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

Overall Winner:

Synovus Financial

Company Background

Based in Columbus, Georgia, financial services company Synovus provides commercial and retail banking, as well as investment services, to 35 banks throughout the southeast U.S.

Business Scenario

New revenue opportunity: eWise, the company that NACHA (The Electronic Payments Association) selected to be the switch processor for the Secure Value Payment (SVP) Program, approached Synovus’ Emerging Business Opportunities to partner on a new Automated Clearing House (ACH) payment program.

Cross industry collaboration: Based on a revenue opportunity, Synovus partnered with NACHA and eWise to be the first financial institution (FI) to create a consumer SVP platform and sponsor merchants to the SVP program.

Use Case: The SVP platform was built to provide the consumer an alternative method to purchase goods and services from merchants and make payments to billers.

The SVP payment method allows consumers to use the trusted FI SVP web site to authorize the funds to be transferred to the merchant or biller using the ACH highway.

The compelling story here is the win-win scenario that the consumer does not have to provide personal account information to the merchant or biller, which lowers their identity fraud concerns, and the merchant has a guaranteed payment from the consumer’s FI at a lower cost than the credit card processing fees.

ROI

IT Cost Savings made business case: Because IT was involved early and was able to leverage its existing SOA infrastructure, hosting and many of its existing services, close to a million dollars from the business case was cut to make the project revenue projections work.

Shared services: The SVP application was built using 19 web services. Of the 19 web services, 10 where reused from previous SOA implementations, one from Metavante for processing payment, three from eWise for switch operations, which leaves five for the Synovus development to build and test. Therefore, the cost and effort from a Synovus IT web service standpoint was 65% cheaper than a project from scratch.

Business Agility (Scale): Synovus did rollout to all 37 Financial institutions within its holding company at no additional project cost, and due to configuration flexibility Synovus will sponsor seven new merchants to the SVP program. Tens of merchants are in the process of adding the SVP payment option to their shopping carts, other Financial institutions (to be announced by NACHA) will join the SVP program plus other FI processors will build SVP products to offer its Financial institutions SVP capability by the end of the year 2008.

Project Organization

Cross Industry Collaboration: The SVP project team was compiled of participants from Synovus’ Cash Management, Emerging Business Opportunities, and IT while external partners were NACHA, eWise, Metavante. iGourmet and Wicked Whoppies were early Synovus sponsored merchants used to kick off the pilot phase of the SVP project.

Business & IT: Because the SVP project is so pioneering, the vendors, Synovus business, business analyst and architects have been working closely to ensure all requirements are analyzed for larger domain adoption.

Synovus’ Architecture and Development team has a governed Configuration Control Board (CCB) that is used for tactical and strategic SOA governance. Through the use of normal project meetings and the CCB, SOA was carefully integrated in the project fabric to help decide the proper technologies used in the SVP implementation.

Lessons

• SOA is an architecture and philosophy not a technology
• SOA is hard but coupled with good governance it can create immense value
• You don’t have to get all of the things right on the first implementation but you do have to get your architecture correct
  

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Special Recognition in Insurance:

Penn National Insurance

Company Background

Penn National Insurance is a regional property and casualty insurance carrier based in Harrisburg, Pennsylvania. Penn National Insurance writes approximately $550 million of annual premiums in personal and commercial lines of business combined.

Business Scenario

Losing market share, independent agent dissatisfaction: Over the past few years, the company has been losing market share in its personal lines of business due to competitor pricing strategies and dissatisfaction with existing systems among the independent agents that market the company’s products. At the same time, the company’s costs associated with processing new and renewal business in this market sector have consistently exceeded those of competitors.

Strategic business initiative: In 2006, Penn National Insurance made a strategic decision to commit corporate resources to reinvigorate its personal lines of business. Key elements of the plan included the implementation of predictive analytics to enhance pricing precision, and the replacement of existing systems to streamline processing and make it easier for agents to place business with Penn National Insurance.

