The next phase of the Internet's impact on business
Whatever may be the various popular conceptions surrounding the Internet boom and bust, Internet technologies have deeply and rapidly impacted computing, information access, and the interaction of people in general, including their business activities. The mad rush to capitalize on new ways of doing commerce may have run into a harsh wall of business reality. The bubble burst resulted from a failure of business modeling, not a failure of technology. Internet technologies will have an ever-increasing impact on business that will continue of its own impetus, just as the Web grew up relatively unnoticed beneath the feet of the business-computing world until its arrival could no longer be ignored.
The Internet is a startling global network of connected servers. A few key technological principles of simplicity, extensibility, and well-defined interfaces have enabled easy online connectivity to computers anywhere in the world. The Web began as a standard interface to allow document sharing over the Internet. It presents the entire universe of documents as part of one global hierarchical file system (URLs), provides a simple communication protocol (HTTP) to request access to them, and a standard mark-up formatting language (HTML) to describe their presentation when viewed. It's true that this document-oriented Web page approach to information sharing doesn't lend itself naturally to interactive user interfaces for business software. But the ability to provide easy access to business functionality to anyone anywhere in the world with an Internet connected PC and a free or built-in Web browser is staggeringly compelling.
The potential of Internet exchanges and other e-markets to provide disintermediation and other price efficiencies in buying and selling between businesses should be viewed in relation to other realities of business behavior. Relationship cultivation and protection, drive for differentiation, large vested influences, chicken-and-egg-syndrome amongst buyers and sellers, all have led to a waning enthusiasm for the B2B e-commerce model. However this won't stop the relentless drive towards the adoption of Internet technologies in business software. What form will these developments take? The first part of the answer is tied to the next logical step in Internet application architecture. The second part involves realizing there's more to e-business than just making transactions.
Machines talk to machines
Web business software is based on a human user operating a Web browser to interact with an application on a server. This is the dominant model for all types of Web activity. However important the interface business software provides to a human user may be, the interface it provides to other business software is of equal and sometimes greater importance. The reason is that to provide an ultimate service to a human user, one business application frequently needs to interact with numerous others. Many of these will be applications within the same company (intra-enterprise); some of them might be another company's applications (inter-enterprise).
A lot of the technology effort and expense in an enterprise involves getting disparate software applications to talk to each other. There are two technical issues: how they talk to each other (communication protocols); and what they say (format and meaning of data). Getting applications to talk to each other across enterprise boundaries adds even more communication infrastructure complexity. When applications need to change, the ripple effects can be nightmarish. Can Internet technology help ease the pain?
It didn't take long for people to realize that the simple, open standards used for Web-browser/Web-server interaction could add a lot of value to the interaction between business software applications. HTTP (or HTTPS for secure transmission) can be used as the simple, standard communication protocol for applications to talk within a company (over an intranet), as well as to talk to other company's applications over the Internet. Free and ubiquitous, this protocol could eliminate all the headaches of the private, proprietary networks traditionally used to enable inter-enterprise communication. On the data format side, the Internet standard mark-up language XML could be used instead of EDI and the boundless variety of other proprietary and non-standard formats. Why not let XML over HTTP become the common, open standard for application-to-application integration? This leads to the concept of Web services.
Defining an application's programmatic interface to the outside world in terms of XML and HTTP suggests a sudden explosion of availability. If my application needs a certain service, and some other application in another company in another country provides it via HTTP, I should be able to directly use it. This is the idea of a Web service. A group of open Web standards are forming (SOAP, WDSL, UDDI), which standardize methods of describing, publishing, and invoking a Web service. This potentially means an application could determine at run time that it needs a certain type of service, search on the Internet for published services with matching descriptions (and perhaps apply various complex constraints to decide which if any it wants to use), and invoke the service; all without human intervention.
The machine-intelligence implications of Web services, and other ideas concerning software using the Internet to directly interact with other software (i.e. the W3C's Semantic Web), may have a futurist AI ring. But Web services will provide a very useful, down-to-earth standard for application integration. The specification of a well-defined interface allows plug-and-play flexibility. It shouldn't matter what software is on the other side of that interface, what language its written in, what computer its running on, as long as it meets the well-defined interface. If applications standardize on Web services to provide these interfaces, suddenly everyone can talk to everyone else. "Talk" here means exchange XML-based messages. It is important to note that having data in an XML format means that any other program can easily parse your data into its constituent elements. It doesn't follow that it can understand what any of the elements mean. Both sides of the interface still need to understand the specific meaning (semantics) of the data. Progress here will come from the various XML vocabulary standardization efforts underway in various industries.
The second key to understanding the future impact of the Internet on business is to realize that e-commerce tends to refer to the buying and selling, transaction-making activities of business. But obviously people engaged in business do many varied and complex things beyond the sheer acts of buying and selling. There are large supporting areas of operations in any non-trivial enterprise that have historically grown to rely on business software for the efficiency, automation, and analytical power computers offer. Enterprise Resource Planning, Supply Chain Management, and Customer Relationship Management are among the large, well known categories of software applications that attempt to address key operational needs of businesses.
One emerging way to think of these business activities is in terms of collaboration. ERP promotes collaboration between key back-office departments and functions to run the core operational elements of a business. SCM aims to optimize collaboration with and among a company's various suppliers. CRM seeks to enhance collaboration with a company's customers in the sales and support contexts. The use of Internet-based technology that promotes collaboration in business has come to be called collaborative commerce. It cuts across the lines of traditional ERP, SCM and CRM, and adds a new dimension as well. Collaborative commerce suggests an entire new domain of applications that becomes possible with the help of Internet technology.
With its ubiquitous availability, low entry-barrier, standard interface, loose coupling, and security infrastructure, the Web promises to be the ideal technology platform for software-based business collaboration. E-business as a concept is being redefined to include not just transaction making, but other collaborative activities that leverage the Web as well. Let's take order tracking as an example.
Providing a customer with ready and accurate order status for an order that comprises many complex steps of fulfillment is a big value-added service many businesses strive to offer their customers. Often whole departments of workers may be involved. Offering customers Web-browser (and perhaps Web-service) visibility to their order status is an ideal interface. Accurately supplying the status of a complex process might require several internal applications interacting with each other. Web service interfaces provide the ideal model. Fulfilling the order may require complex collaboration with other enterprises. Employees from other enterprises may need to directly participate via Web-browsers, and/or their applications may need to talk to internal applications via Web services. All this internet-based collaboration ultimately delivers the service to the customer in an optimal and efficient manner.
The impact of Internet technology on business continues unabated. The technological paradigm shift is too fundamental to be limited by an initial confusion in capital markets and business models. Businesses will have to absorb the next wave of Internet technological impact or risk being left behind. E-business in the expanding framework of collaborative commerce will be an increasingly key technology differentiator for all business enterprises.
Scott Kownslar has worked in commercial software development for more than 20 years and is currently Group Director of E-Business Technology at Management Science Associates Inc.