Wednesday, May 30, 2007

Service Aversion to Service Orientation

Well I have a slightly different take on Service Averse Architecture. It is based on my experience with Banking Financial Services and Insurance (BFSI) industry and may not be generalised to other industry segments. The information technology (IT) was introduced in BFSI to improve operational efficiencies. If you look at the value chain, within BFSI, viz. manufacture-market-sell-service-retire a product or a service, IT was primarily required to take care of ‘service’ part. As long as IT expenditure was less than the operational efficiencies it provided, enterprises were happy, notwithstanding delays and budget overruns. Since IT was not commoditized then, whoever could cross the barrier to entry, benefited from IT (despite cost and time overruns of IT).

Interestingly enterprises within BFSI were always ‘Service oriented’ in their business. They did provide specific services to their stakeholders. The problem was always with the information systems they used to support these services they provided. There was a big mis-alignment between services that business provided and info systems they used to provide these services. These info systems were always monolithic and closed. It was these info systems, which distorted underlying service culture of business. And these ill-fitting information systems were result of what Todd would call ‘project culture’.

Interesting point is how business which itself operated services for its stakeholders, was taken over by this project culture and created ‘service averse architecture’ in information systems. It was mainly due to, aura and geeky culture associated with IT. The business leaders did not understand IT, but understood its importance. So they gave a free reign to IT leaders. Initial IT leaders did not have much understanding of underlying businesses, so they were in the mode, “Tell us exactly what you want done, and we will do it!” Unfortunately what business wanted done was always a small piece of big puzzle. Hence multiple monolithic closed information systems, handling parts of services that business was delivering to its stakeholders, were developed.

Now that IT is commoditized and barrier to entry is lowered considerably (well buying a mainframe used to be a momentous decision for CEO and now any IT related decisions are hardly made by CEOs), cost and time have become important. And, IT has penetrated the other aspects of value chain, notably market, sell and even manufacture (which uses business intelligence tools). So IT has become more important to business at the same time business has become less tolerant of IT’s pitfalls.

Also, over the years IT folks started understanding business in more details and they started asking “Why do you want it done this way?” rather than just following orders. It is, what my friend Ravi would call a shift from output oriented to outcome oriented mindset. So when business and IT finally started coming closer to each other, they started appreciating need for alignment between two. SOA in my opinion is vehicle for that. SOA helps IT recast itself, in business terms.

Most of the organisations out there have ‘Service Averse Architecture’ within their information systems. And the organisations that are doing transitions to SOA are the ones where the IT leaders have made that paradigm shift from output to outcome-oriented mindset. These are the leaders who understand importance of business and IT alignment and how SOA can help achieve that.

Unfortunately leaders buying into SOA vision is just part of the story. It would mean enterprise is willing to make transition to SOA, but whether it will be done successfully or not, depends on changing entire organisational culture from undue competition to more of trust and co-operation.

1 comment:

ashwin said...

One cannot agree more with you on this topic. SOA in BFSI is the hot topic with no hot intelligence.

-Ashwin
BFSIFORUMS.COM - The online community forums for the Banking, Financial Services and Insurance (viz. BFSI) World.

Wednesday, May 30, 2007

Service Aversion to Service Orientation

Well I have a slightly different take on Service Averse Architecture. It is based on my experience with Banking Financial Services and Insurance (BFSI) industry and may not be generalised to other industry segments. The information technology (IT) was introduced in BFSI to improve operational efficiencies. If you look at the value chain, within BFSI, viz. manufacture-market-sell-service-retire a product or a service, IT was primarily required to take care of ‘service’ part. As long as IT expenditure was less than the operational efficiencies it provided, enterprises were happy, notwithstanding delays and budget overruns. Since IT was not commoditized then, whoever could cross the barrier to entry, benefited from IT (despite cost and time overruns of IT).

Interestingly enterprises within BFSI were always ‘Service oriented’ in their business. They did provide specific services to their stakeholders. The problem was always with the information systems they used to support these services they provided. There was a big mis-alignment between services that business provided and info systems they used to provide these services. These info systems were always monolithic and closed. It was these info systems, which distorted underlying service culture of business. And these ill-fitting information systems were result of what Todd would call ‘project culture’.

Interesting point is how business which itself operated services for its stakeholders, was taken over by this project culture and created ‘service averse architecture’ in information systems. It was mainly due to, aura and geeky culture associated with IT. The business leaders did not understand IT, but understood its importance. So they gave a free reign to IT leaders. Initial IT leaders did not have much understanding of underlying businesses, so they were in the mode, “Tell us exactly what you want done, and we will do it!” Unfortunately what business wanted done was always a small piece of big puzzle. Hence multiple monolithic closed information systems, handling parts of services that business was delivering to its stakeholders, were developed.

Now that IT is commoditized and barrier to entry is lowered considerably (well buying a mainframe used to be a momentous decision for CEO and now any IT related decisions are hardly made by CEOs), cost and time have become important. And, IT has penetrated the other aspects of value chain, notably market, sell and even manufacture (which uses business intelligence tools). So IT has become more important to business at the same time business has become less tolerant of IT’s pitfalls.

Also, over the years IT folks started understanding business in more details and they started asking “Why do you want it done this way?” rather than just following orders. It is, what my friend Ravi would call a shift from output oriented to outcome oriented mindset. So when business and IT finally started coming closer to each other, they started appreciating need for alignment between two. SOA in my opinion is vehicle for that. SOA helps IT recast itself, in business terms.

Most of the organisations out there have ‘Service Averse Architecture’ within their information systems. And the organisations that are doing transitions to SOA are the ones where the IT leaders have made that paradigm shift from output to outcome-oriented mindset. These are the leaders who understand importance of business and IT alignment and how SOA can help achieve that.

Unfortunately leaders buying into SOA vision is just part of the story. It would mean enterprise is willing to make transition to SOA, but whether it will be done successfully or not, depends on changing entire organisational culture from undue competition to more of trust and co-operation.

1 comment:

ashwin said...

One cannot agree more with you on this topic. SOA in BFSI is the hot topic with no hot intelligence.

-Ashwin
BFSIFORUMS.COM - The online community forums for the Banking, Financial Services and Insurance (viz. BFSI) World.