AS THE FIRST generation of Web services gains steam as a simpler way to link enterprise systems, SIs (system integrators) whose bread-and-butter projects involve manual application integration coding may soon be at a crossroads.

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Commoditized EAI (enterprise application integration) -- touted as either the great promise or overwhelming hype of Web services -- will challenge SIs to evolve business models and skill sets away from low-level plumbing and an over-reliance on installing packaged systems, industry observers said.

" Web services can be very simple to implement, so it forces integrators like us to move on to having more high-level kinds of skills," said Marvin Richardson, CTO at Lante, a Chicago-based systems integrator.

"It pushes the integration expertise up the stack. So if you are an expert at customizing webMethods adapters, for example, you had better change," Richardson added.

Conceding that some of the grunt work associated with point-to-point coding may evaporate, many SIs and EAI vendors don't buy into Web services as the agent for full-scale plug-and-play integration.

Instead, they see Web services as a standards-based interface to unlock integration's entry points, thus providing an opportunity to focus on more meaningful integration layers.

"Where we deal is in creating and integrating those business processes above Web services and tying them to the legacy apps below," said Joseph Hill, a fellow at SI giant EDS in Plano, Texas. "We see ourselves as playing the broker in a service-oriented architecture."

Until standards are in place to do so, SIs can fill in the gaps left by Web services, such as security and transaction management.

The newest integration frontier for SIs is BPM (business process management). Dominant IT services companies and midtier integrators are looking to join EAI players in the quest to design, map, integrate, and automate a customer's business processes across far-flung systems, partners and suppliers.

At its core, BPM gives technology providers and their SI partners an opportunity to build and deploy tools that allow the enterprise to exploit the underlying connectivity infrastructure for business goals. And it's a value-added service for which they can charge a premium.

"What kind of tools will be available to orchestrate innovative things with business processes? By default, if that is where the value is, that is where the service provider is," said Brad Murphy, senior vice president at Valtech Technology, a system integrator in Addison, Texas.

One way SIs can flex their BPM muscles is by leveraging their expertise in vertical markets to codify best-practice business processes that can be reused on future projects. The technology that drives reuse is emerging as upstart BPM providers Q-Link and Fuego showcase ways to build and store graphical business processes.

Q-Link is expected to announce in a month or two a clearinghouse-type certification program based on its Q-PAC (Q-Link Process Action Component) technology that will allow SIs to encapsulate knowledge gained on one project into individual process components that can be licensed to customers or even other SIs.

"The mind-set for [SIs] is shifting away from billable hours to come up with solutions that are faster," said Greg Wilson, CTO at Q-Link in Tampa, Fla.

Hosted integration projects are another potential revenue stream for SIs, including nimble front-runners Grand Central and Flamenco, along with the large application vendors.

SAP, for example, offers customers a hosting option that includes the integration work necessary to tie SAP modules with other enterprise systems. EDS and Hewlett-Packard provide the infrastructure to support the hosted operation.

"It's a [ Web services] architecture that's easy to host and very natural to integrate with other apps that the customer has," said Tom Melchiore, vice president of SAP hosting in Newtown Square, Penn.

Cap Gemini is also looking at the notion of software as a service, and hosting EAI as an ASP, said John Jordan, a principal in the Office of the CTO for the Americas in New York.

"What is driving enterprise computation is business value," Jordan said. "Merely providing pipes and apps is not getting it done for the client."