Date post: | 28-Mar-2015 |
Category: |
Documents |
Upload: | sean-mchugh |
View: | 212 times |
Download: | 0 times |
Value creation from IS Integration: From ASP to Web
Services?
Wendy.L.Currie
Warwick Business School
Presentation atESRC Seminar – Nottingham University Business School, UK
June 2004
Overview
EPSRC and ESRC Funded Research Project 2000-2004
The ASP market - A Flawed e-business model?
Web Services - Integration: The Missing Link?
Case Study – Implementing A Compliance System in the Financial Services Sector
Research studies
£193,000 from EPSRC: ‘Assessing the deployment, hosting and integration of business-critical information systems by application service providers’ (BC-ASP). October 01-September 03.
£258,000 (plus £195,000 to Fullard Learning Ltd and DCS.com Ltd) from ESRC: ‘Developing a risk-assessment framework for deploying, hosting and integrating vertical and horizontal information systems by application service providers’ (ASP-VH). March 02-February 04.
ASP Definition
“An ASP manages and delivers application capabilities to multiple entities from data centres across a wide area network (WAN)”.
ASP Industry Consortium
InternetService Provider
Data CenterCo-Location
A pplicationServiceP rovider
IndependentSoftwareVendor
NetworkService
Provider
Te leco
End User
Business/ IT Consultants
Ecosystem For Hosted Applications
Early predictions – ASP Market
$23 Billion by $23 Billion by 20032003$23 Billion by $23 Billion by 20032003
Forrester, 2000
DataQuest, 2000$22.7 Billion by $22.7 Billion by 20032003$22.7 Billion by $22.7 Billion by 20032003$19.2 Billion $19.2 Billion by 2003by 2003$19.2 Billion $19.2 Billion by 2003by 2003
Yankee Group, 2000
$24 Billion by $24 Billion by 20052005$24 Billion by $24 Billion by 20052005
IDC, 2001
$18 Billion by $18 Billion by 20052005$18 Billion by $18 Billion by 20052005
Gartner Group, 2001
Spending on ASPs
IDC says companies spent roughly $245 million on application service provider (ASP) services in 2001
Manufacturers spent $221 million on ASP services in 2001
But 60% of ASPs predicted not to survive! (Gartner Group)
Key Drivers of the ASP Industry
BUSINESS DRIVERS
•Adopt a ‘Utility model’•Software provided as a service•Focus on core competencies•Reduce total cost of ownership (TCO)•Better value proposition•Agility and flexibility
MARKET DRIVERS
•Global competition•New business (e.g. ERP vendors)•Faster time to market•De-regulation, consolidation, standardisation •Global IT skill shortage
TECHNICAL DRIVERS
•Access to technical expertise•Information delivered through internet and corporate intranets•Global access to information•Parallel to converged networks•Standardised solutions•Net-centric applications
A comparison of traditional and application outsourcing
Traditional Outsourcing Application Outsourcing
Software licence owned by the customer
Software licence owned by the vendor
One to one relationship between vendor and customer
One to many relationship between vendor and customers
Legacy software application paid for by customer
No up-front costs to customer
Price based upon s/w license and maintenance
Price based upon usage
Software as a product Software as a service
S/W application located at customer site
S/W application located at supplier site
ASP and Integration
Integration of applications across multiple platforms, sites and environments
Business process re-design through integration To create a ‘seamless’ IT organisation Integration of billing information into auditing and
reporting systems To create an infrastructure for better
manageability To achieve faster software application
implementation Resultant synergy from combination of
applications
Scale, Scope and Integration - Definitions
Scale – the extent to which a firm enters into outsourcing contracts in relation to vendor capabilities
Scope – the extent to which it is possible to source specific activities, tasks, processes or applications from a third party vendor
Integration – the extent to which software applications can be integrated across business processes
Scale, Scope and Integration of Outsourcing: the key challenge
Scale000s
Scope Complexity
IntegrationFull Service Providers (FSPs)
Projected Market
Actual Market
Pure-Play ASP(One-
ClickHR.com, Netledger)
Enterprise ASP,(J.D.Edwards, SAP, Corio, Aristasoft)
Examples of Flawed ASP business models
Enterprise ASPs – Difficult to sell ‘vanilla ERP’ to SMBs (example – JD.Edwards)
Vertical ASPs – Customisation and integration/not one-to-many (Aristasoft)
Pure-play ASPs – No profits from commodity software applications (email) (E-Carisma)
Infrastructure ASPs – Over-capacity of network/datacentres, no channel to market (Cable & Wireless)
The first-phase ASP market – a false start
One-to-many became same-for-all No profits from commodity software
applications (email, MS office, etc) ASPs focused too much on marketing – not
