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Operating environment essentials for an ondemand breakthroughOn Demand Business

Fredrik Carlegren ([email protected]), Strategy Director, IBM, Software GroupFredrik Carlegren is a member of the IBM on Demand Technical Marketing team.Angel Luis Diaz([email protected]), Director, On Demand Operating EnvironmentTechnology , IBM, Software GroupDr. Angel Luis Diaz is the director of the IBM On Demand Operating Environment

Technology Strategy and Marketing department. Dr. Diaz received his Ph.D. in computerscience from Rensselaer Polytechnic Institute. Before joining the IBM Software Group in2003, Dr. Diaz was a member and senior manager of the IBM research staff, where he ledadvanced technology projects related to XML and Web services. You can reach him [email protected].

Summary: This article, which extends Part 11 in the "Architecting on demand solutionsseries," shows how you can integrate Business Process Execution Language (BPEL)-basedbusiness processes with service providers using the Enterprise Service Bus (ESB) capabilitiesin IBM WebSphere Application Server V6. You see an example that shows how theflexibility of the service-oriented architecture allows existing services, such as credit checks,to be consumed into a new application.

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Update My dW interests (Log in| What's this?) Skip to help for Update My dW interests

Date: 24 Jul 2004Level: Introductory

Activity: 8867 viewsComments: 0 (View | Add comment - Sign in)

Average rating (1 votes)Rate this article

Introduction

Finally, the siege may be over. After two long years of substantial declines in the capitalmarkets and recession in the general economy, indicators are improving. While sentiment ismixed on how strong the recovery might be, the pundits are forecasting increased ITspending.

According to BusinessWeek Online, "Economy.com in West Chester, Pennsylvania forecastsa 16% increase in IT equipment and software spending, to $532 billion next year. If thatmaterializes, 2004 will top the previous peak in 2000, when Corporate America spent $468billion on tech gear and services. By contrast, a Morgan Stanley survey of 225 chiefinformation officers (CIOs) from among the nations top 1,000 companies projects amore subdued 5% hike in corporate IT budgets for 2004, versus whats expected to be aslight uptick in 2003 over 2002s decline." (see Resources).

Whether 2004 IT spending exceeds that of 2000 or just continues to steadily increase over2002, the upturn is refreshing for anyone in a technology-related position. But the newsactually gets better. During late 2003, IBM completed a study with chief executive officers(CEOs) from around the world. They said the following:

Growth is back on the CEO agenda.-- Eight in ten CEOs view growth as a key focus area.

Clients are concerned that their companies are not agile enough.-- Eight in ten CEOs rate "rapid response" as a high or very high priority.

Clients view product and service innovation as a top priority.-- Nearly two-thirds of those surveyed view product/service improvement as one ofthe greatest opportunities for revenue growth.

Clients seek company-wide transformation with a short time horizon.-- More than nine in ten CEOs believe they need to achieve their transformation goalsin less than five years; nearly half think they need to do so in less than two years.

Growth, rapid response, product and service innovation, and transformation initiatives --these priorities excite technologists. But even as the business worlds focus slowly returnsto growth, IBMs research around the globe shows that companies are opting for a highlypragmatic approach to all their investments. They have an acute awareness of the need todeliver tangible progress and quantifiable results. They also have healthy skepticism. Willinitiatives that attack new markets, or change key processes, or implement new technologiesreally work? Will they make a measurable difference? With the limited number of resourcesavailable and the plethora of possible projects, why this one? Why now?

A little over a year ago, IBM described the approaching era as "the on demand world." It saidthe company best equipped to compete in that world is an On Demand Business -- that is, an

enterprise "whose business processes -- integrated end-to-end across the company and with
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key partners, suppliers and customers -- can respond with flexibility and speed to anycustomer demand, market opportunity or external threat."

Throughout 2003, as industry analysts and competitors began to describe these samemarketplace phenomena using slightly different words, IBM was already hard at work. Side-by-side with industry-leading clients, IBM helped them navigate the issues related to winning

customer loyalty in times of ever-rising expectations. IBM showed how to increaseorganizational flexibility in the face of volatile demand shifts, streamline and integrateprocesses, and increase employee productivity by getting more out of existing investments ininformation technology.

Much work focused on defining and then delivering the infrastructure an organization needsto support its on demand initiatives. IBM calls such an infrastructure an On Demandoperating environment. This article provides an in-depth look at what shapes an On Demandoperating environment, and it answers three primary questions: How can I enable businessflexibility in my infrastructure? How do I simplify the management of that infrastructure?And how can I get started through incremental projects that take advantage of my existing ITassets?

This article has six major sections. The first section discusses whats fundamentallydifferent about the current on demand era and what IBM has learned about creating an ondemand business. The second section describes how the underlying technology infrastructureis tightly woven with new business model designs. The third section discusses entry pointsfor on demand -- specifically, how you can get started and find incremental projects to meetyour priorities and resources. The fourth section describes the characteristics of thistechnology infrastructure in terms of the capabilities of an On Demand operatingenvironment. The fifth section discusses what makes this possible -- Service-OrientedArchitecture (SOA) -- and the impact this architecture has on software development. Finally,section six answers the question, "how can I get started today?"

