Web Services

Web services are being touted as the latest, greatest technologies. So late, in fact, they aren't even on most of the general public's radar yet. And so great that they just may jumpstart the sluggish tech market.
by Julia Hanna

Movie buffs may recall that "plastics" was the whispered tip to Dustin Hoffman in The Graduate; if the movie were remade today, "Web services" might replace that advice. An overflow audience already seemed to know this, crowding a Hawes Hall classroom for a panel overview of Web service technologies from a provider, customer, and investor perspective.

Customers are concerned with integration and driving down costs, said Steven Lewis, Microsoft's general manager of .net market development. "There is a lot of momentum right now behind Web services," he remarked. "These are massive projects involving some of the largest companies in the world. One challenge we'll be facing is managing a highly distributed, complex Web services environment outside the firewall while maintaining security standards."

Interoperability and Web services security are two ongoing challenges, agreed Rod Smith, vice president of emerging technologies for IBM. "Interoperability will be a cornerstone word from now on, whether you're in wireless, the Internet, or Web services integration."

I would argue that Web services are under-hypedat this point.
— Aneel Bhusri,

"I talk to customers about their business problems, not their technology problems," he added. Developing Web services solutions is different from working on a product, because the customer drives the results more directly. "We can go to market and see a pragmatic return on our technology investments," he said.

"Web services are the perfect, customizable technology to meet that 'have it your way' need," said Rose O'Donnell, vice president of engineering at Bowstreet. With that said, she warned, "You don't want to pour the wet cement of hard-wired coding over a new solution." Using a common code base to build applications that automate repetitive tasks is key to serving the needs of various business partners.

The Customer's View

Representing the customer perspective, GM's CTO Tony Scott outlined transitions in the automotive industry that will drive its adoption of Web services: the movement from proprietary to more commonly used technologies; a shift from mechanical systems to those driven by computer connections; and the development of cars that are always "on the grid" and actively participating in service networks.

Before this can occur, however, issues such as complexity of installation and management, software quality, and cost must be addressed. Some other unsolved problems, Scott added, are quality of service and scale.

"We produce nine or ten million vehicles a year that are on the road for an average of ten years. That's a new model for the software industry—think about a ten-year-old PC and what utility value it has—it's a boat anchor. But there are lot of ten-year-old cars that will need service and support."

"I would argue that Web services are under-hyped at this point," said Aneel Bhusri, general partner at the venture capital firm Greylock. "Customers are quietly starting to use this technology, and they're driving significant cost savings."

Investment has taken place across four categories: design, development, and deployment of Web services; management and security; routing and messaging; and B2B Web service networks. While the big players such as IBM, BEA, and Microsoft control the platform, start-up opportunities exist with Web services deployment and application development, Bhusri said.

All About The Interface

How much effort is being put into interface design for Web services, one audience member asked Scott. What will be different about the car of the future's dashboard? "We favor audio interfaces over visual displays," he replied. "The bigger issues are interoperability and the back end and middleware layers—the customer layer will be customizable anyhow."

"Web services are perfectly situated to support multiple presentation layers," agreed O'Donnell.

"Customers will support innovation," said Smith. "But at some point they'll require common standards across business partnerships that will allow them to change the user experience based on market demands."

Does the intangible nature of Web services pose a particular marketing challenge, asked moderator and HBS assistant professor Robert Austin. How do you sell a product that customers can't see?

The easy sell for GM is reducing time to market, said Scott. Using Web services to streamline internal processes has reduced their vehicle design process from forty-eight to eighteen months.

"You can't see middleware, but you can prove ROI quicker than you can on some applications," observed Bhusri. "The cases I've seen show savings of 20 to 30 percent of the cost of traditional solutions—that's what sells in today's environment."

The Web Services panel discussion was held during the Cyberposium 2003 conference on January 18.

About the Author

Julia Hanna is Associate Editor of the HBS Alumni Bulletin.