on revenue generation SMBs were unconvinced about the benefits
of the ASP model ASPs failed to ‘create value’ for customers Technology platforms/software not web-
centric
ASP and Web Services Convergence between telecommunications and
computing industries will continue Market consolidation of ASP vendors Web services will facilitate BPO Value creation through customization and
integration ASP vendors need to develop business models
which address scale, scope and integration
ASP and Web Services
Commodity ASP 1990s
• One-to-many – point solution• 24x7 availability• High scalability• Economies of Scale• Efficiency (of business applications)• Individual performance improvement• Utility pricing models• Packaged ‘Stand-alone’ applications• Functional data/information • Application integration• Remote C/V relationship• Application outsourcing• Service Level Agreement (SLA)• Application-centric• Continuous improvement• Inter-departmental change• Technology peripheral to core business• Silo effect
Web Services2000+
• Many-to-many - Enterprise-wide• 24x7 availability• Unlimited Scalability• Economies of Scale and Scope• Adaptiveness (to business change)• Enterprise-wide improvement• Multiple, fluctuating pricing models• Component based applications• Business Intelligence• Synergy of combination of applications• Loosely-coupled C/V relationship• Business process outsourcing• Multiple SLAs• Industry-centric• Changing Industry/market dynamics• Industry-wide change• Mixed technology portfolio• Synergistic (more than the sum of the parts)
Web Services Definition
‘Web Services are loosely coupled software components delivered over Internet standard technologies. A Web Service represents a business function or business service and can be accessed by another application…over public networks using generally available protocols..’ (IDC, 2001).
Integration Collaboration Innovation Domination
•Experimentation with Web Services with small, internal integration projects•SOAP-enablement of legacy applications and ERP, CRM systems•Fast cycles of learning reach the limits of early Web services, unprepared IT architectures•Increase in shared information across the business
•Experimentation with WS outside firewalls•Increasing interaction with trading partners and customers•Close trading partners implement Web services to drive shared value•External trading partners begin sharing information to drive industry value chain benefits
•Lessons from integration and collaboration applied to new processes and business models•New distributed WS processes and applications drive business change•Dramatic business results are achieved as WS are applied in many ways, driving new value propositions
•First movers begin to assert their dominance over respective markets and industries•Industry dominance achieved by innovating new business models as well as out-executing competitors•Web services leaders win through rapid innovation and cycles of learning•Web services mastery creates new company and industry structures as boundaries are redefined
Stage 1Stage 1 Stage 2Stage 2 Stage 3Stage 3 Stage 4Stage 4
Phases of Web Services Adoption
Source: Marks and Werrell, 2003
Attribute Firm A Firm B
Existing system Four different systems that could not connect with each other
Excel spread sheets and paper based deal tickets
Size Part of a group that employed 22,000. The 120 users managed corporate pension plans, private clients and wealthy individual investors. Twelve dealers.
Thirty employees, the four fund managers also dealt their own trades.
Infrastructure Windows NT, LAN and WAN. All Oracle and SQLServer database systems in US
Windows XP. SQLServer database
In-house skills Expert DBA, network teams, 24hr help desk, in-house training
No expert IT skills
Implementation Team Over 20 at its peak (1 external) 2 core people (both external)
Compliance Rules Over 25,000 Over 350
Accounts and Positions 15,000 accounts: 250,000 positions 25 accounts, 2,500 positions
Securities Traded Debt (10%) Equity (60%)Unit Trusts (10%)Money Market (10%)Foreign Exchange (10%)
Debt (60%)Derivative (35%)Equity (5%)
Time to implement 3 years 6 months
OMS AccountingSy stem
FM and DealersFirewall
Firewall
eMailand Fax
WEB
Orders
Orders
Data Translation
Cash Flow
Reports
Trade Matching
Attribution
FI Data Deriv ativ eData
IndexData
SecurityDetail
Brokers
Custodians
The flow of information within Firm A and B
Web Services
Web Reports
Excel/Access
Windows Messaging
Internet and Intranet
Database
Client
OrderManagementSystem
Value Added Web Services
Conclusion Market driven towards using Web
services for straight through processing
From One to Many (ASP) to Many to Many (Web Services)
Speed of Integration improved with standardisation of interfaces (XML)
Increased liquidity (i.e. allows more buyers/sellers to trade simultaneously)