TechXNY: Cost savings will deliver Web services' ROI

Executives at the TechXNY conference have spoken out to clear up uncertainty as to how customers can generate revenue from Web...

Executives at the TechXNY conference have spoken out to clear up uncertainty as to how customers can generate revenue from Web services, maintaining that cost savings provide the return on investment.

"In this [economic] environment there has to be a solid reason to get funding for a project. Web services has the promise of lowering the cost of integration," said Phillip Merrick, chairman and chief executive of integration vendor webMethods.

Executives from a number of vendor and analyst firms said that several other associated costs will be lessened, therefore giving upfront investment in Web services the potential to pay off over time.

Eric Newcomer, chief technical officer of Iona Technologies, said in a keynote address that to make it easier to achieve ROI, customers should get away from proprietary systems as fast as they can and, in so doing, begin building systems within the firewall based on the standards that will eventually be important when connecting to businesses outside the firewall.

Newcomer added that ROI also comes from making the most of existing Internet infrastructure. "The network is already there for this type of integration, so let's use it and let's not spend money on a new one," Newcomer said.

On the application development front, savings will come through commodity software, such as Windows operating systems, pre-built Web services interfaces to packaged applications, interoperability and component solutions, as well as tools such as XML parsers and utilities, he said.

Patricia Seybold, chief executive of consultancy Patricia Seybold Group, said that Web services enable companies to migrate to a services-oriented architecture and because of the emerging protocols, allow companies to eliminate redundancy and duplication in the process.

Newcomer added that Web services promise to ease software development and lower costs by making developer skills more adaptable. For instance, a developer that learns Web services ideally will be able to integrate a variety of systems with Soap (Simple Object Access Protocol) and WSDL (Web Services Description Language), rather than having to be an expert in each system to be integrated.

One attendee said he still remains sceptical about the monetary value of Web services. "ROI is one thing. But I still want to hear about how we can actually make money from Web services," said the attendee, who asked not to be named.

But another end-user said that measuring return on Web services is not really about generating revenue.

"Frankly, you're not measuring ROI of Web services, you're measuring ROI of the product you offer to users," said Thomas Gwydir, an IT director at Merrill Lynch, in New York. "The ROI is really an EAI ROI. It's not a Web services, per se, ROI."

Gwydir continued that Merrill Lynch has achieved cost savings by reusing Web services. The company built a risk-evaluation service that prior to Web services would have had required installation at several units within the organisation. However because Merrill Lynch built it with Web services protocols they were able to build it once, then have all the appropriate users it access it, Gwydir said.

He added that Merrill Lynch has experienced some revenue generation not necessarily credited to Web services. By offering a Web service, such as analytics, Merrill Lynch presumes that users of the service will also trade with the company.

"It's revenue-generation, but not in the purest sense," Gwydir said.

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