Back to top

Getting to on demand

On demand is not about technology for the sake of technology. Its about enabling newways of doing business. Its about helping an organization reach new levels of innovationwhile continuing to deliver the improvements in productivity necessary to improve thebottom line. Yet the underlying technology makes an on demand business fundamentallydifferent.

When you have business processes that have been integrated end-to-end across your companyand with key partners, suppliers and customers, you have the ability to respond to any

customer demand, market opportunity, or external threat. Yet, a lot of work must be done toachieve that. Todays infrastructure is complex and rigid. And because much of it wasbased on proprietary hardware and software -- delivered well before industry standards wereestablished -- its difficult to make all the pieces work together. And its even morechallenging to make them deliver the flexibility necessary to support todays dynamicbusiness environment.


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Figure 1. Emerging on demand computing model

That has to change. And that need for change is forcing the emergence of a new computingmodel. This new, on demand model blends the robust nature of the traditional IT computingmodel with the industry-standards-based computing model that enabled the Internet and theWeb. And yet it transcends both models, in a number of ways.

The Internet computing model had a different design point. It gave simple mechanisms, basedon industry standards, to link together many components, which you can use to performrelatively simple functions like browsing and searching for information and sending andreading e-mail. The Internet computing model enabled a handful of new business models. Butof even greater importance, it revolutionized the way that existing things were done --communication between companies, marketing, sales and, customer support. And with that

revolution came the recognition that computing technology is exponentially more powerfulwhen its based on industry standards. That meant the industry would need additionalstandards and mechanisms to handle more sophisticated applications.

The On Demand operating environment, as a computing model, builds on both models,leveraging industry standards to redefine how existing systems and technologies interact.This enables the creation of a highly modular environment, where you can more easily defineand manage application and infrastructure components. This allows for a more flexible andreal-time implementation of business policies than was possible with more structuredcomputing models.

Back to topOn demand insights

Three key insights can help you move from the theory of becoming an on demand business tothe reality of actually operating as an on demand business. The following paragraphs examinethe what and why, to the how of on demand.

The first major insight is that the need for flexibility and innovation is forcing organizationsto become more componentized -- that is, to break down the overall business into the pieces(or components) that make it up. This allows you to stop looking at your business throughlenses like organization, geography and product or customer segment, and to begin to look atit through the lens of discrete functions and processes (what is actually being done) instead.

Second, applications are evolving on a similar path, becoming increasingly modular. Soinstead of focusing on big monolithic applications made up of millions of lines of code,


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organizations are beginning to think about discrete modular elements of applicationfunctionality that can more easily be modified as the needs of the business change.

And the third insight has to do with the infrastructure thats required. In the on demandworld, the need to support componentized business models and modular applications requiresan operating environment that can speed the integration process, simplify the overall

complexity, and reduce the unnecessary consumption of resources.

Back to top

Tightening the linkage between technology and the business

While technology has always played an important role in enabling a business to deliver itsproducts and services, in the on demand world, the dynamics of the relationship will change.The linkage will get tighter. It will be harder to distinguish between the business and thetechnology that enables it. However, the most significant, visible change is business andtechnology evolving in lockstep. Business designs will change incrementally and rapidly, andyou must design and deploy the infrastructure to do the same.

Component-based business models

Ever since talk about the on demand era began, many people have struggled to describewhats really different between it and the eras that preceded it: Six Sigma Quality, ZeroDefects, and Business-Process Reengineering -- eras in which technology was applied toimprove an existing business model. The major difference is that in the on demand era, anorganization has the ability to take an existing process and make it better. It also has anopportunity to create a major step-function improvement -- to breakthrough. Getting better isabout applying technology to do what you've historically done, only doing it more efficiently.Breakthrough comes when new business designs are coupled with the technology that makesthem happen.

During 2003, IBM invested tremendously in developing a methodology to speed the creationof these new business designs. It started with a concept that has been around the technologyworld for a long time -- components, and particularly in this case, component-based businessmodels. While the concept has been around for a long time, IBM focused on taking thecomponent notion from generic to industry-specific, and from conceptual to highly practicaland operational. This effort included creating methodology around linking a businesscomponent (and all of its parts, including people, strategy, and operations) through to thetechnology (applications and infrastructure) that enables it. IBM started by creatingcomponent business models for six industries (six more will be completed in first quarter,2004, and the remaining six will be done in early second quarter, 2004). These models aredesigned to simplify the way a business looks at itself by identifying the unique and stand-

alone set of business building blocks (components) its made up of, enabling a moreeffective coupling between changes in business operations and the underlying technologyinfrastructure. This strengthens your ability to connect change and investments with thebusiness outcomes and the returns you anticipate.

However, the process of creating this component-based approach to fusing businesstransformation to infrastructure optimization serves as a reminder that a big gap existsbetween understanding what needs to be done and actually getting it done. A part of that gaphas to do with business processes and creating horizontally-integrated processes that are builtnot just to withstand change but to actually enable and support it.

