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IT wants rapid return on Web services spending

A Yankee Group report indicates more spending on Web services and integration technology -- and lofty expectations accompanying all that spending.

Enterprise IT decision makers promise to spend more on Web services and integration technologies in the next 12 months, but won't do so without some lofty return-on-investment expectations.

Research firm Yankee Group of Boston recently surveyed 437 IT managers in the U.S., and 76% of those surveyed plan significant expansion of their spending on Web services application development and integration. But 70% want a return within two years.


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"This is proof that it isn't pie-in-the-sky anymore," said Philip Fersht, business services and outsourcing analyst at Yankee Group. "These protocols work to make business more fluid."

Most deployments remain internal, the research shows, as companies are taking full advantage of the efficiencies created by reusing application components and building applications that can be used repeatedly as services. Companies are also taking advantage of Web services standards to tighten security, Fersht said.

Web services implementations that have ventured across the firewall are finding the most success and efficiency doing collaboration across the supply chain.

"Enterprise applications such as [supply chain management], CRM and ERP have delivered standardization of processes. However, they have failed to deliver flexibility and have maintained a stranglehold on many enterprises," the Yankee report said. "This has hindered the ability of enterprises to respond rapidly to changes in the business environment, integrate increasingly global supply chains and collaborate effectively with suppliers and partners."

Fersht added that this demand will put pressure on vendors to not only get the message out about the cost savings, efficiency and productivity gains of Web services and service-oriented architecture, but they must move quickly to adopt and integrate Web services standards into their offerings.

This is proof that it isn't pie-in-the-sky anymore. These protocols work to make business more fluid. 
Philip Fersht
Director of business application researchYankee Group

"It's finally happening where we have the technology that enables legacy applications developed in C++ or COBOL to transform data and orchestrate it with the innovative solutions available today," Fersht said.

The Yankee Group survey concluded that the greatest adoption of Web services technology is in vertical markets like government, financial services, health care and telecommunications. Fersht said the financial services and manufacturing markets are spending more internally on staff and training, while health care and government are farther ahead with external projects and spending money on services and software.

IBM, meanwhile, has the greatest perception among IT managers as being a Web services leader, with Oracle Corp. and Microsoft following closely behind. Macromedia Inc. was also an up-and-comer identified in the survey. However, Microsoft has the greatest enterprise penetration and market share.

Other vendors like Sun Microsystems Inc., SAP, BEA Systems Inc., webMethods Inc., and Tibco Software Inc. did not fare as well.

As for standards and platforms, XML had the greatest penetration (70%), followed by .NET (55%), J2EE (40%) and SOAP (25%).

Business process standards like Business Process Execution Language are young and have not gained much market share. But they are noteworthy, the report said. BPEL for Web Services (BPEL4WS), for example, has already been adopted by Microsoft, IBM, BEA, Siebel Systems Inc. and SAP in their products.

"The only impediment to widespread adoption is the potential fragmentation of standards across the W3C, WS-I and OASIS. We are confident Siebel and SAP's support will drive BPEL4WS to displace BPML and WSCI, leaving enterprises secure in the knowledge that their applications will conform to the standard," the report said. "Moreover, freedom from royalties provides a significant boost for ISVs interested in developing BPEL4WS code (such as Macromedia, Progress Software Corp., Vignette Corp., Freshwater Software and Actional Corp.)."

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