Adding a web service intermediary between an application and SQL Server is
always going to be slower.  How much slower depends on how the web service
was written, unless the web service does some sort of value-added
processing (like being an entity broker or something) or caching.

There's nothing less secure about putting a SQL Server on the Internet.
The communication can be on port 80 and can also be encrypted and can use
integrated Windows authentication.  The only difference is that it's
interface isn't proprietary like a web service.

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