There's a lot going on in business and IT today, and it's rapidly becoming more important that you have a good understanding of e-business on demand, service-oriented architecture, Web services, and grid computing. I've been in more than one conversation and read more than one article where someone has defined these terms in, shall we say, "creative" ways. Let me try to put each in its place and show how they relate to each other.

I like to think that there are four major levels that describe how to successfully use IT to run your business. The top level is e-business on demand. This is all about business and describes the ideal way you want to operate to be more efficient, flexible, and responsive to market opportunities and your customers' needs. Of course, no business is perfect, but a good assessment of where you are now, where you want to be, and how you can get there will help you understand your chances of arriving at this nirvana. You'll know you're going in the right direction as it becomes easier to execute new business models and change old ones. More specifically, when you can quickly tune and modify your business processes and the ways they interact with your customers, partners, and suppliers, you will be operating in an on-demand way.

After all, isn't IT a major roadblock to really making this happen? What you need is an architecture that enables true distributed computing inside and outside your enterprise, that treats business applications as collections of services that can be shared or outsourced, and that uses standards to show how the pieces fit together and how they behave while operating. Of course, you want to do this in a secure, reliable, and manageable way. This is the second level - service-oriented architecture (SOA). It allows existing business software to continue to be used for critical processes, but extends its use for new interactions. When done correctly, it makes heterogeneous systems look homogeneous and highly leverages the infrastructure that you now have in place.

The third level is where we deal with specific technology. Web services standards describe the format of the information we use in business transactions. This includes the data (think of a purchase order or a request for a bank transfer), security information (encrypted and digitally signed patient records), and workflow (what gets done in what order). It also involves the additional information we need for reliable delivery of messages and performance management of the services. Web services technology was directly enabled by the widespread use of the Internet as well as the creation of XML. It is the concrete way of saying what we want done, what information we are using, and how we communicate this information to others.

A second piece of technology enabling SOA is grid computing. This is an important standards-based component of how we will deliver the qualities of service our customers will require if they are to remain our customers. For example, Schwab was able to reduce the time it took for an interactive customer portfolio analysis from roughly 4 minutes to less than 20 seconds using IBM-developed grid computing technology. Grid computing is about putting resources and information where they need to be as quickly as they need to be there. It lets you better use what you've already paid for and, perhaps, reduce your infrastructure by outsourcing resources. You pay only for what you need - on demand.

You need software and, at your discretion, services. This is the fourth and bottom level. If you are an IBM customer it means WebSphere software for transactions, Tivoli software for security and management, DB2 for data management, Lotus for collaboration, and Rational for the full life cycle of software development. Other vendors provide software as well, and there are open source options for some of the pieces. IBM and many other companies use the open source Eclipse Project as the basis for their tools. The most advanced software framework in the industry for building and using Web services and SOAs is the Java 2 Platform, Enterprise Edition, particularly the new version 1.4.

Service-oriented architecture is the glue that connects your business needs and models with the technologies that can make them a reality. There are more than 15 years of SOA research and development backing up our IT and business practices in support of the principles and goals of e-business on demand.

Deploying SOA in your organization can be done in an evolutionary manner, and clear patterns are emerging to make it a repeatable practice. It's time for you to seriously consider how SOA can help yours become a better business.