Business Process Management for Innovation and Optimisation

David BateSOA Software Sales ExecutiveIBM Asia Pacific

87% of CEOs believe fundamental change is required in next two-yearsto drive innovation

Source: 2006 IBM Global CEO Survey

Innovation that matters to CEOs and CIOsTop Innovation priorities for CEOs:• Extend the ability to collaborate inside & outside

• Innovate business models & processes

• Leverage information for business insight

Ability to manage increasing regulation costs

Ability to allocate capital

Ability to manage a global organisation

Ability to allocate the best talent

Ability to innovate

0 30 60Source: March 2005 McKinsey Quarterly survey of 9,345 global executives

CIOs and CTOs Recognize Innovation as the Most

Important Capability for Growth

Yet: Only 1 in 10 CEOs believe their organisation has the ability to be very

responsive to changing market conditions

What are the barriers to innovation and flexibility?

Building and maintaining application interfaces is difficult and expensive

“Point-to-point interfaces result in an ever-increasing maintenance burden.”— Gartner

Division “A” Division “B” Division “C” Division “D” Division “E”

The Vertical Silo Problem

. . Starting to Unlock the Conundrum

• Start is by deconstructing your business model - breaking it down into discrete business processes and functions

• These processes and functions are what we call service components

• Each service component serves a unique purpose and interacts with other service components in the business model, using agreed-upon cost structures and service levels

to enable reuse and flexibility . . .

Bank

Where Are We Heading . . . an example

Case Study: Retail Payments Processing

Bank

Bank

Customer

Case Study: Retail Payments Processing

Change: Browser-based Approvals

Shared Service Change: Shared Service –

Exception handling, Risk, Mgmt.

Bank 2 – “Supplier” Change: Domestic Payments Handled Through Bank 2

OutsourcedChange: Check Processing and Image Archiving can be Outsourced

Change: Clearing Process Optimization

Where Are We Heading . . . an example

Where Are We Heading . . . an example

Case Study: The Lolly Shop

Store

Where Are We Heading . . . an example

Case Study: The Lolly ShopCustomer

Shared Service & Information

SupplierPeople

Information

Process

Process

People

Store

What are the implications for IT?

Bank

Shared Service

Customer

Bank 2 – “Supplier”

Outsourced

Case Study: Payments Processing

Full Business view

Process to optimize

Creating IT flexibilityIBM SOA Foundation

Skills &Support

Software

Your business is only as flexible at your IT

SOA Bridges the gap

… a service?

A repeatable business task – e.g., check customer credit;

open new account

What is …..?

… service orientation?

A way of integrating your business as linked

servicesand the outcomes that

they bring

… service oriented architecture (SOA)?

An IT architectural style that supports service orientation

… a composite application?

A set of related & integrated services that

support a business process built on an SOA

Flexibility through Business Services

Service Components are reusable building

blocks

Flexible, componentized business processes

Process logic exists in the form of high value business services that

are reusable.

• more flexible and cheaper to maintain over time,

• enabling dramatic improvements in

• responsiveness, • cost effectiveness, and• profitability.

Flexibility

Point-to-Point connection between applicationsSimple, basic connectivity

Messaging Backbone

EAI connects applications via a centralized hub Easier to manage larger number of connections

Enterprise Application Integration (EAI)

Integration and choreography of services through an Enterprise Service Bus Flexible connections with well defined, standards-based interfaces

Service Orientated Integration

SOA builds flexibility into your existing investments

As Patterns Have Evolved, So Has IBM

The next stage of integration

IBM’s flexible approach to SOA

Gather requirementsModel & SimulateDesign

DiscoverConstruct & TestCompose

Integrate peopleIntegrate processesManage and integrate information

Manage applications & servicesManage identity & complianceMonitor business metrics

Financial transparencyBusiness/IT alignmentProcess control

The SOA Lifecycle enables different profiles for different needs

Clean hand-off to IT with Business

Models, Metrics

ContentManagement

Business Modelingand Simulation

Collaborative Development

Workflow and Choreography

Business Monitoring, Dashboards and Analytics

Integrated deployment of policies, rules, and services based on an

SOA platform

Real time collaboration and management of

business processes

Feedback for continuous

improvement and optimization

Enabling complete life cycle management and

improvement of business processes to drive

innovation

IBM’s flexible approach to SOA Start Anywhere in the cycle, Use only what you need

1. IBM with our Business Partners are the leaders in SOA3,000 engagementsTrained IBM Community grows to over 100,000Added 1,300 new partners (since April)Ready for SOA mark

2. The SOA Entry Points – Business ValueInstitute of Business Value (IBV) studyOver 3,000 assets in the SOA Business Catalog67 new public references

3. Continued build out of IBM’s SOA capabilities: 4 new products, 23 enhanced products and 11 new professional services offerings.

