Can Web Services Live Up to the Hype?
DRIVING DOWN COSTS
""What is monumental about this technology from the past history in computing is to have so many vendors (15 to 20) agree on standards,"" says Shahrawat. ""Over time they realize the users are driving them towards an open environment,"" says the analyst who contrasts this with middleware products that were developed for internal integration, not external integration or to leverage on the Internet. ""Middleware products that have helped in the past won't be able to reduce the total cost of integration or solve the integration problem completely.""
By breaking down monolithic applications into software components that interface through SOAP, Web services can drive down the cost of software development and maintenance, Shahrawat contends. Buy-side institutions, in turn, that have been forced to purchase integrated portfolio management, compliance, trading and order-management platforms, could swap out components rather than rip out the entire system. ""Now, with Web services, you can decouple those four products that sat on the same system,"" he contends. If they want to replace the fixed-income functionality within an order-management system, ""They can go out and see a vendor that has a best-of-breed solution and buy the fixed-income functionality as a component and install it within their proprietary-application suite,"" he says. ""You couldn't do that in the past.""
Another characteristic of Web services interfaces is that they will permit securities firms to expose their applications to institutional clients.
Streetline, a technology-services company, owned by Credit Suisse Group, is running a Web services order-management application to connect institutional clients to the global-brokerage firm through a real-time, electronic, straight-through-processing environment. ""They can go out and completely build the connectivity in-house ... or, using the Web services model - which is basically our exposed application layer and a number of applications we've written - they can access a lot of that information and that capability directly from us,"" explains Christian Hudson, president of Streetline. ""They're directly accessing and interfacing with the application layer ... without the cost involved in development, hardware and so forth,"" says Hudson.
But exposing one's applications to institutional customers can be a double-edged sword. ""If someone does something poorly and exposes it as a Web service, then all they're doing is exposing the fact that they can't do something very well,"" says Hudson. ""If a company does things exceptionally well, he adds, like execute in London or provide a level of symbology or support services or corporate-action services, then there's a wealth of opportunities that are open to financial-services institutions to leverage off of the work they've done and ... provide that service as a value-added service to the marketplace,"" he says.
In Swiss American's case, international execution (in 23 international markets) is a strength, along with the attendant support services, Hudson says, adding: ""So we have exposed that to try and maximize the number of clients that we can attract.""
Despite some lost momentum, analysts and consultants say the rollout of Web services will happen, but it will be more evolutionary than revolutionary. ""I see it rolling out in phases; I see the phases tied to the investment climate,"" says Accenture's Adamczyk. ""The climate is clearly one that companies are not making a lot of investment in brand new systems and are looking at leveraging what they have.""
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Examples + Web Services in Finance
Data Distribution: Technology consultant Accenture has created a demonstration called Live Information Models, where research reports or investment-banking pitch books are automatically updated with data that's gathered from a variety of sources, as opposed to a proprietary network. The application taps into sources for stock prices, all distributed via standard Web service interfaces, while the software could go to a Universal Description Discovery and Integration (UDDI) registry, where it picks a supplier based on lowest cost or the one most likely to be real time.
Financial Reporting: The Nasdaq Stock Market, Microsoft and PricewaterhouseCoopers, together launched a Web-based pilot program for financial reporting with 21 semiconductor and technology companies on Aug. 6, 2002, based on XBRL (Extensible Business Reporting Language). Hosted on Nasdaq's Web site, an Excel spreadsheet calls the Web service and brings back the data, then provides instant analytics within an Excel workbook. The Web site is aimed at investors and analysts, who currently have to re-key data into spreadsheets to make ratio comparisons.
Stock Charting: Streetline, a financial-technology-services company, and a member of the Credit Suisse Group, developed a proof-of-concept for a fee-based Web service with Visualize, Inc. and IBM. Streetline was hosting Visualize's StockPlot software and using it to render charts for its platinum and premium institutional customers, paying a monthly per-rendering fee for every 1,000 charts displayed. Visualize approached Streetline with a contract from IBM about using its software as a Web service. ""There's got to be a reason for us to switch over to Web services as opposed to continuing down the same path, hosting it and using it locally, besides things like reduced server capacity (and) seamless integration of upgrades and fixes,"" says Manny Rosa, Streetline's strategic product manager, who adds: ""And in talking to Visualize and IBM, I keep saying to them, the reason has got to be money."" The companies haven't finalized a deal in terms of price yet, says Rosa.
Corporate Applications: Aspelle, a spinoff of Dresdner Kleinwort Wasserstein, provides secure access (using a browser and Internet connection) to corporate applications and data - including Web, Unix Windows and legacy systems. Based on Microsoft's .NET framework. ""Technically, Aspelle would not be considered a Web service,"" says Simon Johnson, vice president of technology and founder. However, it makes use of Web services standards, such as SOAP and XML. In July, the company announced that Cargill, a provider of financial, agricultural and industrial services, was a client. Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio
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