Enabling horizontal business process organization

Many people are interested in finding innovative ways to differentiate their businesses whilecontinuing their focus on increasing productivity. Yet, most organizations need to take a


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different approach than they have in the past. Historically, organizations have focused on theautomation and optimization of single, stand-alone processes. Think for a minute about thefunctional automation that occurs around your sales organization. If your company is likemost, you spend a lot of money on sales force automation and customer relationshipmanagement software -- and thats true whether you built your own, or chose packaged

software from one of the industry leaders.But the automation process doesn't stop there. You enable your sales team to work around theclock to access its applications any time, from anywhere, from a growing number of devices.And the necessary infrastructure is astounding: servers, storage, communicationsinfrastructure, and security. And once you have it for your direct sales channel, you have toreplicate most of it for your partners.

As you know, the sales organization doesn't operate in a vacuum. Its part of anecosystem that includes marketing and a whole array of Web-based marketing and salesinitiatives. No doubt the individual disciplines within the ecosystem have undergone similaroptimization and automation initiatives.

Marketing has invested in Web-based programs to help generate leads, enable customers toaccess information, and educate themselves. And most companies don't stop there. Theyinvest in loyalty programs designed to simplify transacting business with key customers. Awhole burgeoning set of applications and corresponding infrastructure to support commerce,lead tracking, digital asset management, and personalization exists. And many benefits havebeen achieved.

Organizations that have invested enormous energy and resources to optimize the discretefunctions of sales and marketing have little to gain from focusing on either process discretely.The real gains are in the gaps between the disciplines -- that is, in the interactions betweenorganizations. Integrated processes, backed by information-rich records about every prospectand customer that both marketing and sales use, can make the joint discipline far better. The

opportunity for breakthrough will come when customers can identify themselves, telling youwhat they need and how soon they need it. It comes when your marketing infrastructure cansupport processes that proactively nurture each customer and that provide him or her with theright information at the right time -- all while recording every tactic for future analysis andoptimization.

To create that kind of integrated horizontal process, you need discrete bits of process andapplication functionality that exist within the confines of marketing, sales, and the Web. Thedesire to achieve breakthrough in your marketing and sales processes (or any other horizontalprocess, for that matter) will force you to think about your IT agenda in new ways, as well asto rethink the way you've historically approached your infrastructure.

The infrastructure required to support an on demand business

To support horizontal processes, you have to increase your focus on overall flexibility. This isthe best argument for using industry standards. Being able to quickly and seamlessly integrateprocesses that weren't built to work together from a variety of vendors is key to achievingthis. With industry standards, you don't have to recreate applications every time a piece ofhardware or software changes, nor do you have to rewrite the application to support changesin the dependent processes.

However, you need more than flexibility. You also need a simpler, more manageable ITenvironment. A year ago, IBM said that IT systems needed to be more self-managing andtake advantage of the capacity thats out there. Since then, a symphony of solutions havebeen launched that allow businesses to orchestrate and provision internal capacity in a

heterogeneous environment to do exactly this. And thats just the start.


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Operating environment: the gateway to on demand

This isn't a one-size-fits-all solution or methodology. Organizations have different prioritiesand personalities. An on demand approach reflects that. With many different entry points,where you start depends on your organizations priorities and resources. These mightinclude business design projects, technology projects, or other projects that leverage flexiblefinancing and delivery options.

In todays pragmatic environment, only a handful of organizations are prepared to tackleall of the facets of creating an on demand business. Most companies opt to start more slowly.They focus on one key process and transform it, or they simplify their operatingenvironments, increasing overall flexibility and resilience, while reducing the resources thattheir current approach requires. Experience shows that regardless of where you start, you canreduce the costs associated with the way you're approaching things today -- so you can freeyour resources to help you fund your on demand journey.

On Demand operating environment entry points

Take a closer look at how some companies are transforming their operating environmentswith specific projects that act as entry points to establishing On Demand operatingenvironments:

Schneider Logisticsis a well-known trucking firm and a major carrier for Wal-Mart and General Motors. The company had to comply with new regulatoryrequirements that permitted a maximum of eight hours on-road time per day, perdriver. Schneider now needs to track and bill for the amount of time needed to unloada vehicle at its delivery destination, as soon as the charges are accrued. An entire fleetof trucks must be monitored in real time to properly bill customers in a timelymanner.

Whirlpool is a global consumer appliance white goods manufacturer. The companysought to integrate a variety of messaging formats, including instant messaging,voicemail, and e-mail, into a unified message center so that formats could beconverted as recipient needs dictated. The objective was to incorporate the newmessaging center into an employee personal-knowledge portal.

Honda Motors of Alabama is the newest U.S. plant in the Honda production system.Having invested in production planning and reporting systems managed by the ITstaff, Honda partnered with the IBM jStart team to Web-enable employee access tothis system. Access by a variety of work groups and departments allows content to beconfigured in a self-service, on demand manner and removes it as a gating step in theprocess.

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Creating an On Demand operating environment

On Demand operating environmentThe On Demand operating environment defines a set of integration and infrastructuremanagement capabilities you can use -- in an incremental and modular fashion -- to becomean on demand business.

The On Demand operating environment is not a single product, brand, or platform. Nor is it

strictly an architecture. The On Demand operating environment defines a set of integration


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and infrastructure management capabilities you can use, in an incremental and modularfashion, to become an on demand business.

