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Web Services to Hit $11B by 2008

Worldwide spending on Web services software will top $11 billion by 2008 as enterprises continue to look for ways to integrate applications while cutting costs, according to a new report from tech research company IDC.

Report author Sandra Rogers said that despite the lofty total, businesses will remain cautious as they test service-oriented architectures (SOAs) and Web services as models for distributed computing before deploying them for their networks wholesale.

While spending might take time to pick up, vendors of Web services software are heading full bore into a marketing maelstrom. IBM, BEA, Microsoft Computer Associates and a raft of smaller player are vying for a piece of that $11 billion pie.

That market is considered conservative in some circles, but it far exceeds the $1.1 billion Web services achieved in 2003.

Rogers told internetnews.com software vendors are aware of the potential business Web services and SOAs bring, and are looking to build "complex infrastructures to ultimately solve the problem of complexity."

That complexity, the director for Web Services Software and Integration at Framingham, Mass.-based IDC said, has been created by the number of applications with disparate code bases that have been piped into networks and data centers over the years.

Rogers said the volume has piled up to the point where customers are turning to vendors for point solutions or entire platforms. In some cases, customers rolling their own software remedies to heterogeneous code.

Because SOAs employ reusable standard interfaces to integrate applications within a company and Web services facilitate application-to-application communication to perform certain tasks, they are considered ideal treatments for the integration dilemmas businesses face.

To wit, Rogers said vendors are cobbling together technologies and pushing vendors for new products, based on their requirements. In many cases what customers use now compared to what they acquired from a vendor three years ago may be different, she said.

In terms of who is leading in name recognition, or the degree to which their messages surrounding Web services and SOAs have penetrated the market, Rogers said she has heard the names IBM , Microsoft and BEA more than any others.

However, CA remains a popular choice in management and smaller, more focused vendors such as Grand Central, Systinet, Infravio, Actional, Amberpoint, Cape Clear and others get mentioned, too, she said. These more specialized outfits are offering anything from Web services and SOA security to registries, metadata management, monitoring and integration.

Still Rogers noted that "until we start to see use cases, we need to separate those who are Web services-enabled from those that are working on Web services technology."

"We have an understanding of the traction and the kinds of technology people are investing in," Rogers said. "For SOAs, which have garnered the least amount of traction to date, even though they are not a new concept, people are still putting everything in place because there is a huge amount of interest to make this happen in the next 12 to 24 months."

Ultimately, the analyst said so-called "leading-edge" companies are pushing the technology as the market is evolving along with the user adoption, which although stifled in the most recent economic downturn prompted interest because people could solve problems of the day with little money.

Now the market sentiment is "Let's scale this out, see where this can go and push the envelope," Rogers said. Of course, full-fledged growth has been stymied by a dearth of higher-levels of Web services standards, but this is changing.

"Users and vendors must acknowledge and support an environment that allows for phased change versus big-bang or holistic architectural overhaul," she said. "The ability of vendors to support and help businesses transform multiple generations of Web services and XML-based systems will be vital."

But when an acceptable number of technologies and standards are finally hashed out, Rogers conceded current customer caution could melt the way, leading to the realization of those estimated $11 billion in revenues by 2008.