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Internet strategy the road to web services solutions irm press

  1. 1. TEAM LinG
  2. 2. i IRM Press Publisher of innovative scholarly and professional information technology titles in the cyberage Internet Strategy: The Road to Web Services Solutions MatthewW.Guah WarwickUniversity,UK Wendy L. Currie WarwickUniversity,UK Hershey • London • Melbourne • Singapore TEAM LinG
  3. 3. ii Acquisitions Editor: Renée Davies Development Editor: Kristin Roth Senior Managing Editor: Amanda Appicello Managing Editor: Jennifer Neidig Copy Editor: Lisa Tosheff Typesetter: Cindy Consonery Cover Design: Joyce Li Printed at: Integrated Book Technology Published in the United States of America by IRM Press (an imprint of Idea Group Inc.) 701 E. Chocolate Avenue, Suite 200 Hershey PA 17033-1240 Tel: 717-533-8845 Fax: 717-533-8661 E-mail: Web site: and in the United Kingdom by IRM Press (an imprint of Idea Group Inc.) 3 Henrietta Street Covent Garden London WC2E 8LU Tel: 44 20 7240 0856 Fax: 44 20 7379 3313 Web site: Copyright © 2006 by Idea Group Inc. All rights reserved. No part of this book may be reproduced, stored or distributed in any form or by any means, electronic or mechanical, including photocopying, without written permission from the publisher. Product or company names used in this book are for identification purposes only. Inclusion of the names of the products or companies does not indicate a claim of ownership by IGI of the trademark or registered trademark. Library of Congress Cataloging-in-Publication Data Internet strategy : the road to web services solutions / Matthew W. Guah and Wendy L. Currie, editors. p. cm. Summary: "This book tells you how to create, execute and evolve a customer-centric approach for your Internet-based management strategy"--Provided by publisher. Includes bibliographical references and index. ISBN 1-59140-763-X (hc) -- ISBN 1-59140-764-8 (sc) -- ISBN 1-59140-765-6 (ebook) 1. Business enterprises--Computer networks--Management. 2. Information technology--Management. 3. Web services--Management. I. Guah, Matthew W., 1963- II. Currie, Wendy, 1960- HD30.37.I573 2006 004.6'068--dc22 2005013815 British Cataloguing in Publication Data A Cataloguing in Publication record for this book is available from the British Library. All work contributed to this book is new, previously-unpublished material. Each chapter is assigned to at least 2-3 expert reviewers and is subject to a blind, peer review by these reviewers. The views expressed in this book are those of the authors, but not necessarily of the publisher. TEAM LinG
  4. 4. iii Internet Strategy: The Road to Web Services Solutions Table of Contents Preface .................................................................................................. vi Introduction ......................................................................................... viii SectionI:StrategicApproachestoInternetforOrganizations ChapterI.ApplicationServiceProvision ............................................. 1 Matthew W. Guah, Warwick University, UK Chapter II. Web Services...................................................................... 8 Matthew W. Guah, Warwick University, UK ChapterIII.Concerns ......................................................................... 17 Matthew W. Guah, Warwick University, UK ChapterIV.Recommendations........................................................... 40 Matthew W. Guah, Warwick University, UK Section II: Case Studies ChapterV.ConsideringtheImpactofBroadbandontheGrowth andDevelopmentofB2CElectronicCommerce ............................... 48 Jyoti Choudrie, Brunel University, UK Yogesh Kumar Dwivedi, Brunel University, UK TEAM LinG
  5. 5. iv ChapterVI.ATheoreticalApproachtoEvaluateOnlineand TraditionalTradingontheNASDAQStockExchange ..................... 67 Haroun Alryalat, Brunel University, UK Yogesh Kumar Dwivedi, Brunel University, UK Jasna Kuljis, Brunel University, UK Ray J. Paul, Brunel University, UK ChapterVII.AdaptiveCollaborativeWorkandXMLWebServices: BenefitsofApplicationintoInformationInfrastructureandHuman Resources ............................................................................................ 86 Mayumi Hori, Hakuoh University, Japan Masakazu Ohashi, Chuo University, Japan Chapter VIII. Helping Users, Mentally: A Lesson Learned from HypertextandWebNavigation ........................................................ 101 Paulus Insap Santosa, National University of Singapore, Singapore Chapter IX. Reducing the Costs of Doing Business: Human Costs and Social Issues of IS/IT Strategies ........................ 135 Souad Mohammed, UK Chapter X. From ASP to Web Services: Identifying Key PerformanceAreasandIndicatorsforHealthcare .......................... 149 Matthew W. Guah, Warwick University, UK Wendy L. Currie, Warwick University, UK SectionIII:ThrivingorNot ChapterXI.FutureTrends................................................................ 178 Matthew W. Guah, Warwick University, UK ChapterXII.A21st -CenturyToolforIntelligentEnterprises ......... 185 Mathew W. Guah, Warwick University, UK ChapterXIII.Conclusions ................................................................ 227 Matthew W. Guah, Warwick University, UK TEAM LinG
  6. 6. v Glossary ............................................................................................. 259 AbouttheAuthors.............................................................................. 313 Index................................................................................................... 318 TEAM LinG
  7. 7. vi Preface This book addresses the business issues and management concerns in rela- tions to Internet strategies of organisations in the 21st century. By so doing, the editors hope this book will point medium- and large-sized businesses in the proper direction, to manage emerging technologies, such as Web services resources and strategies to their competitive advantage. With the phenom- enon of Web services in its infancy, the authors have drawn from works of IS pioneers Markus, Porter, Checkland, and others. Their intellectual contribu- tions, plus findings from research work by both new and experienced aca- demics in Europe, USA, and Asia, provide a framework for discussion. Web services business model was borne out of the Application Service Provi- sion (ASP) business model. ASP delivers personal productivity software and professional support systems, assisting an intelligent enterprise in processing information, solving business problems, developing new products, and creat- ing new knowledge. The need to exploit Web services capabilities to preserve and enhance organisational knowledge is clearly defined by this book. This is not a textbook, but it encompasses all the practical areas in which an information system strategist functions, and also those of IT and business man- agers. The following criteria that are being used as the foundation for the best of textbooks on information systems are all explored in this book. They are Internet strategies and management concepts, the business and economic of information systems environment, opportunities and information about ASP and Web services, sociological aspects of Web services buyer behaviour, psy- chological aspects that influence consumption of Web services applications, strategic tools and tactics, market segmentation, Web services product life TEAM LinG
  8. 8. vii cycles and categories, commercialization, distribution, promotion, communi- cations, organization, analysis, application integration, future aspirations of service providers, ethical issues and much more. The aim of this book is to disclose the motives and mechanisms of Web ser- vices as it is developing and changing as the 21st century unfolds. Internet strategies cannot be described intelligently without exploring some fundamen- tal features and problems of society as a whole. That many IT managers in small and medium-size businesses are either directionless, like a boat without a rudder, or are drowning beneath waves of Internet strategies management theories that pass over their heads, and others that persist in spite of the fact that they remain unproven, may well be a reflection of the draft of general economic slowdown. An IT manager or Information Systems strategist or Business Operations man- ager will find that this book: • Balances systems theory and proven Internet management frameworks which are illustrated with practical cases; • Explains the strategic management of Internet policies in terms of capa- bilities of IT in business; and • Provides a good guide to those who need to discover how to apply Internet for strategic advantage of an organization. Matthew W. Guah & Wendy L. Currie Leamington, Warwickshire, UK June 2005 TEAM LinG
  9. 9. viii This book is about strategic direction of Internet strategies and the manage- ment of strategic change to emerging technologies, in general, and Web ser- vices, in particular. To deal with this complex topic we have structured this book into three parts containing six main areas. The first section looks at a comprehensive framework of the emerging technologies process upon which this book is structured. This part also includes chapters on Application Ser- vice Provision (ASP), Web services, Concerns, and Recommendations. These chapters clarify the various issues relating to this new phenomenon in Internet strategy. Section II includes chapters on case studies from different parts of the world showing how Web services are being used to benefit businesses. They show leadership in the Internet strategic direction and decision-making and on cul- ture and values as these are forces that determine how Internet strategy can be managed within an organization. Section III considers how a situation analysis for the future of Web services business model might be carried out. The emphasis is on understanding the future of new technology strategies and the continuously changing business environment and technological resources. The functional subjects that relate to the management of organizational technological resources and that under- pin a study of Internet strategy are examined. Following this Introduction is a Technology Review section that presents the central theme of the historical shifts from a mainframe to a client server, and now to Web services strategy. An observer of the client-server technol- ogy would have found the task of accurately discerning the path of that tech- Introduction TEAM LinG
