Web Services Business Value Team 6 03/07/05 Management Workshop

1. Web Services Business ValueTeam 603/07/05Management Workshop Arsalan A. LodhiPankaj LuthraDaniel M. Li

2. 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 ……? |

3. 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. |

4. Web Services Value > new market • Create new distribution and discovery channels • Enable more innovation • Drive Productivity and cost effectiveness |

5. 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 |

6. 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 |

7. 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-to-date 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) |

8. Evaluating Vendors |

9. 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 |

10. 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. |

11. 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 |

12. 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. |

13. 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. |