Bank VP Shares His Approach to SOA Metrics, ROI

For a long time now, one of the big challenges for service-oriented architecture advocates has been defining metrics for measuring SOA's success or failure. And, of course, if you can't define the metrics for SOA, it's going to be pretty tricky to define the ROI (return on investment).

This week, SOA World published an article called “Making SOA ROI Real.” It is hands down the best piece I've read to date on figuring out SOA's ROI and establishing metrics for measuring SOA.

It was written by Leo Shuster who, as vice president and general manager of Enterprise Services, oversaw National City Bank's SOA strategy. Shuster has both an MS in computer science and engineering and an MBA. Frankly, I don't think it's any coincidence it took someone with his credentials – working at a bank, no less - to figure out this mystery call SOA's ROI.

Shuster takes a position that's sort of fallen out of favor these days: He contends that SOA still needs to evolve into a business initiative, rather than just an IT initiative. I say it's fallen out of favor because, as Burton Group analyst Anne Thomas Manes pointed out, business executives are a bit jaded about SOA and no one's going around talking about “selling SOA to the business” anymore. That said, there's still widespread recognition that SOA can benefit the business.

If Shuster had written this article a year ago, those business executives might not be so jaded about SOA today. Shuster offers a clear-cut list of SOA metrics, covering the areas of IT, business and financial metrics. If you're curious, you can see a table of the metrics here – you'll note he listed integration time savings as a “business metric.”

But he doesn't just stop at the metrics. He takes a detailed look at how you can automate capturing those metrics, noting that there are four pieces of informaiton you should always capture:

1. All the services being created
2. Cost to build each service
3. Integration costs related to service reuse
4. All service reuse opportunities

He also goes into great detail about how you can calculate SOA's ROI. One tricky part of that is calculating cost avoidance, and he goes into some detail about how you can handle that. For instance, you can't know what the integration costs for ongoing or future projects will be, so he explains how you can use a standard reuse factor of 80 percent to estimate that savings.

Frankly, just explaining the financial calculations would make this an exceptional article, but Shuster goes a step further and explains how you can use these numbers to increase overall SOA adoption.

It's a great piece. Everyone involved with SOA should read it.

If you'd like more help on calculating SOA's ROI, you might want to check out this list of SOA ROI tools that Tom Pisello, founder of Alinean, collected in 2007.