Repacking Affects Physical Product Packaging, MarketingPromotion, Business Partnership Strategies, and Sales-Channel Approaches

Repacking Affects Physical Product Packaging, Marketing/Promotion, Business Partnership Strategies, and Sales-Channel Approaches

Figure 5-5 contrasts the traditional approach to product packaging, promotion, partnership development, and sales-channel strategies with the repackaging of products using a Web services approach.

Figure 5-5. Traditional Go-to-Market versus New Web Services Approach.

As illustrated in Figure 5-5, the traditional approach is inherently cost intensive largely because it involves too much investment capital to manufacture and promote a product, too much administrative overhead to structure business partner and customer relationships, too much time margin give-away to incent an indirect sales force to promote a given software product.

The traditional approach to building and packaging software involves the physical manufacture and distribution of the software package, which can be quite expensive. The Web services approach merely requires that the software maker "host" the application as a service on computers that their company (or a close business partner) run for Web-based clients. By packaging a software product for distribution over the Web, very significant costs for manufacturing and shipping can be avoided. This could make the Web services approach highly attractive to new software companies as well as those looking to reduce operating costs.

The traditional approach to marketing software products also involves creating product awareness and seeking/getting publicity. This is accomplished by chasing the press and analyst communities for attention and by investing (sometimes heavily) in advertising. Using the Web services model, a software maker can make its products "known" by publishing a description of them in a UDDI directory, where hundreds or thousands of people or programs may find them. This approach can greatly reduce expenditures on press/analyst activities as well as on traditional advertising.

Another efficiency that Web services could offer the software industry is in the area of structuring business partner and customer relationships. Currently, the approach to structuring business partnerships involves:

• using sales and technical people to search for potential partner prospects;

• then using legal advisors to structure a mutually agreeable business relationship; and

• then using other people to build and manage joint marketing efforts.

This traditional approach is both people- and process-intensive, as well as extremely costly. Using a Web services approach, applications would be able to describe what they can do, how they can link to a requester application, what the legal and financial terms are for doing business, and even how to resolve problems (problem escalation). Suddenly, the people- and cost-intensive traditional approach starts to look very unattractive in contrast to the efficient and cost-saving Web services approach to managing partner and customer relationships!

Finally, Figure 5-5 also shows that Web services can help software companies move their products to market more quickly and less expensively than by traditional approaches (because by listing a product in a UDDI directory they may not need to build a large direct or indirect sales force or even use a direct or indirect or indirect sales channel).

These benefits are related to listing products in a global UDDI directory. The logic is that UDDI directories will some day make products automatically known on a global basis to human or programmatic requesters of services. The need for a large sales force (which is expensive to build and maintain) or an indirect sales force (which can cost a software maker a significant amount of profit margin) to "push" a product to market can be obviated by making the product generally known and able to "sell itself," using WSDL to describe itself to interested requester programs.

Not So Fast…

It is reasonable to expect that over time a majority of software makers will embrace this Web services oriented business model. After all, it greatly reduces operating expenses related to sales/general/administrative costs; it reduces the need to spend vast sums of money on advertising and promotion; and it reduces the need to use human labor in structuring business and customer relationships.

But for this to occur, UDDI directories will have to become more prevalent and WSDL templates more robust in the way that they automate business negotiation functions. In short, the "publish/find/and bind" functions of Web services environments will need to become more sophisticated in order to enable the "new Web-services approach" described above to become a reality.