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Key Applications

It is important to explore some of the fundamentals and business benefits behind the main technology categories and disciplines under investigation: Web services, peer services, real-time computing, business process management, mobile business, and enterprise security. These categories are all infrastructure areas that cut across multiple industries and multiple enterprise user constituencies; each can be applied to specific business processes and application areas for employees, customers, and partners. While enterprise security is not necessarily an emerging technology, it is included here since it is an increasingly important subject for businesses as they seek not only to create new forms of competitive advantage, but also to protect the competitive advantage and assets that they already have in place. As we shall see in the following section, these software categories and disciplines together represent a refocus on infrastructure that will create a new generation of enterprise software applications and new opportunities for enhancing enterprise value.

The business benefits of this next class of applications are perhaps stronger than the previous wave of applications that we saw in the original e-business era of the late 1990s. While e-business helped to connect humans to information and applications, the next evolution of software and the Internet will help to connect applications and business processes together, both intraenterprise and interenterprise. E-business will move from a mostly human-to-machine interaction to an entirely new universe of machine-to-machine and object-to-object interactions, setting the stage for ubiquitous computing. Web services, peer services, real-time computing, business process management, and mobile business will all serve as enablers for this next generation of business applications and for the ubiquitous computing vision to become a reality.

Refocus on Infrastructure

The software industry tends to move in waves, or cycles, as it evolves and matures. While the mid- to late 1990s were focused on packaged applications for functional areas such as enterprise resource planning, customer relationship management, and supply chain management, the next wave for the industry is a refocus on infrastructure: the horizontal or platform software capabilities that serve as enablers for all of these functional application areas.

This infrastructure software can be considered the building blocks, or behind-the-scenes components, that help to make everything run smoothly and transparently. To use a race car analogy, the infrastructure comprises all the components and processes that help to operate the car and relay vital information back to the pits, which are, for the most part, unseen by the driver. The driver, of course, monitors this infrastructure via communications with the pits and via his own dashboard. Along with a skilled driver, this infrastructure can make the difference between winning and losing.

When the Internet became a new infrastructure platform for the deployment of enterprise software applications, pushing many client/server applications into the history books, software vendors rushed in to develop and sell vertical software applications for specific industries and functional areas. The basic Internet infrastructure in terms of protocols and standards was fairly unsophisticated at the time, and still is, but software companies managed to enhance the session-less request/response paradigm of the Internet and offer compelling applications for business users that maintained the state of the users' session. This was achieved by using client- and server-side scripts and software components such as Java applets and ActiveX controls. As we all know, the Internet and the Web were originally designed for simple email, document exchange, and the display of static content, not for sophisticated and dynamic business applications that require access to back-end systems and databases.

Despite the limitations of the earlier Internet protocols and standards, these new vendor applications retained an acceptable level of user experience while using the compelling benefits of the Internet in terms of ease of development and deployment. Client/server applications had historically been very difficult to distribute to end users due to their "thick-client" nature, i.e., software and drivers had to be installed on each individual PC or laptop client in order to run the applications. In the client/server days, application releases, bug fixes, and upgrades were notoriously difficult and time consuming.

Into the Internet II Era

Now that the software industry has built out the functional application side for the enterprise, it is turning its attention back to the infrastructure layer and looking for ways to essentially build an Internet II—a new, more intelligent layer of infrastructure software between applications and the network that can significantly enhance business value.

There is, in fact, an Internet2 consortium made up of "over 190 universities working in partnership with industry and government to develop and deploy advanced network applications and technologies, accelerating the creation of tomorrow's Internet." The consortium works closely with the National Science Foundation (NSF) and other U.S. Federal Government research agencies. The Internet2 community is working on advances in applications, middleware, and networks and plans to offer 10-gigabit capacity by 2003.

The term Internet II is used loosely here, however, and is unrelated to the Internet2 consortium. The former term merely seeks to illustrate how the vendors are aiming to build enhanced capabilities on top of the basic infrastructure of the Internet and in so doing are opening up new possibilities for the enterprise decision-maker to extract business value. Extensible Markup Language or XML, as you might expect, is also playing a key role as an enabling technology for these solutions. Basically, the standards are maturing and becoming more open and interoperable, allowing more powerful business applications to be constructed on top of the underlying infrastructure.

