Change and Innovation in Service Oriented Enterprises

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Principal and Chief Scientist, Khosh Consulting
Dr. Setrag Khoshafian has been a senior executive in the digital industry, where he has innovated, architected, and led the development of several digital transformation products, services, and solutions. Currently, he is the Principal and Chief Scientist of Khosh Consulting. Dr. Khoshafian is a pioneer and recognized expert in Intelligent Databases and Intelligent Business Process Management. His expertise spans Process Automation, IoT/IIoT, Blockchain, Low Code/No Code, AI, Design Thinking, and Competency Centers. He is a frequent speaker in international conferences. His TEDx talk covers the importance of Culture over Technology. Dr. Khoshafian is the author of more than 10 books - including How To Alleviate Digital Transformation Debt post-COVID-19 and the seminal Service Oriented Enterprises. He has also authored hundreds of business and academic articles in recognized journals.

We are at an exciting crossroad bringing technology and business together, as never before. Global collaboration and emerging corporate cultures are creating a new type of innovative enterprise: one that is based on services. Service orientation is about culture, a new service-focused approach of doing business as the modus operandi. Service orientation is also about technology, a standard and effective way of connecting businesses. Enterprises can be empowered to live up to the potential of becoming dynamic, agile, and real-time.

Service orientation is emerging from the amalgamation of a number of key business, technology, and cultural developments. Three essential trends in particular are coming together to create a new revolutionary breed of enterprises, the Service Oriented Enterprise. The three trends are the advances in the standards based service oriented infrastructures; the emergence of business process management; and the continuous performance management of the enterprise.

There is no confusion when it comes to SOA and BPM in Service Oriented Enterprises: the Enterprise Performance Management layers monitor the key performance indicators and analyze the performance of the various departments, applications, or disciplines; the IT infrastructure provides an enterprise service bus for secure and reliable service infrastructure; but the core layer is the Business Process Management Suite (BPMS) that automates the business policies and processes.

BPM suites always include the active participation and interaction of humans. Work can be routed to people based on their roles (e.g., administrators) and skills (e.g., knowledge of Windows networking). When the participants are employees, they will be organized in various organizational units and groups. Today’s BPMSs should be able to handle various models of work assignments, including assignments to work baskets (or queues), and work lists based on skills, roles, or workload.

The BPM suite includes the active participation of enterprise systems. These systems could be databases, ERP applications, legacy applications, document management systems or any enterprise application required to complete the work, together with the process needed to access or update these applications. System participation was the forte of earlier EAI products. The participation of these internal systems, updating them transactionally, and providing an overall flow-based integration, continues to be an important requirement in many BPM solutions. In addition to human and back-end system applications, BPM includes trading partners as participants. Here the process is no longer an internal one; it involves extended trading partners in streamlined flows.

Modern day BPM suites cohesively integrate business rules. These rules can include decision-making criteria, evaluation of conformance, risk assessments, expressions, time constraints, task re-assignment decisions, or decisions on quality. These business rules need to be captured and executed in the context of process flows. The two are inseparable and actually empower on one another: rules influence the flow control, and the flow map determines which rules are involved in the process. Behind every decision, service level, task assignment, integration, user interaction you can have rules.

BPM suites includes business process analysis and activity monitoring. This deals primarily with the “B” – business – and “M” – management – of BPM suites. Businesses are defined through key performance indicators, goals, objectives, policies, processes, practices and priorities. The analysis component allows you to model, simulate, and analyze the performance of you processes. The analysis of historic data is key in identifying potential bottlenecks in your processes or the participants (human, trading partner, or back-end applications) of the process activities. BPM also provides real-time monitoring and measurement, allowing managers or monitoring agents to be retroactive in taking actions to fix processes on the fly.


The Service Oriented Enterprise needs to respond to constant pressures to innovate for growth. The SOE also needs to enact productivity improvements to control costs. As if the pressures for growth and productive were not enough, increasingly SOEs are facing complex regulatory compliance requirements.

