A Slippery Slope with SOAP
By Ivy Schmerken, Wall Street & Technology Online
Aug 15, 2001 (12:10 PM)
Microsoft is preaching open standards to convince financial services firms that .NET (pronounced dot-net), it's new strategy for building Web-based services, is the next wave in Internet computing against the Sun ONE initiative. If you oversee technology in a financial services firm, you're probably hearing the buzz around Web Services--the next generation of Internet computing that revolves around the idea of delivering software as a service over any operating system, hardware platform or device using open protocols.
While Web Services is a generic architecture based on public standards defined through the World Wide Web consortium (WC3), and not specific to any one vendor, several vendors including Microsoft, Sun Microsystems and IBM are providing development platforms, tools and services that will help corporate IT developers build, manage and deploy Web Services.
"Web Services is an electronic linking between your customers systems and your systems. And it's going to be the biggest single piece of investment in banks to try to hook the customer into their systems," says Harpal Sandhu, CEO of Integral Development Corp., who's betting on the Java enterprise (J2EE) technology stack for building capital-markets oriented Web Services.
In capital markets, there is a marketing war being fought by Microsoft with its .NET framework and Sun Microsystems offering Sun Open Network Environment (Sun ONE). Many financial software developers, including SunGard, Global Trade Technologies and Financial Cad, are jumping on the .NET approach while brokerage firms and asset managers are testing it in their R&D labs or watching from the sidelines because the technologies are embryonic and not ready for production.
What's critical and consistent across all implementations of Web Services is that "the delivery edge" must interoperate with SOAP [Simple Object Access Protocol]--a higher-level protocol based on Xtensible Markup Language to allow applications to share data and communicate via standard Internet protocols, says Anne Manes, director of technology innovation at Sun Microsystems. The second is UDDI [Universal Description, Discovery, and Integration]--which functions as an index or big yellow pages on the Internet to help businesses find Web services all over the world.
"It's an opportunity to make technology agnostic," says Jan Jones, vice president of information technology at Dresdner Kleinwort Wasserstein (DrKW), commenting on a proof of concept project for foreign exchange trading he built with the Microsoft .NET framework in Microsoft's booth at the SIA Technology Management Show this past June. The application was comprised of four XML Web Services: FX rates Web, FX pricing, FX trading and FX positions which in turn are consumed by a .NET Web-based front-end. Three of the Web Services were built with .NET and one with Java. "Using SOAP and XML [to share data among applications], breaks down all barriers to the technology," says Jones, a former Java turned Microsoft programmer who runs a group of developers for the London-based investment bank and coordinates the .NET Joint Development Program (JDP) for the bank.Microsoft's Marketing Machine By pumping billions into promoting .NET and fundamentally changing its architecture and its operating systems, Microsoft is wooing its 5 million Microsoft developers over to .NET. Under the .NET development environment, Microsoft has created a language called C# which developers in the financial industry say is similar to Java. The Redmond, Wash. software giant has even created a JUMP to .NET program for Java developers who use Visual Java J++--Microsoft's modified version of Java. Microsoft has automated the tools that can convert J++ code over to C#.
"There's no doubt that Microsoft is putting a lot of effort to promoting .NET. With $30 billion in cash that Microsoft has, whether it can get it to fly or not, is only a matter of when," says Hagay Shefi, CEO and founder of GoldTier Technologies, whose software company is focusing on solutions for straight-through processing.
However, Shefi believes that .NET is likely to take off more on the retail side of Wall Street as well as the front-office trading arena and less in the classic STP which is more the middle and back office where enterprise Java dominates. Noting that Microsoft's Hailstorm--a notification service which flows into e-mail and contact management is built with .NET and will release with Windows XP--ties in with Passport, an identification and registration service that holds payment information, Shefi contends that ".NET is more likely to appeal to the retail and e-commerce sides of Wall Street or perhaps to the front-office trading side where information is needed."
Major financial institutions around the world use the Sun architecture of their mission critical architecture, contends Integral's Sandhu. "We haven't found a single institution that has told us they're going to adopt Microsoft's .NET infrastructure, says Sandhu whose Integral Financial Server, version 5.0, will create Java Web services on top of the BEA J2EE application server. IFS will handle the finance-oriented aspects such as modeling and executing transactions for foreign exchange, bonds, and derivatives, and infrastructure issues such as security, authorization and giving users permission to access, for instance, my Citibank's Web Service, he says. "What they're saying is, of course, we're going to build .NET stuff and you won't even know what's on the back-end server. But we're going to use what we think scales and what's mission critical which is Java Web services which is going to be running on Solaris or big Sun boxes."
