No one — not even the Singapore government — expects Singapore to mobilize for war. Yet the Lion City teems with potential soldiers, including some 350,000 active and reservist national servicemen. Fact is, Singapore roars not in the tactics of battle but in its government’s grasp of how to use technology. The result? Singapore’s army is well ahead of some of Singapore’s most tech-savvy businesses in its use of cutting-edge IT tools.
Where the army leads, business will surely follow, and one of the military’s sharpest advances has been in the promising field of Web services. There’s no elegant way to describe Web services. U.S.-based McKinsey consultant Ayman Ismail calls them “business and consumer applications, delivered over the Internet, that users can select and combine through almost any device from personal computers and mobile phones.”
Really, it amounts to a better platform for technology. Like a bellman in a hotel with an electronic key, Web services open doors to computer programs that were, up until now, locked out from each other. In doing so, they remain modestly invisible. Yet the impact on organizations is tangible. Web services will shrink corporate IT departments and foster new interactions among businesses.
Just ask the IT specialists at Singapore’s Ministry of Defence (MINDEF). In common with any major business with a workforce of 350,000, they needed to find a way to keep in touch with workers and gather data from them in a convenient and cost-conscious manner. MINDEF turned to Green Dot Internet Services (GDIS), a Singapore-based portal services company, to accomplish this task through the use of Web services.
All Together Now
To start, GDIS operates a portal for MINDEF and runs a call center, which is integrated to the back end of the portal for some of the transactional services that are conducted through an IVRS (interactive voice response system).
Since launch in April 2001, much of the time has been spent trying to “remove the seams,” says Andrew Gill, chief technology officer of GDIS. These seams separate a set of inherited and disparate applications, which GDIS has to integrate through a single portal — ASP applications run off Microsoft and NT technology, while the BEA WebLogic middleware (which GDIS uses to run Web services) runs off a Sun platform.
One of the objectives of combining the portal and the call center was to raise the proportion of electronic transactions performed by MINDEF’s individual users. Many transactions had been traditionally performed either over a counter or through telephone calls to operators. If the soldiers and reservists found that the new system was easy to use, then it would only be a matter of time before usage climbed and costs dropped.
To do this, GDIS had to link the various communication channels to a common set of databases, which were in turn linked to MINDEF’s own back-end databases. “We don’t take a portal-centric point of view,” explains Gill. “What we’re really doing is a combination of the available channels, which include telephone, IVRS, and also SMS-based services for some of the simpler transactions. The idea is to give accessibility to obvious services at any time via any means to the end users and also reduce the back-end costs,” he says.
Some of the largest transactions that take place on a combination of the portal and the call center involve either notification of overseas travel or booking physical-fitness tests, which are required of national servicemen in Singapore. Since linking the databases and applications via Web services, 100 percent of these transactions have taken place though either the portal or the IVRS system.
The distribution of transactions between the call center and the portal used to be about 85 percent on the IVRS and 15 percent on the portal. But opening up — and integrating — the channels via Web services has seen that proportion shift to about 65 percent through the IVRS and 35 percent through the portal.
Gill is delighted with this shift towards the portal arena “because it will have the greatest range of multi-channel capabilities,” he says, adding: “Ultimately, this will result in lower costs because we won’t be maintaining disparate sets of infrastructure to deal with multiple channels.” This payoff is important, as MINDEF has spent several million Singapore dollars on the Web services integration. Most of that investment was on the infrastructure side. Hardware — server technology — and a range of software services such as availability monitoring, security and intrusion detection, composed the rest of the setup costs.
Simply put, Web services are a technology platform. But for all their simplicity, they are attracting a lot of attention. A report from U.S.-based IT consultancy Gartner Group, “Key Entry Points into Web Services Markets,” estimates that new licenses for software that use Web services standards will represent a $21 billion global market by the end of 2005.
Similarly, a white paper from U.S.-based IT consultants IDC (sponsored by IBM) projected two major benefits for the vendor’s Web service-enabled customers over three years: 22 percent faster time to deployment of key new applications, and an increase of 47 percent in developer efficiency — that is, being better able to use existing assets to reduce costs.
