Implementing Service Oriented Architecture (SOA) has become the latest “must do” for many savvy IT departments and software builders. Some analysts are talking about figures of 60–80% adoption through 2007, although this may include simple internal integration projects. Quocirca's research suggests a much more conservative estimate, with 85% of business respondents to research carried out in April 2006, having little or no understanding of SOA.

What makes SOA a commercially valuable service rather than simply IT finding a new way of integrating diverse systems? What tangible business benefits will it bring? In order to get the buy-in from the business community and hence gain traction for SOA and related technologies these must be clearly demonstrated.

At a very simple level, a service oriented architecture is a technical environment which uses the power of web services and XML to support business flexibility in two main ways. Firstly to focus on defining services which address business processes rather than point to point data integration e.g. defining a common customer order process rather than simply consolidating customer order data. Secondly to make these services re-usable across any underlying systems, from legacy applications through to spreadsheets, thus eliminating functional redundancy.

At the heart of this new technical environment is the Enterprise Service Bus (ESB) which looks after the connections using web services, the transformation and mapping, defining the services/processes and rules based workflows, and change controls.

This is still not compelling reading to the business user and doesn't necessarily answer the question of tangible benefits, which could be why technology providers are looking for different channels to market and working with associated solution providers as partners, to drive SOA adoption.

An example is Cape Clear, a privately owned “pure-play” ESB provider that has made two recent partnership announcements. Cape Clear announced its partnership with Systar, a Business Activity Monitoring provider (Nov 14th 2006) and with Workday (Nov 6th 2006), a provider of web-based hosted HR and ERP applications i.e. providing Software as a Service (SaaS). The combination of their ESB capabilities with these additional functions show that Cape Clear understands the importance of providing demonstrable benefit to the buying community in order to make sense of embarking on a SOA.

Let's put this into context by considering the Finance Manager and/or Finance Director of a mid-size company that has grown by acquisition and is facing the challenge of trying to standardise the approach to financial processes. The aim is to not only meet the demands of regulations such as the European Audit Directive and Sarbanes-Oxley Section 404 (which may not be in the news so much recently, but which has not gone away) but also to realise some cost savings by streamlining the finance department—perhaps moving to a shared service centre.

The Finance Team needs control and visibility of key financial processes—but these are running in different ways, different geographies and in different financial systems. The IT department suggest using SOA and an ESB. They go into technical detail and the FD's eyes glaze over—but then they show graphics—a dashboard which shows the key processes and workflows, how many transactions are in progress and any events or interruptions that could have material effect. Suddenly the FD has the confidence that he can see all the processes in a common format, despite the diverse underlying systems. Cape Clear's partnership with Systar will build on Systar's experience of Business Activity Monitoring and their template dashboards to display the data held in the ESB more effectively, providing insight to both the IT and Business departments. With this visibility, the FD begins to understand how the technology may actually be of service to his team and the business.

Under the covers, the systems have not been integrated or ripped out and replaced, but the financial processes are defined to the ESB once and then data is called from the underlying systems using web services technology and many to one adaptors, rather than many to many point solutions. The FD doesn't need to worry about that, but will be interested in the economies of reduced support costs.

The FD now wants to start closing departments and moving towards one, or a few, shared service centres. This could mean implementing a new ERP system with all the heartache that that means—evaluating, selecting and paying for a system that will be up and running quickly, but in a phased manner as the various offices around the world are brought on board.

Enter Software as a Service (SaaS)—or “hosted” systems. The capability of hosting business applications has been around for many years, but the take-up has been limited beyond highly constrained solutions such as payroll and expense claims. The benefits of paying per user/usage and growing as you need without the worries of IT infrastructures are well understood, but the difficulties of integration with the core business systems have limited hosted systems to smallish non-complex organisations and to CRM applications rather than HR and Finance.

Cape Clear's partnership with Workday, a newly announced provider of hosted HR and ERP applications, illustrates how such SaaS solutions benefit from the use of an ESB to facilitate integration with a multiplicity of core business systems.

As integration becomes more robust, flexible and cost effective, supported by the SOA related technologies, adoption of HR and Financials systems offered as a per usage service will provide one way forward for mid-market companies to realise the benefits of shared service centres as part of their acquisition strategy.

Cape Clear is by no means the only organisation providing stand alone ESB solutions—others include BEA, IONA, Progress (Sonic) and Software AG. They also have their own challenges in the market especially against some of the larger incumbents, (including IBM, BEA and TIBCO) the traditional application providers (Oracle, SAP) and the more point solutions (AmberPoint, HP (via Systinet). All will have to fight for recognition and dominance in their respective spaces. But the partnerships may help Cape Clear to expand its footprint in this crowded marketplace. Quocirca will watch with interest.

What is more certain is that as more providers of technologies that support SOA start educating the end users, illustrating the service side through business value propositions rather than technology arguments, Service Oriented Architectures will gain traction in businesses of all sizes.