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Technical Trends: xSPs must make strategic choice

by Frederic Morrison

With Web services emerging as the new strategic buzzword in the e-business environment, FREDERIC MORRISON looks at the strategic dilemma facing service providers.

Current market trends indicate that service providers of all types in the Internet industry, generically classified as xSPs, are struggling to grow their businesses and achieve profitability amidst the industry churn and economic slump.

Given this situation, they may be tempted to put these rather complex, strategic issues aside to focus on near-term business. xSPs that are in it for the long haul, however, will need to address both the tactical concerns necessary for day-to-day survival as well as the strategic ones that will give them the headroom to have a sustainable future.

Among the most strategic choices xSPs must make are decisions about which hosting infrastructure to build upon and how to best position themselves to exploit future opportunities tied to Web-services.

To attract and retain customers, xSPs must guarantee high levels of service availability, performance and security. If they fail to meet any of these obligations, they can suffer significant financial penalties or, even worse, lose their customers to rival providers.

Beyond the obvious requirement of fault tolerant hardware servers, reliable operating systems and redundant network components, the middleware upon which hosted solutions are developed and deployed is the most critical building block in the infrastructure.

If an xSP’s middleware is not reliable, scalable and high performing, service quality can suffer and profit models can collapse.

Lately, customers have come to prefer the pre-integrated suite model as opposed to the more traditional best-of-breed model. Several major software vendors have initiated efforts to make the one-stop-shop option more attractive. Some have acquired and integrated best-of-breed components to their middleware suites, while others have relied on massive in-house development efforts.

According to industry analysts, every major infrastructure vendor identified support of Web-services as a strategic priority during 2001.

Many proponents describe Web-services as discrete software components that run on top of the Internet as if this, along with the diverse systems it connects, constituted a huge distributed operating system.

The middleware that does the best job of adhering to the emerging Web-services standards and best executes and manages this new category of components is likely to gain great advantage for its vendor.

How can a xSP determine which vendor will best address its needs?

xSPs need to start by assessing the functionality and integration capabilities that different vendor offerings provide. Then they need to look at the bigger picture to decide which vendor will provide them with the technical, marketing, business and strategic support that they need, both near-term and in future.

Frederick Morrison is CEO of Vesta Technology Holdings. he can be contacted on mailto:frederick@vesta.co.za

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The Big Change is a business strategy blog and newsletter published by Arthur Goldstuck, managing director of World Wide Worx, a leading technology research organisation based in Johannesburg, South Africa.

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