Service Oriented Architecture and Global Trade Management: Exploding the myths

Service Oriented Architecture (SOA): no doubt youve already heard and read a lot about it. But how can you make sense of all the conflicting information? Where does the hype stop and the reality begin? In the context of global trade, this whitepaper investigates this much discussed silver bullet approach to business and separates the fact from the fiction.

Changing times

Without doubt, modern business is complex and ever-changing. As customers become more discerning consumers and their demands become more sophisticated, companies need to innovate rapidly and respond immediately to outsmart the competition and ensure success. In addition, a simple internet presence is now making global trading a reality for even the smallest SME. However, with this opportunity also comes further uncertainty and change due to worldwide procurement and demand fulfillment issues.

Previously the sole domain of larger enterprises, low volume and seasonal operations now need to address these challenges too and ensure that they are able to fulfill orders originating anywhere in the world. Further changes, such as regular modifications in free trade agreements, are also impacting the traditional linear supply chain. A rigid one size fits all approach is no longer appropriate, replaced instead by multiple channels to market. Organisations today typically juggle direct sales, indirect sales, distributors, retailers, and online and offline media, as well as an equally diverse clientele from in store shopper to online buyer.

Responding rapidly

Faced with such a dynamic, fluid marketplace, organisations need to respond in kind, ensuring they have the dexterity to roll with the punches and rapidly accommodate shifts and changes in the business environment. However, speak to any successful business and they certainly wont consider this a revelation. Theyll tell you that they are already acutely aware that business agility is the deciding factor between those companies that succeed and those that fail - in fact, recent research carried out by Capgemini Consulting puts this figure as high as 83%*.

However, the same businesses will also tell you that its easier said than done. And therein lies the problem. Although organisations appear to be ready and willing to embrace the concept of business agility, the sticking point seems to be implementation.

The same CEOs cited above consider IT as critical to the effort, but most think their company is incapable of carrying out the work themselves. Still operating a plethora of monolithic legacy systems that are unable to communicate, the task of integration appears insurmountable.

Making things simple

Aside from these perceived technological challenges, organisations also have numerous preconceptions about the path to business agility. Concerns include high costs, complexity, and exposure to risk. The good news is that nothing could be further from the truth. SOA offers organisations a costeffective, straight-forward and safe route to business agility based on services and contracts and the principles of simplicity and interoperability. It is all about people, processes and technology working together to deliver services that can be reused and combined at will to meet business needs. This can be as simple as verifying a credit card transaction, to allowing customers to track the progress of parcels online, to implementing sophisticated, automated denied parties screening capabilities.

SOA offers organisations the opportunity to align their technology with their business goals to create a more flexible IT architecture to support their ongoing requirements for change. So, multiple redundant IT applications can be consolidated into a single service, or several areas of a business can be aligned to use the same single service. Typically, companies spend valuable resources developing multiple versions of the same offering to satisfy different needs, and extracting the same data using numerous applications for different purposes. Using SOA to standardise processes in the IT domain and to drive waste from the supply chain can therefore equate to a significant saving in fact application development savings alone are estimated as being as high as 50%.**

Using SOA, these services can also be connected, allowing authorized users (including customers) to link to the service and utilise its capabilities at any point in time as the need arises. In addition, if these solutions are delivered in a hosted or Software as a Service (SaaS) environment, this can be done remotely and in real time, further simplifying the process.

Reverse engineering

Most significantly, SOA is about the fusion of technology to an organisations existing business process not the other way around. This is a major leap forwards, forcing organisations to reverse engineer their applications- focused mindset and to consider instead software solutions managing and supporting business processes. In this regard its the first time that technology has taken the lead from business. Traditionally, if businesses wanted a piece of functionality from one software product to enhance an existing system they had to install the whole solution. However, with an SOA-based environment the pieces of functionality that make up the entire application can be split up and used independently.

