Web Services Come of Age

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Ted is a key contributor to Forrester's research on software infrastructure and its impact on business strategy. He currently focuses on Web services and service-based architectures, and also plays a leadership role in Forrester's research on the software industry. Ted has appeared as a software technology and industry expert on ABC and CNBC and is often quoted in publications including The Economist, The Wall Street Journal, The New York Times, and Business Week.

Web services technology promises to cut partnering costs, accelerate product lifecycles, and provide business strategies such as mass customization and data-driven services for customers. But there is still much confusion over the term and the technology.

I talked with Ted about his upcoming presentation in Chicago: Web Services Come of Age.He said, The basic story line is that the software industry, led by IBM and Microsoft, has been developing new software standards under the umbrella name of Web Servicesfor about three years now.The question on everybodys mind is where do we stand in regard to Web Services? Is it ready for prime time? Can we use it? What is it good for? And, what are the best practices? Ted will briefly introduce the technology, then talk about how companies are using the technology internally and externally. Examples of internal use are application integration and portals; external use means establishing electronic links with customers and suppliers.

Ted said that case studies are starting to roll in following a year of pilot projects in 2002. He is still deciding which case studies to use to best illustrate the business benefits. He has many to choose from that show stellar results. He did give me a few examples to illustrate some of the exciting things that are happening.

Citigroup needed a portal to gather information for their front-line management bankers, brokers, and branch reps. The information resides in a number of disparate places in widely different formats and needs to be displayed in a custom format for each of the above parties. Using XML and Web services standards with Microsoft, Citigroup pulled together all the research available for any given company including news, real-time data, real-time stock information and analyst reports, all gathered into a single portal using Web services to do the back-end integration. Ted said that this solution is a new development. In the past, nobody would have bothered aggregating this information because it was too expensive, requiring four or five dedicated terminals open at the same time.

Ted gave another example involving the car loan approval process. A consortium of the credit arms of car manufacturers like Ford, GM and DaimlerChrysler are using Web services technology in an application made to run in car dealerships for real-time loan approval. Dealerships now use a dedicated terminal, a phone line, and a fax to receive credit approvals. The new dealer portal will replace all that. Ted says this is done at about a tenth of the cost of a proprietary solution.

Thats the magic!Ted said. The one-tenth number is coming up over and over again.He gave another example from the travel industry.

Galileo is a travel inventory aggregator with airline seats, car rentals, and hotel rooms packaged for the travel industry. Individual travel intermediaries have proprietary links, so adding train tickets to the inventory, or offering your services to smaller travel operators required a lot of expense and work. But using Web services interfaces for all the data systems lets them mass customize the travel inventory to the customer. AAA said that the new system was set up with 75% less code, and Galileo said it is 10 times faster and easier to link up a new agency. Ted said the first customer link is only about three times faster and cheaper, but after that, the ten factor keeps coming in.

He added that with this type of change, by a factor of 10 - you begin to see new behaviors. An example he gave would be a B2B call center in an industrial market. Most of the calls are for checking the status of orders and changing orders. You can put up a Web site like Fed Ex or UPS, so people can check it themselves, but you can create a much stronger connection to your customer if you automate the status so that each time a change occurs, a pager message or email is sent out. Web services can do this easily and inexpensively.

Ted will also chair a panel on what is coming next for Web Services. He hopes to hold the vendorsfeet to the fire and get answers to questions like: What is real and what is imaginary? How much testing is required? Can we assume interoperability, reliable messaging, and what about security? And because now I have no control over all these messages, what about Web services management?The panel will bring together vendors with next-generation product strategies for these emerging technologies.

I asked Ted about the continuing confusion over the term, and he told me that Web Servicesis a very bad name for what he calls Internet middleware.There is still a lot of confusion about what this technology is and what it is used for. Ted said, In my first talk we will get a chance to present some very real-world, monetized, ROI-driven, why we did it, and what we got cases; and hopefully frame the technology for folks.The case studies show that there is a lot of real value in this technology. Ted said that this will be the year of the case studies. They are remarkable, by a factor of 10.

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