214 The Evolving Web Presence of SMEs dimensions: process of change, content of change, and drivers of change. 7KHEHQH¿WVRIWKHIUDPHZRUNDUH¿UVWLQWKH context of research, it provides a range of different perspectives or lenses with which to study SMEs adoption and progression of e-business, rather than single dimensional approaches, for example the stages model. This should lead to better un- derstanding of why and how SMEs evolve their Web sites and Internet strategies for supporting their Web and e-business strategies. In addition, it facilitates comparisons of commercial Web sites over time and in different regions of the world. 6HFRQGLWVKRXOGEHRIEHQH¿WWRPDQDJHUV knowing the Web site features that other compa- nies in their sector, that is, potential competitors, are implementing would be useful in relation to new Internet investment decisions. In addition, they should know what features need to be pro- vided in order to implement the most suitable Internet strategy. Customers may have different YLHZVRIWKH¿UPGHSHQGLQJRQWKH:HEIHDWXUHV available. Presence or absence of various features or content may determine whether a customer visits the site again or engages in transactions (Teo & Pian, 2004). In all, being aware of the e vo lu t i o n o f SM E s We b s i t e s , i n t e r m s o f t h e t y p e s of drivers of change, the features that have been incorporated and how implemented should be a valuable addition to what is known about e-busi- ness in SMEs and will help to clarify the drivers DQGEDUULHUVWKDWLQÀXHQFHWKHLUDGRSWLRQRIPRUH sophisticated Internet technologies. A pilot study was undertaken of 192 Web sites which were collected and monitored over a 10-month period to identify the types and char- acteristics of changes on these sites. This pilot VWXG\ KDV SURYLGHG VRPH LQWHUHVWLQJ ¿QGLQJV about evolution and change of these Web sites. It has also helped to validate the framework in WKDWWKHFDWHJRULHVLGHQWL¿HGLQWKHGLPHQVLRQV have been found to be relevant, comprehensive and applicable. Future research it is planned to see the increas- ing of the sample of Web sites monitored to two thousand companies in order to obtain a more VLJQL¿FDQWQXPEHURIUHGHVLJQVVRWKDWFOXVWHU analysis and association rules analysis can be undertaken. It is hoped that further research, based on the framework, will produce a predic- tive model, so that the evolution process of any given Web site, in its particular context, can be categorized and its management better supported. Such a model is currently lacking and should be especially useful since continuous maintenance DQG LQQRYDWLRQ LQYHVWPHQWV IRUP D VLJQL¿FDQW SDUWRIWKHOLPLWHG¿QDQFLDOUHVRXUFHVWHFKQLFDO skills, and knowledge of SMEs (Chau, 2003; .R Z W K D & K R R Q /D U JH ¿ U P VH QMR\ D FF H V V to capital, skills and capabilities to support their Web strategies, whereas SMEs often lack these resources and capabilities which makes it even more important that they maximize the potential and minimize the risk of e-business and carefully formulate their strategy for current and future e-business (Barnes & Vidgen, 2001). ACKNOWLEDGMENTS The authors would like to thank Enrique Frias- Martinez, Yogesh Desphande, Michael Lang, and Sandra Bavarosso for their helpful and construc- tive comments and advice. REFERENCES Adam, S., Mulye, R., Deans, K., & Palihawadana, D. (2002). E-marketing in perspective: A three country comparison of business use of the Inter- net. 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Journal of Management Studies, 31(3), 405-431. This work was previously published in Global Electronic Business Research; Opportunities and Directions, edited by N. Al Qirim, pp. 15-41, copyright 2006 by IGI Publishing (an imprint of IGI Global). 