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| Learn now, profit later |
July 9, 2002 |
By Peter Wolchak
There’s a joke making the rounds in the e-business industry: how do you come up with three different definitions of Web services?
Grab two Internet experts and ask them to define the term.
Okay, it’s not exactly a knee-slapper. But it is indicative of the industry’s state of confusion. There’s no question Web services are the latest e-business super-buzz—but beyond that, there is little common ground among experts.
“There is a lot of confusion around Web services, as different organizations try to ram their products or service offerings into a definition,” said Joseph Belsanti, eServices solutions manager at Hewlett-Packard (HP) Canada.
If pushed, most industry watchers would agree on two basic points.
The first is the barest of bare-bones definitions: Web services are an emerging standards-based methodology that will allow computers and/or applications to communicate and collaborate autonomously in order to deliver a business benefit. Basically, it will be easier to link computer A to computer B so the two can do something together.
For example, imagine you run a manufacturing company.
A customer enters an order on your Web site for 57 deluxe widgets. Your customer relationship/enterprise resource system automatically verifies you have the widgets in stock, collects payment from the customer, schedules the shipment from your warehouse, reserves the arrival time at the buyer’s site and updates your widget stock list. Your software has completed a deal with another company’s systems, and you don’t even know it happened until you check the sales report at the end of the week.
Will this happen one day? Yes, say observers. But throw in specifics on how this will work, when it will happen,which software vendors will come out on top or even whether companies should be jumping on Web services now or taking a wait-and-see approach and,well, the experts all retreat to their separate corners.
The second basic truism that everyone seems to buy into is that someday Web services will be big, so you’d better get educated now.
“This is a legitimate movement and a workable technology,” said Tom Murphy, program director at Meta Group in Stamford, Conn. It is also, he said, only an emerging technology. “This is only really being used internally. A growing number of people are doing this for external consumption, but we are certainly still in the early-adopter experimental phase.”
The case in favour
A handful of those early adopters have seen significant benefits, typically in the area of business-to-business e-commerce.
One such example comes from Southwest Airlines in Dallas and Dollar Rent A Car in Tulsa, Okla. The two had a long-standing business relationship in which travellers booking tickets on Southwest’s Web site could also click through to Dollar to reserve a car. But the customer was dumped from the airline to the rental site and had to then re-enter all the information—name, address, credit card number—that had just been given to the airline. It was poor customer service.
Dollar suggested the companies use Web services to link their sites; essentially, a new user interface was added to the Dollar reservation system and then made available from within Southwest’s site.
The project took only six weeks to build using Microsoft’s .Net tools architecture, and according to Murphy, “based on the increase in reservations after the first week of use, they [expect] to do an extra US$10 million of business in the first year. Six weeks of work for an extra US$10 million is a pretty amazing return on investment.”
Another stand-out implementation comes from the Ontario Justice Ministries, an umbrella group that includes the three provincial ministries responsible for the police, court and jail systems.The Ministries needed to streamline communication links between their help-desk systems and those of outside service providers.
Using software from HP, Collective Minds Consulting of North Bay, Ont., built what its owner Mike Campigotto calls “the Ford Model T of Web services.” Despite the relatively simple implementation, it’s expected to save the Ministries between $1.7 million and $3 million almost immediately by replacing seven costly communications systems with one.The system cost about $500,000 to build.
The timeline
While such implementations make good magazine copy, those digging into Web services are likely to uncover disagreement on whether the idea is ready for prime time.
On one side of the debate is HP’s Belsanti. “The Web services vision is very much available today. This is a real solution for real-world problems.
“Web services will improve efficiency of enterprise applications, they will reduce transaction costs, drive inventory savings by brokering information out to the entire supply chain, allow organizations to reach new markets and provide a faster time to market for new services. Also, this will improve the collaboration among customers, partners and suppliers.”