To summarize, the company needed a new system, which enabled:

• Quality growth and market retention through increased pricing precision
• Expense reduction through lower processing costs
• Agency acceptance through ease of doing business
• Flexibility for adding new products, entering new markets, and providing a platform to absorb additional business in the event of an acquisition
• Increased data accessibility
• Faster time-to-market for new products
• Faster turn-around time for system changes

ROI

Pricing Precision: The primary objective of the project was to achieve better pricing precision. Less than twelve months after the project kick-off, a scorecard had been coded as a service and integrated with legacy systems. This allowed the company to move from a simplistic system that assigned new business among just three tiers, to a much more sophisticated system that evaluated numerous risk characteristics and then assigned the business to one of 25 new tiers, increasing pricing segmentation and pricing precision dramatically.

Increase agency acceptance: The second business objective identified was to increase agency acceptance of Penn National Insurance systems. The new system was available to Maryland agents in mid-April, 2008. During the first two months following implementation, the company saw a 65% increase in new business quotes from those same agents over the same time period for the previous year. Feedback from agents indicated that they were “extremely satisfied” with the new system, comparing it favorably to the systems of much larger national carriers.

Policy Processing Efficiency: The third business objective to be achieved by the project was expense reduction associated with policy processing. Using legacy systems, the company’s STP rate for policies processed without human intervention, stood at 18%. At three months post-implementation, the company is already experiencing an STP rate of 75%, where the new system has been deployed. When fully implemented for all states and all lines of business, the company expects to save $1.3 million annually in FTE processing costs.

Additional Cost Savings: Additional annual expense savings of $1.2 million are expected from using defined business rules that apply more discipline in the automatic ordering of third-party reports when compared to the previous process of manually ordering these same reports.

Further, the company anticipates an annual expense savings, in vendor maintenance costs and FTE development/testing time, of over $800,000, by eliminating the need to support two rating systems.

Overall, the company expects to achieve tangible annual cost savings of $3.3 million from the new system.

Project Organization

Business & IT Collaboration: Business and IT project team members collaborated daily to define functionality details for specific modules targeted for reuse. (service design)

Another forum for collaboration existed in the company’s Data Stewardship Council (DSC). Comprised of decision makers from the Underwriting, Claims, Marketing, Finance, Actuarial, and IT Departments, the DSCs mission is corporate data governance.

Lessons

Business buy-in upfront: Time spent up-front gaining business support for the SOA project will be rewarded. There were many times on the project when they had to ask their business clients to think or work differently than they were accustomed to doing. Because their clients already understood the benefits of SOA, they readily accepted these new challenges.

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

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Special Recognition in Transportation:

Con-way, Inc.

Company Background

Con-way, a $4.7 billion freight transportation and logistics services company based in San Mateo, Calif.

Business Scenario

IT-based Business transformation: Recognizing the need for more adaptable and responsive product offerings, Con-way embarked on a journey of business application transformation, moving from rigid and siloed legacy systems to a highly flexible and agile event-driven Service Oriented Architecture.

Transportation Industry challenges: In the face of explosive globalization, rising fuel costs, increased security regulations and extensive government reporting requirements, the transportation and logistics industry is going through dramatic change. Some industry segments are facing the risk of commoditization and consolidation. At the same time, existing customers expect more for less from their transportation and logistics providers.

IT legacy systems & infrastructure impeded business change as follows:

• Respond to continual competitive pressure to differentiate in an industry marked by rapid expansion, consolidation and commoditization.
• Deliver new services, as well as adapt existing services quickly, as new business opportunities present themselves.
• Address increasing and changing customer demands, by participating in a real-time extended enterprise with customers, their trading partners, carriers and other logistics providers in order to provide them with better control of and visibility into their global supply chains.
• Eliminate latency in the flow of information as freight operations and customers require near real-time knowledge of the current state of affairs.
• Deliver IT solutions faster to support the business. Traditional IT solutions architectures could not quickly adapt to changes in the business processes or flow of information.
• Eliminate siloed business functionality requiring inefficient dual entry into multiple systems; with the goal of capturing information once to ensure it gets to other business functions and data stores that require it when it is needed.
• Overcome inertia in the adoption of enabling technologies. Older IT architectures could not support rapid adoption of existing and emerging technologies such as wireless handheld devices, warehouse automation and RFID.

