Enterprise Software

IT analysts: Web services will contribute to cost-cutting strategies but grow slowly

In several recent reports on Web services, analysts predict continued but modest growth for this new technology and expect it to help companies cut costs. This roundup gives you a snapshot of the latest analysis of this emerging technology.


Analyst Views is the leading Web site and newsletter covering the views, opinions, and predictions of over 200 IT analyst firms around the world. Each Wednesday, TechRepublic will publish an article from the editor in chief of Analyst Views that discusses recent research and analysis on a particular IT topic.

By Jim Zimmermann

In the last few weeks, several IT analyst firms have weighed in with varying viewpoints on Web services, one of the hottest topics in IT. One of the most interesting articles was IDC’s release of their predictions for the growth of the Web services market.

According to IDC, “Web services will become the dominant distributed computing architecture in the next 10 years and will eventually define the fabric of computing.”

That’s quite a lofty claim, but IDC goes on to put some numbers behind the statement, “Web services will drive a total software, services, and hardware opportunity in the U.S. of $21 billion by 2007 and will peak at $27 billion in 2010.” In IDC's view, “By the end of 2002, 5 percent of U.S. enterprises will have completed Web services projects, and 80 percent will have some type of project under way by 2008. Growth will be the fastest in large enterprises in the manufacturing and services industries, although the market will be dominated by small enterprises as they become adopters by 2007.”

IDC also claims that one of the biggest challenges facing the Web services market will be the requirement that IT vendors must cooperate to make sure various Web services applications interoperate seamlessly. Read more of IDC’s views of Web services.

ZapThink: Thrift is here to stay
Another analyst firm, ZapThink, which reports exclusively on Web services and XML, offered its own views of the roadblocks to Web services adoption in the article "2002 Retrospective and Thinking Ahead." According to the article, “IT organizations realize that they have to overcome critical security and management challenges before their Web services implementations would meet broad enterprise needs.”

ZapThink also identified other roadblocks to the successful adoption of Web services, including:
  • Transactions
  • Registry solutions
  • Web service orchestration
  • Workflow solutions

The article concludes that, “2003 promises to be a ‘make-it-or-break-it’ year for much of the (Web services) industry.” Read more of ZapThink's article.

In another article from ZapThink, "Thrift: the New Normal," senior analyst Jason Bloomberg offers an interesting view on IT spending and Web services. According to the article, "… many people are betting that Web services and service orientation are the ‘next big thing’ that will drive IT this year or next. Since ZapThink focuses on the emerging market for service-oriented computing, you might think that we'd be first in line to trumpet the power of Web services to bring back the flow of capital. Well, not so fast.

“The Web services story is not about dramatically increasing capital investment. Web services are about thrift. It's no wonder that Web services have moved from hype to reality during a severe IT downturn—after all, in 2002, most companies using Web services were applying these new technologies to reduce integration costs. Hundreds of enterprises have already learned that taking a service-oriented integration approach can reduce the cost of an integration project dramatically—some report cost reductions as high as 80 percent. This is one story that executives love to hear."

The article goes on to predict that there will be:

" … increased investment in the tools and services that will help companies build service-oriented architectures. But we're quite reluctant to paint too rosy a picture. Instead, we believe that IT investment will only grow modestly, in spite of the fact that we see virtually all enterprises moving toward service-oriented computing infrastructures by 2006. Why the doom and gloom? After all, people look to market research firms like ZapThink for big numbers and growth curves that keep bending upwards. Well, we really don't see our modest prediction of IT investment growth as being truly pessimistic. Instead, we're simply painting a picture of the "new normal" for IT investment based upon service orientation—and that new normal is thrift."

So while it’s not contradicting IDC's predictions of spectacular growth in Web services, ZapThink is throwing a dose of reality onto what it means for the larger IT market. Even if Web services do grow as fast and strong as IDC predicts, ZapThink does not think it will be a panacea for the rest of the IT industry—indeed, it believes that successful implementations of Web services may signal a decline in demand for other IT solutions currently on the market. Read more of ZapThink's article.

Gartner lists top Web services products
A final perspective on Web services comes from Gartner Dataquest in a press release titled "Survey Identifies the Leading Web Services Products that Systems Integrators Plan to Support in 2003.” In the release, Gartner Dataquest provides some extracts from the results of a September 2002 Internet survey of 44 consulting and systems integration vendors in North America:
  • Microsoft .NET was targeted by 58 percent of system integrators as one of the top three Web services products to ramp up delivery capability.
  • Forty percent selected IBM Websphere.
  • Thirty-one percent cited Oracle.

In an August 2002 survey of 138 enterprises that were using or planning to use a systems integrator within the next 12 months to design or implement a Web services solution, Gartner Dataquest found that:
  • Thirty-three percent of end users that are working with systems integrators are planning to use Microsoft .NET.
  • Thirty-nine percent plan to use Java/J2EE.
  • Smaller companies tended to favor Microsoft .NET and large companies tended to favor J2EE architectures and products.

Read more about these surveys.

To learn more about what these and other analyst firms are saying about Web services, check out the over 120 Web services articles featured on the Analyst Views Web site.

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