219 Copyright © 2009, IGI Global, distributing in print or electronic forms without written permission of IGI Global is prohibited. Chapter 1.15 Challenges for Deploying Web Services-Based E-Business Systems in SMEs Ranjit Bose University of New Mexico, USA Vijayan Sugumaran Oakland University, USA ABSTRACT E-business initiative in many companies had started in the 1990s. These companies have re- cently begun to explore the use of Web Services (WS) technologies within their e-business context, since they provide an attractive, language-neutral, environment-neutral programming model that ac- celerates application development and integration inside and outside the enterprise. Despite these advantages, companies are slow to deploy WS because it requires a considerable shift in their application development process. While a few studies have reported on some of the reasons for this wait-and-see approach, a thorough and sys- tematic investigation of the challenges from the stakeholders’ — providers, consumers, and stan- dards organizations — perspective is needed. This study addresses that and provides a framework for studying the factors that impact the deployment and use of WS. The framework is used to analyze small and medium-sized enterprises (SMEs), as they play a vital role in generating employment opportunity and turnover within many major economies globally. INTRODUCTION The e-business initiative in many companies had VWDUWHGLQWKHV7KH¿UVWJHQHUDWLRQHEXVL- ness application, with a business-to-consumer (B2C) focus, had simple Web sites with databases and forms for buying and selling online products. Subsequently, the second generation e-business application, with a business-to-business (B2B) focus, had Web sites that were fully integrated with backend systems — consisting of the major 220 Challenges for Deploying Web Services-Based E-Business Systems in SMEs legacy applications — internally, as well as with business partners’ information systems exter- nally to provide a wide range of online services (Gonsalves, 2002). 7KHHPHUJLQJ¿HOGRI:HE6HUYLFHV:6HQ- ables different software components to be integrat- ed without having to develop these components from scratch and without the hassle of custom FRGLQJ6WDO,WLVUHVXOWLQJLQVLJQL¿FDQW changes in the way applications and supporting infrastructures are integrated (Schmidt, 2003). These changes have led to the design and devel- opment of service-oriented architecture (SOA) of application systems (Fowler, 2003). WS are becoming the basic building blocks out of which new applications are being created, and service composition is becoming the main focus of the application development process (Peltz, 2003). Service composition combines two or more WS following a certain composition pattern to achieve a business process goal. Thus, service composition provides a mechanism for seamless integration of cross-enterprise and intra-enterprise applications (Chung, Lin, & Mathieu, 2003). The SOA is built on a foundation of standards, ZKLFKGH¿QHWKHUROHVDQGDFWLYLWLHVRIWKHDUFKL- tectural elements, and thus support the interoper- ability of incompatible systems across the Web. The SOA is distributed, permitting elements of an application to be deployed on multiple systems and executed across connected networks (Geng, Gopal, Ramesh, & Whinston, 2003; Kleijen & Raju, 2003). Because the transport mechanism is built on HTTP (Hyper Text Transfer Protocol), it is possible for application elements to interact within and across enterprises. The elements of an DSSOLFDWLRQDUHGHVLJQHGWRVXSSRUWVSHFL¿FWDVNV ZLWKLQDEURDGHUZRUNÀRZRUEXVLQHVVSURFHVV Each of these service elements of an application LVUHVSRQVLEOHIRUGH¿QLQJLWVLQSXWVDQGRXWSXWV using the standards for WS, so that other elements are able to determine how this element operates, how to make use of its functionality, and what result to expect from its execution (Papazoglou, 2003). A Web service is thus a self-contained and self- described modular element of an application that can be published, located, and invoked across the Web. Based on existing and emerging standards such as HTTP, XML (Extensible Markup Lan- guage), SOAP (Simple Object Access Protocol), WSDL (Web Services Description Language), and UDDI (Universal Description, Discovery DQG,QWHJUDWLRQ6HUYLFH:6SURYLGHVLJQL¿FDQW opportunities for technical and business innova- tion (Arsanjani, Hailpern, Martin, & Tarr, 2003; Maruyama, 2002). Since the WS technologies provide a language-neutral, environment-neutral programming model that accelerates application development and integration inside and outside the enterprise, they encourage an approach to application development that is evolutionary, building on investments previously made within an IT organization, and developing new capabili- ties incrementally (Khalaf, 