  10. 10. ix nology during the last decade of the 20th century very difficult. Similarly, the reality of the Web services technology has not burst on the business scene full-blown, but has evolved over some 5 to 10 years from the ASP business model. Moreover, statistical evidence to define this emerging social and eco- nomic reality has lagged behind the writers and commentators who have iden- tified the important features of this significant change. Chapter I contains ASP and discusses the rise and fall of this phenomenon in a relatively short period. This is followed by a similar discussion for the Web Services business model. This will then be followed by Concerns which discusses the engine that is driving the Web services industry. Just as the steam, electric, and gasoline engines became the driving forces behind the Industrial Revolution of the early 1900s, so the Internet and high-speed telecommunications infrastructure are making Web services a reality today. A resulting “information processing” in- dustry is the business sector which is providing the impetus for this revolution, with its increasingly improving array of hardware, software, and information products and services. These technologies, in turn, are having and will con- tinue to have profound impacts on business management, competitive advan- tage, and productivity. Having set the stage by describing the changing business environment for or- ganizations today, Recommendations then moves to the need for each en- terprise to fundamentally think its corporate strategy. The situation can be compared to the railroad industry in the late 1800s. It had to change its mind- set from one of buying up large land tracts and laying railroad ties to one of moving goods and people from one place to another, so companies today must reconsider their traditional lines of business as they begin operating in the 21st century. For Web services vendors, it is not just a question of selling a product, but of selling a solution to a customer’s problem. This is where the lines between delivering the services and traditional versus emerging markets are blurring and changing. The qualitative dimension is as important in the Web services industry as the quantitative dimension. Quality control must be built into the front end of the service delivery cycle, not viewed as a last-minute check to be done just before contracts are reviewed. Here is where the human factor is introduced into our discussion. In essence, the intelligent enterprise is a distributed net- work of human talent. Within the individual enterprise, outmoded human re- sources management philosophies must be replaced by modern approaches that maximize the brain contribution to the products and services, not just the brawn contribution. The emphasis of Web services is on working smarter, not TEAM LinG
  11. 11. x just harder. Web services strategy requires businesses to rethink not just the elements of their economic milieu, but also their political and social contexts. This does not suggest some kind of radical shift away from the profit motive to the quality-of-life motive. However, we do endeavor to point out that this strategy presents both risks and opportunities for every business in the 21st century. Much of this discussion implicitly recognizes that doing business in an intelligent enterprise forces suppliers, producers, and consumers into far closer proximity with one another than is the case in an industrial economy. Before the concluding statements, we invite the reader to look at more forms of Web service applications involving implementation issues from active re- searchers in both Europe and Asia. Haroun Alryalat and his colleagues at Brunel University, London, report on a strategy involving the Stock Exchange. Mayumi Hori and Masakazu Ohashi both at Hakuoh University, Japan, and Paulus Insap Santosa at the National University of Singapore, report on some respectable projects taking place in Asia involving Web services in the distri- bution of technology to that part of the world. Souad Mohammed clarifies several hidden costs relating to the implementation of information systems in the 21st century. Matthew Guah and Wendy Currie take the reader through an implementation of Web services in the UK National Health Service, summa- rizing parts I and III within a live project. Finally we examine the problem of redefining success in the business environ- ment of the 21st century in Future Trends. Central to this discussion is the idea of adding value at each stage of the information systems life cycle. ASP, as a form of technological accomplishment, had little meaning for businesses and other organizations. Unless Web services can be linked to business inno- vation, the challenge for business professionals is to find ways to improve business processes by using Web services. This book has been written to take the reader into the 21st -century IS strategy paradigm. Utmost attention is paid to integrate the current business and man- agement ideas with the deployment of Web services as one of the new infor- mation technologies. Yet, the book is rooted in the concepts that have emerged over the decades of development of the IS discipline. Web services in terms of its products and services has continued to evolve over its short history. As these changes have progressed, the landscape of the Internet technology has become crowded with new services, technologies, products, and transmis- sion media. As the Internet has continued to evolve with the discovery of new technologies and the integration of “older” technologies such as mobile com- puters and broadband communications, new opportunities and markets within this area of business have opened up. Web services, as a form of electronic TEAM LinG
  12. 12. xi commerce, can be the sharing of business information, maintaining business relationships, and conducting business transactions by means of computer tele- communications networks. Similar to the development of the Internet’s World Wide Web, Web services has been changing both the ways organizations deal with one another and the way internal corporate processes are carried out with the assistance of telecommunication infrastructures. The capabilities of- fered by Web services present an opportunity to redesign the business pro- cesses of intelligent enterprises in order to reach new levels of performance. The researchers whose work underpins this book did not operate in isolation to the work of others in the IS and related fields. All through this book, se- lected examples of the existing literature will be discussed under the various headings of theory. Many examples and cases throughout the text have been drawn from international business areas. The purpose is to describe some interesting work, which was forerunner and inspiration to our research, while maintaining the role of theory and case studies within the interpretive tradition of IS research. The epistemology can be viewed as broadly interpretive, see- ing the pursuit of meaning and understanding as subjective, and knowledge as a social construction. Technology Review Change usually takes a long time, and the technology that transformed enter- prises and the economy is no exception. Why should anyone be overwrought about the slow growth of Web services? It took mainframe computers a de- cade or two to become central to most firms. In fact, when IBM marketed its first mainframe computer, it estimated that 20 of these machines would fulfill the world’s need for computation! Minicomputers moved into companies and schools a little faster than mainframes, but they were also considerably less expensive. Even the ubiquitous PC took 5 to 10 years to become an impor- tant part of work life. The road travelled by these pioneers was rocky. Actual accomplishments seldom matched those initially envisioned. There were sev- eral reasons for this shortfall—a general lack of computer literacy among us- ers, a general lack of business literacy, and an ignorance of the management role by information specialists, computing equipment that was both expensive and limited by today’s standards, and so on (McLeord, 1993). Some IS re- viewers believe that one error in particular characterized the early systems above all others: they were too ambitious. Firms believed that they could build TEAM LinG
  13. 13. xii giant information systems to support all managers. With the benefits of hind- sight, one can now describe systems designed then as being snowballed or the task attempted being unmanageable. However, some firms stuck it out, in- vested more resources, and eventually developed workable systems—although more modest in size than originally projected—while other firms decided to scrap the entire management information system idea and retreated to data processing. When the first computers were applied to business problems in the 1950s, there were so few users that they had almost total influence over their sys- tems. That situation changed during the 1960s and 1970s as the number of users grew. It then became necessary to consider the combined needs of all users so that the systems could function in an efficient manner. During the 1980s, the situation became even tighter when a new player entered the pic- ture—the enterprise (McLeord, 1993). A stage of organization/staff reliance on information systems started in the mid-1980s with demands that informa- tion systems increased operational efficiencies and managerial effectiveness. On the back of such evolution, strategic information systems gained impor- tance as systems expected to help organizations compete. In the 21st century, information systems are being developed in an enterprise environment (see Figure 4.1). 21st Century: The Age of Information Society Beniger (1986) puts forth a seemingly influential argument that the origin of the information society may be found in the advancing industrialization of the late nineteenth century. As industrial plants increased their processing speed, the need for increased resources to control manufacturing and transportation resulted in a feedback loop wherein enterprises had to process information ever faster. The demand for sophisticated information processing equipment resulted in the development of computers. While the subsequent new tech- nologies nurtured the development of an information society, the continuing cycles of demand pull and supply push account for the progress in the field. The Internet is simply a global network of networks that has become a neces- sity in the way people in enterprises access information, communicate with others, and do business in the 21st century. The Internet contains a distributed software facility that organizes the information on it into a network of interre- lated electronic documents called the World Wide Web (WWW). WWW has TEAM LinG
  14. 14. xiii changed the face of computing, both individual and enterprises resulting in the expansion and development of electronic commerce. The Internet is regarded in the 21st century as much more than a means of communication. It is also a source of information and entertainment that facilitates the development of electronic commerce. The initial stage of e-commerce ensured that all large enterprises have computer-to-computer connections with their suppliers via electronic data interchange (EDI), thereby facilitating orders completed by the click of a mouse. Unfortunately, most small companies still cannot afford such direct connections. Web services enable low-cost access to this service and having a standard PC is usually sufficient to enter this marketplace. The Internet has been a subject of enormous hype and speculation since its explosion in late 1980s. However, Web services can most certainly be said to be responsible for the latest debate surrounding its usage for purposes far beyond its original scope. By the late 1990s, ASP-like business models were applied by a proliferation of small businesses in the Western world, thereby creating what sometimes seemed a cult status with people from many parts of society talking about a “new breed of entrepreneurs.” Beyond the problems that may arise from the systematization of information, we suggest that there is within the discipline of Web services a model of infra- structure and context which is foundational but inadequate. This is the code model of Web services, deriving from the work of Sleeper and Robins taking a pragmatic look at the emerging Web services market (Porter & Millar, 1985). We will draw on a number of theoretical sources in search for an improved foundation. A link is also made to the environment reality theory of perception proposed by Little (1999). Internet Strategy Our examination of Internet strategy begins with a look at the understanding of strategy in business and it’s purpose to achieving business goals. Nearly all written work in the area of strategy are based on the classic book by Alfred Chandler (1962), Strategy and Structure. The definition used in that book is: The determination of the basic long-term goals of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals. (p. 13) TEAM LinG
