What is service oriented architecture?

Service-Oriented Architecture can make your eyes glaze over in a meeting. But what if I told you the idea behind it is actually something you already understand?

Imagine your business’s entire tech setup is like a professional restaurant kitchen. You don’t have one single chef trying to do absolutely everything. That would be chaos. Instead, you have expert stations: one handles payments, another manages inventory, and a third looks after customer orders. That, in a nutshell, is the core idea behind SOA.

A smarter way to organise your tech

Instead of building one giant, monolithic piece of software that tries to do everything (and usually does it all a bit poorly), SOA encourages you to break it all down. Think of it like building with professional-grade LEGO bricks instead of trying to carve everything from a single, unyielding block of concrete.

Each “brick” is a service. A self-contained piece of software designed to do one specific business job exceptionally well.

For instance, you might have:

• A service to check a customer’s credit score.
• A service to calculate shipping costs.
• A service to process a credit card payment.

Each service is an expert in its domain. It doesn’t need to know the inner workings of the other services; it just needs a standard way to ask for information from them. This approach started gaining serious momentum here in Australia in the early 2000s, especially as businesses in finance and telco were looking for better ways to integrate their older, inflexible systems. By 2010, nearly half of major Australian enterprises had adopted SOA principles to become more adaptable. If you’re a history buff, you can explore the detailed background by learning about SOA’s evolution on Wikipedia.

The fundamental win here is reusability. Once you build a “Calculate Shipping” service, you never have to build that logic again. Your e-commerce site can use it, your internal sales tool can call on it, and your mobile app can access it. You build it once and reuse it everywhere.

Honestly, this was a massive shift away from the old methods, where every new project often meant starting from scratch. That old way created these tangled, custom-coded nightmares that were a constant headache to maintain or update. SOA brought a much-needed sense of order to the chaos. It’s a design philosophy that organises all your software functions into a library of shareable, independent services. That simple change in perspective is the first real step toward building systems that can finally grow and adapt alongside your business.

The key components that make SOA work

So, we’ve established the big idea: SOA is like a highly organised professional kitchen. But what are the actual moving parts that allow it to run so smoothly? It’s not as complex as it might seem. There are really just a few core components you need to get your head around.

Think about ordering food in a restaurant. You don’t just storm into the kitchen to tell the chef how you want your steak cooked. You interact with a menu and a waiter, who handles the communication for you. The logic behind SOA is remarkably similar.

The services themselves

First up are the Services. These are your individual, self-contained specialists. In our kitchen analogy, one service is the grill cook, another is the pastry chef, and another preps the salads. In a business context, one service might be responsible for ‘Calculate Shipping Costs’, while another is an expert at ‘Verify Customer Address’.

The real power here is that each service does one thing and does it exceptionally well. A ‘Calculate Shipping’ service doesn’t need to know about customer payment details; that’s simply not its job. This intense focus is what makes services so effective and, critically, reusable across different applications.

The service contract

Next, you’ve got the Service Contract. This is the menu. It’s a clear, unambiguous agreement that tells every other part of the system what a service does, what information it needs to do its job, and what it will provide in return.

For our ‘Verify Customer Address’ service, the contract is dead simple:

• Input needed: A street address, suburb, state, and postcode.
• Output provided: A ‘Valid’ or ‘Invalid’ response.

This contract gets rid of any guesswork. Any application needing to use this service knows exactly how to “place its order” because the rules are clearly laid out on the menu.

The Enterprise Service Bus (ESB)

Finally, we have the Enterprise Service Bus, or ESB. Don’t let the jargon intimidate you. The ESB is the central coordinator… the head chef or the restaurant’s dispatcher who makes sure orders go to the right station at the right time.

Let’s say your e-commerce checkout process needs to verify an address, calculate shipping, and process a payment. The checkout application doesn’t have to talk to all three services individually. Instead, it sends a single, consolidated request to the ESB.

The ESB then acts as the central traffic controller:

1. First, it routes the address details to the ‘Verify Address’ service.
2. Once that comes back as ‘Valid’, it takes the address and item details and sends them to the ‘Calculate Shipping’ service.
3. Finally, it bundles the total cost and payment information, sending it to the ‘Process Payment’ service.

