Guardian of the web seeks secure role in new services

Much has been promised by the proponents of web services. If these prove their worth, the world of business will be transformed. Much of the cost and drudgery will be taken out of corporate transactions and productivity will be given a big boost.

But fads and fashions come and go in the volatile IT industry and there are no guarantees that web services, in which computers communicate with each other and carry out tasks without human intervention, will not be among them. While many companies are enthusiastic, others remain sceptical.

Stratton Sclavos, chief executive of VeriSign, the California-based digital trust group, is certainly among the enthusiasts. In his view, web services have the potential to make the internet into a real platform for doing business efficiently.

"Web services is a very significant move by the technology industry," he says. "The value that web services deliver is real machine-to-machine interfaces, the ability to automate business processes, all of the wonderful things you hear about."

But wonderful though they may be, Mr Sclavos, 40, believes it will take time for the true benefits to show through. "What we worry about is that, just as with wireless or some of the other initiatives of the last few years, there will be too much hype and, therefore, too much expectation early on."

For web services to take off, the big IT companies making the running in this area will have to develop software platforms, tools and applications. That will take time. "It's going to be a very long road," says Mr Sclavos.

For VeriSign, founded in 1995 with four employees, he sees huge opportunities. If much of business is to be handled between machines, then trust will be of vital importance. "How do you know that the machine your system is communicating with is the machine that you think it is? How do you know that the answers coming back from that machine haven't been tampered with?"

VeriSign, which now employs some 3,500 people and last year more than doubled revenues to nearly $1bn, intends to be one of the companies providing the answers to these questions. With its specialisations in internet addressing, domain names, authentication, security and payments, it already acts as a guardian of the web. But when computers talk to each other across cyberspace, that role will become more complex.

"As we move to web services and create automation between businesses, trust becomes even more important. You really have no choice but to build trust infrastructure that ensures every piece of communication going across the network is verified, authenticated and kept private. There's more of a need for trust when you go machine-to-machine than when you go person-to-person."

If web services succeed, the effects will be felt across the business world. But some sectors are already pushing ahead. Banks are among the early adopters in their bid to exert more control over their countless transactions and processes.

Mr Sclavos also sees prospects in manufacturing, where web services can bring more order into often unwieldy supply chains. The public sector is another huge area in which web services can cut through the complexity of such tasks as tax filing and contracting and supply relationships.

Healthcare, too, could be a prime beneficiary. Mr Sclavos cites the many US initiatives aimed at bringing patients, doctors, managed healthcare providers and payment mechanism into the electronic arena. "It's a very unique opportunity to improve the quality of care and reduce the costs," he says.

"It will take a very long time because of the complexities of healthcare and all the issues around privacy and security. But it seems to be a situation well set up for web services." New legal requirements in the US are causing many healthcare organisations to launch IT initiatives so they can comply with privacy, protection and other standards.

As web services continue to evolve, VeriSign has been laying the groundwork for its future activities in this new machine-to-machine age. Early this year, it announced its digital trust services framework aimed at making it easier for companies to deploy web services.

The framework is based on open standards and will provide companies with seamless links to VeriSign's digital services. The move was supported by an array of big IT concerns such as IBM, Microsoft, Hewlett-Packard, Oracle, Sun Microsystems, BEA Systems and webMethods.

For VeriSign, Mr Sclavos sees two main benefits from its new framework. Firstly, it will encourage software developers to integrate VeriSign services as they build applications around the new web service platforms. "If web services take off, then we'll have incremental opportunity and incremental revenues."

Secondly, the introduction of new applications should be speeded up if web services are rolled out properly. "If we can make it simple to deploy web services with full trust and security, then these applications will come to market faster, businesses will see the benefits more quickly and that again accelerates VeriSign's opportunity."

Yet Mr Sclavos thinks it will be another two or three years before it can be shown that web services are a success. First, the IT companies have to provide the developer tools as the basis for new software programmes for these services.

"Web services will be the next generation platform and around that will be built an entire industry, very much in the way we saw around both Windows and Unix." He believes between three and five web services platforms will emerge successfully, so no single company will dominate the market.

Microsoft, for example, is pushing hard for success in web services through its .Net strategy, but other leading companies are also in the race. Apart from the software giant, Mr Sclavos thinks IBM, Oracle, Sun and BEA Systems are well positioned in the web services market.

But he also has ambitions for VeriSign, which has a market capitalisation of around $6bn, to join the big league not in terms of size, since it is far smaller than the IT leaders, but in terms of status and reputation. "VeriSign's goal by 2010 is to become one of the top five technology companies in the world," he states. "We believe we have that size of an opportunity."

For a company which has always proceeded cautiously and refused to be sidetracked by dotcom hype, such a goal might seem far-fetched. But Mr Sclavos is adamant. "We want to be seen in the same light as IBM, Microsoft, Oracle and others," he says. "We want to be seen as the company which brings trust to underlying transactions."

To come anywhere near its goal, VeriSign which has just opened a new European headquarters in Geneva, Switzerland, will have to become more global. Thus Mr Sclavos expects the revenue split to change over the five next years, with the US, Europe and Asia-Pacific providing roughly a third each; at present, the US accounts for 80 per cent and the rest is split between the other two regions.

A recovery in spending would also help VeriSign's prospects. But he is cautious after the bruising the IT sector has taken and warns against setting expectations too high. Customer interest is increasing, especially in areas such as security and web services. But too quick a recovery would be unhealthy. "We need to have a return that comes in gradual steps, so that it doesn't fuel the craziness of the last couple of years again."

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