2002; Rust & Kannan, 2003). Because of this potential to enable a new para- digm for enterprise application development and deployment, companies have recently begun to explore the use of WS technologies within their e-business context (Hagel, 2002). The integration of WS into e-business provides several business EHQH¿WV WKDW LQFOXGH ORZHULQJ FRVWV LPSURY- LQJ DSSOLFDWLRQ VKDULQJ LQFUHDVLQJ ÀH[LELOLW\ streamlining business processes, and opportunity to create innovative business models among oth- ers. However, there are a few obstacles that need to be overcome before widespread adoption of WS into e-business is realized (Tilley, Gerdes, Hamilton, Huang, Miller, Smith, & Wong, 2004). They include security, availability, reliability, and performance of WS-based e-business systems. WS-based e-business systems are currently in the early phase of adoption, primarily within large organizations that have well-established IT infrastructures and technically savvy staff 221 Challenges for Deploying Web Services-Based E-Business Systems in SMEs (Chen, Chen, & Shao, 2003). Most of these or- ganizations are experimenting with WS for ap- plication integration and developing innovative implementations within their e-business context. The deployment of WS is currently focused in two areas: (1) enterprise application integration, for integrating disparate components, mainly legacy applications, of an enterprise wide system; and (2) business partner integration and secure exchange of data with dedicated partners without using a proprietary approach (Manes, 2003). Despite the advantages of WS and their in- creasingly vital role in integration initiatives, ¿UVW ZLWKLQ DQ RUJDQL]DWLRQ DQG WKHQ EHWZHHQ enterprises, several challenges exist with devel- oping and using them (Tilley et al., 2004). A thorough and systematic investigation of these challenges is needed to help improve the rate of deployment of WS across organizations. :6FRPSXWLQJSRVHVVLJQL¿FDQWFKDOOHQJHVDV developers determine how to leverage emerging technologies to automate individual applications based on cross-organizational, heterogeneous software components. WS standards permit ap- plication-to-application interoperability, but the coordination of a set of WS working toward a common end is currently an open issue (Orchard, 2002). The service providers need to learn how to develop WS interfaces that perform well, identify performance problems when they occur, and how WR¿[WKHP In order to develop e-business applications using leased components through WS, the chal- lenges from the perspective of the three stakehold- ers of WS, namely the service providers, service consumers, and the WS Standards Organizations, need to be understood. The service providers offer WS. These are organizations that procure the service implementations, supply their service descriptions, and provide related technical and business support. The service consumers are the end users of the services as well as application assemblers who assemble several WS to build an application for the organization. A service agreement, which is a contract between a service provider and a service consumer, is used regard- ing the attributes of a Web Service and its usage. The Standards Organizations are bodies that are involved in developing standards for both the providers and consumers. This study investigates the challenges that exist for each of the stakeholders, and presents a framework that organizes and interrelates these challenges in an easily understandable manner to help study the factors that impact the deployment and use of WS. The framework is used to analyze the challenges in small and medium-sized enter- prises (SMEs), as they play a vital role in generat- ing employment opportunity and turnover within many major economies globally. Particularly, as large companies downsize and outsource more functions, the importance and role of SMEs in the economy are increasing worldwide. SMEs AND E-BUSINESS 7KHUHLVQRXQLYHUVDOGH¿QLWLRQRI60(VHDFK country has its own. However in general, SMEs DUHGH¿QHGDVQRQVXEVLGLDU\LQGHSHQGHQW¿UPV which employ fewer than a stated number of em- ployees. This number varies across nations. The 8QLWHG6WDWHVGH¿QHV60(VDV¿UPVZLWKWKHVL]H of the employees fewer than 500, the European Union sets the limit to 250 employees, while some RWKHUFRXQWULHVDWHPSOR\HHV6PDOO¿UPVDUH generally those with fewer than 50 employees, while micro-enterprises have at most ten, or in VRPHFDVHV¿YHHPSOR\HHV)LQDQFLDODVVHWVDUH DOVRXVHGWRGH¿QH60(V7KH8QLWHG6WDWHVLQ LWV GH¿QLWLRQ DOVR DVVXPHV WKDW WKH 60(V DUH independently owned and operated, and they are QRWGRPLQDQWLQWKHLU¿HOGRIRSHUDWLRQZLWKLQWKH overall marketplace. 