Archives || Search || About Us || Advertise || Feedback || Subscribe-
-
www.networkmagazineindia.com
Issue of February 2007
-

Untitled Document


  -  
 
 Home > Vendor Voice
 Print Friendly Page ||  Email this story

Service Oriented Architecture: the next generation strategy

The financial community must find ways to react quickly to market change, create intra- and inter-company business models and processes, and possess real-time information to make decisions. The answer is Service-Oriented Architecture, an IT strategy that organises discrete functions contained in applications into interoperable, standards-based services that can be combined and reused.


Shailender
Kumar

Agility is the watchword for the financial services industry. But how can an organisation with some many overlapping legacy systems re-new itself as a fast, flexible and service-centric organisation?

Financial Services covers a broad spectrum of businesses, products and services, yet the challenges across each area remain consistent. Whether it’s a retail bank, a securities firm selling prime brokerage, trading, and custody, or a financial advisor advising on wealth management—each one is challenged with tackling similar issues: organic growth, operational cost reduction, and risk and regulatory compliance.

Take retail banking, for example. Outstanding service across every channel is their battle cry. Large corporations or individual retail customers expect a seamless, integrated customer experience. But this requires a strong infrastructure foundation to connect information and users across the enterprise, manage business processes, customise the user experience, and meet new requirements.

Competition for assets and fee income is driving securities firms to enhance their institutional service offerings. Sell-side firms are using integrated research, risk management and trade execution as differentiators to win prime brokerage and other business from hedge funds and other buy-side clients

The same applies to the institutional trade management community. Here, the Directive on Markets in Financial Instruments (MiFID), which is aimed at harmonizing and achieving higher transparency in capital markets throughout the world, is putting a huge pressure for change to the industry. The MiFID impact won’t stop when it goes live on the 1st November 2007 either. In fact, it represents the first chapter of a long term transformation program. The Indian capital markets are set to change radically during the course of the next few years and firms will need to adjust their strategies continually to remain competitive. Investment firms that develop a joined- up response to the directive— one which meets the compliance requirements and creates opportunities to continuously improve business process—will gain advantage.

MiFID is the latest driver adding up in a world that is already struggling with change and innovation. Competition for assets and fee income is driving securities firms to enhance their institutional service offerings. Sell-side firms are using integrated research, risk management and trade execution as differentiators to win prime brokerage and other business from hedge funds and other buy-side clients. Global banks are incorporating treasury and custody services into their securities offerings for improved customer service and cross sell opportunities. And buy-side firms are streamlining internal operations and improving channel access to boost efficiency and increase share.

Risk is also right up there on every boardroom agenda. SOX, Basel II and a more competitive business climate have put pressure on global financial institutions to increase visibility into risk. As a result, firms are improving monitoring, enforcing employee compliance with policies and procedures, and assessing their operations to identify potential problem areas. Regulatory compliance requires a strong infrastructure foundation to connect compliance point solutions with information and users across the enterprise. All too often an institution buys a compliance package and ‘checks the box’ for compliance only to find serious gaps in their ability to identify and correct potential problems, because the solution is not integrated with enterprise data sources, systems and workflow processes.

Distil all of this down, and we reach some common denominators. The financial community—whichever sphere it represents—must find ways to react more quickly to dynamic market change, create intra- and inter-company business models and processes, and be in possession of real-time information to make decisions. In short, these organisations must transform their traditionally separate and fragmented silos of frozen enterprise assets into liquid enterprise assets, plugging gaps between people, processes, applications and systems. By bridging the gap between IT and the business and effectively aligning technology with business goals, they will possess the customer-responsiveness, efficiency, and agility needed to tackle the fundamental market challenges.

Liquid Computing Environment

So how can banks, the capital markets, asset management companies, and mortgage or credit providers unlock their assets and create this liquid computing environment? The answer is Service-Oriented Architecture, or SOA. This is an IT strategy that organises the discrete functions contained in applications into interoperable, standards-based services that can be combined and reused quickly to meet business needs. SOA is a higher level of application development that enables IT to focus on business processes, rather than the underlying IT infrastructure, to achieve competitive advantage. It is invaluable to financial service organisations as they struggle to minimise redundant infrastructure and create a common business interface across customer and employee systems. In simple terms, SOA transforms financial services organisations into liquid, service-driven enterprises.

This isn’t hyperbole either: SOA is a reality that is happening right now. Financial services organisations around the world see SOA as a top priority over the next 12 months. In a recent IDG survey, the number of respondents who said their company considers SOA a critical or high priority for the next 12 months increased to 52 percent, up 10 percent from a similar study conducted by IDG Research in May 2005. In addition, 79 percent of respondents said SOA would be a critical or high priority in the next five years, an 18 percent increase from the survey that was conducted nine months ago.

Achieving a Service-Driven Enterprise

So where do organisations start on their road to SOA? Achieving a service-driven enterprise requires more than just deploying products. Organisations will want to engage an experienced SOA provider with services that can help both business and IT stakeholders. They need to pick a starting point, plan a long term strategic roadmap, and consistently execute on a project-by-project basis. Most importantly, they need to consider approaching SOA via a proven practice methodology. This methodology would include several domains: an aligned business and IT strategy, allowing solutions to be implemented, in a coherent, repeatable way; an architectural framework that allows the assembly of components and services for the rapid and dynamic delivery of solutions; and the measurement of costs. The methodology would also include the identification of applications that will be incorporated into the SOA architecture; the identification of the building blocks—code, services, applications and components—that can be used and reused in a SOA implementation. Roles and responsibilities also need to be identified for new service-oriented IT organisations.

— By Shailender Kumar, Managing Director, BEA Systems

 
     
- <Back to Top>-  
Untitled Document
 
Indian Express - Business Publications Division

Copyright 2001: Indian Express Newspapers (Mumbai) Limited (Mumbai, India). All rights reserved throughout the world. This entire site is compiled in Mumbai by the Business Publications Division (BPD) of the Indian Express Newspapers (Mumbai) Limited. Site managed by BPD.