Network computing
(c) 1996 IBM Corporation

Value Proposition / Business Case for Java


December 11, 1996

Presented By:


META Group Consulting

Don Ryan Director

Kip Martin Consultant ©

1996 META Group 208 Harbor Drive, Stamford, CT 06912

(203) 973-6700 http://www.metagroup.com


TABLE OF CONTENTS

Java and the Evolution of LiveWeb Applications: An Overview
The Java Value Proposition
Software Industry Analysis
Line Of Business and IT Users
Sidebar: CSX Implementation of Java 15


JAVA AND THE EVOLUTION OF LIVEWEB APPLICATIONS: AN OVERVIEW

Java is a third-generation OO programming language that is based on C++, with features added and removed to allow programming ease. One of the main programming benefits is a rich predefined class library that allows programmers to reuse code. Java is both a programming language and an operating system component called the Java virtual machine. It uses interpreted code and executes on either a client or server. Java is currently receiving heightened attention because Java:

An alternate method to frame the critical issues surrounding Java involves Java's ability to enable the deployment of Internet technology as an intelligent information system and network. Java enhances the following key attributes:

META Group sees the demand by IT organizations for "liveWeb" applications driving Java adoption through 1997. LiveWeb applications enable users to receive on-the-fly custom responses to application requests, based on individual profiles. As a result, Java will become the de facto liveWeb standard by year-end 1996. We expect Java's momentum to be propelled into the mainstream by 1997, with the arrival of Java applets (from Dun & Bradstreet, Oracle, InsWeb, USWeb, etc.), enhanced Java development environments (from SunSoft, IBM, Borland, Symantec, RogueWave, etc.) and Java integration support provided by all major technology vendors (analysis/design, development, packages, middleware, database management systems, etc.). By year-end 1997, Java will evolve into a broader role as a full object oriented 3GL for liveWeb development, supported by a wide array of high-level Java development environments. Figure 1 depicts Java's technical maturation through 1998.

The critical characteristic of liveWeb applications is their ability to respond in a customized manner to events triggered by the user. As opposed to the development of specific software, which provides solutions for every conceivable combination, liveWeb applications are addressed by a system that combines components (HTML, business service logic, new media containers) on the fly, based on the triggered event, knowledge of the individual user, and contextual knowledge of the session. Their vitality is further increased when the processing is distributed between the client and the server in a manner that optimizes response time by minimizing network traffic.

Java is used to create small, specialized applications (applets) that are loaded from the server to the client on a "just in time" (JIT) basis. As a result, Java applets are centrally managed, but locally executed. This structure has numerous advantages, which we expect to drive Java's adoption as the standard for delivering liveWeb applications in 1996/97:

Figure 1

In 1997, IT organizations will deliver their first full liveWeb systems. IT organizations will pursue internal applications, built on top of existing legacy software (e.g., HR benefits enrollment, 401(k) investment management, customer information systems). This approach provides the opportunity to build core technical skills in base technologies, without incurring the business risks associated with direct customer interaction. "Light" multimedia content, such as images and graphics, along with business logic applets, will be used to manage user interaction. Media usage decisions will be based on technological maturity, network bandwidth availability, and their role in supporting the application. Aggressive organizations (particularly in consumer-oriented industries) will begin developing liveWeb applications that target both customers and consumers. These projects, typically sponsored by the sales or marketing department, will be perceived as critical to business competitiveness and initiated under tight time-to-market pressures.

Java also has the potential to simplify network management. META Group sees this as an overall trend in network management; significant efforts are underway to enhance the network management capabilities of all operating systems. This improvement in ease-of-use is a critical success factor for all operating system vendor solutions going forward to the year 2000.


THE JAVA VALUE PROPOSITION

Capabilities and Benefits

Java, as an important component in Internet and inter-enterprise computing, is receiving increasingly more attention as Global 2000 companies actively deploy it. The principal benefits driving Java implementation include:

Java is the latest programming language to enable an application run on any platform, allowing complete independence between the application program, type of computer, and operating system. Equally important, Java moves the locus of computing from the desktop to the network.

The purpose of this white paper is to describe Java's potential to benefit organizations along an industry supply chain, from product supplier to IT user to line-of-business management to customer. While we use the software industry as an example, this analysis may be extended to most industries to determine how Java enhances product and service delivery across that industry's supply chain and value chain. To examine in greater detail Java's affects on business processes, we will look at the supply chain and value chain across the software industry, starting with software suppliers manufacturers through line-of-business users and ultimately consumers.

