Decoding Web Services

With the slowing economy, employees are demanding faster, more convenient access to their benefits accounts to keep up with volatile market conditions, and the recent terrorist attacks have only increased that demand. According to Hewitt Associates LLC, 401(k) balance-transfer activity was nine times normal levels on the Monday following the disaster. Hewitt knows because the human-resources company provides employee benefits information, such as 401(k) balances and transactions, to its 250 business customers and their 15 million employees.

Hewitt has been developing a technology strategy to make life easier for its customers. It plans to give each company its own portal--managed by the human-resources company--that aggregates all employee benefits information. The problem: The customization involved in developing such proprietary solutions for each customer is complicated and expensive.

Enter Web services, a set of technologies that will let Hewitt write a secure servlet, a server-side program written in Java, without worrying about which type of technology is in use at customer sites. The servlet will reside on Hewitt's server and contain the logic for tasks such as transferring funds in a retirement portfolio. The Lincolnshire, Ill., company also will be able to give customers easier access to applications provided by third parties such as investment advisers. "Right now, the Web is mostly person-to-person, but both our clients and third parties want to gain access to each other, system-to-system," says Tim Hiltenberg, Hewitt's chief technology strategist. The company is testing about a half-dozen Web-services projects and plans to launch some of them by year's end.

At their heart, Web services comprise another alphabet soup of acronyms that may have IT managers throwing up their hands. But a growing number of business leaders already believe that those acronyms--Soap, UDDI, WSDL, and forerunner XML--portend a sea change in the way companies work together. Web services promise an IT world in which open messaging, search, and registry protocols will enable programmers to build software components that can automatically seek out and interact with other components built to the same standards.

Beyond the technological benefits, Web services have the potential to help companies save money and even find new ways to generate revenue. Because applications built to Web-services standards should talk to each other automatically, that would obviate the need for expensive enterprise application integration software or high-priced integration talent. Some companies have found ways to market their Web-services software externally, while others will use the technology to boost sales and customer relationships by building more effective Web sites.

But there's a host of concerns--from security to application compatibility--that will have to be resolved if Web services are to gain broad acceptance. Many businesses lack policies to collaborate with partners as closely as Web-services advocates envision, says Daryl Plummer, Gartner's VP for Internet and E-business technologies."If all this fails, it won't be because of the technology," he says.

Still, a number of vendors hope Web services will provide the next big market for software and consulting services, and businesses such as Hewitt have started Web-services projects. "We're at the leading edge, but we're convinced this whole notion is going to fly," Hiltenberg says.

Business-to-business application integration isn't new. EDI was launched in 1975 as the first of many attempts to create a standard way for businesses to communicate over a network. Those attempts have left a lot to be desired. While successful in certain industries, EDI has proved too complex and costly for most. Platform wars also squelched progress: Unix vendors pushed the Common Object Request Broker Architecture, while Microsoft backers rallied behind that vendor's interoperability technology, the Distributed Component Object Model.

This time, things may be different. "With Web services, all the major vendors are on board with their support," says Gartner's Plummer. Hewlett-Packard, IBM, Microsoft, Oracle, and Sun Microsystems all have said they will incorporate support for the Simple Object Access Protocol, a format for Internet messaging; Universal Description, Discovery, and Integration, a specification for building online directories; and the Web Services Description Language, which provides a uniform way to describe the interface to a Web service. Most vendors already support XML, which underpins Web-services transactions. Also, the Web-services programming interfaces aren't tied to any proprietary operating system or programming language, are quite flexible, and are becoming easier and less expensive to deploy as tools improve.

Life Time Fitness Inc. plans to give members access to applications through a portal built on Web-services technology. Registered users will be able to log on and create schedules, plan workouts, and chart their fitness progress. Exemplifying the prom-ise of Web services, the Eden Prairie, Minn., fitness company won't have to develop the applications in-house. Rather, it will partner with vendors that specialize in various pieces. For instance, Life Time Fitness will use a scheduling tool created by Xtime Inc., which develops time-management and interactive scheduling software.

