Sometime in the mid-1990s, a group called the Bandwidth Conservation Society made its appearance. It tried to reduce Internet traffic in a few ways-getting Web site designers and developers to create smaller pages, convincing people to do large-file transfers late at night, and so on. I argued in an Internet World editorial that we should encourage the opposite-that we should use as much bandwidth as possible to encourage the development of faster backbones and better connections. Create the necessity to spur the invention.
That's what happened. T-1 backbones gave way to T-3 and DS3, then OC3, OC12, and other high-bandwidth connections. Cable and DSL access for the masses became commonplace. Streaming audio and video became possible for people at home. The lack of conservation gave us Internet access that is, for all intents and purposes, too cheap to meter. (Perhaps there's a lesson here about energy policy. Instead of conserving energy, by using more we may force the development of new and better resources.
And now the next step-made possible by a lack of bandwidth conservation-is Web services. Instead of exchanging data, we will soon be able to share applications. As standards such as SOAP are hammered out and services like Microsoft's .Net and Sun's ONE gain popularity, companies will offer applications-or even pieces of applications-as objects, much the way ASPs offer services, but on a more granular scale.
Make no mistake: The advent of Web services is a major milestone in the history of the Internet and computing in general. Over the next few years, it will cause drastic, changes in the software business. It will make large segments of the insurance technology market into commodities-and if you think that's a nasty word for carriers, wait till you see how vicious the software market becomes when insurers can buy line-of-business applications on contract or subscription...and switch vendors almost at the drop of a hat.
We'll see larger tech companies scrambling to understand the new market, and upstarts snatching business away one application at a time. You'll read stories about reorganizations, spinoffs, new business units, and partnerships. New companies will emerge to fill small niches in the market, and they'll compete with-and in many cases beat-the big names. Perhaps carriers will be able to rent applications not annually or monthly, but on a daily, hourly, or even processor-time basis.
That means potentially good times ahead for insurance companies' IT departments. Although you'll be forced to make significant, difficult changes to your software infrastructure, the long-term benefits and savings will be outstanding. For software providers, the future is cloudy. Nimble companies with high-quality, standards-based products will prosper, while other vendors will struggle to take advantage of the dramatic turn of events. By this time next year, the landscape will have changed dramatically. Wait and see.
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