Networking in a choppy channel
In future the networking channel will have to deal with outsourcing, web services and sheer complexity, writes Maxwell Cooter.
The enterprise network will look very different in a few years' time, as will its relationship with the channel.
This is largely because the systems installed in the enterprise are taking complexity to a new level as the trend for more functions to become computerised continues.
And these functions are becoming increasingly important to an organisation's well-being and efficiency.
However, it is certainly not the case that more computerisation will lead to better systems. The business world is littered with examples of installations, computer projects and managed networks that have gone wrong for a variety of reasons.
Sometimes the problems are technical, as when a product does not work as it should, but more often the difficulties are human. Either a contract has been badly negotiated or office politics have hampered the implementation.
One way that companies will in future try to avoid such problems will be to outsource their networking requirements.
But, according to Nigel Roxburgh, founding director of the Network Outsourcing Association (NOA), it is too simplistic to talk about 'outsourcing networks' as the phrase covers a range of installations.
"It is no longer a question of talking about networks," he explained. "We see business processes being outsourced these days."
Roxburgh insisted that outsourcing customers should be doing more to negotiate service-level agreements (SLAs).
"When the NOA did a survey a couple of years ago, we found that only 30 per cent of users with outsourced networks had an SLA and, of those, most covered availability only," he said.
"We estimated that only one per cent of organisations had a comprehensive end-to-end SLA that covered everything from the wireless area network down to desktop response time."
Changing philosophy
Mike Marks, director of service provider product marketing at network management specialist Concord, agreed that more could be done with SLAs but pointed out that the philosophy behind them is changing.
Concord supplies software that manages networks and ensures that outsourcers provide the expected levels of service, but Marks believes that it goes further. "We need to look at future problems, such as what can be avoided? We try to be proactive rather than reactive," he said.
He suggested that is it particularly important for end users and providers to work together. "What is important is to build up trust," he explained.
Both Roxburgh and Marks see the rise in outsourcing coinciding with a decline in expertise. "It is very hard to find, maintain and keep expertise in managing systems," said Marks. "That is why outsourcing has become so attractive."
Roxburgh said that organisations risk employing experts with little to do if they don't outsource.
Corporate networks do not change too much in the course of a year, and it could prove expensive to keep a network designer in place for years while waiting for a network to be upgraded.
It is not just about managing hardware or looking after a network. A few years ago, there was much talk about the application service provider (ASP) business model for delivering software but, despite massive hype and some over-optimistic figures from analysts, it didn't happen.
This is because the services, as they were offered, were too expensive for SMEs and suffered as a result of internal politics in the larger corporates, according to Roxburgh.
Marks believes that the 'pay as you go' ASP model was unattractive to providers because it encouraged customer churn.
He claimed that software should not be delivered in this way, because it is important for the user to establish a dialogue with the software provider. After all, it is only through communication that both sides can understand what they want.
Too much hype
A few years down the line, we are seeing history repeat itself as web services receive the same level of hype that the ASP concept once enjoyed.
The web services model, which essentially means the automation of an entire suite of commercial transactions through the internet, is a sort of upmarket version of ASP, and the industry cynics are already saying that it is going to fail again.
Marks suggested that the key will be to manage the delivery of the services. "Web services will only work if their performance is monitored. Companies are going to have to observe how long it takes the software to be downloaded, and they will need to watch out for bottlenecks," he warned.
But there are some optimists who see the development of web services as the future. This time it is going to be different, explained Greg Finnigan, European head of software marketing at Ideal.
"ASP didn't happen because it was too early," he said. "It is different with web services: they are already being deployed."
Ideal has recently introduced a service for its resellers that will enable them to buy Microsoft licences over direct .Net links. This allows the company's Microsoft partners to accelerate software licensing, cutting authorisation and confirmation times from days to minutes.
Finnigan claimed that the results can be dramatic. "For example, we can deliver a licence from a reseller's request to completing the process in 85 minutes," he said. "Software licensing is a utility service; it should be delivered like electricity."
There are benefits all the way down the channel, according to Finnigan. Resellers benefit from faster turnaround times, users benefit from easier licensing arrangements which cut down the risk of a visit from the software police, and distributors benefit because staff are taken away from boring administrative processes.
"We have cut our licensing team at Ideal from nine to two," explained Finnigan. "That means those spare people can be better employed elsewhere, on more customer-facing parts of the business."
Better services
It is clear that the channel is not taking the onset of web services purely as a way to cut costs. There is going to be much more emphasis on improving customer services, according to Peter Cook, alliances director at BEA Systems UK.
"If you can pull staff away from areas where they are not really needed, and put them into areas such as customer care or quality control, you are going to build much better relationships with your customers," he said.
