Edging into Web Services: Automating the Flow of Information among Companies Is Costly and Complex. Web Services Promise to Make It Cheap and Easy

By Hagel, John,, III | The McKinsey Quarterly, Winter 2002 | Go to article overview

Edging into Web Services: Automating the Flow of Information among Companies Is Costly and Complex. Web Services Promise to Make It Cheap and Easy


Hagel, John,, III, The McKinsey Quarterly


Companies in every sector have streamlined their internal processes by integrating systems and eliminating the manual activities once needed to coordinate the flow of information across the enterprise. Streamlining processes that involve interactions between companies has been more difficult, however: the automated connections that they currently forge with one another can funnel only certain types of information and require negotiations over the value of these expensive connections.

Web services--new technologies that spring from the Internet and are used mostly to automate linkages among applications--might at last make such connections not only possible but also easy and cheap. Today, connecting systems inside a company (a procurement system and a finance system, say) can require the IT staff to write customized code that "glues" them together. Making connections between companies and their applications exponentially increases the job's complexity and cost. But thanks to the emergence of Web services, programmers can now write a layer of software that sits on top of an application and connects it to any other Web services-friendly application quickly, cheaply, and flexibly.

In the new book Out of the Box: Strategies for Achieving Profits Today and Growth Tomorrow through Web Services, McKinsey alumnus John Ha gel argues that companies will use these technologies first at the "edge" of the enterprise--where business activities involve communications and transactions with other organizations, such as trading partners and customers. Companies that had better and cheaper connections with one another could gain cost savings in the short term and look forward in the longer term to collaborating more innovatively to give customers more value.

The editors

In the decade ahead, companies will pursue strategic opportunities and performance improvements abetted by a new generation of technologies called Web services. Such companies will adopt this novel approach at the edge of their enterprises, where they bump up against customers, dealers, and suppliers, as well as in activities requiring frequent interaction with any number of people and organizations--activities like customer support, marketing, procurement, and sales. As a result, these companies will forge connections among existing systems and applications less expensively and more rapidly and flexibly than they can using today's conventional technologies.

Automating the flow of information between a company and its business partners has always been difficult and expensive. Many interactions thus require human intervention--for instance, employees who key into corporate systems the data retrieved from business partners through faxes, telephone calls, or even lists printed out from the systems of other companies--a practice that leads to human error. Furthermore, many companies maintain larger stocks of inventory than they really need, because the flow of information among partners in the value chains of most sectors just isn't efficient enough. Since activities near the edge of businesses abound in inefficiency, the opportunities for creating near-term value from Web services are substantial there, which makes it likely that companies will apply them in this way before using them to knit together core internal systems.

Until now, though, integrating the systems of one company with those of its partners has been less feasible than integrating internal systems. Web services promise to change that. Better connections among trading partners are going to mean that companies will be able not only to streamline their edge activities but also to collaborate on improving internal processes, such as product development.

But the real long-term prize of business collaboration lies in mobilizing the assets of partners to deliver more value to their customers. When cooperation among different businesses resembles the activity of a network, they can increasingly focus on innovation in their core activities, and the network becomes more efficient and flexible in what it can offer. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Edging into Web Services: Automating the Flow of Information among Companies Is Costly and Complex. Web Services Promise to Make It Cheap and Easy
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.