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There is no Web services yellow brick road

This essay is excerpted from an in-depth analysis paper which will be published in March 2003. The Stencil Group interviewed more than 50 IT executives to discuss the role Web services and service-oriented architectures played within their IT strategy.


Market Analysis

There is no Web services yellow brick road
Between the overwhelming uncertainty surrounding geo-political events and all of the hand wringing about when IT spending will pick-up , the industry is failing to notice that we are in the midst of a major architectural shift in enterprise computing. Enterprises will adopt services-based computing due to the economic advantages enabled by this computing model. One of the core findings from our recent set of interviews, is that enterprises will carve their own path and will embrace Web services in very different fashions.

[Author's Note: This essay is excerpted from an in-depth analysis paper which will be published in March 2003. The Stencil Group interviewed more than 50 IT executives to discuss the role Web services and service-oriented architectures played within their IT strategy. The full paper, "Web Services Rules," is available here: https://www.stencilgroup.com/ideas/reports/2003/wsrules/]

In fact, many early leaders have been pressing ahead over the past 18-24 months. Ultimately, enterprises need more flexibility from their software and IT assets, as well as a tighter correlation between IT assets and their business impact (e.g. increased revenues, faster time to market, heightened productivity, etc.). As opposed to "common wisdom," that Web services are used only for internal integration, we have learned that although this is a common use case, this is not a "one size fits all movement."

Today's IT imperative is to reduce technical complexity to increase business flexibility. Businesses increasingly value agility in their processes and systems, and past models of monolithic application design are no longer an effective option. In fact, the costs of maintenance and accommodating change are the major impediment to increasing productivity today. General Motors provides one telling example: despite the company's $3 billion annual IT budget, GM invests just 20 to 40 percent of this total into new development. The remainder is devoted to ongoing maintenance and upgrades.

One interviewee talked to us about the "Frankenstein effect," whereby enterprises are "stitching on, just one more set of features." Ultimately, these features create a monster, which is difficult to maintain and to isolate failure when things do break. Toby Redshaw of Motorola captured this sentiment recently, when he stated, "(adopting) SOA gives us a chance to dig into the guts of manufacturing processes. Barriers we've had forever are going to come down."

A snapshot of Web services adoption
While these businesses' specific applications and requirements reflect a diverse range of business factors, several themes among the organizations we interviewed emerged.

  • Web services adoption is not a question of if but of how. Adopters agree that the Web services stack and products developed around it are garnering wide acceptance in the marketplace. While they acknowledge the technology is in its early stages of maturity, they believe the wide interoperability and relatively open standards is a major driver of Web services' acceptance.
  • However, the scope of today's activity varies widely from exploratory research to advanced investments in software infrastructure. The relative weight placed on technical and business benefits plays a significant role in the types of projects that adopters pursued. Adopters are not yet using Web services for many applications (such as high-volume and transactional systems) that require more robustness than the first generation of standards allow.
  • Managing the costs and complexity of change is the biggest obstacle to increasing business flexibility. Interviewees identify the challenges of software integration, maintenance, and reuse as key technical issues in their IT infrastructure today. They describe visibility, control, and costs as the primary business requirements driving their decisions about IT.
  • Integration is Web services' primary functional application. The executives we interviewed shared a remarkable consensus that web services represent a very real opportunity to remove barriers to more flexible integration of systems, within and between corporate boundaries. Today's most common applications for services-based integration include portals and self-service automation, extending legacy functionality, and simplifying partner or supplier integration.
  • Evolution of technology and reevaluation of IT governance practices are progressing hand in hand. Balancing the benefits, risks, and strategic role of IT is an explicit element of how many organizations are navigating this shift to service-oriented architectures. These businesses view the loosely coupled architectural model as an enabler of balanced, federated models of governance.
  • Figure 1: Five Groups of Web Services Adopters

    PROFILE

    Technology Leader

    Business Innovator

    Pragmatic Opportunist

    Cautious Conformist

    Struggling Laggard

    APPROX. POP.

