A fundamental shift

For a long time, the idea of accessing and distributing software across enterprise systems in easy-to-use service arrangements stood high on the wish list of Putnam Lovell Securities Inc. CTO Rodric O’Connor. When the opportunity arose to implement such a plan, he jumped at it.

In the past two years, O’Connor has helped the San Francisco-based investment bank realign its IT business plan to deploy software as a service, contracting with several Web services providers for many of its enterprise applications. “We needed more functionality for the dollar, and we got it,” O’Connor says.

Efforts to simplify data distribution across enterprises and knock down interoperability barriers have long occupied developers, with notable attempts including DCOM (Distributed Component Object Model), Microsoft’s technology for distributed objects, and CORBA (Common Object Request Broker Architecture) a standard for communicating between distributed objects.

But the onset of Web services has shifted the foundations of distributed computing. New frameworks are rapidly developing, taking advantage of technologies based on the Internet, XML, J2EE (Java 2 Enterprise Edition) and protocols such as SOAP (Simple Object Access Protocol), UDDI (Universal Description, Discovery, and Integration) and WSDL (Web Services Description Language).

CTOs, from some of the largest companies, are taking components from disparate software to create new models. They’re using Web servers, application servers, and databases to create ways to expose applications within their intranet to employees and to extend them out through the Internet to selected customers and partners. Others are looking to breakdown traditional vendor/client models and save on the bottom line.

Bottom-line Savings

Putnam Lovell’s O’Connor looked to contract for CRM as a Web service and other applications on a subscription basis instead of paying for more costly software licensing arrangements. The company signed on with Salesforce.com, also in San Francisco.

As part of its Web services infrastructure, Putnam Lovell also hired Grand Central as an integration hub, Jamcracker for HR applications, Blue Matrix for a Web-based product for its research content creation, and AppShop for its Oracle financial applications.

With 150 employees, Putnam has to compete with much larger firms and keep costs in line. “In [early] 2000 we decided we had a blank sheet of paper to create our enterprise infrastructure,” O’Connor says. “We had legacy systems like our general ledger and CRM, but we decided we would use the Internet to preserve these generic applications.”

O’Connor found that functionality was lost with subscription-based CRM. “You don’t own the environment so you can’t customize it as much as you want. But since it isn’t a core competency, you don’t need that high a level of control.”

The Web services model, he says, also offers more flexibility than traditional ASP models, in which the client buys a license from the vendor and the ASP provides the hardware and operating system, O’Connor says. “We are using best-of-breed, Web-based applications and integrating them using Web services integration technologies.”

The move to the service model has saved the company as much as 60 per cent more than traditional applications costs, O’Connor estimates. “One of the big benefits is Salesforce.com upgrades applications every quarter,” he says. “I’ve seen an increase in functionality automatically, without any cost to me.”

As development moves forward, Web services must address the practical needs of enterprises, says Dave Moellenhoff, Salesforce.com’s CTO. “In the long term, for seamless integration, we need to define what business objects are between and among applications,” he says. “Like, what is customer contact? People have different systems. How do they piece them together?”

Driving Change With Web Services

At General Motors, CTO Tony Scott, a member of the InfoWorld CTO Advisory Council, says he is pushing ahead in several directions. “We are right in the middle of evaluating .Net, Sun ONE [Open Net Environment], and other [Web services platforms],” he says. “We have questions about how easy is it to use, how does it scale, and what kinds of things in our work environment are practical applications of it?”

Scott says much of the progress in expanding Web services at GM will depend on the evolution of security models. “The stuff that keeps you up at night is security,” Scott says. “We are supporting the Liberty Alliance because we think a federated, integrated single sign-on for Web services is the way to go, instead of everybody doing [authentication] themselves with an alphabet of platforms, etc.”

Scott is also considering aggregating hundreds of the company’s software applications for vehicle identification numbers into an accessible, Web-based database. “All the applications need the same information. In the old model, you built databases for each application, then you had a massive integration problem,” he says. “Now, we are looking at how we would create Web services for vehicle ID look-ups.”

Information on VID would be commonly available and accessible, Scott says, with differing levels of security. “GM would establish a server architecture – a single server or a distributed service, depending on volume and network bandwidth, etc. – with an appropriate level of security assigned to each level of information.” The data will be accessible to employees, customers, and partners depending on the level of security assigned.

Next-gen Challenge

As they move forward, several CTOs says the next challenge is to find ways to foster even more open, dynamic, and secure Web services models capable of accessing and combining applications to create greater value. The challenges for further adoption of Web services, they say, will be to develop sophisticated security approaches and standards, and to create tools to enhance business processes.

As John Studdard makes Web services a cornerstone of his company’s operations, he’s concerned about standards development. And by extension of that, the CTO of Palm Beach Gardens, Fla.-based Virtual Bank wants further cooperation between Microsoft and Sun.

Studdard wants to feel more comfortable as he builds more functionality into his company’s Web services. Currently, the CTO is using Web services internally – for common financial services such as credit bureau reports and fraud checks. “Traditionally, [the delivery of the information] would have been Windows-based as a C++ component or as a COM component,” Studdard says. “Now, we have created these services as a Web service available anywhere on our LAN or enterprise environment.”

The CTO is also developing a back office wealth-management application on Microsoft’s .Net platform. “We have to do a lot of data-gathering for customers,” Studdard says. “They have different accounts and it’s labour intensive to do it. So we have our developers automating data acquisition.

“As soon as we start to build business-to-business interfaces, we want to make sure we can leverage that as much as we can, and standards are a big part of that,” Studdard says.

One analyst says such trust issues need to be resolved before enterprises deploy Web services on a massive scale. “[Web services] are still behind the firewall,” says Rikki Kitzner, research director for application development and deployment with Framingham, Mass.-based IDC.

“The standards are immature,” Kitzner says. “SOAP and XML are there and if all you want to do is [put on] a SOAP wrapper, you can. But that is not all we are talking about. Companies need to be able to figure out how to extract key business elements or processes so they can combine them with other software and become a service.”