Introduction
Measuring the performance of any initiative is imperative for its success. "If you don't measure it, you won't improve it" is something that we've found to continually be true. In the past few years, the Service Oriented Architecture (SOA) has become an accepted architectural paradigm, but SOA metrics have not kept up. While, some organizations have had success utilizing SOA, this has typically been in spite of lack of SOA metrics, not because of it.
Organizations often struggle in translating technology value of an initiative into business value that the business organization can really understand. Though SOA is supposed to help in technology connecting with the business, there is very minimal prescriptive literature and framework that can guide us in terms of aligning the business and IT.
This article looks at utilizing a strategic performance management tool. A "Balanced Scorecard" is a concept that has been around for some time, used for measuring the overall impact of an initiative or department (for example, an "IT Balanced Scorecard"). Extending this concept to SOA makes sense and will be useful for measuring the performance of SOA. Instead of looking at which specific business initiatives SOA can support to drive the revenue numbers, this article looks at SOA itself as a business and should help you to initiate the creation of a Balanced Scorecard for SOA. The perspective of "SOA as a business" is important because it causes the measurement of SOA performance business agnostic to a particular business as opposed to being business specific. This is possible because immaterial of the industry, the basic tenets of SOA remain the same, in that sense it is very similar to a Software Development Lifecycle.
This article also seeks to establish a descriptive set of business agnostic objectives from a SOA BSC (Balanced ScoreCard) perspective and refine it through industry participation. Once developed, the objectives can be prescriptively tailored by different organizations for their benefit based on their maturity and industry maturity
The core reason for this article is not education but collaboration. We are primarily looking for partners to work with to refine this scorecard that the industry can benefit from through metric comparisons.
Definitions
Service Oriented Architecture - Service Oriented Architecture is an architectural methodology where, among other things, business logic and business rules are encapsulated through self-complete constructs known as "Services" that are given service orientation based on business prioritization.
Balanced Scorecard - "Balanced Scorecard (BSC) is a strategic performance management tool - Semi-standard structured report supported by proven design methods and automation tools that can be used by managers to keep track of the execution activities by staff within their control and monitor the consequences arising from these actions (Wikipedia)." Balanced scorecard postulates four specific perspectives for which the metrics are tracked. These perspectives are described below
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Standard
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The key metrics to be utilized to financially succeed
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Customer
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In order to facilitate the key metrics financially, the customers and value propositions that will need to be implemented
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Process
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In order to facilitate the customer perspective, which processes needs to be focused, monitored and improved
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Learning and Growth
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In order to facilitate the specific set of processes in process perspective, what training and skills need to be acquired
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Figure 1: Balanced Scorecard Perspectives
For a commercial organization, the layers work by complementing the layer directly above it, and indirectly in complementing other layers above it. BSC suggests that one balance the effort across all of these layers instead of focusing on a single layer, as this would lead to a more sustainable growth. A painful current example of this is the modern day financial debacle, where the focus was on profits alone with customer ability to repay and the resultant risk of the financial instruments was largely ignored or swept under the rug.
Each perspective is further structured into the following 4 key attributes
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Objective
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Objective that the organization is trying to achieve ex. Growth, Profitability
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Measure
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Observable Parameters that will be used to measure progress of the objective ex Growth in Net Margin
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Target
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Time bound specific value for the measure ex. +2% growth
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Initiative
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Action Programs that need to be initiated in order to meet the objective
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Figure 2: Structure for a Perspective
SOA Balanced Scorecard
By assuming that SOA itself is the business of operation, the SOA Balanced Scorecard (SBSC) describes the objectives that SOA is supposed to achieve based on the perspectives.
Figure 3: SOA Balanced Scorecard
As explained in the previous section, the SBSC features 4 perspectives. There is some additional information that has been added to the customer perspective, so that it not only shows the value propositions but also shows the customer segments that SOA is serving in the enterprise.
Financial Perspective
Financial perspective concerns itself with increasing the ROI for the organization. SOA Financial Perspective consists of objectives that SOA needs to achieve to be financially successful. These are explained below
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Change Channel Mix to Increase Revenue
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The revenue for any organization can be increased by increasing the markets to which its products can be exposed to diversified market. Customers utilize channels as conduits to access the services of the organization. Multiplying these conduits increases the ability to access to these services
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Reduce Cost
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Every product offered by an organization typically has a cost structure associated with it. This objective is about understanding that structure and reducing the overall cost of the product
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Reduce Operating Cost
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There is a cash-to-cash cycle for any organization. This is the time between the account payable to account receivable. This objective deals with the ability to reduce this time.
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Reduce Risk
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The products that the organization supplies / sells will always have an actual demand and a forecasted demand. The gap between the actual and forecasted demand causes organizations to lose money i.e. when there is more demand than forecast, lost market and when there is more forecast than demand, unused inventory. This objective is for reducing this gap
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Figure 4: Definition for Objectives in Financial Objectives
Customer Perspective
SOA Customer perspective consists of objectives / value propositions that need to be provided to its customers to achieve the financial perspectives.