  15. 15. xiv Chandler considered strategy to be about setting general goals and deciding on the broad types of action and use of resources needed to achieve them. These involved the overall size and scope of the organization concerned, the mix of products or services being provided, and the organization’s core val- ues. Such approach to strategy implies that strategies are the intended out- comes of systematic, rational decisions by top managers about clearly defined problems. The resulting strategic change or innovation would appear as a linear, sequential process in which strategic analysis and choice would follow unproblematic trend by strategy implementation. It has been recorded that Chandler’s views of strategy goes without its cri- tiques (Mintzberg, 1979, 1990; Quinn & Hilmer, 1994; Whittington, 1993). Some of these authors have contrasted the idea of strategy as a deliberate, consciously intended plan with strategy as an emergent property, evolving incrementally and piecemeal out of the ideas and actions of people at different levels of the organization. Such strategies may be articulated consciously by top management in most successful organizations. Others consider such emer- gent, adaptive, or incremental view of strategy assumes that the internal and external environments of organizations are inherently ambiguous, unstable, and unpredictable. Others believe strategy does not assume that managers in or- ganizations can only influence events at the margin, simply adapting pragmati- cally and opportunistically to continually changing circumstances. These au- thors consider the essence of a strategy and its crucial importance in any pro- cess of change or innovation is that it embodies the deliberate and conscious articulation of a direction. Successful strategies require both an overall sense of direction and a continuous adaptation to change. For a deeper understanding of strategies and strategy development, it is im- perative to recognize their strong links with organization culture, the deeper level of basic assumptions and beliefs that are shared by members of an orga- nization that operate unconsciously and define in a basic taken-for-granted fashion an organization’s view of itself and its environment. It has become even more accepted in the 21st century that strategies are both rooted in, and partly explained by, organization culture. Jon Clark in his book, Managing Innovation and Change (1995), outlined how the original founders of many of today’s large successful organizations—Ford in the USA, Marks & Spen- cer in the UK, Pirelli in Italy, and Siemens in Germany—played a crucial role in establishing their overall strategy and organizational culture. Clark (1995) also shows that organizational culture is one of the most important areas of strategy which can be influenced by top managers and visionary leaders within the organization. TEAM LinG
  16. 16. xv Mintzberg (1979, 1990) shows strategies to usually exist at a number of lev- els in any organization. These strategic levels can be generally distinguished into corporate, business, and operational. 1. Corporate strategy is concerned with the overall size and scope of the organization.Thisinvolvestheorganization’sbasicgoalsandobjectives, its core values and overall profile, as well as the general allocation of resourcestodifferentoperations. 2. Business strategy can also be referred to as competitive strategy and is concerned with the choice of products or services to be developed and offeredtoparticularmarketsandcustomers.Thisalsoinvolvestheextent towhichthechoicesmadeareconsistentwiththeoverallobjectivesofthe organization. 3. Operationalstrategyisconcernedwiththedifferentfunctionswithinthe organization. These functions could be production or service delivery, finance,personnel,research,ordevelopmentwhichallinfluenceandare integratedwithinthecorporateandbusinessstrategiesoftheorganization. The interaction and consistency between the different levels of strategy and structure are crucial issues for the organizational performance. Clark (1995) raises the level of a long-standing debate about the relation between strategy and organization structure. Chandler (1962) phrased this debate with a phrase that “structure follows strategy.” This implies that orga- nizations should first plan their strategy before embarking on the process of designing their structure to fit within such strategic plan. In contrast, Mintzberg (1990) argued that strategies are unlikely to be decided without reference to existing structures. The relationship between strategy and structure is likely to be reciprocity rather than a one-way determination. Mintzberg (1990) para- phrased Chandler’s “structure follows strategy” as the left foot follows the right. Clark (1995) points out that multinational corporations face a number of complex structural problems in developing strategies which are not faced by small businesses or professional organizations. TEAM LinG
  17. 17. xvi References Beniger, J.R. (1986). The control revolution: Technological and economic originsoftheinformationsociety.Cambridge,MA:HarvardUniversity Press. Chandler,A.D.(1962).Patterninorganizationalanalysis:Acriticalexamina- tion. Business History Review, 36(2), 233–. Clark, J. (1995). Managing innovation and change. London: Sage. Little,G.R.(1999).Paper1:Theoryofperception.RetrievedJune2002,from McLeord Jr., R. (1993). Management information systems: A study of computer-based information systems (5th ed.). New York: Macmillan. Mintzberg, H. (1979). An emerging strategy of direct research.Administra- tive Science Quarterly, 24(4), 582–589. Mintzberg,H.(1990).Thedesignschool:Reconsideringthebasicpremisesof strategic management. Strategic Management Journal, 11(3), 171. Porter,M.E.,&Millar,V.E.(1985).Howinformationgivesyoucompetitive advantage. Harvard Business Review, 62(4), 149–160. Quinn, J.B., & Hilmer, F.G. (1994). Strategic outsourcing. Sloan Manage- ment Review, Summer(39), 63–79. Whittington,G.(1993).Corporategovernanceandtheregulationoffinancial reporting. Accounting and Business Research, 23(91), 311. TEAM LinG
  18. 18. xvii Acknowledgments So many people have played a role in the development of the ideas presented here that it is difficult to know where to begin in acknowledging them. The first draft of this manuscript was written while I was a PhD student at the Centre of Strategic Information Systems in the Department of Information Systems and Computing at Brunel University. All the staff at DISC, initially, established a wonderfully hospitable environment for this enterprise. I owe an inestimable debt of gratitude to Michael Livesey with whom I have discussed many of the ideas developed herein and who read and made nu- merous helpful comments and suggestions on several drafts that have been incorporated in the final version of this book. While I was writing this manuscript, I was reading Wendy Currie’s excellent book Value Creation from e-Business Models (Elsevier Butterworth- Heinemann, 2004). Her study clarified my thinking on many issues and con- tributed to shaping the direction of my own work. I humbly appreciate her continuous support and encouragement as I seek my way through the ‘trap- doors’ of academic life. This book would not have been possible without the cooperation and assis- tance of the authors, reviewers, my colleagues and the staff at Idea Group Publishing. The editors would like to thank people at Idea Group, namely: Mehdi Khosrow-Pour for inviting us to produce this book, Jan Travers and Amanda Appicello for their contributions, Diane Huskinson and Michele Rossi for managing this project, especially for answering our questions and keeping us on schedule. A special word of thanks goes to Ms. Kristin Roth, for her diligence and determined stewardship during this laborious project. TEAM LinG
  19. 19. xviii Last but certainly not least my family (including Evelyn Christine, Michael Appopo, Matthew Gbeyadeu and David Gbemie) who have all patiently borne with me through dejection and inspiration as this book has evolved. Evelyn has also provided a steady supply of patience, sound judgement and an inde- fatigable supply of good nature for which I will continue to owe her consider- ably. TEAM LinG
  20. 20. Section I Strategic Approaches to Internet for Organizations TEAM LinG
  21. 21. xx TEAM LinG
  22. 22. Application Service Provision 1 Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. Chapter I ApplicationService Provision Matthew W. Guah, Warwick University, UK Abstract Thischapternotonlydefinestheapplicationserviceprovisionphenomenon, but also details the issues surrounding its emergence as an Internet strategic module. It reports on several studies that concentrated on the application service provision module impact on the day-to-day operation of a business. What is Application Service Provision (ASP)? According to the ASP Industry Consortium, an ASP is a third-party service firmthatdeploys,manages,andremotelyhostssoftwareapplicationsthrough centrally located services in a rental or lease agreement (ASP Consortium, TEAM LinG
  23. 23. 2 Guah Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. 2000). Such application deliveries are done to multiple entities from data centresacrossawideareanetwork(WAN)asaserviceratherthanaproduct, pricedaccordingtoalicensefeeandmaintenancecontractsetbythevendor. ASP is considered by many to be the new form of IT outsourcing, usually referred to as application outsourcing. While the IT industry has become accustomedtosellingsoftwareasaservice,theASPbusinessmodelisdifferent due to its scale and scope of potential and existing application software offeringstosmall,medium,andlargecustomers.Inaddition,thismodelenables ASPstoservetheircustomersirrespectiveofgeographical,cultural,organiza- tional,andtechnicalconstraints.TheapparentcomplexityoftheASPmodelled to a taxonomy including Enterprise ASP, Vertical ASP, Pure-Play ASP, Horizontal ASP, and ASP Enabler (Figure 1.1). An earlier evaluation of differentASPbusinessmodelsresultedintofourbroadcategoriesofdelivery, integration, management and operations, and enablement (Currie, Desai, & Khan, 2004). An important debate surrounding all ASP models is the extent to which applicationoutsourcingisdifferentfromtraditionaloutsourcing.Figure1.2 providesabreakdownoftraditionalandapplicationoutsourcing.Probablythe Initiation Evaluation Implementation Integration Services Consolidation 1997 2003 2002 2001 2000 1999 1998 Full Service Providers (FSP) Application Service Delivery (ASD) Virtual Application Service Provider (VASP) Application Centric Customer Centric Figure 1.1. The evolution of the ASP models TEAM LinG
  24. 24. Application Service Provision 3 Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. mostnoticeabledifferencebetweenthetwoiswithintherelationshipwiththe customer. ASP is a metamorphosis of software into a service that exists on the Web, or often referred to by practitioners as Web-native software world. In this model,agiantInternetprotocol(IP)network(calledtheInternet)isbeingused toeffectivelyturnsoftwareintoaservicedrivenfunctionthatexistsasaone- to-many option. The simple explanation for ASP is that a company delivers application software from a central source, delivering it over a network connectionandchargingafeeforitsuse. ASPscanalsobedescribedasthedeliveryofpreconfiguredtemplatesoftware fromaremotelocationoveranIPnetworkonasubscription-basedoutsourcing contract.Thisisusuallyinaone-to-manyrelationshipandmustbeviewedas apreimplementationoutsourcingcontractthatcanbebilledaspaymentfora service—inrelationtotheUKmobilephonemarket,apay-as-you-goservice. Figure 1.2. Three stages of IT outsourcing (Currie & Seltsikas, 2000) TEAM LinG