– New products:• Business Services Fabric • Service Registry and Repository• Dynamic Workload Broker• IBM Change and Configuration Database

– Enhanced products include:• WebSphere Process Server with Human Workflow• Rational Software Development Platform• Workplace Dashboard Framework

– Services and Methods include:• BPM methodology • Management of Services for SOA offering• SOA Integration Services

IBM SOA: 3 October Announcements

Interaction Services Information Svc’s

Partner Services Business App Svc’s Access Services

DevelopmentServices

Management Services

Infrastructure Services

Enables collaboration between people, processes &

information

Manages diverse data and content in a unified

manner

Connect with trading partners

Build on a robust, scaleable, and secure services environment

Facilitate interactions with existing information and

application assets

Integrated environment

for design and creation of

solution assets

Manage and secure

services, applications &

resources

Optimizes throughput, availability and utilization

App

s &

In

fo A

sset

s

Process Services

Business ServicesSupports enterprise business process and

goals through businesses functional service

Enterprise Service Bus

Orchestrate and automate business processes

Defining the capabilities for your SOA environment SOA Reference Architecture

SOA entry points to get you startedHow IBM can help you towards service orientation

Entry point

Department level –implementation across a set ofmultiple related projects

ClientArchitectureReadinessEvaluation

Cross-division/ enterprise level –a strategic initiative for application development and integration

Component BusinessModeling

Single project – implementation at single project level. “Testing the waters,” a gradual adoption approach

Project Definition Workshop or

Self-Assessment

SOA entry points to get you startedBoth Business Centric and IT Focused

11

33 22

5544

Lower risk and speed work by using proven, time-tested services

Take advantage of prior work, or work done by others

Reduce maintenance costs and gain greater reliability and consistency through flexible, any-to-any linkages

Connect systems, users, and business channels based on open standards

Greater innovation and flexibility due to faster deployment and modification of business processes

Achieve business process innovation by treating tasks as modular services

Improve productivity by putting the user experience within the context of the business process

Deliver role-based interaction and collaboration through services

Provide trusted information to people when, where and how they need it

More informed decisions, insights, and reduced risk with information delivered in-line and in-context

SMB Customers gain value through Entry Points

People

Information

Process

Connectivity

Reuse

What is it? Value

Reduced costs, increased customer satisfaction

600 person lender gets credit reports via Web Services; reviews loans in 15 minutes

Provide vets with 24-hour reliable access; reduced ratio of returned goods

36 person firm extends ordering to Veterinary application via Services

Automated data transfer cut workload, increased revenues

Facilitate realtime donations in 400 person non-profit organisation

Expecting to yield a 25% increase in revenue

Collaboration for 20 person eCommerce consulting firm

Radio Frequency Identification package tracking

30% reduction in cost for mishandled packages

SMB Customers gain value through Entry Points

SVS Veterinary Supplies

People

Information

Process

Connectivity

Reuse

Customer Example Customer Value

23% reduction in resolution time for customer calls; ROI in less than two months

720 employee firm automated application process. Reuse of services in call center

Loans in hours instead of daysAutomate loan process in 725 person firm from students to lenders

Expecting a 20% increase in customer satisfaction and a 15% increase in new business750 person ISV adds multichannel eCommerce

integrated with backend systems

Increase workload without adding people, with no compromise on service levels

90 person ISV reuses collaboration tools for employees and for customer service

People

Information

Process

Connectivity

Reuse

SMB Customers gain value through Entry Points

Reduced costs and made it a great deal easier for travelers at the station

Consolidated view across bus operators; Reuse to see via cell phonesSofia Bus

Station

Customer Example

Vormittag Associates, Inc

Customer Value

Are Customers Really Deploying It ? Or Is It Hype?