Web services and peer services are two perfect examples. Both represent innovations that are reshaping the realm of possibilities for the business to create and deploy superior Internet-centric applications on both a technical level and a business level. We'll continue by looking at these two application areas and then move on to other exciting and overlapping areas, including real-time computing and business process management.

Web Services

Web services are perhaps one of the most exciting new areas within the emerging technology landscape. They truly have the potential to reshape entire industries and are closely connected with the SaaS movement.

Web services allow enterprises to communicate with one another in a business-to-business scenario by exposing their services programmatically over the Internet. Other enterprises may then search for, discover, and integrate with these services in an automated machine-to-machine manner. Ultimately, Web services presents the "holy grail" for business-to-business integration: business process discovery among business partners. Instead of publishing static content on the Internet, or dynamic, database-driven content for end users to interact with, companies are now able to publish entire transactional business processes via software. These business processes can be executed in a fully automated manner via the systems of customers and business partners without requiring those customers or business partners to know about the services ahead of time.

Web services can also be applied inside the corporate firewall in order to streamline enterprise application integration initiatives or even for enterprise portal development initiatives. The current evolution of Web services is expected to progress from internal application integration, to business-to-business integration with prearranged business partners, and finally to true business-to-business integration with dynamically discovered business partners. The latter will most likely gain adoption only in niche, commoditized areas where business trust issues related to dealing with unknown companies do not present a substantial business risk.

Electronic data interchange, or EDI, as a technique for integration between companies has been around since the mid-70s, but Web services promise to make enterprise application integration far more flexible and interoperable. They can help applications talk to one another independent of programming language or operating system by making the communication more loosely coupled and standardized. Additionally, a host of new business models can be created by combining Web services from a variety of business partners into powerful new offerings.

The research firm IDC expects the global market for Web services to triple from $22 billion in 2000 to $69 billion in 2005. All major software companies, including IBM (WebSphere), Microsoft (.Net), Oracle (Web Services Framework) and Sun (ONE), have announced strategies and platforms to support this emerging technology. In fact, Microsoft has already made an initial $5 billion investment on .Net, their Web services initiative. Additional new entrants in the Web services arena include companies such as Asera, Avinon, Bowstreet, Cape Clear, Grand Central Communications, Kenamea, Talaris, and UDICO. WS-I, announced in early 2002, was another milestone for the overall movement and will help ensure that Web services from different vendors stand the best chances for interoperability. The Web services value chain includes infrastructure services, platform services, directory services, aggregation and portal services, and, finally, business and consumer services. The value chain is being assembled and driven by the software industry, but the benefits for business users are compelling.

The business benefits of Web services include cost reduction via reduced IT expenses for enterprise application integration software and services and increased revenue opportunities via software as a service providing automated links with business partners for transaction fees and referral fees. Web services also help the enterprise move closer to the concept of the virtual enterprise by allowing core business functions to be published as Web services and other noncore business functions to be outsourced and subscribed to as Web services. As businesses start to unbundle their business functions and digitize them into software, Web services provide them with a new mechanism for exposing these services in an interoperable and accessible manner. For example, a company moving to an IT shared services model can use Web services to expose application functionality for other operating companies to use within the same organization. It can then assess charge-backs for use of these services.

An example of a company already gaining an advantage from Web services is Dollar Rent-A-Car. The company used Web services technology from Microsoft to integrate its online booking system with the Southwest Airlines Web site. The company expects to save hundreds of thousands of dollars by routing bookings through automated airline sites versus through travel agent networks. In this scenario, Web services technology is automating business-to-business transactions and disintermediating traditional aggregators of services. The ability to more easily connect systems between business partners has reduced the need for third parties to serve as brokers for the transactions. As another example of Web services, DuPont Performance Coatings used Web services technology from Bowstreet to create a customer portal for distributors and body shops in the automotive industry. The solution yielded increased business rule flexibility, end-user management, and mass customization of the portal when compared to more traditional development environments for constructing Web portals.

Peer Services

The concept of peer-to-peer computing was popularized by companies such as Napster in the consumer space with their controversial file-sharing community for the exchange of media files. The peer-to-peer concept has actually been around for decades and was used extensively in the early days of corporate networking in local area network products such as Microsoft Windows for Workgroups, Novell Personal NetWare, and IBM peer-to-peer Systems Network Architecture (SNA) networks.

Peer-to-peer computing is now becoming an increasingly important technology within the business community. Peer-to-peer basically leverages computers on the network "edge" (desktops) instead of centralized servers for performing various content, collaborative, and resource-sharing functions between client, or peer, computers on the network.

