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Profiting from service reuse

by Keith Rodgers
September 19th, 2005

Achieving service re-use within an SOA could become a commercial opportunity for IT departments if Rearden Commerce is successful in its plans.

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Rearden Commerce hosts a composite application platform that lets enterprises consume and potentially resell business services:
  • Rearden's first application brings order to non-PO purchasing
  • Made up of composite services, it is built on an SOA platform
  • Rearden plans to open up its platform to third-party developers
  • Customers too can use the platform to expose services commercially
  • But services will have to be designed with re-use in mind

Glossary terms: on demand, composite application, SOA, development, registry, lookup tool

The California-based provider intends to open up its on-demand services platform to customers and third party developers next year, in one of the earliest examples of commercial collaborative development in an SOA environment.

Rearden, which has accumulated $42 million of funding to date, has spent much of the last five years building an SOA-based infrastructure, the Rearden Commerce Platform. Earlier this year, it released its first application, Employee Business Services (EBS), which is designed to streamline procurement of non-PO items — items that fall outside standard purchase order-based processes, such as air travel, hotel conferencing and package shipments. Run by charismatic founder Patrick Grady — and aided through its development phase by a group of advisors that included Adam Bosworth, VP of engineering at Google, and Jon Bosak, who ran the group that created XML — Rearden's strategy is built around two core factors.

Firstly, it's looking to sign up major customers through the EBS application, by offering significant opportunities for cost reduction in non-PO expenditure. In addition to allowing employees to procure services through a single marketplace, Rearden allows organizations to introduce controls by building rules into the system to impose spending limits or force employees to use preferred suppliers. Unlike the first wave of electronic marketplaces in the dot-com bubble years, which focused on high volume but often low-priced indirect goods, services expenses of this nature are higher value and can be subject to huge price differentials. There is also potential for cost reduction in IT overhead, given that many organizations currently run multiple applications to handle services procurement, which each eat up development and maintenance budgets.

First of many
More strategically, Rearden sees the EBS application as the first of many on-demand services that can be offered over its Commerce Platform — applications that will be built by both Rearden and third parties. It expects to unveil its platform plans in the first half of next year, and Grady says he anticipates three main types of participants. The first consists of service providers within the existing EBS grid who also offer applications, such as events ticketing, scheduling and package shipping. The second group is third party application developers, who may be attracted by the lower development costs and shorter time-to-market they can achieve using the Rearden platform. They will publish their applications in the Rearden registry to be consumed by other customers. Effectively, this creates a new channel for on-demand services, although its effectiveness in terms of reach will depend on how widely Rearden can encourage end-user adoption of its services. Grady expects business process outsourcers would be an offshoot of this group, taking advantage of the development capability to automate their service offerings.

The third group — and one that in the short-term at least is likely to be the smallest — consists of Rearden's existing corporate customers, who having subscribed to the company's services may see an opportunity to publish their own home-grown applications. These might range from a niche application such as conference room scheduling to cross-departmental processes such onboarding, which begins when a new employee is hired and triggers numerous business processes related to physical needs (such as allocating a desk, telephone, and laptop) and system issues (including providing access to multiple systems and entering data into the HR and payroll applications). Recognized as a major challenge for larger companies, a number of organizations have developed their own home-spun onboarding solutions that may be relevant to others. Speaking to Loosely Coupled earlier this year, Grady also suggested Rearden could offer private and partially-private services registries as an extension to the UDDI-based registry, allowing application developers to certify and authorize users in order to restrict access to their applications (for example, by denying access to competitors).

According to Rearden, customers will be able to add their internal services to the platform as part of a composite application, exposing the business logic through a web services interface or other integration option. The business function will then be available at design time over the Rearden development platform. The Rearden runtime engine will control the application workflow, user interface, and integration points, and also handle orchestration.

Pros and cons
From a user's perspective, there are a number of advantages to developing on a common reusable platform in this way, not least the fact that the IT department's security and architectural reviews will only need to take place once to cater for multiple applications. Rearden argues that this could cut its own sales cycle by one third — although the hard part, inevitably, will be clinching the first deal.

While this kind of approach may appeal to some users in the longer term, there are a number of limitations. For one thing, in-house IT departments are accustomed to meeting the specific system and process needs of their organization, rather than keeping an eye on the generic applicability of their work, and applications developed to cater for their unique working practices would have limited appeal. Grady argues that a lot of the one-off processes that organizations rely on are found in back-office functions: more suitable applications for the Rearden Commerce model would be those that are "highly horizontal, high-frequency, high touch and cross-industry".

In theory, however, this kind of approach could allow organizations to claw back a small portion of the investment they sink into R&D, so that "the IT guys go from being a cost center to a profit center," says Grady. It would also, of course, have some welcome side effects for Rearden itself: by providing a new channel to market, it can reasonably demand a slice of any dollar revenues its customers generate.

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