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Tuesday, May 17, 2005

Web Services : Reality Check

( Via HBWSK) Web services have made huge strides, but two hurdles remain, one technical, the other organizational, says HBS professor Andrew P. McAfee. "It is in fact getting easier to integrate applications, but it's never going to be easy." The benefits of Web services, in terms of data-sharing and communication exchanges, are not going to happen unless managers better integrate common standards says, Andrew P. McAfee. "The organizational challenge comes as all stakeholders get together and hammer out common definitions. This might not seem like the kind of work that leads to disputes, but it is," he says. The hype that in the future of Web services—defined as application-to-application communication—some vendors and futurists paint a scenario where businesses collaborate and compete in profound new ways is unrealistic. The technical problem is that any two applications are virtually guaranteed to contain dissimilar data and execute dissimilar business processes.Before any systems integration can take place, these dissimilarities need to be resolved. There is no magic bullet in the Web services toolkit that does this automatically or quickly.
The organizational challenge comes as all stakeholders get together and hammer out common definitions.This might not seem like the kind of work that leads to disputes, but it is.In most companies, questions like the following would lead to heated discussions:
• Who's got the real customer contact information? Who gets to access it? Who gets to update it?
• What's the last day for bookings in each quarter? Is it the same all around the world?
• Do we have to do a credit check before scheduling every order for production?
• Who gets to certify approved vendors? What's the process for adding a vendor to the list?
Answering these requires a combination of diligence and tough-mindedness.
Web services technologies work equally well within and between companies. Cross-company implementations, however, are still comparatively rare. We see them between large and technically sophisticated organizations who have longstanding ties, and we're also starting to see them between big companies and their smaller suppliers. Big companies have the power to convince or compel their partners to participate, and to shortcut negotiations by simply dictating terms. Amazon and eBay have both done brilliant work with Web services to open up their IT infrastructures and let thousands of small sellers plug into them, but it's a "take it or leave it" proposition. Amazon and eBay don't renegotiate Web services standards with each seller; they simply publish their standards and wait for other companies to adopt them.
So far Web services are being used to automate simple business processes—transmitting an order, acknowledging a shipment, describing an item for sale, etc. Over time the processes enabled via Web services will become more complex, but it's best to start small and build incrementally.In terms of benefits, Andrew says that all the parties that he talked to felt that productivity had increased, but they talked about the work more as capability development than benefits realization. They were learning how to "speak Web services," and were confident that they would have many opportunities to use their new language skills.

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