  25. 25. 4 Guah Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. Emergence of ASP ThissectionfocusesontheemergingroleoftheASPmodel.Duringthelastfive years,theASPphenomenonhasgrownconsiderably,withmanyestablished andstart-upfirmsdevelopingtheirASPstrategies.Thereisagrowingaware- nessthatfewactivitiesandprofessionshaveseensucharapidchangeoverthe past years as the activities and professions related to the field of information systems(Leeetal.,1995).Initiallycalled“appsontap,”thissourcingmodel promisedtodeliverbest-of-breed,scalable,andflexiblebusinessapplications tocustomerdesktops(Kern,Willcocks,&Lacity,2002).ASPwasthehottest topicin2000–2001inwhatwasreferredtoinUSAas“practicemanagement solution.”Well-establishedpracticemanagementsoftwarecompaniesinclude Medic, Millbrook Corp., and Computer Sciences Corp. Other less-known companies are Greenway Medical, Alteer Corp., and Perfect-Practice.MD. Whilethesecompaniesofferremotehostingofsoftwaretotheircustomersin the healthcare sector, they also promise the advantages of client-server applicationswithouttheexpensiveinfrastructureoreventhestaffrequiredto maintain it. Forecasts for the growth of the ASP industry vary, with Ovum (Ring,2000)predictingitwillbe$25bnandDataquest$22.7bnby2003(ASP IndustryConsortium,2000).ASPswillhaveasignificantimpactonoutsourcing policies and practices if the business model successfully penetrates underexploitedsectorssuchashealthcare. TheearlyphaseoftheASPmodelappearedtorevisittheservicebureaumodel of the 1960s and 1970s (Currie, 2000). During this period, many companies signed outsourcing contracts with a service bureau. The fashionable term “outsourcing” was rarely used, as the more narrow facilities management contractsinvolvedmainframesdatacentresandbespokesoftware.Theservice bureau model was moderately successful even though there were many technical,communications,andfinancialproblemswhichprecludeditbeinga viableoptionformanycompanies. Inthiscurrentera,outsourcingwillcontinuetoundergoasignificantshiftfrom thecentralizedcomputingofthe1960sand1970s,thedistributedcomputing of the 1980s and 1990s, through to the remote computing in the 21st century. ASPswillplayacentralrolesincetheywillincreasinglyofferautilitymodelto customers where the latter will purchase applications on a pay-as-you-use basis (Currie et al., 2003). TEAM LinG
  26. 26. Application Service Provision 5 Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. Asthesehistoricalstageshaveevolved,thebasicstrategicresourcesandtools ofeconomicactivityhaveshifted,ashasthenatureofworkandculture.Inthe “post-Net era,” a term coined by editors of Issues of Strategic Information Systems for its special issue in 2002, the application of knowledge and intellectualtechnologyinresponsetotheorganizedcomplexityoftechnology, organizational,andsocialinstitutionsbecomethecriticalfactorofproduction andservices. Thefindingsofmanystudiesprovidesubstantialevidencefortherealityofthe ASPindustryintheUSAandthetransitionalphasewhichthenationaleconomy hasmovedthroughinprogressingtoASPtechnology(Currie,2000).More- over, the study also provided support for the notion that the basic sources of wealth had shifted from capital to information and knowledge resources. If ASP is a technological and economic reality, then what is its impact on business? At the outset, it is clear that the Internet’s impact on business will evolveovertimeandwillredefineourunderstandingofbusinessmanagement, competition, and productivity. While we have been living with the conse- quences of the Internet for many years, our understanding of these shifts in humaneventshaslaggedbehindthereality. Ironically,thisdelayedeffecthasbeenparticularlyacuteinEuropeinrecent years, as compared to Japan and the USA. For example, in the USA, preliminaryplanninginmovingIToutsourcingtowardanASPmodelemerged as a general business goal in early 1980s, and by the late l990s it had been translatedintoafull-scaleeconomicdevelopmentstrategy.Moreover,bythe late 1990s, the USA was beginning to assess its economic development strategies in the ASP industry, and the impacts such pronounced shifts in IT industryprioritieswouldhaveonbusiness. Eventoday,EuropeanbusinessandpoliticaldebatesoverISstrategicpolicy remaintiedtotraditionalviewsofoutsourcing.Manyseniorexecutivesstill remain sceptical or openly critical of the ASP phenomenon. These attitudes among corporate executives and senior managers betray some fundamental misunderstandingsnotonlyofthecurrentstateoftheASPindustryinEurope, butalsoofthetermsandconditionsunderwhichtheadvancedASPindustry intheUSAwillcompetewithEuropeanbusinessinthefuture. Nearlyeveryparticipantinourresearchwithsmall-andmedium-sizecompa- nies(SME)intheUKagreesthatimplementingASPsolutions(whichsome- timesresultsinautomatingcertainworkflows)withoutfirstmakingnecessary fundamentalchangesandimprovementsisthewrongwaytogoaboutbusiness TEAM LinG
  27. 27. 6 Guah Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. improvement.Thatisbecausenewandbetterproductsoftenreplaceexisting ones. At the same time much-needed skills may not be backed up by job descriptionsandfunctionalstatements.Andtoooftenthepoolingofparallel andsimilaroperationsisnotconsideredwhenimplementinganASPsolution. Preliminary findings of our research show some conflicting stakeholders perceptionsforasuccessfulimplementationofsuchamodel.Thesepercep- tionsnotonlyleadtoabetterunderstandingoftheethicalissuesinvolvedbut also of the complex relationship of these ethical issues with other technical, organizational,andsocialissuesthatneedtobemanagedeffectively. What Does ASP Mean for Your Business? An application containing a database with all your customer information or paymentduedateorrecordsofalle-mailisstoredandprocessedbyanoutside providerinlieuofbeingonyourlocalnetwork. Thismeansnooneinyourbusinessneedstoworryaboutmaintainingaserver fullofallthisinformation.ItispainfulforanorganizationtohavetospendIT resourcesmaintainingserversandthinkingofthedisasterswhenthesystem goes down or an upgrade is needed. An ASP business model allows your businesstheluxuryofhavinganoutsideserviceprovider,whospecializesin server maintenance and support, to provide what should be an incredibly reliableandsecureITsystems—somethingonlyafewbusinessescouldafford beforenow. A typical ASP has to submit to government audits, provide multiple servers (redundancy),four-way(4-T3)replication,backuppowersystems,and24/7 support. Most small- and medium-size companies cannot afford all that and keep up to date with necessary improvements. It also allows savings from software licensing, enabling small- and medium-size companies to be as powerful as their larger competitors. They do this by subscribing to an inexpensive monthly ASP service giving them the chance to be virtually unlimitedintheircapacitytostoreinformation. AnASPsuppliesacompleteinfrastructureforyourbusinessandmanagesthe networkandalltheapplicationsthatyouwishtorunonallthecomputerswithin yourcompany.AnASPusuallychargesafixedfeetomanageyournetworkand TEAM LinG
  28. 28. Application Service Provision 7 Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. applications. One important factor in this business model is that the ASP is allowed to manage your network. Your business does not need to operate its own server; instead, your computers are connected to the ASP’s server throughanopenconnection.OnemajorproblemwithASPuptake,sofar,has been that the costs of such connections have not fallen significantly as anticipated.Thiswouldhaveprovidedanattractivealternativetoincreasingly expensive network management. Moreover, your company would know in advance what the software and management will cost because it is being charged a fixed fee. References ASPIndustryConsortium.(2000).Industrynews.RetrievedDecember2002, from Currie, W., Desai, B., Khan, N., Wang, X., & Weerakkody, V. (2003). Vendor strategies for business process and applications outsourcing: Recent findings from field research. Hawaii International Conference onSystemsSciences,Hawaii. Currie,W.L.(2000).ExpandingISoutsourcingservicesthroughapplication serviceproviders.ExecutivePublicationSeries.CSIS2000/002. Currie,W.L.(2004).Theorganizingvisionofapplicationserviceprovision:A process-oriented analysis. Information and Organization, 14, 237– 267. Kern, T., Willcocks, L.P., & Lacity, M.C. (2002). Application service provision: Risk assessment and mitigation. MIS Quarterly Executive, 1(2), 113–126. Lee, D.M.S., Trauth, E.M., & Farwell, D. (1995). Critical skills and knowl- edgerequirementsofISprofessionals:Ajointacademic/industryinvesti- gation. MIS Quarterly, 19(3), 313. Ring, (2000). European market research: A report to the ASP Industry Consortium.Ovum,March. TEAM LinG
  29. 29. 8 Guah Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. Chapter II WebServices Matthew W. Guah, Warwick University, UK Abstract Organizations today are desperate to identify new opportunities in the facilities provided by the Internet. Few have attempted to link interorganizational, interfunctional and interpersonal levels of their organizational processes via Web services. They have undertaken this process in anticipation of reshaping and improving their core business processes. This chapter details how Web services could potentially make a significant different in the integration of software applications across multiple platforms, sites and departments of an organization. The chapter concludes by advising that organizations, in the process of reviewing their Internet strategies, should at least investigate the potential impact of Web servicesintegrationbecausethiscouldsoonerorlaterbecomeapermanent business necessity and not just a competitive advantage material. TEAM LinG
  30. 30. Web Services 9 Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. What are Web Services? Web services are the small software components that are available over the Internet. Publishing as Web services makes the software applications more reusable and shared by many more users. Web services enable business partnering and thereby generate a great way of revenue streaming for the companies.Italsohelpsinreducingthedevelopment,integration,andmainte- nancecostofthesoftwareapplication. Simple Object Access Protocol (SOAP) is the communication protocol that helps in transporting the Extensible Markup Language (XML) messages between the client and server. SOAP is nothing but XML over Hypertext TransferProtocol(HTTP).WhentheWebserviceclientmakesarequest,the SOAP client application programming interface (API) constructs a corre- spondingXMLmessagecontainingtheremotemethodnameandvalueforits parametersandsendstheXMLmessageoverHTTPtotheserverhostingthe Web services. The server receives the XML message, executes the business logic (may be written in Java), and sends the response back to the client. The Web services paradigm includes a programming model for application integrationthatdoesnotdiscriminatebetweenapplicationsdeployedinsideand outside the enterprise. Integration and development of Web services can be done in an incremental manner, using existing languages and platforms and adopting existing legacy applications (Figure 2.1). One of Web services’ anticipatedbenefitsisthathumanend-userinteractioninthenormaldataentry Webapplicationcanbereplacedbydirectapplication-to-applicationcommu- nication. When we talk about the benefits of Web services, we cannot overlook a few issues in using Web services as well (Sleeper & Robins, 2002). The primary issueissecurity.TheotherWebapplications,suchasJavaServlets,arebeing accessedviaHTTPbrowser.Theuser-specificinformationcanbestoredinthe HTTPsessionandusedforusers’sessiontracking.Afineexampleofthisisthe shoppingcartapplication. However,becauseWebservicesarebeinginvokedbythestand-aloneclient applications,theservercouldnothaveanyideaabouttheuserwhoisactually makingtherequest.Thiswouldposeamajorproblemthatanyunauthorized user may consume our Web services and we do not have any control on this. Another serious problem is the tampering of XML messages while they are transmittedoverwire(Wilkes,2002). TEAM LinG
  31. 31. 10 Guah Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. Figure 2.1. Web services integration model TEAM LinG
