A survey of financial justification

among SOA adopters in North

America and Western Europe.

SOA
RESEARCH
SOA Justification

GCR Custom Research

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SOA RESEARCH
Costs and Benefits
Customer service
Much of the service oriented architecture (SOA) debate improvement
65%

among IT practitioners centers on the tension between a

great concept and the perception of how difficult it is to Faster time to
market
56%

implement at the enterprise level. In qualitative interviews

with senior IT decision-makers, the perceptions of SOA Information
visibility
53%

were decidedly mixed. However, findings from a recent

SOA Justification Survey, with billion dollar plus New products or
48%
services
companies in North American and Europe, suggest that
enthusiasm for SOA is much less tempered than may be Regulatory 36%
the case in the general IT population. An estimated 60% compliance

of these SOA savvy decision-makers indicate an absence

of serious business or technical impediments to SOA New channels 32%

implementation. This pattern persists regardless of Question asked: In

Mergers and
whether SOA implementation is at an early project stage acquisitions
25%
which areas do you
or at a mature enterprise-level implementation. expect to see impact on
Major competitor
has SOA initiative
16% your business as a result
According to the SOA Justification Survey, forward of deployment?
thinking decision-makers ask themselves a number key
questions when planning SOA implementation. First, what
are the tangible enterprise benefits that will result from the Figure 1: Expected Areas of Impact
initiative? Second, how best to champion and find funding
for a SOA initiative? The research indicates that answers
to these questions vary by region, but that there are many
IT Cost Savings
similarities in how these questions are addressed.
Over three quarters of respondents expect SOA to reduce
integration costs. Slightly fewer expect to see similar
SOA’s Impact savings in maintenance. Only half of respondents think that
SOA will result in lower development expenditures. The
The top three reasons driving SOA adoption are cost general take away is there is an overall expectation that
savings, improved customer service and faster time to SOA will contribute to cost reduction.
market (see Figure 1). While cost savings remains an
important single factor, the combined importance of
“customer service improvement” and “faster time to
market” underscore the importance of business agility in a IT cost savings 30%

SOA vision.
Customer service 23%
improvement
Business Agility
When asked where they expected to see the greatest Faster time to market 21%

impact resulting from SOA implementation, there was a

Information visibility
tendency to give greater weight to items more closely 6%

associated with business agility. Respondents

New products or services 6%
underscored “customer service improvement” (65%) and
“faster time to market” (56%). C-level respondents were
Regulatory compliance 5%
pronounced in their expectations for these two areas,
suggesting the prominence of business objectives
New channels 5%
underlying the justification of SOA.
Question asked: What is the
Mergers and acquisitions 4%
primary driver for the SOA
The survey results identify North America as the region
vision in your organization
most focused on using SOA to affect revenue potential. Major competitor has SOA
1%
initiative
Only 21% of North American respondents indicated IT
cost savings; compared with 40% of Europeans surveyed.
Ironically, as noted in the following section, Europeans
also expect SOA to contribute less to overall expense
reduction than their North American counterparts. Figure 2: Primary Driver for SOA Implementation