For IT and business managers, Java's benefits extend beyond improved programming efficiencies; Java's cross-platform solution downloads applications from server to client on demand, ultimately providing lower-cost application delivery by 2000. It is Java's ability to distribute applications to upstream and downstream supply chain partners, regardless of computing environment, that will enhance business processes and make Java an important component in the evolution of electronic commerce and the Internet. Business process improvements can accelerate time to market, enhance customer service, solidify business relationships, and provide opportunities for value and profit potential across an entire supply chain. META Group believes Java will mature quickly because it offers benefits to all members of a supply chain; this multi-tiered constituency will drive acceptance of the Java development environment more rapidly than other development solutions introduced over the past decade.

While most current benefits of Java apply to business interactions, an equally important function enables the development of new consumer devices, such as Web TV and low-cost network personal computers with enhanced application access. Java has the potential to be an underpinning that enables these new devices to expand the scope of consumer communication and entertainment. Java has the potential to Web-enabled consumer households by extending some of the same functionality to consumer electronic devices currently found on personal computers.

A secondary impact of Java allows the migration from standalone technology to value-added network-based services. Electronic information access and communications becomes more widespread through a low-cost network-based application delivery. Java along with a number of other the key Internet technologies may break down the two major barriers to consumer computer use: difficulty of use and high cost.

There are, however, some caveats associated with Java. Java is an important catalyst to the evolution of the information technology ecosystem; in isolation, however, Java is no more revolutionary than preceding object oriented environments. A number of technology, business maturity, and business model propositions must mature before the benefits of Java significantly impact supply chain management through activities such as improved customer service delivery or electronic commerce enablement.

A key factor in this evolution is the tradeoff between performance and cross-platform support. Proprietary operating system solutions can deliver greater performance through tight integration with operating systems; Java enables cross-platform compatibility of applications. A significant issue surrounding the future success of Java will be the value users place on cross-platform capability versus operating system performance. Ultimately, users will choose operating systems based on a number of factors; Java increases the scope of these options and is one of a number of key considerations such as network bandwidth availability, security, access control, and applications availability

Leading-edge user organizations are actively implementing Java; developers are moving to incorporate Java into a range of environments more rapidly than any other language or development environment. However, the impact that Java will have on supply chain management and business process will be gradual. Currently, monolithic systems form the core of most IT systems; the installation of these systems represented a lengthy and expensive process for most corporations. Few will be in a position to significantly modify or augment this infrastructure within the next half-decade; additionally, any change must leverage the current investment in client / server and desktop-based technologies. To the extent that Java complements with existing systems, its implementation will be smoother and faster. Additionally, Java adoption will be significantly impacted by other prominent Internet technologies, as well as the further maturation of standards. All of these factors will influence the time frame in which the benefits of Java we outline in this paper will come to full maturity in large scale corporate settings.

Figure 2
Supply Chain and Value Chain Models

By describing the individual component products, materials, and services that are used to conduct business processes as links in the supply chain, we can assess the impact of a new technology according to the extent of its use in the chain. Various technologies can be employed to manage supply chain relationships; it is these technologies that can add considerable value to business processes, either through increased efficiencies or direct cost savings. Java, as a supply chain-enabling technology, can add value by facilitating information flow and interactions between trading partners. Supply chains, whether extending across a single organization or an industry, play a significant role in defining value chains.

Value chain analysis offers a method of evaluating business processes as a means of adding value to a product or service. Every business process takes in resources with the goal of producing an end product required by the next organization in the chain; ideally, the end product of service is of greater value than the original components. Those processes that add increased value along the way are value chain components and key contributors to increasing profit, market share and revenue. In addition to industry-wide value and supply chains (external to an organization), there are equally important internal value and supply chains. Internal supply chains progress through inbound resource logistics, operations, outbound distribution, sale and marketing, and customer support. In our analysis, we view Java as a value chain component that enhances business process and adds value to products and services.

The remainder of this paper provides a supply chain analysis focusing on where Java adds value for each major user community of interest: from software vendors through ISVs to the end-user customer. For many of these segments Java boils down to reduced cost in providing applications and supporting business processes. These processes can enhance customer service and extend electronic commerce across an entire supply chain. Figure 2 depicts Java's benefits in each step throughout the software industry supply chain, all of which arise from its cross-platform independence.

The key point is that Java has benefits as both a product and a business process solution, and has the potential to be a highly leveraged technology because it adds potential value across every segment in the supply chain. As with most intranet technology development, META Group believes that to get a quick start, companies must have in place a robust applications and network infrastructure from which to build Internet platforms and applications. Companies have to be object-ready; that is, actively employing programming resources that can use object oriented programming techniques. However, over the next two years there will be a proliferation of tools enabling the evolution of new Java applications, reprogramming of existing applications, as well as fostering an organizational culture that is able to profit from an object oriented programming methodology.