  32. 32. Web Services 11 Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. UsingXML,businessanalystscandefinepoliciesandexpressthemasEML documents. These documents can have sections that are encrypted and the documents can be digitally signed, distributed, and then interpreted by the securitymechanismsthatconfigurethelocalsoftware.Thiswillallowvarious implementationstomapfromtheXMLdescriptiontoalocalplatform-specific policyenforcementmechanismwithoutrequiringchangestotheinfrastructure. Web Services Approach This new approach introduces the proxy-based lightweight framework for providingsecureaccesstotheWebservicesbeingrequestedbytheclients.The basicideaistodeployaproxyWebservicethatreceivestherequestfromthe endclientonbehalfoftheactualWebservice.Theproxyserviceauthenticates theendclientbyvalidatingtheclient’scredentials,whichhe/shehadsentalong withtheWebservicerequest.Iftheclientisauthenticatedsuccessfully,he/she will be given access to the requested service. The advantages of this approach are as follows: • Itisbasedonmessage-levelsecurity. • It does not only authenticate the user, but it also verifies the message integrity. • ItdoesnotdisturbtheactualWebservice,whichmayberunningonthe productionserver. • It acts like a plug-in; it can be removed and replaced with any other solutionatanypointintime. • IthidestheactualWebservice;theprocessisabstractedfromtheclient. Theclientwouldnotknowthathis/herrequesthasbeeninterceptedand processed by a proxy. Integrating new handlers, such as auditing and notification, is very easy. Whereasanauditinghandlerisformaintainingtheserviceaccessinformation, anotificationhandlercouldbeusedforsendinge-mailstotheserviceproviders in case of any problem in accessing the service. Someone might now want to raise a question about the performance of the proxyapproach.Becauseoftheintroductionofaproxyinthecommunication TEAM LinG
  33. 33. 12 Guah Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. path of end service, the invocation time will be a little longer. However, the performancefiguresaremoreacceptable. The proxy Web service uses Web services handlers to intercept XML messagesusedinWebservices.Itcontainstwomajorcomponents,namely: • Authenticationhandler • Proxyclient Needlesstosay,theauthenticationhandlerisrealizedbyusingaWebservice handlerandtheproxyclientistheback-endcomponent.Thetwocomponents are packaged into a single Web service. While the authentication handler authenticatestheclient,theproxyclientinvokestheactualWebservice. Tostartwith,theendclientsendstherequesttotheWebserviceproxyalong withitscredentials.Thecredentialscouldbeeitheracleartextpasswordora digitalcertificate.Incaseofbasicauthentication,thecredentials(usernameand password) need to be sent as HTTP header parameters. In the case of advancedauthentication,theendclientsignstheXMLmessagewithhis/her digital certificate and sends the signed XML message to the server. Now the client has done its job. On the server side, the authentication handler acts as an XML interceptor, which receives the XML message and the HTTP header parameters, if any. Dependingonthetypeofauthenticationmechanismneeded,thecorresponding Figure 2.2. Proxy-based approach to Web services ( articles) WS 1 WS 2 TEAM LinG
  34. 34. Web Services 13 Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. implementationisinvokedtoverifythecredentials.Byprovidingmanyhooks, differentkindsofimplementationsfortheauthenticationcouldbeintegrated veryeasily.TheLightweightDirectoryAccessProtocol(LDAP)servercanact asanACLrepository,whichstoresalltheclients’profiles. In the process of authenticating the client, the credentials being sent by the clientscanbeverifiedagainstthecredentialsstoredintheACLrepository.If they are found to be matching, the user is authenticated successfully. Other- wise,theauthenticationprocessisafailureandthehandlerwillsendthefailure message to the end client. In the case of successful authentication, the proxy client invokes the actual Web service by constructing a new SOAP message and sending it to the server hosting the actual Web service. As far as the end client is concerned, he/she receives the response from the proxy Web service and the whole logic of authentication and actual service invocationisabstractedout.Theotheradvantagesofthisnewproxyapproach over other products are as follows: • Lightweightframework • Low cost • Easytointegrate • Quick to deploy Webservicesarenotadisruptiveapproachtohostedservices,rather,theyare anadditivestepforward.Theywillprovideastandards-basedwayfordifferent servicesandapplicationstointeroperate,whichwillgreatlyreducetheintegra- tionhurdlesASPshavelongfaced.Intheprocess,Webservicewillalsogive ASPs increased flexibility to create and deliver more personalized hosted solutionsfortheircustomers. ConsideringWebservicesarecreatedanddistributedbymultipleentities,an ASP would not be able to ensure that individual Web services will be developedorrunontheinfrastructureoftheirchoice. However,theASPmust developanddeployitsownserviceswithinfrastructurethatcomplieswithWeb servicesstandards.Thiswillensurethatservicescanefficientlyinteractwith, and take advantage of, other Web service components. TEAM LinG
  35. 35. 14 Guah Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. Web Services’ Impact In the seemingly fast-paced world of the 21st century, change is the only constantandthereforeeventhorizonsareimmediate;businessescannotpredict whattheywillneedorhowtheywillactinayear’stime.Webservicesarethe currenttoolsbestsuitedtotheabilitytobridgethemultiplicityandcomplexity ofexistingITinfrastructures.SuchusefulnessofASPtoanintelligententerprise isasimportantasanyotherinthe21st -centurycollaborativebusinessenviron- ment.Webservicesareself-contained,modularbusinessprocessapplications that Web users or Web connected programs can access over a network— usuallybystandardizedXML-basedinterface—andinaplatform-independent and language-neutral way. This makes it possible to build bridges between systems that otherwise would require extensive development efforts. Such servicesaredesignedtobepublished,discovered,andinvokeddynamicallyin adistributedcomputingenvironment.Byfacilitatingreal-timeprogrammatic interaction between applications over the Internet, Web services may allow companiestoexchangeinformationmoreeasilyinadditiontootherofferings, suchasleverageinformationresources,andintegratebusinessprocesses. Users can access some Web services through a peer-to-peer arrangement rather than by going to a central server. Through Web services systems can advertise the presence of business processes, information, or tasks to be consumed by other systems. Web services can be delivered to any customer device and can be created or transformed from existing applications. More importantly,Webservicesuserepositoriesofservicesthatcanbesearchedto locatethedesiredfunctionsoastocreateadynamicvaluechain.Thefutureof Webservicesgoesbeyondsoftwarecomponents,becausetheycandescribe theirownfunctionalityaswellaslookforanddynamicallyinteractwithother Webservices.Theyprovideameansfordifferentorganizationstoconnecttheir applicationswithoneanothersoastoconductdynamicASPacrossanetwork, nomatterwhattheirapplications,design,orrun-timeenvironment. Web services represent a significant new phase in the evolution of software development and are unsurprisingly attractive to a great deal of media and industryhype.LikealmostallnewInternet-relatedtechnologies,theimmediate opportunitieshavebeenoverstated,althoughwebelievetheeventualimpact couldbehuge.ThiscanbedemonstratedbytheimmediateandkeyroleofWeb serviceswhichistoprovideaparadigmshiftinthewaybusinessmanagesIT infrastructure(Hondo,Nagaratnam,&Nadalin,2002).Itprovidesintelligent TEAM LinG
  36. 36. Web Services 15 Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. enterpriseswiththecapabilityofoverturningtheacceptednormsofintegration and thereby allowing all businesses to rapidly and effectively leverage the existingITandinformationassetsattheirdisposal. Intelligententerprisescurrentlyrunninganoutsourcingservicearealreadyseen to be one of the early gainers of the Web service revolution. However, there will be others as enterprises discover the hidden value of their intellectual assets. Considering most enterprises have until now used the Internet to improveaccesstoexistingsystems,information,andservices,weenvisagethe dayswhenWebservicespromisenewandinnovativeservicesthatarecurrently impossible or prohibitively expensive to deploy. With such developments anticipated to promote the ASP business model, Web services integration is considered to be at the heart of this expectation. Through this process of connectingbusinesses,ASPswillbeabletoquicklycapitalizeonnewoppor- tunitiesbycombiningassetsfromavarietyofdisparatesystems,creatingand exposing them as Web services for the end game of fulfilling customer expectations. ItisourviewthatanyintelligententerpriseconsideringtheASPbusinessmodel shouldatleastinvestigatethepotentialimpactofWebservicesintegrationas thiswillsoonerorlaterbecomeanotherpermanentbusinessnecessityandnot a competitive advantage material. Those intelligent enterprises that have adoptedoursuggestedapproachwillnotonlygainadvantagenowinbusiness for lower costs and better return on assets, but are also expected to develop valuable experience for the first decade of the 21st century. Considering the Internet’s history, as Web services become the standard and the expertise of ASP become more established, it should become the norm. Figure2.3showsthatholisticapproachtotechnologyalwaysseemstowork betterthanpiecemealapproachtoinformationsystemssolution. Web Services, as it is currently is like a two-legged table. A version of Web Services Plus being practiced by a few vendors after the crash is representedbythethree-leggedtableabove.However,anevenmoresuccess- fulmodelofWebServicesPluswouldbeaproperlyarchitecturedfour-legged table, as presented above. The analogy here is that a two-legged table is less stablethanathree-leggedtablewhileafour-leggedtableisevenfirmer(Figure 2.3). TEAM LinG
  37. 37. 16 Guah Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. • Technology • Application • Technology • Application • People • Technology • Application • People • Work Flow Figure 2.3. Evolution of Web services Conclusion This chapter has discussed Web services and the security issues involved in usingWebservices.Italsobriefedyouaboutthevarioussolutionsavailableand howtheproxy-basedapproachcanbeveryusefulforsecuringWebservices. References Hondo, M., Nagaratnam, N., & Nadalin, A. (2002). Securing Web services. IBM Systems Journal, 41(2). Sleeper,B.,&Robins,B.(2002).Thelawsofevolution:Apragmaticanalysis oftheemergingWebservicesmarket.AnanalysismemofromtheStencil Group. Retrieved April 2002, from Wilkes, L. (2002). IBM seeks partners to drive adoption of XML Web services. Interact, February. TEAM LinG
  38. 38. Concerns 17 Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. ChapterIII Concerns Matthew W. Guah, Warwick University, UK Abstract As evidence relating the reality and basic features of the application service provider (ASP) market continues to grow, there begins to be less concern about confirming that any structural economic shift has continued historically, and more concern about understanding how the ASP industry is performing, and its impacts on productivity, investment, corporate capital formation, labor force composition, and competition. The relationship between the traditional outsourcing and the “latest wave” e- sourcing on the one hand, and Internet investment productivity on the other, is at the centre of the IT strategic problem confronting corporate management in the 21st century. Intelligent Enterprise Business Environment Anintelligententerpriseexistswithinseveralenvironmentalelements.Theseare theenterprisesandindividualsthatexistoutsidetheintelligententerpriseand haveeitheradirectorindirectinfluenceonitsbusinessactivities(seeFigure TEAM LinG
