Systems/Enterprise:
WEB SERVICES: ONE SIZE DOES NOT
FIT ALL
The Australian Taxation Office, the Bank of Queensland and Nintendo
Australia
use Web services in different ways for different things but for the same
reason: to get closer to their customers.
Peter Wilson has worked at the Australian Taxation Office since 1964. "I've
been around a little while: long enough to see the evolution of business use
of IT," says the first assistant commissioner of ATO group technology, "but
not long enough to get set in my ways."
With such experience, Wilson is an exponent of the theory first set out in
Clayton M Christensen's book, The Innovator's Dilemma, that technology exists
in either of two states: disruptive or sustaining. In Dilemma, Christensen
argues companies throughout history who dominate in the use of a sustaining
technology often fail to grasp the implications of new ones.
Businesses today have the dilemma of how to harness it, something the ATO,
Australia's tenth largest bank, Bank of Queensland (BoQ) and videogame
distributor Nintendo Australia are all trying to do. Many people come unstuck
at the first hurdle -- defining Web services -- and mistakenly believe the
term simply means using the Web as a channel.
Wilson says Web services is, "A service or process interacting with another
service or process via the Web" -- the result being a higher-value service.
"It enables us to access information where it naturally resides and to use
processes we don't own or control but with which we can access and affect a
process we do own or control."
Wilson compares each service or process within a business to the components
of
a car -- sparkplugs, pistons, fuel gauges. "Put them together, you get a thing
called a car that delivers a service too," he says. "You have to co-locate
them to make them work together. Web services enables us to create that kind
of service without needing to group them so tightly together."
The potential use of this technology is so broad, BoQ's general manager of
IT
and operations, Jennifer Heffernan, chooses to shun the term 'Web services'
altogether.
"I prefer 'business services' as it more appropriately describes what it
really means for business -- extending the range of services your own
technology framework offers both internally around the company itself and
externally to customers and business partners," she says. "You can deploy
services in, around and outside the company quicker and cheaper than was
possible before. Business services give business agility."
Green-Screen Departure
From a programming point of view, what Web services-enabled architecture
does
is allow applications to 'talk' to each other via the Web using protocols such
as XML (extensible markup language) and SOAP (single object access
protocol).
At Nintendo Australia, a 60-person company importing Nintendo products for
distribution to retailers in the ANZ region, this has allowed great
improvement to be made to the business-to-business (B2B) communication
process, which largely relies on EDI (electronic data interchange).
Nintendo Australia is not in a position to use Web services for competitive
advantage, explains IT manager Peter Stroud, because it has no direct
competitor and its activities are determined by what its Japanese parent
supplies and the demands of powerful customers like the Coles Myer Group.
"They come to us and say 'you will do' rather than us going to them with
ideas," explains Stroud.
"If we go back three years, we had standard JD Edwards green-screen
software
in-house: that was our foray into B2B communications," he says. When JD
Edwards introduced a forced upgrade, Stroud took the opportunity to look into
Web services-based architecture. "We wanted to move away from having to put
any more software on to our platforms.
We didn't want any more proprietary software except for the base ERP
(enterprise resource planning) system," he explains. Through this, Nintendo
Australia connects to a Web services-based EDI system, from which it downloads
EDI messages from clients in whatever format it needs to. "EDI's not old
technology when it's been Web-service enabled," says Stroud.
Using a Web service any business can access without needing its own
proprietary software means Nintendo Australia can expand its customer base.
"It pushes it down to make it more affordable, which we like," says Stroud.
"This allows us to do business with smaller customers who can't afford
proprietary EDI. What we do in the future is push that down to the extremely
small retailers, the mom-and-pop businesses."
Stroud says the migration from green-screen to a browser interface has been
easy and that management has been supportive of the switch. "Retail's going
through a lot of transition," he adds, "and this makes it easy for us to
respond quickly."
ATO Wets Its Feet
The ATO's only 'true' Web service is the Australian Business Register
(ABR),
a
process it operates separately to the rest of its business and supplies to
other service providers. The full ABR Web service was launched in June 2000
and is used by services offering ABN registration, such as Business Entry
Point, the ATO's online portal for businesses.
"We use the Web for a whole heap of things but these systems are using the
Web
as a channel," says Wilson. "They are not Web services in themselves."
The ATO's first foray into dealing with its customers electronically came
in
1989, with the introduction of the Electronic Lodgment Service (ELS), which
enables tax agents to lodge clients' tax returns by dialling up to a secure
network operated by Telstra. Tax agents file 75 per cent of Australian tax
returns in this way. The ATO is shortly launching a Web-based alternative to
the Telstra service.
"We're trying to wind that up even more with IT products developed for
specific users," says Wilson. One such example is the eTax browser, a Web-
based product launched in 1998 that allows individuals to lodge tax returns
online. In 2001, eTax had 170,000 users; in 2002 it had 550,000. The ATO also
has the Electronic Commerce Interface (ECI), a Web-based form that allows
people to lodge business activity statements via e-mail.
