Web services finds new life as corporate bridge
By Martin LaMonica
One of the software industry's brightest prospects--Web services--has started to prove its worth by driving e-commerce in an unexpected way: as the bridge that links companies behind the scenes.
An e-commerce site, for example, could be given access to a shopper's credit card data, shipping information and calendar to set up a delivery time. And businesses could license a Web service that processes insurance claims rather than building their own software from scratch.
The reality of Web services, however, has taken a dramatically different--and more utilitarian--form. Instead of automated shopping "bots" or a thriving Web services marketplace for a vast array of functions, the very few Web services available for use on
Today, Web services has begun to find a home as a much-needed technology that allows systems from different companies to communicate and work together, regardless of age or origin. This software "integration," as it is known in the industry, has become especially valuable for the many businesses that need to connect internal systems. Now, many of those same firms see Web services as an easy way to link systems between companies, in the area of business-to-business e-commerce.
The routine business of exchanging data between partners and corporate departments may not sound as interesting as the consumer applications originally touted for Web services, but it's a business nonetheless. And that's welcome news to proponents who feared that the technology would never live up to early hype.
Analysts say these business-to-business applications demonstrate a clear business value for Web services at a time when the technology is facing an important litmus test in the marketplace.
Most initial Web services projects focus on exchanging information between internal systems, in large part because of the data neutrality provided by using the Extensible Markup Language (XML). Cost-conscious companies are measuring the effectiveness of Web services for data and application integration.
A recent Evans Data report found that although 80 percent of companies surveyed were using Web services standards, including XML, Web Services Description Language (WSDL) and Simple Object Access Protocol (SOAP), only 15 percent said these standards affect most corporate applications. But as XML catches on as a standardized document format for transactions, companies invested in business-to-business commerce are finding a significant role for Web services.
A survey of early adopters done in April found that a surprisingly high number of businesses--48 percent--were implementing Web services for business-to-business transactions. Although the early-adopter survey does not reflect the market as a whole, the research found that saving money on integration costs and building closer ties to customers were the primary motivators to go with Web services.
"These applications were generally with known and trusted partners such as suppliers and distribution partners, not public Web site kind of activity," said Tim Clark, partner at FactPoint Group, which
Web services additions for security or reliability can be used for internal integration within a company, as well as for linking applications to outside partners. But executives at several makers of such technology argue that businesses will get a bigger bang for their buck using their software for e-business. Why? They argue that system integration headaches are amplified when businesses need to connect to partners online, making Web services an ideal way to bypass those roadblocks.
"A lot of the problems Web services were set up to address are most profound once you move outside the firewall," said John Blair, chief technology officer and co-founder at start-up Kenamea, which sells reliable messaging software. "As soon as you want to implement a system that transcends enterprise boundaries, you have got an implementation problem because one partner may have SAP and another may have WebMethods and a third may have something different."
Blair isn't just spouting hype. The National Student Clearinghouse (NSC), which provides enrollment information on about 90 percent of U.S. college students, has adopted Web services to automate paper processes and displace a dedicated EDI (electronic data interchange) network.
NSC maintains a database of student profiles, including enrollment status and degree certification, and sells lenders and school registrars access to the data. With several thousand organizations already connected, NSC wanted to get customers online quickly and have real-time access to the data through a Web browser.
"We realized we could potentially roll out the service to thousands and thousands of end points, but we needed to find a solution that wouldn't be a big burden on the IT staffs of customers to set up one-to-one connections," said Mark Jones, vice president of marketing and business development at NSC.
XML-based documents and transport mechanisms used through Web services were a simpler and cheaper alternative to EDI networks. But NSC still needed to guarantee secure communications and authorize access to its system. For that, the company turned to Flamenco Networks, an Atlanta-based
"Quite frankly, it was a pretty easy decision when we thought about all the things you needed to do robust Web services and looked at what Flamenco was covering," said Doug Falk, NSC's chief information officer.
Other Web services providers can boast of similar large-scale applications. Cellular service provider T-Mobile used Web services software from start-up Systinet to aggregate data between content providers and present personalized information to its mobile phone subscribers. Because Web services was a relatively inexpensive means to exchange information among partners, T-Mobile was able to consolidate content and billing information and deliver personalized information in different countries.
Basic Web services protocols such as XML and SOAP simplify intercompany communications, but networked Web services still are not as strong as many existing business applications. Notable problems include a lack of integrated controls to validate a person's identity and few ways to guarantee that a purchased product will actually reach its intended recipient.
Several companies have cropped up to address those problems. Such companies as Systinet, Microsoft and IBM sell development tools and server software, while start-ups such as AmberPoint and Blue Titan Software offer
Advocates argue that Web services has an advantage over traditional middleware software for connecting systems because Web services is better suited for routing messages due to its "loosely coupled" process. Previous server-oriented architectures, such as the Common Object Request Broker Architecture (CORBA) standard and Microsoft's Compound Object Model (COM) programming, required that business partners have an always-on network connection and the same software on both ends.
"If you use proprietary middleware systems, it will never work, because proprietary means incremental expense," said Greg Clark, chief executive of E2open, a business-to-business exchange where electronics makers can buy and sell material, as well as jointly design products. By adopting Web services aggressively, he said, E2open lowered the exchange's integration costs tenfold over custom-built applications that use traditional integration middleware.
And in the latest incarnation of Web services, saving money is everything. As Greg Clark put it: "What we do is intercompany process integration, and Web services changes the economics of integration."