BT - a web services provider?

Deals with Microsoft and now BEA suggest as much

BT Retail recently unveiled its plans for web services offerings, claiming that they will form a key part of BT's hosted services and managed application services strategy. Katy Ring asks whether other service providers should be rushing to add web services to their portfolios. BT Retail is seeking revenue growth of 6-8 per cent per year and, to achieve this, chief executive Pierre Danon plans revenues of £3bn within three years, with approximately two-thirds of this planned business coming from what BT terms 'ICT', or converged communications and IT services. This revenue is expected to be generated from CRM application services (as BT moves up the value chain from contact centres), the provision of storage area networks and optical networks, and - can we be hearing correctly? - from web services. What services is BT offering around web services?
From January 2003, BT will be offering three main services around web services: - the creation of a web services application component library (WSACL), which contains re-usable components from leading third-party software vendors, existing BT products, or services that have been developed as part of individual customer solutions. Each component will go through an accreditation process to ensure that it meets a defined set of standards for quality, interoperability, scalability and support and can operate under service level agreements for delivery via the WSDE or WSML services. - a managed, hosted web services deployment environment (WSDE) to assist companies to pilot and roll out web services in a controlled external environment. BT will work with customers and third-party solution providers to set the parameters of the pilot, undertake the technical design, and manage the application, hardware and helpdesk. WSDE will support both .Net and J2EE-based technologies. - hosted web services deployment infrastructure - a 'web services network' called the web services management layer (WSML), based on technology from Flamenco Networks, to enable clients deploying web services in the B2B space to be assured of a business class management environment that is secure, reliable and controlled. How do these web services offerings fit with BT's growth plans?
Web services are a technology that will make the delivery of hosted services easier because, once adopted, they make it easier to integrate different IT systems, whether those systems are internal, external, new or legacy. However, the business community is not feeling particularly responsive to the next IT revolution at present. The standards upon which web services are based are not yet stable, and it will take years for them to become standard within software products. Meanwhile BT Ignite has some serious revenue growth to achieve within three years. There are currently two main sources of revenues for BT Ignite: hosting, which accounted for £150m last year, and managed applications, which accounted for £300m. From this base, Sally Davis, president of managed applications and hosting, needs to grow her business to a £1.9bn revenue contribution by 2005. The web services offerings could deliver some earnings for hosting from the deployment environment (WSDE) and from the B2B managed service environment (WSML). Nevertheless Flamenco Networks and Grand Central in the US, which pioneered the 'web services network' business models, both have customers in single figures, which suggests the market for such a service is in embryonic form. Meanwhile, the library of application components might contribute to managed application revenues, especially those components owned by BT. However, in truth, the revenues from any one of these offerings is likely to be negligible over the next three years. So why is BT promoting web services?
There are several reasons why BT is aligning its brand with web services. One of these is that Microsoft is doing a superb charm offensive with the European carrier community to get them aligned behind .Net. That Microsoft is being successful here is no mean feat. The carrier's chosen development environment has been Unix since the late 1980s and Java since the late 1990s, yet BT named Microsoft as its first strategic web services partner, ahead of BEA this week. With the promotional zest of Microsoft (the largest software vendor behind web services) and the high-profile Java proponents such as BEA, IBM and Sun, web services are moving up the priority lists of corporate IT. For BT to align its brand with web services may therefore help it get both existing and new clients through the door to consider its hosted services, whether they go on to buy web services offerings from BT or not. Like all carriers operating in the xSP market, BT also wants to attract IT service companies to partner with it in order to raise its profile with business executives as an added-value service provider. BT is gambling that its hosted deployment environment (WSDE) may enable it to attract closer working relationships with IT service companies. In other words, BT is using web services as a loss leader, hoping to bring in the real money to be made from managed applications and web hosting by baiting the market with a web services lure. This research is taken from the hostedservices@ovum Advisory Service.
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