Creating Economic Value With Web Services
SDForum Web Services SIG
Tue Apr 8, 2003, 6:30pm-9:00pm, San Francisco
John Hagel III, Business Consultant and Author
These are some notes taken from a great presentation in SDForum by John
Hagel. His web site and his book "Out of the Box" provide more in-depth
Vendor's presentation of the technology is different from the reality.
They are their worst enemy in adoption.
Fundamental of economic. Look at what people are
doing with the technology.
Board economic trend
- Technology innovation
- public policy shift (towards free economy)
|Competition, uncertainty||Need flexibility|
|Margin squeeze||cost reduction, collaboration, outsourcing|
|growth imperative|| |
Example I Dell
Use WS to greatly improve supply chain management.
Dell was already well known for efficient supply chain management.
Promote vendor collaboration.
Example II Merrill Lynch
Aggregate information from difference database and application.
Provide new services for customers.
Example III GM
- Connects dealers' network.
- Before relies on phone and faxes to communicate.
- Dealers are different in scale.
- Have different information system and different sophistication in IT.
- For successful technology adoption, it must be quick and inexpensive to implement.
- Consultant able to get each dealer setup in days.
- Dealer see immediate benefit.
- Pay as you go.
- For GM, inventory and operation asset down.
Web services implementation
Cost and asset saving is a compelling proposition to business.
- leverage existing investment
- incremental implementation
- focus on early win
Early adoption concentrate on the edge, such as procurement, sales,
customer interface. Today enterprise's internal operations are already
well optimized. Cost saving opportunity is with partner automation.
2 adoption path observed
(One off implementation vs grand architecture)
- IT tend to be experimental, pilot project, deploy within firewall.
- Line manager faces cost cutting pressure. Use it to solve immediate problem.
Long term impact of WS
Stage 1 - Operational cost saving
Stage 2 - Refocusing the enterprise
Stage 3 - Growing the enterprise
- expose payment engine as a service.
- Cost center becomes revenue generator.
Li & Fung (apparel)
- Help designers in manufacturing and distribution.
- A global company, 70000 partnetrs worldwide. Deep expertise.
- Global cooperation (logistics, tariff, quality control).
- Remarkable growth in the apparel industry.
- At present not very automated. Relies on human.
- Hardwiring vs flexibility? (ability to quickly reconfigure processes)
- Offer Performance feedback to partners. Share best practice along the value chain.
- To play an orchestrator role?
When will tech spending recover?
Wrong question! How to sell in today's climate?
Focus on near term, targeted, modest investment. No regrets (micro-sales).
Big bang implementation, mega sales not coming back.
(Uncertainty is subversive to big bang approach)