Web Services Business Models

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Web Services Business Models
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Web Services Business Models

• To explore the infrastructure though which Web
  service providers deliver their services.
• To discuss service-level agreements (SLAs) and
  how they help ensure the quality of Web services.
  
• To introduce payment mechanisms for Web services,
  and to discuss available bil1ing solutions.
• To examine service-to-consumer (S2C),
  service-tobusiness (S2B) and service-to-employee
  (S2E) Web services, and to provide examples of
  each.
• To examine Web services registries, brokerages
  and networks, and to provide examples of each.

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Web Services Business Models

• It is an immutable law in business that words are
  words, explanations are explanations, promises
  are promises-but only performance is reality.
• Harold S. Green
• To be of true service I must know two things his
  need, my capacity.
• Nikita Nikolayevich Panin

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Introduction

• For Web services to reach their potential in the
  business world, companies must establish plans
• how services are marketed, distributed, paid for
  and managed
• Going to introduce frameworks for providing
  business-grade Web services
• including who the key players are
• how they interact to facilitate Web services
  transactions
• Two important aspects of these models
• service-level agreements
• payment mechanisms

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Frameworks for Delivering Web Services

• Web services technologies can create new business
  opportunities
• For software vendors, Web services represent a
  new method of distributing their products
• develop software applications in house to fill
  corporate needs, such as supply-chain management,
  human-resources administration or inventory
  control

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Frameworks for Delivering Web Services

• Enhance their business models and increase
  revenue by packaging their business processes as
  Web services, then marketing the services to
  other companies that require similar
  functionality
• Need new business and possible frameworks though
  which businesses can create, distribute, sell and
  use Web services

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Service-Oriented Architecture

• Created by IBM
• A generic model describing service collaboration
• Comprises relationships among three entities
• a Web service provider,
• a Web service requester
• a Web service broker

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Service-Oriented Architecture
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Service-Oriented Architecture

• Service provider
• A server or system that makes a Web service
  available over a network, such as the Internet.
• Achieves this through a service interface
• a software component that enables other
  applications to access the service
• Publishes the service to a service broker after
  creating a service interface

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Service-Oriented Architecture

• Service broker
• A networked server or system that maintains a
  directory or clearinghouse for Web services
• Act as liaisons between service providers and
  service requesters
• communicate with service requesters and direct
  them to appropriate service providers
• E.g.,
• the operators of the public UDDI Business
  Registry (UBR)
• offering information about service providers and
  their available Web services.
• Web services brokerages and portals
• aggregate Web services targeted to a specific
  industry

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Service-Oriented Architecture

• Service requester
• A networked server or system that accesses and
  employs a Web service
• Interacts with a service broker to find a Web
  service that fills a specific computing need

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Service-Oriented Architecture

• Although the provider, requester and broker
  technically are computing systems, we use the
  terms more generally to refer to the individuals
  or businesses that manage those systems.

• E.g., companies that aggregate content
  communicate with a variety of data sources to
  amass information and present it to customers.
• yahoo.com or msn.com rely heavily on combining
  information from multiple sources

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Service-Oriented Architecture

• Service aggregation
• a newer concept referring to businesses that
  combine electronic services to provide a single,
  more comprehensive service to customers
• E.g., a company offers a composite service for
  automobile owners combining features such as
  on-demand directions, roadside assistance, online
  concierge and stolen vehicle tracking

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Service Provider

• A service provider can be any organization that
  creates or hosts software and wants to make that
  software available over a network. For example,
• Application service providers (ASPs)
• ASPs already possess infrastructure
• Independent software vendors (ISVs)
• Company that specialize in the development and
  sale of software
• Not directly associated with a specific platform
• might become Web service providers
• Companies create Web services available only
  within their organizations or to trusted business
  partners

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Service Provider

• Not necessarily the creator of the services
• May employ a third party to host and maintain the
  services
• the hosting entity is the Web service provider
• it manages the computing system on which the
  service resides
• The creator of the service is called the asset
  owner
• If a company both develops and hosts a Web
  service, that company is both the service
  provider and the asset owner

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Stages of Web Service Development and Deployment
Discuss the tasks that comprise the Web service
development process, from generating an idea for
a service to actually deploying and selling that
service
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Web Service Business Lifecycle

