Web services execs explain ROI

Although the model for customers to generate revenue from Web services remains unclear, executives on Wednesday here at the TechXNY conference maintained that the ROI in Web services comes largely though cost-savings.

"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 CEO of integration vendor webMethods, in Fairfax, Va.

It's no secret that Web services will lower integration costs, but a number of executives from vendor and analyst firms said that several other associated costs will be lessened, thereby making the upfront investment in Web services one with potential to pay off over time.

Eric Newcomer, CTO of Boston-based Iona Technologies, said in a keynote address that to lower the ROI point, 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 eventually will be important when connecting to businesses outside the firewall.

Newcomer added that ROI also comes from using the existing Internet infrastructure already in place.

"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, CEO of consultancy Patricia Seybold Group, in Boston, 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.

Furthermore, the loosely coupled nature of Web services helps companies to add partners into existing systems.

"I [can] expose the function, but I don't break the existing six or 600 people already using the system," said Anne Thomas Manes, CTO of Systinet, a Web services software infrastructure provider in Cambridge, Mass.

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), WSDL (Web Services Description Language), rather than having to be an expert in each system to be integrated.

One attendee said he still remains skeptical 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 before Web services would have had required installation at several units within the organization. Because Merrill Lynch built it with Web services protocols, however, they were able to build it once, then have all the appropriate users it access it, Gwydir said.

Also, 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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