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Grand Central exec: 2004 to be breakout year for Web services

The CEO of Web services management provider Grand Central Communications says that Web services won't make a huge impact until 2004, when more customers implement enterprise applications with native Web services functionality. Craig Donato also says his company realizes that it can't compete directly with the likes of IBM, BEA Systems and Microsoft, but he believes there is a market for products that extend the capabilities of those vendors' products.

With new support for the WS-Security specification on the way, San Francisco-based Web services management firm Grand Central Communications Inc. is doing everything it can to separate itself from an ever-growing number of competitors. recently spoke with Craig Donato, president and CEO of Grand Central, about how his company differs from other management providers, the importance of portals to Web services, and what he learned during his tenure with Excite@Home.

Craig Donato
Your company is often called a Web services network provider, but what does that mean?
Donato: Our company provides a network-based service that enables you to have, in a very simple way, end-to-end security and reliability in hooking up your systems to your partners' systems. The company was founded on a vision recognizing that, as the Internet evolves, it's typically pushed by edge software and, invariably, network infrastructure emerges to help facilitate that communication. The next phase of the Internet is really going to be about business communication and [moving] transactional data between applications, and extending them in a way that's appropriate for enterprise-class communication. That's what our business is all about.

How does that relate to Web services? Donato: When you expose a business-class Web service that someone consumes,...

you're going to have to worry about issues like security and reliability and tracking it, if you have a dispute. All those sorts of issues are things that Grand Central deals with.

Who do you see as your ideal customer, and why?
Donato: Our ideal customer is interested in deepening the relationships they have with their distributors and their customers. They would be someone that recognizes that, for them to really effectively compete in their industry, they need to have a more proactive relationship with their partners. To do so, they need to do more than just provide them with a way to access information. They want to more tightly align their business processes with those partners. Web services provide an ideal vehicle for doing so because, if you have a portal, you've already done a lot of the work you need to expose those business processes.

Are you saying that having a portal is a prerequisite to having a Web service?
Donato: A portal is certainly not a prerequisite. I think that one of the things we look for with companies starting with Web services is whether they have business processes that are ready to be exposed as Web services. And if you've built a portal you've already done a lot of that underlying work. Essentially, a portal is a collection of exposed business processes.

We recently published a story about the dangers of secret Web services, especially undiscovered, internal, department-level Web services. Do you believe they pose a threat?
Donato: A Web service that a security team may not be aware of is exactly the reason why a company would choose Grand Central, to prevent that problem. With Grand Central, when you've got a service that you want to expose to the Web, the first thing you decide is how to secure it, such as with a VPN or digital certificate. Secondly, say my service can only receive 1,000 transactions per second. With Grand Central you can write rules saying that it is only allowed to receive 1,000 transactions per second. But we can also protect it [in] a number of other ways. We can control who can see it, who can access it, what's happening, and put in alerts that notify you if people access it who aren't allowed to.

What does a Grand Central implementation involve?
Donato: There's no additional software. You simply figure out how you want to send and receive messages through Grand Central, and there's a variety of ways. If you already have a Web services platform, you're ready to go. You simply change the logical URL of your service, so that messages get routed through Grand Central before they hit your service. We also can send message involving FTP servers, or XML over HTTP, and there are a lot of different ways of connecting to Grand Central. Out of the box, whether you're using WebSphere, BEA or .NET, you've got everything you need to connect.

Do you have formal partnerships with any of the major software companies? We partner with IBM, BEA, SAP and Microsoft, and we have done joint programs with all those companies.

As of this summer, my research found that you had about a half dozen customers, but one publication speculated that you need 10 times that number just to cover your own costs. Can you respond to that and give us an update on your customer and financial outlook?
Donato: We're doing well. We're continuing to add customers, and we'll have some announcements in the coming weeks and months where we'll talk more about that. Certainly we're not profitable, but we feel we're on the right track. We've spent a long time thinking about our business model and how it works, and feel confident that we're executing on it. Clearly, we're not going to be a profitable company without more customers [because] we're a service-based business, but we're ready to scale.

It's been said that there isn't enough room in your space for all the current players to survive. Do you agree with that?
Donato: The question is: is there room on the software end of things? Inevitably, the ever-expanding enterprise platform space is being dominated by IBM, BEA and Microsoft. We made a very conscious decision to focus on functionality that can be uniquely supplied from the middle of the network. We immediately can broker between different types of network architectures and infrastructures, so we can have a Tibco [system] talk to WebMethods, or a WebSphere [system] talk to SAP. We therefore extend the value of software at the edge of the network. It's a much more difficult proposition to add value at the edge.

Who do you see as competitors, and how are you going to work to differentiate yourselves in 2003?
Donato: I don't want to say we have any direct competitors, but I'd say there are alternate ways of doing things. One is to have all the parties using your service agree to a whole set of technical and operational issues ahead of time before the service is used. For example, if I offer a service and I decide how to secure it and monitor it, I need to get those who use it to agree to do things the same way. You either need to get everyone to install some sort of software, or you can have it brokered by a neutral third party, which would be us. There are a lot of people who believe that you should have everyone install the same piece of software to use Web services, but I think that's the antithesis of Web services, which are about loosely coupled services.

Do you fear that Web services standards are becoming too proprietary?
Donato: We think that there is a wide range of Web services standards. I think the low, protocol-level standards will continue to be supported, such as XML, SOAP, WSDL. On the other end of the spectrum, there are a bunch of industry standards that are based on XML, and there will be thousands more of them. In the middle, there are emerging specs that are designed to coordinate security, routing, et cetera, and that's the area where I'm not so sure we're going to have a universal set of standards. I think that when you start talking about workflow standards and such, that's how companies are going to differentiate their platforms. I suspect we're not going to have 50 ways of doing them, but we'll have four or five.

Analysts seem to believe that 2003 will be the year that internal Web services projects begin to extend beyond the firewall. Do you agree?
Donato: I think 2004 will be the breakout year. In 2003 we're going to see a lot of good traction and a lot of people declaring success, but I don't expect there to be exponential growth. I think the defining elbow on the curve will be when enterprise applications have a Web service interface and those applications are being deployed by customers. When you've got ubiquitous, exposed APIs to business processes that can be woven together effectively, good things will happen. But those products are being rolled out slowly due to the economic environment.

Your background includes time as an executive with Excite@home, which has seen its share of troubles. What did you learn in your time there that helps you run Grand Central today?
Donato: I started off my career as a technology integration person. When I joined, it was before we actually launched a search engine. Excite was the sum of its data relationships. We had to incorporate everyone else's functionality into our portal, so we had between 4,000 and 5,000 integration relationships. To keep on top of all of that, we had to leverage all the precursors to Web services, and it was a nightmare. So how does one solve this problem? I recognized [that] anytime in history [when] there's a many-to-many problem, it's always solved with shared infrastructure. We felt that with XML and the Internet, and originally with HTTP but now with SOAP, the time was right to access a shared infrastructure with integration. I also learned how to run a service provider organization, such as how to provide great service but also how to really watch the business, and not gold plate everything while still making a real commitment to following processes.


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