But before leaping onto the bandwagon, CFOs need to understand what Web services can do in their companies. Web services, for example, can act as an online back office, taking enterprise application tools one step further by enabling applications to talk to each other via a common language and set of protocols, rather than integrating them all onto one hub.
If Web services do allow applications to talk to each other through a reference architecture that defines some open technology standards, what are the standards, and how do the applications talk?
From a physical standpoint, there has to be a network between the applications. That network could be the Internet, or an extranet between a company and a supplier, or an intranet between two single applications within one company. Generally, Web services are deployed from a CD-ROM, usually implemented into a software or hardware product, be it from major Web services providers such as IBM, Microsoft, Sun Microsystems, and BEA Systems, or one of several other application vendors.
Let’s say that you have an application, a billing system. Prior to Web services, a Web browser using HTML (hyper text markup language) would connect to this billing application online using HTTP (hyper text transfer protocol). The application understood how to talk through the protocol, and it passed on information, represented in that specific language. When the basic Web environment became pervasive, a protocol and language were developed to enable the billing application to continue to work in this wider environment.
These were WAP (wireless access protocol) and WML (wireless markup language). In the current Web services environment, the billing application is the same, but the protocol to enable it to connect directly to other applications is SOAP (simple object access protocol), and the information is encoded in XML (eXtensible Markup Language) and marked up using WSDL (web services definition language)
Confused? You’re not alone. But to visualize what a Web services-driven future will look like, all you have to do is look at the online travel business. When an end user books a flight online, for instance, common sense dictates that a hotel and perhaps a rental car should also be booked at the destination. Eventually, these commonsense elements to a booking process will be completed through Web services without human intervention, using transactional procedures that will dictate potential database parameters and make automated choices according to the information already identified.
An example: A typical parameter might concern transportation at a destination. Under this parameter, there could be several data fields indicating preferences regarding rental cars, buses, rail services, or private limousines.
“If I know all your travel preferences, for example, but that application is not linked to my Web-site application or my transaction or billing system, the business process is disjointed,” says Tom Burns, director of Intel Semiconductor’s Asia Pacific Internet Solutions Group in Hong Kong. “But the online travel company that automates the preferences, not for all consumers in its business base but the ones it knows well, and then puts together a system that meets that target audience, will win more business,” he adds.
Of course, the world at large tends to be squeamish about machines and automation, thanks to heightened security fears. And yet there is something deliciously addictive about completing a booking process in half a dozen steps via a machine connected to the Internet. The question is: Will the end user be more inclined to flick through pages of flimsy travel brochures, or to click feverishly on a computer mouse and scroll down endless Web pages to find a hotel or flight that might already be fully booked?
According to IT advisory group Giga, the lion’s share of Web services implementations have been on the small side. In a recent survey of 120 companies in the United States, some 43 percent of the respondents said they were building physical Web services architecture. But only 38 percent of these were implementing internally between two or more of their applications. About 62 percent said they were linking applications with a business partner.
In Asia, Taiwanese semiconductor giant TSMC has a Web services platform for its business partners based on Java architecture. This supports a customer portal, TSMC Online, an employee portal, and a supplier portal called TSMC Supply Online, all of which run on Sun servers using Web services software from enterprise applications companies BEA Systems and BroadVision.
TSMC also uses an alternative business-to-business (B2B) platform called RosettaNet. This consortium, which now has more than 400 members worldwide, sets standard E-commerce interfaces to ensure collaboration between companies engaged in B2B.
The interfaces are defined as a series of steps, or PIPs (partner interface process), which occur in the business processes between the companies. Using RosettaNet standards, TSMC’s work-in-process information, for example, which defines where in the manufacturing chain a customer’s wafers are, can be transferred directly into a customer’s ERP system because both parties subscribe to the same definitions of the business processes, and their systems can talk to each other.
Investment in the four platforms is difficult to estimate, says Quincy Lin, TSMC’s senior vice president and chief information officer, because they have been built over several years and the investment is ongoing. He’s clearer about the benefits, however. “We estimate that RosettaNet alone has shaved 50 percent off our time and costs,” he says.
