Without the buy-in of top management, SOA implementation is likely to fail. And management must understand it is not just a technology issue. Heather McKenzie reports.
When Credit Suisse first attempted to implement a service-oriented architecture (SOA) in 1993, the results fell short of the mark. The bank never achieved the reuse, cost benefits and better governance of IT processes it expected from the move. More than a decade on, however, the Swiss bank is one of the leading proponents of SOA.
What was missing from its first foray into SOA was senior management buy-in. “The difference between the two approaches was that the second time, we realised that SOA is not just about technical issues – it is a lot more than that,” says Martin Prater, head of integration technologies at Credit Suisse Group. “We needed buy-in from the CIO, who at the time sat on the Credit Suisse Group board of directors. The project was realised through a management-down ethos.”
Starting from scratch
This February, Credit Suisse renewed its multi-year, multi-technology relationship with Iona Technologies, a Dublin-based integration technology company. The two organisations started working together in 1996 when Credit Suisse reviewed its SOA project and decided to start again from scratch, says Mr Prater.
“The high-level involvement helped to incentivise the application development side of the group to develop a services environment,” he says. “SOA has important implications for the IT structure. You must define clear responsibilities as to who owns which data. To get to a position where there was no overlap of services, top-level sponsorship had to enforce the idea of reuse.”
The attraction of SOA is that its component-based approach enables financial institutions to re-engineer their core systems without having to ‘rip out and replace’ technology – a prospect that has put off many banks in the past. Under SOA, business rules govern how the IT infrastructure responds to specific demands. The most commonly used word to describe the benefits of SOA is ‘agility’ – financial institutions can respond more quickly to changing customer demands, regulatory requirements or cost drivers.
Sean Baker, chief corporate scientist and co-founder of Iona Technologies, says Credit Suisse’s success is due to the involvement of very senior people at the bank. “With a large project such as this, it is important that there is self-discipline and rigour to drive it through. That is best done by a senior person who can ensure that there is buy-in at all levels of the bank.”
He adds: “Sometimes when people think there is a need for high level involvement, they also think you need a big budget and a big bang change.” However, he explains, SOA can be done in an incremental way, enabling some parts of the IT infrastructure to respond to individual business needs. “You can integrate two parts of a business and bring in a third a year later.”
This incremental approach takes time – another reason why senior management should be involved, he says. “SOA projects are generally undertaken over a number of years and you need long-term commitment to see them through. Senior management must ensure that the ethos of the organisation changes in order to benefit from the reuse of existing services that SOA is good at encouraging.”
Maria-Luisa Kun, research director of banking advisory services at industry analysts Gartner Group in Buenos Aires, says it is essential to have senior management involvement in SOA projects. “SOA is not only about technology; it is also about people and processes that are related to leveraging the benefits of SOA,” she says.
It is also all about reuse, and composing services or software modules that enable the business to adjust to different demands, she says. “If there is no established policy for reuse that is adopted by the people managing the resources in IT departments, then an SOA project will not succeed.”
Reto Gruenenfelder, distinguished engineer and banking industry technical leader at IBM, agrees with Ms Kun that high-level involvement is essential for SOA projects to succeed. His job is to provide technology insight to bank COOs, CIOs and CEOs, particularly with regard to SOA. “This technology is a key topic today in the financial industry and is of great interest to CEOs,” he says. “A CEO is always interested in cost reduction and if you can show a CEO that they will achieve cost reduction by eliminating duplication, then he or she will buy into the concept.”
Rik De Dyn, director of industry solutions marketing, finance at SeeBeyond, says CEOs will ask for SOA projects by “a different name”. It has much higher recognition at the CIO level, he says. “SOA itself is never a goal; the main goal of a CEO at a financial institution is to provide customer agility – to respond to customer demands quickly.”
This goal is translated by the CIO into time-to-market, which will lead to a focus on SOA, says Mr De Dyn. “SOA, combined with business process management, enables CIOs to organise software systems and projects in a way that gives them consistent access to multiple products.”
Cutting launch costs
The desire to reduce the cost of launching new products will also be a factor that suggests an SOA approach should be adopted, he says. “There are other drivers as well: for example, a bank may want to improve data quality in its foreign exchange trading environment. That is likely to be something a CEO might say to his CIO, who would then translate it into an SOA project.”
Lance Hill, vice-president of product and solution marketing at US-based integration software developer Webmethods, says the direct involvement of senior management in SOA projects enables financial institutions to bring together business elements “in a way they have intended to do for some time”. It enables banks to focus on services that are truly cross-functional, he adds.
Like Iona’s Mr Baker, Mr Hill points out that SOA projects need not be large scale. “Some banks are experimenting with SOA by aligning it to specific projects that are already budgeted. They will try to prove the concept can save cost and speed time to market on a single project basis. Once the case is proven, SOA can be scaled up – at which point, more senior people will buy into the concept to roll it out across the business.”
Comprehensive coverage
Credit Suisse took a similar approach. Initial investment resulted in about 150 services focused on core data such as the customer information side, says Mr Prater. “This provided great value and helped in going forward with the entire programme. To date, the Credit Suisse SOA comprises about 2000 services, which is a fairly comprehensive coverage of the bank’s activities.”
He says everyone throughout Credit Suisse is aware of the SOA approach. “We have very strict procedures, standards and guidelines, which are difficult to circumvent. Before each project is started, a developer will have to declare how data will be accessed, the services they want to use and provide and this is reviewed. I think the SOA project has given the group a definite advantage. I haven’t come across any other bank that is at a similar level to us in terms of SOA implementation. The time-to-market you can achieve building new applications with a comprehensive set of components makes a big difference to us.”
Application developers, who were initially reluctant to use the SOA approach, have been won over, he adds. “Now SOA is something that is so clear and obvious to everyone throughout the group they want to use it. They understand the advantages it delivers.”
