IT-Services Vendors Gear Up For Web Services

Most players in the IT-services market are gearing up to provide Web services as they attempt to stay competitive in a fast-growing revenue arena, research firm IDC said in a report released Thursday. Customers need to be able to differentiate the capabilities of the major players, said IDC, if they're to make the right choice in picking a partner.

"The most important thing for companies and end users to realize," said Sophie Mayo, IDC's director of Web-services implementation and the author of the report, "is that Web services are real, and they need information to help them make a decision about which provider to choose."

Although adoption of Web services is affected by the lagging economy and uncertainty about global events, IDC projects that Web-services spending will increase threefold this year over last year, to $1.2 billion.

In its Worldwide Web Services Competitive Analysis 2003 report, IDC profiles 14 IT service providers who are moving into the Web-services market. Ranging from Sun Microsystems and HP Services to IBM Global Services and Accenture, these companies' profiles include details on their offerings, pricing strategies, partnerships, projects, and their competitive position.

The report separates these service providers into three groups: the comprehensives, the technologists, and the contenders. Firms such as EDS and Accenture, which have made major investments in Web services, are bunched in the comprehensives.

Technologists include providers like HP and Sun, providers that IDC rates as having greater technical skill but that rely heavily on partners for their business and vertical-market expertise. Contenders are just that: smaller providers such as Wipro and SBI that focus on specific industries and offer a limited portfolio of services.

"Global or multinational companies, even if they're planning to implement a project nationally and then take it internationally, should look at those providers in the comprehensives category," Mayo said. These large providers are well versed in international business consulting and knowledgeable about a wide range of vertical markets, she said, making them prime picks.

However, the technologists may be just as good a selection for some companies. In fact, Mayo sees the providers in this category complementing rather than competing with the comprehensives. The two groups have very similar characteristics, with the primary difference that they focus on technology instead of concentrating on end-to-end solutions.

"And if there's an intersection between comprehensive and technologists, it's Hewlett-Packard," Mayo said. "HP has the largest track record in the number of projects, even though many of them are more technical and tactical."

Mayo's report also had several suggestions for companies implementing Web services internally that may lead them to bringing in an outside provider. According to IDC's numbers, nearly half of all enterprise Web-services projects are performed by in-house IT staffs.

"Corporations need to find a balance between one-time initiatives and coordinated Web-services initiatives," she said. There's a danger that in-house development, perhaps done simply because the project is doable by the IT department, will lead to less-than-stellar returns on investments. "Money is very scarce and the times are uncertain. Every dollar spent has to be justified," she said, whether it's spent in-house or on a provider. "There's an opportunity for services firm to bring some order and some better direction to internal Web-services efforts to turn them into money-making machines."