Re-engineering the software supply chain

Web services will have a major impact on business organization throughout the software supply chain.

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Guest Commentary
Re-engineering the software supply chain
by CBDi Forum

The new software supply chain
Do you remember the fad for business reengineering? Led by arch guru Michael Hammer, enterprises around the world tore up their business processes and started over. Eventually reengineering became badly tarnished, a synonym for downsizing and over ambitious business change. However whatever your viewpoint on the specifics of BPR, Hammer did popularize the notion of business process engineering and highlighted the need for comprehensive reviews of business process activity to deliver dramatic improvements.

One of his techniques was to stimulate "discontinuous thinking". This entails identifying and abandoning the outdated rules and fundamental assumptions that underlie current business operations. For example in Hammer's day he would thunder on about "customers don't repair their own equipment", or "local warehouses are necessary for good service".

Outdated software delivery rules
Consider the potential impact of Services. We might create a list of rules that are about to become outdated along the following lines:

Enterprises acquire applications as monolithic packages
Packages and application operations are outsourced to ASP's
Business systems do not cross organizational boundaries
Every organization replicates data about those they do business with
Applications are monolithic, costly to build, acquire and implement, slow to change
Business processes and rules are an integral part of the systems solution and cannot be rapidly changed

and many more similar . . .

If I were to re-create this company?
Back to Hammer. "Reengineering means abandoning long-established procedures and looking afresh at the work required to create a product or service and deliver value to the customer." It means asking the question "If I were re-creating this company . . .given current technology what Would it look like?"

So let's consider how Services represent a new enabling technology. How might a Service based environment facilitate radical change?

1. Specialization: there may be considerable opportunity for specialization, as authors delegate publishing and provisioning activities, providers and integrators come to rely on others rather than managing the entire Application base.

2. Change of role: traditional providers will be joined by businesses that become both providers and consumers, and traditional software suppliers will realize opportunities to offer business services. So conceivably software companies may provide banking and insurance services and banks may offer travel and software services.

3. Delegation: tasks that companies have undertaken traditionally will need to be re-examined. Consider for example the network infrastructure required to manage Web services. This considerable investment in routing, security, directory, event management, process control and other services may be avoided by using one of the emerging third parties that specialize in delivery of these services outside the firewall.

4. Collaborations: organizations will collaborate to provide sets of richer services. Business collaborations overturn conventional thinking about the best way to deliver business Services, and encourage everyone to look for synergies with unconventional partners.

5. Data ownership: real-time availability of secure transactions will cause a gradual migration of data towards the owner, whether real or represented by a proxy. The result is higher quality and better controls over data usage

BT announces Web services-based products
This is not an academic exercise. Last week BT announced a strategic initiative to enter into the Web services arena. Interestingly BT's Web services approach is much broader than the footprint of their conventional business model. They are offering an end to end solution service including a Web services application component library, a deployment environment and a Web services management layer based on Flamenco Networks products. This broadly based announcement suggests BT has recognized their core competencies of managing networks and systems integration provide a basis for value added services.

However BT does not seem to have understood yet that there is a further opportunity in another core asset - their network customer base. BT, like all the major telcos, is ideally placed to act as an identity agent, providing authentication services for both businesses and consumers.

Re-engineering the service delivery process
The BT announcement represents a small but significant step towards a revolution in how Services are delivered. In our work on Service business frameworks we suggest that the telcos are ideally situated to act as what we define as a super intermediary - a middleman that aggregates and provides both tangible (SLA's) and intangible (brands) product offerings that encourage consumer and business trust in remote service operation. This model will slowly evolve over the next five years, and will soon be recognized as a radical reengineering of the Service delivery process.

In BT's case they have some serious work to do. Whilst they have a significant asset in their network integration capability, they have a huge learning curve to climb, to transition into a Services vendor and in particular to deliver trusted services, which many including ourselves would assess right now as not being an area of strength. They have made a good decision in adopting a respected Web services management environment, but this is merely the starting point to establishing a trusted network. In their initial announcement they target their Services at internal usage, and whilst this may reflect the current state of the market, it does not give us confidence that BT has thought through how they will establish their trust architecture and framework.

If BT is to be successful with the super intermediary model they must avoid the dancing bear syndrome. We marvel at the bear that can dance because it can do it at all, not because it can do it well. As we have suggested in our short list of outdated rules, very soon there will be no distinction between the internal or external Services market, and enabling this is a critical success factor for the super intermediary. Reengineering is all about recognizing which rules are outdated and changing them. BT is to be applauded for starting out on what will be a long, often difficult journey, and we look forward to seeing how they really plan to make it work.

In our Special Report - Web Services Business Framework we provide guidance for all the types of organizations in the software supply chain on potential new models. This is a business facing report and is intended to stimulate thinking on how to reengineer business models for end users, ISV's, xSP's and Intermediaries. In addition to describing the new supply chain, we assess impact on each type of player and then provide a series of business models.

We welcome feedback. Please send comments to david.sprott@cbdiforum.com

Links:
SPECIAL REPORT - WEB SERVICES BUSINESS FRAMEWORK
More details and immediate purchase at: www.cbdiforum.com

BT Announces Comprehensive Web Services Strategy
CBDi Report

Reenginering the Corporation, by Michael Hammer, Nicholas Brealey, 1993


Copyright CBDi Forum Limited 2002. The CBDi Forum is an analysis firm and think tank, providing insight on component and Web service technologies, processes and practices for the software industry and its customers. To register for the weekly newswire click here.



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This was first published in October 2002

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