RISK NO. 3: Vendors might go out of business.
MITIGATION: Look past a vendor's software to its management.
As with any emerging technology, not all of the software you need can be purchased from well-established vendors. There's a risk that you could choose a vendor that goes under or a product line that doesn't survive.
"Theoretically, you'd say you have to let this space mature, you have to let the rate of change among the vendors slow down, and you have a much higher chance of picking the right choices," says Motorola's Redshaw. "It's nice, safe, probably a good approach for some companies. But if you're using old 'me too' technology, someone who is several steps ahead of you may have competitive advantage." Redshaw is willing to accept, as the premium Motorola pays for being an early adopter, the possibility that some of the vendors he picks may not survive.
To mitigate that risk, Redshaw recommends that companies look past the capabilities vendors offer in their current products and conduct due diligence on their R&D plans. "The tricky part is to look under the covers, to see what their underlying architecture is," he says. "We're trying to pick the horse that's going to win 20 races over the next two seasons."
To this end, Redshaw scrutinises the vendor's middle management. "Who's running R&D? If those guys really get it, I have a more comfortable feeling," he says. By this test, the major software vendors probably understand Web services technology best, even if their products aren't mature. Working with companies that aren't well established also requires some extra effort. "You have to really play a partner, if not 'big brother' role," adds Desai. "In many cases where we think it is strategic to IT, we become an owner as well as a customer."
However, there are some risks Redshaw isn't willing to take. A vendor's lack of attention to security, he says, "is a deal-breaker". Vendors must address how they plan to maintain security as their software passes data to another vendor's application. "If you have a serious enough gap there, you just walk away," he says.
Whit Andrews, research director at Gartner, adds that a critical factor in the choice of vendors should be whether they are driving the development of standards "or being driven by them". He advises picking vendors that have a financial stake in the outcome of the standards battles.
RISK NO. 4: Adoption by partners is unpredictable.
MITIGATION: Deploy robust middleware that can translate a variety of formats.
If you build a Web services application, will anyone use it? That's a risk you take when you develop a process that's meant to be used by a trading partner. It's one thing to adopt new technology yourself - another to expect customers and suppliers to make the same investments. And when you rely on trading partners to supply Web services that are critical to some business process, the potential points of failure are multiplied. The vision of Web services as a way trading partners could "discover" and use externally published components has generated a lot of hype, but it's far from reality. Nevertheless, early adopters anticipate benefits to using Web services with external partners. The key: Don't rely on anyone else to supply any Web services you need to execute a transaction.
Wells Fargo learned from its experience in rolling out its Internet applications that customers "don't care about the technology", says Steve Ellis, who heads the Wholesale Banking unit, as long as the bank provides reliable and convenient service. So he and Peltz see little need to push customers to adopt simple object access protocol for sending XML messages, or even to send XML messages at all. Instead, the bank will accept messages in any format and convert them to XML for use by the Web services that apply EAI tools.
"We see this as one of a suite of formats," says Ellis. "How people connect, we expect that to evolve over time. We have 30,000-plus companies we work with, with different expertise and skill sets." Donie Lochan, vice president with the Cap Gemini Ernst & Young Financial Services Consulting Group, says Wells Fargo's strategy will be a common one as Web services is offered externally. "There's a large cost to develop common middleware across an enterprise," says Lochan. "But if you didn't have that, you would need to go and rewrite a lot of the mainframe applications that you have to expose them securely."
It's also necessary to think hard about how to maintain systems' performance when Web services applications interact with each other, says William Wood, executive vice president for enterprise business services and information management with Wells Fargo's IT organisation, Wells Fargo Services Company. "To manage end-to-end availability, you're only as strong as the weakest link, so capacity and performance planning and really understanding what service levels are provided needs to be a very big focus," says Wood, who oversees Web services investments at the enterprise level. That's easier to do yourself than if you're depending on external trading partners to provide Web services.
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