222 Challenges for Deploying Web Services-Based E-Business Systems in SMEs Characteristics of SMEs There have been many studies in the literature WKDW KDYH DWWHPSWHG WR GH¿QH VHYHUDO XQLTXH characteristics of SMEs compared with large enterprises. Central to all of these studies is the realization that many of the processes and techniques that have been successfully applied in large enterprises do not necessarily provide similar outcomes when applied to SMEs. In other ZRUGV60(VDUHQRW³VPDOOODUJHHQWHUSULVHV´EXW are a separate and distinct group of organizations compared to large enterprises. Therefore, it is appropriate to know some of their characteristics reported in the literature. Some of these characteristics include lack of technical expertise as well as adequate human resources in SMEs to develop complex techno- logical solutions and to undertake technical en- hancements (Barry & Milner, 2002). Most SMEs avoid sophisticated software and applications and often suffer from inadequate organizational plan- ning (Tetteh & Burn, 2001). They tend to have a VPDOOPDQDJHPHQWWHDPDQGDUHVWURQJO\LQÀX- enced by the owner’s background and personal WUDLWV$XJHUDQG*DOODXJKHULGHQWL¿HGD variety of business characteristics that affect the adoption and use of IT in SMEs. These business characteristics include business size, business age, business sector, market focus, and level of IT expertise among others. IT Adoption in SMEs SMEs in the United States, Canada, Australia, and leading European economies are realizing significant financial benefits from adoption and implementation of Internet-based business solutions. These Internet-based solutions fall XQGHUWZREURDGFDWHJRULHVWKH¿UVWFDWHJRU\LV customer-focused such as customer development and e-marketing, whereas the second category is internally-focused such as accounting and supply chain management solutions. A recent study re- ported that 25 million SMEs in the United States generate 53% employment and 51% turnover and 18 million in the European Union generate 66% employment and 55% turnover. In spite of these impressive statistics, the state of adoption, and implementation of Internet-based business solutions in SMEs worldwide can be divided into four evolutionary categories rang- ing from limited use of information technology through to full integration of business automated SURFHVVHVDVVHHQLQWKHGLJLWL]HG¿UP.QRO Stroken, 2001; Mehrtens, Cragg, & Mills, 2001). These categories are (1) no adoption — there is no information and communication technologies usage or limited usage, (2) basic adoption — e-mail and static Web pages are implemented within the business, (3) intermediate adoption — e-business platforms are being used including B2C online payment systems, and (4) advanced adoption — e-business platforms are used including B2B processes/exchange. )DFWRUV,QÀXHQFLQJWKH$GRSWLRQ and Non-Adoption of E-Business in SMEs The advent of e-business in the 1990s offered considerable opportunities to SMEs to expand customer base, enter new product markets, and rationalize their businesses (EMPG, 2002). Many VPDOOHU ¿UPV KDYH VWDUWHG XVLQJ HEXVLQHVV WR customize products and services, manage sup- ply processes and inventories, and reduce the WLPHEHWZHHQRUGHUDQGGHOLYHU\7KHVLJQL¿FDQW EHQH¿WV DFKLHYHG E\ WKRVH 60(V WKDW DGRSWHG e-business include cost reduction, sales increase, and the ability to reach a global market. The literature reports several factors that in- ÀXHQFHWKHGHFLVLRQWRDGRSWDQGXVHHEXVLQHVV in SMEs (Fariselli, Oughton, Picory, & Sugden, 1999; Mirchandani & Motwani, 2001). They include the size of the business in terms of the number of employees; the age of the business; the business sector, for example, service, manufac- 223 Challenges for Deploying Web Services-Based E-Business Systems in SMEs turing, or retail; the market focus, for example, local, regional, national, or