Sydney, 17 July 2007

1. IBM SOA EXECUTIVE SUMMIT Sydney, 17 July 2007

2. Dollars & Cents, Justifying Your Business Flexibility Project Matt English Strategy & Change Consulting Leader Australia / New Zealand IBM

3. Justifying and Financing Investments in SOA • Many companies have realized the benefits of aligning IT and business via SOA – as demonstrated in IBM proprietary research • These benefits are crucial for justifying the business case for the investment in SOA – a framework for measuring those benefits • Financing hurdles can be overcome with flexible financing solutions to meet the funding requirements of SOA projects - and help deliver business value rapidly

4. We collected data from over 35 projects, in 5 sectors covering 11 industries world wide Project Breakdown by Sector Project Breakdown by Geography Source: IBV analysis

5. Our thought leadership confirms the drivers of business value that we have seen consistently in SOA engagements Benefits Resulting from SOA Solution Source: IBV analysis

6. Select a group of simplified benefits Structure cost benefits around three basic cost scenarios Calculate simple return using benefits and costs first Select cost scenarios for second and subsequent implementations Look at the return for second and subsequent implementation (keeping benefits constant) relative to first implementation We used the study findings to create a framework for looking at the business value of a Service-Oriented Architecture Source: IBM Institutefor Business Value“The Business Value of Service-Oriented Architecture” 2006

7. Flexibility value drivers Profitability value drivers The intuitive framework guides the examination of the business benefits of SOA for the non technical user Reduced Operational Risk Reduced processing time errors Reduced Protect existing revenue Improved Ability to Change Reduced system downtime Enable new product development Generate new revenue Increase Revenue Increased Profitability Increase existing revenue Improved flexibility Ease of integration Decrease Costs Reduced time-to-market Reduced integration time Reduced integration cost Increased reuse Reduced maintenance cost Improved ability for compliance

8. To gain these benefits, you will incur costs in one of the following patterns Full Implementation Service User ServiceProvider Front-end Application SOA Infrastructure Business Application Service Interface Scope A: Service user Scope B: Service provider + Scope C: Scope A + Scope B

9. Reduced Reduced Operational Operational Risk Risk Reduced Reduced processing processing time time Reduced Reduced Protect Protect errors errors Improved Improved existing existing Ability to Ability to revenue revenue Change Change Reduced Reduced system system downtime downtime Enable new Enable new Generate Generate product product new revenue new revenue development development Increase Increase Revenue Revenue Increase Increase Increased Increased Improved Improved Ease of Ease of existing existing Profitability Profitability flexibility flexibility integration integration revenue revenue Decrease Decrease Costs Costs Reduced Reduced Reduced Reduced Reduced Reduced time time - - to to - - integration integration integration integration time time market market cost cost Reduced Reduced Increased Increased maintenance maintenance reuse reuse cost cost = Improved Improved ability for ability for compliance compliance Full Implementation Service User Service Provider Front - end SOA Business Service Application Infrastructure Application Interface A simple return can be calculated using the business value trees and the cost scenarios $ Simple ROI $

10. First Implementation $$$ $$ or $ Subsequent implementations = less spend Second & Subsequent Implementations

11. Return of succeeding SOA Implementations Second & Subsequent Implementations First Implementation Over time, cost decreases & return increases

12. Full implementation Service User Service Provider Front - end SOA Business Interface Interface Application Infrastructure Application An example Reduced Reduced ü $ Operational Operational Risk Risk Reduced Reduced processing processing ü time time ü ü Reduced Reduced Protect Protect errors errors Improved Improved existing existing Ability to Ability to revenue revenue ü ü Change Change Reduced Reduced system system ü downtime downtime Enable new Enable new Generate Generate product product new revenue new revenue ü development development Increase Increase Revenue Revenue ü Increase Increase Increased Increased Improved Improved Ease of Ease of existing existing Profitability Profitability flexibility flexibility integration integration revenue revenue Decrease Decrease Costs Costs Reduced Reduced Reduced Reduced Reduced Reduced time time - - to to - - integration integration integration integration time time market market cost cost ü ü Reduced Reduced Increased Increased maintenance maintenance reuse reuse cost cost = Improved Improved ability for ability for compliance compliance ü $ • Company A • Insurance, Group Products Division, SOA investment used across Life, Disability, and Long Term Care • Company B • Insurance, Property & Casualty Division, SOA investment used for personal property quotes, agency interaction, and quotes extended to auto Source: IBV analysis

13. SOA business value outweighs the problems and challenges • Significant business value can result from well-managed SOA solutions • Measure, but simplify and measure long term! • Don’t abandon building a business case for SOA • Take a simpler, more intuitive approach • Measure beyond the first implementation • A sea-change for system communication and collaboration will drive equal change in business processes • Industry structure change is inevitable • Collaboration within and between industry players will increase • Table stakes!

14. Full study details and white paper • Service-Oriented Architecture: A practical guide to measuring return on that investment IBM Institute for Business Value Available on the web: http://www.ibm.com/iibvttp Contact Information: Jay DiMare idimare@us.ibm.comjdimare@us.ibm.com Associate Partner IBM Global Business Services, Institute for Business Value