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SOE: Service-oriented economics

Service consumers and provides need trust and the proper incentives to make a corporate SOA function like a working marketplace.

Jake Sorofman

Think back to Econ 101. You may not remember how to calculate a deadweight loss, but I'll bet the concepts of supply and demand are clearly imprinted on your brain. When supply meets demand, a market is made. The same is true in SOA. After all, SOA is nothing more than a marketplace, where buyers meet sellers—or, in this case, where service consumers meet service providers. Stripping away the rest of econ theory, the two most fundamental factors for any market are trust and incentive. When they don't exist, neither does the market. This is an often overlooked truth about SOA: in its most essential form, SOA is a marketplace and absence of trust and incentives will undermine any SOA effort you undertake.

If we build it, will they come?

The answer is a definite maybe. Setting up a shared service catalog doesn't necessarily mean that consumers will beat a path to your door or that consumers will feel the urge to contribute services for reuse. Without trust, consumers won't reuse services. Without incentives, providers will quietly ignore the opportunity to contribute. What's most important is applying the psychology of buyers and sellers to service consumers and providers—and building an SOA catalog that explicitly addresses everything from fear and doubt to greed and ego.

Caveat Emptor—buyer beware

Every service consumer has a basic choice: reuse a component from the service catalog or build it from scratch. Without explicit consumer/provider trust and a means for knowing that the service will perform as advertised, the consumer will always opt to roll their own. The reality is that the consumer is accountable for the quality and the performance of the application he or she is developing. Most developers are pretty exacting in their standards, motivated by intellectual challenges—and sometimes just a little paranoid about code quality. In the absence of truly knowing, most application developers will take the more conservative path and build their own capabilities. You would too. Without trust, there is no demand.

Caveat Mercator—seller beware

Service providers are equally vexed by SOA and its absence of incentives. In principle, sharing services for reuse seems like a good idea—excellent even. Conjure images of hands joined and roses blooming. The problem is WIIFM—what's in it for me? As a service provider, I'm now beholden to a whole new set of internal customers who are banging on my door, complaining about performance, outages and asking me to implement changes. Why did I ever get myself into this? The reality is that most providers will hoard rather than share—unless there is an appropriate incentive system in place. These incentives need to be both intrinsic and extrinsic, said more simply, both money and recognition. Consider implementing a chargeback system for cost recovery or even to make service contribution an internal profit center. And don't forget to draw attention to the top contributors, rewarding desired behaviors and making a big deal of successes. Without incentives, there is no supply.

Making a market

A wise person (probably) once said that the road to a failed SOA is paved by good intentions. On the surface, the consumer and provider dynamics of an SOA make good sense. Sharing and reuse are unassailable virtues like motherhood and apple pie. Who could argue with something so right? But the reality is that collective good always starts with the choices of one—which are more often than not motivated by self interest. So the lesson is to build your SOA with self interest in mind and a keen appreciation for the economics of buyers and sellers.

About the author

Jake Sorofman is vice president of marketing North America for JustSystems, the largest ISV in Japan, and a seller of XML and information management technologies. Learn more about JustSystems at www.justsystems.com and contact Jake at jake.sorofman@justsystems.com.

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