• Four stages creation, publication, promotion and
  sale

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Creation

• Creation includes
• the initial construction of the Web service
• the steps required to prove that the service
  operates correctly

assemble documentation
Designer
Developer
test
Creation Stage
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Creation

• Creation Testing
• Organizations that develop Web services can test
  them in house.
• However, an independent third party that
  specializes in the assessment of Web services
  functionality and interoperability should
  administer the tests and provide a form of
  certification
• No standard testing procedures now
• Should be crucial to Web services development

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Creation

• The final step
• Creation process is handled by a distributor
• Can be either the same as or separate from the
  service's owners
• Package all the code and documentation relating
  to the Web service in a format that can be
  understood and used by other applications
• Make decisions regarding the publication of the
  Web service
• Exposing all necessary pieces of a Web service on
  a network
• Can outsource these tasks
• ASPs, ISPs, and Web-hosting companies are the
  most obvious choices to host Web services

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Promotion

• Third parties must enable service requesters to
  locate the service
• Carried out by brokers
• public UDDI registries
• the UDDI Business Registry (UBR)
• private registries
• promote Web services available within an
  organization or among partners
• www.xmethods.net and www.salcentral.com have
  created their own Web services directories

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Sale of Services

• Two main anticipants
• a company or organization that manages Web
  services accounts
• can be the entity that hosts the service or a
  separate organization that specializes in billing
• Web service auditor
• an individual or organization responsible for
  reviewing the functionality of Web services
• service provider might ask an auditor to
  reevaluate the service on a regular basis

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Service-Level Agreements (SLAs)

• Legal contracts in which a service provider
  outlines the level of service it guarantees for a
  specific Web service
• SLAs cover a specific time period, after which
  the agreements must be renegotiated
• When customers purchase Web service
  subscriptions, their subscriptions guarantee
  service according the contents of the SLA

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Service-Level Agreements

• Most SLAs define relationships between Web
  service providers and requesters
• Delineate the requester's needs
• goals with regard to the service
• the capabilities of the provider to meet those
  requirements
• In SLAs between developers and providers
• the developer specifies the capabilities of the
  service
• the provider outlines the level of service it
  will provide to the service's requesters

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Service-Level Agreements

• An important function of SLAs is to address
  quality of service (QoS), which refers to the
  level of service that a particular Web service
  provides
• QoS is defined by factors
• such as the probability that a service can
  respond to a request at a given time,
• how well a service executes its tasks,
• how quickly a service works
• how reliable and secure it is
• Etc.

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SLAs stipulate QoS requirements

• Availability
• Describes the probability that a Web service is
  ready for use (i.e., available)
• Measured as a percentage
• E.g., a Web service might be available to service
  requesters 99.99 percent of the time.

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SLAs stipulate QoS requirements

• Accessibility
• Describes the group of users that can access a
  service, as well as how difficult it is to access
  the service
• For example, a Web service that supports multiple
  languages (such as Spanish, Japanese, etc.) would
  more accessible than a Web service that supports
  only English

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SLAs stipulate QoS requirements

• Integrity
• Describes the probability with which a service
  performs its tasks in the exact manner described
  in the service's WSDL document or service-Ievel
  agreement (SLA)

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SLAs stipulate QoS requirements

• Performance
• comprised of two main factors throughput and
  latency
• Throughput
• Represents the number of requests that a Web
  service processes in a given time period
• latency
• Represents the length of time that the service
  takes to respond to each request

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SLAs stipulate QoS requirements

• Reliability
• Describes the ability of a Web service to
  function correctly and provide consistent
  service, even in the event of a system or network
  failure
• Also encompasses procedures for data backup and
  redundancy

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SLAs stipulate QoS requirements

• Conformance to standards
• Describes whether a Web service employs the
  specific standards and implementations
• Service providers must adhere to standards agreed
  upon in SLAs
• otherwise, requesters might not be able to access
  the services

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SLAs stipulate QoS requirements

• Security
• involves technologies and processes such as
  authentication, message encryption and digital
  signatures
• An SLA defines the amount of security that a
  particular Web service requires, and the service
  provider then must maintain that level of
  security

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Importance of SLAs

• SLAs are crucial to the success of the Web
  services industry
• Web service customers must be able to trust that
  services will adhere to certain
  quality-of-service requirements
• Help ensure the reliability of a Web service
• Include information regarding liability
• If a deficiency in service impacts the
  requester's business, the provider is legally
  responsible to compensate the requester.

