Transcript Managing Digital Organizations Web Services Business Value Team 6 03/07/05 Management Workshop Arsalan A. Lodhi Pankaj Luthra Daniel M.

Managing Digital Organizations
Web Services Business Value
Team 6
03/07/05
Management Workshop
Arsalan A. Lodhi
Pankaj Luthra
Daniel M. Li
Managing Digital Organization
Key Issues
 Biggest Challenge!
Tremendous pressure to drive growth by productivity and squeezing cost
 How do we achieve productivity?
Intelligent automated responsive business model
 What does that mean?
- Componentized and prioritize your processes
For example – credit card authentication, supplier lookup, risk management
suite, etc
- Enable processes to be responsive to the dynamics of market
For example – have systems find the best and cost effective supplier themselves
and place an order
- Improve connectivity both internally and externally
For example – systems that are closely connected to each other will streamline
business processes and improve reliability
How do I achieve all that ……?
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Web Services
 What is it ?
a standard way to leverage your existing IT infrastructure component talks to
other components within the same enterprise, across the enterprise with your
customer and supplier.
Can be seen as a way to integrate IT applications built using different
technologies.
 What is the problem?
½ of 80% of companies that had to alter their business models could not do so
because of inflexible IT. ERP systems reduce fragmentation and silos, but lock
companies into rigid business processes.
 Value Proposition
-
Faster response to customer priorities and shifting markets
Faster delivery of business change, both internal and external
Higher end-to-end process value
Reduced cost of change
Build inventory of service component to be re-used for
different business model scenarios.
Streamline and simplifies information management.
Flexibility in the integration of both internal and external components
to improve business processes.
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Web Services Value > new market
Create new distribution and discovery channels
Enable more innovation
Drive Productivity and cost effectiveness
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Web Services value > loosely coupled applications
 Leverage assets across enterprise when wrapped around services by breaking vendor
specific communication channels
 Generate new businesses and stream of revenue by selling internal core expertise as
services
for example: CitiConnect – Citibank payment processing service
 Improve business intelligence by acquiring real time business performance data by
integrating once-siloed applications/departments
 Improve time to market as connections to partners and customers can be made faster
even dynamic
 More choices of vendors and partners to pick on the basis of cost effectiveness and
excellent service: same communication language leads to intelligent systems to pick and
place order to new vendors
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Web Services value > Lower IT Budgets
 Lower the cost of connection, management, and integration
 Reduces complexity of integration – Open architecture simplifies third-party
implementation
 Delivers platform and technology independence – businesses will no longer
worry about picking right suit of applications to match existing Infrastructure
 Creates stack of component based inventory of services lead to reduce
deployment cost
 Support for multiple client types
 Higher availability – one system down will not affect the entire business
 Reduce development cost as integration and communication of component will
be based on Industry Standards
 Eliminate need to rip and replace – more of a plug ‘n play framework
 Facilitates grid computing – workload is distributed across cheap machines –
example of Google
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Web Services value > Strategy Perspective
 Buy services on a need basis, shifting development/maintenance burden to
service providers.
 Latest technology available - service providers will compete to provide up-todate technology to keep their market share.
 Some online services can be sold to other companies as a potential source of
revenue.
 Enhanced services for customers, leading to increased customer satisfaction
(Allstate insurance)
 Effective communication with vendors streamlines supply chain and cuts costs
of stockpiling inventory/maintaining warehouses. (DELL corp)
 Increased employee efficiency (UnumProvident)
 Facilitated Grid Computing – reduced operating costs.(Hewitt)
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Evaluating Vendors
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Considerations while choosing Technology
 Lifespan – shouldn’t be replacing technology every 2-3 years
– XML, SOAP, HTTP offer 7-8 yrs lifespan.
 Comparative ease of implementation – a relative measure
 Comparative costs – another relative measure as compared to other
technology/vendors
 Security – should be based upon “INDUSTRY STANDARD” security protocols
 Scalability – ease of adding extra functionality or additional users as or when
needed.
 Reliability
 Interoperability
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Considerations while selecting vendors
 Vendors that conform the most to existing industry standards.
 Stable, mature companies with a history of reliable customer service.
 Vendors who are experts in their field and intend to remain among the market
leaders.
 Vendor should be able to support your system for the duration of its lifespan.
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What are the disadvantages of WS?
 Relatively New
- No established “Best Practice” methodology in this realm
- Prone to implementation risks.
- Lack of security standards – Still being finalized by vendors as they work toward achieving a common set of
protocols
- Many specifications/standards are still “work in progress”
 Some Problems with Availability and Reliability
- Easy to become overly dependent on service providers.
- No website is available 100%, service providers can become unavailable.
- Initially requires a certain amount of commitment between partners.
 Increased Competition
- Competitors can also easily implement very similar services.
- Service providers can also cater to the competition.
- Services become more increasingly commoditized
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Frequently Asked Questions
 Is it more hype from IT industry - why not?
- Technology providers have been investing heavily in implementing Web Services infrastructure
- Support from major vendors including IBM, Microsoft, Oracle, BEA, Siebel, and SAP
- New standards are created and approved by bodies such as OASIS, WS-I, and W3C for reliable deployment of
transactions, workflow, e-commerce, messaging and security
 What is the ROI on Web Services?
- ROI is usually hard to establish in terms of dollar amounts; a better measure would be the strategic value added:
- Business Process Efficiency
• Improved information management and accessibility by business processes
• Real-time and straight through processing (ie. up-to-date inventory and order processing)
• Customer, partner, and employee enablement
- Business Process Efficiency
• Not locked into proprietary technology
• Wide choice of suppliers and improved quality through competition
• Reduction in technology costs through commoditization
- Lower Entry Barrier
• Low cost enables the integration of a branched network of small partners and suppliers
• Globalization and the integration of geographic dispersed organizations
- Flexibility
• Minimizes system change on the business
• Simplifies finding and switching to new partners and services.
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Frequently Asked Questions (cont.)
 What is the best implementation strategy?
- Step-by-step approach
- Start with the “Edge” of the enterprise and work inward
• Supply Chain Integration
• Connecting with external partners, customers and suppliers.
• Implement functionality with the most payoff first
- Incorporate additional functionalities as returns are realized.
- ie. IBM’s SOMA (Services Oriented Modeling Architecture) – reference architecture that simplifies the alignment of
business processes to Web Services
 What value do I get to be a leader instead of follower?
-
Gain competitive advantages earlier on
Establish exclusive and/or strategic partnerships
Improve customer loyalty by enhancing customer experience
Services implemented can become revenue generating; “rent” to other companies.
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