Architectural Bet As brokerage and investment firms evaluate the competing architectures their strategic considerations will be flexibility, usability, development cost versus maintenance. Will there be more interoperability by choosing one? Will there be more opportunity to buy solutions rather than build them?
The promise of .NET is that financial service companies will be able to leverage existing code--even functionality developed in Java--because applications can be exposed through XML and SOAP interfaces or be consumed by Web Services developed under the .NET framework or any other vendor.
Prudential Securities utilizes Microsoft technologies for PruFN, it's consumer investment Web site, in addition to IBM's WebSphere, an application server based on Java and IBM MQ Series. "IBM is apparently embracing the same technology [SOAP], which is attractive to us," says Bella Loykhter, chief information officer at Prudential Securities who adds, "we're using WebSphere, Java and MQ Series--IBM's middleware program and DB2, IBM's relational database, and IBM is promising to make all of these available as services," she says. If Prudential decides to develop Web Services with the .NET framework once it's released for production environments, it would be looking for those to interact with WebSphere, DB2 and MQ Series. "Absolutely. If it can't then it doesn't do anything [for us]," she asserts. One primary concern for Wall Street firms is whether the .NET framework will lock them into developing on the Microsoft platform. ".NET does not tie anyone to any particular platform, your competition ends up around the standards," says Lehman. Referring to Microsoft's role in creating the standards--UDDI and SOAP--that Web Services is comprised of, Lehman says Microsoft has either initiated or led the evolution of each of those standards and therefore that means earlier and deeper adoption into the tools and into the service," he says. "The competition is less about our platforms versus their platform, but rather who has the best tools," says Lehman. Time to Market Why should financial services firms care about Web Services at all? "My biggest goal and biggest challenge is time to market. If the .NET technology turns out to be what it promises to be, I think it can really speed out the delivery of a variety of functions to our clients," says Loykhter, at Prudential Securities. The Newark, N.J.-based brokerage firm is participating in the early adopter program for .NET by developing R&D applications for its internal IT organization.
Another benefit is that .NET allows "you to leverage the skills in its development organization. You don't have to retrain your people," she says. Moreover, .NET supports multiple languages, notes Paul Adler, Prudential's chief architect. " You can use Visual Basic, you can use C#, the new language that Microsoft developed--"that is very close to Java," he notes. .NET languages currently announced include COBOL, Small Talk, Fortran, Perl, Python and Eifel. "The .NET Web Service is theoretically not tied into any one language [because] it all translates into their internal language--the Common Language Runtime [CLR]," says Adler. [The CLR is the engine within the .NET platform that consumes Web services, says Lehman.]
Third Parties Create Web Services In the risk management world, where regulations and market data requirements are onerous, Financial Cad, Toronto-based developer of derivatives software, has used the .NET development environment to create value-added services for corporate treasury customers to mark to market their derivatives. One of the first consuming organizations for FinancialCad.Net was Ernst & Young's audit practice. Currently, 600 field auditors are trained in using Fincad.net and they're doing spot checks on derivatives valuations and FAS 133 compliance throughout the United States, says David Glassco, CEO of Financial Cad. "The key benefit that FinCad provides to us, everyday, starting a year ago, is they build forward rate curves each business day. The other benefit to us they're storing that data on their systems. All we need is to access that through their .NET technology," says Rob Royall a partner in E&Y's professional practices group, responsible for FAS statement 133. Tools, Tools, ToolsTime to market and the quality of its tools may turn out to be Microsoft's competitive advantage. "This application from start to finish took 48 hours," claims DrKW's Jones at SIA who says the biggest advantage to developing under .NET is "developer productivity. We're finding the .NET framework is very rich and easy to build things quickly. Visual Studio.NET--the visual development environment is also very good," he adds. Similarly, Global Trade Technologies, which just completed a pilot with Microsoft's .NET early adopter program to bring online bond inventories into its trade, order and inventory management system, praised Microsoft's .NET tools.
"You've got the whole SOAP toolkit which allows you to take existing [Microsoft] Com+ components that you may have written over the last couple of years and rapidly build a SOAP interface on top of them," says GTT's CTO Eddie Gulley. "You've got the whole Visual .NET toolkit which allows you to build applications in C++, Visual Basic and Active Server Pages (ASP) on their Web server that are all integrated with XML right now." Certainly right now, "Microsoft has the broadest offering, the most tools to build SOAP and open interface technologies that I need right now in our development shop," says Gulley. GTT deployed a SOAP interface that would allow its platform to be consumed by three pieces of software: Broker Dealer Enterprise, its order management system; BizBond.Net--a Web Service for searching bond inventories being launched this month--and by other third-party vendors or broker/dealers with home grown order management systems that want to subscribe to the service. "The importance of the inventory piece is that it essentially exposes a catalogue over the Internet to look at that inventory from Merrill or anybody else who wants to publish on the platform," says Gulley.