Working side-by-side with leading customers, you learn a lot about what it takes to create thekind of infrastructure that truly enables -- rather than inhibits -- an on demand business. AnOn Demand operating environment must leverage existing assets. No one is interested in

starting from scratch. Instead, you need a disciplined approach to evolving what you haveinto what you need.

The design of an On Demand operating environment must also match the design of thebusiness itself. To achieve increasing flexibility and componentization in your businessdesign, the infrastructure must evolve from silos of complex, over-provisioned, proprietaryhardware and software to a standards-based infrastructure in which capacity can be optimizedacross your entire organization.

The characteristics

What are the characteristics of an On Demand operating environment that give companies,large and small, across a variety of industries, the opportunity to become an on demand

business? Simply put, they are the capabilities that guide companies to increase businessflexibility and simplify management of the underlying technology infrastructure in a way thataligns to their business objectives.

The first focus is to increase business flexibility through capabilities designed to speedintegration initiatives. The ability to connect people, processes, and information in a way thatallows your organization to become more flexible and responsive to the dynamics of yourmarkets, customers, and competitors is critical. It becomes increasingly so as you extend yourvalue net to more tightly integrate partners, suppliers, and customers into your processes.

For example, considerAcuity Insurance, a small insurance company. This company foresawan opportunity to increase revenue and agent productivity by making it faster and easier for

its agents to access information. By responding to agents with real-time business processes,Acuity could help agents gain efficiencies and productivity, while increasing its own marketleadership and company market share. Acuity created direct company-to-companycommunication processes, connecting agents own management systems to its coreinsurance transactions by developing an adaptable, open infrastructure using industrystandards. This resulted in US$200 million increase in premium revenue over a two-yearperiod, 15% higher profitability than the national average for property-casualty insurancecompanies, and a 40% increase in average premium revenue per agency in the most recentfiscal year.

The second focus is IT simplification, the creation of an infrastructure thats easier toprovision, deploy, and manage. You do this by creating a single, consolidated, logical view of

and access to all the available resources in a network. Many organizations have becomecomfortable with the practice of over-provisioning, buying excess capacity so they canhandle the occasional spikes that almost every system experiences. Interviews and surveyswith more than 20,000 clients show that simply eliminating the practice of over-provisioningby moving to an infrastructure that accommodates dynamic resource provisioning can reducean organizations capital investments by anywhere from 15 to 35%.

Consider the U.S. Tennis Association (USTA), the non-profit governing body for tennis inthe United States, which relies on the US Open tournament to generate significant revenue.The organization wanted to both protect and monetize its intellectual property (such as scoresand images), which decline in value if not used in real time. The USTA needed to serve andsatisfy its key constituencies, including the players, umpires, and the media, with timely

information. Yet, with only two weeks per year to generate the bulk of its annual revenue, the


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USTA needed to provide a truly differentiated experience to online fans and to effectivelycommunicate match-related information to a global audience quickly and accurately.

IBM orchestrated the operation of the US Open IT infrastructure to help fans get a courtsideseat through the Internet. IBM orchestration solutions helped prioritize which IT resourcesshould be doing what, based on predefined business rules (leveraging existing resources) with

the ability to bring new resources online almost as fast as an overhand serve.What was the result for the USTA? IBM implemented a Web infrastructure to support theneeds of the USTA that was scalable to 50 times greater during the US Open than during therest of the year. It provided on demand access to server resources during the US Open event(when they're most needed), with the flexibility to pay for only what the USTA uses. IBMimplemented an orchestration solution that helps the USTA take advantage of businessopportunities and increase revenue, giving it competitive advantage. After all this, Webtraffic on usopen.org increased 18%.

The ultimate insight is that to achieve more flexibility and componentization in your businessdesign, your infrastructure must evolve from silos of complex, over-provisioned, proprietary

hardware and software to an industry-standards-based infrastructure, where capacity can beoptimized across your entire organization.

The capabilities

On Demand operating environment capabilities enable business flexibility and ITsimplification. Two entry points are integration and infrastructure management. The objectiveis to evolve into an industry-standards-based, integrated, automated, and virtualized ITenvironment.

Merriam-Webster defines a capability as "the facility or potential for an indicated use ordeployment." Each of the capabilities for an On Demand operating environment, therefore,acts as a facilitating element to enable the deployment of an underlying infrastructure -- an

infrastructure that drives business flexibility and IT simplification. At IBM, these capabilitiesare delivered by middleware, hardware, and services, integrated seamlessly for this purpose.Next, this article explores the necessary capabilities that enable an On Demand operatingenvironment.

Integration capabilities let you connect people, processes, and information in a way thatallows you and your enterprise processes to become more flexible to the dynamics of themarket, customers, and competitors around you. To maximize your ability to integrate withinand beyond your enterprise, add these six key capabilities over time:

Business modeling enables the graphical depiction and simulation of a businessprocess, including task descriptions, resources required, and decision points.

Process transformation enables existing applications and information to be reused innew ways.

Application and information integration enable multiple information sources andbusiness applications to be combined.

Access extends data and information to new classes of devices and methods ofinteraction regardless of connection type.

