Wonders of Soap: A Dream for Users, Nightmare for Vendors

By Maria Trombly | Securities Industry News | May 5, 2003

Everybody and his brother has a different definition of Web services, but it's really very simple: Web services are built with Soap (Simple Object Access Protocol). If it ain't got Soap, it's not a Web service. It's something a vendor conjured up in a vain effort to sell a proprietary money-making scheme in place of the glorious, open and public thing that is Soap. You see, Soap-and all the various add-ons and extensions being developed by the standards-setting bodies-is the Esperanto of the computer world. It's a common language in which any computer program can talk to any other computer program. And nobody owns it. It's a user's dream. And a vendor's nightmare. Everybody with a business plan based on locking in customers is staying up nights worrying about it.

And it's not a pipe dream. Companies like Microsoft and Tibco are rewriting their business models because of Web services and Soap.

Every language has to have two things: a grammar, and a vocabulary. For Web services, the grammar is XML. XML (eXtensible Markup Language) is a generalization of, and looks somewhat like, HTML (the stuff Web pages are made of). It explains what part of a message holds the actual information, and what part of a message tells you what to do with that information.

The XML grammar was so clear and user-friendly that every industry group out there immediately started creating dictionaries using this grammar. MDML (Market Data Markup Language), FPML (Financial products Markup Language), XBRL (eXtensible Business Reporting Language), FIXML (Financial Information eXchange Markup Language), IRML (Investment Research Markup Language). The list keeps getting longer. As I write this, someone out there is creating UFOML, to exchange information about UFOs.

Microsoft even supports XML in its latest version of Office, Office 11, now out in beta.

But all the other dictionaries out there pale in comparison to that of Soap and its relatives. Soap tells computer programs how to talk to one another.

Vendors used to make a lot of money selling middleware packages that did exactly that-except that they charged a lot of money for it. Now the smartest of them are busy repositioning themselves up the value chain. It's a race-as long as they stay ahead of standards and hardware evolution, they're OK.

For example, Web services transaction and security standards aren't completely hammered out yet. Neither are Web services orchestration standards, business process modeling standards, Web services management standards-but every few months, a new standard is ratified, and the list gets shorter and shorter.

Another problem with Web services-at least, from a vendor point of view-is that they're relatively easy to roll out. And new tools are coming out every day making them even easier. They were designed that way. So all those folks who got used to never-ending consulting contracts are rethinking the way they do business, too. One solution is to drop the price way down and make it up by volume, since Web services will now make integration projects appealing to even the most cost-conscious of businesses. That could mean getting rid of some high-priced staff and replacing them with good, hardworking folks in places like Ireland, India, and China.

Finally, Web services makes software components truly re-usable. Since they all speak the same language, a piece of an application that isn't working too well can be pulled out and replaced with a better one-without breaking the entire system. If it still doesn't work, or is too much trouble to handle, or costs too much, it can be outsourced. And if the outsourcer isn't working out, or a cheaper and better one comes along, you can switch. Getting out of the contract may be an obstacle, but the technology won't be.

The bottom line for securities firms? Costs will take a sudden spike downwards and productivity will jump as Web services percolate through the capital markets value chains.

There will be straight-through processing.

And life will be good.