Reconfiguring the political value chain: the potential
role of Web services
Francesco Virili1 and Maddalena Sorrentino2
1
Dipartimento Impresa e Lavoro, Università di Cassino
Via Mazzaroppi, 1 - 03043 Cassino (FR) - Italy
[email protected]
2 Dipartimento Scienze dell'Economia e della Gestione Aziendale
Università Cattolica del Sacro Cuore di Milano
Via Necchi, 5 - 20123 Milano - Italy
[email protected]
Abstract. A new technological standard, called 'Web services' has recently
made its first appearance in the Web technologies arena. Our question here is:
what is the role of Web services for eGovernment? In the present contribution,
the concept of 'political value chain' is introduced and the process of value reconfiguration is illustrated, evidencing one of the potential roles of IT on administrative activities: the facilitation of 'citizen value' creation activities connection. A brief illustration of the Web services technology is then given, finally exploring its potential for e-Government activities and the related research issues.
1 Introduction
A new technological standard, called 'Web services' has recently made its first appearance in the Web technologies arena. Our question here is: what is the role of Web
services for eGovernment?
In the following sections, the concept of 'political value chain' is introduced (Section
2), and the process of value reconfiguration is illustrated (Section 3), evidencing one
of the potential roles of IT on administrative activities: the facilitation of 'citizen
value' creation activities connection. In Section 4 the Web services technology is
illustrated, finally exploring, in Section 5, its potential for e-Government activities
and the related research issues.
2 The political value chain
In a recent contribution about the use of IT for business process reengineering in the
public administration, Anderson [1] maps on a value chain model, based on the classical Porterian concept [10], some examples of IT applications in the public sector.
Anderson calls this scheme, inspired by [5] and depicted here in Figure 1, 'political
value chain'. Actually, the transposition of a typical concept of industrial business
strategy (that of value creation) to the Public Administration, would require more
caution: the author notices, a bit superficially, that 'in the public sector there is typically no financial margin of value to be added by innovation. Instead, the public sector can partly add value by shaping the business environment and helping companies
be more efficient and effective. In part, too, the public sector is legitimised by its
political actions in the democratic domain. So the margin of value in Figure 1 is cast
as some combination of the economic, the democratic and the technical'. The idea of
value production in the public administration would deserve a deeper analysis, and
also the notion of purely 'financial margin' in the industrial business doesn't give
justice to the more complex and comprehensive concept of 'customer value' discussed
by Porter, that certainly includes many immaterial and qualitative aspects the customer is willing to pay for.
EDI/ e-commerce/ e-mail
Staff selection and scheduling systems
Support
activities
Planning models (budgeting, economic, demographic)
Groupware
Automatic
warehousing
Flexible
service
delivery
Links to
suppliers,
citizens, board
members,
politicians
The margin
(economic,
democratic,
technical)
Front
office,
one-stop
shopping
Remote
online
access
points
Primary activities
Fig. 1. IT opportunities within the political value chain. From [1], page 320.
Moreover, the value chain is better used to represent the value creation process in
the industrial production than in the service sector. From this point of view, the analysis of Stabell and Fjeldstad [14] certainly deserves attention: the two authors observe,
not without reason, that there is a great difference between the value production processes of a typical industrial business, that inspired Porter's value chain proposition,
and that of a service provider, like a bank or a hospital. For example, in Figure 1 the
phase of 'inbound logistic', usually referred to the 'raw materials' of the production
process, is somehow kept in the model to figure out an 'automatic warehousing' IT
application. It is hard to say that inbound logistic is a value production phase in most
of the typical public administration activities: immaterial services often constitute the
main output, and there is no relevant inbound logistic process. In such cases, different
value configurations may be considered as a starting point, like the 'value shops' and
the 'value networks' discussed by Stabell and Fjeldstad.
Nevertheless, the political value chain is a simple and interesting starting point for
our present work, and we would use it as it is, knowing that it may deserve some
deeper analysis and (re)definition. For our purposes, we take for granted the existence, in the public sector, of a sequence of value creation activities, aimed to the
production of what Anderson calls 'margin', that we would still call 'value'. We may
better say 'citizen value', instead of 'customer value'. We won't investigate, in this
contribution, on the specific characteristic of the 'citizen value' and on the details of
the value creation activities description, categorization and sequence.
