Dow's SOA blazes a trail for other SAP R/2 users

Dow Chemical Company's plans for a global service oriented architecture (SOA) could show other SAP R/2 users an alternative to SAP R/3 as a route to a more modern IT ­environment.

As reported in Computer Weekly last week, the SOA, which Dow calls its Next Enterprise Architecture (NEA), is based on SAP's Netweaver and MySAP platforms. It is designed to give the company greater flexibility to respond to market changes quickly.

The system will allow the £24.4bn chemicals company to develop new systems while running existing SAP R/2 and in-house systems, which it plans to replace over the next 10 years. Dow said it expects to use NEA for the next 15 to 20 years.

In the highly regulated chemicals sector, speed to market is worth billions of pounds. To confirm their operational readiness, Dow tested the SOA tools by building a system for its product development department to streamline the onerous regulatory documentation process.

Melanie Kalman, Dow's information systems program director, said, "We have not yet quantified the results, but the team saw such a drastic reduction in time that all future products will take this route.

"The biggest challenge has been getting key IT suppliers to understand that Dow is on a transformational journey. We are not simply executing a technical upgrade of the capability we have today we expect the IT capabilities to help us deliver the desired business results."

The first five applications Dow is developing under NEA will do things that are difficult or impossible under its present regime. They will cover purchasing work and plant maintenance commercial pricing a platform to leverage joint ventures in developing economies such as Brazil, Russia, India, China and the Middle East and a message optimisation platform for tracking correspondence and documents.

Dow plans to roll out these applications over the next six months.

Kalman said NEA will provide a highly integrated view of Dow's operations worldwide. In addition, managers and staff will gain easier access to the information they need, and systems development staff will be able to respond to their changing needs more quickly. Kalman also expects to cut the cost of developing and maintaining those systems. This will help the business as a whole to perform better, she said.

Henry Peyret, a senior analyst with Forrester Research, said many big companies are starting to move towards an SOA. "Their aim is to get a better view of their business processes and to integrate them better," he said.

Peyret added that an SOA makes gaps in the applications portfolio more explicit. "This makes it easier to see what you need to do next. This alone will help to reduce costs, because you waste less effort," he said.

"In addition, because SOA makes it easier to transfer data and code between silos, you can do more with less-skilled people."

Peyret said the next release of MySAP will "enable activity-based costing almost out of the box". This will allow companies to identify precisely how their costs arise so that they can focus on minimising them.

Peyret said SAP's implementation of SOA theory "looks good on paper". "SAP will definitely be a player in the SOA market," he said.

Christian Hastedt-Marckwardt, SAP's solution marketing director for enterprise SOA, said Dow's project would pave the way for other SAP users to update technology. "Dow is a key customer for us to show other SAP R/2 users how to migrate to more modern technology," he said.

Hastedt-Marckwardt said SAP was working closely with Dow. The project's chief information architect has an office down the hall from his own and the chief executives of both firms know each other well.

"This is important because it means we can escalate things quickly to get stumbling blocks blown out of the way," he said.

Hastedt-Marckwardt said SOA technology requires different, more people-oriented skills. "This will require a big change in most IT shops," he said.

Kalman said, "Dow has always linked its IT development very closely with the business processes, but this project could be the most important work many of us in IT do at Dow."

Dow speeds time to market with SOA >>

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