Others aren’t so sure. “A lot of people are asking questions because the hype is enormous—this is the latest and greatest thing and will solve all the problems of the world,” said Terry Retter, director in the Strategic Technology Services group at the PricewaterhouseCoopers (PwC) Technology Centre in Menlo Park, Calif. “But the fact is, this is an emerging technology that is not fully developed and the development of the infrastructure and management tools has not really started. If someone is saying people are going to adopt this next week, that’s not going to happen.”
PwC stated in its recent Technology Forecast that Web services will not achieve full potential until after 2004, and that for the next two years, activity will be limited to integration between trusted business partners, as with Southwest Airlines and Dollar Rent A Car as well as the Justice Ministries.
While the vendors and the analysts spar over predictions, many front-line business professionals can muster only cautious interest.
“I’m not hearing a lot of buzz about it,” said Faye West, director of information systems at the Alberta Research Council. “I see it in the media but I don’t hear a lot of talk about it (from my colleagues).
“This is not something we can implement right now because it’s not well defined; it doesn’t even exist in many ways. It is not something with which I can go to my management or my users and say ‘This is something we’re going to use now.’”
The standards
Feeding this type of hesitation is a vendor battle over who sets the pace. One significant fight is between Microsoft, pushing
an online identity standard called Passport, versus the Liberty Alliance, an industry consortium advancing a competing standard.
Liberty boasts American Express, AOL Time Warner, Bell Canada, HP, Sony and Sun Microsystems among its members.
A reliable and verifiable online identity standard is critical considering Web services make it possible for software to initiate business transactions.Without a solid identity process, a hacker could, for example, trick a bank’s system into transferring funds by masquerading as a legitimate business partner.
In May Microsoft announced it would recast Passport as a more limited initiative, and even floated the idea of joining the Liberty Alliance.
Another more wide-ranging standards group is the Web Services Interoperability Organization (WS-I). This group includes Accenture, BEA, HP, IBM, Intel, Microsoft and SAP.
Noticeably absent is Sun, which has publicly accused the WS-I of fostering a secret plan to control Web services profits. Other industry watchers have suggested Microsoft and IBM snubbed Sun by not inviting it to the party, and Sun is simply hurling back sour grapes.
In another initiative, Microsoft, IBM and Verisign launched a joint effort in April to craft new standards for addressing security concerns. While it has been generally well received, it is unclear what rocks will be thrown in this particular path.
As engaging as industry infighting always is, standards battles muddy the waters and delay the implementation of new technology. “Any time you start to do this stuff it slows things down.And there’s also the risk of [industry] fragmentation if these efforts don’t work out,” said PwC’s Retter.
The advice
So with all this going on, what should savvy senior execs recommend when discussing Web services around the boardroom table? The experts suggest varying levels of caution but agree that ignoring the issue is a mistake.
PwC’s Retter sounds a cautionary note. “The people who are early adopters should be experimenting with this in noncritical areas to find out what works and where the holes are.
For those who are technologically more conservative, I would say read a lot but don’t spend very much money.”
HP’s Belsanti is, again, bullish.
“My advice is to embrace this internally, understand Web services and make sure you know how this will behave within your organization.You don’t need to be a mechanic to drive a car and you don’t need to be an IT person to understand Web services, but you will need to understand them in order to develop effective business strategies.”
For Campigotto of Collective Minds, it’s all a question of ROI. “Our customers have seen a huge benefit. So my advice is, if you can demonstrate a business benefit from a Web services model, then there is value in proceeding.
“I would not wait for the marketplace to mature any more.
Jump in and give yourself a head start over others.”
Web services
Alberta Research Council http://www.arc.ab.ca
Collective Minds Consulting http://www.collectivemc.com
Dollar Rent A Car http://www.dollar.com
Hewlett-Packard Canada http://www.hp.ca
Liberty Alliance http://www.projectliberty.org
Meta Group http://www.metagroup.com
Microsoft http://www.microsoft.com
Oracle http://www.oracle.com
PricewaterhouseCoopers http://www.pwcglobal.com
Southwest Airlines http://www.southwest.com
WS-I http://www.ws-i.org
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