Collaboration allows users to interact in a personalized way with dynamicinformation, applications, processes, and people.

Business process management allows you to model, deploy, and analyze processeswith the goal of managing the end-to-end business process.

Infrastructure management capabilities extend access to and create a consolidated, logicalview of resources across a network. This dramatically simplifies the operating environment,


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increasing flexibility and delivering broad-based cost savings. Fundamental to thissimplification are the concepts of virtualization and automation. Virtualization is the abilityto separate the direct dependency of an application to a physical resource. Throughvirtualization, you get a single, consolidated view of -- and easy access to -- all availablenetwork resources in your network, regardless of location. This allows you to efficiently

access and manage those resources to reduce operations and systems management costs whilemaintaining needed capacity. It also allows you to respond dynamically to the applicationneeds of your users and to gather information across your organization quickly to gaincompetitive advantage.

Automation enables your IT infrastructure to manage many day-to-day tasks itself. With aself-managing infrastructure, you can increase efficiencies and simplify resource allocation.A fully automated IT infrastructure can sense changing conditions, like surges in demand orisolated application errors, and can spot trends that could lead to costly system downtime.The infrastructure then automatically responds by taking corrective actions that ensure yourIT resources remain aligned with your business goals.

To achieve this simplified and optimized management of your infrastructure, implement theseseven unique capabilities over time:

Availability helps ensure the health and appropriate functioning of IT environments.

Security helps ensure that information assets, confidentiality, and data integrity areprotected.

Optimization helps make the most productive utilization of your IT infrastructure.

Provisioning makes the right resources available to the right processes and people atthe right time.

Infrastructure orchestration senses, triggers, and responds according to businessgoals.

Business service management helps you visualize your IT environment in businessterms and manage service levels to business objectives.

Resource virtualization provides a single, consolidated, logical view of and easyaccess to all available resources in a network (including servers, storage anddistributed systems, and so on).

Although this article discusses the capabilities through the two entry points of integration andinfrastructure management, in reality, each are tightly linked. Security, for example,permeates IBM solutions, providing a critical, pervasive functionality across the On Demandoperating environment.


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Figure 2. The On Demand operating environment architecture

The on demand computing model (see Figure 2) applies at various levels in the IT stack. Atthe system level, the components are system objects (for example, computing capacity,storage, and files). At the application level, components are dynamically integratedapplication modules that constitute sophisticated, yet much more flexible applications. At thebusiness level, the components are business objects, defined for particular vertical industries

or more generally, as they apply horizontally across industries. And because the on demandcomputing model is based on industry standards, you can use it to define the business,application, and systems at various levels: within a department, across an entire enterprise, orthroughout an industry ecosystem. It enables true end-to-end business process integration.

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But is it real?

Over the years, there has been much discussion about taking a more componentized approachto software and infrastructure development. While most organizations have made progress, ithasn't come without challenges. What has changed to make a componentized infrastructure

viable today? First, industry standards with which to create services and have themcommunicate have evolved and been agreed on by major vendors. In conjunction with broadindustry support, business-level interoperability is now being tackled, as opposed to simpleconnectivity. Second, the infrastructure to support self-defined, loosely coupled services hasemerged. And finally, tools to incorporate existing assets are now available.

Service-Oriented Architecture

As a result of the maturation of these standards, the on demand computing model can enablea modular approach to infrastructure, including software design, development, and execution.The industry term for this approach is Service-Oriented Architecture (SOA). In an SOAenvironment, every application and resource is treated as a service. These services have

interfaces that are defined according to industry standards, enabling them to exchangestructured information and providing the flexibility to treat applications and their underlying


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infrastructure -- as well as business processes -- as components that can be mixed andmatched at will.

In a successful SOA environment: Business rationale -- not technical features -- is the key factor in determining IT

investments. Every technology choice is backed by a business objective. IT decision makers find a pragmatic balance between technical rigor and time-to-

market.

Ongoing flexibility and agility are valued more highly than one-time efficiency gains.

Investments made in a diversified portfolio of applications -- not a single packagedapplication or a technology platform -- reduce risk.

Business processes federated across business units, trusted partners, and valuedcustomers reduce costs and increase visibility into performance, while creating new,and perhaps unexpected, opportunities to capture value.

The Guardian Life Insurance Company of AmericaIn a fiercely competitive industry and in the midst of an economic downturn, The GuardianLife Insurance Company of America (Guardian), the fourth-largest mutual insurancecompany in the United States, wins business by making it easy for its business partners(independent agencies and agents) to sell its insurance policies and financial services toindividuals and customers. Although annual revenues grew in 2002 by 3.5%, the growth wasnot enough to offset costs, and the company posted a US$283 million loss.

Guardian realized that it had many silos of information managed by different business units,and this was undermining its ability to run its business profitably. Choosing to focus first onits sales channels because its agents represent a primary source of revenue, the companyfound that its business processes and systems were actually hindering its business partners.Agents simply did not have the time or resources to search multiple databases for cross-selland up-sell information, successful sales strategies, and customer information records. Andindependent agencies could not easily access comprehensive sales compensation programinformation to help with recruiting and retaining key sales staff. To drive more revenue moreefficiently, Guardian needed to integrate its business processes and the informationinfrastructure that supported them.