The ATO is only getting its feet wet with Web services, says Wilson,
because
it cannot justify large investments in bleeding-edge technology without a
clear-cut business need. "What's the value proposition that needs to be in
place?" he says. Web services may provide the best solution to service
customers cost-effectively but he wants the ATO to be known for its innovative
use of proven technology, not as a cavalier.
"You stay away from bleeding-edge technology because you're not in the
business of being first to market," he explains. "It's not the competitive
edge you're looking for. We have to collect 95 per cent of Australia's revenue
and we're not going to put that -- or taxpayers' confidence in our
administration of the system -- at risk.
Capability enabler
No such constraint exists at BoQ, where the business need for Web services
was
clear from the start. "We had to get Internet banking up and running as soon
as possible," explains Heffernan, "we were in a situation of competitive
disadvantage."
The bank needed something that could be implemented fast, within a limited
budget and be cost effective. With an overhaul of its core banking system also
due, the solution had to be compatible with new, as yet unspecified,
systems.
"We wanted to be in a position to be able to cost-effectively extend the
range
of services offered online as we build new capability," she adds. The
advantage Web services gave, says Heffernan, was flexibility, as the Core
Systems Migration project gets underway with EDS. "It gives us the advantage
of being able to extend a new range of products and services to the customer
faster and cheaper than the competitor can."
BoQ had promised its customers Internet banking within a six-month
timeframe.
This succeeded, she says, because the company got the basics right first.
Heffernan says it's vital to understand your current capabilities before
deciding on a use for Web services. You can then decide what architecture
needs to be in place to support a Web services-enabled business and start to
leverage it.
Having the right partners is also crucial. At BoQ, this meant working
closely
with technology partner EDS and Microsoft, as the Internet banking solution is
based on .Net. Some BoQ staff transferred to EDS. "None of this is easy," she
says. "You should expect a high degree of stress." Nonetheless, Heffernan says
the project was a success because it reversed the bank's situation of being at
a disadvantage in an incredibly competitive sector.
As this competition intensifies, Heffernan says she expects banks to
increasingly rely on Web services for the flexibility and agility they need,
although she believes the change will be gradual. "I don't expect an
avalanche," she says, "because banks are very much constrained by legacy
systems and spaghetti architectures."
Security Suspect
The greatest question mark hanging over Web services, as organisations
relinquish proprietary control over the services they provide, is security --
particularly for those such as the ATO that deal with sensitive information.
"All organisations are concerned about risk and we're no different," says
Wilson. "What we will provide access to will depend on the amount of risk
we're prepared to take and that depends on how certain we are that you are who
you say you are."
Again, Wilson says the approach has to be user-centric. "What we're trying
to
do is build the value proposition from a customer perspective to want to have
these things." Critical to this is a system of online verification for the
taxpayer that allows them the convenience of being applicable to all
government Web services transactions.
"When they have learnt to deal with one of you, they're going to be able to
deal with all of you," says Wilson. "After all, if every car had a different
user interface, then nobody would learn to drive. You have to have
interoperability."
Currently, digital certificates are not this simple, falling into what
Wilson
says is the greatest restriction to the ATO's use of Web services -- the
customer's capability to conform: "to be confident in technology, in the
Internet, in you as a service provider and their own ability to set up the
technology." He says existing access to customer-facing Web services tools has
been too complicated and too convoluted for the average user to bear. "When
you start to think about everything being service-based, what determines
whether you use a service is how accessible it is," he says. For Web services
to make a real impact on individuals, "it has to be as simple to use as the
telephone.
"We have the power now to do things we would never have dreamt of doing
before," says Wilson. Changes to the delivery of computing power through grid
computing and the speed and volume increase enabled by broadband are not only
making computing more powerful but have the potential to alter cost structures
too.
As with many other areas of service delivery in the 21st century, we are
moving towards a far more user-centric environment. "We firmly believe the
marketplace is heading in that direction. The question is about timeframes -
how quickly? We need to be able to find ways of opening up services that are
convenient, low-cost and will recognise their circumstances," says Wilson.
Stroud agrees the potential of Web services in a future that also includes
grid computing and widespread access to broadband is enormous. "In the gaming
industry, it's very competitive, so who knows where we're going to be in five
years time?
"Our biggest worry is whether the average Australian family can afford A$60
a
month for broadband just to play games. Telstra has to pull its finger out on
that one."
But Stroud believes the biggest impact on his industry will come from IPV6,
the next-generation of IP addresses due to be made available when the current
ones run out. "Once these are available," he says, "everything can have an IP
address so everything can be online. Major devices can all have an IP address
so you can be anywhere in the world and you can obtain access.
Even our products will have an online address. You may still buy a Nintendo
game from a store but six months later you might be able to buy six new levels
that you can download." All of this would be done through Web services, he
says, as the various services and processes, located via IPV6, talk to each
other.
"That means Web services is going to become far more important for us to
interact with our customers as we're going to use it to push more stuff out
and make it more the user's responsibility to access the services they need,"
he says.
For IT professionals in smaller companies such as Stroud's, the biggest
benefit could be the free time this creates, as users service themselves. "As
we'd spend less time providing services, more time would be available for
research and development (R&D). We're only a small IT department -- R&D tends
to be done in the evenings and that's no good for your quality of life," he
adds.
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