Business Landscape

The innovation phase of Web services adoption will be characterized by the following traits:

• Organizations will apply the lessons learned from the integration and collaboration phases of Web services adoption to new processes and business models, redefining how organizations work with partners, suppliers, and customers.

• Publishing and discovery of services using UDDI registries will be widely utilized as organizations begin exposing and extending their internal processes using Web services standards.

• Organizations will transition from purely Web service consumers to also being Web service providers. Those organizations that recognize the value of their IT intellectual property, based on core competencies in IT, will be able to create new revenue streams by publishing their IT assets as Web services for others to consume. This in effect will change the IT department from a cost center to a profit center.

• Distributed Web services will be leveraged in extended business processes, driving business change in unanticipated directions as first movers experiment with Web services to drive new sources of competitive advantage.

• New business value will be created as value chains are expanded beyond traditional industry segments and boundaries.

Web services innovators will be forward-thinking organizations that see the big picture of how this technology will fundamentally change business dynamics. Innovators will seek new ways to drive business value and develop new revenue streams through the application of Web services technology. These organizations will redefine how business processes will be conducted across the boundaries of the traditional four walls of the organization. They will know how to expose very specific operational elements of their enterprise and dynamically link them to the corresponding processes of partners, suppliers, and customers.

For example, Wachovia Corporation and Thomson Financial extended their business processes using Web services by leveraging Grand Central as a services broker:

Wachovia Corp.’s Securities Equity Capital Markets division, in Charlotte, North Carolina, uses Grand Central’s Web Services Network to share market data with Thomson Financial, which provides data and analysis services to the financial industry. Wachovia’s intranet connects to the Grand Central network using SOAP, and Thomson connects to Grand Central using Microsoft’s ASP.NET. Previously, the companies were exchanging these reports via FTP; the failure rate was 2 to 4 percent.

Though the Wachovia IT team considered tackling the development themselves, Gwen Moertel, head of IT for the Securities Equity Capital Markets group, ultimately decided there were just too many hurdles. One of the biggest was getting a sign-off from numerous internal groups. “I would have had to go to our FTP guys, to our security guys, and to our database guys—just getting the approval would have taken months—so outsourcing made sense for us,” she says. ^[6]

Such operations are bound by workflow processes and Web services technologies into distributed information-based processes, reaching new levels of efficiency, collaboration, adaptability, and flexibility.

Planning Considerations

During the innovation phase Web services will truly become a disruptive influence for many organizations and markets. Initially, most disruptive technologies cause chaos, and the disruption created by Web services will be no exception. Thinking back to the introduction of the first microprocessor by Intel in 1971,^[7] IBM and the other mainframe manufacturers showed no interest in, and saw no market potential for, small PCs.

The development of the 4004 and later the 8008 microprocessor chip created the opportunity for innovators such as Apple, Tandy, and Commodore to capture an early lead in the emerging PC market. By the time IBM entered the PC market, it faced stiff competition from organizations that had already been selling PCs for a number of years.

The point is that even though large established organizations such as IBM have the people and capabilities, they sometimes lack the organizational flexibility and vision to embrace disruptive technologies. This allows those unencumbered by predefined operating plans, corporate mandates, and rigid reporting structures to grasp the innovation opportunities.

As the number and pace of disruptive ideas continues to increase, it is increasingly important that organizations develop and nurture the ability to think “Out of the Box.” As James C. Collins and Jerry I. Porras discuss in their book Built to Last, ^[8] it is critical to preserve the core, but continually stimulate progress. From the perspective of stimulating progress Collins and Porras suggest three organizational characteristics that can play a significant role in an organizations ability to adapt and innovate:

• Try a Lot of Stuff and Keep What Works —It is critical that organizations create an environment in which it is okay to experiment, to learn what does not work, and perhaps be surprised by what does.

• Good Enough Never Is —Everyone in every part of the organization should push the accepted boundaries, striving for never-ending improvement in all aspects of the organization.

• Big Hairy Audacious Goals (BHAG) —A BHAG (pronounced b-hag) represents a project or goal that goes to the roots of the organization. Take, for example, Boeing’s decision to commit their company to the introduction of the first commercial jet aircraft when everyone else believed that jets were only appropriate for military use. A BHAG challenges the norm and seeks to push the organizational boundaries, moving beyond the expected and taking the organization to new levels. Be aware that BHAGs are not for the faint of heart. Boeing bet and nearly lost the company in its efforts to develop the first commercial jet aircraft, but subsequently dominated the commercial aircraft industry for several decades.

The innovation phase will undoubtedly witness the emergence of new organizations as well as the morphing of established ones, but without a doubt the implications of Web services are not an “if” scenario but rather a “when” scenario. A firm does not need to be on the bleeding edge of the Web services tsunami, but do not wait to get washed away by the organizations who truly understand the implications of Web services for business innovation.

Plan of Action

Innovation using Web services will build upon capabilities developed during the integration and collaboration phases, but perhaps more importantly will require some organizations to make cultural changes to support and nurture an entrepreneurial and innovation-friendly environment. Important activities during this phase include:

1. Complete the back-office build out of Web service from both an integration and collaboration perspective. A Service Oriented Architecture (SOA), see Chapter 7, “Architecting for Competitive Advantage,” will provide greater flexibility to innovate and adapt as new competitive threats and challenges emerge.

2. Create a small multidisciplinary innovation team tasked with thinking “Out of the Box.” This team should bear three key questions in mind:

   • How can Web services be leveraged for innovation of current processes and capabilities?

   • What do we really excel at? Can these capabilities be exposed as Web services to create new revenue streams?

   • Are there any Big Hairy Audacious Goals (BHAG) that Web services can help us achieve?

3. Network with peers to see how they are using Web services for business innovation. Now is not the time to experiment in isolation.

4. As Collins and Porras suggest in Built to Last, “Try a Lot of Stuff and Keep What Works.” Where possible, experiment with Web services, learn from what does not work, and build upon what does. You might be surprised by what you learn and will be able to leverage successes to achieve competitive advantage.

5. Be sure to monitor emerging players in your markets as they may be positioning themselves to change the rules. As with the example of Dell Computer, new entrants may be better positioned, less encumbered, and more nimble in their ability to implement new business models. Learn what you can from these new entrants and be prepared to adapt quickly to changing market dynamics.

6. Do not let your investment in Web services get out of control. It will be critical to balance innovation with governance to ensure that newly developed Web services are deployed when and where appropriate, and are leveraged by authorized employees, partners, and suppliers to achieve maximum business benefit.

7. Continue to monitor Web services standards to determine which new standards can be leveraged to further extend the capabilities and options open to both you and your competitors. As discussed in Chapter 2, the W3C, OASIS, and the WS-I are three standards organizations that are extremely active in the Web services space and well worth keeping on eye on.

The innovation phase of Web services adoption will eliminate major roadblocks to the widespread use of Web services. Web services will enable new business process innovation and, ultimately, new levels of business execution and performance.

^[6]PC Magazine, June 30 2002, “Web Services Warm Up,” by Sarah L. Roberts-Witt.

^[7]www.intel.com, Processor Hall of Fame.

^[8]Harper Business, New York, 1994, “Built to Last,” by James C. Collins and Jerry I. Porras, pp. 90, 93–94, ISBN 0-88730-671-3.