A cornerstone of the companys solution was a redesign of its underlying enterprisetechnology infrastructure. Guardian developed an SOA that integrates with legacy systemsand uses industry standards to ensure flexibility for future development. Using this SOA,Guardian also created two critical applications to help its agents: a Web-based unified clientview tool that shows agents all the products that individual customers have purchased fromthe company and a Web-based tool that shows agents what the future value of the businessthey are doing with Guardian will be -- a very effective tool in retaining a good sales force.

Now, many of Guardians agents do business with the company because of its agent-oriented technology, rather than in spite of it, as was common in the past. And whilebecoming more responsive to its business partners, the new architecture has allowedGuardian to drive down costs. IT expenses alone have dropped 30% over the last two and ahalf years. In the future, Guardian will continue to use this industry-standards-basedarchitecture to develop new applications and services that cut across its information silos,making it possible for its partners and employees to work more efficiently and effectively.

Impact on software development

So far this article has established the requirements of an On Demand operating environmentand discussed the need for and benefit of integrating and automating horizontal business


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processes. As you think about this, remember that these horizontal business processes areunique to each business. Integrating and automating these processes can't be done bypurchasing packaged applications. Its a custom effort for each company. This is a key toachieving strategic, competitive advantage. Organizations that can achieve this horizontalintegration distinguish themselves from companies locked into vertical, entrenched business

processes. Software development plays a critical role in bringing this to fruition by leveragingall forms of applications. That includes leveraging the value of existing legacy systems,customizing and deploying commercially-available packaged applications, and building new,custom software and applications. Only by harnessing all available software assets can youintegrate and automate your business processes.

To accomplish this, you must be prepared to buildnew applications, modernize existingapplications, extendpackaged and existing applications, integrate new, existing, andpackaged applications, and finally, deploy new, existing, and packaged applications.

This requires software development teams to embrace three software developmentimperatives:

Develop iteratively by adopting a proven, results-oriented process that deliversincreasingly improved software system iterations.

Focus on architecture by basing software design on reusable components and service-oriented models.

Manage change and assets by protecting and tracking changes to all assets involved inthe software development life cycle.

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How to get started with on demand today

Getting to on demand is an evolutionary initiative that occurs over time. Start where yourbusiness needs demand and where immediate ROI can be seen. Align IT with businessobjectives and know that, over time, the investments made in an industry-standards-based ITinfrastructure will support your evolution at the pace your business requirements demand.

While some of the capabilities that will ultimately be delivered are still in development,Schneider Logistics, Whirlpool and Honda, among others, provide proof that you can getstarted today. The products are real. The expertise is available. And if your company is likemost, opportunity is plentiful. The Appendix includes a table with specific, how-to, building-block steps that highlight where you can immediately extract value and benefit as you moveforward toward implementation of an On Demand operating environment. These steps arecategorized into two areas: creating business flexibility through integration and IT

simplification through infrastructure management. The list below helps you address theconcrete problems you might face today:

Creating business flexibility through integration

Simplify building, developing, and deploying on demand business applications.

Improve communication and collaboration within your business and beyond.

React quickly to changes in the marketplace by rapidly modifying business processes.

Instrument applications and analyze the events they generate to understand businessprocess impacts.

Create links between new and existing applications.

React in real time to the most relevant information by ensuring a seamless flow ofinformation.


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Simplifying IT through infrastructure management

Secure access to, and control of, information, resources and applications.

Ensure scalable and consistent management and control of operations to support end-to-end business systems.

Avoid system failures and take automated action to resolve problems. Protect systems from intrusions and threats by using monitor and alert systems that

allow automated self-protection of your IT environment.

Provide monitor and alert systems to allow the establishment of business service-levelagreements (SLAs) and the automated detection and remediation of violations.

Reduce the time or cost to repurpose IT resources to meet business requirements andservice levels by evolving to the dynamic assignment of resources to needs.

Provide the ability to map the IT resources used by various business processes and tomonitor and control all tiers of an end-to-end solution.

Optimize utilization and pool resources across a heterogeneous environment tomaximize ROI.

Consolidate and simplify infrastructure to improve performance, maintainability,availability, recoverability, and scalability, while positioning for future growth andimmediate reduction in fixed costs.

Provision system resources as business demands dictate. Automatically provisionexisting resources to compensate for rapid changes in demand.

The goal is to provide you with an evolutionary path toward shaping your On Demandoperating environment. These services and products can help you deliver business valuetoday, while the capabilities evolve and strengthen over the long term.

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Are you ready?

Conversations about new business designs, component-based business modeling, andhorizontal business processes are occurring now, and many more will occur over the nextyear. New, more flexible business designs, backed by horizontal business processes, are thekey to being competitive in the on demand world. But another thing drives theseconversations -- the recognition that these changes can be made incrementally.

