Web Services in Financial Services Dr. James Gardner Financial Services Industry Group Microsoft Corporation.

Web Services in Web Services in Financial Services Financial Services

Dr. James GardnerDr. James Gardner

Financial Services Industry GroupFinancial Services Industry Group

Microsoft CorporationMicrosoft Corporation

“The newest innovations, which we label information technologies, have begun to

alter the manner in which we do business and create value, often in ways not readily

foreseeable even five years ago.”

Alan Greenspan Chairman, U.S. Federal Reserve

This SessionThis Session

Web Services: a reviewWeb Services: a review Enhanced Web Services: the service Enhanced Web Services: the service

oriented architectureoriented architecture The Services EcosystemThe Services Ecosystem

The problem…The problem…

The old way: types and proprietary The old way: types and proprietary implementationimplementation

Tight couplingTight coupling Fundamental premise: things will workFundamental premise: things will work Assumption is that data is well formedAssumption is that data is well formed

… … and the solutionand the solution

The new way: schemas and contractsThe new way: schemas and contracts Loose couplingLoose coupling Fundamental premise: things will go Fundamental premise: things will go

wrongwrong Data may not be well formed: web Data may not be well formed: web

services are self defensive (internet services are self defensive (internet pedigree)pedigree)

Web Services Web Services EvolutionEvolution

Business BenefitBusiness Benefit

Pre-1990sCustom, staticCustom, staticB2B IntegrationB2B IntegrationCustom, staticCustom, staticB2B IntegrationB2B Integration

Early 1990sApplication integration

technologies appearApplication integration

technologies appear

Late 1990sWeb technologies appear

e.g. HTTP, HTML, XMLWeb technologies appear

e.g. HTTP, HTML, XML

2000+Web application

technology = Web services

Web application technology = Web services

The result…The result…

Universal and Universal and safesafe interoperability interoperability Connectivity across process and Connectivity across process and

enterprise boundariesenterprise boundaries Web services make it easier than ever Web services make it easier than ever

before to integrate systems, processes before to integrate systems, processes and peopleand people

We see web services everywhere… We see web services everywhere…

Platform

Identity Management

Messaging/Collaboration

Business Process Management

Integration

CRM

ERP

Datawarehouse / Business Intelligence

Customers Suppliers

Back End / Legacy

ClientFacing

Functions

Value adding functions thatthe customer experiences.

Support for CustomerActivities.

Middle Office Back OfficeFront Office

Cha

nn

el

… … and analysts agreeand analysts agree

““The payoff is huge – using Web services instead of The payoff is huge – using Web services instead of proprietary integration technology cuts the time and proprietary integration technology cuts the time and cost by a factor of 10”cost by a factor of 10” - Forrester Research March - Forrester Research March 20032003

““Web services will become the dominant distributed Web services will become the dominant distributed computing architecture in the next 10 years and will computing architecture in the next 10 years and will eventually define the fabric of computing” – IDC, eventually define the fabric of computing” – IDC, 05/02/0305/02/03

““Everyone should build on the XML/SOAP Everyone should build on the XML/SOAP foundation.” - Meta Groupfoundation.” - Meta Group

WSIWSI

Industry initiative focused on promoting Industry initiative focused on promoting Web services interoperabilityWeb services interoperability

Open participation and membership Open participation and membership (160+) including, customers and (160+) including, customers and vendors (MS, IBM, Sun)vendors (MS, IBM, Sun)

Example: Risk Management Example: Risk Management DashboardDashboard

Schedules, companydata, analysts’ reports,company reports,third-party news,pricing, and content

Example: Cost ReductionExample: Cost Reduction 1-800-Merrill: Used Web services to 1-800-Merrill: Used Web services to

consolidate multiple legacy voice response consolidate multiple legacy voice response systems (> 75 million transactions/day); systems (> 75 million transactions/day); reduced customer response time, increased reduced customer response time, increased flexibility—ASP.NET, SQL Server™, flexibility—ASP.NET, SQL Server™, VoiceXMLVoiceXML

Used Web services to improve management Used Web services to improve management of customer stock orders; increased of customer stock orders; increased customer satisfaction and employee and customer satisfaction and employee and developer productivity; saved $100K – developer productivity; saved $100K – Windows® 2000, SQL Server, Visual Windows® 2000, SQL Server, Visual Studio® .NET, ASP.NETStudio® .NET, ASP.NET

AccessAllstate.com: Used Web services to AccessAllstate.com: Used Web services to integrate five policy management systems integrate five policy management systems and extend access to more than 350K and extend access to more than 350K agents; reduced costs for mailings, call agents; reduced costs for mailings, call centers; 300% performance increase — centers; 300% performance increase — ASP.NET, Visual Studio .NET, SQL Server, ASP.NET, Visual Studio .NET, SQL Server, Windows 2000Windows 2000

But what is the true value?But what is the true value?

Are web services just another way to do Are web services just another way to do integration?integration?

If so, what is the true value?If so, what is the true value? Shouldn’t there be real business Shouldn’t there be real business

benefits, not just technology outcomes?benefits, not just technology outcomes?

Web Services: more than integration?Web Services: more than integration?

Stateless web services don’t cut it for Stateless web services don’t cut it for some business transactions.some business transactions.

Reliable, just once in-order delivery?Reliable, just once in-order delivery? High value transactions between High value transactions between

counterparties?counterparties? Transactions that span systems?Transactions that span systems? Long running transactions without Long running transactions without

atomicity?atomicity?

Enhanced Web ServicesEnhanced Web Services

Reliable MessagingReliable Messaging SecuritySecurity TransactionsTransactions Processes (Orchestration)Processes (Orchestration) WS Architecture complete- vendors WS Architecture complete- vendors

starting to deliver implementationsstarting to deliver implementations

So What?So What?