• Companies of all sizes are using SOA today for real business value

Source: Forrester

Base: North American and European software and services decision-makers

Not Using SOA Use/Planning to Use SOACompany size

1,000 to 4,999

5,000 to 19,999

20,000 or more

All Respondents

56%

39%

38%

49%

44%

61%

62%

51%

n = 315

n = 187

n = 140

n = 1440

6 to 999 56% 44% n = 798

24%

19%19%

12%

9%

9%

7%

0% 5% 10% 15% 20% 25%

Reduce time and cost of delivering new services

Align IT to business more effecitvely

Flexibility to change/create business processes

Enable more flexible and reusable services

Optimise IT resources

Improve organisational competitiveness

Other reasons

. . . and how about SOA Adoption in Asia Pacific?Springboard surveyed

2,615 CIOs and IT Decision Makers in Australia, China, India, and Singapore and found that only 21% were aware of the concept of SOA. From the survey results, IBM had a massive lead over other IT vendors with 50% of organizations planning to implement SOA saying that IBM was the best suited to help them migrate to a service oriented architecture.

Q: what is your organisation’s primary reason for investing in SOA?N= 113 (SOA Users)Source: Springboard Research, 8/2006

Source: 2006 IBV Business Value Study

SOA Delivers Business Value … TodayFlexibility, Growth, Reuse, Decrease Cost

• 97% of customers justified their SOA project on cost

• 100% saw increased business flexibility

• 51% revenue growth

Top 5 Results From SOA Projects1. Improved Customer Satisfaction

CNH (New Holland & Kobelco)2. Business Operational Savings

TransFonD3. Increased Competitiveness

Pacorini4. IT Cost Improvement

Grohe5. Reduction in Business Cycle Time

Storebrand Group

Source: 2006 IBM SOA Technology Study of 137 Companies

Align Business and IT with SOA Governance

What is SOA Governance?– Decision making rights, measurements, and

controls throughout the lifecycle of services

What is the value of SOA Governance?– Realize business benefits of SOA– Mitigate business risk; retain control– Improved team effectiveness

"IBM's approach aligns with Gartner’s view of SOA governance, and we believe it is likely to be more effective than narrower approaches.”

Gartner, "IBM Takes Another Step Toward Its SOA Governance Vision", Michele Cantara et al, March 28, 2006.

Why SOA Governance matters

Realize business benefits of SOABusiness process flexibilityImproved time to market

Mitigate business risk and regain controlMaintaining quality of serviceEnsuring consistency of service

Improved team effectivenessMeasuring the right thingsCommunicating clearly between business and IT

Professional investors are willing to pay premiums of 18-26% for stock in firms with high corporate governance.Source: McKinsey Quarterly

"firms with above average IT governance... had more than 20 percent higher profits than firms with poor governance following the same strategy" Source: Peter Weill and Jeanne W. Ross, Harvard Business School Press 2004

"Effective IT Governance is the single most important predictor of value an organisationgenerates from IT.”Source: Peter Weill, MIT Sloan School of Management’s Center for Information Systems Research

SOA Governance should not be an afterthought

Advancing IBM’s SOA Governance Story New Method, Tool and Catalog to help get started quickly

IBM SOA Governance MethodRational Method Composer SOA Gov Plug-in Allows Client-unique process customisation

WebSphere Service Registry and Repository New enabling tool for runtime and discovery Track metadata though the lifecycle

SOA Business Catalogue Shared Services across Business Partners Available though the Web

SOABusinessCatalogue

IBM SOA Assessment ToolOn line or on site

Find out at ibm.com/soa

or contact soa@us.ibm.com

Receive actionable recommendations customized to your level of SOA maturity

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SOA Business Value Assessment ToolWhy is ROI Important?

With an ROI a project is 60% more likely to be approved (Gartner)ROI can reduce sales cycle by 30-40% (IDC)More than 82% of IT decisions require an ROI (Information Week)

SOA Business Value Analyst Tool

Generate ROIQuestions

Sample Report Produced

Summary of Customer Experiences• SOA is a team sport:

– Business Team and IT Team work hand-in-hand

• SOA Foundation is critical:

– Establish an enterprise architecture & infrastructure, based upon SOA principles to enable your journey

• Project Entry points are important

– Avoid The “Big Bang” Approach

• Governance is a must for success

The first step is the most important… so plan ahead

Find out more at: ibm.com/soa

Thank You

ibm.com/soa

Criteria for consideration as an IBM SOA customer

All the companies represented on the list met basic qualifications: customer has implemented or is implementing one or more targetedIBM services engagements for SOA and/or one or more IBM SOA Foundation software products for the purpose of improving service orientation and/or is creating/has created reusable services with well-defined services interfaces (such as through WSDL).