CFO Magazine

Web Services: A Work in Process

Web services combined with BPM may change the way you think about software.

Scott Leibs
CFO Magazine

October 1, 2002

Could this be the beginning of a beautiful friendship? Web services and business process management (BPM), two promising if arcane approaches to software design, may prove to be a potent combination. If analysts' predictions come to pass, the perennial question that haunts most companies' software strategies — whether to build or buy — may give way to a build-and-buy approach, with Web services and BPM able to tie it all together.

The problem companies face with current software, says Tyler McDaniel, managing director of analyst services at consultancy Hurwitz Group Inc., is that it "often prevents [them] from responding to new circumstances." Once a given approach to a task has been encoded in software, it's difficult to change. By integrating existing software with BPM and Web services, however, McDaniel says that "you can break an application into smaller components and rearrange them as your process changes or as you add new information, and the time required to do that is minimized."

The result, say analysts, is that software now in use — whether packaged applications or homegrown systems — once integrated and recombined with help from Web services and BPM, could provide unprecedented flexibility while protecting current investments. And while the vision of broad "end-to-end" integration is still a ways off, companies are taking early steps. A survey by FactPoint Group found that nearly two-thirds of Global 1,000 companies are piloting or actually using Web services standards within their overall software efforts. Meanwhile, the market for BPM software "engines" is expected to grow from $267 million last year to $1.5 billion by 2007, according to WinterGreen Research.

Integrate, Then Facilitate
As independent approaches to software integration, both Web services and BPM have their uses and their fans. Web services is a set of standards (XML, SOAP, and others) that determine how data is passed from one (usually Web-based) application to another. BPM is a method for modeling and automating how multiple-step business processes — whether hiring a new employee or paying an invoice — are handled within a company or between companies.

Web services and BPM can provide substantial benefits independent of each other, but because they both address problems and possibilities inherent in Web-based software, using them in tandem may allow companies to extract far more value from Internet connectivity. The Web can unite all the workers and departments that may be involved in a given process. If several applications are needed to address that process, BPM tools can integrate them at the programming interface and messaging levels, and Web services standards can make sure the data passes between them smoothly.

Once integrated, much of the grunt work associated with a given task can be automated. Today, the synapse between one software program and another is often a human being, one engaged in some tedious manual process. At Minneapolis-based Xcel Energy Inc., for example, the "affiliate billing" function, in which various operating companies are billed for their respective shares of operating expenses, processes 450,000 transactions a month. While the enterprise resource planning system can handle much of the work, director of financial systems Ken Ellgen says that IT and accounting staff had to submit the batch jobs, review them, and pass them through, which amounted to some very expensive baby-sitting.

So the company is piloting BPM tools from Nobilis Software Inc., which in turn rely on Web services standards to integrate several applications into a seamless and largely automated billing process, one that frees up staffers to focus on exceptions versus routine processing. The software uses a drag-and-drop interface to create a flowchart of how work gets done: what applications, what data, what people, and so on. Once the process is captured, it can be automated; the applications it relies on are integrated and work is routed to the appropriate department. If Xcel decides to do things differently, a business user simply redraws the map to reflect the new rules, and the underlying technology makes the necessary changes (that is, it "manages" the business process, hence the not-intuitively-obvious term BPM).

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