Vendors preach the gospel of utility computing

IBM has claimed that resellers will benefit as it goes head to head with Microsoft in the web services arena. Sara Yirrell looks behind the hype.

The battle for web services supremacy among vendors is heating up, with IBM setting in motion the first phase of its utility computing plan.

If web services advocates such as IBM, Microsoft and BEA are to be believed, resellers are set to benefit from this latest technology trend which, although still in its infancy, is aimed largely at the small and medium-sized enterprise (SME) sector.

"We cannot achieve our vision without partners. Independent software vendors and system integrators play a critical role and will continue to do so," said Michael Riegel, manager of the global marketing management team at IBM.

Big Blue, which recently pledged $10bn (£6.3bn) to its per-use computing strategy, launched its utility computing model for SMEs last week.

The company said it will provide accounting, human resources (HR) and customer relationship management applications over the web on a per-use basis.

Customers will receive a monthly or quarterly bill from IBM, but the systems are managed by IBM's channel partners.

The launch follows the recent introduction of the smaller-footprint version of IBM's dedicated web services platform, WebSphere Express, also aimed at the SME market.

With this launch, IBM is going head to head with Microsoft's .Net strategy. "Because we live in an on-demand world, this [utility computing] model is absolutely critical," said Riegel.

"If we can run HR, accounting and back-office functions together with our partners, it enables customers to focus on their core business.

"Of all the potential customers we talked to, the mid-market customers were the ones that were most excited about utility computing."

He added that utility computing provides a strong value proposition for channel partners because it allows for fast implementation and low price points for customers. Resellers also receive a guaranteed revenue stream from IBM.

But Kevin Drew, managing director of IBM reseller Triangle, is sceptical about the benefits IBM's vision will bring to the channel.

"Anything that lowers the cost of computing for the customer has to be the way forward. Low price and simplicity are what the world wants. That way all businesses can focus on what they do best, and therefore generate and retain more profit to invest," he said.

"However, just like with the application service provider model, I see a problem. Many businesses have three core systems and hundreds or thousands of ancillary systems such as email, spreadsheet and printing.

"Solving the per-user cost at the core only addresses part of the problem, as they still have to maintain their ancillary systems."

Drew added that, although IBM has announced its per-use model, there has been no clear statement of how resellers will play a part in selling and servicing this style of computing.

Microsoft is equally bullish about web services, and used its Tech-Ed conference in Barcelona earlier this year as a platform for preaching its mantra, which is selling web services through its .Net strategy.

At the time, Jean-Philippe Courtois, EMEA president at Microsoft, said: "We are doing a lot of work with the channel around [XML web services] technology and now is the time to investigate web services and the benefits the technology set can bring to business."

However, research from analyst IDC contradicts some of the vendor hype, suggesting that vendors still have a lot to do to convince businesses of the benefits of web services.

Following a survey of 750 businesses, the firm's report, Web Services Awareness and Adoption Study, concluded that the prospect of moving to a more flexible, interoperable systems environment is appealing to businesses.

But IDC claimed that the web services phenomenon has been "hyped prematurely" and that standards are still evolving.

The firm also said that the benefits of investing in an "immature technology" are not clear enough to justify the investment in the current climate.

One firm that has been heavily involved in web services for the past five years is Scala Business Solutions, which specialises in collaborative enterprise resource planning software.

David Topping, senior vice president of marketing at Scala, believes that web services will work, but that most applications will have to be rewritten.

"The problem is not so much in the technology behind web services, but the business environment it faces," he said, pointing out that most computing environments still consist primarily of legacy systems.

For utility computing or a true web services-based business to work, those legacy systems have to be able to do more than just operate web services; they have to be rewritten to turn them into web services environments.

"The overall vision of utility computing and web services is valuable and at least has the capability of changing how IT works. But IBM's and Microsoft's vision is not going to succeed just because they say so," explained Topping.

"It will succeed or fail depending on whether the individual pressure on businesses, chief information officers and vendors persuades the whole industry to rewrite software to be web-services compliant."

Clive Longbottom, services director at Quocirca, added: "The web services market will be big enough for many players.

"The losers will be those that try to keep monolithic applications or suites going, those that try to create super-standards, and system integrators that choose to approach the market as a continuing big project market."

SUMMARY

• Major vendors are battling for supremacy in the web services arena.
• IBM launched its utility computing model for SMEs just weeks after confirming the launch of its web services platform WebSphere Express.
• Some resellers are confused about the role they will play in web services.
• Businesses are interested in web services, but the technology is still seen as immature.
• Many vendors will have to rewrite their software applications for web services to work.