  39. 39. 18 Guah Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. 3.1).Consideringintelligententerprisesareoperatingindifferentsectors,area ofemphasis,andwithdifferentpoliciesandstrategies,theenvironmentofone enterpriseisoftennotexactlythesameastheenvironmentofanother. Thebusinessenvironmentforintelligententerprisesincludestheenterpriseitself and everything else that affects its success, such as competitors, suppliers, customers, regulatory agencies, and demographic, social, and economic conditions.AproperlyimplementedASPbusinessmodelwouldprovidethe meansoffullyconnectinganintelligententerprisetoitsenvironmentalelements. As a strategic resource, ASP helps the flow of various resources from the elementstotheenterpriseandthroughtheenterpriseandbacktotheelements (see Figure 3.1). Some of the more common resources that flow include informationflowfromcustomers,materialflowtocustomers,moneyflowto shareholders,machineflowfromsuppliers,andpersonnelflowfromcompeti- tors and workers’ union. Looking at Figure 3.1, one can see a generalized theory of enterprise’s perception(Little,1999).Thetheoryissufficientlyimaginativelymotivatedso thatitisdealingwiththerealinnercoreoftheASPproblem—withthosebasic relationshipswhichholdingeneral,nomatterwhatspecialformtheactualcase may take. Intelligent Enterprise Financial Community Environmental Movements Competitors Worker’s UnionShare Holders Suppliers Customers Education / Researchers International Government Charities / NGO National Government Local Government Figure 3.1. A tool for controlling influences in a complex environment TEAM LinG
  40. 40. Concerns 19 Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. Anintelligententerprisecansucceedonlybyadaptingitselftothedemandsof its external environment, which is often represented by a number of groups (formallycalledstakeholders)thataffecttheorganization’sabilitytoachieveits objectives or those affected by it. Stakeholders other than participants and customersformanotherimportantpartofthecontext.Stakeholdersarepeople withapersonalstakeinanASPsystemanditsoutputseveniftheyareneither itsparticipantsnoritscustomers.Permanentamongsuchgroupsarecustom- ers, distributors, competitors, employees, suppliers, stockholders, venture capitals,tradeassociations,governmentregulators,andprofessionalassocia- tions.Animportantrolefortheinformationsystemsistokeeptheorganization informedoftheactivitiesofallthesestakeholdersandsimilarlystakeholdersare keptinformedabouttheactivitiesoftheorganization. Zwass (1998) describes an organization as an artificial system. He further defines an organization as a formal social unit devoted to the attainment of specificgoals.Withnotificationthatabusinessenterprise,asasystem,hasto generateprofit,thoughitmayalsopursueotherobjectives,includingemploy- mentprovision,andcontributingtoitscommunitygenerally.Zwass(1998)also restricts the value measurement of an artificial system to two major criteria: effectiveness (the extent to which a system achieves its objectives) and efficiency(theconsumptionofresourcesinproducinggivensystemoutputs). Consideringthatintelligententerprisescompeteinaninformationsociety,the requirementsforsuccessfulcompetitiondependsontheenvironment.Inthe case of ASP, such environment presents several serious challenges, and the role of intelligent enterprises information systems has evolved over time as competingenterprisesattempttomeetthesechallenges.Fewenterpriseshave, however,identifiedopportunitiesfordeployingstrategicinformationsystems that have proven success in the competition process by analyzing the forces actinginthemarketplaceandthechainsofactivitiesthroughwhichtheydeliver products and services to that marketplace. Infrastructure Issues Infrastructure is the resources the system depends on and shares with other systems.Infrastructureistypicallynotunderthecontrolofthesystemsitserves yetitplaysanessentialroleinthosesystems.ForASPthetechnicalinfrastruc- turetypicallyincludescomputerhardware,telecommunicationfacilities,and appropriatesoftwaredesignedtorunontheInternet.Examininginfrastructure TEAM LinG
  41. 41. 20 Guah Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. mayrevealuntappedopportunitiestouseavailableresources,butitmayalso revealconstraintslimitingthechangesthatcanoccur. Evaluationofinfrastructureisoftendifficultbecausethesameinfrastructure maysupportsomeapplicationsexcessivelyandothersinsufficiently.Drawing from Porter and Millar’s theory that information systems are strategic to the extent that they are used to support or enable different elements of an enterprise’s business strategy, this paper proposes a framework that IS in largerorganizationalsystemsmayenabletheireffectiveoperationormaybe obstacles (Porter & Millar, 1985). In an earlier paper we use the UK’s National Health Service’s system infrastructure and context as two distinct meansofdeterminingimpactonlargersystems(Guah&Currie,2002). Infrastructure affects competition between businesses, geographic regions, andevennations.Inadequateinfrastructurepreventsbusinessinnovationand hurtsintelligententerpriseefficiency.Whileeveryinternationalbusinessperson canseethatthingshavechangedvastlyinmostofAfricaandSouthAmerica, thesignificanceofinfrastructureasacompetitiveenablerorobstaclehasclearly not changed. That is because infrastructure consists of essential resources sharedbymanyotherwiseindependentapplications.Alocalregion’sphysical infrastructureincludesitsroads,public,transportation,powerlines,sewers, andsnowremovalequipment.Itshumanandserviceinfrastructureincludes police, fire, hospital, and school personnel. A region’s physical and human infrastructurecanbeeitheranenableroranobstacleandisthereforeacentral concerninmanybusinessdecisions.TheimportanceofcertainISinfrastructure elementsserveasakeymotivationforthesuccessfulimplementationofASP. The required IS infrastructure raises a broad range of economic, social, and technicalissuessuchaswhoshouldpayforinfrastructure?Whoshouldhave access to/control over them and at what cost? Which technology should it include?WhereASPisinvolved,theeconomicquestionoftenputstelephone companiesagainstcablecompanies,bothofwhichcanprovidesimilarcapa- bilitiesformajorpartsofthetelecommunicationssystem.Fromcertainview- points,itcanbeconsideredtheresponsibilitiesofgovernmenttoensurethata nationalITinfrastructureisavailableasakeymotivationforthepreviousbuzz words“informationsuperhighway.” Justaslocalregionsdependonthetransportationandcommunicationinfra- structure, infrastructure issues are important for ASP implementation and operation. These systems are built using system development tools; their operationdependsoncomputersandtelecommunicationnetworksandonthe ISstaff.Deficienciesinanyelementofthehardware,software,orhumanand TEAM LinG
  42. 42. Concerns 21 Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. serviceinfrastructurecancrippleaninformationsystem.Conversely,awell- managedinfrastructurewithsufficientpowermakesitmucheasiertomaximize businessbenefitsfromASP. Inadequacy of Existing Infrastructure Most people would agree that motorways such as the M4, M6, and M1 together with railways up and down the country are a part of the UK’s transportationinfrastructure.Transportationisvitaltotheeconomy;itmakes themovementofgoodsandpeoplepossible.Economicinfrastructureprovides afoundationonwhichtobuildcommerce.Isthereatechnologyinfrastructure? At the national level, there is a communications infrastructure in the form of networks that carry voice and data traffic. In recent years, the Internet has become an infrastructure that ties a wide variety of computers together. The Internethighlightsthefactthataninnovationwhichbeganasanexperimentcan maturetobecomepartoftheinfrastructure. InfrastructurebeginswiththecomponentsofASP,hardware,telecommunica- tion networks, and software as the base. A human infrastructure of IS staff membersworkwiththesecomponentstocreateaseriesofsharedtechnology services. These services change gradually over time and address the key businessprocessesoftheintelligententerprises.Noninfrastructuretechnology isrepresentedbyapplicationsthatchangefrequentlytoservenewstrategies andopportunities(Weill,1993). Itsoundsinpracticethatmuchofthejustificationforinfrastructureisbasedon faith. Weill (1993) did find one firm with a creative approach to paying for infrastructure. The company required careful cost-benefit analysis of each project.Whenthisshowedhigher-than-necessarybenefits,itwasloadedwith infrastructure costs to take up the slack. In essence, the company added in “infrastructuretax”toprojects,notunlikeairlinetickettaxestopayforairports. Infrastructureisvital,butinvestmentsinitarehardtojustifyifyouexpectan immediatereturn.TheSingaporeexamplepresentstheclassiccaseforinfra- structure;asmallamountofinvestmentandguidancecreatesafacilityonwhich many organizations can build. Networking in Singapore has the potential to transform the nature of commerce on the island and to help achieve the city- state’sgoalsforeconomicdevelopment. TEAM LinG
  43. 43. 22 Guah Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. Telecommunications: Facilitating ASP Emancipation Telecommunicationsistheelectronictransmissionofinformationoverdis- tances. In recent years this has become virtually inseparable from computer withapairedvaluethatisvitalforintegratingenterprises.Mostenterprisesin the 21st century have access to some form of telecommunications network, which is simply an arrangement of computing and telecommunications re- sourcesforcommunicationofinformationbetweendistantlocations.These enterprisesareusuallyusingoneoftwotypesoftelecommunicationsnetworks which can be distinguished by their geographical scope: local area network (LAN)andwideareanetwork(WAN).LANisaprivatelyownednetworkthat interconnectsprocessors,usuallymicrocomputers,withinabuildingorona compoundthatincludesseveralbuildings.Itprovidesforhigh-speedcommu- nicationwithinalimitedareawhereuserscansharefacilitiesconnectedtothe network. On the other hand, WAN is a telecommunications network that coversalargegeographicalareawhichlargebusinessesneedtointerconnect their distant computer systems. Computer networks differ in scope from relatively slow WAN to very fast LAN. There are several topologies and channel capacities responsible, which the objective of this chapter does not permitofadetailedexploration. ASPs use WAN as a fundamental infrastructure to employ a variety of equipment so that the expensive links may be used efficiently. The various equipmentscontrolthemessagetransfersandmakesharingthelinksamonga number of transfers possible. An increasing number of ASP customers have user PCs that are connected to a LAN that communicates with the WAN via a gateway. In certain cases the ASP may offer common carriers and provide value-addedservicethatcanbecombinedwithprivatenetworkstocreatean overallenterprisenetwork. Asane-commercephenomenon,afewoftheessentialsofanASPinfrastruc- ture are common carriers, value-added networks, private line, and private networks. Common carriers are companies licensed, usually by a national government,toprovidetelecommunicationsservicestothepublic,facilitating thetransmissionofvoiceanddatamessages.Asmostcountriespermitonlyone common carrier, the service can be broken down and leased as value-added networkstovendorswhothenprovidetelecommunicationservicestotheirown customers with added values that could be of various sophistications. For increasedspeedandsecurity,anenterprisemaynotwanttosharewithothers andcouldtaketheoptionofleasingitsownprivatelinesorentirenetworksfrom TEAM LinG
