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Survey: SOA prominent on 2005 budgets

A Yankee Group survey of 473 enterprise decision makers reveals that companies have put aside money for service-oriented architectures for 2005.

Enterprise decision makers have SOA on the brain -- and their 2005 budgets.


Read Radicati Group's take on Web services spending


Web services buying decisions will be a challenge

A recent survey of 473 enterprise buyers by the Yankee Group of Boston revealed that in the next 12 months, 75% plan on investing in the technology and staffing necessary to enable a service-oriented architecture.

Awareness in SOA, and subsequently Web services, continues to rise as the economy improves and vendors evangelize the benefits of decoupling systems and developing applications as service components that can be reused across an enterprise network, the report also said.

"A lot of companies are considering applications that support SOA. We were taken aback by how bullish they were," said report author Philip Fersht, director of business applications and commerce research at Yankee. "A lot of senior IT don't understand Web services, but they do understand SOA."

Fersht cautioned that the sudden upsurge in SOA interest could threaten traditional ERP vendors. Suites installed in the 1990s, Fersht said, are being Web services-enabled and decoupled.

"In many cases, traditional ERP is in trouble," Fersht said. "Companies that have (SAP) R/3 or Oracle Financials installed are wrapping Web services around them to make them SOA-enabled. And many of these vendors are building in Web services components."

A lot of companies are considering applications that support SOA. We were taken aback by how bullish they were.

Philip Fersht
Director of business applications and commerce researchYankee Group

Yankee's survey results point out that the greatest investments in SOA are coming from the wireless telecom and manufacturing markets (78%), while financial services (77%) and health care (71%) are not far behind.

"There's been a big shift in attitude toward investing in the underpinning architectures," Fersht said. "These are simple investments. You can spend between $100,000 and $500,000 to decouple a system, and invest more over time."

Specifically, enterprises will be investing in application servers, systems and network management software and database tools, Fersht said.

"Three-quarters of the respondents said they'll be investing in application servers, either new or Web services-enabling existing ones," Fersht said. "Eighty percent of investments will come in systems and network management software, and a significant amount will be spending on connecting tools around database integration."

Fersht predicted that during the next 12 months more companies will try to bring SOAs across an entire enterprise and then explore integration with the entire value chain. Vendor evangelism will help accelerate that process, he said.

"Vendors have to get on the pulpit. The biggest inhibitor to investments we found (44% of respondents) were that executives do not understand Web services or loosely coupled architectures," Fersht said. "It's up to IBM and other vendors to explain to customers what SOA and composite applications are about. There's still a limited understanding about these things. General-level communication and dialogue is needed to move this to a universal level."

The Yankee survey also revealed that companies are architecting CRM, human resources and financials first around SOA. Fersht said he is confident executives will begin understanding the benefits of SOA.

"The real market shift will come when the COO and CFO is involved deeply in business processes," Fersht said.

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