Speaking at the IT Director's Forum, Thompson said that although web services had been over-hyped, they would become a "fact of life" for IT departments.
Web services are currently used primarily for internal communication within companies, but will begin to replace the supply chain data exchange standard EDI over the next few years, and by 2010 will underpin external online services for customers, Thompson predicted.
"Web services will become a fact of life," he said. "[Web services] are to do with the whole ethos of your business and they can give you the ability to rethink your business."
Benefits of web services technology - defined by Thompson as making IT systems talk to each other using internet data exchange standard XML - include making business processes in the supply chain run more efficiently by getting functions on demand and being able to modify systems to reflect changes to industry and government regulations.
To develop web services, businesses need to map out their IT systems and business functions and break down the elements within a software application into separate components
Although the initial review can be time consuming, Thompson added that it could help cut running costs within three months because the business is more aware of its IT infrastructure and business processes.
The easy-to-use components of web services technology will also play a key role in supporting utility services which allow users to share computing resources, said Thompson.
Microsoft was one of the first suppliers to launch web services, under its .net technology. Microsoft's web services tool includes Visual Studio .net, an alternative to Java-based web services. Microsoft is in discussions with IBM about agreeing a common standard for web services.
This was first published in May 2004