international; level of IT expertise available amongst staff; and the annual turnover of the business. $¿UP¶VSDVWH[SHULHQFHZLWKLQIRUPDWLRQWHFK- nologies in terms of exposure and organizational learning ultimately affects its future choices in adopting advanced information and communi- cation technologies. At the business sector or industry level the factors include the availability of external know-how (for example, technology suppliers), the degree of innovativeness of the industry, the requirements imposed by major customers and external markets, and overall levels of competition and technological sophistication in the industry. The greater the computer literacy and computing skill of the owner, the more likely WKH¿UPZLOODGRSWHEXVLQHVVWKURXJKDZDUHQHVV RILWVEHQH¿WVHVSHFLDOO\IRUWKHVWUDWHJLFPDQDJH- ment of the business. The literature also reports several factors that LQÀXHQFHWKHGHFLVLRQWRQRWDGRSWDQGQRWXVHH business in SMEs (Scupola, 2002). They include lack of awareness and knowledge of e-business; limited understanding of the complexity of elec- tronic operations; inadequate skills and high initial investment required to develop a viable e-business strategy; infrastructure access and costs; lack of suitable software standards; lack of easily acces- sible, independent and inexpensive advice and assistance in e-business development to SMEs; and concerns with security and privacy. State of E-Business Adoption in SMEs More and more SMEs are adopting e-business by implementing Web sites with portals while focusing on the quality of these Web sites and the choice of functionalities that they offer to users (Jeffcoate, Chappell, & Feindt, 2002). The 60(VDUHGH¿QLQJWKHVFRSHRIWKHLUHEXVLQHVV operations by identifying (1) the functionalities and services they will provide, (2) the clienteles they will target, and (3) the geographic scope of their operations. The technological solutions that the SMEs have adopted for e-business fall within a range of options to complement their traditional operations (Cote, Sabourin, & Vezina, 2004). These technological solution options are as follows: e-shop — information or information requests, sale and distribution of the business’s products and services; e-procurement — is a site on which vendors sell to big buyers; e-auction — is an electronic auction site; e-mall — sev- eral vendors operate on the same site; 3rd party marketplace — provides transactional support for vendors; and virtual communities — are designed to foster communication between the members of a given community. WEB SERVICES CHALLENGES FRAMEWORK Web services-based applications are being de- veloped to increasingly support sophisticated e- business processes. The application development trend can be categorized into three categories. Category 1: Enterprise Application Integration ²WKH¿UVWVWHSLVWRLQWHJUDWHLQWHUQDODSSOLFDWLRQV WS allow enterprises to expose legacy applica- tions to business applications in heterogeneous HQYLURQPHQWVZLWKRXWKDYLQJWRUHZULWHVLJQL¿FDQW amounts of code. Category 2: Interoperability with Key Business Partners — the next developmental step for most enterprises is to integrate one or two key partners outside the enterprise. Enter- prises use WS because they allow for interoper- ability between applications across the public Internet. Currently, due to the lack of broadly DGRSWHG VSHFL¿FDWLRQV HQWHUSULVHV PXVW DJUHH upon the technologies they will use to develop these interoperating WS applications. Category 3: Interoperability Across Multiple Enterprises — the subsequent developmental step for most enterprises is to extend their computing out to more business partners and customers. Currently, . like to thank Enrique Frias- Martinez, Yogesh Desphande, Michael Lang, and Sandra Bavarosso for their helpful and construc- tive comments and advice. REFERENCES Adam, S., Mulye, R., Deans, K.,. infrastructure access and costs; lack of suitable software standards; lack of easily acces- sible, independent and inexpensive advice and assistance in e-business development to SMEs; and concerns. stages model. This should lead to better un- derstanding of why and how SMEs evolve their Web sites and Internet strategies for supporting their Web and e-business strategies. In addition, it facilitates