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Having hyped web services to kingdom come as a means of extending business processes beyond the enterprise, there is now
growing recognition that the more compelling, more immediate, though somewhat more modest, value proposition of web
services lies in enterprise application integration.
Based on open standards, web services are about exposing business logic as software functions or modules which can be
accessed by other applications over the Internet or intranet.
"The initial benefits from web services are expected to come from the application integration
area," says Srinivasan Srikanth, vice president, ERP Technologies, dotcomERP. He cites a Forrester brief which says web
services interfaces for applications will lower the cost of integrating applications by an order of magnitude. "This is because
the web service interface will be a part of the application and so the cost of proprietary adaptors will be eliminated," he says.
Kenneth Andersson, associate research fellow of the Gintic Institute of Manufacturing Technology, estimates that a third of
IT budgets currently go into integration issues. "Business processes usually span multiple applications such as legacy
systems, customised systems and ERP (enterprise resource planning). There is the problem of having different platforms and
different meanings attached to data. This means before you do external integration, you need to do internal integration," he
points out.
Integration is key if businesses are to effectively manage and benefit from increased online presence and processes via the
Internet. "Businesses must ensure that their IT infrastructure and capabilities can integrate data from different sources and
formats for different applications, users and devices," says Keith Budge, managing director of Oracle Corporation Singapore.
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Internal integration issues are so important, in fact, that Roger Sessions, chief executive officer of ObjectWatch, believes two
years from now, 90 per cent of web services usage will be within the intranet.
"What drives banks crazy is that they cannot get their own systems to work with each other," he says. According to Sessions,
web services standards pave the way for enterprises to address these problems.
But what about B2B (business-to-business) collaboration over the Internet?
"Not yet," he says.
According to Rick Bergquist, chief technology officer of PeopleSoft, the concept of working collaboratively is itself a change
–"Not a technology change, but a mindset change."
"Historically, the enterprise has four walls. Collaboration pushes out applications further to customers and suppliers. Systems
will talk to each other and publish to directories. You can expose data, and customers and suppliers can look at the data. That
is a change in the business process."
So it may be a bit premature to talk about collaboration; but web services' B2B moment will come, say the faithful.
"Web services will be prevalent as more organisations move towards process integration with their key business partners as
well as potential business partners," says Andy Tan, ebusiness director of Intrinix Networks. "It extends the client-server
computer architecture prevalent today to be more network centric."
Srikanth of dotcomERP paints the scenario of a company wishing to purchase a large quantity of a particular material from
an electronic market place. It can specify its terms of purchase including delivery dates, insurance and financing options.
Web services will then help the company to identify the right supplier, insurer, insurance policy and transporter.
"Web services provide a conceptual and architectural foundation which can be implemented using a variety of platforms and
products to model B2B collaborations," says Srikanth. "The various different web services all running on standards-based
architecture bond dynamically to create a single business transaction."
Colin Png, director, .Net and Developer, Microsoft Asia, talks about "business process orchestration".
"It is not enough to integrate internal systems and external systems. With business process orchestration, the technology
allows you to orchestrate a workflow that integrates internally and externally," he says.
Png gives the example of a purchase order which is generated and approved internally, then goes out through the work flow
engine to an external partner. "It is about orchestrating multiple business processes across boundaries," he says.
And with this, web services will lead to businesses taking a second look at traditional B2B enabling technologies, says KC
Phua, product manager of Microsoft Singapore. "It is going to lift the barriers to real distributed computing."
For the IT industry, Srikanth sees two possible business models emerging from web services. The first is the creation of the
services themselves.
"Companies which specialise in building adaptors are expected to move into this space first, followed by the application
vendors themselves who will offer their application interfaces as web services," he says. There will also be many other web
services not specific to an application, for example a currency converter. "These could be developed by anybody from a large
enterprise to an independent developer. There are a lot of creative pricing models expected to spring up in this sector," says
Srikanth.