Previously, he explains, overseas customers had to call TSMC’s regional sales offices in San Jose, Boston, and Amsterdam to ask for an engineering document. Sales people would talk to customer engineers and the document center in Taiwan, so it took three or four days to get a document.
“Now, customers come to TSMC Online and find the documents they need online instead of calling our company,” says Lin. “I can’t quantify it other than to say the mode of business operation between TSMC and its customers has elevated to the level of color TV compared to black and white,” he says.
The Next Big Thing
TSMC isn’t alone in its enthusiasm for Web services. A growing number of companies are spending their IT budgets on Web services.
IDC expects the market to achieve a compounded annual growth rate of just over 50 percent up to 2006 in the Asia Pacific region (excluding Japan). Of course, buying software that is Web services-enabled is an easy decision to make. But as with any IT expenditure, finance managers need to remain focused on the potential return on investment and what business processes are likely to improve as a result of that technology.
At Beans Factory, a Singapore-based components manufacturer, CEO and chief technology officer Ng Kek Wee has done just that. He says that not only are Web services easier to implement than the process of unraveling and linking together customers’ legacy systems, but the fact that they communicate in one language — XML — makes application-to-application integration much simpler.
“We used to focus on developing products and creating more proprietary bridging technology so that our components could work with the various legacies in our customer organizations. But Web services have made this a non-issue,” he says.
Even his customers are beginning to recognize that integration is not as great as using the common languages and standards of XML and SOAP to communicate. Several of them, including Standard Chartered Bank, are now asking Ng how Web services can work for them. “Their CFOs used to be concerned about sticking to proprietary platforms because they had already invested so much and needed to keep them to ensure interoperability,” says Ng. But, he adds, the reality now is that “the more open you are, the more standards-compliant you are, the better off you are.”
The tough part, according to users and vendors of Web services, is to get started on implementing the technology internally.
Peter Brooks, HSBC’s senior manager for e-Channel Development, says that longer-term, the bank has a big opportunity to link ERP and CRM systems and will do so — providing they contribute to management of a customer’s online relationship with the bank. “Our CRM team is working now on how we want to manage at the customer level and how we display that through all technology in the bank, not just the Internet profile,” he says.
But should you bet your whole company and all future IT projects on Web services implementation today? No, says Intel’s Burns. What you can do is start small with a Web services implementation within one department, then scale up if it works. Scaling up will take Web services beyond their “first generation” position as a means to access rich content and embed it within an application or portal.
The “second generation,” which some companies have already reached, is where information and transaction flows between departments or companies are automated. An example of this would be the integration of an airline or hotel booking engine into a company intranet, which also has the company’s logic (its travel rules, discounts, or pre-negotiated rates) embedded into it.
“Customers want to know how they can take their existing IT investments and really preserve them across the enterprise,” says Michael Leung, group product marketing manager, .NET at Microsoft, in Hong Kong. “If they have back-end customer information locked up in a mainframe, for example, how can they expose that to other parts of the enterprise? Our clients are using Web services on intranets, to link ERP systems with CRM systems. They care only that whatever application is built, is built on an XML Web services interface.”
Adds Leung, “What’s the point of writing an application if the knowledge or the data within that application cannot be leveraged by other parts of the organization?”
But what next? C.J. Martin, director of IBM’s WebSphere Foundation & Tools, Software Group, says the virtual value chain — where multiple parties specializing in certain functions choreograph a business process together — is as far ahead as the IT industry is prepared to crystal ball-gaze.
In this scenario, an Internet portal provider, a warehouse management company, and a logistics company might get together to set up a Web services business to sell books online, warehouse them, and distribute them. “These three companies work in a virtual value chain where each of them does what’s specific to their core competence and nothing else,” says Martin. “That’s the utopia of Web services, where people’s application assets become a function point within a choreographed business process,” he says.
Interestingly, technology is not the primary inhibitor of this virtual-value-chain development. Achieving satisfactory contractual relationships between the parties, maintaining trust, and developing a viable business model will be the hold-ups. But when those requirements are met, the technology will be there to allow this particular utopia to unfold.