One of the major players in this field is Groove Networks, a company whose product lets groups create workspaces to share files, use message boards, mark up virtual whiteboards, engage in instant-messaging, have voice chat sessions, and much more. Groove Networks was founded in 1997 by Ray Ozzie, one of the original creators of Lotus Notes in the mid-1980s. Peer-to-peer computing goes beyond person-to-person collaboration for knowledge management purposes and also includes distributed content management and distributed computing cycles. Examples of its application for distributed computing cycles include the Intel Philanthropic Peer-to-Peer Program which focuses on a variety of scientific research efforts, including cancer research, and the SETI@home program which focuses on processing data from the radio telescope in Arecibo, Puerto Rico. SETI, or the Search for Extraterrestrial Intelligence, is a scientific program seeking to detect signs of intelligent life outside the planet Earth.

The analysts anticipate a strong market for peer-to-peer technologies within the business community due to the solid business benefits they enable. The Aberdeen Group and AMR Research expect corporate spending on collaboration software to triple from $10.6 billion in 2001 to $33.2 billion by 2004. The analyst firm IDC estimates that Fortune 500 corporations will lose $31.5 billion by 2003 due to rework and the inability to find information. Likewise, Meta Group states that workers spend approximately 25 to 35 percent of their time searching for the information they need, rather than working on strategic projects and business opportunities. Peer-to-peer computing has the potential to address many of these pain points within the business by opening up all computing resources for the searching and sharing of business information and for richer forms of collaboration.

Current initiatives in the world of peer-to-peer computing include Intel's Peer-to-Peer Working Group and Peer-to-Peer Trusted Library, and Sun's Project Juxtapose (JXTA). These initiatives aim to help build standards, protocols, and best practices so that corporate developers can focus on business applications for peer-to-peer technologies rather than building the infrastructure themselves. Some of the issues which these initiatives are currently addressing include the increased requirements for security, management, and interoperability that peer-to-peer computing requires, as opposed to the standard client/server model. Business users are understandably nervous about opening up their personal computers for resource sharing and for others to search and access. Some of the vendors and products in the peer-to-peer space include Groove Networks, NextPage, OpenCola, Advanced Reality, Microsoft Messenger, Yahoo Messenger and Groups, and Intranets.com.

One of the business benefits of peer services is improved employee productivity through the use of peer-to-peer collaborative platforms. These platforms allow groups to conduct business processes in a far richer collaborative environment than the simple email, phone, and fax interactions typical today when collaborating with business partners and customers. According to Groove, the technology helps people in different companies or different divisions reduce their "cost of connection" in collaborating with one another and performing their work. Business processes that can be enhanced and extended through the use of peer-to-peer collaborative platforms include purchasing, inventory control, distribution, exchanges and auctions, channel and partner relationship management, and customer care and support. Additional benefits of peer-to-peer computing include the ability to better utilize computing cycles on workstations across the business and the ability to better search and share content residing on knowledge worker desktops. Intel's NetBatch initiative, started in 1990, enabled the company to save hundreds of millions of dollars by using existing workstations on a global basis for large processing tasks related to their Engineering Design Application (EDA) environment and other initiatives.

Real-Time Computing

Real-time computing aims to enhance enterprise value by speeding business processes. In this manner, the enterprise can speed operations and sense and react to changes in its internal and external environment more quickly than its competitors, thus decreasing cycle times, reducing costs, and improving productivity.

There are many areas within the business that can benefit from real-time computing. These include interactions with employees, customers, and partners. One of the challenges for the business is to determine which business processes are capable of this change, which will actually benefit from this change, and which will yield the most favorable return on investment for real-time enablement. To determine this return, the business should generally look at the amount of cost takeout that can be achieved via real-time enablement and understand the amount of process change that needs to occur and the associated costs in implementing this change. Some business processes have natural frequencies that cannot be streamlined, while others are ripe for optimization. An area that has gained considerable attention recently is the reporting of financial results to the investment community. This is an area that can be improved considerably and may help to take some of the surprises out of financial reporting for both management and investors if it is moved to a more frequent timeframe. Homeland security is obviously another key area where real-time intelligence and information dissemination are critical.

The real-time arena has a natural overlap with mobile business technology since, for business processes to move closer to real-time scenarios, information and transactions need to be able to move from source to destination regardless of location. Human approval processes may also be a part of a larger business process that is being streamlined, so real-time computing requires mobile business techniques in order to reach key employees at any time and any place.

