Inspired by Graeme Burnett
being able to build an entire business by walking into a store and buying the pieces you need, in the same way you would if you were building, in a do-it-yourself fashion, a new kitchen, bathroom or garage. The common components of these businesses would be functions like open an account, create a bill, process a credit card payment, lookup credit rating and auction this item on eBay. Like the DIY construction industry, the implications of the 'end user' supplying itself are far reaching.
"Successful businesses need to supply computing solutions that can respond very quickly to market changes. Timescales for change will be impossible to meet using traditional code development, testing and deployment techniques. Instead, business functionality will be created dynamically by combining services from different sources and re-branding them to exhibit a company’s identity." Graeme Burnett.
Enter the role of web services. Web Services are not just sources of information or handy routines, but plug points that are key interfaces and relationships that will enable a business to reconfigure itself. Think plug and play business not plug and play software.
For two years, Samsonite has been auctioning its distressed inventory on eBay in a completely automated fashion. Samsonite took four weeks to create a web service that linked its internal product catalogue to web services exposed by eBay's platform. The impact on its balance sheet was immediate and sustained. Samsonite's web services are now consumed by other online auction sites, providing the company with multiple points of distribution.
In July 2004, Amazon announced the launch of Amazon Web Services 4.0. These allow other businesses to embed Amazon's functionality into their web sites. Amazon's CTO said "If more of the information and processes that businesses (already) have were exposed via web services so developers could integrate them, people would do incredible things". The most valuable web service on earth will be Amazon's One Click™ technology, white labelled and re-used by millions of other web sites for the sale & purchase of goods. Every time another business invokes this service, it will pay Amazon a few cents. Amazon will make more money from One Click™ than it will from the sale of books, videos and DVDs combined.
Distribution is key
But where are these software pick 'n' mix stores? They are beginning to emerge. Grand Central, SalCentral and ComponentSource are getting there but do not go far enough. There is a need for web services intermediaries, intermediaries that can bring together consumers and providers of web services and build a critical mass of participants. These intermediaries will provide a trusted environment for the publication and subscription, secure delivery, metering and payment of services. They will enable transactions between parties that are previously unknown to each other. Intermediaries will eventually apply debt style reputation ratings (e.g Standard & Poor) to these services, effectively shifting the value of an enterprise's web services from a dark corner of the IT department to the corporate balance sheet. Intermediaries will also enable independent programmers with good ideas to become wealthy individuals. Eventually web services will take on the characteristics of bonds and will be traded on open markets. "Companies will finally be able to focus on delivering services relating to their main business, rather than code production. This will allow them to respond quickly to opportunities provided by new niche markets, thereby opening up new revenue streams". Graeme Burnett.
Extending the DIY analogy to Lego blocks, successful businesses will be those that can create the most innovative, attractive, and useful shapes. Business models can be tested on the fly and new partners can be switched on in hours. This will have quite profound human resource implications for enterprises. People with the imagination and curiosity of children will be far more valuable than a Java architect or a .Net developer, and they will spend more of their time in conversation with the market - managing relationships and sourcing services. In California, some VCs are already adjusting their business models for start up funding requirements measured in six figures rather than seven or eight figures.
The web services paradigm is for those who belong to upstarts, who don't have anything to lose, and the risk-takers among big companies, who are willing to bet more heavily on the future than they do on the past.
Since this was published...
This article was first conceived in 2004 and inspired by Graeme Burnett's original paper (XML & the Role of Web Services, 1999). In 2008 at least two ventures have launched that prove the veracity of the predictions here. Rollbase offers "a growing library of web-based business applications that can be installed into your Rollbase account with a single click." Coghead lets you easily build your own applications and then lets you share them with anyone, any time, any place.