Web Services Take Integration To A New Level

Encompys Inc. would have a tough time doing business without Web services. The New York outsourcer supplies customer-management and trading services to financial-asset managers. As the financial-services industry moves toward its goal of achieving near-real-time transaction processing, a growing number of companies rely on Encompys' integrated customer-relationship management and trading applications.

Encompys' services are based on financial and CRM software from vendors such as Advent Software Inc. and Onyx Software Corp. Web services are built into these applications, making possible the high level of integration that customers need, says Michael Lane, Encompys' chief marketing officer. "Web services make our applications available to anyone with Internet connectivity. Our vision is to be available anytime, to any device," he says.

Web services will bring about the democratization and commoditization of enterprise application integration, says Annrai O'Toole, CEO of Cape Clear Software Inc., a Dublin, Ireland, development-tool maker. "Large companies that spend thousands, even millions, of dollars on developing links with their business partners can now devote their IT resources to more revenue-generating tasks," he says. "Small companies that were locked out of buyer-supplier networks because of the unaffordable costs can now do business with the big boys through Web-services connections."

Computing costs have dropped dramatically in recent years, including the cost of processing power and network bandwidth. But integration costs have, if anything, increased along with the complexity of companies' IT systems. "Web services will fundamentally change the economics associated with integration and make a significant impact on enterprise computing," says Craig Donato, president and CEO of Grand Central Communications, which operates a Web-services network.

Web-services standards--Simple Object Access Protocol, Web Services Description Language, XML, and Universal Description, Discovery, and Integration--make it easier to link applications inside companies and over the Internet to business partners, without adapters or tedious development work. It's an alternative to complex, expensive methods of business-to-business integration such as the aging EDI.

Proponents of this new, Internet-aware type of integration see Web services as the future of E-commerce. While Web services initially will be used by most businesses to integrate applications running inside their firewalls, their greatest value lies in integration across the supply chain.

Just how quickly Web services will become mainstream depends a great deal on how fast major application vendors such as PeopleSoft, SAP, and Siebel Systems build support for Web services into their products. Application vendors are taking a number of approaches to add the capabilities to their products. Most are adapting their software APIs to support the Soap standard, the fundamental message-passing protocol for passing data between applications, and WSDL for defining what a particular Web service does.

Many vendors are on track to debut new releases of their software with Soap and WSDL support later this year. Siebel plans to debut version 7.5 of its applications with that support sometime this summer, while Oracle, which already supports those standards in Oracle9i Application Server, plans to do the same with its E-Business Suite applications by year's end. Manugistics Group will support Soap and WSDL in version 7.0 of its supply-chain and profit-optimization apps due next month.

These developments will give IT departments a standard way to link applications from various vendors without resorting to the expensive EAI technology they've relied on in the past. Web services also provide a bridge between the worlds of Java 2 Enterprise Edition and Microsoft .Net development architectures.

Most application vendors have been aggressive in their adoption of Web services, Meta Group analyst Dan Sholler says. Along with integration advantages, application buyers are demanding Soap APIs as a way of "future-proofing" applications. With Web services, links between applications don't have to be rebuilt every time an application is upgraded or modified. But vendors' motives aren't entirely altruistic, Sholler notes, because Soap support reduces their need to write APIs that support all possible computing environments.

"The benefit to people like me is more flexibility," says Matt Doyel, CRM director for Reflect.com LLC, an online provider of customized beauty-care products. Reflect uses E.piphany Inc.'s CRM software for campaign management, real-time personalization, and market-data analysis. E.piphany is rolling out components of its E.6 release with Soap and WSDL interfaces, and Doyel says that will make it easier for him to configure E.piphany's call-center and Dialog customer-feedback applications when he buys them later this year. "Ultimately, the service I offer my customers is better," because of the improved integration, he says.

The benefits of Web services are manyfold for Encompys. Besides making the New York company's services easily accessible through the Internet, Web-services standards make it easy to link new clients into Encompys' network without developing expensive custom interfaces, chief marketing officer Lane says.

Human-resources consulting firm Hewitt Associates is adding Web-services interfaces to its benefits-administration software, making it easier for clients to tie into the system. But Tim Hilgenberg, chief technology strategist at the Lincolnshire, Ill., company, says he hopes to one day link that system with the SAP and PeopleSoft applications running in-house. "That's kind of the nirvana," he says.

Web services also are helping companies better personalize the information and services they deliver to customers. For example, a major financial institution and Cape Clear customer that O'Toole declined to name plans to use Web services to build custom financial applications that tie into customer data maintained by Siebel applications.

But exposing an application's API set to Web services is only a first step. Soap and WSDL just enable the connection. Application vendors have yet to specify the ways in which their software will collaborate with other Web-services applications. For that, vendors will need to build into their applications more collaboration and business-process functions that leverage the Web-services interfaces, O'Toole says.

A few vendors are moving beyond supporting Web services through their APIs and rebuilding their applications entirely. Onyx Software last year released a version of its CRM software suite that was rebuilt on XML, the markup language that provides a common format across applications. "We can publish our entire application as a Web service," Onyx CEO Brent Frei says. That reduces the cost and complexity of implementing the applications and adapting them to a business' IT architecture, he says. The advantage: Customers get more flexible applications, and business developers spend less time getting everything to work together.

SAP has taken particularly aggressive steps with Web services. Last year, it unveiled a plan to expose the majority of R/3 interfaces to Web services through Soap and WSDL support. About 500 APIs support Web services, says Peter Barth, technology director for the mySAP technology platform, and that number will eventually reach 2,000.

SAP is in the process of redesigning its applications to make them more modular, using Web-services interfaces as the connecting tissue among components, which will make it easier for customers to deploy and upgrade their systems.

Because Web services can make it easy to integrate software modules, some proponents claim the technology will take the best-of-breed concept to a new level by letting small companies produce components that compete with applications from SAP or other vendors and yet work within those application environments. But many are skeptical. "The issue isn't about integration, but about cost of ownership and management versus integration," Sholler says. "I find it hard to imagine that there's a tremendous opportunity for new application providers to compete directly with SAP in a way that SAP would be unable to duplicate."

A more likely scenario is that small software vendors will develop software components aimed at vertical markets that plug into ERP and CRM application suites from other vendors. For example, an equipment-purchasing applet could be developed for the oil exploration industry.

"We think there will always be a core set of highly integrated applications to provide core functionality," says Bo Manning, president and CEO at Pivotal Corp., a supplier of CRM applications for midsize businesses. Manning's vision is that businesses will obtain 30% to 40% of their application functionality from vertical applications, with the balance provided by enterprise application suites such as Pivotal's.

Even if Web services result in greater modularity, IT managers who expect easier upgrades could be disappointed. Testing and supporting greater numbers of software components, rather than complete applications, is inherently more complex, Meta analyst Sholler says. And the need to maintain stable interfaces usually results in "function degradation," because standards represent the lowest common denominator.

Ultimately, some application vendors will disappear as a new generation of software, designed from the ground up for Web services, appears. Just as client-server applications ate into the market for mainframe systems and Internet applications eroded the client-server market, Web services will upset the status quo.