To put it simply, SOA is built from a few fundamental parts that work together. Let’s break them down.

Key components of SOA at a glance

Understanding how these pieces fit together is the key to grasping the power of SOA.

The ESB is pretty much the central nervous system of a Service-Oriented Architecture. It handles message routing, protocol translation (in case services “speak” different technical languages), and orchestration, making sure complex processes happen in the right sequence.

This central coordinator is one of the most defining characteristics of a classic SOA. While the individual services are independent, the ESB ensures they collaborate in a structured and predictable way. Getting this right is absolutely fundamental to building successful system integrations, as it dictates how smoothly disparate parts of your business can communicate. Grasp these three components—the specialist services, the clear contracts, and the coordinating ESB—and you’ve unlocked the core concept of SOA.

Why SOA is still relevant for modern business

I know what you might be thinking. “SOA? Isn’t that a bit… old news?” And you’re not wrong, in a way. Service-Oriented Architecture has been part of the IT vocabulary for decades. With so much noise about newer, shinier architectural styles, it’s fair to ask why on earth it still matters.

The answer is simpler than you’d think. For most established businesses, SOA isn’t some dusty relic; it’s the essential bridge between yesterday’s systems and tomorrow’s innovations. It’s the pragmatic, real-world way to get that 20-year-old mainframe you can’t just unplug to talk to a brand-new cloud service.

The unsung hero of enterprise IT

I’ve seen it happen time and again. A company gets swept up in the hype of a new trend, like microservices, and tries to jump straight there. But without the foundational discipline that SOA brings, they often end up creating a bigger, more tangled mess than what they started with.

The principles behind SOA—clear contracts, strong governance, and reusability—are more critical now than ever before. This is especially true in sectors like finance, healthcare, or government, where a clear audit trail and robust security aren’t just best practices… they’re non-negotiable legal mandates.

SOA provides a structured, manageable way to modernise. It doesn’t force you to rip everything out and start from scratch. Instead, it offers a pathway to gradually untangle complex systems, one service at a time.

This resilience is why SOA remains a strategic linchpin in the Australian IT market, especially for large enterprise projects that need to be both agile and stable. Forecasts show Aussie IT spending growing by about 8.9% annually, with a huge chunk of that investment flowing into AI and cloud platforms—areas where SOA principles provide the bedrock for making everything work together. You can discover more about these Asia Pacific trends from Forrester.

Bridging legacy systems with modern automation

Take a moment to think about your core business processes. How many of them still depend on older, well-established systems? Quite a few, I’d bet. These are often the workhorses handling critical functions like billing, inventory, or customer records. They’re bulletproof, but they were never designed for today’s hyper-connected world.

This is where SOA’s real value clicks into place. It lets you wrap those legacy systems in a service layer.

• You don’t have to replace them: Avoiding a massive, risky, and eye-wateringly expensive project.
• You can make them accessible: New applications can now communicate with the old system through a clean, standardised service interface.
• You can introduce new capabilities: This opens the door for powerful tools like AI and automation to tap into legacy data without needing brittle, custom-coded connections.

For instance, you could build a service that exposes customer data from an old AS/400 system. Suddenly, your new AI-powered chatbot or an automated workflow can access that information safely and reliably. This practical approach is central to our work with Robotic Process Automation, where the main challenge is often building bridges between the old and the new. It’s not about chasing the flashiest tech; it’s about making what you already have work better, smarter, and more efficiently. If you’re struggling with a similar challenge our expert team is here to help with all your AI consulting needs.

Comparing SOA and microservices

Ah, this is the big one. The question I hear all the time is about the real, practical difference between Service-Oriented Architecture and microservices. It’s completely understandable why they get tangled up—both are built around the concept of ‘services’. But their core philosophies are worlds apart.

Let me try an analogy.

Imagine you’re building a house. With SOA, it’s like hiring a team of specialist contractors: a plumber, an electrician, and a plasterer. They all work together under a general contractor (our ESB), sharing some common tools and following a single, master blueprint for the entire house.

Microservices, on the other hand, are like building a village of tiny, self-sufficient houses. Each small house has its own plumbing, its own generator, and its own toolkit. It’s completely independent and can function entirely on its own. It’s a subtle but massive difference in approach.