The other business model that will emerge is the provision of support infrastructure for web services. This could include
maintaining directories for web services, or search engines that can check multiple directories for a particular service.
Microsoft has taken to web services with a vengeance, trotting out XMLised servers, services, clients and developer tools as
part of its .Net web services strategy.
Embracing it with equal gusto is Oracle whose 9i platform, consisting of the Oracle 9i application server, database and

JDeveloper, provides a J2EE-enabled platform for businesses to develop and deploy web sevices.
For Bergquist of PeopleSoft, web services are "just APIs by another name". "They are about exposing applications," he says.
"But the big change in the last year as been the emergence of protocols such as SOAP and UDDI, that make it more
compelling and support the concept of the collaborative enterprise."
Indeed, the emergence and acceptance of these protocols and standards are a prerequisite if web services are to become a
major part of the B2B landscape.
"For true interoperability, standards have to be laid down and accepted by all both at the functional level and at the protocol
level. Industries must define and agree upon business forms, terms and processes, and the various web services protocols
must be agreed upon by the IT industry and be consolidated," says Srikanth.
The implementation of web services involves the adoption of standardised data formats such as XML (extensible markup
language).
"The determining factor is that data must be separated from processes as well as applications and this data structure needs to
be easily converted to different structures while retaining the integrity. XML's primary design goal was to achieve this main
objective," says Tan of Intrinix.
Steven Buckley, director of International Marketing at EXE Technologies, says XML will play a key role in transforming
sofware applications. "Previously, software was implemented in 'functional silos'. There may be one system for
merchandising, another for purchasing, another for planning, another for warehouse management and so on. The systems
could be integrated but sometimes only with significant cost and effort."
According to Buckley, XML opens systems such as EXE's EXceed Warehouse Management System (WMS) so that they can
become the "engine" of an operation. "Sometimes the WMS is driving other systems to execute tasks and other times,
systems are requesting information from the WMS and asking it to execute activities. It makes for a much more seamless
enterprise and allows companies to do many new things," he explains.
To turn web services into a reality, there also has to be a mechanism to locate the services and discover what they do. This is
handled by the Universal Description, Discovery and Integration (UDDI), a business registry that is analogous to the Yellow
Pages. "This standard defines the data structure to describe the web service interfaces and a set of application programming
interfaces to publish and maintain the registry," says Tan. "UDDI will provide the basic infrastructure for company to publish
its web services and enable other companies to find or discover them and become business partners."
Then there is SOAP (simple object access protocol), which provides the means to send a message to a service and get a reply.
SOAP provides a simple and lightweight mechanism for exchanging structured information between peers in a decentralised,
distributed environment using XML, explains Tan. It relies on two open standards: HTTP (hypertext transfer protocol) and
XML.
For example, whenever there is a purchase order for the supplier, the online procurement hub will set up a SOAP session to
send the purchase order to the supplier. Upon receiving the new order, the data will be transformed and sent into the
supplier's order processing software. An acknowledgement will be generated and this document is then sent back to the
online procurement hub.
Other key components of web services include a way to describe the input and the output of a service (WSDL or web
services description language), a platform to develop and deploy web services, and a mechanism to notify changes in service
descriptions.
While these standards pave the way for interoperability, Srikanth also points out the trade-offs. "By stressing interoperability,
web services sacrifice transactional efficiencies. Performance and load issues might play a major role in the future of web
services," he cautions.
There are also security concerns which have to be addressed in the various web services standards because essentially, web
services enable the opening up of application interfaces to the Internet, Srikanth adds.

Despite these challenges, the industry as a whole is optimistic about the future for web services.
Srikanth cites the same Forrester brief which notes that web services – currently deployed in high-risk, high-return projects –
will move to the mainstream by 2003 and gain maturity by 2005.
Benjamin Wong, chief executive officer of R&D TeamWorks, expects to see a substantial increase in B2B web service
offerings. "Many organisations today are looking at e-procurement, customer relationship management, field sales, supply
chain management and e-storefronts. With on-time, client-vendor relationships that need to be managed, web services then
become an essential medium for inter-organisation communications," Wong says.
