Tracking Technology: The Big Buzz

By Alan Radding

Web services — a term that conjures up images of dot-com fiascoes or fast-imploding Internet consulting firms. Today's Web services are totally different. They are the standards-based pieces of code that have become the darling of leading technology vendors and their consulting-firm partners. If Web services take off the way some pundits predict (buyer beware: the same pundits who predicted there would be by now more e-marketplaces than people in Pennsylvania), then Web services may fundamentally change the way consulting firms make money.

Already, the Web services hype machine is cranking up big-time. "A major paradigm shift that could ultimately redefine the current world order of the industry …" declares the editor-in-chief of a leading computer industry magazine about Web services. Whew, pretty heady stuff! Every major computer vendor has already jumped on the Web services bandwagon — IBM, Oracle, Sun, HP — with Microsoft and its .Net initiative leading the charge. And the top-tier consulting firms are tagging right along.

Far From Radical

Web services are pieces of software code, components or a set of components, that perform a useful function. Technically, "a Web service is a software component accessible for use by applications over the Internet. The component typically has an interface defined by the Web Services Definition Language (WSDL) and is invoked using the Simple Object Access Protocol (SOAP)," explains Rhett Guthrie, senior technology partner, Axys Solutions, a consulting firm based in Dallas. In practice, a Web service might be a pricing and scheduling algorithm, a credit card validation service, a sales tax or commission calculator — any piece of functionality that someone's system might need or want to use.

In terms of technology evolution, Web services are far from radical. "Web services are the next increment in software development," says Tom Johnson, managing director, KPMG Consulting, Minneapolis. The roots of Web services go back to object-oriented programming and component-based development. Web services are components that use open Internet protocols, such as HTTP, along with emerging standards, such as XML, WSDL, SOAP, and UDDI. "The core computer science and basic technology is known. The hard part is figuring out what the business is," Johnson adds.

For consulting firms, the immediate business opportunity in Web services is educating clients about this latest technology and then building the Web services for their clients. Consulting firms large and small are rushing into the Web services space. "Almost all our work now is based on XML. That is the first step to Web services," says Greg Phelan, vice president/Web solutions at ePresence, Inc., a consulting firm based in Westborough, MA, that has already completed one major Web services engagement.

Finalizing Standards

At least initially, building Web services will consist of isolating pieces of existing functionality and exposing an XML interface. The difference between a Web service and a Web application is the user. An individual using a browser runs a Web application at a Web site. Other programs access the Web service for system-to-system interaction.

Axys recently built a Web service to handle mortgage closing. The Web service takes information for the various parties involved in a mortgage closing and automates much of what had been a primarily manual process. However, Axys continues to build conventional Web applications for clients despite shifting its focus to Web services. "Web services are still very new. Even .Net is really still in beta and most of the Internet standards are not even finalized," notes Guthrie. Still, he believes that Axys's early experiences with Web services will give the firm a competitive advantage going forward.

The big players too are rushing to establish their Web services credentials. Accenture turned to Web services using the Microsoft .Net services approach to create the Accenture eGovernment Accelerator, a set of Web services intended to help government agencies at all levels deliver their own services over the Internet. The Accenture Web services give governments a means to move from existing paper forms to on-line transaction processing, according to Anthony Roby, Accenture partner, Chicago. The Web service was built jointly by Accenture and Avanade, a Microsoft-Accenture venture.

KPMG, another Microsoft .Net Web services partner, used Web services to create a flexible, scalable, and customizable supply chain solution based on Manugistics' supply chain offerings. KPMG provided the strategy as well as technology and software integration services. The new integrated supply chain Web services are designed to help trading partners collaborate across both private and public marketplaces and assist marketplaces by providing suppliers and customers with supply chain optimization services, trading partner visibility, and Internet-based collaboration, according to KPMG.

The Ground Floor

The Web services consulting market is at the very earliest stage. Most clients have only just started to hear the Web services buzz. They haven't even begun to think about how Web services might apply to them. "Our work today mainly involves getting the organization to think about the possibilities opened up by Web services," Accenture's Roby explains.

The immediate opportunities for Web services, which enable loosely coupled interoperability between systems, will focus on application integration between business partners. This makes Web services a natural for the B2B supply chain. In such cases, Web services will likely replace proprietary EAI and middleware solutions, which generally are more costly and less flexible. Consulting firms that handle a lot of EAI work will probably want to add Web services to their core competency pretty quickly.

But the far greater opportunity around Web services — and what makes the technology truly radical — is the potential to create Web services that are free-standing revenue generators. Consulting firms that know how to build Web services could take domain expertise they have acquired through various engagements or in partnership with clients and build Web services that others would pay to use, creating a nifty revenue stream.

"We could build a Web service to work with small and midsize businesses that we don't work with now," suggests KPMG's Johnson. For example, the consulting firm could offer a performance measurement or benchmarking tool as a Web service on a subscription basis. Small and midsize organizations would pay to use the Web service, but they would never actually see a consultant. "It is an opportunity to dramatically scale the business," he notes.

Before they focus on transforming their own services to Web services, consulting firms will likely work with their clients, inventorying existing services and determining which have potential as Web services. For example, Bekins Co., the moving company, is reviewing its applications to determine which functionality could be exposed to the systems of customers and partners as Web services to increase business or improve efficiency. If Web services take off, companies everywhere will be going through a similar exercise.

Entrepreneurs are only just beginning to imagine the possibilities with Web services. Duzine LLC, New Paltz, NY, for example, launched a foreign currency conversion Web service available on a subscription basis. The company updates the foreign exchange rates each day. Applications that have to calculate prices can tap into the service to get the latest exchange rate, saving the user organization from having to manually update multiple currency exchange rates each day. Given its low subscription fee, $49.95 annually, it doesn't sound like a service someone will get rich quick on, but who knows?

Ultimately, Web services may finally deliver on the promise of point-and-click component-based application development. "It's kind of nebulous right now, but you could imagine a market of off-the-shelf Web services that you could use to assemble your own application," says Guthrie.

But a lot more has to be done before Web services can move into the mainstream. For instance, "the business models aren't clear. Web services will require changes in business models," says Evan Quinn, chief analyst, Hurwitz Group, Framingham, MA. Right now, the subscription model appears to be the most practical way to generate revenue from Web services, but down the road pay-per-use may be feasible.

Long before you get to the question of business models, there are attitude issues to resolve. "A lot of people simply don't trust opening their systems to the Internet. A level of comfort is required before a company will want to expose services in a public way," says Roby. Large companies, in fact, may start using Web services internally before venturing into the public arena.

Hidden Paths & Hurdles 

Then there are technical issues still to resolve. "No one really knows what it takes to run a set of Web services," Roby continues. How do you handle capacity planning or security? How do you design Web services to scale very big? How do you make the whole thing robust?

Perhaps more basic is the question of how you even find Web services in the first place. "The directory is the first thing. The green pages have to be done right, and companies have to get on board and use the directories," says Johnson. The proposed UDDI (universal description discovery and integration) standard promises to address this critical directory question through Internet-based registries, but the first of these registries are only just getting off the ground.

It is very early in the Web services game. Any number of things could go wrong. The technology may founder over standards conflicts. The business models may not work. The registries may prove too unwieldy. If, however, Web services do take off — and that's still a big if — they not only will be the next big thing for consulting firms and their clients, but they will also have the potential to alter the way consulting firms deliver services and generate revenue.