SOA Consortium and CIO Magazine Announce Winners of SOA Case Study Competition

Overall Winner:

Cisco IT Case Highlights

Company Background

Cisco Systems, Inc. designs, manufactures and sells hardware, software and services to create Internet and networked based solutions.

Business Scenario

Inconsistent, Disconnected Business Processes: Cisco’s legacy infrastructure had more than 400 diverse applications, many of which supported products and services that had been developed and acquired over the years. Consequently, several core business processes such as product ordering and pricing were becoming inconsistent, monolithic, complex, and inflexible to change. A lack of comprehensive end-to-end monitoring was also a concern.

Disjointed Customer Experience: While customers could initiate nearly all their orders electronically, most still required employee assistance for completion. Customers also had to use multiple online applications. The overall customer experience was far from unified, essentially impeding the flow of company revenue. Numerous initiatives were underway to improve the situation, further complicating the process.

Quest for Unified Customer Experience: Cisco wanted to create a consistent, unified ordering experience for users of its online commerce applications. Ideally, customers, partners, and sales representatives could visit a single Cisco site to securely register an opportunity, configure products, place and track orders, renew maintenance agreements, or evaluate leasing options, all from a unified interface. Cisco also wanted to improve operational efficiency by reducing the number of online transactions that required human intervention.

Commerce Transformation Initiative: The aptly named “Commerce Transformation” initiative is based on SOA principles that have allowed Cisco IT to create a solid architectural and technology foundation for both existing and future application development. Commerce Transformation was chosen as a key proof point for SOA adoption for several reasons. Support for large business priorities was driving significant IT application investment. Numerous business capabilities were identified that would be ideal as reusable services - and the IT organization was ready to embrace SOA principles. Cisco also wanted to achieve differentiated business capabilities to maintain its leading market position.

Early Use Case: Since most of Cisco’s revenues come through partner channels, one of the first projects developed within the Commerce Transformation initiative was the Partner Deal Registration (PDR) application. Before PDR was developed, application access to business services such as pricing and configuration resided behind Cisco’s firewall. This required Cisco employees to manually help partners integrate these services into their systems, prolonging deal cycle times.

PDR was designed to give partners secure access to Cisco pricing concessions and programs, leveraging reusable enterprise-class business services such as corporate pricing, configuration, and partner profiles that were coupled with flexible business rules for price lists, contractual discounts, and promotions, among others. Existing functionality such as pricing could be wrapped into a reusable business service that partners could easily incorporate into their own processes. Granular services could then be combined to provide composite services, with the ultimate goal of an agile Business Process Management (BPM) implementation. The expectation was that developers could effectively combine services to quickly offer new value-added capabilities.

At the same time, this approach would ensure that key business services were available consistently and securely across the enterprise and would simplify their incorporation into partner commerce portals.

ROI

The Commerce Transformation initiative is already delivering scalable solutions, enhancing customers’ experiences, and providing the partner ecosystem with secure access to business services like pricing, promotions and configuration tools. It also allows Cisco to more easily and cost-effectively support new business models and enter new markets.

The solution leverages reusable enterprise-class business services such as corporate pricing, configuration, and partner profiles, coupled with business rules such as price lists, contractual discounts, and promotions.

Key benefits achieved from the PDR project:

• Improved process agility: The way quotes are priced can be rapidly changed, enabling processes such as stacking discounts and promotions.
• Growth: There has been steady growth in the number of partners, deals, and bookings. Six months after initial project rollout, the system had more than 9,000 partner users worldwide and had processed 37,000 deals worth $1.2 billion. Nearly a year later in June 2009, there were close to 20,000 partner users, and 56,000 deals worth $3.92 billion net had been processed.
• Productivity: Deal cycle time has been reduced by 50 percent, allowing sales representatives to focus on providing customers with value-add solutions and services. The volume of time consuming non-standard deals has shrunk by using upfront pricing and incentives. Since the project’s pilot rollout in September 2007, the company has realized estimated savings of $12.7 million through improvements in discounting trends and reductions in non-standard pricing. More than 18,000 man-hours of productivity have been gained by eliminating unnecessary administrative tasks for field sales team members.
• Detailed tracking: A SOA dashboard provides deep visibility into service usage and delivers data that enables service architects to continually improve services.
• Improved customer experience: The number of clicks and time to place an order have been reduced. Users receive consistently correct pricing regardless of quoting or ordering process, making it easier to conduct business with Cisco. Pricing functionality can be smoothly integrated into partner systems.
• Increased back-end efficiency: Almost 70 percent of quotes are processed with no human intervention. The pricing service is now centrally managed to reduce overhead. Business Rules Engine integration provides faster, more accurate decision-making.
• Faster time to market: The reusable pricing service improves time to market as the company sells into new markets and embraces new business models.
• Better compliance: Built-in compliance processes provide the required audit trails.

