At SOA-savvy firms such as Merrill Lynch and JPMorgan, service-oriented architectures are not new; they've been in motion for five years or more. But at 37 percent of buy-side firms and 47 percent of sell-side firms (according to a recent Wall Street & Technology survey), building a service-oriented architecture remains a top IT priority in 2008. With that in mind, we set out to uncover the next SOA innovation on The Street for those companies that are ready to deploy next-generation solutions, as well as to reveal the challenges of SOA and lessons learned for those firms that are just starting out with it or that have struggled with certain parts of its implementation.

The promise of SOA lies in its ability to recombine software functions, or services, to produce new business applications faster than with traditional software development techniques. Analysts and vendors say the future of SOA on Wall Street lies in expanding the pool of available services through "federated" or "collaborative" development. Here, firms subscribe to a hosted service registry (IBM, SunGard, BSG Alliance and Xignite each offer one, for instance) through which they can access Web services that have been created by vendors, consortia, partners and, perhaps, even competitors, and publish back their own internally developed Web services.

Such an open-source-style platform would let Wall Street developers build service-oriented applications that blend prefabricated Web services with their own specialized services and incorporate data sources from both within and outside the organization. "People are trying to break their software down into manageable and digestible chunks that can be published out to a hosted platform, so their own developers and others can contribute to them," explains Adam Honore, an analyst with Aite Group.

George Surdu, CTO of Comerica, notes that the industry has been talking about federated solutions for five years. "Bits and pieces of it are coming to life, and many of our technology partners are working on it, including Novell, IBM, Sun and HP," he says. "It's the ultimate SOA open-source solution. At the end of the day, the vision is to have all these common SOA solutions out there that we can all benefit from. The federated part would let me easily talk to other banks, clients and business partners." On the other hand, Surdu cautions, more standards would need to be in place before this vision is realized.

IT consultancy BSG Alliance is among the firms that see promise in that vision. It currently is talking with one capital markets firm about using BSG's e.laborate Web services sharing tool in conjunction with data from two Software-as-a-Service (SaaS) vendors, including Salesforce.com, and internal data that resides on the Wall Street firm's enterprise bus, reports Tom Steinthal, the managing director of BSG's financial services segment. BSG and the capital markets firm would jointly build an application to aggregate the information that would run either on the firm's enterprise bus or in SaaS mode on BSG's platform, he explains.

This kind of solution lends itself best to applications that have a social networking aspect to them, according to Steinthal, who notes that BSG's e.laborate platform originally was a social networking/customer service platform called Kalivo, which BSG bought in late 2007. "I wouldn't put it in the middle of the trading system flow," he admits, but it can be very useful for a research department, for example.