ROI

Application Portfolio benefits: Con-way has approached SOA holistically, believing that the real benefits are derived only when the approach is applied consistently across the application portfolio. So, this case study reflects not just the results of one project in isolation, but how early efforts have over time yielded a high degree of reuse, cost-savings and accelerated delivery of systems. Projects are now being delivered 3-4 times faster.

Business Benefit examples:

Reduced time at Canadian border: For example, all interactions with Canadian and U.S. Customs by Con-way were previously manual and paper-based. Truck drivers frequently encountered delays in crossing the border as a result. By sending Canadian Customs Conveyance reports and U.S. Customs Manifests and Conveyance containing information about the tractors and trailers in an event-driven manner, Con-way trucks crossing to and from Canada are often pre-cleared. This enabled Con-way to reduce the time required for border crossings from two to three hours to less than a minute.

Automation creates man-hour reduction: There are between 6,500 and 10,000 appointment shipments processed by Con-way per day. These were being handled manually in Con-way’s system, resulting in redundant data entry. Each entry took up to two to three minutes. By automating the business process and triggering it through an event, Con-way has saved up to 500 man-hours daily.

Business Agility: Operations, Sales and Finance personnel also have real-time decision support by removing the latency in the flow of mission critical data. Millions of business events are being published and processed in an event-driven manner.

Finally, an agile architecture has been enabled, facilitating change both in the business and technical arenas, including integration hooks for advanced dock simulation, dock automation, handheld devices, emerging technologies and e-Business processes.

Project Organization

Business-IT Collaboration: As part of Con-way Freight’s project governance, business cases are developed with business sponsors before any major project is undertaken. During the execution of a project, there are usually several business users involved in various parts of the software development lifecycle including use case analysis, user interface design and user acceptance. As agile software development practices are being adopted, business users will become even more closely integrated with the emergence of new applications and functionality.

Lessons

• Get senior executive sponsorship from the outset. Con-way set out the prove the concept with its first SOA project and made sure that executive management understood this was going to be the first step in a systematic, broader effort. This has been critical to the company’s success with the event-driven SOA effort. ROI can be difficult to assess at the outset, which is why an executive sponsor, like the CIO, really needs to be on board to sell it to the business. Further, the executive support needs to be intrepid and stay the course as the company goes through finding the right groove to move forward.
• Approach the SOA program from a holistic perspective. Partition business functionality into services whether there is anticipated reuse or not. Do not over engineer or try to build for unknown requirements, but build in an extensible manner.
  

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Special Recognition in Government:

US Department of Defense, AT&L

Organization Background

The US Department of Defense (DoD) Acquisition, Technology, and Logistics (AT&L) organization has responsibility for management and oversight of Major Defense Acquisition Programs (MDAPs).

Business Scenario

Poor information visibility, manual report creation: Currently, DoD generally limits the collection, correlation, and dissemination of acquisition information to mandated reporting and specifically formatted products, such as the Selected Acquisition Reports (SARs) submitted annually to Congress or the Defense Acquisition Executive Summary (DAES) Reports. Oversight requirements from Congress and OSD are met primarily through manual data collection and the import of electronic data from the Services.

Acquisition program and status reporting processes for the Department are resource intensive, lack timeliness, and frequently are not authoritative. These limitations create an environment where the norm is reactive responses to existing problems versus proactive management to mitigate potential problems.

Improve decision-making: To address these issues and to provide effective and efficient delivery of warfighter capabilities, AT&L needed to achieve timely access to accurate, authoritative, and reliable information supporting acquisition oversight, accountability, and decision making throughout DoD. DoD leadership initiated a number of data and information sharing activities to address the information management gaps. One of these was SOA, as stated in 2007 AT&L Strategic Implementation Plan Goals.

