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SOA implementation propels business process transformation

When business process automation was insufficient and BPM products proved too narrow, a CIO turned to SOA to streamline business processes and boost productivity by 30%.

Catalina Marketing Corp. is in the second of a three-year business process management (BPM) project that aims to boost productivity and speed to market by 30%. On the back end? A service-oriented architecture (SOA) implementation.

"There are companies that utilize service-oriented architecture as a standard to interface one system with another," said Catalina CIO Eric Williams. "Then there are people like us who are doing a business process management implementation and build a solution using SOA.

"We did both at the same time," explained Williams, a 16-year veteran at the St. Petersburg, Fla.-based marketing business. By doing both, IT showed just how much it can contribute to business process. "People all over the company know it as business process transformation -- BPT!"

No one would call Catalina technology-backward, even before BPT. Catalina makes the coupons shoppers get at the supermarket checkout lane. With about $500 million in revenue and 1,000 employees, the company owes a lot of its success to its unique computer systems built by the 250-strong internal IT team overseen by Williams.

The company has built one of the largest consumer behavior databases in the world. It draws on that store of information (600 billion rows of data) to customize clients' coupons in real time, down to whether to slap a picture of a big or small canine, for example, on an ad for dog biscuits. The marketing firm also does the customized instructions stapled to pharmacy prescription bags.

The behavior-based marketing -- 20 million coupons a day -- is delivered via a proprietary network installed in more than 45,000 retail stores and rendered on state-of-the art color printers that Catalina co-developed with Epson Corp.

Yet despite all this technology, Catalina's business processes badly lagged the times; indeed, they had not changed much since the company's formation in 1983. Think The Dick Van Dyke Show or Mad Men, Williams said, then picture a Catalina team flipping through whiteboard mockups while honchos from the likes of Procter & Gamble and Frito-Lay sit there and pass judgment.

"These people come in and say, 'I like idea No. 2 and No. 4, but can you change the font, the color and the pricing, and oh yes, we want the dog to look left not right,' " Williams said.

With all the back and forth, getting a little coupon out took an average nine weeks. Not good, in the competitive, need-it-now consumer product market, but also not a process that can be simply automated.

When the business kept pushing IT to build faster solutions to the problems, Williams and his head of research and development, Jeff Mount, argued for a business process overhaul, rather than simple business process automation (BPA).

"We kept saying to them, 'Guys, this is not a technology process but a business challenge. We cannot continue to automate us into the next millennium,'" Williams recounted. "We need to change the way the company thinks and build the online tools to change the way we process services."

To prove their case, Williams and Mount mapped out the process for one simple segment for business leaders, documenting 227 steps involving 35 Excel/Word forms and 13 different systems. "Their jaws hit the ground," he recalled.

Further analysis showed that 50% of Catalina programs required rework, 40% of sales time was spent on "non-value added" activities, 33% of operations time was unproductive, and the company had poor visibility into where programs were in the process.

Deciding on a SOA implementation

When Williams researched the BPM products, however, the group became convinced that most functioned "almost as standalone solutions."

"As we did due diligence, we uncovered that people used a BPM platform for building a business-to-business customer order-entry site or a shopping-cart automation project. It was a point solution," he said.

Catalina's process is built on legacy applications. The company needed a way to deconstruct the applications and make their capabilities more accessible to both internal users and clients -- in other words, interactive. Mount turned to a SOA framework and the company's IT staff to do the work.

"We had been utilizing the concepts of object and service calls for about five years," Williams said.

Most companies that have been building software and Web services are utilizing SOA principles. In using service-oriented architecture to re-engineer an entire business, Catalina built a more standard set of structures and implemented SOA governance. The company now has a person responsible for the SOA library. Any time a Catalina team needs a new service, it calls on the SOA architect, "who either says, yep, we've got a widget for that," and adds the team to an existing call. Or IT will develop a product that can be added to the library for anybody else to use.

A SOA implementation and legacy apps

Developing that library may sound simple, but "there are huge bumps," Williams said. The first one is that "there is no such thing" as a SOA-compliant product.

"Everybody thinks this stuff is a set of standards everybody adheres to, like SQL," Williams said. "SQL is a wonderful standard; SOA is not. It's a set of guidelines and services, and there are people that allow some of the standards established, but many of them don't."

Catalina's legacy applications (all but the financial system are homegrown) proved a blessing and curse. "The downside is, we had to write all our SOA pieces. The good side is, I didn't have to worry about SAP having one format and Oracle having another and so on down the line." In addition, while Williams and his group tried to stick closely to the SOA standards, what they learned was that it was easier to build the service layers to meet their business in some cases, because the standards are still so fluid.

Getting the players in place

Another key move was getting people in the right places. Mount moved over to operations for the business process transformation project, so IT leadership had a foot in both camps.

"We wanted to make sure that operations and IT were joined at the hip, and what better way to do that but to send my spy over the business?" Williams said. "Jeff and I and a few other people worked as a team to make sure this wasn't just an IT or just a business project but a combined project."

The upshot is no more Dick Van Dyke reruns. The whiteboards, for example, are now interactive, dynamically tied to Catalina systems. Any Catalina marketing team with an Internet connection can present mockups to customers, capture requests, send ideas back to a graphic artist if necessary, and execute a marketing program in 24 hours.

"The big difference was changing that whole process so that all of that information is captured in a logical and progressive process as it goes through," Williams said. "That was a tremendous amount of technology change, but I will argue it was twice as much business change that had to get done."

Let us know what you think about the story; email Linda Tucci, Senior News Writer.

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