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The costs involved in SOA and cloud computing

Here, Randy Heffner, analyst at Forrester Research, sets a baseline for an in-depth discussion of the costs associated with maintaining a service-oriented architecture on-premises and with relying on cloud services. These are the basics behind measuring the costs and benefits of any enterprise architecture, and Heffner discussed them in terms tailored to fit SOA and cloud-based architectures as part of his presentation in the SOA in Action VTS in June of 2011.

Heffner draws an analogy between enterprise application choices and transportation. If you lease a car you make the payments whether you use it or not. If you take a taxi or public transportation, you pay only when you use it. The taxi and mass transit symbolize cloud services, while leasing the car symbolizes on-premise infrastructure. As your preferred method of transportation will vary from city to city, so too will your platform choice change depending on several factors in the enterprise architecture.

Read the full transcript from this video below:  

The costs involved in SOA and cloud computing

Randy Heffner: So it seems SOA's long running status as a top line industry conversation is over. Now we're on to social and mobile and cloud and who knows what else.

Well let me tell you SOA is as important as it's always been.  It's important for cloud.  It's important for Mobile and Social for all of your doing.  And today what I want to do is put SOA and cloud value together.  To give you some clear prospective's on both, so that you can get economic advantage out of using both.  Using one using the other using them together. So let's talk about how they fit together and then that will be a foundation to talk about the value separately, and then you'll have some notion of how they fit together.

So what's really great about SOA is it provides consistent access to any unit of work, anything that you've got anywhere.  And SOA makes it easier to move things around to any place.  So you start, you know, in the traditional world ,with your own premise environment. And you got your whole data center and everything.  And you got you apps running in your data center and everything is connected.

Well if you got a good SOA implementation in the box, as it were, in this box, the on premise box, you've got a lot of flexibility.  And you could move things around, you can replace applications and still have them use the same service interface to a different application underneath. And all sorts of SOA chocolaty goodness, as a friend of mine used to say.  And so that's great.

Well with cloud what you start doing is you start adding on new things.  Like first you got your cloud environment and things that you're going to be running in your cloud environment.  Well actually you got your cloud environments, plural, because you'll have multiple things running in the cloud if you go down that adoption path and find more and more usage scenarios.

Well SOA also would be working as your connecting not only between your own environments but also between your partner's environment, partner's cloud environments, business process outsourcing environments, all sorts of different places.  Well lots of things are running lots of places here and you want to get to anything anywhere across this, and have a consistent interface to it.  So as it moves from one place to another then you can go get it.  With using the same interface and you don't have to rewrite your applications.  So you enter SOA into this cloud environment and have some SOA services at the access point into any one of these environments. And obviously this is a simplified picture compared to what you your customers and your partners and government entities and everything else might be doing.  Well this is great, now that you've got these SOA interfaces, now you can from your own premise environment connect to any of the others and it would transparently to your internal on premise application.  They don't know what's in the cloud environment.  They're just accessing an SOA service interface.  And that's all the implementation is hidden behind that interface.  From your cloud environment you get many of these and it's same transparency.

From your partners environment they're able to get to your own premise, your cloud environment.  If you move something from home premise to cloud you don't have to get all your partners to convert to the new interface, you just redirect where it's going. This is the relationship between SOA and cloud.  Cloud is where things are running, SOA is how you get there.  And that's how they fit well together.  How the two of them fit well together.  And so you get business flexibility from SOA, and some lower level application flexibility that we'll talk about.  And you get that implementation flexibility at two levels.

Number one, where anything technical is running in these different environments.  But then also the ability to take some that's maybe in your cloud environment and then outsource it and now it's in your partners cloud environment.  And you get that business level of flexibility.  So you combine both value points.  SOA is helping you get more value out of cloud, because you can move things around faster and the like.  And do business partnerships in different ways.

OK.  Well now I'm going to start moving a little faster to the SOA side value here.  If you're following my work, you'll recognize some of this because the story kind of stays the same.  What's the real source of business value with SOA.  The industry tends to focus on reuse.  Well that's great. You know, we want to save value and get value from reuse.  But here what we're targeting with reuse is the development costs and maybe up to 40 percent of the development cycle is detail design coding, testing, and there's some maintenance savings as well in there.  But, you know, say you could save a 100% of detail design decoding and testing with SOLA.  You could only save 40 %  in development cost.

Well spending a lot on development costs, that's great. But you're spending a lot more on IT, development cost is just part of that.  So now that savings is now just 40% of the 30% that you're spending on new development, you know, in a typical shop.  But IT is only 2%,  or  ½%, 10 %e of the overall cost of the business.  And so now that 40% of 30% is now reduced to that much of less than 10 percent.

Well, so the reuse opportunity compared to your overall business is very small.  It may be significant if you're spending lots on IT, but it's small.  The business value proposition with SOA in terms of some of the business flexibility, is addressing and attacking and getting, trying to get value from the other 90% or so of the business.

So here you're trying to get business optimization and innovation and new sources of revenue.  You're aiming at reducing business costs of one kind or another.  And that's where it becomes important to understand what kinds of services that you're developing and delivering with SOA.  And Forrester's taxonomy has three types of services.  And this is not uncommon in the industry, but the most important kind is business services.  Business transaction, submit order, convert account, make reservation, things that are business tasks that are wrapped up  and behind SOA interface. So that you can get to it anywhere, you know and no matter what environment it's running in. 

That's the big value proposition with SOA. SOA is also very important inside your implementations, application services, infrastructure services that are more application integration or technical utility functions.  So that's great, lots of value there.  The important distinction, however, is that business services give you a strategic business focus.  You're dealing with business building blocks, with business services versus technical building blocks with application and infrastructure services.  And we find lots of stories where the value really is focused at the business building block level.

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