Prior to SOA, data systems within DoD were implemented to electronically mimic pre-existing paper-based systems. They are better in that regard, but they are not noticeably different in type. SOA is reaching for a profoundly different data model: one in which data are simply, transparently available throughout the enterprise to whomever has a legitimate need for the data as soon as the data are developed.

ROI

Mission agility: To further prove the flexibility of this new data management model, the Air Force changed one of their authoritative data elements at the program management source for the B2-EHF program; business tool displays were refreshed, and the revised program data element was properly reflected in each display—available for use by the Department in less than a minute.

Better decision-making: The SOA infrastructure and related governance processes enabled authoritative information supporting acquisition decision making on $103B in total program value to be pulled from authoritative sources, as needed. With the existing processes, obtaining this same information may take several months, and the data may no longer be current when it is needed for decision making.

Project Organization

Center of Excellence. Governance Team.

Cross-service collaboration: The technical team was made up of technical resources from three sources: data providers (from Army, Air Force, Navy, and the Defense Acquisition Management Information Retrieval program office), the hosting partner (BTA), and software technologists.

Lessons

Data Governance Team: The governance established for the demonstration included leadership representing the functional interests and the technical interests of the effort, along with support from data source and SOA service consumer representatives. Mission: This governance body agreed to data definitions, identified authoritative sources for the data, and achieved data availability for on-demand access. Management: Centralized management is required for ongoing coordination of business processes and information requirements to avoid duplicate efforts and costs while encouraging reuse of services.

Security complications: Significant delays and challenges resulted from differing security standards among organizations, and initial lack of understanding of the maturity and configuration of data providers. Thorough analysis of security policies and practices and careful design are required for the next phase, which will include identity management, access management, Public Key Infrastructure (PKI), and the usage of Computer Access Cards (CACs).

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Special Recognition in Technology:

SunGard Financial Systems

Company Background

SunGard Financial Systems delivers software and processing solutions to the Financial Services industry.

Business Scenario

Product transformation for agility: SunGard Financial Systems delivers software and processing solutions to the Financial Services industry through hundreds of products, many obtained through acquisition. These products have been built on disparate operating systems making integration very lengthy and difficult. These are the same challenges that their customers face with inflexible technology and business silos. SunGard is organized around different units, which serve unique business areas, such as investment management or brokerage and clearing. These units are known as business segments.

Customer Drivers: Many of their customers had embarked on SOA architectures themselves and wanted to find a trusted partner whose efforts complemented those initiatives. They also said they wanted to reduce the number of vendors they deal with and thus were looking to leverage more of what SunGard could offer.

SOA-ify Products: The goal with the SOA project (called Common Services Architecture or CSA) was to expose more components and business process logic and make it easier to consume them. CSA allows SunGard segments to catalog their software assets, produce reusable components and consume them in composite solutions. CSA establishes standards and fosters reuse through the sharing of design principles across products, and sharing of utilities and business services. The CSA is an evolution in the way that they develop new products and services.

The SOA project is addressing both the SunGard business problem of creating agility from siloed applications and the customers’ business problem of needing to change how the software mapped to their evolving business processes.

ROI

ROI is beginning to be recognized by the business with continued progress expected through this year and well into 2009 and beyond. The basic metrics of the ROI include:

1. Higher volume of solutions delivered, including greater exposure to previously hidden assets
2. Greater efficiencies of delivering solutions
3. Compatibility to integrate with customers’ SOA environment, resulting in higher business satisfaction.

Project Organization

SOA COE: The Infinity team manages the SOA Center of Excellence, which has a quality assurance team and certification and performance lab. They also provide centralized management of federated development communities across the global organization and the registration of assets and project management cataloging the decomposition of key products into agile components. Common architects represent each of the business segments and they review and vote on submissions to the SOA from various workgroups. Collaboration is fostered by community calls and active wikis to leverage each other’s work in real time.

Customer Advisory Board: To ensure that the project remains on track, they instituted a customer advisory board, whose membership is composed of enterprise architects and technology officers from top tier banking, investment services, energy and insurance organizations.