SOFTWARE INDUSTRY ANALYSIS

As a proxy and model for various industries, the software industry provides a convenient example of the benefits of Java. Java value propositions extend across the components of the software industry: independent software vendors and integrators, distributors and dealers, and line-of-business and information technology users. There are benefits within each of these supply chain segments, as well as within the interactions between segments.

Software ISVs and Integrators

Value Propositions:


We discuss here the benefits of Java for software companies and integrators. Many of these benefits and value propositions also apply to IT hardware infrastructure vendors as software is an integral part of the systems they sell. Currently, software companies sell into specific segments based on platform and operating system constraints. The market has been characterized by mainframe enterprisewide platforms, server-based systems and personal computers. Software is usually not portable from one environment to another, and as a result ISVs and integrators normally address only one or two segments of the industry due to the prohibitive costs associated with the production on multiple sets of code.

With Java, ISVs and integrators can develop applications that are cross-platform, thus opening up their programs and services to a much wider client base. Best-of-breed applications, previously developed for one or two platforms, will now be available on virtually all platforms, expanding the base of available software on various platforms. Cross-platform portability will drive a greater availability of software and a broader potential market for all software companies and integrators; it will also enable development companies to focus on features and functionality rather than on platform requirements, creating applications tailor for business processes rather than operating systems.

A large integrator, Trilogy Development Group, is currently engaged in high profile Java projects for major Global 2000 companies, focused primarily on Web-based sales function automation. Trilogy is realizing a greater than sixty percent cost savings due to ease of programming in Java as compared to other development environments. They are able to write to one platform, and thus can focus more attention on customization and adding value to the business application. One of their notable clients is the Chrysler Corporation. The Chrysler application involves utilizing an interactive automobile information and configuration application over the Web and Web-based kiosks in Chrysler dealerships; this application will also enable dealers to locate and order the cars as configured by customers. This Web-based delivery will replace CD-ROM distribution of promotional, pricing, and product information, allowing for more rapid and uniform dissemination to dealers and more effective satisfaction of customer requirements and inquiries.

Figure 3

A new groupware vendor, Sanga International, has been able to develop a Java-based product in less than six months and is hoping to cross market segment boundaries based on features and functionality rather than platform requirements. This has significantly improved their time-to-market, and enables increased flexibility in implementing updates and modifications to the initial release.

Figure 3 shows the current structure of the software industry, with market size and development efforts determined primarily by platform. Java will allow vendors to address new market segments and promote interchangeability of positions. Existing vendors will attack new market segments, thus widening the range of choices for software buyers. Java, by potentially changing the dynamics of software delivery, will effect the downstream supply chain as it expands the scope of software applications and increases the number of solution vendors in any one business process application segment. Technology platforms do not pose a barrier to market extension or expansion into new markets. The critical success factor becomes feature- and functionality-based, with success criteria for ISVs based their effectiveness in addressing the business needs of particular market segments (defined by both business size and vertical market).

Distributors/Dealers

Value Proposition:

Java applications are operating system-neutral, allowing them to be deployed on any client machine for which a Java Virtual machine is available. As a result, Java applications (applets) run on desktops whose configuration is not within a corporation's direct or indirect control. This capability translates into a number of supply chain and value chain benefits:

For example, R.R. Donnelly's WebDIRECT database retrieval service uses Java as an underpinning for interactive catalog and software delivery capability that reaches to any desktop platform. META Group sees interactive catalog and ordering capability as a critical component in electronic commerce enablement for both suppliers and customers by linking suppliers to distributors/dealer to IT customers and line of business management. Java is an important tool in enabling this through application partitioning.

For example, information that was once reserved for internal company use, such as inventory or product availability, can now be shared with supply chain partners. Information developed by all supply chain partners for inventory management, forecasting, and sales force automation can be shared and updated through the use of Java applications coupled with an underlying intranet infrastructure. Information delivery points can be a kiosk, a mobile computer, and ultimately a hand-held organizer. This platform-independent delivery enables more widespread use of electronic information networks than do the proprietary networks used currently to handle electronic supply chain management communications.


Figure 4

Open access to information via the Internet will also change the face of customer service. Access to customer files, order records, inventory status, and the capability to dynamically interact with live applications from any platform will drive a new model of customer service. All participants in the supply chain can have 24 x 7, location independent online access to the same information. The value proposition for the customer is faster service; the potential value proposition for the distributor/dealer is a lower cost model for customer service fulfillment.

The best example of Java enabling a new breed of customer service is customer and distributor access to legacy databases, which store 90% of all customer service-based information. Using JDBC and gateways, Java-enabled clients can access the order information and account status that have previously been reserved solely for customer service agents over proprietary networks. Java enables intelligent applications that are event-downloadable, enabling implementation of business-logic-based application delivery via the Internet. Java applications have the potential to strip delays from supply chain management, imparting increased efficiencies, and therefore greater profit potential, across supply chain and value chain segments. Figure 4 shows the key business applications impacted by Java and the intranet in supply chain management.


