IT Strategy Letter March 24, 2002

Web Services for SMEs. I had the privilege of spending 45 minutes on the phone today with Julian Bond as part of the research for my book on strategies for web services. Julian brought up a fascinating issue: Few people are yet talking about web services for small and medium enterprises: the restaurants, the doctors and the small manufacturers. Linking to their suppliers and customers is just as valuable for SMEs as it is for the big guys, but SMEs don't have programmers. How are they going to take advantage of web services until long after those with more resources solve all of the problems of incompatibility, reliability and security? SMEs buy off-the-shelf software that works out of the box. They live in a world that is standardized by virtue of being shrink wrapped. In this world, the desktop is more important than the server, and it's a world controlled by Microsoft.

Consider, as Julian suggested, the value of direct ledger-to-ledger transactions. Isn't that the ultimate goal of at least one aspect of web services? Imagine what it will take to build an integrated ledger-to-ledger web service supply chain for a large organization, even with a slew of programmers. How can SMEs even think of achieving such integration without help?

Now ask yourself, why did Microsoft by Great Plains [accounting software]? Was it to be the leader in the SME accounting software market? Maybe. Or maybe there's something bigger going on. Here's a scenario: Microsoft releases the .NET version of Great Plains. It has, built in, ledger-to-ledger communications. It talks to other Great Plains implementations straight out of the box. No code to write. Do these web services need to meet every standard? Must they be able to talk to systems running software from IBM, Sun or BEA? Not at all. Great Plains already has a strong installed base, and once a capability such as this is available, Microsoft can move through the SME universe, industry by industry, taking over complete value chains. (Remember, SMEs don't have as substantial an investment in applications beyond their accounting pacakges.)

And it's not just the software sales. SMEs will need a third party to provide authentication (PKI) and audit services. Who's well equipped to provide those services and to collect the monthly and per-transaction fees? And who's in a position to address the very small business (the SOHOs) by providing compatibility through a browser-based service? Can you say, "bCentral?" All that's missing are full-time broadband Internet connections for SMEs. What's that, two years out? About the same timeframe in which Microsoft could have the other pieces in place.

I haven't heard any of this from Microsoft, and I don't think Julian has either, but it's so incredibly powerful, it's a virtual no-brainer. What do you think?
Posted Sunday, March 17, 2002 3:18:42 PM

Web Services are Global. It's encouraging that web services are as active outside the U.S. as within. Too much of the Internet to date has been created in the U.S. and then localized for the rest of the world. It's not only inefficient, it also means that doing it right is an afterthough. That's one advantage of web services being supprted early on by companies like Microsoft, IBM, Sun and BEA that, that although U.S.-based, are already active worldwide. As Leon Benjamin in the U.K writes in his weblog, "In multi-lingual Europe we have a much bigger problem to solve than the USA and we are spending a lot of taxpayers’ money to solve it." Leon is considering the need for shared ontologies.
Posted Friday, March 22, 2002 11:00:53 PM

Passport. This is the best description I've read of the technology and issues surrounding Microsoft's Passport. By Andrew Conry-Murray in Network Magazine.
Posted Friday, March 22, 2002 2:41:37 PM

It's Whom You Know. Computerworld reports that Novell and BEA have formed an alliance. Funny how things work. BEA was created by buying-out Tuxedo (an important TPMS) from Novell. (Novell, at the time, had no idea what to do with this thing.) Now Chris Stone is Novell's vice chairman and acting CEO. Where did he come from? Chris created the OMG. Small world, eh? Does that give you a hint as to what might happen between these two companies down the road. Novell has certainly lost its lustre, while BEA has done well. But now the guy running Novell is an object guy and a good politician. (I knew Chris when he was in Data General's product marketing in the early 80's.) Stay tuned to this one!
Posted Thursday, March 21, 2002 10:34:40 PM

Dvorak: Another Crock. (That's his title, not mine.) I have no problem with John Dvorak's PC Magazine attack on the "rent software on an as-needed basis," but, unfortunately, the scope of his lambasting is too broad. He apparently believes all "software-service schemes" are the equivalent of renting applications. He never acknowledges web services as APIs into valuable hosted services. (John, have you ever used a web browser to track a FedEx or UPS package? Don't you think an application should be able to do the same thing?)