3 The value reconfiguration process
Taken for granted the existence, in the public administration activities, of several
value creation activities, we may point the attention to a process that is becoming
increasingly common in several industrial and service sectors, generally called 'value
reconfiguration', that is well described, for example, by Malone, Yates and Benjamin,
in [8] using the framework of the transaction costs theory [17]. According to the
authors, ICT may significantly reduce the overall transaction costs, inducing organisations to externalise some activities of the value production process without loosing
control (value disaggregation). Moreover, an extensive use of Information and Communication Technologies would then allow the integration of third parties value production activities, creating new inter-organizational value configurations. By this
value reconfiguration process, the organisation at the final end of the value creation
system may develop and manage a wider and more articulated offer, integrating products and services from several other organisations. For example, Seifert and Wimmer
[14], describe the value reconfiguration process focusing on the financial industry.
They analyse the case study of a German mortgage bank, the Rheinische Hypothekenbank (Rheinhyp), that externalised the division of 'direct customers' (mortgages
distributed via Internet) to a new joint venture company, 'Extrahyp'. Extrahyp was
involved in the value production activities related to the new distribution channel;
moreover, it was used to develop a richer product/service offering: in addition to the
basic Rheinhyp mortgages other products and services issued by third parties were
introduced. Finally, Extrahyp started issuing IT services to other banks.
Is this concept of value reconfiguration applicable to the public administration activities? The framework used by Malone, Yates and Benjamin [8] is based on Oliver
Williamson's theories, that were later extended by the same author to the governance
mechanisms [18], with some important modifications: a significant new concept is
that of 'inefficiencies by design' (see also [16] for an application). Basically, we
should now take into account, besides the classical transaction costs, also the cost of
political consensus. In facts, some degree of governance inefficiency may be accepted (and even introduced on purpose) in order to 'buttress weak political property
rights' ([18], page 199) extending consensus with compromising governance choices.
The existence of this efficiency/consensus trade-off should not affect the potential
role of ICT as transaction costs reducer and driver of value reconfiguration processes
[2][8][10], though some research work should be devoted to deal with the enhanced
complexity of the modified framework, with its peculiar aspects, and also to some
recent criticisms like [3], based on the ambivalent effects of IT externalities on transaction costs.
In the next section we are pointing the attention to a new technology that may potentially play a central role in the value reconfiguration process.
4 Web services: an emerging standard
In April 2001, some 52 IT companies and 'power users', participating in the W3C
consortium (including Microsoft, IBM, HP, Sun, SAP, Boeing, …) conveyed to a
workshop in San Jose (California) to advise the W3C on the further actions to be
taken with regard to Web services. All of them published their 'position papers',
(http://www.w3.org/2001/01/WSWS), discussing their peculiar view and means of
implementation of the new technology.
Web services are self-contained, modular business process applications that Web
users or Web connected programs can access over a network via a standardized
XML-based interface, in a platform-independent and language-neutral way [4] [5].
This makes it possible to build bridges between systems that otherwise would require
extensive development efforts. Web services are designed to be published, discovered, and invoked dynamically in a distributed computing environment. By facilitating real-time programmatic interaction between applications over the Internet, Web
Services may allow companies to more easily exchange information, leverage information resources, and integrate business processes.
In practice, a Web service is a software reusable component (i.e. a small functionality, a little 'piece' of an application) that can be written by anybody (for example a
software vendor), and published to be later retrieved and dynamically used within an
existing application by anyone (for example an IS developer). Adopting this framework, companies in the future will be able to buy their information technologies as
services provided over the Internet, rather than owning and maintaining all their hardware and software (Hagel, 2001). The functionalities that can be implemented by
Web services have virtually no limits, ranging from major services as storage management and customer relationship management (CRM) down to much more limited
services such as the furnishing of a stock quote and the checking of bids for an auction item.
Users can access some Web services through a peer-to-peer arrangement rather than
by going to a central server. Some services can communicate with other services and
this exchange of procedures and data is generally enabled by a class of software
known as middleware. Services previously possible only with the older standardized
service known as Electronic Data Interchange (EDI) are now likely to become Web
services. Besides the standardization and wide availability to users and businesses of
the Internet itself, Web services are also increasingly enabled by the use of the Extensible Markup Language (XML) as a means of standardizing data formats and exchanging data.
Through Web services systems can advertise the presence of business processes,
information, or tasks to be consumed by other systems. Web services can be delivered to any customer device - e.g., cell phone, (PDA) and PC - and can be created or
transformed from existing applications. More important, Web services use repositories of services that can be searched to locate the desired function to create a dynamic
value chain. Web services go beyond software components, because they can describe their own functionality, look for, and dynamically interact with other Web
services. They provide a means for different organizations to connect their applications with one another to conduct dynamic e-business across a network, no matter
what their application, design or run-time environment.