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Importance of SLAs

• However, even with SLAs in place, quality of
  service is not guaranteed.
• Service providers still might not honor their
  contracts
• providers know that the cost of litigation often
  is far greater than the cost of switching to
  another provider

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Web Services Payment Models
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Web Services Payment Models
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Free Charge

• Most publicly available Web services are free
• It is important that service providers supply
  free services to publicize Web services and to
  encourage users to experiment with the technology
• Designed to provide an immediate benefit while
  requiring little commitment on the part of the
  requester
• E.g. supply news-headline services and calendar
  services for free
• Some offer free services in exchange for
  displaying the provider's brand or logo

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Free Charge

• Service providers hope that, after successfully
  using free services, requesters will return and
  subscribe to more complex, fee-based services
• Free services can be appealing, fee-based
  services usually are more reliable
• Free services are not governed by SLAs or other
  QoS assurances

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Pay-per-use Model

• Involves the smallest commitment from customers
• Most pay-per-use services require that requesters
  purchase a set number of service invocations
• Requestors prepay for a certain volume of
  service,
• Then can decide whether to renew once they
  exhaust their prepaid limits
• If no minimum to the amount of service that
  customers can buy,
• The small usage fees might not justify the cost
  of billing
• Include a mechanism
• counts and records the number of times each
  requester uses the service

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Pay-per-use Model

• Charge on a sliding scale
• requesters who buy more service invocations incur
  a smaller cost per unit
• Requesters use the service before paying Model
• billed according to the number of times they
  invoke the service
• Such models are riskier for providers
• cannot be sure that customers will pay

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Flat-fee subscription Model

• Service requesters pay a fee for unlimited use of
  a Web service during a specific time period
• Most experts believe that, flat-fee subscription
  will become the most common way to charge for Web
  services
• The providers can better predict their incomes
• Can place service providers at a disadvantage if
  providers underestimate the amount of service
  that requesters will use

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One-time charge Model

• Requesters pay a single fee in exchange for
  unlimited access to the service for the entire
  lifetime of the service
• For most services, this billing model is
  impractical
• However, one-time payment is an ideal charging
  mechanism for perishable services, or services
  that exist for a finite period of time
• E.g. specific Olympic games, World Series or
  presidential campaign

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Business of Publishing Web Services

• Three main categories
• Models that support service-to-consumer (S2C)
  Web services
• Models that support service-to-business (S2B) Web
  services
• Models that support service-to-employee (S2E) Web
  services

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Service-to-Consumer (S2C) Web Services

• Web services intended for consumption by
  individuals, rather than businesses
• Brokerages list S2C services that provide general
  information
• E.g., news headlines, sports scores or stock
  quotes.
• Web services can simplify the process of
  communicating content or requested data to users
• Many S2C are free and offer only trivial
  functionality
• most service creators do not have defined
  business models or immediate plans for
  profitability

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Service-to-Consumer (S2C) Web Services

• Some companies are including Web services as part
  of larger offerings, such as travel services or
  customer-relationship management
• Expedia, Inc" maintains an online travel agency
  (www.expedia.com)
• Free services
• E.g., Book air travel, car rentals and hotel
  accommodations
• Access updated travel information, such as flight
  status
• Enable travelers to integrate the latest travel
  information into their personal calendar
  applications
• Differentiate itself from competitors in the
  online travel industry

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Microsoft's .NET

• Microsoft's .NET My Services
• A set of S2C Web services that stores users'
  personal information
• Username and , password pairs, appointment
  schedules, travel information and credit-card
  data
• Microsoft's .NET Passport
• Single Sign-on service (SSO)
• stores users' authentication information and
  enables automatic sign-on at participating Web
  sites
• Each Passport account encompasses four components
• a Passport Unique Identifier (PUID).
• a user profile,
• credential information
• an optional wallet feature called Express
  Purchase