There is an additional catalyst in the form of wireless technologies. "The deployment of real-time online services has become
a reality," he says. "Web anytime, anywhere is going to be the main driver of web services in the very near future."
'The next major web innovation'
Business software currently being used to automate various business processes in the organisation includes material resource
planning, enterprise resource planning and sales order management. "Business processes are successfully implemented in the
software as modules and applications," explains Andy Tan of Intrinix Networks. "Business partners who want to consider
further extensions of their business process can consider exposing some of the software modules or functions."
The software objects – pieces of code that perform certain tasks – can be shared by many applications.
Objects have properties – attributes that users can interrogate or set to a certain value, explains Tan. For example, users can
access the status of an order by accessing the properties of the purchase order object.
Objects also have what is called a "method" – a function that the object performs when invoked. Examples of methods are
AddNewOrder or GetStockPrice.
Using server side scripts and engines, these business objects can be exposed through a set of predefined interfaces as web
services. Another program on a different computer at a different physical location can then access these services. "This is the
next major innovation available in the infrastructure of web," says Tan.
Knowing the SCOR
Businesses may be adopting a wait-and-see attitude towards web services, but they are tackling
inter-enterprise collaboration on other fronts – leveraging existing investments in electronic data interchange technologies,
benchmarking themselves against supply chain management (SCM) best practices and taking a closer look at supplier
relationship management (SRM).
"Because the majority of a company's value is no longer created in-house – typically over half of the value is purchased or
sub-contracted – lowering the cost of the goods and services procured can have a significant impact on profit margins," said
Ramesh Ramchand, marketing director of SAP Markets Asia Pacific.
To come up with a unified way of talking about the supply chain and to provide benchmarks against best practices, the 700-
member Supply Chain Council has come up with the Supply Chain Operations Reference (SCOR) model.

One of the key areas addressed by SCOR is business process re-engineering. "The aim is to capture the 'as is' state of a
process and the desired 'to be' future state," explained Luc Kremers, business consultant with the Supply Chain Management
Centre, Gintic Institute of Manufacturing Technology. "But how do we quantify the 'to be' targets? We need performance
measurements," he pointed out.
"It is very hard to manage your company successfully if your company does not have a clear understanding of how well it is
performing and if your company does not know how your competitors are doing."
To address this, the second part of the SCOR model is about benchmarking, based on best-in-class practices. The Supply
Chain Management Centre recently conducted its first SCM benchmarking study covering 125 companies in three countries –
Singapore, Malaysia and Thailand. It included industry sectors such as electronics, food and beverage, petrochemicals and
transportation. Among the performance metrics measured in the study are days of payables outstanding, days of sales
outstanding, cash-to-cash cycle time, inventory days of supply and asset turns.
The third part of the SCOR model involves the analysis of best practices – the management practices and software solutions
that make up best-in-class performance.
Among the products supporting SCOR is Gintic's Supply Chain Information Portal, that "unlocks" information on the
enterprise resource planning system SAP R3 and gives a company the full set of SCM performance indicators based on the
SCOR model.
On the supplier front, SAP Markets talks about "exchange-based SRM", which will enable suppliers with collaborative tools
and information for conducting business more effectively, without the costs of establishing specific one-to-one systems for
each partner. "Traditionally, much of the total cost of procurement has stemmed from deep within the supply base where
processes haven't been automated and insufficient supplier performance monitoring has resulted in extremely low compliance
and unacceptable supply quality, reliability and delivery time," said Ramchand. "With powerful monitoring and analysis
capabilities as well as increased connectivity with suppliers, the costs and risks associated with rework can be prevented and
quality increased."
Microsoft last month also announced the availability of a new solution for supplier enablement. A key piece of software is
the BizTalk Accelerator for Suppliers, which includes adapters that let suppliers connect to systems that use the XML
formats created by Ariba and Commerce One and business intelligence tools for data analysis.
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