Introduction

The key characteristics of on demand enterprises can be summed up as greater Focus, heightened Responsiveness, Variable cost structures, and improved Resilience. Achieving an increasing degree of on demand characteristics requires fundamental business transformation supported by IT simplification. Roadmaps and entry points for such a transformational journey are different for different enterprises based on the current state of their business and the specific goals they are planning to achieve.

Simplification of the IT environment is necessary for technology to act as a catalyst and an enabler of a nimble and responsive business. IBM has defined such a simplified IT platform as the On Demand Operating Environment (ODOE). ODOE defines a visionary architecture for IT that combines concepts from different domains, including:

• Business Performance Management -- includes the tools to analyze and model business processes, integrate various packaged and custom applications to support the modeled process, export and execute the modeled process in a robust runtime environment, monitor business processes in real time, track current performance against goals/historic trends, and align the business operations to match the changing business priorities.
• Service Oriented Architecture (SOA) -- an emerging style of architecting next-generation enterprise applications by composing and choreographing business-aligned services into end-to-end business processes to fulfill business goals. SOA provides a sound foundation for Business Performance Management systems.
• Web Services -- a set of standards which makes it possible to publish, discover, invoke, manage, integrate, and interoperate application functionality across heterogeneous technology platforms.
• Autonomic Computing -- a set of technologies that enables a system to self-configure, self-optimize, self-protect, and self-heal thus dramatically reducing the cost of managing complex IT shops.
• Grid Computing -- enables the virtualization of distributed computing and data resources such as processing, network bandwidth and storage capacity to create a single system image, granting users and applications seamless access to vast IT capabilities.

The resulting open standards-based architecture supports faster integration, automated management of IT, and ubiquitous access to computing power where and when needed through virtualization. Figure 1 shows a simplified view of ODOE.

ODOE is a sophisticated instantiation of a Service Oriented Architecture, where end users and business partners receive Business Services that are composed of finer grained services provided by various elements of ODOE. The Enterprise Service Bus provides the backbone for the message exchange, mediation, transformation, and event notification between various service endpoints. Application Services supports user interaction, business process implementation, and information management capabilities. In other words, it supports people, process, and information of the overall solution. Infrastructure Services include various capabilities necessary to manage a robust infrastructure onto which Application Services can be deployed and managed. It includes capabilities to virtualize the IT capabilities to enable sharing across applications, automated management of service levels through autonomic computing capabilities, and the ability to track and bill various applications for their workload based on usage.

IBM has conducted an extensive study to understand customer pain points as they relate to their current IT environment’s ability to support business flexibility. Table 1 summarizes the key common pain points across industries that have emerged as a result of this study.

Table 1. Customer pain points with the current IT environment

ODOE addresses these pain points through thirteen capabilities designed into the operating environment. These capabilities can be broadly classified into Integration and Infrastructure Management related capabilities. Each capability addresses one or more of the above listed commonly observed customer pain points with their current IT environment. As a result, ODOE provides a sound IT foundation for supporting a business that is focused, responsive, variable, and resilient. To maximize your ability to integrate within and beyond your enterprise, there are six key ODOE Integration Capabilities you'll want to add over time:

1. Business Modeling enables the graphical depiction and simulation of a business process including task descriptions, resources required and decision points
2. Process Transformation enables existing applications and information to be reused in new ways
3. Access extends data and information to new classes of devices and methods of interaction regardless of connection type
4. Collaboration allow users to interact in a personalized way with dynamic information, applications, processes and people
5. Application and Information Integration enables multiple information sources and business applications to be combined
6. Business Process Management allows you to model, deploy and analyze processes with the goal of managing the end-to-end business process

To simplify and optimize the management of your infrastructure, you'll need to implement seven key ODOE Infrastructure Capabilities over time:

1. Availability ensures the health and appropriate functioning of IT environments
2. Security ensures information assets, confidentiality and data integrity are protected
3. Optimization ensures the most productive utilization of IT infrastructure
4. Provisioning makes available the right resources to the right processes and people
5. Infrastructure Orchestration senses, triggers and responds according to business goals
6. Business Service Management to visualize IT environment in business terms and manage service levels to business objectives
7. Resource Virtualization provides a single, consolidated, logical view of and easy access to all available resources in a network (i.e. servers, storage, distributed systems/grid)

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Business scenarios from the Banking industry

As described in IBMs article "From banks to banking: The on demand journey" (see Resources), banks during the 1990s predominantly used three strategies for increasing shareholder value:

1. Risk Reduction through securitization
2. Revenue diversification through non-interest incomes
3. Consolidation through mergers and acquisitions

During this decade, however, these value creation strategies stalled as banks were undertaking fundamental changes to their business structures, and meanwhile, the industry itself was taking a new shape.

With the dynamics of the future so unclear, banks will need to show greater focus on their core competencies, heightened responsiveness to their customers and business partners, variable cost structures which will insulate them from unpredictable swings in market demand and improved resilience in order to maintain high quality services despite potentially disruptive events.

In order to convey how a given financial services company can achieve these objectives by leveraging ODOE capabilities we will introduce four business scenarios -- customer enrolment, personal loan, online trading and portfolio management -- of a typical banking and financial services company. In this article, we will describe the existing scenario and its limitations and introduce a transformed future scenario. For each of the future scenarios we identify the ODOE capabilities leveraged.

