Technology executives and analysts agree that Web services, a much-hyped new way to build software, can enhance software applications by using the Internet for exchanging data. This allows, for instance, for more flexible systems and better communications with mobile devices.
The problem? "IT people are...confused. There are multiple standards, and the authority is being left to the vendors, who no one trusts," said SoundView Technology Group analyst Kris Tuttle.
The result: Buyers are waiting for additional standards and better compatibility before they commit to large-scale projects.
The Web services concept has been embraced by nearly every software vendor. Camps have formed around two largely incompatible architectures: Microsoft's .Net plan and Sun Microsystems' Java technology, supported by IBM, BEA Systems and other companies. Instead of picking one over the other, most companies are supporting both, said analysts, meaning that compatibility issues will need to be ironed out eventually.
Existing standards, such as Extensible Markup Language (XML) and the Simple Object Access Protocol (SOAP), make up the initial building blocks for Web services that work within companies, and for rudimentary cross-company services. But before more complicated--and useful--Web services that span multiple companies and processes can be developed, additional standards need to be worked out.
As a result, distant promises are still outrunning reality.
"A lot of customers are interested in Web services, but the truth about Web services is much less sexy," said John Radko, chief architect for GE Global eXchange Services, a business-to-business exchange and a General Electric subsidiary. "It's the glue that allows you to integrate applications easily."
Much of the infrastructure to guarantee security, reliability and consistency of Web services doesn't yet exist. Other roadblocks to widespread acceptance include a lack of security standards and products, poor understanding of the benefits among top executives, and a lack of internal development skills, according to a survey conducted by Forrester Research.
Add it all up, and it's clear that companies are not doing much more than dabbling in Web services.
"There's a lot more interest than cold, hard cash coming in," said Bernhard Borges, head of's Advanced Technology Group.
Mike Gilpin, an analyst at Giga Information Group, said the weak economy has curbed any big-ticket IT projects, including those focused on Web services. A recent survey by Gartner and Goldman Sachs predicts anemic IT spending for the remainder of 2002 with fourth-quarter growth of 1.5 percent.
Gilpin predicts spending on Web services will grow gradually, representing roughly 5 percent of software integration spending in 2003 before accelerating.
Likewise, a Forrester Research survey found that 84 percent of 70 top IT executives polled said their spending on Web services-related software and services will increase in 2003.
Still, Tuttle said he expects corporations to hold off spending big bucks on Web services. Why spend the money before you know how the standards will shake out? He said software infrastructure spending is likely to face "more paralysis and delay" as customers hold out to see how Web services develop.
"I don't expect any clarity anytime soon," said Tuttle.
Standards: Slowly but surely
Some of the key Web services standards have been defined, and others are being debated within standards organizations such as the World Wide Web Consortium and the Internet Engineering Task Force.
Technology buyers see a need for additional standards, but they have been patient. Bob Gerardi, manager for Xerox's office services operations, said the software industry has taken a "smart approach" to standards.
"They are solidifying the right building blocks for security and laying the groundwork," said Gerardi. "There are so many players vying for standards, but the major ones--IBM, Sun and Microsoft--are doing a good job."
Forrester analyst Ted Schadler said vendors are grudgingly moving toward shared standards for data exchange. "The entire software industry has finally decided that it can make more money by letting firms and consumers share information. It's what any maturing industry is forced to do: make sure their product works with everybody else's product."
Nevertheless, there are still spats among vendors, and long-standing grudges have not eased. Microsoft, along with IBM, co-founded the WS-I), which aims to promote Web services by ensuring that software from technology makers is compatible. More than 100 companies have joined, but Sun Microsystems has declined an invitation to join as a contributing member, campaigning instead for more influential "founding board member" status so it can help set the group's agenda.(
During the Microsoft antitrust trial, evidencein written testimony that Chairman Bill Gates and other Microsoft executives attempted to steer the direction of the WS-I away from Sun.
And vendors have beenin their criticism of standards bodies as moving too slowly to approve new guidelines.
Meanwhile, software makers are forging ahead with products, sometimes before standards are fully baked. Recently, Microsoftit is building additional Web services security software in the hope of reassuring big companies now assessing the technology for future projects. IBM continues to its tools and application server software to form a more cohesive package for Web services development. And Sun executives said they're getting more serious about Web services.
Technology buyers, still digesting all of the software applications they bought in the late 1990s, are moving more slowly. While interested in Web services' more advanced concepts--such as delivering real-time order status information to customers, and automatically scheduling appointments and coordinating calendars--companies are starting out using it as a cheap and easy way to integrate applications.
For instance, GE Global eXchange, which serves 60 percent of the Fortune 500, is using the technology to swap and track documents involved with B2B sales.
Radko said his customers and partners are enthusiastic about Web services, but are just beginning to ponder how to use it. "Customers love to hear what we're doing but haven't programmed to it," he said.
"Web services projects have to focus on integration because it's easily defended," said Radko. "Big standalone efforts aren't going to happen, so Web services will tackle the little things now and a few years later the big dollars will be spent."
So when will Web services boost software vendors' bottom line? "That will take a couple years," said Schadler.
Although most were optimistic about the long-term prospects, it's unclear whether a slow-but-steady buildup will satisfy software vendors, which are hoping services will mean stronger growth figures.
Don Nanneman, vice president of marketing for business process management company Savvion, said there's a lot of interest from his customers, but it will take time for Web services to be everywhere.
"It's going to take a lot of work, pilots and trials," said Nanneman. "As the comfort level and experience level increases there'll be opportunities for it to proliferate."
Until that day, it's going to be baby steps for Web services rollouts--not to mention the revenue that'll come with them.
"We're going to see bigger projects, but I'm not sure how it's going to pan out with infrastructure spending," said Radko. "We're mining the software we have--there's a lot of capability there."