Neil Sholay, UK marketing manager at Ideal, added that relationships are an important component of what web services can bring to the channel.
"In the past, most channel relationships have been hierarchical," he said. "Web services have given us the ability to create a community. So we can have partner A talking to partner B and also talking to partner C. We will see partners being able to work together, creating a strong synergy."
But there is scepticism about whether the channel will want to work that way. Not only does there have to be a change in business culture, there will have to be more agreement on other issues.
David Straus, senior vice president for product marketing at Chordiant, said: "Historically, channel players do not invest a lot in their applications, and they are pretty tentative to invest IT spend in connecting to their upstream partners unless it is a real win for them.
"So, when 10 upstream partners are all asking you to connect, it had better be to one interface, not 10.
"If web services can deliver both standard structure and standard-based definitions, such as reporting point-of-sale information so that the channel can connect to all upstream partners, it might just work."
The interface question
But the crucial question is whether web services can operate with a standard interface. Some critics claim that there is still a long way to go before the industry can talk in these terms.
Alan Lawson, an analyst at Butler Group, suggested that web services have not yet taken off because there is still some way to go before they will be developed sufficiently to be used.
"I estimate that they won't really exist for five to 10 years. It is true that vendors are heavily promoting web services, but there is a long way to go," he said.
In fact, Lawson believes that companies looking to jump on the web services bandwagon have caused a great deal of damage. "Everyone has a web services strategy, even if they don't have any products yet," he pointed out.
Lawson sees the provision of software like a utility having serious consequences for vendors. "Once they are adopted, web services will undermine the entire licensing structure," he explained.
His view seems to tally with those of Ideal and BEA, which see web services as available here and now.
"A lot of work has been done in the three areas that still needed work: interoperability, standards and security," said Sholay. He pointed out that the vendors are working hard to ensure a degree of interoperability. "We have been working hard with Microsoft on this," he added.
But Straus thinks that the channel has to go much further. "Lots of folks are trying to solve the basic technology issues, things like security," he said. "A much bigger problem will be the meaning of communication between applications."
Straus claimed that one of the biggest problems facing the industry is how to take data from one application and move it through another.
"That means data transformation happening between one system and another," he explained. "A good example is part-number matching and conversion, when an order flows from one system to another."
He added that this is already a huge cost in integration projects, before the complexity of introducing web services.
Easy does it
Sholay stressed that companies looking to integrate web services should start simple. "I think it is a common mistake to start with complex projects," he said.
"I saw a project recently by a retail organisation that had gone horribly wrong. Its mistake was to work on a supply-chain project that was far too complex.
"The best way to approach a web services trial is to start with something simple and not too business-critical."
Cook claimed that BEA takes a pragmatic approach to incorporating web services into business software.
"Lots of people have looked at web services and think that it means Microsoft, but web services are not going to work unless we all work together," he said.
But it is not just the providers that have to work together. The channel has to start becoming more responsive to users' needs, and stop thinking of the customer as just another deal to clinch.
Roxburgh maintained that the industry is very keen to talk about partnerships, but very few companies actually want to behave like partners.
"I've been in negotiations with companies where everything has been proceeding well, then the supplier suddenly goes into deal mode and tries to increase the price," he explained.
"I don't understand why they do it. Certainly if a deal goes through on that basis they might have a short-term win but, over the length of the contract, they will be the long-term losers because they will have to deal with bitterness from the customer."
Channel opportunities
One area where the channel might find it still has work to do is in selling new licences for Microsoft products. The company has its own problems persuading users to adopt its new licensing arrangements for its software.
The Licensing 6.0 programme was delayed for several months while the company fought to persuade users of its worth. A survey found that 38 per cent of corporate Microsoft users would seek alternatives to its products, such was the dissatisfaction with the arrangements.
And this does not just apply to web services. Linux is making inroads into the enterprise server market and Sun Microsystems has even launched a desktop Linux product that it hopes will capture 10 per cent of the desktop market in three years.
Lawson claimed that the channel will have to start changing its approach, and predicted a social change in business relations.
"The channel has got to evolve and develop a more 'human' face," he explained. "When it comes to web services, the channel makes much about how it will supply the software over a secure network. But security is not enough; what is more important is trust."
To do that, Lawson insisted that the channel has to build a relationship based on genuine trust. We are not there quite yet. "After all," he pointed out, "until a few months ago, one of the most trusted companies in the US was Enron."
CONTACTS
Ideal (020) 8286 5000
www.ideal.co.uk
BEA Systems (01494) 559 500
www.bea.com
Concord (01784) 898 298
www.concord.co.uk
Chordiant (020) 8380 0600
www.chordiant.com