Web services by themselves are just Web services by themselves are just islands of functionislands of function

Add the new standards and you can Add the new standards and you can describe any sort of business describe any sort of business interactioninteraction

Service Oriented ArchitectureService Oriented Architecture

Service Oriented ArchitectureService Oriented Architecture

Service orientated architectures are Service orientated architectures are what result when you connect what result when you connect functional islands in a process centric functional islands in a process centric way.way.

Loose wiring, rapidly changing.Loose wiring, rapidly changing. Look to BPM-like platforms for the Look to BPM-like platforms for the

wiring.wiring. The process itself can be a web service!The process itself can be a web service! Web services build web services build Web services build web services build

web services.web services.

Service OrientationService Orientation Nasdaq.com: Used Web services to Nasdaq.com: Used Web services to

extend personalized market data to extend personalized market data to traders on any device anywhere; traders on any device anywhere; leveraged Platform Web services, Alerts, leveraged Platform Web services, Alerts, Passport to provide better customer Passport to provide better customer experience—Visual Studio .NET, experience—Visual Studio .NET, ASP.NET, SQL ServerASP.NET, SQL Server

Used Web services more efficiently to link Used Web services more efficiently to link sales, research, and trading areas with sales, research, and trading areas with CRM system to provide more automated CRM system to provide more automated and timely information to customers; and timely information to customers; sales increase of 30%, ROI of 35% in 12 sales increase of 30%, ROI of 35% in 12 months — SQL Server, Windows months — SQL Server, Windows 2000, .NET Framework2000, .NET Framework

SOA: Divisione MutuiSOA: Divisione Mutui

““We built a solution that gives us full control We built a solution that gives us full control over our business data, integrates promoters over our business data, integrates promoters into all loan application processes, and into all loan application processes, and transparently connects our systems to those of transparently connects our systems to those of our partner banks. Now we are free to focus our partner banks. Now we are free to focus and devote our best resources to meet our and devote our best resources to meet our customers’ needs and expectations”customers’ needs and expectations”

- Diego Locatelli: MD, Divisone Mutui- Diego Locatelli: MD, Divisone Mutui

Service Oriented Service Oriented Architecture: benefitsArchitecture: benefits

Makes it easy and quick to delivery Makes it easy and quick to delivery capabilitycapability

Means you can rapidly respond to Means you can rapidly respond to changechange

Ultimately, lets you solve IT problems in Ultimately, lets you solve IT problems in an elegant wayan elegant way

No longer about J2EE vs. .NetNo longer about J2EE vs. .Net

Why Bother?Why Bother?

The customer relationship is the most The customer relationship is the most important assetimportant asset

Supply what the customer wants, at the Supply what the customer wants, at the time and in the channel of choicetime and in the channel of choice

““Know me, know my needs”Know me, know my needs”

Removing the barriers…Removing the barriers…

What if you don’t have the product the What if you don’t have the product the customer wants?customer wants?

What if you don’t have the channel?What if you don’t have the channel? Can one financial institution be the Can one financial institution be the

answer to all the customers’ needs?answer to all the customers’ needs?

The future…The future…

““By 2006, Web services will take By 2006, Web services will take hold as a competitive differentiator hold as a competitive differentiator in business relationships and in business relationships and product innovation”product innovation”

- Gartner 2003- Gartner 2003

Services EcosystemServices Ecosystem

A business environment where every A business environment where every process, every service, every product, is process, every service, every product, is sourced from best of breed suppliers and sourced from best of breed suppliers and seamlessly integrated into a unified customer seamlessly integrated into a unified customer offer.offer.

Substitute any work unit, any business Substitute any work unit, any business process for another without change (loose process for another without change (loose coupling)coupling)

Source any work unit (product), any business Source any work unit (product), any business process from any supplierprocess from any supplier

Do it dynamically!Do it dynamically!

Business Opportunity of a Business Opportunity of a WS EcosystemWS Ecosystem Ensure that your offering in the marketing is Ensure that your offering in the marketing is

comprised of “best of breed” componentscomprised of “best of breed” components Give the customer what they want, even if you Give the customer what they want, even if you

don’t have itdon’t have it Differentiate based on service and how well Differentiate based on service and how well

you integrate the piecesyou integrate the pieces

Web Services EvolutionWeb Services Evolution

Technology

Result

Services Ecosystem

WS Connected

Compete in the market

WS Enhanced

SOA

Resolve ITChallenges

Integration

Web Services

InteropInnovation

Why MicrosoftWhy MicrosoftA

bi l

i ty

to

Exe

cut e

Ab

i li t

y t

o E

xecu

t e

Completeness of VisionCompleteness of Vision

IBMIBM

MicrosoftMicrosoft

Gartner Group: “Major Vendor Web Services Platform Influence Magic Quadrant”Gartner Group: “Major Vendor Web Services Platform Influence Magic Quadrant”

HPHP

SunSun

OracleOracle

BEA

Challengers Leaders

Niche Players Visionaries

2002-20032002-2003

*CIO Magazine Poll Jan 03*CIO Magazine Poll Jan 03

CIOs: which platform is preferred CIOs: which platform is preferred in building Web services*in building Web services*

Microsoft .NET Microsoft .NET 46.5%46.5%IBM WebSphere 19%IBM WebSphere 19%Sun ONE 8.2%Sun ONE 8.2%

“The newest innovations, which we label information technologies, have begun to

alter the manner in which we do business and create value, often in ways not readily

foreseeable even five years ago.”

Alan Greenspan Chairman, U.S. Federal Reserve