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This chapter is from the book

This chapter is from the book

Finding Web Services Applications

Web service providers will look for Web services applications proactively. In doing so, it is essential that they look not only at how to automate existing solutions but also at how to take advantage of the nature of Web services to rethink the business model.

When ISPs launched, they sold their services as cheaper alternatives to familiar products. Web sites were sold as cheaper and more widely distributed marketing brochures. Likewise, e-mail was marketed a cheaper and faster replacement to postal mail.

There's some truth in there, but it misses interesting points. For example, Web sites can do more than marketing brochures. Web sites are also effective solutions to distribute up-to-the-minute information on products, such as their availability.

E-mail does more than traditional postal mail, too. Because it is both cheaper and faster, it enables more interactive communications with customers.

Looking for Opportunities

When looking for Web services opportunities, it is essential that you realize that they can do more than just automate existing procedures. Web services can deliver new forms of doing business.

When I was studying computer science, our teachers told us that unless we worked for a software editor or a hardware manufacturer, we would work in a cost center. At the time I didn't know what a cost center was, but here's how it was explained to me: The accounting department is a typical cost center. It costs money to pay the accountant and his or her secretary's salaries, but they contribute nothing to the bottom line. The law—not to mention good business sense—requires a company to account for its revenues and expenses, so it needs an accountant, but the accountant does not generate value. An accountant works only to support the other, moneymaking departments. A cost center is an expense that is accepted as part of the cost of doing business, but that does not contribute to total income.

As a young computer scientist, I was facing a life as a cost of doing business. Indeed, it makes good business sense to install software and automate as much of the administrative tasks as possible, but it does not contribute to the company's earnings. Computers can also dramatically lower the expenses, but reducing the costs in other departments is not, by itself, a revenue-making activity.

This line of reasoning, common at the time, has led to the widespread belief that IT departments exist solely to serve the other departments. I meet many computer scientists who adopt this point of view. They use words like "the business comes first" where "the business" stands for "the money-making departments."

That is true, but only up to a certain point. More specifically, that was a very sensible attitude 10 years ago when IT was mostly used to process information more efficiently. Today, with the advent of the Internet, IT is a new opportunity in its own right and, as developers, we have to help our users recognize this.

For an information-driven company, computer systems are like factories in the industrial age: the flesh and blood of the business. In the Industrial Age, businessmen would invest in good factories. Although building factories was expensive—a very serious cost indeed—a factory was also the foundation of the business.

We need to view IT in the same light. Computer systems are the flesh and blood of tomorrow's powerhouses. The dotcom failures are a keen reminder that creating cool technology is not enough to demonstrate good business sense, and that turning a profit remains a business priority. However, it makes sense to treat IT, and Web services in particular, as opportunities to grow the business.

Want proof? I lack the space for a detailed explanation, but look at distributors and supermarkets. To turn a profit they need more than good stores (the Industrial Age investment); they need to manage the logistics efficiently. This, in turn, requires computer systems (the Information Age investment).

Why It Matters

For an example, look at ordering and inventory management. Typically a manufacturer learns about the sales of its products through the orders from its resellers.

Suppose your company produces office chairs and you launch a new model of chair. How do you find how well the new chair sells? You can infer it is doing well if you receive frequent re-orders from your resellers. You might suppose it is not doing so well if your orders are low.

That's indirect information. It's useful, but not as useful as the direct sales information collected by your resellers. For example, reseller sales might be disappointing, but more detailed information would reveal that the chair is doing extremely well in certain markets. Re-ordering by resellers also always lags behind actual sales, which does not help with planning production efficiently. For example, you might refrain from producing new chairs because the initial sales have been low and risk running out of stock when sales finally pick up.

Web services offer opportunities to manage sales reports more efficiently. For example, a Web service could give you instant access to the sales information at the resellers' point. Instead of learning about the sales with a delay from a few weeks to several months, you could follow sales almost in real time and better adapt chair production.

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