Partners now have self-service access to incentive programs, promotions, and return merchandise credit capabilities that previously required direct contact with a Cisco salesperson. Quotes initiated by partners through PDR can now be shared with Cisco sales representatives using Salesforce.com for further opportunity collaboration, increased productivity, and reduced cycle time. The PDR application has been localized in 15 different languages in 150 different countries around the world.

Project Organization

Boards and Councils: Cisco’s “boards and councils” governance model was critical to the success of the Commerce Transformation initiative. Cross-functional councils comprising business and IT leaders were tasked with the planning and execution of an integrated capabilities roadmap. The roadmap was developed collaboratively across teams representing different functional groups, initiatives, and capabilities.

Before the roadmap was defined, pricing capabilities were spread across multiple IT and business organizations. To provide reusable SOA-based pricing services that could be used by the PDR and other applications, the councils had to identify business rules and processes that led to the definition of a target pricing service.

SOA Project Team: Once the roadmap was finalized, a SOA project team consisting of their Enterprise Architecture team, Business Architects and IT Architects evaluated the use of SOA. As functional, operational and compliance requirements were assessed, the need for a companywide SOA platform was established. Several areas of concern associated with developing pricing as a set of business services were identified, including availability, performance, security, operational excellence, and governance. The team also evaluated existing capabilities and gaps in technology.

SOA Framework & Platform: Working closely with their business and IT counterparts, the EA team began building a framework for the identification, creation, reuse, governance and monitoring of services and composite applications. The SOA platform and framework were developed by matching Cisco’s business needs and long-term strategy with products and solutions available in the market. This early work greatly streamlined the implementation of new capabilities for many other teams within Cisco and generated positive feedback from business stakeholders.

Center of Excellence: The EA team acts as the Center of Excellence for SOA and BPM and is responsible for building the foundation for all current and future SOA and BPM initiatives. They focus heavily on the areas of concern identified during the SOA assessment to ensure a solid foundation for enterprise-class business services.

Lessons

• SOA is not about technology, but rather how you implement, operate, and govern it. A large-scale enterprise SOA rollout requires maturity from people, processes, and technology as well as grassroots-level adoption.
• SOA and BPM go hand-in-hand. Plan for it in advance.
• A combination of iterative top-down and bottom-up approaches results in faster realization of SOA benefits.
• SOA introduces additional challenges with distributed business services. The SOA technology platform must be architected for the enterprise rather than focusing on a project-by-project basis.
• The organizational model of councils, groups and collective decision-making was initially painful but important to the success, funding and adoption of this project.
• Initial success stories go a long way in creating awareness, confidence and enterprise adoption of a SOA platform. The team has seen tremendous adoption of the SOA platform after the initial success of the highly visible PDR project.
• High availability, performance and end-to-end visibility of services infrastructure are paramount for long-term sustainability of SOA-based solutions.
• When you are a large company, most of the benefits will come from volume, so target simple things (services) with high volume.
• Governance is most needed when you are about to be most successful. If you don’t have it, you will fail.
  

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Special Recognition in Energy/Utility: 

BlueStar Energy Case Highlights

Company Background

BlueStar Energy is an independent retail electric supplier, certified to sell electricity in Illinois, Maryland and the District of Columbia. In addition, BlueStar provides green power and energy efficiency solutions to home and business customers.

http://www.bluestarenergy.com

Business Scenario

Business Agility: BlueStar’s business is in a very fluid regulatory environment. Business conditions change all the time, and the IT infrastructure has to adapt to those changes immediately. The BlueStar executive team formulated a strong strategy and needed a foundation for business execution.

Unite Business & Technology: In mid 2006, BlueStar sponsored an enterprise-wide SOA initiative to unite business and technology based on a strategic enterprise vision to increase competitive advantage. The goal was to provide BlueStar with a rock-solid IT platform and digitized business processes to automate the company's core capabilities.

Enterprise Architecture Evolution: BlueStar adopted the concepts of a mature EA methodology and embraced service orientation (SOA) as their enterprise architecture style. The EA methodology allow the CTO to make tough decisions about which processes BlueStar had to execute well, then implement the IT systems needed to automate those processes.

