4.1.10: Funding and Charges
Establish Service Funding and Charging Mechanisms Other Information:
Effective funding and charging mechanisms that provide incentives for appropriate behavior among service providers and consumers
are critical success factors for SOA in the longer term. Funding mechanisms deal with the investment required to acquire or
provision services. In general, there are four types of service funding mechanisms: project, reciprocal arrangements, consortium,
and central/corporate. While most organizations begin with a 'project-based funding' of services, project level investment
usually leads to every program developing or acquiring its own business and infrastructure services built to its own specifications;
thus obviating most of the potential benefit at the enterprise or inter-enterprise level of SOA. This is an immature approach
to implementing SOA and can lead to "service anarchy." Reciprocal arrangements between projects have the same issues, but
allow for some sharing of services on a bilateral basis. The consortium funding model aligns well with the COI recommendations
above and includes the following: • The investment is shared across the stakeholders of the COI; • The model is appropriate
for the provisioning of “core business services” for specific domains; and • The model requires a very clear and articulate
value proposition for all players, the involvement of motivated individuals, and extreme patience and discipline. The central
or corporate funding model is most appropriate for infrastructure or “utility” level services in the layered services architecture.
In this case, the central authority (such as the OCIO) funds the development of services on behalf of the entire organization
or community. Charging mechanisms are a potentially viable funding model, but have yet to be proven in the federal arena.
Charging mechanisms are methods to recoup the costs for shared services across multiple user communities. The three basic
charging mechanisms are: no charge, flat fee and usage charges. Although not charging is often an initial strategy, particularly
for centrally-provided utility services, over the long term, not charging does not provide the proper incentive to provision
and upgrade such services. In the short term, however, not charging may be a desirable approach because fees act as a tax
or disincentive for projects to consume shared services – the opposite of the desired behavior. Flat fees are easier to administer,
but usage charges are the most equitable method of covering the cost of provisioning and maintaining services. Alternatives
within the usage charge approach include volume discounts and charging early users and new adopters on a different basis.
Creating enabling services at the enterprise level therefore implies the need for some explicit budgeting above the individual
program level and/or clear incentives to programs to make it worth their while to federate. Our recommendation is to adopt
the mechanisms most appropriate for the program or enterprise given its stage of SOA maturity. As organizations become more
mature, a portfolio of sharable services makes the decision of program managers to consume services easier. Eventually, as
more programs contribute to the service portfolio, the model becomes self-sustaining.
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