When a Life Time Fitness member initiates the Xtime application on the Life Time portal, the action triggers a hyperlink via Secure Sockets Layer encryption to an Xtime secure page. The sites exchange certificates to verify each other's identity, and the member's information is passed from Xtime back to the Life Time Fitness site via a Soap interface.

Life Time Fitness plans to market to others in the hospitality and fitness industries a Web-service-based application to manage membership that it developed for internal use. Interest has been so great, CIO Brent Zempel says, that the company will spin off the unit that developed the application into a subsidiary called Averisoft.

Certain vendors actively promote the revenue potential inherent in Web services. Scott Clawson, director of marketing for Oracle's Oracle9i application server, says Web services can underpin business models that promise new revenue opportunities. A company that takes orders for its products on the Web, for example, could provide automatic links to a shipping service, a service that provides consulting on export-law compliance, or a service that provides tax calculation. Such links could generate referral or transaction fees.

Business users aren't the only ones who hope to make money with Web services. Microsoft is staking its future, and an initial $4 billion investment, on .Net, a Web-services initiative it introduced last year for enabling the delivery of software over the Web. Microsoft is outfitting software developers, at vendors and within IT departments, with tools such as Visual Studio to create applications that can take advantage of Web services. By year's end, the company expects to release Visual Studio .Net, which will offer better support for Web services. Future versions of its servers, including SQL Server and Exchange Server, also will feature deeper support for XML and Soap.

A handful of companies already use .Net services and software. Dollar Rent A Car Systems Inc. uses a Soap development toolkit from Microsoft to integrate its online-booking system, which runs on a Sun server, with Southwest Airlines Co.'s Web site, which runs on a Compaq server that uses the VMS operating system and Corba. Despite the different platforms, a person booking a flight on Southwestair.com can reserve a car from Dollar without leaving the airline's site. The Tulsa, Okla., car-rental company expects to save hundreds of thousands of dollars by routing customer reservations through Southwest and other airline sites rather than travel-agent networks that charge Dollar as much as $5 per online transaction. It costs the company just $1 per online transaction via the new methods.

But upgrading its line of development tools and servers doesn't radically change Microsoft's business model or create the new revenue streams the software company will need in the post-PC era. That's why it plans to deliver its own set of applications and services, some of them fee-based, over the Web. Under an initiative dubbed Hailstorm, Microsoft will offer office-productivity suites, Hotmail E-mail service, Passport user-authentication services, and scheduling applications as Web services. Microsoft "has long lusted after a subscription model that gives it an annuity revenue stream," says Dwight Davis, an analyst at Summit Strategies.

What remains to be seen is whether consumers will trust their personal information to Microsoft for safekeeping, a requirement of some Hailstorm services. Privacy advocates worry how personal data will be used, while others say security is a concern because of frequent hacker attacks on Microsoft. "It's worth worrying about Microsoft's ability to protect data against attacks," Davis says.

Industry players are understandably leery about anointing Microsoft as gatekeeper for Web services, but the Web-services model will need, at the very least, some entities acting as clearinghouses for various applications. Under such a scenario, service providers could establish themselves as central repositories for a wide variety of applications. The industry will need what Gartner's Plummer calls "service area networks" to pull together Web services for centralized security, billing, and payment management.

Security isn't just a Microsoft problem; concerns about privacy and data integrity could derail Web services altogether. Early adopters such as brokerage firm Charles Schwab & Co. say there are no built-in security mechanisms in XML or Soap, and vendors have yet to agree on a common fix. "There are still security and performance issues," says Chalon Mullins, director of architecture and planning at the San Francisco brokerage. Schwab is testing Web-services technology from Microsoft and others to integrate incompatible back-office systems and communicate with institutional investors, but Mullins isn't ready to introduce Web services into Schwab's trading-execution system because of that system's requirements for high reliability and performance.

Mullins has encountered compatibility problems when using Web-services tools from different vendors. In one instance, Schwab had trouble linking a Corba application to one written using the latest version of Java 2 Enterprise Edition. "You think the specs are at a certain level of interoperability," Mullins says. "It's not until we get in the field and do real things that we find the incompatibilities."

Some analysts aren't surprised. "If you're expecting to see Web services proliferating in a pain-free fashion, you're dreaming," says Summit Strategies' Davis. "The world of boundary-free interplay without programming intercession is still years away."