NextStar™: The enterprise architecture would be named NextStar™ (for the “next” BlueStar) with the goal of streamlining and automating core business processes including eCommerce, B-to-B Integration, Accounting, Automated Provisioning, Risk/Energy Management, Pricing and Product Management, Sales Force Automation, Customer Relationship Management and Billing Systems. Millions of dollars in revenue are tied to timely access to information and the ability to act on that information.

Incremental Delivery: Key to BlueStar’s success was thinking big and starting small—partitioning BlueStar into narrowly defined business domains, processes and services, building out features iteratively, and, showing early value and success—instead of attempting to define the architecture for the entire company at once.

Their services and applications have been architected leveraging SOA constructs such as standard-based interface, consumer heterogeneity, loosely coupling, and, composability, among others. Said services and applications as well as existing legacy systems, workflows and third-party service providers interact with each other in a standard, loosely coupled manner via their Business Integration Suite, which consists of open source distributed, scalable and reliable components such as enterprise service bus, business process management system and messaging fabric.

ROI

BlueStar’s CEO Guy Morgan attributes much of the company's recent growth to the NextStar initiative. BlueStar has grown 12,197% over five years.

In addition to growth contribution, between the adoption of enterprise architecture, open source and offshore development, the company estimates saving $24 million over the course of five (5) years.

Business benefits:

• Improve business agility by streamlining core business processes, accelerating supply chain integration and providing business tools to offer new products in new geographies for new demographics, at an attractive price
• Reduce business operational expense and cycle time through automation of manual processes and seamless integration with trading partners and value-added vendor-supplied services
• Position the company to compete with Illinois utilities to serve residential and small-business customers after the discounted rate the state required utilities to charge for 10 years, ended in January 2007
• 50% reduction in billing staff
• Met per account operational cost targets for small business and residential customers through 100% automation of account management
• Ability to cope with frequent regulatory requirements changes from states where BlueStar operates
• Ability to enter new energy markets such as natural gas
• Ability to either in-source or outsource business processes to respond to market conditions
• Facilitate merger and acquisition (M&A) activity due to likely industry consolidation

IT benefits:

• Ability to scale from thousands of customers to tens of millions of customers nationwide
• Serve as a foundation for massively scalable solutions
• 10% reduction in IT expense associated with enrollment and billing processing
• Reduced IT capital investment and ongoing operational expense through 100% use of open source technologies

Project Organization

Business & IT Collaboration: From inception to deployment, this project has been a collaborative effort between business and technology teams. As a first step in the governance and change management areas, BlueStar established a Steering Committee comprising the company’s executives. Then, with executive management sponsorship, the company formed several domain-based change control boards consisting of multi-disciplinary teams including business, legal and IT members. The change control board members meet weekly to discuss prioritization, progress, change and control management, and release planning.

In-house Effort: NextStar was developed 100% in house. The Chief Technology Officer, Director of Enterprise Architecture and Lead Solutions Architect worked in Chicago, IL. Software Engineering and Quality Assurance teams worked in Lima, Peru.

Enterprise Architecture: The Enterprise Architecture team was responsible for providing leadership, mentorship and oversight of the Business, Solutions, Information and Technology Architectures, all of this under the SOA paradigm.

Lessons

BlueStar discovered early on that these actions would make the project more successful:

• Increased focus on program management (strategy) versus project management (tactical)
• Importance to address and agree on budgetary planning and allocation
• More strict adoption of the architecture and software engineering methodologies
• More strict management and governance of IT assets

Disciplined architectural governance and communication processes are essential to the success of a SOA project.

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Special Recognition in Regulatory:

Financial Industry Regulatory Authority (FINRA) Case Highlights

Company Background

The Financial Industry Regulatory Authority (FINRA) is the largest independent regulator for all securities firms doing business in the United States. Created in July 2007 through the consolidation of NASD and the member regulation, enforcement and arbitration functions of the New York Stock Exchange, FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services.

http://www.finra.org

Business Scenario

Merger/Consolidation: The Financial Industry Regulatory Authority (FINRA) SOA project consolidated the New York Stock Exchange Member Regulation systems with the NASD Member Regulation systems. FINRA is the largest private independent regulator for all securities firms doing business in the United States. FINRA oversees nearly 4,850 brokerage firms, about 173,000 branch offices and approximately 649,000 registered securities representatives.

