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10/8/2004
09:25 AM
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Software's Next Step

Services-oriented architectures are being embraced by business-technology specialists charged with creating more-efficient IT infrastructures

Aeroplan developed a services-oriented architecture because, although it tracked frequent-flier miles and accounted for their redemption in its internal systems, "we needed to externalize those same services to our part- ners," such as hotels offering rewards, says Spyros Kattou, E-business architect. Also, Aeroplan made it easier for consumers to redeem miles on its Web site, skipping the need to apply for a certificate sent in the mail. The change has led to "a very important increase in reward redemption," Kattou says.

There's a compelling business case behind Aeroplan's services-oriented architecture: The company can't recognize the transactions as revenue until the rewards are redeemed. "We earn revenue from the burn rate of those miles," Kattou says.

The architectures can give IT planners greater flexibility in choosing products and programming languages. "I don't like it when vendors try to block us in to the point where we can't move and match," says Soren Burkhart, senior VP of business and technology integration at Aloha Airlines Inc., which is pushing vendors to support data in the XML format for easier sharing within its systems. "We're well on our way," Burkhart says.

Burkhart was brought in 12 months ago to revamp Aloha's outmoded mainframes, and a services approach is yielding results. In August, the airline celebrated its 58th birthday by offering dollars-off coupons. In addition to being available by mail for a $3 handling charge, they were available as printouts from its Web site for the first time. Aloha anticipated that only 15% of coupons would be from the Web-site offer, but the percentage was closer to 85%, resulting in "a huge savings for us," Burkhart says.

Vendors urge customers working on services-oriented architectures to think in terms of an "enterprise service bus," loosely defined as an XML messaging software layer that can translate messages being sent between applications. But vendor-specific approaches can be problematic. "No [enterprise service bus] standard has evolved to the point where you're protected against vendor lock-in," Aeroplan's Kattou says.

Among the other things to look out for: Not all applications are perfectly suited to be rewritten as pluggable services. For example, some high-performance systems will continue to work best with point-to-point connections. And in other places, applications that already use WebSphere MQ or Java Messaging Service messages may do just fine without an XML injection.

But the benefits can clearly be worth the sweat. Countrywide Global Markets, a division of Countrywide Financial Corp. that provides mortgage-processing and -underwriting systems, has tied five core applications to Woolwich and Barclays Bank to conduct mortgage processing for the banks. (Barclays acquired Woolwich, and Countrywide provides separate outsourced processing services to each.) A services-oriented architecture means Countrywide Global can extend its mortgage-processing services to additional mortgage originators, integrating their systems into its operations in 60 to 90 days, says chief technology officer Jim Pierce. And, because of the modular nature of its architecture, Countrywide Global has the option of offering one service, such as mortgage quoting or underwriting, rather than insisting on an all-or-nothing deal.

That's the dual benefit of services-oriented architectures: In addition to helping companies apply Web services, they support new ways of doing business. At Citigroup and the New York Board of Trade, architectures will help get to straight-through processing, where trades are concluded in one day, while at Countrywide, the architecture opens doors in expanding its mortgage-processing business.

Says Pierce, "We're in a very competitive business. We have to have our developers working on business logic for new products, not the plumbing."

Continue to the sidebar: "Scalable: Managing Web Services Demands New Approach"

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