    15%

    10%

    25%

    40%

    10%

    VIEWS
    OF SOA

    Vision predates standards

    Early proponent of business value

    Tactical value for specific projects

    Cautious of change from status quo

    Cost pressures taking all attention

    KEY BENEFIT SOUGHT

    Loosely coupled infrastructure

    Competitive advantage and innovation

    Faster application deployment

    Reducing costs and leveraging skills

    Not looking ahead

    DEPLOYED PROJETS?

    Yes

    Yes

    Yes

    No

    No

    INITIAL FOCUS

    Enterprise SOA infra-structure

    Shifting IT economic model

    Cheaper, faster systems integration

    Keeping tabs on standards and vendor support

    Not thinking about it today

    INTERNAL OPINION LEADER

    CTO and architecture boards

    CIO and
    biz-tech executives

    Lead developers and project teams

    IT operations staff

    None at this time

    ACHILLES' HEEL

    Trying to design "perfect stack"

    Leaping before market matures

    Lack of coordination in efforts

    Little or no competitive advantage

    Falling further in the hole

    Underlying motivation for adoption path
    As Figure 1 ("Five Groups of Web Services Adopters,") points out, enterprises are embracing web services and service-oriented architectures in very different ways. It is not simply a question of "Crossing the Chasm," and a (reasonably) strict and linear path to adoption. However, each company with which we spoke was taking a slightly unique path to adoption (or non-adoption in some limited cases). The key differentiator was whether the early projects were focused on business or technical solutions. The second most telling factor was the breadth and scope of vision.

    As we dug into the interview with each enterprise, it became clear that the 4 core drivers which influenced this strategy were the following: Risk tolerance; strategic importance of IT to establishing competitive advantage; the business model / economic model for the company and the company's DNA, personality, etc. If an enterprise had self-awareness on these four issues, they are in a great position to develop an adoption roadmap with an appropriate sense of urgency for their operational needs.

    Risks and challenges face each slice of the spectrum. The most pragmatic companies we talked to, claimed to occupy more than one segment of this description, as they attempted to balance risk. This is a core challenge, as a company that it too technically-focused will replicate the "big bang" errors, while one that is too business and opportunistic, is on their way to duplicating the inefficiencies and redundancies of the "client-funded" model.

    What's changed during 2002?
    Over the course of the past 18-24 months, we have talked to more than 150 adopters at more than 100 companies. There were some major developments to highlight in this last concentrated set of interviews:

    The acceptance, in some cases begrudging acceptance, that Web services, warts and all, were on their way to broader adoption in 2003. The support from the packaged applications vendors (e.g. PSFT, SAP, SBL) – if at least by press release – seem to demonstrate additional weight and made the adopters significantly more comfortable than just a IBM/BEA/MSFT/SUN party did in the first half of 2002. The standards continued to progress at a steady rate and although challenges remain, not one of the platform vendors had taken their ball and gone home, nor invoked any royalty clause around an emerging standard (at least not yet!).

    Adopters continue to experiment and continue to learn. In our conversations, it became readily apparent that adopters are more comfortable with Web services and SOA after running 6 months of limited pilots, proof of concepts or simple experiments. They are learning which use cases are a strong fit for Web services, which will be in the future and which are not likely to be at all(at least not worth the effort). This success helps the early leaders define future use cases with greater confidence and move on to tackle more vexing questions, such as what is the right degree of granularity (fine v.s. coarse-grained) for a "business" service.

    Bottom-Line
    Enterprises will adopt service-based computing because of the economic model it enables. Enterprises need to have a stronger connection between the share of investment an asset receives and its impact on the business. By reducing the capital required to support maintenance and integration, enterprises will free up capital. Services-based computing enables a better resource allocation model by allowing businesses to outsource where needed and/or employ a variable solution. Although the motivations are the same – everyone wants to get to Oz, right? – the paths that companies are taking to achieve these goals. For better or worse, there is not a "yellow brick road" in the world of Web services.


    Copyright 2003 The Stencil Group, reprinted with permission. The Stencil Group is a strategic consulting and advisory services firm focusing on the creation of effective go-to-market strategies for their clients, enterprise software vendors, enabling them to establish competitive differentiation and market leadership.

    About the Author:

    Bill Robins is a partner at and co-founder of The Stencil Group. He focuses on understanding the buying priorities of Fortune 500 IT executives around enterprise software purchases and projects. He can be reached at ( bill@stencilgroup.com)

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