The primary challenges:

1. Consolidation of the two organizations’ application portfolios that support the member regulation business. Each application portfolio was sizable and heterogeneous. At the onset FINRA had ~160 applications and NYSE Member Regulation was supported by 86 applications.
2. Reconciliation of two sets of legacy business processes into a final-state business process.
3. Final-state business processes must seamlessly integrate new systems and existing systems from both legacy organizations. The existing systems required enhancements.
4. Business teams were distributed across the United States in district office locations. The development team was located in New York City and the Washington D.C. area.

The objectives:

1. The final-state business processes of the merged company required seamless operation.
2. The team needed to ensure a continuity of business operations while transitioning in phases to the new final-state business processes.
3. Performance and reliability of the systems was a key requirement in maintaining core mission success.

Why SOA:

1. The size and complexity of the project required multiple teams in different locations working effectively in parallel to meet the aggressive schedule.
2. A SOA approach reduced risks presented by the large team size.
3. The end-state systems had to be flexible and provide the ability to quickly deploy changed and new business process without breaking the architecture.
4. It was anticipated that the approach would deliver significant savings in both cost and time when compared to competing approaches.

ROI

The Member Regulation function of FINRA (the new, merged regulator) benefited greatly from the new system. Broker regulation tasks were simplified and accelerated, and delivered cost savings for the business.

The key business values achieved are:

Time to Market – Project delivery was greatly accelerated by allowing development teams to conduct parallel development of 10 major services with minimal interaction and dependencies. The service oriented approach and detailed overall vision allowed each team to rapidly deliver individual services that were seamlessly integrated and tested by the system team.

Reduced Risk – The SOA approach mitigated many of the risks associated with large development teams (100+ staff) by facilitating parallel development while minimizing team interdependencies and setting clear team responsibilities. The key to reducing risk is the early definition of business service interfaces and responsibilities.

Cost Savings – The modular SOA architecture of the new system consolidated business functions into a common set of business services that are leveraged across many business processes, resulting in cost savings for construction, deployment and maintenance of the system.

Improved Agility – The business-centric service design and modularity of the SOA approach provides flexible deployment to support current business processes and to rapidly adapt to support future business process. Current business centric services include data sourcing, analytic surveillance and case management.

Resilience – Fault tolerant business-continuity is achieved using guaranteed message delivery, as individual business services are moved off-line for maintenance and restored.

Process Optimization – Technology duplication is eliminated through the consolidation of functionality into discrete standardized business services. This also provides a uniform approach and consistent results across all the business processes.

Project Organization

FINRA used a three-tier approach to organize the project:

Tier 1 was comprised of business analysts that spanned the various business processes.

Tier 2 consisted of 10 distinct service teams that defined the function of their service based on the business analysis and under the supervision and guidance of architecture and program management.

Each service team was individually sponsored by the organization and was a cross-functional team comprised of business analysts, architecture, development, and testing. The collaboration and alignment of technology and business staff on each individual service team was key to their success.

Tier 3 was comprised of the system architecture team and program management who provided overall vision, governance, and timeline. The overall vision provided business-centric services spanning many business processes. This naturally created emphasis on major business functions such as analytic surveillance and case management.

Lessons

1. The single most important lesson from this SOA project is that extremely large, time critical applications can utilize a SOA approach to segregate and compartmentalize common services and allow for massively parallel work by independent teams. Not only does this approach increase organizational productivity but also mitigates some of the risk presented by a large project.
2. The SOA approach gave the teams a measure of insulation, helping ensure decisions on one component did not negatively impact other components or the project. The de-coupling allowed teams to deliver well-defined components on an aggressive time line required for project success.
3. Understanding the underlying business problems and processes is crucial to creating well-defined services that are reusable and exhibit the correct level of granularity. The payoff for this is a flexible business process that can change and grow without changing the architecture
4. A concise architectural vision shared between system architects and application architects is key in large projects. Effective governance, along with well-defined services with clear functions and interfaces, is essential. Since the interfaces will change over time, it is important to develop a plan to handle this early.
5. For projects that use process orchestration, identify and document those processes early in the project. This will help ensure that they operate in conjunction with the business function they automate and avoid problems that would be more costly and difficult to solve later in the project.
6. The combination of an ESB and BPM is a robust and powerful enterprise pattern. This combination greatly simplified several of the tasks of adapting existing capabilities into a new unified SOA system.

