Enterprise SOA Governance

Janne J. KorhonenSOA SIG Spring Seminar, May 17, 2010

1950 1960 1970 1980 1990 2000

Production Economy

Distribution andSales-Driven Economy

Quality and Mass Marketing Economy

Customer Service and Niche Marketing

Economy‘Customers of One’

Economy

The Frequency and Amplitude of Change are Escalating

Effectiveness

Efficiency

Integrity

• Service-Dominant• Organismic• Holistic• Dynamic• Emergence• Coordination• Post-Formal• Dialectical

• Goods-Dominant • Mechanistic• Reductionistic• Static• Planning• Control• Formal• Logical

Com

plex

ity

IT Governance Traditional Definition“IT governance is the responsibility of executives and the board of directors, and consists of the leadership, organisational structures and processes that ensure that the enterprise’s IT sustains and extends the organisation’s strategies and objectives.”– IT Governance Institute; CobiT 4.1 (2007)

Basic CobiT Principle

Business Requirements

IT Resources

IT Processes

Enterprise Information

drive the investment in

that areused by

to deliver

that are used by

CobiT

Source: CobiT 4.1

IT Scorecard

Enterprise Architecture for IT

IT Goals

Business Goals for IT

Enterprise Strategy

CobiT Follows Top-Down Approach

Source: CobiT 4.1

Conformance

Is this enough?

Effectiveness

Efficiency

Integrity

• Business Technology • Value Creation• Performance• Business-IT Convergence • Interactions• Informated• In the Cloud

• Information Technology• Cost Containment• Conformance• Business-IT Alignment• Transactions• Automated• On the Ground

Com

plex

ity

Alignment

EffectivenessLess Effective Highly Effective

Less Aligned

HighlyAligned

The Path to IT-Enabled Growth

”Alignment Trap”

11 % of respondents+13 % IT Spending

-14 % 3-year Sales CAGR

”IT-Enabled Growth”

7 % of respondents-6 % IT Spending

+35 % 3-year Sales CAGR

”Maintenance Zone”

74 % of respondents+0 % IT Spending

-2 % 3-year Sales CAGR

”Well-Oiled IT”

8 % of respondents-15 % IT Spending

+11 % 3-year Sales CAGR

Sour

ce: B

ain

Anal

ysis

n = 504

Today’ssituation

All Too Common:Higher costNo change of impact

Higher Growth:Higher costHigher impact

Stable Cost:Same (current) costHigher impact

Sweet Spot:Lower costHigher impact

Reduced Cost:Lower costSame (current) impact

Typically Undesirable:Lower costLower impact

Cost

ImpactLower impact Higher impact

Lower cost

Higher cost

IT improvementzone

Goal of IT Governance: Reducing Costs and Improving the Bottom-Line Impact

Adopted from Benson, Bugnitz & Walton (2004): From Business Strategy to IT Action

Strategic Alignment ModelBusiness Strategy IT Strategy

Organizational infrastructure and processes IS infrastructure and processes

BusinessScope

Distinctive competencies

Business Governance

TechnologyScope

Systemic competencies

IT Governance

Admin Infrastructure

Processes Skills

Architectures

Processes Skills

Functional Integration

Strategic Fit

Exte

rnal

Inte

rnal

BusinessInformationTechnology So

urce

: Hen

ders

on &

Ven

katr

aman

(199

1)

1. Strategic ExecutionBusiness Strategy IT Strategy

Organizational infrastructure and processes IS infrastructure and processes

BusinessScope

Distinctive competencies

Business Governance

TechnologyScope

Systemic competencies

IT Governance

Admin Infrastructure

Processes Skills

Architectures

Processes Skills

Functional Integration

Strategic Fit

Exte

rnal

Inte

rnal

BusinessInformationTechnology

2. Technology PotentialBusiness Strategy IT Strategy

Organizational infrastructure and processes IS infrastructure and processes

BusinessScope

Distinctive competencies

Business Governance

TechnologyScope

Systemic competencies

IT Governance

Admin Infrastructure

Processes Skills

Architectures

Processes Skills

Functional Integration

Strategic Fit

Exte

rnal

Inte

rnal

BusinessInformationTechnology

3. Competitive PotentialBusiness Strategy IT Strategy

Organizational infrastructure and processes IS infrastructure and processes

BusinessScope

Distinctive competencies

Business Governance

TechnologyScope

Systemic competencies

IT Governance

Admin Infrastructure

Processes Skills

Architectures

Processes Skills

Functional Integration

Strategic Fit

Exte

rnal

Inte

rnal

BusinessInformationTechnology

4. Service LevelBusiness Strategy IT Strategy

Organizational infrastructure and processes IS infrastructure and processes

BusinessScope

Distinctive competencies

Business Governance

TechnologyScope

Systemic competencies

IT Governance

Admin Infrastructure

Processes Skills

Architectures

Processes Skills

Functional Integration

Strategic Fit

Exte

rnal

Inte

rnal

BusinessInformationTechnology

Fundamental System Perspectives

• ”Black Box”– Functional– Teleological– Control-oriented– Design irrelevant

• ”White Box”– Constructional– Ontological– Change-oriented– Design essential

Performance

Enterprise Governance:Equal Weight on Performance

“The set of responsibilities and practices exercised by the board and executive management with the goal of providing strategic direction, ensuring that objectives are achieved, ascertaining that risks are managed appropriately and verifying that the organisation’s resources are used responsibly.”

