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For corporate computing, the big story of the new millennium has been Web services. As the excitement around the Y2K “crisis” and e-commerce business models faded just after the turn of the century, enthusiasm started to build for this technology, which is a set of tools that make it easier for applications to talk to each other. In other words, Web services install the plumbing required for information systems to interact without human involvement. An important aspect of Web services is that they work as well between companies as within them. Just as the Internet and the World Wide Web led to a huge change in how people interact with distant applications (for example, the applications at Amazon.com), so the Internet and Web services hold out the promise of drastically changing how distant applications interact with each other. See sidebar
About the Research
Over the past five years, in researching and writing case studies on more than a dozen multicompany efforts to deploy and profit from IT, I noticed sharp differences between those that involved people and those that aimed to get people “out of the loop” via Web-services technologies. IBM’s midrange B2B-ordering effort provided an excellent opportunity to analyze and understand why this was the case, and to explore whether the great enthusiasm around Web services was justified. To write the case study summarized here, I interviewed more than 20 people at IBM and four of its European distributors, and reviewed data on project timing and outcomes. I also immersed myself in the literature about the impact and evolution of Web-services technologies, and in relevant work in computer science and economics.
But how real is this promise? Will Web services be a truly disruptive innovation that revolutionizes how companies interact? Or will they turn out to be the latest in a series of technologies, developed and promoted by the highly entrepreneurial IT industries, that fizzle when they hit the real world? (You may remember CASE tools and Internet “push” technology.1)
The answer is that they will be neither. They will be highly useful, but not quickly or obviously disruptive; in fact, they will reinforce existing relationships rather than catalyze new ones.
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1. Computer-aided software-engineering (CASE) tools promised to automatically convert a software designer’s vision into lines of code. Internet “push” technologies like PointCast sent information to users rather than waiting for them to request it. Both were greeted with great enthusiasm; neither lasted.
2. J. Hagel and J.S. Brown, “Your Next IT Strategy,” Harvard Business Review 79 (October 2001): 105–113.
3. For a sober discussion of the Internet’s impact on competition and industry structure, see M.E. Porter, “Strategy and the Internet,” Harvard Business Review 79 (October 2001): 63.
4. See X. Chen, J. Funk, S. Madnick and R. Wang, “Corporate Household Data: Research Directions” (proceedings of the Americas Conference on Information Systems, Boston, August 2001); and M. Hansen, S. Madnick and M. Siegel, “Data Integration Using Web Services,” working paper 4406-02, MIT Sloan School of Management, Cambridge, Massachusetts, May 2002.
5. For a more complete description of this case, see A. McAfee and M. Otten, “IBM: Ordering Midrange Computers in Europe,” Harvard Business School case no. 605–022 (Boston: Harvard Business School Publishing, 1993).
6. Wal-Mart Stores Inc., for example, has mandated that its suppliers move their existing electronic-data-interchange transmissions to the Internet.
7. See A. McAfee, “When Too Much IT Knowledge Is a Dangerous Thing,” MIT Sloan Management Review 44, no. 2 (winter 2003): 83–89.
8. The strongest statement of this argument comes from Nick Carr: N.G. Carr, “IT Doesn’t Matter,” Harvard Business Review 81 (2003): 41–49; and N.G. Carr, “Does IT Matter?” (Boston: HBS Press, 2004).
9. L. Hitt, “Information Technology and Firm Boundaries: Evidence From Panel Data,” Information Systems Research 10, no. 2 (1999): 134–149; and E. Brynjolfsson, T. Malone, V. Gurbaxani and A. Kambil, “Does Information Technology Lead to Smaller Firms?” Management Science 40, no. 12: 1628–1644. See also an article showing the ease with which even judgment-based work can migrate to India: K. Boo, “The Best Job in Town: The Americanization of Chenmai,” New Yorker, July 5, 2004, 56.
10. A. McAfee, “The Napsterization of B2B,” Harvard Business Review 78, no. 6 (November–December 2000): 18–19.