Because SOA masks the underlying technical complexity of the IT environment (as services can communicate regardless of whether they fully understand each other), a vendors integration strategies become more important than the features of their software as its the interconnection between the applications that matters most to an organisation. This helps avoid the traditional issue of vendor lock-in, providing businesses with purchasing agility and enabling a greater choice of added value providers offering specialist skills

Taking one step at a time

As far as exposure to risk is concerned, the incremental approach offered by SOA allows organisations to also allay their fears. A managed step-by-step approach enables companies to drag and drop services to meet their needs and at their own pace. With no need to rip and replace applications that support the business, SOA actually reduces risk, protecting an organisations investment, reducing delivery time and cost and importantly, keeping them in control at all times.

Underlying SOA principles of a distributed architectural approach, open standards and protocols and common technology and platforms reduce the risk even further. By implementing SOA, businesses can be certain that it will interoperate, it will connect in standard ways, and data exchange will work.

Selecting a partner

That said, choosing the right supplier or partner is crucial to the success of any SOA project. To make the right choice, organisations must spend adequate time and effort strategically sourcing likely candidates by evaluating their skills, assessing their proposed costs, and considering how they fit with their particular business need. There are several key criteria to bear in mind when choosing an SOA partner.

These include:

Experience look for a track record of customer references that show depth and breadth of experience.

Knowledge expect not only technical expertise but also a step-bystep explanation of how all aspects of the service will bring real business benefits to your organisation. Make sure all your requirements will be met.

Approach check that the service is flexible and will scale if required. It is also important to make sure that the supplier offers plenty of choice in connection capabilities (being able to work with both traditional and emerging communication technologies) and can integrate with many applications using different protocols.

Financial security investigate the financial security of suppliers to minimize risk.

Future proofing consider the advantages of finding a long-term strategic partner that can help keep your business up-todate with the latest advances in technology and industry best practice. This will also ensure your remain compliant with ever-changing legislation and processes.

Geographical focus dont automatically assume that a global organisation is the best choice for you. Search for a supplier who not only offers experience of global markets and supply chains, but also has a presence on the ground in your locale, ensuring access to expertise, support and infrastructure. The ability to provide a local focus specific to your organisation will prove invaluable.

So, for those organisations interested in increasing revenues and customer satisfaction, lowering operational costs and benefitting from higher returns on their existing technology investments, SOA provides a sensible choice. Whats more, independent research indicates that there is significant value in achieving the business agility delivered by SOA an estimated 16,000 extra profit per head***. It could be just the silver bullet youre looking for

*Capgemini Consulting (March 2007)

** The Truth About SOA, Christopher Koch (June 2006) www.cio.com

*** An Agile Age, Gartner (July 2002)

 
Using SOA, a global supply chain service business has implemented an export documentation solution and customs reporting modules to manage the administration and compliance associated with moving goods across international borders. The solution speeds up processes involved in getting products to market and reduces costs. It also ensures compliance with local export government shipping controls and address requirements.

One of the UKs leading independent brewers implemented an automated export document production and management system for the administration of its fast-growing export business. The new system has successfully eliminated the duplication of data input by integrating its ERP application and the New Export System (the HM Revenue & Customs Website for export declarations). This means once data has been entered into the ERP system it is automatically collated and export declarations are sent out electronically. This ensures the company can export to any country in the world safe in the knowledge that the specific legal information they are providing is correct.

Using SOA, a leading freight forwarder working in the global trade environment connected inbound and outbound shipment information to the correct worldwide customs authority. This ensures quick and efficient approvals for goods movement, and allows the organisation to quickly react to new procurement or fulfilment markets. Delivered as a cost-effective SaaS solution, up front software licence purchases and implementations costs were removed and simply added as a transactional charge to the organisations monthly bills.

Using the principles of SOA, a leading manufacturer cut the time taken to process export documentation by integrating an automated export documentation and production and management system with its ERP system. The company now automatically populates data on export documents, improving response times and addressing ever-changing local customs requirements. Customs reporting for export shipments is also electronically transmitted.