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Plug-and-Play

Web services and service-oriented architectures lead to shorter development cycles for bank IT departments.

It's the Cycle Time, Stupid

Bankers also notice the benefits of working on an SOA. The architecture allows an organization to complete a greater number of IT projects at a higher level of quality and at a faster speed than had been possible before. "In a point-to-point integration approach, you'll typically measure your cycle time in months," Banknorth's Petrey says. "Once you have the platform implemented and you're ready to roll out Web services, you'll typically measure your cycle time in weeks."

After conducting a vendor review and proof-of-concept testing for SOA middleware software, Banknorth chose webMethods' (Fairfax, Va.) solution over competing products from IBM and BEA Software (San Jose, Calif.). Banknorth also selected the J2EE protocol for Web services over the .NET standard, which Petrey contends works best in a Microsoft-centric environment.

The shorter cycle time has important implications for the structure of the IT department, in that it tips the scale toward internal development rather than outsourcing, according to Petrey. Although SOA-enabled applications would be easier for an offshore programmer to work with, the beneficiaries of that shorter learning curve will likely reside instead within the bank. "With outsourced projects, you have a high fixed cost of communications with your outsourcer," he explains. "You don't necessarily need to climb that wall with short-duration projects."

Compared to the "manufacturing"-based model of IT development, in which systems are viewed like automobiles or airplanes, "there's little programming involved" when developing on an SOA, Petrey notes. "It's more business analysis; it's more thinking about, 'How do I want the process to work?' and 'What are the steps in the process?'"

That's a different job description than that of the typical coder, as it requires people to have a solid understanding of the business of banking. Now, the bank's IT staff will be working through a "laundry list" of areas needing improvement put together by a Banknorth taskforce, Petrey says.

At the top of the list are initiatives to optimize customer service by making data available across multiple channels, both for employees and for customers. "Our whole culture is local decision-making and high-quality customer service - that's how we differentiate ourselves in our marketplace," Petrey says. "But everybody else is trying to ratchet up the bar, so we have to continue to improve the way we do things."

For Banknorth, innovation doesn't happen at the center, but rather at the edges. "The core applications over the last 10 to 15 years have been surrounded by hundreds of different specialized applications, from international banking to wire transfer to account analysis to profitability analysis," Petrey describes. The core applications have "really been relegated to being these engines in the back room and being surrounded by these front-end applications."

At the edges, the specialized applications are often prickly creatures with custom code and hard-coded links to specific databases. These unique features make the applications hard to replace, while the hard-coded links make it difficult to consolidate databases onto a single platform. Even replacing the whole mess with an extensive application suite may not solve the problem for a big bank. "That works great for smaller organizations, but you won't find banks [worth] over $20 billion or so that can operate that way," asserts Petrey, who used to work for Fidelity National. "There are hundreds of applications that those companies don't have."

That's not for a lack of solutions in the marketplace. The recent wave of consolidation in application-suite vendors has led to a handful of prominent players offering an ever-broadening portfolio of software services for banks. Furthermore, the larger technology companies, including IBM, Sun, HP and Microsoft, have all developed blueprints for banks in which their respective architectures form the foundation for a comprehensive IT environment. On top of any of these architectures, a bank can deploy various components as needed, using pre-tested and approved software partners.

As a result, banks that are fed up with their integration hassles can turn to a suite provider or to a technology integrator that has already figured out how to make the various components work together in harmony. But behind the scenes, the vendors' suites are sometimes as heterogeneous as the banks they serve. In turn, the technology providers themselves have had to turn to Web services and SOAs in order to get their own internal suites integration-ready. "This is where all of the vendors are going," Petrey says. "It's a question as to what degree have they begun to implement it."

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