In order for companies to benefit from the strategic value of information technology, there needs to be much closer alignment between IT and the business side. So far, these two counterparts have had a difficult time seeing eye to eye. The problem is that despite earnest intentions by both to work together, the application integration tools that IT has had to work with have been cumbersome. This has resulted in too many projects being delivered late and over budget and has caused the business side to stop expecting IT to deliver what it needs when it needs it.

Integration is the bugaboo. Organizations are taking an enterprise-level look at their applications and this means integrating and sharing data between applications is a requirement in many projects. Gartner Dataquest predicts spending on integration projects will reach a staggering $10.6 billion in 2006.

So what companies need is a cheaper, easier, faster way to handle enterprise application integration. An Infoworld survey shows that application integration costs are at least 25% of the total IT budget at many companies. If Web services can help deliver on this requirement, they will play a role in improving business's perception of IT. As IT demonstrates greater responsiveness, the alignment with the business side will occur more easily. And IT is jumping on the bandwagon. The same survey indicated that 55% of the IT managers polled said Web services will make integration projects more viable.

The Never-Ending Quest
IT innovation is about making IT more accessible. By providing companies with the means to better leverage their IT assets Web services drives up the ROI for existing and new IT assets. Web services in and of themselves are not free and require their own cadre of specialists and consultants, but they are a more appealing option than older approaches. A recent survey of IT managers showed that 74% of them expect Web services to reduce their need for more expensive EAI software and services.

Relationship Building
Although IT departments are not known for their public relations savvy, they do realize the importance of having a good relationship with their internal customers. The problem has been one of difficult-to-implement technologies getting in the way of good intentions. The project delays and cost overruns posed by centralized, proprietary, EAI hub solutions hinder IT business-alignment efforts. Web services avoid many of the factors that make many EAI solutions so challenging by using standards that are widely supported. It's the business agility afforded by Web services that will bring the two sides closer and support the sense of a shared mission.

A necessary component in any business relationship is trust. In providing information solutions that accommodate managerial dynamics, management starts to see IT as a partner that "gets it." The value in promoting trust is that organizations will look at IT in new ways and try to integrate it into the fabric of the organization.

The World Is Not Flat
Increasingly, the most valuable applications are not internally focused but rather external facing. The competitive landscape brought on by the Internet requires companies to connect with competitors, supply chain partners, and marketing research databases. Web services help companies leverage their supply chain and other external connections. Until now, proprietary protocols have made the interchange of information and services difficult. Web services take advantage of the universal connectivity provided by the Internet to enable the sharing of applications in the form of services with any and all partners.

The Power of Agreement
The Internet may be the first thing all mankind has ever agreed upon. Web services has the potential to follow a similar track of standardization and global adoption. Of course it needs to avoid the pitfalls posed by vendors who have an interest in promoting "proprietary standards."

Standards, such as XML, are central to companies making more productive use of information. By investing in Web services, companies are able to leverage their IT capabilities into industry leadership. A well-known business practice is "giving to get." Web services enables a strategy of giving partners access to application capabilities in order to foster relationships that lead to more business.

An example of the business value of Web services is Amazon.com. Amazon.com is using Web services to make its system capabilities available to others who in turn use Amazon to sell products to their mutual benefit. It's give to get, and is an argument for companies to look at Web services not just as a tactical alternative to application integration but as a strategic initiative. In 2002, Amazon generated about 6.2% of their revenues, or $246 million, by using Web services to become an e-commerce platform.

Economic Principles
In addition to providing a significant ROI on their own, Web services boost the ROI of other IT investments by enabling greater reuse across the organization. Companies no longer need to incur the expense of duplicating functionality that exists elsewhere. And most important, you're speaking a language that the CEO and CFO understand and appreciate. Web services moves IT out of the expense category and into a long-term value proposition.

Is It Just the Latest Dance Craze ?
Every IT investment decision comes with the question of how long before the technology becomes obsolete. To the chagrin of CFOs, too many technologies become outdated before they're fully depreciated. A natural question is whether Web services are a passing fad or the building blocks for future growth and value. Web services are not the "end all" for a company's IT challenges, but they are an important next step for companies to take. They let companies leverage existing standards such as HTTP and the Internet, and lay the groundwork for taking advantage of future standards-based advances.