Profit From Web Services

"Bricks, nails, pipes and wiring all are of limited value to building a house if you don't have them in standard formats that can be reused," Scott says. "I see Web services the same way: building blocks within the enterprise."

Scott isn't alone among CIOs targeting software reuse as an early benefit that Web services will deliver to the enterprise. With IT budgets still tight as a drum in 2003, Web services is more about saving money than it is about the high-flying promise of far-flung systems conducting unassisted business transactions over the Internet. At its core, the new development approach sounds an efficiency mantra that clients of solution providers and integrators want to hear: Rather than rebuild code every time businesses' needs change, for example, why not encase a customer's processes in Web-services interfaces that are stored in a UDDI repository and used when needed to access core data from any application? For that matter, why toss out perfectly useful legacy applications when you could front-end them with Web-services interfaces to tie them more easily into your new application layers and out onto the Net?

Admittedly, it's a lot less sexy than some of the early hype around for-profit Web services as the new cash cow for the Internet. But in this economy, CIOs see value in the nuts and bolts.

"The promise of using Web services to generate revenue is not something that I have seen yet in the field," says Mike Condon, a partner in Accenture's communications and high-tech practice, based in Reston, Va. "It's clearly the cost-reduction and efficiency piece where we are gaining the most traction."

For its part, GM is planning to increase its spending on application development and, by extension, Web services, in 2003. While Web-services projects comprise only 10 percent of the auto-maker's overall development budget, that percentage is double what it was last year and is expected to double again in 2004, Scott says.

In contrast, GM this year has plans to trim,by less than 5 percent,overall IT spending with its stable of outsourcing partners, such as Accenture and EDS, "unless the economy gets much worse," says Scott, in which case that percentage will go up.

The dollars GM is committing to Web services will be earmarked for several key, but controlled projects,among them building a distributable set of Web services that navigate the ever-changing business rules around vehicle identification numbers. In addition, Scott is thinking of assigning Web services to a central role in the company's browser-based vehicle-location and configuration engine, which helps consumers design their own cars online.

"Right now, we are starting at a departmental level, but over the next year or two, we will cross over to do [Web services] at an enterprise level," says Scott, who attributes the cautious deployment to Web services' current shortcomings in security, transaction-integrity and quality of service.

Tiptoeing Into the Pool
Caution is the word of the day for most CIOs dabbling in Web services. And, yet, all the back-room pilot projects and proof-of-concept tests belie a technical curiosity that is inching beyond the "So, what are they?" phase to something more intent on actual deployment. A recent IT spending report by Forrester Research, for example, found that 31 percent of North American companies surveyed had completed at least one project using Web-services tools and technologies by early 2003. This contrasts with 11 percent who said they had finished such a project by mid-2002. Likewise, respondents who have a Web-services rollout under way increased from 13 percent in mid-2002 to 21 percent in early 2003.

In VARBusiness' own 2003 State of Enterprise Spending survey, 62 percent of respondents acknowledge plans to use XML, the technology cornerstone of Web services that enables a common format for data to be exchanged among differing platforms. Likewise, 21 percent of those surveyed say they would be using SOAP development tools this year; 12 percent revealed plans to implement a UDDI server. The latter percentages aren't overwhelming, but considering that Web services was a foreign notion to all but the most cutting-edge companies just a year ago, it's progress.

Perhaps the biggest hurdle to adopting Web services is not learning the tools or techniques around XML, SOAP, WSDL or UDDI, but rather undergoing the requisite examination of company business processes and other heavy housekeeping chores, such as creating a common data dictionary for applications enterprisewide. Such work presents a lucrative opportunity for IT consultants and solution providers who can help CIOs rearchitect their systems around a set of common best practices.

"My view on it is that Web services represent a way of working, not just one project," says Alan Boehme, CIO at Best Software, an ISV of such products as SalesLogix CRM software. "For us, it means embracing a services-oriented architecture and common processes across the company that can be reused."

Boehme says his company's budget process starts midsummer, and that part of what it will be looking to spend money on is the tools to develop a consistent applications interface to both customers and employees. One such initiative would involve putting a new front end on its existing EDI service so that internal systems can communicate seamlessly with their suppliers on the outside, he says.

All that said, ubiquitous Web services' crossing company boundaries is still a long way off for most companies, particularly as long as the economy is stalled. However, their impact will eventually be felt in the business-to-business realm, particularly among companies looking to automate their supply chains, order fulfillment, logistics and distribution systems. Some vertical industries may move more quickly than others.

