Opinion

The Role of Web Services in Mergers and Acquisitions

Web Services provides a cost-effective way for IT to help achieve corporate merger goals and to contribute significantly to fast, reliable merger synergies. A growing number of companies are using Web Services after a merger.

By Bob Anderson, Eric Stettler

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Web Services becomes critical when companies choose to integrate rather than rationalize systems supporting a certain business function after a merger. In its most basic form, Web Services can act as a wrapper around existing systems to provide consistent methods to access legacy environments. It streamlines the integration with its open messaging and communication standards.

Integration Environment Rationale

Once a company decides to integrate its legacy systems, our third criterion considers the question, "Is Web Services the appropriate integration technology given the existing applications, data and infrastructure environments?"

Web Services is not always an effective integration tool because of its potentially higher implementation costs. In many cases, legacy systems have little or no existing Web Services functionality. An old mainframe running custom cobalt code over a proprietary database used to manage a specific part of the business may not be the ideal candidate to retrofit with Web Services. The cost of building Web Services wrappers around older legacy systems might not be justified. A more appropriate integration strategy in such cases may be to selectively build custom interfaces to the platform or to focus on upgrading the legacy environment and consolidating the merged entities on new systems.

Web Services is most effective if the systems are newer, already have Web Services functionalities, and can support Web Services with little additional integration. For example, procurement is often one of the first functions to be integrated because of the potential for significant cost savings. Web Services can be used to integrate disparate ERP systems, enabling aggregation of data such as sales projections, item master catalogs and inventory information at the corporate level, and in turn, allowing for centralized purchasing and logistics capabilities.

Because Web Services is vendor neutral, companies can choose best-of-breed technology components and maintain a high level of supplier flexibility as their systems evolve. In addition, companies can establish or terminate business partnerships without being limited by technology constraints. As Web Services continues to gain momentum in software products, this type of streamlined interoperability will become more common.

CONCLUSION

Web Services is commanding more attention in software development. Established leaders like IBM (Web Sphere) and Microsoft (.NET) continue to push their offerings, and other vendors are making Web Services their development focus. For example, SAP has made Web Services and other open technologies the focus of its development efforts for its enterprise service architecture (ESA), which serves as the foundation of SAPs NetWeaver product. The more software developers integrate Web Services into their application suites, the more prominently Web Services will participate in merger integration.