Financial Firm's SOA Formula: Dream, Plan, Track

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October 04, 2006

Financial Firm's SOA Formula: Dream, Plan, Track

Ameriprise Financial's credo is "dream, plan, and track." The brokerage and financial planning firm, which was spun off from American Express a year ago, has always emphasized a long-term or lifecycle approach to managing customer accounts.

"Dream, plan, and track" has also become the credo of the firm's SOA effort, now in its seventh year. (Yes, Ameriprise's "dream, plan, and track" has a similar ring to our motto of "plan, build and manage" SOA here at the SOA in Action site.)

Tracy Legrand, chief architect for the financial planning firm Ameriprise Financial, talked about his firm's SOA progress at a recent press conference for IBM's latest SOA product rollouts, which include a registry and repository, along with 26 other products.

In 1999, long before the term SOA was even around, Legrand's team set out to address data integration issues through a hub-and-spoke implementation employing MQSeries messaging. These days, a hub-and-spoke implementation would be called an enterprise service bus, Legrand said. "It's very simply a way to connect services across the company, and allow them to communicate with each other." These days, the MQSeries messaging has been supplanted by SOAP/HTTP calls.

Back to "dream, plan, and track." Ameriprise's dream was to move its SOA effort from the realm of bits and bytes and make it a business proposition. "We realized is that in order for SOA to deliver the full business value, it has to become a business strategy," Legrand said. "If it stays as a technology strategy, what you find is that you get limited benefits from SOA.

Next is plan. "In financial planning, what that means is you establish a personal relationship with a trusted advisor, you identify your goals, and you determine what's needed to achieve those," Legrand related. Likewise, the planning aspect of SOA centered around funding the SOA in ways that will deliver maximum return to the business. "We focused on what are the key business services," said Legrand. "The services that we started with are customer management, asset management, and the notion of money movement - the ability to move between products, between funds, or accounts."

The SOA effort followed a roadmap which brought SOA functionality to new applications or services as they came online. "We didn't take a scorched earth approach, where we said, 'let's stop all of our investments, and rebuild the architecture as SOA," Legrand said. "Instead, we focused on what are the key business services that we need to support the business strategies of being more nimble, reliable, and a quicker time to market."

The next step was track. "In financial planning, you track progress against your personal goals, and you adjust them as necessary," Legrand said. "In SOA, we ended up doing the same thing. We started in 2000 tracking against a set of business metrics. The metrics that we tracked were things like reuse, time to market, and cost avoids." Governance became a key part of the tracking equation, since "it's important that you're governing the project investment against a roadmap of where you want to go. What are the services that you care about getting implemented in a robust, reusable way, what are the services that you can let be more specialized in nature?"

Legrand estimates that Ameriprise has saved almost $10 million in cost-avoidance over a three-year period just from one of its leading services -- customer management. He cautioned, however, that "cost avoids were a difficult measure to calculate, because you get into discussions about the road not taken. What would the road not taken have cost us to build these services? So you end up needing to create a set of mechanisms that help you value, what was the value of that choice? What was the value of investing in that service at an enterprise level, versus a portfolio level?"

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Comments

This is an excellent example of how to turn the SOA claim of "aligning IT with business" into something real.

The key point for me is that this company treated SOA as a business strategy and therefore tracked tangible measures of success. It is too easy to claim vague virtues like "business agility", but it is hard to create a fundable business plan based on them. Instead, as this firm did, you need to focus on objectives which fit with the business strategy and then figure out how to map these to what is measureable within SOA such as reuse.

An excellent piece - in sympathy with my own thoughts that I have covered recently at my Illuminatus Research blog: http://ronanbradley.typepad.com/litebytes/2006/10/translating_reu.html

Posted by: Ronan Bradley at October 5, 2006 01:58 PM