Perhaps he just enjoys reading his own stuff, such as when he refers to the Liberty Alliance Project as "another drinking club." As research for my new book, I spent 90 minutes this afternoon interviewing a senior executive for one of the worlds largest financial-services firms. I can tell you with absolute certainty that Passport and Liberty are considered to be very important by companies that matter.

One one hand, it's good to see articles that counter the hype. I'd normally just ignore someone who writes, "Face it, the web services model is a throwback to the dot-com era and this has nothing going for it. Waste your time on it at your own risk." But a lot of people read Dvorak, so we need to keep him in check.
Posted Thursday, March 21, 2002 10:15:17 PM

Fear and Loathing. In his editorial this week, InfoWorld editor in chief Michael Vizard suggests that, "...the concept of web services is downright frightening to [large ISVs], because it opens up the entire best-of-breed can of worms again." Michael continues, "With the advent of web services and corporate portal technologies, much of the rationale for purchasing application suites from specific vendors is going to disappear...The one place you hear broad support for web services is among providers of specialized applications seeking to integrate their offerings with larger sets of applications." If true, this may justify the existence of the cross-platform integration vendors. Otherwise, they're dead.
Posted Wednesday, March 20, 2002 6:22:10 PM

CitiBank to use Microsoft Passport. This looks like an important announcement. "Citigroup will use two of the .Net technologies: Passport, a password authentication service, and .Net Alerts. The Passport service will allow customers to be authenticated by Citigroup when making purchases online or accessing personal data. The Alerts service will be used to provide people with custom information online." [Sources: Pelle Braendgaard's Financial Applications Security Weblog, and Dave Winer's Scripting News]
Posted Wednesday, March 20, 2002 2:51:02 PM

It's So Crazy, It Just Might Not Work. I just recently found this article written by Clay Shirky last October. It's one of the best cut-through-the-hype articles I've read. Excellent food for thought.
Posted Monday, March 18, 2002 2:26:48 PM

Semantic Contexts. I'm still catching up on some excellent web-services analyses written nearly half a year ago. In response to the "It's So Crazy..." article by Clay Shirky, Julian bond posted this essay last October. Reading both articles, one realizes (or realises, in Julian's case) they're both right. Clay claims the web-services stack doesn't address the semantic context necessary to implement integration of two business entities. Julian at first seems to disagree, but instead goes on to describe the types of efforts underway to create those required semantic standards. Yes, they're above and beyond the web-services stack, and they include industry-specific efforts such as Rosettanet for the electronics industry, the mapping of competing standards such as Microsoft is attemptint to do with Biztalk, or through de facto standards such as via QuickBooks or Microsoft's Great Plains accounting package as I mentioned a few days ago.
Posted Wednesday, March 20, 2002 2:37:09 PM

Now is Not the Time. Gartner security analyst John Pescatore predicts this year will bring at least one major IT security problem that exploits a web-services vulnerability. He suggests, "Now isn't the time to jump on the web-services bandwagon." Information Week writer George V. Hulme sums it up, "Until that fear is overcome, the hoped-for revolution from web services will have to wait."
Posted Wednesday, March 20, 2002 10:38:17 AM

Web Services From Another Planet. I'm not a pessimist—really, I'm not. But I am on a quest to find the truth about web services. Two vendors have already told me I'm too negative, but when I asked them, "Show me," I heard nothing back. I keep reading amazing things about web services in various trade publications, but I haven't yet been able to find examples like these on my own. And it's not for lack of trying. Here's an example from this week's issue of Information Week:

"Behind his [Tony Scott, GM's CTO] enthusiasm is the fact that any application incorporating Web-services standards—SOAP, WSDL, UDDI, and XML—can automatically discover and connect with others based on those same standards."

"Jose De La Torre [...] whose firm does Web-services consulting for the auto industry, says he doesn't see any of the major software vendors lagging when it comes to support for Web-services standards. 'We've worked with everything out there and it does appearly truly interoperable,' he says."

I must be living on another planet. None (!) of the CIOs, CTOs and developers I've spoken with who are in the trenches trying to make disparate systems communicate are finding this to be true. In a nutshell, the standards either don't yet exist, or they're too much in flux. Anyone out there finding it easy?
Posted Wednesday, March 20, 2002 12:12:33 AM

The IT Strategy Letter is published weekly by Doug Kaye. The content is identical to Doug's weblogs.