It's called e-services, after a new Hewlett-Packard Co. (NYSE:HWP) strategy. But observers say HP will have plenty of company in this arena, which some said will replace e-commerce as the next big driver of the Internet economy.
"This e-services wave is where we would like the world to go," said Patty Seybold, president of Patricia Seybold Group, a Boston-based consultancy.
While the e-services business in many ways extends the business-to-business market, Seybold called the e-services concept "a huge mind-shift" for companies. At the same time, she said IT departments used to thinking about distributed computing would find the concept familiar -- thanks to Java and object-oriented software efforts such as CORBA or Microsoft Corp.'s (Nasdaq:MSFT) COM.
"The idea is you have distributed components that you can call from across the Net. Both applications and data stay where they are and you make requests of them, and they give you the information you need," she said.
A new model
The basic e-services concept calls for companies to use the Web to create both new revenue streams and business efficiencies. But rather than having to work through lengthy partnership negotiations, companies will do things dynamically to enhance their Web sites.
"It's a different model than just aggregating links," said Todd Holcomb, vice president of marketing at Sapient Inc. As an example, he cited what Springstreet.com is doing with its site, which helps people find apartments online. The site also lets customers reserve rental trucks, get information on moving their pets and provides other services that go beyond just listing apartments.
While today it had to build its site through lengthy discussions and writing code, in an e-services world, Springstreet could serve as a mere interface between user and moving companies, pulling in quotes dynamically, with little or no human intervention, Holcomb said.
"So it's saying, 'We as a company don't actually have to own all these individual pieces and build them ourselves, but make this link more effective than what we could do in brick/mortar world,'" Holcomb said.
HP officials call it the Internet, chapter two. Their vision includes "apps on tap," which involves paying subscription fees rather than licenses for software applications; next-generation portals; and e-speak, a dynamic object brokering technology that embodies some of the same concepts as intelligent agents.
"There isn't any question with e-services that this is the way [the market] is going," said Ann Livermore, president of HP's $15 billion Enterprise Computing Group. Livermore thinks that within three years, between 20 and 50 percent of her unit's revenue will be generated by e-services.
HP cited a Forrester Research Inc. study saying that by 2001, e-services will be a $10 billion market.
A new way of doing business
Analysts agree that the market potential is substantial.
"We're in the middle of a big rearchitecting of how applications work, where they work or where they live, and even how businesses interact with applications," said Jerry Michalski, principal at Sociate, a San Francisco technology consultancy. "This is different from taking the normal application and putting it on the Web."
At Answer Financial Inc., the new model offers an attractive way to make its business work better. The company runs a site that offers insurance policies, and is working to let someone handle every part of buying insurance on the site, right down to scheduling the mandatory blood test needed for life insurance.
"You can do it by writing custom code, or you can create a standard and say, 'OK, let's all pile on and move it through the pipe at a hell of a lot less cost,'" said Alan Snyder, president and CEO of Answer in Los Angeles. Snyder estimates that by dynamically adding features to the site, instead of building them from scratch, Answer can cut 30 to 40 percent from the cost of buying insurance.
Future trend
One aspect of the shift hearkens back to the world of building data centers, only now companies will offload anything that doesn't fit with their business skills. For instance, Microsoft and HP will partner to let companies buy subscription fees for Microsoft Exchange and Back Office.
"It's outsourcing IT is what it really is," said Jean Bozman, an analyst at International Data Corp. "We think this whole thing is happening in general. People are saying, OK, there's a need to create all this infrastructure very quickly, let's let someone else do it and we'll pay them a fee."
Analysts say whatever the name, corporations will be hearing about it.
"The future is here," said Nina Lytton, president of Open Systems Advisors, a Boston consultancy.
PC Week's Carmen Nobel contributed to this story
