Valero Energy is North America’s largest refiner. When they recently acquired some competing refineries, Valero tripled its annual revenue to $90 billion. While Valero’s rapid growth has been good for its shareholders, it has been a nightmare for the company’s information systems management professionals. By acquiring several companies that were themselves products of multiple acquisitions, Valero found itself with dozens of incompatible software systems that somehow had to find a way to communicate and share data. Although one traditional solution would have been to design or purchase middleware to bridge the gap, Valero chose a cutting edge software development technique called a service-oriented architecture (SOA). Valero software engineers began designing software services to provide users with an interface to its disparate systems. They developed the services based on industry standards and designed them to be flexibly reused and recombined. By using the SOA approach, Valero planned to pull together the various information systems, conduct business more efficiently, and reduce operating costs. Over time, the company has introduced over 100 services built on SAP’s NetWeaver Application Server Development Environment. Many are composite services built by combining several smaller services. Roughly 22,000 employees and 5,000 customers now use Valero’s SOA services. When approaching a new service request, rather than programming from scratch, Valero’s software engineers consider the services that have already been developed to find one that can be reused or refashioned. Organizing and cataloging services for reuse helps Valero save time, effort, and money. Developing services with the NetWeaver platform lets Valero engineers develop 300 services quickly and easily. Nayaki Nayyar, Valero’s director of enterprise architecture and technology services, stepped in to reduce the number of services to 50, isolating the best core services before moving forward with new development. “Unless you can catalog, find, and use these services,” she said in a CIO Insight interview, “you just end up with a virtual junk drawer of services.” The result of their SOA approach has saved Valero millions of dollars. One system designed to provide visibility into tanker transportation schedules saved the company a half-million dollars in penalties for ships that sit idle at the dock. Other savings are incurred from management being able to view corporate data from across the enterprise in real time. Valero is working on tools that will allow managers to design their own SOA services. If managers can access the information they need without the usual system request process, the business becomes more streamlined, and the information system staff is freed to focus on bigger projects.
1. Why did Valero choose an SOA to integrate its systems rather than creating middleware?
2. What benefits does the SOA provide to businesses such as Valero?
Critical Thinking Questions
1. Why is it important to maintain a reasonably sized catalog of services rather than a large amount of services?