Intellectual hot property
- Article 47 of 77
- Information Age, September 2002
Web services could offer a way for IT departments to turn their in-house technology expertise into a revenue stream.
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Word of warning
Success stories such as these have fanned IT departments' enthusiasm for web services, but analysts warn that current web services standards are deficient in a number of areas, including authentication, billing and security. As a result, web services may not be appropriate for many external applications. But standards bodies and development tools vendors are working together to provide new standards or upgrade existing ones to fill in those gaps. “At the moment,” concedes King at Microsoft, “authentication and security are things that are going to have to be constructed on a case by case basis for verifying web services.”
And while developing a web service can be simple, selling it is another matter. “The technological case for web services is very strong,” argues Clay Shirky, a partner at development consultancy The Accelerator Group. “The business case for web services is more limited right now, in part because it raises the same questions as application service providers and business-to-business marketplaces did. Just because it's possible to adopt the same data standard as your competition, and just because that's better for the market as a whole, doesn't mean it's better for you. As the software industry has learned to its chagrin over and over again, people strongly prefer buying a product outright to paying an annuity for services.”
In the short term at least, this means that many organisations will sell on web services as an adjunct to other services and applications. “My belief is that there won't be standalone web services merchandised for some time,” says John Hagel, a web services business consultant. “Enterprise systems are systems of record that must provide high levels of integrity, security and reliability.”
The initial winners in the web services marketplace, according to Brent Sleeper of consultancy The Stencil Group, will be “established service providers that can extend their existing offering into a new channel or a new version of the product” and “new businesses formed by [those] who have existing ties and deep expertise in a particular sector or with a specific, complex business process.”
A web services provider must provide a way to solve a specific, valuable business problem, says Sleeper, identify the processes integral to the business and figure out a way to express that in a services architecture - something the IT department of a major enterprise is uniquely capable of doing in its own vertical market.
As a result, the first organisations to sell web services are those in highly specific niches, such as financial services, where existing trust relationships are in force. These companies, says Sleeper, have simply used web services to develop new licensing models for their products.
“Web service providers won't be married to a subscription or per-use model and will adapt to satisfy customer requirements. Web services will let companies put in much more complex rules so that their systems can interact in a very specific and dynamic way that would have been much more cumbersome and expensive previously,” explains Sleeper. The rules will be exposed to partner companies, eliminating the need for hard-coding and permitting companies to change pricing on a daily or even hourly basis.
Management maze
But as David Truog, an analyst Forrester Research points out, managing such processes can be a nightmare. “It's tough enough for IT to monitor and secure the services it runs, but it's a bigger challenge entirely when the firm depends on services under a partner's control. And when companies offer programmatic interfaces on the Internet and ask customers to pay for accessing them, tracking who's using what is no longer just a matter of good housekeeping - it's core to the business,” he says.
Apart from the problems of tracking use and billing, a major problem for developers of web services is how to coordinate transactions between different services, particularly over extended periods of time. Prospective standards such as the Business Transaction Protocol will help, but until these standards are finalised, most organisations will have to settle for simple interactions between web services - iVillage's link to Tesco.com is a good example.
For those IT departments that simply want to be able to make back some of the money invested in developing software, these management complexities may prove too much. “Commercialisation only goes so far with internal IT organisations - and selling a package outside of the corporation is often difficult for many IT organisations,” says Martin Tennant, senior consultant at Compass Management Consulting.
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