Friday, March 23, 2007

Assemble-to-order: How using it can improve agility and operational alignment

In manufacturing, there are several categories of production. A manufacture can be a "build-to-order", "engineer-to-order" or "assemble-to-order" shop. Engineer and build-to-order means they make their products from scratch or raw materials. This is the most flexible, but requires a longer lead time to make the final product and therefore is less agile. Assemble-to-order means that themanufacture take parts called assemblies, put them together in different interesting ways to create the mered of potential final products and thereby increasing agility. An example of this would be Dell Computer. When they take your order, they have lists of options for each area or functionality. These areas would include disk drive, motherboard, ram, operating system, monitor, etc. This ability allows Dell's customer to mix and match their system based on their needs.
Service Oriented Architecture gives IT shops the same advantage to their customers. By design, SOA helps engender the "assemble-to-order" mentality that is needed in order to become agile. In these terms, an SOA service is functionality. It abstracts or hides the complexity of "how to do something." So, this service is the equivalent to the assembly part in the manufacturing process.
IT shops have to decide on how to get these assemblies or functionality and what are the assemblies they need. The ability to make these decisions separates the successful implementers of SOA from the frustrated. Answering the how question better allows more agility. Answering the what question better allows more organizational alignment. Let's focus in on both.
The how decision affects agility because of resource allocation issues. With unlimited budget, talent and time, we would build everything from scratch because it specifically addresses our issues. Since this isn't the condition we live in, we have to decide what we build based on things that will make a difference for us in the marketplace and things that we have thecompetency to build. We need to allow others (3rd Parties) to build things that don't make difference for us or that we don't have the competency to build. A rule of thumb is from Anne Lapkin of Gartner , "Build for competitive advantage; buy or reuse for competitive parity." The beauty of this principle is that not only does it limit what you build, but also indicates who you should hire.
As we increase our understanding of the functionality needed to enable business processes, the more IT can serve the organization as a whole. Business are in essence a collection of processes, ideas and effort. Processes are broken into steps. Each of these steps is a function. An action to be taken. To help define the set of functional steps, an enterprise should develop a vocabulary. (There will be further blogs about vocabulary)
In the beginning, it may seem to have a lot of overlap and confusion as to what is a service. How granular to make the service. The rule is to make it large enough so that a typical person who deals with that process can understand what is happening but no more than that. This is what I am referring to as the Middle Ground between the Business and Information Technology. This is the chasm where chaos rules in today's business and IT integration. Semantics, language, comprehension of processes from differentvantage points all lead to this ineffective integration.
It is this chasm which causes a lot of the confusion. But it is also the place of the richest gains in productivity can be gained. I am not saying that to tackle all of the middle ground issue at once, but once familiar with the tools and how to use them is achieved, find an important but not mission critical process that lives in this middle ground to work on first. Use enterprise architecture vocabulary to name and describe the steps for the process. Then build, buy or reuse the services named according to the Build-Buy principle.
An important note to remember is that there may be more granular services that your higher level services use. The services in the middle ground are the ones that need to be understandable to the typical business person using that process.

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