The Best & The Worst: Web Services Scare

Another issue for solution providers is the growing popularity of Web services among technology vendors. Proponents of Web services, such as IBM and Microsoft, say delivering a software application's services over the Internet will make technology easier to use for customers. But as the lines between software and services blur, many solution providers fear they'll be taken out of the game completely.

Microsoft's .NET platform has emerged as the poster child for Web services. "Everything about .NET is about the move to software services," says Gene Cornfield, Microsoft's strategy and market development manager for Web services and hosted applications. However, the world's largest software maker admits there is apprehension from channel partners who are wondering how much business they'll see when software turns to services.

"We need to do a better job communicating to our partners," Cornfield says. "Our channel partners are cautiously excited about it because there hasn't been a clear value proposition that states how necessary systems integrators, consultants and VARs are to the successful realization of .NET."

Analysts agree. Summit Strategies vice president Dwight Davis reports that Microsoft is doing little to dispel charges from competitors that .NET is simply a way to extend Windows and related software over the Internet as a service. Sun made a splash in February with its Sun One Web services initiative, and again more recently when it entered the Web services fold via iPlanet, a joint venture with AOL Time Warner. Still, Sun has found itself in the same boat as Microsoft, IBM, Novell and other Web services backers. Analysts say there is a lot of hype, but little explanation, which is bewildering service partners.

Many VARs are wondering if the Web services push will increase technology vendors' own services business instead of their partners'. Microsoft says some of its partners have been concerned about the role of Microsoft Consulting Services in the .NET push, but the largest software company in the world says there is no cause for alarm.

"Our customers, especially enterprise-level, have been telling us for a long time they want more Microsoft skin in the game, [but] we often lead in an engagement and subcontract to an SI partner," Cornfield says. "Clearly, there are other vendors out there with longstanding professional services organizations that are well-known for competing with their partners, but that's never been--nor will it ever be--our intent."

Only time will tell if the lure of services revenue proves too tempting and prompts vendors to abandon such pledges. Certainly, they are under pressure to do so. IDC, for one, forecasts that the PC slump will continue until at least 2003. Furthermore, no one is sure when microchip sales will pick up again, or when IT spending will recover. Until then, choose your partners wisely.

Part 1: The Best & The Worst

Part 2: IT Disservices?

Part 3: No Other Choice

Part 4: Battle for the Midmarket