Major corporations embrace SOA, but Fidelity worries about cost

Fidelity Investments and State Street Corp. are among the companies making what some call an “uncomfortable transition” to service-oriented architecture, an approach to building IT systems that’s centered around the deployment of reusable application components.

Fidelity is finding the transition costly, an official with the company said at a conference Wednesday. But proponents of SOA say it will save corporations money in the long run by letting them reuse software instead of having to write new applications or buy new software every time they encounter a new task.

“You cannot do SOA without incurring more costs,” said Stein Eriksen, vice president of architecture at Fidelity Investments Institutional Services in Boston. “It’s a lot more expensive than what you actually do today.”

Eriksen took part in a panel discussion about SOA put on by the Mass Technology Leadership Council in Needham, Mass. The session was moderated by Judith Hurwitz, president of Hurwitz & Associates and coauthor of Service Oriented Architecture for Dummies, a book released last month.

Companies face start-up costs when they embrace SOA but can make their software systems more sustainable and cost-effective over the long haul, Hurwitz said in an interview after the panel discussion.

“It’s short term vs. long term,” Hurwitz said. “You might be able to buy something that is packaged in a traditional way cheaper. If you’re looking at it in terms of a long-term benefit . . . and how it’s going to serve this company, not just next month but three years from now, you’re investing in the future.”

As is typical with any large change in business practice, big companies like Fidelity are the early adopters, but some small companies are starting to apply SOA principles to their IT systems, Hurwitz said.

Hurwitz calls SOA the “hottest topic being bandied about by IT vendors across the globe” and “the beginning of the industrialization of software.” When businesses are faced with a new problem, they typically write a new application from scratch, creating redundancy. “The problem is, you’re always writing something based on the problem last week, not preparing yourself for the future,” she said.

Another problem is that previously existing applications that address the same task are wasted. SOA, if done properly, lets companies take software that may be decades old and make it useful again.

“Do you have to throw all of that investment away, or can you take the relevant pieces out of that and reuse them somewhere else? It really is about reusing what you already have and building new services that can be used in lots of different situations,” Hurwitz said.

Deborah Cicerone, vice president and SOA architect at State Street in Boston, said during the panel discussion that her company has service-enabled certain customer-relations and treasury functions, among other tasks. As a result, State Street has many old software products that can still be useful today, she said.

“We have a lot of legacy software, legacy products,” Cicerone said. “We can’t just abandon everything we have.”