High-speed business processes
Coty reaps value from SOA in record time
By Sidney Hill, Jr., Executive editor -- Manufacturing Business Technology, 1/1/2007 7:00:00 AM
Anyone struggling to understand the business value of a service-oriented architecture (SOA) should have a chat with David Berry.
Berry is CIO of New York City-based Coty Inc., the world's largest fragrance manufacturer. He says installing an SOA helped Coty accomplish three major business goals in less than six months.
"We absorbed the entire IT infrastructure of a newly acquired company, connected to a new IBM procurement system, and implemented a new SAP system in Western Europe—all in less than six months," Berry recalls. "That's like climbing Mt. Everest without oxygen. There's no way we could have done that using traditional programming methods."
For the past several years, technology vendors have been telling customers such feats were possible with SOA. Now, as success stories from early adopters like Coty start to circulate, more companies appear ready to embrace the SOA model.
In a 2006 survey by Boston-based AMR Research, 81 percent of respondents said they were planning to either evaluate or implement an SOA within the next two years. These numbers reflect the value companies are reaping from SOA, which AMR Analyst Dennis Gaughan describes as "an approach to building and maintaining enterprise systems that promotes speed of innovation, flexibility, and reuse of existing assets."
In simple terms, an SOA is an infrastructure in which software applications are broken into modular components—called services—and placed in a repository where they can be easily accessed either by users or other services. When this is done properly, a company can implement new business processes almost at will by writing procedures that call for specific sets of services to interact with one another.
But even the most ardent champions of SOA warn that getting the most out of an investment in the model requires adherence to some fundamental principles, the first one being: Don't look at implementing SOA as an IT project. View it as a way of using IT to accomplish specific business goals.
"Projects that focus on improving business processes—especially those involving customers or suppliers—tend to have the longest-lasting benefits," says Lance Hill, VP and general manager of SOA solutions for webMethods, a supplier of tools for building and integrating IT infrastructures.
An initial SOA project will produce a set of services that can be reused any number of times. As a company continues working with an SOA, Hill says, the IT department ultimately will reap benefits as well.
"Once you have an SOA, you want to ensure it will continue working properly over time," Hill explains. "That leads to creating procedures for how services are shared across the enterprise. That's called SOA governance. As it takes hold, the IT department will suddenly discover it can do things like add new business functionality or integrate applications at a much lower cost."
Hewlett-Packard (HP) uses what it calls a Manufacturing Industries Reference Architecture to help companies in the sector implement successful SOA projects. "This is a framework for positioning SOA as a business enabler," says Ian Cole, HP's technical director for the manufacturing and distribution industries.
The framework calls for taking specific steps on SOA projects. The first step is examining the tasks that make up the processes being SOA-enabled. "You need to understand what people actually do, what information they need, and who they interact with."
Cole calls this the functional view of the SOA. After that view is captured, he says, technical people should design the SOA, with their first goal being to determine what services will be needed to perform the functions outlined.
"Identifying services should not include selection of technology," Cole adds. "Only after you know which services you need should you choose the technology for creating them."
Coty did not work with HP on its SOA project, but did follow many of the steps outlined in the HP architecture.
Coty selected its SOA technology a bit earlier than Cole may have advised, but it had good reasons for doing so. First, Berry was not well versed in SOA at the time. He knew the primary goal was connecting three major technology platforms, so he was seeking the best systems integration tool. When he polled the IT pros in Coty's various business units, one vendor's name—iWay Software—surfaced. "At the time, we had one small iWay implementation, connecting a production planning application to an Oracle ERP suite," Berry says. "But people kept telling me how well it worked."
When Berry contacted iWay about Coty's larger integration needs, the topic of SOA emerged. He was intrigued but not quite sold. Then he attended an SOA conference in Cannes, France, sponsored by Gartner, the Stamford, Conn.-based IT research firm.
"That was in the fall of 2005," Berry says of his trip to Cannes. "By January [2006], I was an SOA evangelist. We had to complete these projects, and I knew that SOA would be the glue that brought it all together. I told people we didn't have a lot of time, or a lot of choices. We couldn't do what we needed to do if we went down the path of traditional programming."
Time was especially critical for integrating Coty's new acquisition. Coty purchased Unilever Cosmetics in July 2005, and it had to be completely merged with Coty by the end of Coty's fiscal year—June 30, 2006. The first six months were spent dismantling and reassembling the Unilever Cosmetics networking infrastructure—replacing PCs and desktop applications, and setting up new firewalls and virtual private network connections.
That left six months for integrating the applications, which is where the SOA came in. Even though Berry knew he wanted to build the SOA on iWay technology, no development work was done until all the business process issues were resolved.
The first phase of this project covered Coty's European operations. Other parts of the company, including North America, will be linked by SOA sometime this year.
"We focused on the order-to-cash cycle, and supply chain processes," Berry says of the initial project planning. "The big issue was the company had been configured to ship two specific product lines from separate distribution centers in Germany." Now there were several more product lines and distribution centers.
"We had to figure how to split orders for shipping from the appropriate distribution centers, making sure customers got the right advanced shipping notices and order confirmations. And once the order was delivered, all information related to the order had to be routed back to our central ERP system for proper invoicing."
In January 2006, Berry convened a meeting with representatives from Coty's customer service group, its distribution centers, the IT and finance organizations, consultants from New York-based Accenture, and iWay management. The group hashed out process issues.
"We wanted to identify the transactions that were essential to keeping the business going while we were making this transition," Berry says. "That led us to focus on transactions related to order-taking and pricing."
Ultimately, Coty pulled bits of functionality from its various ERP systems around Europe into the iWay Service Manager platform to create a set of 30 services that are activated at the appropriate times for processing orders.
Under this setup, all of Coty's European orders—whether they come via EDI, phone, fax, or a salesforce automation system—flow into the SAP order management module, which checks certain codes to determine which warehouse—or warehouses—the order will be shipped from. The order is then placed into an iWay Service Manager queue. At that point, the various services take over, determining the proper pricing for the order, and formatting it for delivery to whatever ERP system is operating at the designated shipping location. That could be Oracle, J.D. Edwards, or one of two legacy systems.
When the order is shipped, the ERP system at the shipping location sends a confirmation to iWay Service Manager. That triggers another service, transforming the message from the native format of the system that sent it into a format that the SAP invoicing application understands.
Coty created, tested, and deployed this portion of its SOA in 10 weeks. It then created another half-dozen services to link the IBM procurement application to Coty's accounting systems.
Barry says this infrastructure paid for itself before it was turned on, and he sees it paying dividends far into the future.
"I look at this as a strategic initiative," he says. "The company's goal is to be at $5 billion in revenue over the next couple of years [from $2 billion in fiscal year 2005]. We're probably not going to get there solely though organic growth. There has to be another acquisition on the radar. Our SOA can handle whatever comes down the line."
