On a basic level, SOA means designing systems that closely model the business. Once a set of services is created and implemented, businesses can focus on combining the services in novel arrangements. Using SOA, organizations can achieve agility and optimal efficiency because resources are tightly bound to business processes.

Although few companies have completed the transition to a fully mature SOA environment, many are aligning SOA with business goals. Those that adopt a service-oriented outlook can consolidate redundant functionality and data input throughout the organization. Because SOA delivers reuse—providing one point of data entry for multiple consumers—more is done with less. New applications plug into existing ones rather than reinventing their functionality. And with fewer software licenses, SOA can deliver cost savings in enterprise operating budgets.

To better understand the fundamentals of a service-oriented approach, consider how a loan service operates within a bank. For most banks, the loan service isn't designed to support loans acquired through any channel other than the bank representative because loan acquisition is tightly bound to the bank's systems and processes and is executed in a linear manner. A potential customer's application is entered by bank personnel into a mainframe database; that information is then sent to credit-bureau services for reference. Qualifications are returned to the bank, which finally determines whether the customer gets the loan.

But SOA is about creating a system in which the components of the system are loosely coupled and available to multiple users in the business process. So in our loan example, no party that uses the loan data—neither internal bank personnel nor those in outside credit and reporting agencies—would be differentiated. Armed with this power, the bank can now service loans acquired from other sources, such as auto dealers and furniture stores. Doing this can reduce loan decision-making time from 48 hours to minutes without changing how the loan was acquired. Operationally, a higher number of loans will be processed without investing in new applications and higher margins can be gained on each loan.

In another example, a midsize business-process outsourcer (BPO) wanted to bring on more clients at a faster pace. The company provided management of back-office financial services, such as leasing. While each client required the BPO to adhere to, and integrate with, business processes, many tasks were similar across clients. The company wanted to leverage reuse where possible.

By designing a service-oriented approach, the company replaced departmental silos with sets of services, such as customer service, payables, financing, loan acquisition, and software development. Each service implementation was defined as a business process that leveraged both human and machine-based resources; a service manager was responsible for drafting the service contract. Once completed, a work flow was created for the BPO's business processes across each service. With this approach, the company accelerated its ability to add clients.

What's important to remember is that SOA develops services that represent business capabilities, with an emphasis on design rather than software applicability. By keeping to this premise, the technology implementations of future services will mesh naturally with the overall system design of business capabilities.