In todays pragmatic environment, few organizations are prepared to make a wholesalemove to operating as an on demand business. Most companies opt to take a more incremental

approach, choosing from multiple possible entry points. A company may choose to focus onone key process and transform it. Another company may decide to simplify its operatingenvironment -- increasing overall flexibility and resilience, while reducing the resources itscurrent approach requires. Regardless of where you start, its critical that you help yourorganization recognize that the transformation won't take place overnight. The value will beachieved incrementally.

As your organization makes the journey, technology will be driven deeper and deeper into thecore of the business. The infrastructure, applications, and business will share a commondesign point: componentization. Adoption of the on demand computing model will enableuse of rich modular components, easily defined and deployed to enable dynamic definition ofapplications. Modularity -- leading to flexibility and simplification -- drives breakthroughs.


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Integration and infrastructure management are the On Demand operating environmentcapabilities that deliver business flexibility and IT simplification. These capabilities manifestthemselves in real products and technologies today. All of this lets you get started on the ondemand journey through incremental steps.

The potential benefits of the on demand model are astounding, and the path to get you there

doesn't need to be overwhelming or risky. Its a matter of starting and continuing withincremental projects based on the needs of your business, reinvesting cost savings fromincreased business and IT efficiencies, and leveraging existing assets and investments.

Given the volatile economic climate, the eventual recovery of the IT market inevitablyrequires a focus on investments that are proven to save or make money in the short term. Butequally important will be investments that maximize flexibility. And thats the advantageof the on demand model. It makes technology an enabler of innovation and growth. It enablesyou to usher in a new generation of integrated business processes. It provides anunprecedented level of flexibility so that you can change when you're ready and grow theway you want to, build and support the kind of applications you need, and access capacityand storage the way your business needs dictate. This flexibility lets you create the OnDemand operating environment necessary to enable your companys transition tobecoming an on demand business.

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Appendix

NOTE: Charts contained in this appendix represent only a small sampling of IBM's productportfolio.

Table 1. Creating business flexibility through integration

Business how-to Capabilities requiredHow to get started today using

IBM products

Simplify designing,developing, testing, anddeploying on demandbusiness applications

Business modeling

Business processmanagement

IBM WebSphereStudio

IBM Rational Suite

IBM WebSphere BusinessIntegration

Modeler, Message Brokerand Technology Adapters

IBM WebSphere ProcessModeler and IBMWebSphere MQWorkflow

IBM WebSphereApplication Server

Improve communicationand collaboration betweencustomers, partners, andsuppliers -- within the

enterprise and beyond

Collaboration

Access

IBM WebSphere Portal

IBM Lotus Workplace

IBM WebSphere Studio,

Integration Edition IBM WebSphere Studio


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Business IntegrationConnect and Adapters

IBM DB2InformationIntegrator

React quickly to changes inthe marketplace by rapidlyand easily modifyingbusiness processes


Business modeling

IBM Websphere BusinessIntegration Modeler

IBM WebSphere Studio

IBM RationalXDE

IBM WebSphere MQWorkflow

IBM WebSphereInterchange Server

IBM WebSphereApplication Server

IBM DB2 InformationIntegrator

Instrument applications andanalyze the events theygenerate to understandbusiness process impacts


IBM WebSphere BusinessIntegration Server,Monitor, Collaborationsand Message Broker

IBM WebSphere MQWorkflow

IBM WebSphereInterChange Server

Provide seamlessconnectivity between newand existing applications,data, and processes

Application andinformationintegration

Processtransformation

IBM Websphere BusinessIntegration

e-business Adapters,Integration Connections,Collaborations, andAdapter DevelopmentTools


IBM WebSphere MQ

IBM WebSphere Portal

IBM LotusWorkplace

React in real time to themost relevant informationby ensuring a seamless flowof information


Application and

informationintegration


IBM WebSphere MQ

Workflow


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Business modeling IBM WebSphere Portal

IBM Lotus Workplace

Table 2. Simplifying IT through infrastructure management

Business how-to Capabilities requiredHow to get started today

using IBM products

Secure access to and control ofinformation, resources, andapplications

Security

Availability

IBM TivoliIdentity Manager

IBM Tivoli AccessManager

IBM Tivoli DirectoryServer and Integrator

IBM Tivoli Storage

Manager Platform security

(IBM RACF,Kerberos)

Scalable and consistentmanagement and control ofoperations to support end-to-endbusiness systems

Security

Provisioning

Infrastructureorchestration

IBM TivoliEnterpriseConsole

IBM Tivoli RiskManager

IBM TivoliMonitoring

IBM Tivoli StorageManagement

IBM IntegratedSolutions Console

Avoid system failures and takeautomated action to resolveproblems

Security

Provisioning

Availability

IBM TivoliMonitoring

IBM Tivoli

AutonomicMonitoring Engine

IBM Tivoli SystemAutomation forLinux andOS/390

IBM TivoliIntelligentThinkDynamicOrchestrator

Protect systems from intrusions Security IBM Tivoli Intrusion


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and threats by using monitor andalert systems to enable automatedself-protection of IT environment

Provisioning


Manager

Web IntrusionDetection System

Network Intrusion

Detection System IBM DB2

UniversalDatabase

IBM Tivoli RiskManager

Platform IntrusionDetection Services

Provide monitor and alert systems

that allow the establishment ofbusiness SLAs and automateddetection and remediation ofviolations

