IT MATTERS: Web Services Prevail Despite Travail

Tech slump yields economies for supply-chain and sell-chain automation.

2002 Volume 5 Issue 2

Tech slump yields economies for supply-chain and sell-chain automation.

The notion that e-business got dumped along with tech stocks clearly misses the reality of how much business has been transformed electronically. Even though IT budgets have been stripped, many information technologies are now fundamental to business practice. In fact, many Internet-based technologies survived and even thrived in the down-turn.

The reason is simple. These technologies transform costly, clumsy, painful business processes into processes that are faster and cheaper. Even though, there is an up-front cost, the bottom-line is impacted enough over time that these technologies and the efficiencies they provide are now often operationally essential in order to firms to remain competitive in an even more competitive environment. They not only impact the bottom-line in the short-term but they also may win customers in the long-term.

Two major forces are reshaping e-business. The first is bundling, where once separately sold applications are now sold together. The second is outsourcing in which software previously sold as a product are now sold as a service. In essence, e-business got harder for the technology competitors selling the wares because of increased competition for lower budgets and it also got smarter for the companies employing the technologies. The competition fueled more reasonable prices, better service and better products. However, it may still be difficult, given a limited budget, to assess what your company might need and what efficiencies can be achieved within specific cost constraints. In order to evaluate this, Table 1 compares various e-business components that medium-to-large sized enterprises are using to compete.

Certainly efficiencies in the supply-chain and the sell-chain enable firms to remain competitive during lean times. The current technologies are all about getting the right information to the right people. A good portion of this is increasingly being achieved via web-services. These services are fueled by the reality that full integration is still a long way off so it is still not possible for servers at different companies to really share and exchange information spontaneously without considerable effort.

Web services are arising as the key technology for enabling this interaction, if only superficially sometimes. It is still impossible to connect your bank, airline, rental care and frequent flier program seamlessly. However, the web-service technologies are certainly moving in that direction. The interesting thing about achieving these efficiencies through web-services is that there is nothing ‘flashy’ about the technology. The tools that make this possible are not at all glamorous, but boring nuts-and-bolts technologies. Maybe this means that while the honeymoon is over with e-business solutions and they may not be as ‘sexy’ as once considered, more importantly they are stable and integral to our daily business lives.

Table 1. Basic eBusiness Tools and Costs

Tools

Price Range (US $)

Data Storage and Management

Storage Systems(Hardware)

.03 – .15 per megabyte (for a large 4 tera-byte ebusiness application the range is in the 1.5 million area)

Database Software

11,000 – 40,000 per CPU
Network Hardware

Carriers

13,000-23,000 per month

Routers

10,000-55,000 depending on processing, dataports, software, memory

Load Balancers

4,500 (for eight 100 megabit ports)-30,000 (more for gigabit Ethernet ports and advanced functionality)

Switches

4,000-20,000 (pay more for the number of ports)
Web Applications

Web Server Software

Free – should be included free of charge with an application server

Application Server Software

8,000 – 35,000 per CPU

Enterprise Portal Software

100 – 200 per seat (the more applications you want to integrate the higher the price)

Integration Software

300,000 – 500,000

Content Management Software

250,000 (applies to licensing only – integration costs up to 5 times the cost of the software)
Business Applications

Supply Chain Management

1 million – 5 million (for midrange retailer)

Customer Relationship Management

5,000 per user (list price)

Procurement

500,000 (without customization or integration)

Financials

190,000 (for a midsized company purchasing 70 seats with mixed read-only and full-access)
Security

Authentication

20 per user (enterprise wide deployments can cost considerably more)

Encryption

11,000 – 18,000 (costs range from $10 per user to $200 per user depending on the complexity and scalability required)

Disaster Recovery

100,000 and up (depending on the complexity of the system)

About the Author(s)

Charla Griffy-Brown, PhD, is an associate professor of information systems at the Graziadio School of Business and Management. In 2004, Dr. Griffy-Brown received a research award from the International Association for the Management of Technology and was recognized as one of the most active and prolific researchers in the fields of technology management and innovation. A former researcher at the Foundation for Advanced Studies on International Development in Tokyo, she has also served as an associate professor at the Tokyo Institute of Technology. Dr. Griffy-Brown graduated from Harvard University, is a former Fulbright Scholar, and holds a PhD in technology management from Griffith University in Queensland, Australia. She has worked for NASA at the Kennedy Space Center and has taught innovation/technology management courses in Australia, Singapore, Indonesia, Malaysia, and Japan. She has also served as a consultant for the United Nation's Global Environmental Facility and the European Commission.

Comments are closed.