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Microsoft's .NET

• Assigns a PUID to each, enabling Passport to
  distinguish among users
• A user profile is associated with each Passport
  account
• Credential information consists of an email
  address or phone number
• A password containing a minimum of six characters
  
• Passport user also selects a four digit security
  key
• A large number of business allow visitors to log
  into their Web sites via the Passport
  authentication system
• eBay, McAfee.com, Monster.com, Office Depot
• Critics have raised significant concerns
  regarding security and privacy

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Service-to-Business (S2B) Web Services

• Recognizing the advantages of interacting via Web
  services, many companies are developing S2B Web
  services
• communicate with one another and share data,
  regardless of platform
• simplify existing transaction processes
• enable the formation of new, more streamlined
  relationships among organizations
• link their databases and applications
• companies share updated data
• Etc.

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Service-to-Business (S2B) Web Services

• Currently, most businesses allow only trusted
  partners to access their S2B Web services
• address a wide range of business communications
  needs
• E.g., Dollar Rent A Car Systems (www.dollar.com)
  developed a Web service linking its reservation
  system directly to Southwest Airlines Company's
  Web site (www.southwest.com)
• Purchase plane tickets and rental-car
  reservations from the same Web page
• Communicate with their client businesses

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Service-to-Employee (S2E) Web Services

• Web services specifically designed for use by
  employees
• The services can take many forms
• Some S2E Web services help companies deliver
  information to employees, whereas others simplify
  interactions among employees
• Enable employees with appropriate access rights
  to use corporate applications and modify files
  over the Web

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Hewitt Associate LLC

• A consulting and outsourcing firm that provides
  human-resources and employee-benefits services to
  businesses
• With more than 250 client companies
• Manages retirement. plans, healthcare benefits
  and other services for over 15 millIon employees
  worldwide
• Want to offer employees convenient access to
  their personal retirement and benefits
  information
• retrieve data or change options through
  customer-service representatives

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Hewitt Associate LLC

• Hewitt's client companies requested that the firm
  provide more direct access to benefit data
• Wanted the ability to retrieve information
  regarding 40lk accounts and health-care policies
  from their companies' corporate portals, without
  going through Hewitt's site
• Could achieve this by creating custom connections
  between its computing system and those of its
  clients
• The costs and development time involved seemed
  unreasonable
• Instead, using Web services technologies
• build a platform-independent system
• all its corporate clients can integrate into
  corporate portals or other applications
• Use IBM's development tools

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Hewitt Associate LLC

• The portal translates a request to XML
• Send it in a SOAP envelope over the Internet
• Using IBM WebSphere application server unwraps
  the SOAP envelope and passes the request to
  Hewitts mainframe
• Translates the request from returns an XML and
  processes it
• The mainframe returns an XML response to the
  application server (in SOAP envelope )
• Transmits it back to the client application

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UDDI Registries

• UDDI registries are the most commonly known
  method of discovering Web services
• provides information about and access to publicly
  available Web services
• conceptually similar to a that of a phone book
• companies can search registries by business
  entity, business service and other categories

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Web Services Brokerages

• Web sites that list available Web services
• E.g. www.XMethods.com
• Can discover Web services
• Some also supply value-added services
• include advanced search capability
• Service monitoring
• Service supports

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Web Services Networks

• Most enterprises that use Web services require
  more comprehensive, end-to-end support for Web
  services transactions
• Web services networks can provide additional
  service support
• Companies that oversee Web services
  communications by offering authentication.
  security, routing. etc.
• Similar to the package delivery services provided
  by UPS and FedEx
• when two businesses need to exchange products,
  they employ a package delivery service to route
  the package
• the delivery service guarantees that the package
  reaches the appropriate recipient
• It arrives by a certain time
• it remains undamaged

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Web Services Networks

• Organizations will not be comfortable conducting
  important business via Web services unless the
  participants can ensure that messages arrive
  securely, on time and intact
• Web Services Networks act as intermediaries
  between enterprise
• Exchange Web services
• As such the networks provide a variety of
  services that address QoS, network reliability,
  security, metering and billing
• If a Web service message must pass through
  multiple parties, the network can ensure that the
  message is routed correctly

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Web Services Networks