The turbulent modern business environments require firms to be more flexible and agile. This requires ability to quickly integrate and automate intra and inter-organizational business processes. An agile IT architecture is key to achieving success in this environment. Service oriented architecture and Web services provide means for achieving the business agility; however, significant impediments to wide scale adoption and use of these technologies remain. We will focus on significant challenges in the areas of service identification and design, cataloging and searching for appropriate services, domain specific standardization of service interfaces, matching service functionality with requirements, and service selection based on non functional characteristics. We describe an integrated framework based on standard modeling, design and code generation tools to support development of highly agile application systems. This framework is a result of multi year research effort aimed at developing methodologies and tools for defining business components and Web Services, develop schemes for describing components and services in business terms to allow efficient search of appropriate component/services and an environment for assembling application from reusable components and web services. Specific approaches used to address some of the challenges described above will be discussed.