Lessons

They have learned through experience in the Infinity project that agility is realized far before significant reuse, (which does come but it requires a critical mass of component content before reuse becomes meaningful).

They also reaffirmed the importance that senior executive sponsorship has to an SOA initiative.

They gained an appreciation for some other key characteristics required for an SOA project of any size, including:

1. Keeping the objectives and scope at each stage clear, tracked, measured and reported.
2. Ensuring the teams are organized, with clear roles and responsibilities defined.
3. Project discipline such that the SOA initiative maintains clear milestones, project plans, risks, issues, resource allocation, and progress reporting.
4. They’re still learning the lessons of the importance of communication at all levels, ensuring frequent, accurate and consistent information is exposed to the right people.
5. Don’t try to boil the ocean – begin with a pilot project that will show immediate business benefit.

SOA & BPM: The interdependency between SOA and BPM has also become very clear to them. To achieve the benefits of BPM you need to provide the right level of services – to achieve business-focused SOA, BPM enables the identification and prioritization of which services should be built.

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Special Recognition in Healthcare:

Canada Health Infoway

Company Background

Canada Health Infoway is an independent, not-for-profit organization funded by the federal government that jointly invests with every province and territory to accelerate the development and adoption of electronic health record projects in Canada.

Business Scenario

Nationwide Electronic Health Records: The Canada Health Infoway’s (Infoway) mandate was to develop an architecture to support an Interoperable Electronic Health Record (iEHR). They define it as: “The iEHR provides each individual in Canada with a secure and private lifetime record of their key health history and care within the health system. The record is available electronically to authorized health providers and the individual anywhere, anytime in support of high quality care. This record is designed to facilitate the sharing of data across the continuum of care, across health care delivery organizations and across geographies.”

The iEHR is designed to be a reliable, authoritative, private, secure, and highly available set of databases of clinical information that is sourced from the clinical point of service.

Scope: They estimated that once the Canadian healthcare system is fully IT enabled there may be as many as 40,000 point of service (PoS) systems which will be connected to the iEHR. These systems support a very diverse set of users and clinical settings. This is further complicated by the fact that each of these settings and/or users are independent businesses or organizational entities. High quality, safe and efficient healthcare requires that the clinical data for a patient be shared among authorized clinicians.

Federated records: The final major requirement they had was to interconnect each of the jurisdictional systems into one seamless, federated set of EHR Solutions. By creating this connectivity, a resident in Canada will have a complete clinical record regardless of where they got care in the country. Their record will “follow them” if they move within the country as well. Finally, for something like public health surveillance, it is an imperative to have interoperability across the country to detect and manage an infectious disease pandemic.

ROI

Agility: The architecture was developed with a few key principles in mind from agility to support the evolving nature of healthcare delivery, to hard financial benefits. The architecture has been adopted by all of the jurisdictions in Canada.

Savings & Cost Avoidance: An independent study of the cost benefits of the HIAL and iEHR was done for Infoway by Booz Allen Hamilton. They estimated that the total cost of IT enabling the healthcare system to be $9.9B. The annual benefits (savings or cost avoidance in healthcare services) are estimated at $6.1B and to be $82.4B over 20 years.

Project Organization

Industry Subject Matter Experts: They had a core team of staff architects and standards experts that were part of the Solution Architecture Group at Infoway. Other core team members were from other departments including project managers, change management specialists and knowledge management specialists. This team was supplemented by contract subject matter experts that ranged from clinical experts (e.g. physicians, nurses, pharmacists) to technical experts in various areas (e.g. HL7, privacy and security).

Lessons

Infoway is currently addressing these shortcomings: (Service Design) They are creating more detailed implementation guides and specifications for the critical services that need to be defined and exposed in a common way across the country. They are also in the midst of defining their conformance strategy whereby these services, and other aspects of systems interoperability such as HL7 messaging and the use of controlled medical vocabularies, can be tested for compliance to the specifications and certified.

If they were to do this again, they would have worked more closely with the jurisdictions and their vendor partners to define these guidelines and specifications early on. This would have been followed up by consultations to build consensus on the solution definition.

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