Out of The Box: Strategies for Achieving Profits Today and Growth Tomorrow Through Web Services Review

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Out of The Box: Strategies for Achieving Profits Today and Growth Tomorrow Through Web Services ReviewThe story in web services to date has been told by the technologists. That is why we see an endless supply of articles about XML, SOAP, WSDL, UDDI and the rest of the WSxL alphabet soup. Ditto for the .NET vs. Java wars. It's time to transition from architectures and protocols to business models - how does any of this help to run a business faster, better, cheaper? Enter John Hagel, who spent sixteen years as a Partner with McKinsey, and has recently set up his own consultancy company.
Hagel starts by noting that web services is the first IT technology which supports an organic and self-adaptive organisational model of the enterprise. Hagel introduces "the Service Grid". Above the computing and network protocols there is a conceptually-distinct layer of functionality which has to be there to make web services fly. We need solutions to problems such as: security; transaction integrity; billing; orchestration of functions; and in particular ontologies - the standardisation of the meanings of entities and attributes within and between businesses. (Note the "semantic web" activity in W3C).
Many people assume web services are just a re-run of the "application service provision" experiment we saw a couple of years ago. In chapter 3, Hagel provides an excellent review of the ASP wave, the business requirements which drove it and the reasons why the experiment failed. Business were keen to move from a license to a subscription model, they wanted to use enterprise application services without investing in technology and operations. But CIOs were worried about the performance and security of Internet-provided applications, and concerned that if ASPs went out of business, their own companies would be left in a lurch (and the CIO would lose his/her job!).
Although the technologies of web services are still in their infancy, some people out there are using them. In chapters 4 and 5, Hagel describes Dell's continuous improvement of its supply chain using web service interfaces to talk with its supplier systems. He points out that existing applications can be upgraded to expose their interfaces as web services to support new business processes relatively easily and cheaply.
Generalizing from his Dell example, Hagel argues that web services will be introduced from the edge of the enterprise, later penetrating the core. The "edge" is that part of the enterprise which deals with the environment: customers, suppliers, partners. The alternative view is that web services will see early introduction within the enterprise itself, as CIOs exploit the power of web service interfaces to kick-start enterprise application automation (EAI) for legacy systems, which to-date has been just too difficult, costly and time-consuming.
In chapter 6, Hagel uses the examples of Cisco and Nike to examine "process networks". The situation where an orchestrator (dominant company with market power) controls the activities of a veritable keiretsu of partners in its industry value-net. Not via micro-management or direct administrative power, more through "certification, coaching, promoting or dropping based on overall partnership performance".
In chapter 7 Hagel turns his attention to the enterprise itself. Most enterprises, Hagel observes, are coalitions of three very different kinds of business. Firstly a customer relationship business focused on "share of wallet" (customer-centric); secondly an operations business focused on low-cost, economies of scale and routine (process-centric); and thirdly a product development business focused on creativity and innovation (new-product-centric). These three business types have different drivers, cultures and types of people. Many commentators have pointed out that enterprises have to decide if their focus is to be "customers, price or product" and that it's foolhardy to try to be a bit of everything.
Why not unbundle these functions into separate enterprises? Conventionally the answer is that excessive transaction costs load the scales in favour of retaining vertical integration of these functions. However, visionaries have long argued that eBusiness, with its dramatically decreased transaction costs, will permit a generalised outsourcing model leading in the limit to the virtual corporation. Hagel's view is that rather than atomization of enterprises, we can expect to see significant consolidation, particularly in the areas of customer relationship and operations-focused companies, where strong economies of scale exist.
Concluding, Hagel has a vision of the web-services-enabled company moving over a period to a fluid, decoupled "process-network"-type architecture. I imagine this will work for some companies and not for others. Company architectures are solutions to multiple complex constraints, and web services modify the parameters of some of them, but leave others unchanged.
Conclusion
John Hagel writes in the fluid style of the McKinsey consultant, short sentence constructions embedding abstract nouns and appropriately well-judged adjectives. But it's so bland that at the end of a long day, one can barely keep one's eyes moving along the lines of the pages. It's hard to know what to advise. The parts which read best are the case studies, where the arguments are locked into real experiences. Perhaps the problem is that the ratio of ideas to words is just too low.
Is this a book about business trends or is it a book about web services? There is a reasonably familiar story about eBusiness, the "frictionless economy" and the industry-architectural consequences of increased service velocity and very low transactional costs. Anyone who has looked at web services has experienced the "aha" feeling that at last we know what will actually make eBusiness work.
Except that eBusiness and web services are both very much works in progress. We don't know exactly how web services will transform business, and we don't know exactly how the needs of eBusiness will shape and form web services. This book is a great scene-setter at some level of generality, (although it is too long), but it flies a little high over the terrain, and we don't seem to see where the major issues will be over the next two to three years. I guess that book remains to be written.Out of The Box: Strategies for Achieving Profits Today and Growth Tomorrow Through Web Services OverviewManagers today are understandably skeptical of the promises of new technologies. During the 1990s, vendors of both enterprise applications and Internet platforms promised enormous benefits. Companies invested large sums, but the benefits either failed to materialize, or came at a high price. Managers sacrificed flexibility and struggled to collaborate with business partners - a crippling disadvantage in today's marketplace. Now, leading business strategist John Hagel III has a refreshing message for managers burned by over-hyped technologies, yet pressured to find innovative ways to deliver more value with fewer resources. He focuses on a new generation of technology - known as Web services. This technology connects existing IT platforms in more automated and flexible ways, leading to much lower operating costs. The premise is practical and devoid of "change the world" promises. That very pragmatism, says Hagel, will drive enterprises to adopt it.In this book, he provides a clear view of the business implications of Web services: its distinct capabilities, its power to deliver near-term profits, and its potential to drive long-term growth.Drawing from the experiences of pioneering adopters, Hagel shows how Web services will enable companies of all sizes to: realize bottom-line savings quickly with modest investment; leverage investments in existing applications and create more flexibility; target specific areas for near-term cost reduction; establish-or leave-business relationships fluidly and inexpensively; and, create leveraged growth platforms for long-term competitiveness.A landmark book for CEOs, strategists, and IT managers, "Out of the Box" addresses near-term cost concerns and requirements for future success. As it discusses Web services, it provides deep insights into business strategy. At its core, this book tackles the most fundamental business issue facing managers today: how to continue to create value as competition intensifies. It also outlines innovative approaches to business process management and organization. John Hagel III is a business consultant based in Silicon Valley, and is coauthor of two best-selling books, "Net Gain and Net Worth". He has served as a senior executive with various technology companies and spent sixteen years as a Partner at McKinsey & Company, Inc.

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