E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
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Its size makes it an ideal candidate for web services, analysts say. “The larger the organization, the more potential for realizing benefits from web services,” says Boone of IDC. “But the higher the complexity of a large organization, the greater the need to have web services standards in place and get it right the first time.”
Web services also play into the need for companies to have scalable infrastructure that can easily expand along with their growth as well as with the growth of their trading partners. To connect with multiple trading partners, for instance, a retailer might have to integrate disparate applications running on different platforms. An inventory-tracking system at a distribution center could be a Java-based application running on an IBM platform, while the in-store systems could be running on Microsoft technology. Integrating them could require extensive code writing. “But because web services can abstract you from specific technology, you don’t have to worry about which technology your systems are built on,” says Sholler of Meta Group.
But web services can also pose serious security threats by exposing corporate data outside of a company’s firewall, where the automated push and pull of web services could let that data get in the wrong hands. If a retailer is using web services in an external b2b environment, it will need to assure that it controls access through what’s known as Port 80 in corporate firewalls. But security in web services is not just for external exposure, says LeClaire. “Businesses should care even more about securing web services behind the firewall, to make sure that when two applications are communicating, no one is eavesdropping,” he says.
Companies that provide web services management and security services include Blue Titan Software Inc., San Francisco; Forum Systems Inc., Waltham, Mass.; Reactivity Inc., Belmont, Calif.; Talking Blocks Inc., San Francisco; DataPower Technology Inc., Cambridge, Mass.; and Islandia, N.Y.-based Computer Associates.
As is the case with most evolution of technology, web services will grow after the experiences of early adopters become known, and particularly after major industry players begin to realize efficiencies and higher customer service capabilities that force others to follow suit to remain competitive.
Behind the scenes
But the spread of web services technology will also occur in a more behind-the-scenes way, because major technology vendors, including Microsoft, IBM, Oracle and SAP, are all building web services standards into their applications and development tools. “New applications will use web services as a matter of course,” says Knickle of AMR. “This will be a push from the developers, not a case where you just wait for large companies to force small companies into a new technology.”
“You’ll wake up one morning and find that all software products support web services,” says Jerry Rightmer, CTO of 360 Commerce Inc., which is building web services technology into its suite of retail operations software.
And as retailers get their technology infrastructure updated with web services, they’ll reach the point that web services are intended to provide: An environment where business processes that increase value in operations dictate what technology does-instead of the other way around, where business processes are forced to fit the parameters of technology. “Retailers will see where they need to better integrate applications to improve operations, and then see where they can build web services to make that happen,” Knickle says.
Says REI’s Hughes: “We’re not leading our business with technology. We’ll be building customer service with web services. That’s what it’s all about.”
How web services work
Web services rely on a bunch of integration standards that can easily get lost in a sea of acronyms: XML, SOAP, WSDL and UDDI. But they’re not as obscure or confusing as they might seem. Basically, they’re designed to describe the content of a software application and make data from one application integrate more easily with data from another application.
XML, or Extensible Markup Language (a more complex outgrowth of Hypertext Markup Language, or HTML) is designed as information that can describe itself. It’s also known as meta data, or data about data. It can enable the data from one application to communicate with the data from another application, such as to describe a request for an inventory report on the number of in-stock Nikon D100 cameras. The requesting application and the inventory application are able to exchange this data automatically and deliver it to whatever device, such as desktop computer application, an e-mail in-box, or a handheld PDA, that’s been programmed to receive it.
While XML is the language that helps applications communicate, SOAP, or simple object access protocol, makes it possible for the data from each application to enter the other application. In other words, SOAP formalizes the way XML data passes between different processes. WSDL, or web services description language, describes how the data in different applications can be mapped using transport protocols.
“The main benefit of web services is that the web service interface describes itself, so it’s easier for different web sites or applications to interface,” says Philip Sonntag, retail products manager for SAP AG. “That’s the beauty of SOAP and XML.”
Over the longer term - though no one seems sure just how far into the future - retailers as well other types of companies will use the full capabilities of web services to communicate with a potentially limitless number of trading partners over the Internet. They’ll do this by placing web services-enabled applications on the Internet that can communicate with applications of other companies. Using an online Yellow Pages type of web services standard known as UDDI, or Universal Description, Discovery and Integration, a potential trading partner or supplier could find a retailer listed in the UDDI registry, find out how it likes to communicate and do business, then integrate applications that would, say, exchange information between the supplier’s product catalog and the retailer’s catalog.
Use of UDDI is not expected to happen until web services standards become further developed, particularly for security of corporate data, and until companies move beyond using web services for developing internal application integration.