Projects related to service-oriented architecture have been underway for at least five years, albeit on a small scale. The outlook over the next five years is that communication service providers will become more ambitious and pursue more of an enterprise-wide SOA strategy.
SOA investments are being driven by the threat of internet-based services to marginalize existing communication services; the exploitation of IP technologies to generate new services and longer-term shifting to a more open ecosystem. Other factors influencing the future adoption of SOA include introducing new services more quickly, improving customer service and seamless integration with third-party partners.
Analysys Mason forecasts that the SOA software component market will grow from $280 million in 2007 to $910 million in 2012 at a CAGR of 27%. The major drivers for SOA investments are service agility and the need to respond to market changes as media, internet, and entertainment industries reshape the industry.
SOA implementations vary based on a CSP's objectives, which are driven largely by disruptive forces in the market, risk tolerance, and the willingness of the senior management team to invest in IT technology to achieve a competitive advantage.
We have identified three types of scenarios that provide some insight on market acceptance and level of penetration within IT organizations. One is targeting a specific area of the business to reduce human touch points and streamline business services related to operations and business support systems. This is primarily a back office integration scenario.
Another is aiming at higher growth, next-generation end-user services that depend on service enablers and exposes network resources. Third is getting into enterprise-wide transformation, which attempts to unify business processes across the entire organization to provide convergent services to a diverse set of customers.
In December 2007, Verizon president and CEO Denny Strigl outlined Verizon's major productivity initiatives. These include reducing cost of service, system consolidation, leveraging common platforms and processes, increased automation, integrated marketing, and effective resource allocation.
Verizon has a very large IT organization that develops most of its own telecom software. CIO Shaygan Kheradpir has taken a high-profile role in asserting that telecom software systems can give Verizon a competitive advantage.
The company started its SOA initiative in 2002 after the merger of GTE and Bell Atlantic and deployed its SOA management platform, IT Workbench (ITW), in 2003. Since then, SOA has expanded across Verizon Telecom and Verizon Business.
Verizon's ITW SOA initiative was driven by the requirement to introduce new services faster in the market; integrate strategic Verizon business units with each other and their external business partners; reduce support costs from consolidating core business functions; and reuse, rather than reinvention, information assets.
Further, Verizon discovered that many of its core business functions were being duplicated by groups across different applications because of the mergers and acquisitions that occurred over several years. It used SOA as a strategy to reduce support costs by eliminating the duplication of applications and building a platform that could be accessed by the entire IT organization. Some of the capabilities that Verizon wanted to target at the onset included loop qualification, provisioning services, credit check services, and trouble ticketing services.
To overcome the resistance from developers to depend on a shared development community approach to supporting mission critical applications, Verizon had to change its mindset.
The result is that the entire IT development organization inside Verizon Telecom and Verizon Business is aware of ITW. Web service transactions exceeded 17 million per day with 2,500 services in use. Verizon Business has seen its service transaction usage grow from just under 500,000 per month in December 2006 to over six million transactions per month as of the end of 2007.
CIOs and architects should assess how SOA can achieve tactical advantages in the short term and build a plan for phasing in enterprise-wide SOA initiatives that support convergent services. Applying SOA and web services to legacy systems is a worthwhile short-term approach because it avoids expensive replacement alternatives and promotes reuse. CSPs may decide to focus on legacy billing applications or commercial packaged applications such as Siebel or SAP. Service-enabling legacy applications can begin with mapping the legacy data model into an extensible markup language schema and defining the service using web service definition language.
We acknowledge that enterprise-wide SOA projects are ambitious and often difficult to achieve particularly when some parts of the organization have not bought into the concept. SOA must be driven top-down in most organizations and requires educational workshops and more collaboration with IT groups that can show clear payback to the organization.
Patrick Kelly is research director for global telecom software at Analysys Mason