  44. 44. Concerns 23 Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. acarrier.Ithasbeenproventhatleasinglinkscanresultinsavingsfromhigh- volumepoint-to-pointcommunications. TheabovearetheapparatusthroughwhichanASPusestelecommunications togiveitscustomerthecapabilitytomoveinformationrapidlybetweendistant locations and to provide the ability for their employees, customers, and supplierstocollaboratefromanywhere,combinedwiththecapabilitytobring processing power to the point of the application. As shown earlier in this chapter, all this offers an ASP customer the opportunities to restructure its businessandtocapturehighcompetitivegroundinthemarketplace. Issues of Security ConsideringtheASPindustryisridingonthebackoftheInternet’sovernight success,thehighlypublicizedsecurityflawshaveraisedquestionsaboutASP suitabilitytoserveasareliabletoolforthepromotionofintelligententerprises forthe21st century.AnASPvendorcouldbeforgivenforthinkingtheprimary servicetoitscustomersistoprovideconnectionsbetweenpossiblymillionsof computerslinkedtothousandsofcomputernetworks.However,thepreven- tion of unauthorized users who steal information during transmission, who sabotage computers on the network, or who even steal information stored in thosecomputersaremajorpartsofthevendor’sresponsibilities.Exploitingthis flawmightpermithackerstogaincontrolofdesignatedserversandthenaccess ordestroyinformationtheycontain.Aslongastheserisksarenotasfarfetched asonemighthope,customerswouldcontinuetobewaryabouttheuptakeof ASP business model (Currie, Desai, Khan, Wang, & Weerakkody, 2003). The many break-ins and other general security problems occurring with Internet/intranet demonstrate some of the risks of engaging in any form of businessmodellinkingtotheInternet.ManyASPvendorshavetriedtoreduce thedangerusingfirewallsandencryptionsbutsuchmaneuversnotonlyreduce risk, but they also reduce the effectiveness of a networked environment (see Figure 3.2). The IT community has generally accepted that effective use of encryptionandfirewalltechniquescouldeliminatemuchoftheriskrelatedto unauthorizedaccessanddatatheft. Doesanymathematicalencryptionguaranteeabsolutesecurity?No.Justasa physical lock cannot provide absolute safety, encryption cannot guarantee privacy—ifathirdpartyusesenoughcomputersandenoughtime,itwillbeable tobreakthecodeandreadthemessage.However,bychoosingtheencryption TEAM LinG
  45. 45. 24 Guah Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. methodcarefully,designerscanguaranteethatthetimerequiredtobreakthe code is so long that the security provided is sufficient. It is advisable that intelligententerpriseskeepthisprincipleinmindwhenthinkingaboutInternet security.Whensomeoneassertsthatanencryptionschemeguaranteessecu- rity,whattheyactuallymeanisthatalthoughthecodecanbebroken,theeffort andtimerequiredisgreat.Thus,anencryptionschemethatrequireslongertime to break than another scheme is said to be “more secure.” However, a good proportion of the small- and medium-size enterprises (SMEs) surveyed did not appreciate that many ASP vendors have tried to reduce the danger using what is called firewalls—computers that intercept incomingtransmissionsandcheckthemfordangerouscontent.Somefearthat the mere process of downloading information across the Internet may entail hidden risks (see Figure 3.2). As far as performance goes, some vendors are consideringarrangementswithnationaltelecommunicationgiantsforbetter dataaccessfacilitiesoverWAN.Thetrendtowardderegulatingtelecommu- nicationsmustcontinuegloballyfordataratestobecomeamuchlessimportant restrictioninthefuture. Overcoming Obstacles to a Commercial Future Thepowerfultrendtowardanetworkedsocietyhasmanycomponents,starting with the fact that use of online networks is exploding. Businesses in the 21st Figure 3.2. Comparison of forward and reverse proxy cache security TEAM LinG
  46. 46. Concerns 25 Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. century require tools that take advantage of the millions of people who have usedcomputernetworksforbusinessandpersonaluses.Thesebusinessesrely on the fact that e-mails and e-bulletin boards are not only commonplace in leadingbusinessesbutalsousedforpurposesrangingfromansweringcustomer service inquiries to exchanging views about personal topics and politics. Reinforcingthesetrends,ASPvendorsarebuildingthenetworkcapabilities into their products for intelligent enterprises to see the Web services as an importantturningpointforcommercialopportunitiesbecauseithasmadethe Internet so much more accessible and adaptable for nontechnical business users. Many obstacles are currently apparent, however, when one looks at the possibilitythatASPwillbecomeamotivationaltoolforintelligententerprises inthe21st centuryandamajordeterminantforthefutureofInternetinfluence ontheworld’spopulation. Theareasofconcern,mentionedinTable3.1,relatetoorganization,security, online performance, freedom and control, competition, and hype versus OBSTACLES CAUSES SOLUTIONS Organization Earlier capacity was daunting and business strategy was unproven Advent of Web services to make ASP far easier to comprehend and adapt Security Too many reported server break-ins and other general Internet/intranet security problems Industry to emphasize efforts in protection machinery and firewall systems Performance Telecommunications infrastructure available in the 1990s globally not sufficient to support requirements Use of broadband services and improvement to infrastructure globally Control General negative press about lack of control on the Internet and risk to criminal accessing confidential data Some form of regulation— of an international nature—might be needed Competition Business model does not encourage differentiation Cooperation must be based on trust between vendors and individual customer Hype Although ASP model was said to save costs and is enticing to SMEs, very little evidence exist Whether the great potential of ASP to SMEs will prevail over the sceptics’ views remains to be seen. Web services is expected to provide that killer means of bridging the gap Table 3.1. Major obstacles and proposed solutions TEAM LinG
  47. 47. 26 Guah Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. substance.TheissueoforganizationisbasedonthewayASPhasevolved.The ASPindustrylacksthetypeofclearorganizationthatwouldmakeiteasytouse as a reliable and profitable business model. Although ASP vendors’ former capacitywasdauntingandstrategywasunproven,theadventofWebservices will make it far easier to comprehend and even adapt. LookingbackattheInternet’shistory,oneseesmanyincidentsthatraiseissues about freedom and control. Major Western nations (USA, UK, France, etc.) have either proposed or passed legislation related to criminal penalties for transmitting,accessing,orinterceptingdataoftheInternetillegally.Although theInternethasbeenunregulatedinthepast,seriousconsiderationofASP-like businessmodelscouldresultinmorelegislation. ASP as Competitive Investment Thefundamentaldefinitionofwhatconstitutesamission-criticalapplication remainsrelativelyunchanged;itisthoseapplicationswhereeventhesmallest amountofdowntimewillhaveasignificantnegativeimpactonanenterprise’s operationalefficiencyandbottomline.However,thenatureofwhatintelligent enterprises now deem to be mission-critical systems has altered with a far greaterrangeofapplications. Onewaytointerestamanagerinanewinnovationistoshowthatacompetitor is planning to adopt this innovation. Intelligent enterprises do respond to competition to avoid being put at a disadvantage. Banks provide a good exampleofinvestmentintechnologyforcompetitivereasons.Inanearlystudy ofATMdeployment,BankerandKauffman(1988)foundthatATMadoption providedalimitedadvantagetocertainbanks.Thefindingssuggestanearly advantagefrominstallingATMsandjoiningalargenetwork.Customersclearly likeATMsandtheinterconnectionstothebankingnetworkitprovides:there is very little reason for a bank not to join an ATM network. In fact, because competitors offer ATMs and are in networks, a new bank is almost forced to investinthistechnology.In2002ATMswerecertainlycompetitivenecessities forbanking.SomebankswereclosingexpensivebranchesandinstallingATMs instead.However,sinceallbankscanfollowthisstrategy,itwasunlikelyone wouldgainasignificantadvantagefromit. TheairlineindustryoffersanotherexampleofISasacompetitivenecessity.To start an airline in the 21st century—especially in the UK and the USA—you wouldhavetoinvestinsomekindofASPserviceformakingareservation.The TEAM LinG
  48. 48. Concerns 27 Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. travellingpublichasbecomeaccustomedtobeingabletomakereservations andobtainticketseasily,eitherpaperorelectronic. Investmentsforstrategyandtomeetacompetitivechallengemaynotactually benefittheenterprisemakingthem.Anenterprisemaybeforcedtoadoptnew technologytostayevenwiththecompetition,asinthetwoexamplesmentioned earlier. In this case, it is not so much return on investment in ASP, but rather whatisthecostofnotinvesting?Willanenterpriselosecustomersandmarket sharebecauseitdoesnothaveaparticulartechnologyinplace? Canyouenter anewlineofbusinesswithoutinvestinginthetechnologythatcompetitorshave adopted? What kinds of services do customers expect? ASP Implementation Strategies Thestrategyonechoosesforimplementationhasadirectimpactonthelevel of investment required for an ASP initiative. One strategy is to hire external expertise,eithertodeveloptheentireapplicationortoworkwiththeinternal ISstaff.ConsultantshavebeenavailablefordevelopingASPinvestmentssince the first systems appeared. Consultants will provide advice, and many will actually undertake the development of the IT application. Carried to an extreme,theenterprisecanoutsourcethedevelopmentandeventheoperation of an ASP application. There are a number of network providers who offer completexSPservices(vertical,horizontal,pureplay,etc.)andanenterprise mightoutsourceitselectronicdatainterchangeeffortstothem. Themajoradvantageofusingconsultantsandoutsourcingistheavailabilityof external expertise. ASP is so complex and difficult to implement that most intelligententerprisesincludeabudgetforhelpfromaconsultingenterprisethat hasextensiveexperiencewiththispackage.Whentheenterpriseentersintoa consultingoroutsourcingagreementforanASPinitiative,itshouldbeaware oftheneedtomanageitsrelationshipwiththesupplier.Enterprisesthathave delegatedtheresponsibilityfordevelopinganewASPapplicationtoanoutside enterprisegenerallyhavebeenunhappywiththeresults.Managersstillhaveto monitortheagreementandworkwiththesupplier.Thereareexamplesofmany very elaborate management committees and structures established at enter- prises such as Microsoft, UNISYS, and IBM to manage outsourced IS. Evidencewithinthepastthreeyearshaveshownthatsituationscandevelopin whichlargenumbersofinsurmountableproblemsarisewithissuesthat,inan TEAM LinG
  49. 49. 28 Guah Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. ASPvendor’sopinion,weregoingtocauselastingimpedimentstotheultimate systemsimplementation.Amongseveralvendoroptionsweretheseprimary four: • ImplementedtheISasbestastheycouldwithintheseconstraints; • Demonstrated unpalatable objection to the problem owners and set conditionsforeventualcompletionsofwork; • Strove to ignore the problems and created the system as if they did not exist;and • Completelyrefusedtocontinueworkregardlessofsystemphase. Whileeachoftheabovecourseshasquiteaseriousimplication,thefirstoption was most taken. IntelligententerprisesshoulddeterminetheuptakeofASPbasedontheirlong- termISplanandonrequestsforinformationsystemsbyvariousstakeholder, that is, the prospective users, corporate management, internal IS team, customer,andsupplieraccessibility.ItisnotsufficienttoimplementASPforthe competitive edge the system may give the enterprise or the high payoff the system promises. The past phase of ASP has proven that not all systems that appearpromisingwillproducesufficientbusinessresultstojustifytheiracqui- sition.However,itisnosurprisethatcertainintelligententerprisesstillfindit difficulttoevaluatetheworthofprospectivenewtechnology. BorrowingfromCheckland’sHumanActivitySystem(HAS)concept,anASP vendor will have problem with certain stakeholders and surrounding issues (Checkland & Scholes, 1990): • Client: the systems beneficiary can be difficult to identify due to the outsourcingnatureofASPbusinessarrangements. • Owner: the eventual system owner may be anywhere between the negotiatingpartytoafourthpartysomewhereandinsomecasesnotable toparticipateintheoriginalnegotiations. • Actor:theseareoftenindividualsandgroups—ofvarioustypesandwith variousneeds—whoareusuallyinvolvedinthesystematdifferentstages. • Objective:whattheprojectisintendedtoachieveishighlydependenton theprocessanditcanoftenbedifferentforvarioususersandstakeholders. TEAM LinG
