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This paper provides a balanced perspective of the business value and technical challenges of adopting Web services. Technology adoption is a continual challenge for both tool developers and enterprise users. Web services are a prime example of an emerging technology that is fraught with adoption issues. Part of the problem is separating marketing hype from business reality. Web services are network‐accessible interfaces to application functionality. They are built using Internet technologies such as XML and standard protocols such as SOAP. The adoption issues related to Web services are complex and multifaceted. For example, determining whether this technology is a fundamental advance, rather than something old under a new name, requires technical depth, business acumen, and considerable historical knowledge of past developments. A sample problem from the health care industry is used to …