Small Vendors Cautious In Web-Services Spending

Companies that make a living on application integration technology are walking a tightrope with Web services. While the much-hyped, emerging standards for connecting business applications over the Web have attracted a lot of developer attention, they haven't drawn much revenue.

Many developers are testing Web services with open-source or free tools supplied by vendors. Forrester Research Inc. predicts traditional application integration technologies will prevail until 2004, because Web-services standards for security, auditing, and transactions won't stabilize until then. By 2006, Forrester says, business executives will become confident enough to start applying the technologies in more complex, transactional business processes.

In the meantime, integration vendors are balancing investment in Web services with available revenue stream. "You want to really be on the cusp," says Kim Trudel, VP of enterprise Web services at webMethods Inc. "You don't want to be in a position where you're investing a lot and there's no payback. At the same time, you don't want to be behind."

WebMethods and rival SeeBeyond Technology Corp. are the latest integration vendors preparing to release Web-services strategies. SeeBeyond is holding an event in New York Friday to discuss Web services as part of its new integration strategy called the "Real-Time Information Network," which amounts to the company explaining its focus on providing tools for moving data through a manufacturers' supply chain and through customer-relationship management systems. WebMethods Tuesday will use a Forrester Research technology forum to outline how its current tools enable developers to leverage Web-services technology in connecting existing applications and in managing those connections.

Both companies decline to give details when discussing upcoming product releases centered on Web services. Kate Mitchell, senior VP of marketing and business development at SeeBeyond, says the company will make a major product announcement in the spring, showing Web services as "critical components." Trudel says there won't be any major product upgrades involving Web services for the next couple of quarters. "We're pretty comfortable with where our product offering is today," she says.

While smaller vendors are being cautious in their investment, large vendors such as Microsoft have been able to spend more and take a technology lead, says Aberdeen Group analyst Darcy Fowkes. Microsoft has made Web services the core of its .Net strategy for the future of Web application development. "Microsoft is betting the bank on Web services," Fowkes says. "They're investing more in terms of developer resources." Nevertheless, most of the smaller vendors are supporting the foundation technologies in Web services--Simple Object Access Protocol and Web Services Description Language--and can afford to move more slowly because customers aren't ready to buy. Says Fowkes, "There's not a lot of pressure from their customers."