Web Services Require Streamlining, Governance

By Maria Trombly | Securities Industry News | April 26, 2006

For the last few years, securities firms have been hearing the siren song of Web services: the promise of a world where the lingua franca of extensible markup language (XML) and ready-made computing frameworks like IBM Corp.'s WebSphere and Microsoft Corp.'s .Net overcome old problems of system incompatibility and enable pieces of software code to be reused and deployed efficiently across the enterprise.

To be sure, companies on Wall Street and elsewhere in the corporate world have realized the dream, at least in part, by decoupling applications from dedicated pieces of equipment and converting the software into a service that can be accessed on the network as needed. Merrill Lynch & Co., Charles Schwab & Co., Lehman Brothers, Goldman Sachs Group and many others have used service-oriented architectures (SOAs) to get more mileage out of legacy applications, to bring together information from disparate sources and to create common standards and procedures that cut across different business units.

"Normally, mentioning a legacy system migration creates looks of horror in the executive conference room--the dollars and operational risk can be enormous," says Adam Honore, senior analyst at Boston-based research firm Aite Group and author of a recent report on SOA. "However, leveraging a service-oriented architecture with .Net Web services, which will be the choice for many, creates a natural path over time."

But as Web services and SOA mature into sizable components of firms' IT infrastructures, new challenges of management and coordination come to the fore. Because Web services cut across business lines, sprawling Wall Street institutions have to reexamine such questions as who owns an application, or service; who is responsible for ongoing development and maintenance; and how is it paid for? Without addressing and reorganizing around these issues, a firm risks getting tangled in its own bureaucracy.

"It creates an environment of 'not invented here' and mistrust," says Carl Ververs, SOA strategist with Chicago-based consulting firm ThoughtWorks, which has helped half a dozen brokerage firms in the past year to set up SOAs. The answer is governance, and virtually all institutions and vendors active in the SOA field have been working on governance structures and solutions. A case in point is SOA Software, the Santa Monica, Calif. company that late last year acquired an SOA system developed by Merrill Lynch and put it on the market as Service Oriented Legacy Architecture. Known as Sola, it is one component of a comprehensive SOA offering that embeds service management and governance in products called Service Manager and Registry.

The best approach to governance, says Ververs, combines top-down guidance and common standards with a practical, bottom-line-driven focus on specific projects. "What we promote is to try to pick some strategic pieces of methodology that would benefit the most from going to Web services, such as asset information or customer information, which is typically stored at various points in the enterprise, and render it as a Web service," he explains. "This shows to the business that something with added value has been delivered--you can get information, uniformly, from a variety of possibly contradictory sources. And to that, business responds very well."

Additional coverage of Web services governance will appear in the May 1 issue of Securities Industry News.