This diagram helps to visualise how SOA acts as that central bridge, connecting older, established systems with newer technologies in a structured way.

You can see the clear, structured flow from legacy systems through the SOA layer to modern cloud infrastructure, highlighting its role as an integration backbone.

To get right to it, let’s break down the key differences between these two architectural styles. The following table provides a direct comparison of their philosophies and technical characteristics.

SOA vs microservices: a straightforward comparison

As the table shows, the choice isn’t just a technical one; it fundamentally shapes how your teams are structured and how they work.

Scope and size: the granularity debate

The most obvious difference is in scope. SOA services are typically built to be enterprise-wide. Think of a large, reusable service like ‘Manage Customer Profile’, designed for use by sales, marketing, and the support centre. The goal is sharing and reuse on a grand scale.

Microservices are far more granular. Much smaller. Instead of one big service, you might have separate microservices for ‘Update Customer Address’, ‘Change Customer Password’, and ‘View Order History’. Each one is laser-focused on a single, specific business capability.

Communication and coordination

This is another huge point of difference. In a classic SOA, communication often flows through that central coordinator we mentioned: the Enterprise Service Bus (ESB). The ESB acts as the traffic cop, directing messages, transforming data, and making sure everything communicates in an orderly fashion. It’s a model built on centralised control.

Microservices advocate for the opposite: “smart endpoints and dumb pipes.” This means each microservice is intelligent enough to handle its own logic and communicates directly with others using simple, lightweight APIs. There’s no central bus, which also means there’s no single point of failure. It’s decentralised by design.

The core trade-off here is control versus independence. SOA offers strong, top-down governance and orchestration, which is vital in some industries. Microservices prioritise agility and team autonomy, allowing different teams to work on their tiny houses without waiting for anyone else.

For a deeper dive into evaluating architectural choices, including the trade-offs between monolithic and microservice approaches, you can refer to resources on selecting appropriate compute for workloads including monoliths and microservices.

Data management philosophies

How data is handled also reveals their different philosophies. In SOA, it’s common for multiple services to share a single, central database. That ‘Manage Customer Profile’ service probably reads and writes to the main enterprise customer database. This can simplify data consistency but it also creates tight dependencies.

Microservices are almost militant about each service owning its own data. The ‘Update Customer Address’ microservice would have its own small, private database that no other service is allowed to touch directly. If another service needs that data, it has to ask politely via an API call. This approach avoids bottlenecks and ensures a service can be updated without breaking something else that relies on the same database structure.

So, which one’s better? Well, the honest answer is… it depends entirely on your situation. There’s no single right answer. It’s about choosing the right tool for the job based on your organisation’s size, goals, and existing technology.

How SOA powers business automation and AI

This is where the real value of SOA clicks into place. For a long time, we saw it as a clever way to get old, stubborn software systems to talk to each other. And it is. But its true power today is how it acts as the central nervous system for modern business automation and AI.

Think about it for a moment. How does an AI tool actually do anything useful for a business? How does it get the information it needs to make a smart decision, like approving a loan or personalising a marketing offer?

It calls a service.

The engine room for intelligent workflows

SOA provides the perfect, structured environment for AI and automation tools to plug into. Instead of a developer having to build a messy, one-off connection directly into a legacy database (a genuine nightmare, believe me), an AI agent can simply make a clean, standardised request to a well-defined service.

Let’s say a bank wants to automate parts of its loan approval process. The AI model needs three key pieces of information: the applicant’s credit history, their income verification, and their current account status.

In a business with a solid SOA, this is incredibly straightforward:

• The AI agent calls the ‘CheckCreditScore‘ service.
• It then calls the ‘VerifyIncome‘ service.
• Finally, it calls the ‘GetAccountStatus‘ service.

Because these services are self-contained and reusable, the AI can tap into the business’s core functions without requiring a massive, risky overhaul of the entire technology stack. It’s like giving a new, smart assistant a library card. They don’t need to own the library… they just need to know how to borrow the right books.

