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3/10/2006
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Web Services By The Dozen

The buying and selling of Web services is in its infancy, but StrikeIron provides customers with a range of hosted services and content databases

StrikeIron isn't the first to try to capitalize on general-purpose Web services. Grand Central Communications ran through millions of venture capital dollars and investment by CNET founder Halsey Minor to offer Web services as an integration hub for business partners. But enterprises needed to bring their own integration capabilities to the party, which remained a stumbling block for customers. Grand Central is being reorganized.

StrikeIron goes beyond Grand Central's plan, offering services directly to customers, with easy- to-use integration tools and partners like Bridgewerx, a supplier of a $17,000 appliance for Web service connectivity, to supply connectors and adapters inside the customer's firewall between StrikeIron services and specific mainframe and ERP systems. StrikeIron handles the billing and accounting chores for its partners that build Web services, including Dimple Softwares, FraudLabs, idExec, and Relevant Automation.

Not For Everyone

Web services aren't suitable for every business need. They tend to be most useful for occasional interactions between business partners and one-time interactions with an online customer, rather than high-volume, transaction-intense operations. And connecting to Web services can be a challenge, depending on how much of the infrastructure of the business adopting the Web service has been converted to a services architecture.

For new Web applications designed as services with their own Web interfaces, the connectivity problem is reduced, says Ken Harris, CIO at Shaklee, which provides nutrition supplements, household cleaning products, and cosmetics to its distributors and customers through its Web site, and uses StrikeIron's address-verification service. Shaklee uses the service "several thousand times a day," StrikeIron's Brauer says

"The technology piece of it is very simple," Harris says. But formulating the business rules and taking action when address discrepancies occur is more complicated. That requires in-house know-how of what steps to take and which systems to tap to resolve discrepancies.

Harris is considering using other StrikeIron services, even though he says the company tends to write its own code in-house. But many see the day coming when companies will first look to marketplaces of Web services rather than develop applications. "It's a very good economical proposition," he says.

Fast Start

At eDiets, Wicorek says StrikeIron's address-verification service was easy to use, and it has performed to the company's expectations. "It corrects the misspellings of a user's entry and verifies that the address really exists," he says. If a customer's entry has discrepancies with what the Web service can verify as a real address, eDiets takes the order anyway, then tries to resolve the differences through an overnight batch process that double-checks possible explanations for the problem. When all else fails, human troubleshooters intervene and call the customer for resolution.

The result, Wicorek says, is a successful delivery service that greatly expands the scope of eDiets' business. "The first two weeks of January are our highest volume days of the year," and the company got its food shipments off to a fast start by having items ready on its site in time for New Year's Eve, he says. Because of the address-verification service, eDiets' "shipment error rate is extremely low," Wicorek says. Like Shaklee, eDiets is considering other StrikeIron services.

EDiets found that low fee-per-use pricing reduced its cost of entry into the packaged meal business. StrikeIron's services vary in price: The global address-verification service starts at $19.95 for 200 hits per month. But Wicorek knows there will be a day of reckoning as his new line of business takes hold: "As my volume goes up, the cost goes up," and businesses must calculate the long-term impact of that fee-per-use expense on their margins. EDiets negotiated a set fee with StrikeIron, projecting how many times it would use its service in its first year. It will pay higher fees if it goes above the projected level.

Brauer jokingly characterizes StrikeIron as an "80-pound gorilla" because, while the company is small, it dominates a field with few competitors. If it succeeds, and Web service markets proliferate, companies like Shaklee and eDiets that are just trying out Web services may find one day they can't live without them.

Photo by Image Bank

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