− Information Systems Audit and Control Foundation (2001)

Enterprise Governance

Corporate Governancei.e. Conformance

Business Governancei.e. Performance

AccountabilityAssurance

Value CreationResource Utilisation

Source: IFAC (2004)

Enterprise Governance: My Definition

The word governance derives from the Greek verb κυβερνάω [kubernáo]: to steer

Enterprise Governance defines the requisite roles, accountabilities and policies to effectively design and operate an enterprise in continually shifting contexts.

To Optimize the System, One Needs to Pareto-Optimize the Sub-Systems

”Structure Follows Strategy”– Alfred Chandler

VIII

IV

IV−V General ManagementBusiness models, products, services

VI+ Executive LeadershipStrategic organizational leadership: culture, values, vision; business portfolio

III

I

II

I−III OperationsDay-to-day work, supervision, first-line management, departmental management

Board Member,

Super Corporation CEO

Corporate CEO

Business UnitPresident

General Manager

Corporate EVP

Unit Manager

First-Line Manager;Specialist

Supervisor; Operator

Conc

eptu

al-A

bstra

ct

Dial

ectic

al

Sym

bolic

-Ver

bal /

Logic

al

VII

V

VI

VII-VIII Long-term sustainabilityV-VI Innovation, transformationIII-IV EffectivenessI-II Efficiency

Requisite Organization as Metadesign

ServiceInvocation

Internal External

IT Domain

Business Domain

I II III IV V VI VII

Servi

ce St

rategy

Servi

ce Contra

ct

Servi

ce Definition

Servi

ce In

terface

ClientInteraction

Service

Service Offering

Service Portfolio

Value Proposition

Service Ecosystem

Service Economy

ServiceInstance

Service Implementation

Service Design

Service Analysis

Service Architecture

Event orTransaction

Activit

y

Business

Process

/ Cap

ability

Product / S

ervice

Mix

Business

Model

Business

Portfolio

Model

Vision

VII VI V IV III II I

Korhonen, Hiekkanen & Heiskala (2010):”Map to Service-Oriented Business and IT”

Design, Planning and Support

Real-Time

Tactical

Operational

Strategic,internal

StrategicDecision-Making

EnterpriseCoordination

Tactical Decision-Making

Domain Coordination

Operational Decision-Making

OperationsPlanning &

Support

StrategicSteering

Development and Execution

Strategic,external

Agile Governance Model 1.1

Adapted from Korhonen, Hiekkanen & Lähteenmäki (2009)

Benefits of SOA at Different Levels

Application Infrastructure

Information Systems

Business Processes

BusinessStrategy

• Business modularity Agility• Outsourcing

• Rapid service development• Agile business processes

• Composite applications• Process automation

• Reusability• Interoperability

Technology Infrastructure• Technology virtualization

Levels and Dimensions of Enterprise SOA

Process Information Service IT/IS

Value Network Industry Ontology

Service Strategy IT Strategy

End-to-end Processes

Enterprise Ontology

Enterprise Services

Technology and Systems

Portfolio

Functional Processes

Domain Ontology

Procedural Services

Technology Platforms, Enterprise

Information Systems

Workflows, Orchestrations

Logical Data Model

Declarative Services

Application Infrastructure

Process Activities

Technical Data Model

Infrastructure Services

Technology Infrastructure

SOA Governance Strategy and Goals

SOA Principles and Policies

SOA Governance Organization and Stakeholders

Governance Processes

Governance Roles and Responsibilities

Governance Behavior and Reinforcement Model

Governance Metrics and Process Performance

Gov

erna

nce

Perf

orm

ance

Mgt

Fund

ing

and

Budg

eting

Mod

els

Governance Enabling Technology & Implementation

Defi

ne/E

nfor

ce P

olic

ies

by G

over

nanc

e Ti

ers

SOA Governance Reference Model

• Govern What and Why?• What must be governed now?• To what end?• SOA goals, principles, and policies

• Who governs What?• Who owns what and how? What events trigger policy enforcement?• Who is responsible for enforcing what?• Who provides services? Who consumes services?

• What behavior do we need?• How do we incentivize that behavior?• What rewards, penalties and reinforcement mechanisms will work for us?• What metrics are needed?

Source: Marks (2008)

Agile Governance Model Applied to SOA Governance

Enterprise/ Strategic

Governance

SOA Architecture Governance

SOA Operating

Model Governance

SOA Services Governance

SOA and Services Lifecycle

Governance

SOA Governance

Enabling Technologies

SOA Projects / Operations

Planning, coordination,support

Implementation,operations, control

• SOA Opportunity Management• Service Portfolio Management• Service Promotion/Demotion• Management Reviews

• Service Identification• Modeling, Design• Publishing• Composition, Orchestration

• SOA Development• QA/Testing• Execution and monitoring• Maintenance

• SOA Reference Architecture• Services Reference Architecture• SOA Platform Architecture

• Services Reference Model• Design Patterns and Standards• Runtime Standards• Versioning/Naming Conventions

• Development Tools• Registries and Repositories• Policy Engines• Distributed Policy Enforcement

• Strategic Management• Budgeting and funding• Enterprise Architecture• Business and Technology Alignment• Compliance

http://www.requisiteremedy.com/