"The financial industry is very entrenched in providing online services, so it's easy to make a case for spending money on [Web services]," says Kim Hoover, CIO of InvestorForce, a Wayne, Pa.-based provider of tools and services for institutional investors. "And these days, you can set up a network for $250,000 that three years ago would've cost you $1.5 million."

Can I Take Your Order?
For Motor Coach Industries, a leading manufacturer of charter and long-haul buses and their parts, Web-services technologies are part of the here and now. The approach helped the company deliver a customized Web solution to a top client,the New Jersey Transit Authority (NJTA),with the added benefit of creating a blueprint for a broader, more public rollout of the application.

"We were trying to achieve a level of self service and automation in our support of the customer," says Tim Boychuk, director of applications development for Schaumburg, Ill.-based Motor Coach. "And we saw a large opportunity to integrate dissimilar systems using Web services."

The impetus for the year-long project, which was fully outsourced to E-Business Solutions Pros (eSP), Tustin, Calif., stemmed from NJTA's desire to enable its individual repair shops and mechanics to order parts over the Internet from Motor Coach's distribution centers,with a 24-hour turnaround time for delivery.

To date, the ordering process has been typically clunky and inefficient: NJTA mechanics would call NJTA's corporate headquarters with their parts order, NJTA would phone Motor Coach's central-purchasing department with the request, and, from there, Motor Coach would communicate the order out to its distribution centers. Complicating matters, if the order was placed after business hours, the request wouldn't get processed until the next day, delaying delivery times.

Anchored by IBM's WebSphere Commerce suite, eSP developed a browser-based order-entry front end for NJTA mechanics that, via Web-services interfaces, links directly to Motor Coach's back-end order-management and fulfillment applications. The new application is centrally located at Motor Coach's request, with Web services operating between the two locations to trigger everything from credit-card authorization to customized reports on payment, billing and delivery times sent by e-mail to NJTA.

Dan Hogan, vice president of client technical services at eSP, says the project is fairly typical of the as-yet limited number of B-to-B Web-services implementations he has been asked to orchestrate.

"What we are seeing with Web services right now is internal integration, one-way communications between partners and fulfillment applications," Hogan says. "But I really expect Web services to mature and become better. They'll be more full-featured and tighten up the development cycle a bit more as standards emerge."

Motor Coach's next step, which eSP is also leading, is to take its NJTA-exclusive order-placement and fulfillment application to its public Web site, where customers are also able to order bus parts. In addition, the company is looking to add Web-services capabilities to its warranty and service-center operations as a way to further connect disparate systems and streamline transactions.

Incremental Steps
For some IT departments, Web services is simply the next planned leg in their journey to implement Web-based applications. The South Carolina Department of Health & Human Services, for example, is in the midst of a $2.1 million infrastructure project aimed at giving its legion of 1,300 mobile workers, telecommuters and Medicaid providers browser-based access to back-end systems, services and data. It's an incremental process, with an assist from Atlanta-based consulting firm BravePoint on process and development plans, and Novell on technology.

The state agency formerly had 15 branch offices; however, the number of locations exploded in recent years to 140 sites in addition to a raft of "officeless" employees who work in a different hospital every day.

"It was a like an ocean flowing, with people constantly on the move," says Pat Ellis, bureau chief for the agency's Bureau of Information Technology. "We couldn't support, cost-wise, a dedicated network."

Through the use of Novell's Application Server and tools, the state and its partners were able to provide access to data and applications over the Net, in the process ditching the dedicated frame-relay network and its hefty price tag. Next year, they are planning to spend additional monies to expose new Java applications as Web services.

"It's a natural fit. If you build this as a Web service, then everyone can use it," Ellis says. "I think the light-bulbs are finally beginning to kick on and realize that."

As the lightbulbs grow brighter among end users, it will be incumbent on solution providers to learn the Web-services ropes. By all indications, Web-services usage,including everything involved that drives its deployment,will creep up into 2004, particularly as heavyweights such as IBM and Microsoft push standards to ease fears about security and transactional integrity. The arrival of Windows Server 2003 this month, with the .Net framework baked right in, will only hasten development of Web-services applications.

To take advantage, solution providers and integrators should begin making Web services a part of their MO for tying together systems, extending EAI platforms and helping customers automate their business processes.

"It's key for solution providers to understand the core technology, the basics," GM's Scott says. "It's necessary to do the kind of internal learning that IBM, Microsoft and Sun have invested in Web services, because they are going to be here [for] awhile."