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Costs and Benefits
SOA’s Impact (Continued)
It is important to note that North Americans are more
aggressive in their estimation of the savings that
accrue from SOA implementation than European
decision-makers. For integration and maintenance,
European estimates are approximately half that of
North American decision-makers. The disparity is
even greater for development cost savings.
SOA Buy-in and Champions
A salient theme among the majority of surveyed SOA
adopters was the need for executive level
sponsorship. While nearly a third of all sponsors were
CIOs, other mentions included CFOs and IT
Directors.
The need for high level sponsorship is even more
apparent when examining SOA budgets.
Approximately half of respondents indicated that their
organizations had spent at least one million dollars on
SOA in the past two years. An estimated forty percent
of SOA adopters project spending increases of more
than one million dollars in 2007.
Budgets of this size and projected duration require
senior authorization. However, it is important to note
that the survey data did not provide a demonstrable
relationship between the maturity of deployment and
the level of spending. While duration of a SOA
implementation is reflected in higher spending, there
is little difference in spending patterns based on
contrasts between pilots and full deployments. This
suggests that there may be few savings resulting
from incremental pilot approaches to SOA
implementation.
Approving Business Cases
Senior executives tend to be responsible for
approving the business case, but the regions differ
when it comes to which executive. When asked which
senior executive had primary responsibility for
approving the business case, fifty-six percent of
American respondents cited the CIO. Only 6%
identified the CFO with primary responsibility. This
can be contrasted with Europe, where 38% of
respondents pointed to the CFO. The implication is
that the rationalization of European SOA initiatives
may be subjected to more traditional financial and
cost guidelines than in America.
Page 3 of 5
Lack of confidence in
a big SOA payoff
54%
Securing funding 47%
ROI not strong enough 42%
Unable to build a case 34%
Question asked: Which of
the following are
C-level skeptics 31% roadblocks to justifying
SOA in your organization?
Figure 3: Roadblocks to SOA Justification
Business Case Metrics
Two thirds of SOA adopters indicate they had internal
agreement on metrics that would be used to build the
business case for SOA implementation. Of this group, eight
in ten are currently tracking metrics related to their SOA
activities.
Decision makers are also judicious in their expected levels
of reuse. Three quarters of the respondents stated they
expect levels of reuse between 11% and 40%.
In the SOA Justification Survey, respondents believe that
reuse is important. Close to 90% say that they see reuse
as a critical success metric. There are a number of ways of
hitting project targets and a popular one is the use of
incentives. Of those who say that reuse is a critical success
metric, half have an incentive plan that rewards reuse
levels.
The metric component in business cases is critical for
maintaining long term support from senior IT and business
leaders. Qualitative research with C-level executives
suggests considerable skepticism with traditional IT
metrics. Participants in these interviews are frequently
uncomfortable with the linkages between business
objectives and IT metrics used to support the business
case. The current study suggests a less pervasive concern
among enterprises that have begun to adopt SOA.
While concern appears less pervasive among current
adopters, the SOA Justification Survey indicated forty
percent of respondents feel that acceptance is hindered by
problems of financial justification. This affects funding and
threatens plans for further implementation. The most
frequently cited impediment is lack of confidence in the “big
SOA payoff”. Other frequent mentions include “ROI not
strong enough” and to a lesser extent C-level skepticism
(see Figure 3).
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SOA RESEARCH
Costs and Benefits
Planning for SOA Question asked: What percentage of the total business
case costs does each area represent? Will you justify
SOA adopters take a realistic view to portfolio planning. this cost at the enterprise level or the project level?
They tend to look out over a year, but set reasonable
expectations about the number of services they can
manage and the levels of reuse they can expect. Software infrastructure 40%
The majority of SOA adopters are not generating long
term SOA plans that extend beyond twelve months.
With just under 50% of organizations planning twelve
months out, most respondents indicate that their portfolio Cost of External
consultants/systems 34%
plans include at least a year’s worth of detailed activity. integrators
The plans are built with an expectation that they will have
fewer than fifty services identified in the portfolio.

SOA funding sources Reskilling existing staff 31%

Enterprise
Software projects are often funded by IT budgets and by
Project
money redirected from other priorities. The SOA early
adopters are also using SOA specific funds. Twenty two New internal roles 23%

percent of respondents say they funded the SOA

implementation and ongoing projects with SOA specific
budget. The largest share, nearly 60%, comes from
business solutions. Figure 4: Break of Cost in Business Case

While less pronounced, a similar trend is evident

Business case components
The most significant component of the business case cost
is software infrastructure. Respondents indicated that the
most expensive elements of the software infrastructure
plan were security, enterprise service bus and data
services.
SOA Teams
Building the right team for SOA is critical for success. The
SOA early adopters put more resources into retraining
their existing staff than into hiring new people. The more
money a company spends on SOA, the less, as a
percentage, they spend on hiring new people. The
trendsetters almost universally put governance teams in
place to manage the SOA process. (See Figure 4).
Governance
Most organizations have governance teams overseeing
their initiatives, which play a critical role in identifying
required common services. Only 16% of respondents told
us that they do not have these teams in place to oversee
and analyze their SOA project portfolio.
Almost all organizations spending more than a million
dollars have governance teams.
among those involved with enterprise deployments.
Conversely, organizations spending less on SOA are
less likely to have governance teams in place. An
outstanding question is: how do these organizations,
in the absence of governance teams, expect to
mitigate commonly perceived risks such as
organizational interdependencies, complexity, cost
escalation and lengthened timeframe for realization
of benefits?
Demographic profile:
In order to participate in the study, potential
candidates had to meet the following criteria:
Geography: Work for a company based in North
America (and Canada) or Europe (UK, France and
Germany).
Revenue: Company for which they work has an
annual revenue or operating budget greater then one
billion per year.
Deployment status: Have at least an active pilot
program in place.
Responsibility: A SOA decision maker or influencer
of decisions.

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Costs and Benefits
Study detail:

This paper details results from a survey of 151 technology

decision makers who met the above criteria. The study was
sponsored by BEA Systems.

Authors:

Tripp Ritter, Senior Researcher, GCR

tritter@gcrinsight.com
R. Scott Evans, Ph.D., VP, GCR
sevans@gcrinsight.com

About GCR:

GCR, formerly Gartner Custom Research, is a strategic

market research company focusing on the technology
industry. GCR was founded in 1979 and has more than 25
years experience conducting qualitative and quantitative
research for Fortune 500 technology companies.
GCR’s core research offerings include Branding and
Market Positioning, Market Sizing and Segmentation,
Advertising and Message Testing and Service/Concept
refinement, including customer satisfaction and win/loss.
www.gcrinsight.com.

About BEA Systems:

BEA Systems, Inc. is a world leader in enterprise

infrastructure software. BEA's SOA 360º platform is the
industry's most unified SOA platform for business
transformation and optimization, in order to improve cost
structures and grow new revenue streams.
www.bea.com.

BEA p/n CWP1489E1106-1A

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