Web Services Are Poised To Change Business

Executives from many of the biggest IT vendors gathered in San Francisco this week to share thoughts on building the agile, or adaptive, enterprise, and two opposing themes jumped out: While Web services are the odds-on favorite to help create business agility, IT departments aren't designed to change as quickly as the companies they support.

Web services are growing more important, but the business world has yet to take full advantage of their potential, said Chris Thomas, chief E-strategist for the Solutions Market Development Group at Intel. Thomas, who defines Web services simply as applications that interact with each other using Internet standards, said there is a huge opportunity in knowing how to design and use Web services to sell products. But first, he said, some evolution will have to occur. The current Web-services focus is on integration and transactions, but eventually the technology will be used for process automation and collaboration in a trusted computing environment.

Thomas pointed to the nonprofit RosettaNet consortium, which has processed $5 billion worth of transactions in its effort to establish open standards for E-business processes, as an example of early Web-services success. He also noted that chemical provider Air Products and Chemicals Inc. has saved $1.5 million by using XML to eliminate one customer touch point in its transaction processes, and that it also has seen a 20% reduction in transactional errors.

But Thomas said the real value of Web services will require a shift by IT departments to a model based on occasionally connected computers, or OCCs. He expects increasing mobility to spur a user interface evolution from HTML online forms to XML offline documents that won't require persistent connectivity to complete. Retailers such as Amazon.com Inc. and Lowes Food Stores Inc. already are working on making this happen, said Thomas. "It's not an if, it's a when, as to whether you'll convert to an asynchronous model for mobile usage."

Such a change won't come easily, said Juergen Rottler, senior VP of sales and marketing for the services division of Hewlett-Packard. But companies facing the transition to an adaptive model can look to HP, which was forced to embrace business agility in completing its megamerger with Compaq. Rottler said that in the first nine months after the completion of the merger, HP cut the combined companies' costs by $3 billion, including $1.3 billion in supply-chain integration savings. IT costs have been slashed by 24%, he said.

Rottler also offered a number of adaptive enterprise successes among HP's customers, including:

-Savings of $10 million a year at Amazon.com;

-A reduction of 20% in technology costs at Sprint;

-A 30% reduction in printing and copying costs at Alcatel;

-And as much as a four-week reduction in design-to-order cycles at Herman Miller.

Rottler attributes the success HP and its customers have demonstrated in part to a set of metrics HP has developed to measure three aspects of business agility: how long it takes to institute change, the breadth of change a company can handle, and the ease with which changes are introduced. The ability to measure the results of the switch to an adaptive model is crucial to gauging its effect, and as Rottler pointed out, "almost no one has a framework to measure the impact of change."