This flexibility is what allows businesses to see a real return on their AI investments quickly. To properly integrate new technologies, businesses often need specialised support, and AI Enablement services are far easier to implement when they can hook into a well-designed SOA.

This isn’t just some theoretical idea. It’s already happening right here in Australia.

Recent data shows that as of 2023, over 60% of medium to large Australian enterprises have integrated AI capabilities that rely heavily on service-based architectures to automate workflows. Even smaller businesses are catching on, with AI usage jumping from 25% to 34% in a single year—a shift driven by the very modular IT designs that SOA champions.

Real-world examples of SOA in action

Let’s step away from the theory for a minute and look at some practical scenarios. The ability to have independent, reliable services is what unlocks genuine digital agility. A well-designed SOA allows a business to pivot and respond to market changes or customer demands without having to rebuild everything from scratch.

Here are a few ways this plays out:

1. Real-Time Retail Personalisation: A retailer wants to send a personalised offer to a customer’s phone the moment they walk into a store. To pull this off, an AI needs to instantly access their purchase history, check current inventory for related products, and apply a discount. SOA makes this possible by providing separate, fast services for ‘GetPurchaseHistory‘, ‘CheckStockLevel‘, and ‘ApplyDiscount‘.
2. Streamlined Insurance Claims: An insurance company uses an AI agent to process simple claims. The AI can call a ‘VerifyPolicy‘ service, a ‘ReviewDamageReport‘ service, and a ‘ProcessPayment‘ service to handle the entire workflow without human intervention. This makes the process much faster for customers and frees up staff to work on more complex cases. A key piece of this is having well-structured automated data processing pipelines, which SOA helps create and manage.

In both of these examples, the magic isn’t just the AI itself; it’s the underlying architecture that gives the AI the tools and data it needs to do its job. Without that flexible, service-oriented groundwork, implementing intelligent automation would be significantly slower, more expensive, and far more disruptive. SOA provides the stable, scalable platform a business needs to truly modernise its operations.

Practical first steps for implementing SOA

So, you’re looking at Service-Oriented Architecture and thinking it might be the answer for your business. It’s a common thought, especially when you’re fed up with systems that just don’t talk to each other. But the big question is always the same: where do you actually begin?

It can feel like you’re standing at the bottom of a mountain, I get it, but the climb doesn’t have to be overwhelming. The key is to be strategic. Forget trying to boil the ocean or overhaul everything at once. You need to start small, prove the value, and build momentum from there.

This is all about taking pragmatic, deliberate steps.

Choosing your first project

Your first decision is arguably the most important one: picking the right pilot project. This is absolutely not the time to tackle your most complex, mission-critical business process. That’s just a recipe for disaster.

Instead, find a project that ticks a few specific boxes:

• High Value, Low Risk: Look for a process that’s causing genuine, visible pain but won’t grind the company to a halt if things go sideways. Automating customer data synchronisation between your CRM and marketing platform is a classic example.
• Clearly Defined: The project needs a clear beginning and end. Vague, open-ended goals are momentum killers.
• Visible Win: Pick something where a successful outcome will be obvious to key stakeholders. When they see a tangible improvement, you’ll get the buy-in needed for the next phase.

Think of it as a proof of concept. Its main job isn’t to change the whole organisation overnight. It’s to prove the approach works, build confidence, and give your team a real-world win to rally around.

Getting governance right from day one

Another critical piece is establishing governance from the outset. I know the word “governance” can sound terribly corporate and boring, but it’s really just about setting the rules of the road. Without them, you risk creating a new, more complicated kind of chaos.

This means agreeing on standards for how your services will be designed, documented, secured, and managed. Who owns which service? What are the security protocols? How do you make sure a new service is genuinely reusable, not just a one-off solution? Answering these questions early prevents massive headaches down the track.

Defining what is service oriented architecture for your specific context means planning how your teams will collaborate. Putting this framework in place before you start building ensures that as your library of services grows, it becomes an organised, valuable asset instead of a tangled mess.

Navigating these first steps can be tricky, and having an experienced guide makes all the difference. At Osher Digital, we’ve been through this process with countless businesses, helping them lay a strong foundation for integration and automation. If you’re exploring this path, our AI consulting team can help you choose the right tools and build a successful SOA from day one.