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Customer enrollment scenario

In the existing enrolment scenario, it may be necessary to access multiple new and legacy applications. In many cases, the number of applications will have multiplied through mergers and acquisitions and applications will have many different user interfaces and security models. The result is that a bank employee in a call center may be needed to hide the complexity from a potential new customer and the enrolment may only be finished after a number of overnight batched updates have been completed.

In a future customer enrolment scenario, it would be better to transform the business process to allow enrolment confirmation in real-time by improving the application and information integration. It would also make the service more accessible if it were provided through a customer portal. In addition, improving the service availability and security would allow the bank to deliver a highly responsive and resilient customer experience.

ODOE capabilities that are emphasized by this scenario are shown in Table 2.

Table 2. ODOE capabilities for customer enrollment scenario

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Personal loan scenario

In the existing personal loan scenario, the customer's loan request is typically viewed by a loan officer following a credit check in order to apply the bank's business rules manually. This process takes a number of days -- and can be further delayed if the third-party service providing credit checking is unavailable for any reason.

In a future personal loan scenario, it would be a major improvement if the business process can be redesigned with greater flexibility so that the latest business rules are applied automatically giving the customer a real-time response and only exceptions are passed to the loan officer for review. In addition, the system could be designed to detect any loss of credit checking service with an automatic switch to an alternate service provider when necessary. The resulting major improvement in the responsiveness and resilience of a core competency business process would be a major benefit.

ODOE capabilities that are emphasized by this scenario are shown in Table 3.

Table 3. ODOE capabilities for personal loan scenario

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Online trading scenario

In the existing online trading scenario the bank may provide the customer with batched updates of world wide stock prices around the clock sorted by geography. Some customers may wish to see an integrated list of all stock prices in real-time with the ability to do what-if analyses.

In the future online trading scenario it would be better if the system had the unlimited power of a computing grid to capture the changing stock feeds, integrate them and offer powerful match-making of the international stock to the investment objectives of the requestor. The resulting customer experience would be transformed by a highly responsive, flexible and highly integrated system.

ODOE capabilities that are emphasized by this scenario are shown in Table 4.

Table 4. ODOE capabilities for online trading scenario

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Portfolio management scenario

In the existing portfolio management scenario the bank may rely on an offline evaluation of a customer’s financial position and an email flyer advertising a new financial product resulting in a very low take up.

In the future portfolio management scenario it should be possible to flexibly integrate multiple bank applications to calculate the customer’s financial position in real-time and then model the value of the latest financial product to the customer. This could be communicated by email in close to real-time - with an offer to connect the customer to a financial advisor immediately in order to increase the business closure rate significantly. This would significantly differentiate the bank’s core competency in financial products from the other mass mailing offers that the customer regularly received through the mail. It would also significantly improve the customer’s perception of the bank’s service.

ODOE capabilities that are emphasized by this scenario are shown in Table 5.

Table 5. ODOE capabilities for portfolio management scenario

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Summary

These are just a few examples of how existing business scenarios can be significantly re-designed using the ODOE capabilities and technologies referenced earlier. Taken together, you can see how additional focus has been applied to some banking core competencies to differentiate them from their competitors. In addition, greater flexibility has been built into the business processes enabling quicker future change whilst delivering more resilient and responsive services today.

Future articles in this series will drill down into each of these scenarios in turn to describe the specific technologies, patterns, best practices, products and skills applied to achieve these transformed business scenarios. In order to promote the reuse of architecture and design considerations across industries, the future articles will describe the architectural patterns and design patterns leveraged by each of the scenarios. Architectural patterns in this context represent commonly occurring fundamental structure of an IT system as observed and documented by IBM’s Patterns for e-business (see Resources). Design patterns in this situation are commonly occurring detailed application design best practices that are relevant within the context of a broader architecture. Since implementing these solutions requires deep business process design and IT skills, it will be apparent that a consulting partner with strong Business and IT expertise is highly beneficial in order to transform business processes and to exploit the range of technologies necessary to achieve an On Demand Business.

Resources

• Read about IBM and the On Demand Business.
  
  
• Read about Banking On Demand.
  
  
• Read the Whitepaper "From banks to banking: The on demand journey" (pdf).
  
  
• Find out more about IBMs Patterns for e-business.
  
  

About the authors

Guru Vasudeva has broad experience in various aspects of Solution Architecture and Enterprise Architecture disciplines. His areas of technical and business expertise include Web Services, Service Oriented Architectures, Internet Architectures, Component Based Development, Business Strategy, IT Strategy, Application Portfolio Management, and IT Governance. He is co-author of the book "Patterns for e-business -- A Strategy for reuse".

Jonathan Adams is an IBM Distinguished Engineer. He has been an IT architect with IBM for 36 years. Since September 1998 he has been working in the SWG Technical Strategy organization leading the definition and development of the Patterns for e-business. He can be contacted at jonathan_adams@uk.ibm.com.

Christina Lau is a Senior Technical Staff Member at IBM. Christina is an architect on the On Demand Development team focusing on the next generation technologies for the On Demand Operating Environment. You can reach Christina at clau@ca.ibm.com.

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Table of contents

• Introduction
• Business scenarios from the Banking industry
• Customer enrollment scenario
• Personal loan scenario
• Online trading scenario
• Portfolio management scenario
• Summary
• Resources
• About the authors
• Comments