Provisioning

Optimization


IBM Tivoli

Monitoring forTransactionPerformance

IBM Tivoli ServiceLevel Advisor

IBM Tivoli BusinessSystems Manager

IBM TivoliEnterprise Console

IBM Tivoli DataExchange


Reduce the time/cost to repurposeIT resources to meet businessrequirements and service levels byevolving to the dynamicassignment of resources to needs

Provisioning


IBM TivoliProvisioningManager

IBM Tivoli

IntelligentThinkDynamicOrchestrator

IBM TivoliConfigurationManager

Table 3. Simplifying IT through infrastructure management (continued)

Business how-to Capabilities requiredHow to get started today

using IBM products

Provide the ability to map the ITresources used by various business

Business service IBM Tivoli


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processes and to monitor andcontrol all tiers of an end-to-endsolution

management ConfigurationManager

IBM Tivoli LicenseManager

IBM TivoliMonitoring forTransactionPerformance

Consolidate and simplifyinfrastructure to improveperformance maintainability,availability, recoverability, andscalability while positioning forfuture growth and immediate

reduction in fixed costs

Resourcesvirtualization

Optimization

Availability

IBMTotalSotrageFAStT

IBM TotalStorageEnterprise StorageServer

IBM TotalStorageVirtual Tape Server

IBM TotalStorageNAS 100 and 200

IBM Ultrium LinearTape Open

IBM eServerzSeries,iSeries,

pSeries,xSeries

IBM eServer zSeries-- zVM with Linux

IBM eServer xSerieswith VMWare

Optimize utilization and poolresources across a heterogeneousenvironment to maximize ROI

Optimization

Provisioning

Infrastructure

orchestration Resources

virtualization

IBM TotalStorageVirtualization

IBM TotalStorage

SAN VolumeController

zSeries withIntelligent ResourceDirector andWorkload Manager(WLM) acrossLPARs

IBM Grid Toolbox

IBM Grid Offering

for RiskManagement


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Provision system resources asbusiness demands dictate.Automatically provision existingresources to compensate for rapidchanges in demand


Provisioning

Optimization


IBM Director IBM WebSphere

Application ServerNetworkDeployment

IBM DB2 UniversalDatabase WorkgroupServer

IBM eServerBladeCenter

IBM eServer xSeries IBM FAStT900

Storage Server

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Downloads

Description Name Size Download methodmediation project interchange code i-odoebp13code1.zip6 KB HTTP | Download Director

BPEL project interchange code i-odoebp13code2.zip21 KBHTTP | Download DirectorInformation about download methods

Resources

The On Demand operating environment: Architectural overview (developerWorks,2004): Read the preceding developerWorks article to get more details about the OnDemand operating environment.

IBM and On Demand Business : Discover how IBM can help your company becomean On Demand Business.

"Is Tech Spending Ready to Rise Again?," in which Eric Wahlgren explains analysts'predictions that corporations will make big technology purchases in 2004(BusinessWeek Online, December 23, 2003).

Attend no-charge IBM technical briefings : Find out more about developerWorks techbriefings.

About the authors

Fredrik Carlegren is a member of the IBM on Demand Technical Marketing team.

Dr. Angel Luis Diaz is the director of the IBM On Demand Operating EnvironmentTechnology Strategy and Marketing department. Dr. Diaz received his Ph.D. in computerscience from Rensselaer Polytechnic Institute. Before joining the IBM Software Group in
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2003, Dr. Diaz was a member and senior manager of the IBM research staff, where he ledadvanced technology projects related to XML and Web services. You can reach him [email protected].

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developerWorks: Sign in

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The first time you sign into developerWorks, a profile is created for you. This profileincludes the first name, last name, and display name you identified when you registered withdeveloperWorks. Select information in your developerWorks profile is displayed to thepublic, but you may edit the information at any time. Your first name, last name (unlessyou choose to hide them), and display name will accompany the content that you post.


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Help: Update or add to My dW interests

What's this?This little timesaver lets you update your My developerWorks profile with just one click! Thegeneral subject of this content (AIX and UNIX, Information Management, Lotus, Rational,Tivoli, WebSphere, Java, Linux, Open source, SOA and Web services, Web development, orXML) will be added to the interests section of your profile, if it's not there already. You onlyneed to be logged in to My developerWorks.

And what's the point of adding your interests to your profile? That's how you find other userswith the same interests as yours, and see what they're reading and contributing to thecommunity. Your interests also help us recommend relevant developerWorks content to you.

View your My developerWorks profile

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Help: Remove from My dW interests
https://www.ibm.com/developerworks/mydeveloperworks/profiles/home.do?lang=enhttps://www.ibm.com/developerworks/mydeveloperworks/profiles/home.do?lang=en


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What's this?Removing this interest does not alter your profile, but rather removes this piece of contentfrom a list of all content for which you've indicated interest. In a future enhancement to MydeveloperWorks, you'll be able to see a record of that content.

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https://www.ibm.com/developerworks/mydeveloperworks/profiles/home.do?lang=enhttps://www.ibm.com/developerworks/mydeveloperworks/profiles/home.do?lang=en

operaTING ENVIR.

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