IBM hopes to cut that time by building its Web-services tools on open-source development platforms such as the Apache Web server and Linux. Additionally, the company is bringing Web-services tools to market under its existing WebSphere brand of E-business software. In August, IBM unveiled WebSphere Studio version 4, a set of tools designed to help software developers more easily create, deploy, and maintain Web-services applications. The company also recently unveiled its WebSphere Private UDDI Registry, which gives users what IBM says is a secure environment for posting Web services in an extranet or intranet.

IBM's notion about how Web services will best serve business diverges markedly from Microsoft's. Scott Hebner, IBM's marketing director for WebSphere products, says Web services will be of most use to companies that manage complex supply chains or large, dispersed internal organizations. Hebner envisions businesses connecting with multiple trading partners via Web-services technology to automate mundane tasks. "A vendor could write a programmable interface to a shopping cart with WSDL, register it in a UDDI repository, and a customer, without ever talking to the vendor, can send a query out once a month to buy what he needs," Hebner says.

IBM's focus on integrating enterprise applications may make sense. According to a recent Jupiter Media Metrix survey, 53% of companies that plan to deploy Web services will do so to interact with existing suppliers and partners. "Despite the enormous potential of Web services, the technology will find its early uses in the humdrum role of tying together an enterprise's internal applications," says David Schatsky, research director at Jupiter. Only 16% of U.S. companies will use Web-services technology in the next year to discover and interact with new partners.

The Bekins Co., a Hillside, Ill., trucking company, is doing just that. Bekins uses subcontractors to haul loads for which it lacks capacity or local presence. It's developing an application based on IBM's Web-services architecture that will make these orders, which reside on a legacy order-management system, visible to subcontractors that can use a Web browser to view and bid for the jobs. The Java app will run on IBM's WebSphere application server 4.0, which supports Soap, UDDI, and WSDL. The application is expected to be up and running by next month.

Randy Mowen, director of data management and E-business architecture at Bekins, says he wants to use Web services to give customers visibility into the company's inventory-management system so they can make better decisions about inventory replenishment. "We need to give them the ability to do that through our systems," he says.

Most businesses will adopt Web-services technology in small bites, says Paul Roth, chief technology officer at systems integrator CommerceQuest Inc. Because applications can be built piece by piece, he says, "you don't have to eat the whole watermelon to achieve some benefit." CommerceQuest is using Web services to help a large retail chain, which Roth declined to identify, integrate its supply chain. Using Web services for such a project is better than deploying a commercial application, Roth says, because Web services don't require custom interfaces. For that reason, Web services could give smaller companies an incentive to participate in supply chains, because interfaces built according to Web-services standards can be used to interact with a multitude of partners. "If an 800-pound gorilla insists its partners build this, it's not such an onerous burden anymore because they'll be able to use that exact same interface with other customers," Roth says.

In the Web-services market, Microsoft and IBM face competition from the usual suspects. Sun launched its SunOne initiative in February as an umbrella campaign that will house a broad range of Web-services initiatives. Prior to that, Sun laid the foundation for standards-based integration when it released Java 2 Enterprise Edition. But Bill Roth, group marketing manager for SunOne, concedes that J2EE doesn't go far enough in supporting full integration and directory services as provided by UDDI. "J2EE has been very successful, but there's still a set of needs out there," Roth says. Oracle is pledging support for Web services through its Oracle Dynamic Services framework, which has been available as part of Oracle's development technology since last December. The current version of the Oracle9i Application Server can respond to Soap requests, but a new version of the application server due later this year will include all the Oracle Dynamic Services technology.

Many of the pieces are in place for Web services to deliver on their promise. The necessary standards are gelling, and major vendors are rallying behind them. In the end, though, Web services' success rests with the businesses that will use them. The biggest hurdle may have little to do with technology and more to do with convincing business managers to adopt the more collaborative practices the technology enables.

Bekins' Mowen is cautiously optimistic."We probably won't know for three to five years," he says. "It's all about relationships and what companies are willing to do with each other."--with Alorie Gilbert, Jason Levitt, and Rick Whiting

Illustration by James O'Brien