Software vendors in the real-time computing arena include KnowNow, Bang Networks, FineGround Networks, and OpenDesign. Many vendors in this space position their technology as an alternative to costly enterprise application integration (EAI) initiatives and state that real-time computing helps to move EAI functionality to the network. The technology usually aims to implement a two-way communication mechanism between various applications and uses Internet protocols such as the Hypertext Transfer Protocol, the communication protocol between browsers and Web servers, as the transport vehicle for the communication to take place. Real-time computing enables powerful and flexible methods for controlling data flow, aggregation, and analysis, acting in some ways like a hardware router in moving information to the appropriate systems.

One of the additional benefits of real-time computing is that it forces the business to focus on key performance indicators and key metrics and can help employees focus on the work activities that matter the most. When business processes are energized in this way, real-time computing can also help expose and correct weaknesses in data quality and process bottlenecks, or simply bad processes, that were less apparent under the former processes and procedures.

Business Process Management

Business process management, or BPM, is affecting enterprise application deployments on a number of levels. As an evolution of traditional enterprise application integration, it is helping to force a top-down view of the world from a business perspective rather than a bottom-up view from an IT perspective in order to solve business problems. Traditionally, a business requirement has been implemented via software by connecting databases together or by connecting applications together. Business process management views the world from a process orchestration perspective where business processes need to be created, executed, and managed. Business process management also allows business processes to be rapidly redesigned in order to meet changing business requirements. Business processes are allowed to span applications, devices, and people as discrete nodes within the overall set of process steps.

Software vendors in the business process management space include companies such as Fuego, Intalio, and Systar which focus exclusively on business services orchestration, business process management, and business process performance management, respectively. These companies target industry verticals such as telecommunications, energy, and financial services in functional areas such as customer relationship management, enterprise resource planning, and supply chain management. Additionally, most integration middleware vendors such as BEA, Vitria, and webMethods are beginning to support BPM functionality as a core product feature.

The business benefits for business process management include increased flexibility, reduction of complexity, decreased cost of ownership, and faster return on investment. One of the advantages of the process view ingrained into the BPM paradigm is that it helps the enterprise take a holistic view of its business transactions. It crosses internal and external boundaries in terms of data, applications, and people. It also helps to cross the conceptual boundaries between wired and wireless transactions which are really just different modes of connection to the network. Finally, BPM helps to focus the enterprise and IT operations on business processes and metrics and not IT metrics. In many enterprise scenarios, business metrics can fail even when IT metrics are satisfactory. For example, server uptime is independent of whether or not a key business customer has placed an expected order or whether or not a financial transaction has been settled in time in order to avoid financial penalties.

Business process management is an important set of functionality that can help to speed integration of applications and empower end users to play a more vital role in the overall modeling and orchestration of their business processes.

Mobile Business

Mobile business is another area that cuts across numerous industry verticals and numerous functional and horizontal areas; it can be applied to functional application areas such as customer relationship management and field force automation, and also to horizontal application areas such as corporate email, personal information management, executive dashboards for the aggregation of business-critical information, and business intelligence applications.

Mobile business represents an opportunity to move information and transactions to the point of business activity and to remove former process bottlenecks for mobile employees. It represents a way to increase the reach and value of technology within one's business by extending it to any employee, any customer, and any partner, anywhere and any time. The opportunity exists both to refine existing processes and to create entirely new ones.

Mobile employees now have the ability to leverage technology just as if they were in the office. Improvements in devices, applications, networks, and standards over the past few years have made this far more practical than it was when first introduced. The drivers for adoption are finally starting to outweigh the barriers. For example, major vendors such as IBM, Microsoft, Oracle, and Sybase are all playing a larger role and taking a larger interest in mobile business than they had previously. These vendors all have mature, proven offerings for enterprise mobility. Additionally, the wireless carriers are rolling out "2.5G" and "3G Lite" networks such as General Packet Radio Service (GPRS) in the United States that enable higher bandwidths for wireless data. Devices are making strong strides forward in terms of usability and features. Microsoft's Pocket PC 2002 is a notable example of one of the latest operating systems. Standards such as Extensible HTML (XHTML), Binary Runtime Environment for Wireless (BREW), Java 2 Platform Micro Edition (J2ME), and Wireless Application Protocol (WAP) 2.0 are all having an impact as well. They are helping to make mobile business easier for both developers and end users by enriching the functionality available on mobile devices.