Line Of Business and IT Users

Value Proposition:

META Group, however, poses a caveat that currently, Java is still in its infancy in terms of availability of off-the-shelf applications. Two critical success factors need to be in place before Java plays a major role in Internet computing: a more mature applications framework, and greater object oriented programming readiness. Solutions are on the horizon, however, because Java offers benefits to all participants in the supply chain.

A key to Java's success lies in its potential to improve IT and business processes by centralizing network management of application delivery and maintenance while delivering applications to the user's desktop platform of choice. Specifically for IT business process management, Java allows greater customization of department-specific applications and improves throughput and cycle times by partitioning parts of an application across multiple servers and clients. In addition, the underlying object oriented programming technology upon which Java is built encourages reuse of components which simplifies and accelerates application development. In the future, generic platform independent components may represent pieces of process specific applications that can be purchased off-the-shelf (objects). In addition, IT application maintenance will take less time and be less complex due to the homogeneity of components across multiple applications.

Figure 5

As business processes become software- and application-dependent, this capability to delivery applications more rapidly will have significant ramifications for line of business management. Software becomes a value chain component that can bring significant competitive advantage. A real payoff for Java comes in the improvement of line of business process that are enabled by bringing applications to the desktop more quickly and having these applications accessible to all supply chain partners. The time frame in which Java achieves this promise depends the rate at which ISVs port applications and develop off-the-shelf solutions. Figure 5 outlines key benefits across a line-of-business value chain for customer service and electronic commerce applications.

Consider an example outlining Java's possible effects on customer service delivery in an organization. Currently, customer support functions are labor intensive because customers talk to call center agents who access legacy data to answer questions. In many instances, access to information is limited because customer service centers only operate during the day, telephone lines are busy, and information is incomplete or not up to date. Customers cannot have online access to these systems because most required mainframe-based access.

As another example, a Web-based product catalog with Java client support would allow customers to automatically sort and reformat database content for online viewing and printing. Many more options can be reviewed online as compared to utilizing a live call center agent for instructions or direction to information. This type of system can be expanded to a full-blown electronic commerce environment where customers have access to shipment status, e-mail, corporate address books, account information, and order/payment functions. Two of Java's key technical benefits -- openness through platform independence and ability to serve specialized applications that can access customized requests for information -- are the underpinnings in developing this type of online customer service network.


Sidebar: CSX Implementation of Java

CSX is a major transportation company that wants to Web-enable all its transportation information systems that impact their customers. A primary goal is the offer of services to any desktop in the company, as well as to customers and suppliers. CSX has an established history of electronic customer communication through a proprietary DOS-based client and network system known as Mercury. Dozens of CSX's major customers now use this system. During the first quarter of 1997, CSX implemented TWS Net, a Web-based and Java-developed system for its 15 largest customers (encompassing about 175 users).

CSX evaluated Java during 4th quarter of 1995 and realized in January 1996 that Java was a viable option. CSX identified three business-critical applications that were all highly interactive, requiring liveWeb capability and necessitating solutions beyond simple HTML programming. The first two are currently in production; the third will be added during the first quarter of 1997:

In developing this system, CSX identified a number of critical success factors:

These design parameters allow new functions to be added as required (at least every six weeks for CSX) and to be fully integrated with existing EDI applications. CSX started with a common object model based on C++, was used for applications such as tracking railway car use and location. The first application was implemented with team of programmers that ranged in size from 6 to 20 persons over a period of four months. CSX's team of programmers had previous object programming experience, and many of the existing databases were developed in C++. The total cost approached $1 million; 60% related to programming and 40% spent on hardware and software. Payback is estimated to be less than one year, based on deferral of customer service calls and simplified management of online customer systems. A notable example of benefit provided to IT management involved providing customers with a URL and password, instead of needing new hardware and software revisions, as under the old Mercury system.

CSX wants to have 3000 users by end of 1997 and entirely replace the existing DOS-based system. Indeed, CSX views online freight tracking as the 'price of admission' for transportation-based companies. CSX may productize this system as a commercial offering for other railway and transportation companies, and is currently working with Deutsche Bahn, the German railroad for technology transfer towards this end.

The next big step for CSX is the implementation of network computers; 1997 use will account for 10% of their IT infrastructure, growing to 40% in two years. Key application areas include scheduling, modeling, and field administration. All of these developments demonstrate that, for customer service and electronic commerce applications, the accelerated development and rapid investment payback resultant from Java implementation is important in the business decision to deploy intranet infrastructures.



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