  50. 50. Concerns 29 Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. • Environment:thesituationinwhichthesystemwillbedevelopedand implementedgrosslyaffectsthefinaloutcomeoftheprocess. • Expectation: there are often as many assumptions of a project as the numberoftimesitisdiscussed.Moreimportant,theseassumptionstend tochangeasonegoesthroughvariousstagesofthesystemdevelopment andimplementation. Theissuehereisnotjustoneofinvestment;italsoinvolveslearningandtime. Thereisalearningcurve,sometimesquitesteep,withnewtechnology.Ifthe enterprisehasnotdevelopedamoderninfrastructureovertime,itwillhaveto investmoreforanewASPinitiativebecauseoftheneedtobuildinfrastructure. It will also have a longer development time as the IS staff learns about this infrastructureanddevelopsthenewapplicationsthatrequireit. Problem, Solution, or Opportunity? OnestimulusforASPsolutionimplementationisitsintentiontotransformthe enterprise. In this light, the investment in ASP is part of a larger change programmethatismeanttoenableintelligententerprises’virtualandmultiple- team structures. The resulting contributions can be described as part of the outcome of a general change effort. Change is also an opportunity. For most ofthecompaniesinvolvedinourresearch,managementdecidedonadesired organization structure and used IT investments to help create it. Managers planned for change and welcomed it as an opportunity to make the entire organizationfunctionbetter.Changeisalwaysathreat,asstaffmembersare forcedtoalterbehaviorthathasprobablybeensuccessfuluntilnow.However, asshowninsomeoftheexamplesinthisbook,changeisalsoanopportunity toreshapeintelligententerprisesandmakethemmorecompetitive. ThepushtowardgreaterconnectivityisamajorfactordrivingASPinvestments in the 21st century. The UK’s Department of Trade and Industry (DTI) has encouraged (some would say mandated) a certain level of electronic data interchange(EDI)complianceforcompaniesthatwishtodobusinesswithit. Industryassociationsencouragecompaniestocommunicateelectronically. Efficientcustomerresponse,EDI,just-in-time,continuousreplenishmentpro- grams, and the Internet are all examples of the different kinds of electronic connectivity. TEAM LinG
  51. 51. 30 Guah Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. For the successful implementation of ASP in the 21st century, organizations must maintain a socio-technical perspective, thereby avoiding the purely technologicalapproachtoachievinghigherproductivity.Indeed,balancingthis with the consideration of social and human aspects of technology brings the added value of creating a workplace that will provide job satisfaction. Such information systems must be designed to fit the needs of its users and the organization at large and be capable of evolving as these needs invariably change.Suchethicalconsiderationsofinformationsystemshavemovedintothe forefrontasinformationsystemshavebecomepervasiveinmodernbusinesses. Ethics,forthemostpart,involvemakingdecisionsaboutrightandwrongand notnecessarilyaboutthepossibleandimpossibleandonlyremotelyrelatesto production increase or decrease. The major ethical issues that have been noticedtobeaffectingintelligententerprisesinformationsystemsinthe21st centurycanbesummarizedintoprivacy,accuracy,property,andaccess. In an effort to modernize, every challenging intelligent enterprise in the 21st century seems to be jumping on the ASP bandwagon. There comes a point whenindustryanalystsshouldimplementthecriticalsuccessfactor(CSF).The CSFmethodology—developedbyJohnRockartoftheMassachusettsInsti- tuteofTechnology—definedasthosefewcriticalareaswherethingsmustgo rightforthebusinesstoflourish—derivesorganizationalinformationrequire- ments from the key info needs of individual executives or managers. CSF methodologyisorientedtowardsupportinganenterprise’sstrategicdirection. BycombiningtheCSFsofthesemanagers,onecanobtainfactorscriticaltothe successoftheentireenterprise.Suchanapproachhasbeenproventobeuseful in controlling quality of the information system in certain vertical sectors (Bergeron & Bégin, 1989). Effects of ASP on IS Departmental Staff Employee involvement is an employee’s active participation in performing workandimprovingbusinessprocess(Alter,1996).Theold-fashionedview ofemployeeinvolvement—employeefollowingtheemployer’sinstructionin returnforawage—encouragesemployeetobepassive,takelittleinitiative,and oftenviewthemselvesasadversariesoftheenterpriseanditsmanagement.In contrast,trulyinvolvedemployeesfeelaresponsibilitytoimprovetheirwork practiceswiththehelpofmanagersandothersintheenterprise. TEAM LinG
  52. 52. Concerns 31 Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. ASPcandirectlyaffectemployeeinvolvement.ASPcangenerallybedeployed inwaysthatincreaseordecreaseemployeeinvolvementintheirwork.AnASP businessmodelthatprovidesinformationandtoolsforemployeesincreases involvementbecauseitreinforcestheemployee’sauthorityandresponsibility forwork.Ontheotherhand,anASPbusinessmodelthatprovidesinformation tomanagersorqualityinspectorsbutnottheiremployeescanreduceinvolve- mentbyreinforcingthesuspicionthattheemployeeisnotreallyresponsible. Thehumanandservicesideoftheinfrastructureinintelligententerprisesoften gets short shrift in discussions of new systems or system enhancements. Businessprofessionalsareoftensurprisedattheamountofeffortandexpense absorbed by the human infrastructure. The tendency toward organizational decentralizationandoutsourcingofmanysystem-relatedfunctionsmakesit even more important to include human infrastructure in the analysis of new systems. Human Factors in ASP Technologies Development Therapidrateofdevelopmentofthesetechnologicalmiracles,astheywould havebeenviewedfromanearlierage,hascreatedamomentumofitsown,and it is not surprising that concomitant concerns have also developed about the impactandinfluenceofASPonhumansociety.Theshrinkingoftimeandspace enabledbyASPhasbenefitsintermsoftaskefficiencyandwidercapabilityfor communication,butitislessobviousthateaseofmanagementorevenstress at work are improved at a deeper level (Markus, 1983). TheabovediscussionshouldnotbetakentoimplythatASPmodelsdetermine thedirectionofintelligententerprisemanagement.Thedevelopmentandtheuse ofanASPsolutioniswithinmanagementcontrolandthereisnoinevitablefuture path. However, it can be argued that the quantity and quality of debate about the human and societal impact of computers and related technology has not matchedthatrateofdevelopmentofthetechnologiesthemselves(Walsham, 1993). For example, the debate concerning ASP and its Web services in intelligententerpriseslargelycentresonquestionsofstrategicimportanceand valueformoneyratherthandeeperissuesofhumanjobsatisfactionandquality oflife. While the mechanistic view of enterprise formed the early foundation of an intelligententerprisemanagement,theimageofenterprisesasorganismshas arguablybeenthemostinfluentialmetaphorformanagementpracticeoverthe TEAM LinG
  53. 53. 32 Guah Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. lastfewdecades.Thecorporealviewseesintelligententerprisesasanalogous tolivingsystems,existinginawiderenvironmentonwhichtheydependforthe satisfactionofvariousneeds.Theoriginsofthisapproachcanbetracedback totheworkofMaslow(1943),whichdemonstratedtheimportanceofsocial needsandhumanfactorsinworkactivitiesandenterpriseseffectiveness.Itthen emphasized that management must concern itself with personal growth and development of its employees rather than confining itself to the lower-level needsofmoneyandsecurity. WithrespecttosocialrelationsasconsideredinWebmodels,itisimportantto notethatparticipantsincludeusers,systemdevelopers,theseniormanagement of the company, and any other individuals or groups who are affected by the ASPbusinessmodel.Kling(1987)notesthatcomputingdevelopmentswillbe attractivetosomeenterpriseparticipantsbecausetheyprovideleveragesuch as increasing control, speed, and discretion over work, or in increasing their bargainingcapabilities.Fearoflosingcontrolorbargainingleveragewilllead some participants to oppose particular computing arrangements, and to proposealternativesthatbetterservetheirinterests. It could be said that the above comprises the analysis of what Checkland (1983)definesastheHAS.HAScanbeseenasaviewonthesocial,cultural, ethical,andtechnicalsituationoftheorganization.Bothmodelsdealwithone old problem which continues to trouble information systems today. That is, thinking about the means by which to deal with the two aspects of any new system(humanbeingsandtechnology)andhowtheycanbestcommunicate witheachother.AsitrelatestoASP,theindustrymustbringtogethertheright mixofsocial(humanresources)andthetechnical(informationtechnologyand othertechnology)requirements.Hereiswherethekeyhardwareandidentified humanalternatives,costs,availability,andconstraintsaremarriedtogether. AsynopsisofanISproblemusuallyappearschaoticandincomprehensible.An exampleistheNHSISstrategyasofDecember2001(Guah&Currie,2002). The use of a problem framework will not only show the essence of a view of the problem context but will also demonstrate that getting the context and meaningoftheproblemrightismoreimportantthanpresentation.Theprimary tasksshouldreflectthemostcentralelementsofwhatisoftencalled“problem setting.” ASPvendorsshoulddemonstrate,whenreviewingagivensituation,thatany incoming information system is intended to support, develop, and execute primarytasksoriginallyperformedbyhumans.Theyshouldbeawareofissues thataremattersofdisputethatcanhaveadeleteriousaffectuponprimarytasks. TEAM LinG
  54. 54. Concerns 33 Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. In terms of IS, the issues are often much more important than the tasks. Consideringitisnotpossibletoresolveallissueswithanygiventechnology, theyshouldalwaysbeunderstoodandrecognized.Thatisbecauserealityreally is complex, so the ASP industry should never approach a problem situation withaconceitedorinflatedviewofitsowncapacity.Notallproblemscanbe mapped, discussed, and designed away. Often the ASP industry will be requiredtodevelopaformofamnesiatowardcertainproblemsthatareeither imponderableortoopoliticalintermsoftheorganizationorbusiness(Guah& Currie, 2002). A detailed understanding of the above will help in providing a reasonable answer to certain essential questions that are necessary for an ASP to satisfactorilyproduceworkingsolutionsforitscustomers.Afewofthegeneral questions are: Who is doing what, for whom, and to what end? In what environmentisthenewsystemtobeimplemented?Towhomisthefinalsystem goingtobeanswerable?Whatgapswillanyadditiontotheoldsystemfillwithin thenewsystem? Socio-Technical Issues AnintelligententerprisenormallyhasseparateobjectiveswhenlookingatISin termsofsocialandtechnicalrequirements.Whilethesocialobjectivesreferto theexpectationsofmajorstakeholders(i.e.,employees),thetechnicalobjec- tives(Table3.2)refertocapacityoftheorganizationasawholetoreacttokey issues. Because the social objectives (Table 3.2) of an ASP solution can broadly be seen as the expectations of the system in terms of the human beings who are goingtobeworkingwithit,theywillvaryfromoneproject/contracttoanother. Astheyareoftenundervalued,managementdoesnottendtofeelthatthesocial SOCIAL TECHNICAL Being relatively self-sufficient Informing management Providing a quick service Improving timeliness Providing job satisfaction Improving communication Providing professional satisfaction Increasing information-processing capacity Improving division’s professional status Providing a long-term facility Table 3.2. Socio-technical benefits of ASP TEAM LinG