Future historians may well look back on 2003 as a major inflection point in the evolution of information technology--as important, perhaps, as the commercialization of the Internet in the mid-1990s. Last year, we saw the beginning of a paradigm shift toward business-process computing, a new approach to IT made possible by the emergence of Web services. In 2003 and beyond, this shift will accelerate to become the next wave in enterprise IT, resulting in dramatic gains in productivity and organizational agility.

Business-process computing makes business processes the focal point of IT. Whereas previous stages of IT evolution emphasized the development and deployment of discrete application functionality--building more features and capabilities into application software--business-process computing places central importance on the interoperability of applications to support end-to-end business processes.

Business-process computing promises to both reduce costs and improve business impact by enabling organizations to deliver better customer experiences with greater efficiency. Take the insurance industry. Today, most insurance companies require several days to complete requests for new policies.

Why? Because their underlying systems--rating, underwriting, policy administration--aren't connected. Instead, the process requires multiple manual steps and handoffs, creating inefficiencies and adding cost. With business-process computing, all these systems are seamlessly connected, so the process is completed in real time during a single interaction with the customer. The result? Greatly reduced cost and increased customer satisfaction.

Effective application integration--seamless, inexpensive, rapidly deployed, and easily modified--has long been the Holy Grail of IT. But before the advent of Web services, no solution made this possible. Most organizations have had to write custom programs to connect applications, each of which has its own set of application programming interfaces. This point-to-point approach is not only complex and costly, consuming up to half of an organization's IT budget, but also highly inflexible. Once in place, point-to-point integrations are difficult to modify and upgrade.

With Web services, we now have a set of standards--based on XML and XML variants such as XSD, XSLT, and BPEL--that facilitate application interoperability. And last year, the IT industry saw the introduction of Universal Application Network, the first complete integration solution that's based on Web-services standards and has the broad support of leading technology companies, including Accenture, Hewlett-Packard, IBM, and Microsoft.

As the market increasingly embraces Web services, Universal Application Network, and service-oriented technology platforms such as Microsoft's .Net and Java 2 Enterprise Edition, we'll see dramatic transformations in enterprise IT. For the first time, companies will be able to rapidly and inexpensively connect disparate applications and unlock the value of data residing in silos throughout the enterprise. Customers will become part of the fabric of the enterprise ecosystem, connected minute by minute, second by second to business processes and data. Companies will be able to achieve unprecedented levels of agility based on highly flexible business systems, which can be easily modified in response to new opportunities and changing market conditions.

We'll also see organizations embrace the concept of prepackaged business processes. Just as we saw packaged enterprise-application software emerge in the '80s and '90s, reducing the need for companies to custom-build applications, we're seeing the emergence of prepackaged business processes. Instead of modeling their own processes, companies can take out-of-the-box processes and slightly customize them to reflect their unique approach, resulting in significant savings in time and cost. Accenture estimates the use of prep ackaged business processes can reduce integration efforts by up to 60%.

The emergence of business-process computing means that the days of closed, monolithic application suites and proprietary integration solutions are over. Business-process computing, based on open standards, will free companies from being locked into one vendor's proprietary architecture. With Web services, application functionality becomes disaggregated, with each function available as a service that can be accessed (or consumed) on demand by any other application or service on the network, anytime, anyplace. Therefore, companies can freely choose those services that best support their business processes without having to adopt an entire application suite from a single vendor. More than ever, enterprise IT will be a best-of-breed world.

Thomas Siebel is chairman and CEO of Siebel Systems Inc. In October, Business Executives for National Security presented him with the David Packard Leadership Award.

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