Wall Street Says Wait and See Because .NET tools are still in beta version, and are not due to be released until the fall,Wall Street firms are monitoring the developments closely but are waiting to make any broad sweeping architectural bets. "As far as where we go at Oppenheimer, our position is more of observing and monitoring of what's going on. I don't think there are plans to use .NET strategy here in the near future," explains Mike Goldverg, vice president, investment systems corporate technology group at OppenheimerFunds. "But we certainly are looking at when the strategy and the technologies supporting the strategy becomes effective in the enterprise like ours," he adds. Currently, Oppenheimer has selected the J2EE philosophy and architecture as its foundation for enterprise Web Services that it's trying to build for portfolio managers, traders and analysts. These Web Services run on an internal intranet. "Again who knows what will happen two or three years down the road. So we're trying as much as possible to do the development [based on] standards so it will be easy for us to change direction or adopt new standards as they come [out]," says Goldverg. "That's why we embrace XML services and XML-based exchange which opens limitless avenues for us to go forward, either with SOAP or something else."
Large IT shops may dabble in both J2EE and .NET architectures, but those who are already developing on NT will seek to leverage their Microsoft developer skills. "I think firms will go with what they currently have. You're trying to deliver fast and cheap and the best thing to do is to leverage your investment in your data center and also to leverage the experience in your staff, says Prudential Securities' CIO Loykhter.
"In terms of price performance at the moment, .NET is the winner," comments an industry source working with .NET. "Look at the price of a Sun server compared with the price of an Intel server," he points out. With investment banks cutting their costs, price performance is an important factor, he argues.
Aside from the hardware costs and the religious wars between choosing Microsoft .NET or Sun ONE, do Wall Street's IT gurus believe that Web Services is the next wave in Internet computing?
"If everything that is being put on the table right now [with .NET] comes through, if it really will be open, if IBM embraces it, if it's going to be the industry standard, I would say it's going to be the next wave. If its going to be proprietary, we're going back to the same uncomfortable picking the vendor environment," says Loykhter. Part of the promise is the openness of it," she says. The key difference between Microsoft .NET and Sun ONE is that with .NET applications are built on a Windows platform-today Windows Server 2000. Microsoft supports multiple languages-including Visual Basic and C++ and C#, a new language. Sun ONE's strategy is based on using Java Enterprise Edition (J2EE) as the programming standard. In contrast to the Sun ONE implementation, which allows corporate IT departments to choose the implementation platform and toolkits from as many as 30 or 40 third parties like BEA, IBM WebSphere, SilverStream, etc. or Apache in the Open Source community, for instance. Microsoft's .NET framework can only be purchased from Microsoft. Right now the beta version of the .NET framework is only available to run on Windows 2000. It will be incorporated into the Windows XP environment when the consumer edition ships October 25th, but most corporations will wait for the professional edition due early next year. The full version of .NET won't be available until Whistler sometime in 2002. "Microsoft's approach says build with the .NET framework which doesn't exist yet, build with Visual Studio .NET which doesn't exist yet, build with C# which doesn't exist yet. And you will be able to create these wonderful powerful Web Services and you will be able to connect with anything in the world, but by the way, they will only run on Windows. You have to have a Windows operating system," says Anne Manes, director of technology innovation.
However, Microsoft refutes this point. "There's nothing about .NET Web Services that ties anybody to working [with] Microsoft," contends Jeremy Lehman, Microsoft's chief technology for financial markets. "The idea is to shift from [proprietary] APIs (application programming interfaces) and ways of hooking up applications that are just talking within the application to instead doing business processes and trading partners across the Web. In order for that to happen, Microsoft and everybody has to accept the fact that it is a heterogeneous world out here and it's really not about using .NET."
Lehman says that Microsoft has submitted the spec of the C# language to the European Manufacturers Association. "Contrast that with the competitor who retains control over Java," he says, referring to Sun. Microsoft's hope is that C# is evolved through the open community, he claims. Taking that a step further, the common language interface (CLI) which is a subset of the Common Language Runtime (CLR), which is the engine within the .NET platform that consumes Web Services, has been submitted to ECMA with the hopes of encouraging cross platform and open evolution of CLR. "Compare that to people who remain control over Java virtual machines," he says.