The very nature of change in the 21st century implies innovation needs to be introduced quickly in all domains: finance, customer, product, service, partner, and human resources. This culture of innovation needs a solid connectivity and plumbing infrastructure. Furthermore it needs streamlined and digitized processes and business rules. And it also needs continuous monitoring and management of the enterprise as a whole, linking performance measures to executing processes on top of the service architecture.

Innovation is always on the top 5 list of priorities and goals for most companies. In order to sustain their competitive advantage, companies need to go beyond customer retention and need to quickly create new markets through new innovative products. An organization needs to liberate its knowledge worker so that the creativity can flow in all the departments – especially its product engineering departments.

This is achieved through automation (at the BPMS layer) with tremendous advantages in managing and improving the productivity of business owners, developers and the end-user. Straight-through processing of work frees up the end-user to focus her/his energy on innovative products and services. BPMS also helps organization innovate in their production and service processes. Organizations need to be able to introduce new products at an increasingly accelerated rate. This innovation can be achieved when the entire lifecycle of business process management is automated and strategies are linked to digitized process and business rules.

What was difficult and time consuming in siloed and ad-hoc practices can now be realized through the core BPMS layer. The BPMS empowered work milieu is critical to productivity and innovation. What is even more important are the end-to-end processes that span departmental and organizational boundaries. It is not just about the data or the bits that get communicated reliability across the globe. It is about the knowledge and content of these bits. More importantly, it is about the communities: customers, shareholders, partners, and employees that are services across the extended network. It is about processes that span and integrate all these communities. It is about service oriented enterprises.


A key characteristic of our changing world is customization and the flexibility to respond quickly to ever-changing customer demands. Amplifying this trend is the emergence of giants such as China, India, and other developing nations.

The challenges are enormous: those who do not adopt to changes quickly, those who do not respond to customization fast enough, those who do not produce high-quality products and services at increasingly shorter develop cycles simply will not survive. So how should one build to change?

The build to change help comes from the second major layer of service oriented enterprises: service oriented business process integration. There are several factors:


  • Focus on The End to End Processes – not the organization: what is the enterprise attempting to achieve? Everything from internal HR operations to business to business interactions could be automated, using various components of service oriented technologies. The build of change starts with the key strategies and key performance indicators for the organization. The enterprise should then be able to drill down from these key performance indicators all the way down to automated and digitized processes.


  • Analyze, Build, and Continuously Improve the business processes: This is critical. Rather than focusing on eliminating jobs from the get-go or introducing organizational change, the focus is on incrementally and iteratively improving the business processes. The iteration is key. Many organizations that have successfully deployed process automation often started with few less ambitious projects and demonstrated quick wins or achieves with tangible results.


  • Treat your processes and business rules as assets: The principle is analogous to relational databases. One reason RDBMSs are so important and critical is that databases are important assets in the organization that need to be managed, concurrently shared, and maintained independent of any application. They are separate. The same separation principle applies to processes as well as practices. The main reason for the emergence of the business process management is this idea of separating the operations or processes from the application code. Just as in relational databases the integrity constraints had to be stored and managed in the DBMS, in the emerging BPM suites the rules and the processes need to be managed together. More importantly they need to be managed, maintained, and deployed as corporate assets.


  • Support for specialization and application of the appropriate business rule or service or process – depending on the situation: This is critical. Customization is a requirement – customized interfaces, special promotions depending on the customer category or time (e.g. sales), or other. So you need an environment that supports creation of services, the easy discovery and deployment of these services, but also the ability to define specialization of services, processes, or business rules along a number of important dimensions: temporal, customer category, security, or circumstance (to name a few).



The heart and core of the Service Oriented Enterprises is the Business Process Management Suite layer. Where and how should SOA projects start? With the BPMS. Where can you encourage innovation and support change? In the BPMS layer. The amalgamation of human workflow, enterprise application integration, business to business integration, business rules management and process monitoring has resulted in the emergence of holistic, end-to-end Business Process Management Suites. This is where it all comes together.

Note: This article contains excerpts from Dr. Khoshafian’s recent book: Service Oriented Enterprises, Auerbach Publications, ISBN 0849353602.

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