Customer Segments for SOA Customer Perspective:
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External Business Partners
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External Partners are vendors who are integrated into the organizations supply chain. This includes vendors who are connected to the enterprise as supply's supply or demand's demand. This category also includes customers who are serviced indirectly through external business partners (B2B2C)
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Application Development
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Application developers who are responsible in terms of automating and maintaining the applications through which the internal and external business partners interact
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Compliance Team
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Audit teams which are interested in establishing policies so that the organization is compliant with internal and external standards
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Figure 5: Definition for Customer Segments
Value Propositions for SOA Customer Perspective:
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Ease of Integration / Agility
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Ability to integrate internally and externally with ease. Ease of integration can be characterized by lack of overhead in integration, ability to adopt to change / entropy (Agility) and minimal technology debt (low technology issues).
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Secured with Guarantee of No Risk
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Appropriate security instrumented / implemented in transactions so as not to compromise the vendor or the data that is being transacted on. A non-intrusive yet appropriate implementation is directly proportional to ease of integration
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Standards Based
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Conformance to industry standards in integration and interaction to have better synergies. Having a standards based integration helps in other value propositions by utilizing industry knowledge and industry adoption of standards thereby benefiting from standards maturity
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Consistent Data
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Provide consistent data/ information to all partners. This can be characterized through a clearly established source of record for the information being transacted, ensured synchronization for data based on perceived value of staleness and a well established master data management strategy
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Pervasive Information Access
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This value proposition describes the capability to extend the information access across multiple channels, multiple semantic formats, multiple data protocols across multiple partners thereby ensuring the end customers get access to it wherever they need it
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Figure 6: Definition for Objectives in Customer Objectives
Process Perspective
SOA Process Perspective is divided into 3 types of processes and groups the process execution along the lines of these three types
Innovation
These are the processes in SOA that create innovation in the enterprise. Innovation primarily leads to change in other processes mostly for the betterment
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Technology Selection Process
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Processes through which new technologies are onboarded into the enterprise. This process has to be cognizant of the partner capability to ensure the greater goal of best strategy as opposed to the tactical goal of best practices only while balancing it with the aspect of being standards based.
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Best Practices and Standards Adoption
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Process through the standards are created, adopted, governed and executed in the enterprise. This plays a key role in establishing the standards based value proposition
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Figure 7: Definition for Objectives in Innovation Processes
Operational
Operational processes are the activities through the customer value propositions are facilitated. These processes are described below.
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Service Development
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The development lifecycle through which the service is developed in the organization. The execution and governance of this process has impact in terms of realizing reuse in the organization
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Service Security
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The process through the security is instrumented and implemented in the transaction pipeline for the service.
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Business Process Management
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Development for business processes is different from the development of services. This is because the latter is a customization of business logic while the former is a configuration done through declarative paradigms and realized through technology standards such as BPEL, BPMN.
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Semantic Interoperability
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Applications typically utilize business entities / concepts as structures for stationary data and for data in transit between applications during integration. Standardizing the business entity structures helps in moving from a point to point application interfaces to a reusable service endpoint where additional consumers can be integrated with minimal service refactoring.
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Figure 8: Definition for Objectives in Operational Processes
Support and Regulatory
These are governance processes that ensure that the objectives are being achieved in a rightful manner. These governance processes could be internal governance processes to conform to internal organizational policies or they could be external such as PCI, PII, HIPAA, etc.
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Service Governance
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Process for managing the lifecycle for service provider and service consumers. As service providers move to newer versions of service endpoint due to functional or non-functional requirements, the consumers should be migrated appropriately so as to up the QoS. Service governance also ensures that the technology and security standards are followed by the service implementation and service consumption
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Compliance and Audit
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There are typically two aspects to compliance and audit function i.e. the policy / design time aspect and the runtime aspect. This process is to facilitate the ability to design these policies for internal and external compliance and instrumentation of the transaction pipeline to conform to the policy guidelines
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Figure 9: Definition for Objectives in Compliance Processes
Learning and Growth Perspective
This perspective highlights the objectives that need to be achieved to facilitate the process perspective. These are described below
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Training
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Training the enterprise to embark on the SOA program. This includes establishing change management processes to raise SOA awareness across the enterprise and identifying and addressing large knowledge gaps to facilitate voluntary compliance to the SOA Program.
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Core Group Skilling
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Training the core participants of the process perspective to ensure that the process can be executed efficiently.
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Standard
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Participating in standard bodies to be well integrated with the industry
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Participation and Contribution
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to ensure the appropriate standards are being adopted by the enterprise. This objective also involves the aspect of contributing back to the community to help the industry. The standards can range from horizontal / business agnostic standards to vertical / business specific standards.
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Collaboration
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Establishing appropriate collaboration avenues to ensure internal partners benefit from each others knowledgebase. The collaboration may also be seen as a portal for creating new ideas that will improve process efficiencies and providing better value propositions
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Figure 10: Definition for Objectives in Learning and Growth
Conclusion
This article demonstrated one practical way to measure the performance of SOA from a technology / Operational perspective, that then be translated into business perspectives for better uptake of the initiatives.
In the next few articles, we intend on further elaborating the meaning of these objectives and break them further down into a catalog of initiatives and their related performance indicators so that business value can be realized through these indicators. Once this preliminary work is complete, we intend on taking specific high level value propositions offered by SOA and prove it out through BSC strategy maps for a given type of industry and organization
As we had mentioned upfront in the article, my intention of writing this article is not to be prescriptive or for education it is for collaboration. We look forward to you to help me refine this Balanced Scorecard with possible objectives we may have missed.
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