By this new software layer, it’s possible to build applications without having to know
whom users are, where they are, or anything else about them. Users of these applications can source them as easily as they would be able to source static data on the
Web, with complete freedom and no concern about the format, platform, or anything
else.
So the revolutionary aspect of using Web services is that they are self-integrating
with other similar applications. Until now, using traditional software tools to make
two e-business technologies work together required lots of work and planning, to
agree on the standards to pass data, the protocols, the platforms, etc. Thanks to Web
services, applications will be able to automatically integrate with each other wherever
they originate, with no additional work.
4.1 The Web services architecture
The Web Services architecture, depicted in Figure 2, is based upon the interactions
between three roles: service provider, service registry and service requestor[4]. The
interactions involve the 'publish', 'find' and 'bind' operations. Together, these roles
and operations act upon the Web Service software module and its description. In a
typical scenario, a service provider hosts a network-accessible software module (an
implementation of a Web service).
Service
Registry
Find
WSDL,
Service
Requesto
r
Publish
WSDL,
Bind
SOAP
Service
Provider
Fig. 1. The Web Services Model (from[4])
The service provider defines a service description for the Web service and 'publishes'
it to a service requestor or service registry. The service requestor uses a 'find' operation to retrieve the service description locally or from the service registry; it uses the
service description to 'bind' with the service provider and to invoke or interact with
the Web service implementation. Service provider and service requestor roles are
logical constructs and a service can exhibit characteristics of both.
The foundation of Web Services is represented by new standard technologies which
meet the basic requirements for their implementation:
·
SOAP (to communicate) a standard mechanism for sending requests to services and receiving responses;
·
WSDL (to describe) a standard way to describe services, with a input/output
interface specifications and some meta information (copyright, version, update URL,
etc.);
·
UDDI (to advertise and syndicate) a standard means of locating relevant services with the desired characteristics.
4.2 Building Web Services
Using Web services, as usual in componentized software applications, the system
development process may be fractioned in two major parts: the standard components
development and the integration into the target system.
Even if, given the novelty of the platform, a consolidated methodology does not yet
exist, we may figure out, in the development process of the standard components, that
approximately four major phases might be followed: building, deployment, running,
management.
The 'build' phase includes the development and testing of the Web service implementation, and the definition of the descriptions for both the service interface and the
service implementation. Web services implementation can be provided by creating
new Web Services, transforming existing applications into Web Services, and composing new Web Services from other Web Services and applications.
The 'deploy' phase includes the publication of the service interface and service implementation definition to a service requestor or service registry and deployment of
the executables for the Web service into an execution environment (typically, a Web
application server).
During the 'run' phase, the Web service is available for invocation. At this point, the
Web service is fully deployed, operational and network-accessible from the service
provider. Then the service requestor can perform the find and bind operations.
The 'manage' phase covers ongoing management and administration of the Web service application. Security, availability, performance, quality of service and business
processes must all be addressed.
On the user side, the deployment of Web services in existing systems should not
require any effort or resources for application integration. This fact would surely have
a significant value to developers, and we may figure out it could have a dramatic
impact on the way of designing and implementing Information Systems that may be
dynamically adapted to new business needs or organizational changes. The whole IS
development process may be radically transformed, as foreseen by (Lyytinen et al,
1998): '… the distinctions between 'internal' and 'external' applications have greyed.
The impact of this greying is both the altering and the broadening of design considerations such as availability, security, support and access for all applications. In response to these issues new mechanisms and methods of application assembly are
emerging. […] These are a far cry from the application-oriented, data flow diagramming, functional design and bespoke application days of yore. Against these changes,
the role of the software developer necessarily changes. Some will manufacture components; the majority will facilitate their adaptation, choice, understanding and use'.
(page 248).
5 Preliminary conclusions: exploring the potential role of Web
services
What is the potential role of Web services in the value reconfiguration process? John
Hagel III, in [5], writes:
Two and a half years ago, Marc Singer and I wrote 'Unbundling the Corporation'
[6]. In that article, we described […] how the Internet would facilitate the unbundling [process], leading to much more tightly focused companies. The rise of the Web
services architecture will not only speed this unbundling but will spur the growth of
the new companies by letting them mobilize a greater range of resources to reach a
broader set of customers (page 113).
Obviously, this statement is only a hypothesis that should be confirmed by evidence
and better investigated. If we transpose this hypothesis to the Public Administration
sector, the peculiar aspects of governance [10][11] and the higher complexity of the
resulting framework would obviously require some additional efforts. The resulting
research agenda would encompass theoretical aspects like transaction cost theory
investigation and application, management aspects like the definition of the new
organisational assets, and applicative aspects like the development of a security infrastructure to ensure the required level of trust.
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