Mobile business technology helps to extend the corporation out to its edges in areas such as sales force automation, field force automation, and enterprise operations. Benefits can include improved data accuracy, reduced costs, increased productivity, increased revenues, and improved customer service. Beyond being an additional channel for communications, mobile business enables the enterprise to think about the powerful combination of business process, e-business, and wireless communications. Instead of being at the intersection of e-business and wireless communications, it often helps to think of mobile business as being a superset of e-business and wireless that also includes business process.

In Business Agility, I took an in-depth look at mobile business and how it can be applied for competitive advantage within the enterprise. In Business Innovation and Disruptive Technology, we'll extend the radar further and look at upcoming areas within the field of mobile business, including mobile commerce, location-based services, telematics, and electronic tagging. These are all interesting subcategories within mobile business that open up new opportunities for mobility beyond simple employee applications. Embedded computing and electronic tagging are especially interesting because they extend wireless and mobile technologies not just to humans but also to a wide range of objects such as consumer and industrial products. These products can gain intelligence via electronic product codes, which are a potential replacement for universal product code (UPC) barcodes, and via RFID tags with two-way communication capabilities.

Enterprise Security

Enterprise security is an area that is perhaps the most fundamental and yet the most critical of all the technologies and disciplines for the business to have squarely in place in order to execute on its business strategy. Without solid enterprise security processes and procedures, none of the other technologies can be reliably applied for business advantage. Security is no longer just a luxury. Today it is a business imperative. Business disruption can be not only an inconvenience for business users and their customers and partners, it can also cost millions of dollars in lost revenues or lost market capitalization. But the business cost of inadequate security does not stop at simply inconvenience and loss of revenues or market valuation. It can even force a business out of existence. One of the earliest examples of this was the case in early 2002 for British Internet service provider CloudNine Communications, which was the victim of a distributed denial-of-service (DDOS) attack that forced the company to close operations and to eventually transfer over 2,500 customers to a rival organization. While emerging technologies can help a company to gain competitive advantage and market share, lack of security can have the opposite effect, causing profitable companies to lose market share or even their entire business within hours or days of an attack.

Fortunately, the security arms race in terms of attacks and prevention measures is not all one-sided. As hackers exploit vulnerabilities, so software companies and enterprise security specialists continue to close the gaps and find new solutions and approaches to secure enterprise operations and data. One of the challenges facing enterprise security is that it is often very difficult to know when enterprise networks and applications have been attacked or are in the process of being attacked. Because of this, security measures within emerging solutions are becoming increasingly proactive. Instead of simply responding once a business system has been compromised, businesses are moving toward real-time proactive monitoring of their operations and employing intrusion detection tools that can help to spot illegal or unusual activity on the network. With these tools in place, activities that would have gone hitherto unnoticed are detected while they are in progress and can either be instantly blocked or have their actions immediately reported to enterprise security administrators or law enforcement for rapid response.

Some of the categories of software and services in the enterprise security arena include biometrics, intrusion detection, encryption, vulnerability assessment, managed security services, and general security management. Security management typically includes functions for what is termed "3A": administration, authorization, and authentication. The analyst firm IDC estimates that the total IT security market will grow from over $14 billion in 2000 to $46 billion by 2005. This market estimate includes security software, hardware, and services. It expects the security software market alone to reach over $14 billion by 2005 and be comprised of security "3As," firewalls, antiviral software, and encryption technologies. Companies in the security hardware, software, and services arena include well-established vendors such as Computer Associates, Cisco Systems, Symantec Corporation, Network Associates, Check Point Software, Nokia, and RSA Security, together with newcomers such as Tripwire, Vigilinx, Viisage, and Visionics.

Business benefits in deploying the latest advances in security technologies include the cost avoidance of greater disruptions without such technologies, together with increases in productivity of employees due to coordinated approaches for administration, authorization, and authentication. As the number of applications and modes of access to the network increases within the business, the importance of single sign-on technologies and efficient management of security profiles cannot be underestimated. An additional business benefit related to security is compliance. In many industries such as health care and financial services, businesses face government regulations which require consumer privacy protection. An example is the Health Insurance Portability and Accountability Act (HIPAA) within the health care industry where techniques such as encryption can help protect stored or transmitted data from unauthorized viewing or alteration.

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