Web services are for small businesses, too
by Ronald Schmelzer, Senior Analyst, ZapThink, LLC
ZapThink frequently talks about how Web services and Service-Oriented Architectures (SOAs) provide significant benefits to enterprises by virtue of their ability to dramatically reduce the cost and complexity of integration and enable business agility. It is apparent that companies in many industries are realizing the promise of Web services by implementing a variety of Web services projects. However, much of the short-term promise of Web services applies to companies where the integration cost and complexity is high because their IT infrastructure is heterogeneous – that is, consisting of a wide range of disparate technologies that are difficult to interoperate. Certainly, a heterogeneous IT environment is the norm in companies of any significant size, but the smaller a company gets, the more homogeneous its IT infrastructure becomes. And so, what do Web services and SOAs offer the small or medium-sized company that has, until now, simplified its IT universe by standardizing on a single platform or environment?
It's still about integration
At its core, every business shares the same elements: products or services that a business sells, customers that buy those products or services, suppliers that provide the components of a product or service, and the operations that make producing, buying, and selling possible. For large enterprises, each of the above operations can be extremely complex, involving hundreds or thousands of different systems, individuals, and processes. As such, to get the business running properly, all those internal systems must work together seamlessly – thus resulting in the tremendous need to simplify internal integration. However, the smaller a business gets, the more external its integration issues become. Rather than dealing with internal heterogeneous infrastructures, small businesses must integrate with their suppliers', customers', outsourced vendors', and partners' systems. In some industries, such as insurance, healthcare, and government, external integration is the primary integration issue since there are a large number of disparate, disconnected parties to integrate.
For such companies, Web services can make just as a significant dent in reducing the cost and complexity of external integration as it can with internal integration for larger companies. The challenge these small businesses face is that they must be able to implement secure, reliable, process-driven Web services across enterprise boundaries while staying within their small company IT budgets. Since small businesses typically have homogeneous IT environments, it will probably fall to their existing IT suppliers to provide Web services capabilities without breaking any wallets.
The smallest of small companies is, of course, the individual. The primary integration issue facing individual IT users is neither strictly internal nor external – it's integrating the applications on their desktop. Fortunately, individuals can just as easily realize benefits of Web services as their larger company counterparts by simplifying the interaction and exchange of information among the various pieces of desktop software that they require to maintain their productivity, either as knowledge workers or small business owners. While we have (mostly) realized the promise of plug-and-play interoperability of hardware on the desktop, the same cannot be said for the interoperability of software. If Web services are to gain any traction at all with the smallest of businesses, they must solve once and for all the integration issues facing desktop applications.
Looking to others for service
Nevertheless, simplifying integration is not the end-all and be-all for enterprises looking to implement Web services –the promise of business agility is just as intoxicating. SOAs in particular are all about enabling reusability and agility through the implementation of an architecture that provides loose coupling, coarse granularity, and asynchrony. While large enterprises crave the benefits of business agility, it may be that small businesses that depend on technology for their operations – no matter how small the companies are -- have the most to gain from the promise of SOAs. After all, large companies are often victims of their own size. Decisionmaking is often slow and tedious, and any process improvement or change often requires long periods of time. Also, large companies are bogged down with legacy investments that require them to evaluate all the implications of a business decision. Small businesses, on the other hand, thrive because they are nimble and agile enough to make business decisions on-the-fly. However, small businesses that depend on technology, like their larger peers, can be also become bogged down if their IT infrastructures are not capable of rapidly changing in response to business requirements.
Therefore, technology-centric small businesses have much to gain by implementing process-driven Web services and SOAs that allow them to outsource critical aspects of their operations and make changes to their businesses with minimal IT impact. In addition, such companies can find significant value from Web services that give them the redundancy, fault tolerance, and reliability that only their larger competitors can now achieve. Web services and SOAs are location independent, which means that the underlying systems can exist anywhere behind or in front of the corporate firewall. By taking advantage of location independence, small businesses can continue to be agile – innovating and expanding their markets while reducing their cost of change.
In the next 12-24 months, ZapThink predicts significant growth in the market for outsourced services to small and medium-sized businesses based on Web services. Companies like Salesforce.com, Amazon.com, and others are banking on the fact that small businesses will choose to outsource their critical operations to these companies, while depending on Web services as a way to simplify and reduce the risks of outsourcing.
Web services as a business model
On the flip-side of Web services consumption, small businesses also have lots to gain by exposing certain core business operations through Web services. While business models for selling access to Web services online is still mostly the stuff of fiction, companies can realize significant benefit by providing Web services interfaces to products and services they already sell. For example, manufacturing companies can expose their inventory and shipping processes as Web services so that their customers can get better visibility into ordering and fulfillment. The benefit to a small business of exposing certain of their operations is simple: making it easier to embed a company's processes into their customers' can increase sales, customer satisfaction, and competitive advantage. In fact, companies that embed their supplier's operations into their own will find it that more difficult to replace them – not because of technical difficulty, but because of their usefulness to the organization.
Solving small businesses' problems
Many vendors selling Web services products or services today are focusing entirely on solving problems at the largest of enterprises. Indeed, there are many good reasons to focus on the large enterprise: large enterprises have the greatest complexity, short-term need, and largest budgets. However, there is a limit to which the Web services markets as a whole can depend on large enterprises for growth. Most industries are dominated by small and medium businesses, their problems are just as significant as those of their larger competitors, and small companies vastly outnumber larger ones.
However, small businesses are different from their larger peers in that their problems are of a smaller scale, more external in nature, and require significantly lower IT investment. As such, vendors looking to sell Web services products and solutions to small and medium sized businesses must provide simplified, often out-of-the-box solutions that offer not just the basics of Web services and SOAs, but also all of the complex requirements of an SOA including security, management, and process. Of course, divisions of large companies share many of the same characteristics of a small business, providing another reason why Web services vendors should be encouraged to think of the small business as they put together their offerings. By paying attention on the small-end of the Web services implementation scale, the usefulness of Web services increases dramatically for everyone.
Copyright 2003. Originally published by ZapThink LLC, reprinted with permission. ZapThink LLC provides quality, high-value, focused research, analysis, and insight on emerging technologies that will have a high impact on the way business will be run in the future. To register for a free e-mail subscription to ZapFlash, click here.
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