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Special Recognition in Government/Public Sector:

New York State Department of Taxation and Finance Case Highlights

Organization Background

The New York State Department of Taxation and Finance is responsible for the administration of the state’s tax laws, including the administration of related local taxes, and the management of the State Treasury.

http://www.tax.state.ny.us/

Business Scenario

Modernization & Re-engineering: Existing systems had several business issues: User view into the system was not integrated across all platforms and systems, leading to longer training times and an inconsistency of service. The delivery or work was still paper based. The expectations of both internal and external customers changed dramatically with the emergence of the Web. The department wanted to facilitate Web filing and change the processing model to transactional from its historical batch pattern.

Legacy Constraints: Meanwhile the technical side of the house was not only having trouble keeping up with the new demands, but was becoming unable to support all the different legacy technologies. In fact the primary system for processing personal income returns dates back to 1970s and was built on a homegrown database system by experts who have all retired.

Talent & Intellectual Capital: All the while, in both business and technical areas, experts were retiring with considerable undocumented enterprise intellectual capital. The department was finding it hard to recruit the next generation of leaders, because the work involved was not as attractive as other offers.

Cost Reductions: At the same time, the technical organization was being asked to cut costs and reduce total cost of ownership.

e-MPIRE Project: The goal was to establish a 21st century government system and toolset. To meet these goals Tax brought in through RFP a vendor who proposed an Integrated Tax System. The solution was a black box with security, work management and written business rules all built into it. After reviewing the initial high-level design of the vendor, the department decided to dismiss the vendor and implement an approach that lead to a more open solution that leveraged existing assets.

ROI

Expected Value: The planned business value of e-MPIRE was to eliminate the risks of having the core departmental systems on unsupported platforms, give the user a single interface into all systems and build agility to adapt to changing legislative and business requirements.

Agility: On the agility part, the annual legislative changes (referred to as annual cycles) for Corporation Tax historically had taken six weeks to code and more than two months to test. Under e-MPIRE R2, and because of the externalized rules and improved testing tools, the annual cycle changes took two weeks to code and two weeks to test.

Optimization: With the implementation of a workflow engine in R2, they found that individual work item time was reduced by 40%, exception inventories were reduced on average by 60% and backlog was reduced by 80%.

Volume: In R3, the ability to process the high volumes of income tax returns and deliver refunds to taxpayers improved dramatically. Historically, barely 150,000 returns were processed a night, with a 24 hour delay for fraud detection. e-MPIRE R3 hit a high water mark of 390,000 returns in a night (ran out of input), which includes a near real time evaluation for fraud.

Project Organization

Business and IT Collaboration: The project team included managers and staff people from across the Department of Taxation and Finance, along with business analysts and programmers from the IT organization.

Two enterprise wide IT organizations participated via dotted line to the project: Enterprise Architecture and Infrastructure. Enterprise architecture had some embedded teams with the project, since the project was going to establish many standards and tools moving forward. The User Interface Team, Java Framework Team and Technical Workflow Team were essentially Architecture’s Centers for Excellence on the project.

The User Interface Team worked with business analysts and users to establish everything from navigation patterns to field naming conventions, all with the intent of having a consistent UI to simplify training and usage.

The Java Framework Team worked with the programmers and architecture teams to develop the coding behind the navigation, tools to aid development (some code generation), develop consistent integration services (to Content Management, Workflow, Business Components, etc.) and with basic application development support.

The Technical Workflow Team worked with business analysts, users and the Workflow team (non-technical team of business modelers) to develop common workflow services, monitor models and process patterns.

The Architecture Team helped align the business with the project because they enforced the consistent enterprise view of process and look and feel (the two places the system touches the users).

There were validation meetings with larger groups of users to validate the design and direction of the project.

The Business Roles and Navigation team of users was established to build the tabsets (functions) for the user groups, establish roles, make sure the right roles have access to those functions, and establish that function in the overall navigational scheme of e-MPIRE.

Lessons

NY State Department of Taxation and Finance cites four reasons for success:

1. Executives (commissioner, deputies and CIO) were committed to the creation of a system that will grow with the department for the next 20 years. This is the most highly visible application at Tax and the one that has the largest impact on the citizenry ($3.5B in refunds in the economy). This was a risky system. It took real commitment and belief to pull the trigger.
2. A shared vision of what the system had to be.
3. A department culture that facilitated success. The cultural advantages they had were a trust of IT across the department, a history of working together, and within IT a culture of reuse of services (again a pattern of how they work together).
4. The considerable effort expended by their users, programmers and partners.

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