Adaptive Business Networks on the Corporate Agenda

CIOs are struggling to lower the total cost of ownership (TCO) of the technology investments they’ve made over the last decade, while at the same time they are under pressure to improve the functionality of their systems. As they wrestle with those challenging issues, CIOs are beginning to turn to service-oriented architecture (SOA) as a potential solution. SOAs, such as SAP Enterprise Services Architecture, use open Web-based technologies to create the flexible, adaptive business networks companies need today.
Analysts, the media and vendors are touting the value of SOAs. But experts acknowledge that the move from traditional client-server systems to SOA is a challenge that could take years and must be approached with caution. Adolf Allesch, vice president, SAP solutions for SAP global services partner Capgemini, spoke with SAP INFO about how companies are entering what he calls “the brave new world of Web services.”

How does SOA differ from client-server?

Allesch: In some cases client-server was built with a proprietary technology. That was SAP’s direction early on. The difference now is that SOA also includes service oriented infrastructure. So, the combination of business logic from client server through an open infrastructure allows for the realization of SOA.

Which industries are moving most quickly toward SOA?

Allesch: Everyone is looking at SOA. I can’t think of any industry that’s not. Within every industry there are leaders and laggards. But if I had to say who was really doing a good job at this, it would be the companies that are distributors. They are entrenched in the supply chain and challenged to open new markets. At Capgemini we work with an electronics distributor that sells components and sources materials from overseas. They are developing products in Asia and in a variety of manufacturing plants around the world. This company is starting to market their products through news channels – Costco, Wal-Mart, Target and the federal government, for instance. So this company is opening its business, moving from a traditional OEM customer base to a customer base that includes consumer, industrial and government outlets. This company has adopted SOA faster than most companies in the consumer packaged goods, banking or utilities industries, for instance.

What is your definition of an adaptive business network?

Allesch: It’s a network with the ability to act upon a business event using open Web standards and pre-built business logic. Companies have business logic built into their client server applications but they can’t share it until they’ve got an open architecture and a Web service to enable it. They can build SOA on top of their Enterprise Resource Planning (ERP) systems. So, at Capgemini, we’re seeing a big move to implement generic ERP again, such as mySAP ERP, because companies are realizing that it’s a prerequisite to service-oriented architecture.

Can you build an SOA without a preexisting ERP?

Allesch: It’s a little tough to build from scratch although some companies are doing it. In some cases when a company has several or many best-of-breed ERP systems rather than one generic ERP solution, their enterprise architects even have trouble building an SOA on that. Because of the total cost of ownership of those disparate applications, they lack the skills, tools and maintenance abilities to build on each one. Also, they need to have a server environment for each one of them, which is costly and difficult. Those challenges preclude them from building an SOA on top of best-of-breed ERP.

What’s the answer for a company in that situation?

Allesch: The answer is to rationalize application vendors and also rationalize technology vendors. They have to migrate applications to a standard platform and move the technology over to that standard platform as well.

Do you see SAP Enterprise Services Architecture and SAP NetWeaver as potential solutions to those problems?

Allesch: Believe it or not there are a lot of middle market and large companies that have yet to put in ERP. They are buying mySAP ERP plus the SAP NetWeaver stack for the ESA/SOA vision, but they must start out with the implementation of ERP. These companies may only put in a component or two of SAP NetWeaver, but SAP Enterprise Services Architecture gives them an SOA direction to move toward.

Would you say companies are receptive to the vision of SAP Enterprise Services Architecture?

Allesch: It is being adopted quicker than we thought. It’s being implemented in components rather than in an all or nothing fashion. Some companies are installing just SAP Enterprise Portal or just SAP Master Data Management, for example. They aren’t doing it quickly or haphazardly.

At this stage, what SAP NetWeaver components are most useful for companies starting down the path toward SAP Enterprise Services Architecture?

Allesch: SAP Enterprise Portal is mature. SAP Business Analytics has come of age. Corporate executives wanted a cockpit with a view into business processes. The combination of these two SAP NetWeaver components provides it. I’d also cite SAP Integration Broker as a useful component for companies transitioning to ESA now. It’s the middleware component that helps them move from proprietary electronic data interchange (EDI) to a custom interface. Finally, I’d say that SAP Web Application Server is a useful platform and toolset for companies making the transition to ESA.

What are the major stumbling blocks to SOA/ESA?

Allesch: First, some companies lack an enterprise architecture as well as a qualified enterprise architect. The technologist they employed to do reengineering in the 1990s and to handle Y2K is not a candidate for the enterprise architect role. And, the technologist who implemented dot-com systems probably left the company to go out into the marketplace. So the first challenge is finding a qualified enterprise architect. The second challenge is the business analyst. Much of what’s required for SOA/ESA is wizard-based Java development. It’s code free. It’s not difficult to build fast, but finding someone who can work with the business as well as the technology is a requirement. Most companies lack business analysts that work in the SOA/ESA world.

Do corporate CIOs understand the vision of SAP Enterprise Services Architecture?

Allesch: At Capgemini we believe the CIO must become the chief innovation and process officer as well, the person who can look end-to-end across the company and understand all the business events and how to apply Web services to them. A lot of CIOs aren’t in that position yet, but they are starting to recognize that they need to be.

Is SAP offering help with that transition?

Allesch: Most of our clients are SAP users. They’ve been doing SAP since 1995, 1996 or 1998, for example, when the SAP solutions were independent of each other. It wasn’t until early this year that SAP offered a synchronized release. Today if I buy SAP NetWeaver, I get a DVD on which all the components talk to each other. But if a company is already an SAP client, it may have different instances of SAP HR and other SAP solutions. They face a challenge in migrating their systems to be able to deploy the synchronized release and get the full benefits of SOA/ESA.

What are the major challenges for a company making an effort to embrace ESA and create an adaptive business network?

Allesch: The first thing is that the CIO is trying to balance fixed versus variable costs. He needs to keep his TCO in check. We believe ESA is going to be cheaper in the long run. But it may take some money to get there. Another challenge is for companies to guarantee security during the transition. Companies are deploying a Web service or two or three, but not many at a time. They aren’t willing to take the security risk. The other challenge for companies is to ensure reliability. CIOs must do constant testing and modeling of the network. It takes time and money to scale everything to ensure that the final product is reliable.

Sarah Z. Sleeper
Sarah Z. Sleeper