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Gartner: Web Services Strong Amid Sluggish Economy

A new report from research group Gartner has determined that although the progress of Web services has been curtailed by a sluggish economy, the projects based on such services retain a steady pulse.

Web services is the practice defined as a means of enabling applications to communicate data without intimate knowledge of each other's IT systems through Web servers or other Web-connected programs.

They also run the gamut of software, including any niche from enterprise applications such as human resource management (HRM) to auction services for consumers. Their popularity has caused both major and minor software companies to try to strike while the iron is hot.

According to the report, 48 percent of North American enterprises surveyed said the flaccid economy has caused them to pare spending on Web services development, but not so much as to kill projects.

While some respondents said they were reducing spending on Web services, Gartner analyst Nicole Latimer said nearly one-third of folks surveyed said the economic slowdown has not affected their organization's budgeted investment in Web services development projects.

"Only 1% of respondents stated that they stopped all Web services development projects going forward, and only 6% stated that their organization has postponed the majority of Web services development projects for 1 year or more," Latimer told internetnews.com.

Rather, the development of new applications is usually one of the last budgets to be trimmed. Latimer said this suggests IT departments are holding Web services projects in great regard, if not as sacred cattle.

According to the survey, 54 percent of users said they used or planned to use Web services to integrate applications within the organization, as well as with partners or customers, during the next 12 months. Thirty-nine percent used or planned to use Web services only within their organization.

However, when the time frame is extended to during the next two years, 65 percent of respondents said they used or were planning to use Web services intra- and inter-enterprise, and only 23 percent limited Web services projects to only within the enterprise.

Latimer predicted software and professional services markets will contract over the next few years, with survivors using Web services to establish and streamline their business processes.

"To take part in the Web services 'wave', software vendors and system integrators must communicate a clear, concise, cost-saving message to potential customers," said Latimer. "Each vendor must tell a clear, distinct story about how Web services will benefit enterprises and how Web services will evolve to transform their businesses."

Even so, in the mad dash to stay ahead of the curve, software vendors have also encountered significant barriers to adoption, such as security, management and reliability. Moreover, a lack of standards in deploying Web services applications has kept the Web services enthusiasts at bay.

Companies such as Microsoft, IBM and Sun Microsystems, to name just a few, have been developing specifications for Web services and submitting proposals to standards bodies such as the W3C and OASIS for review.

Contributing to the craze, analysts have spent no shortage of time guessing the value of these services, often predicting total market opportunities of several billion dollars over the next few years.

Analyst Stephen O'Grady, who tracks Web services for his research firm Redmonk, said he found little to disagree with in the Gartner study. He also sees the issue of Web services standards as a tangled mess of spaghetti.

"While the economy has certainly taken a bite out of some enterprises' potential Web services budgets, many are continuing with their investments in these areas because of the possibility for immediate, shorter term results," O'Grady told internetnews.com. "But more detrimental to overall sales and investments is the confusing tangle of conflicting, competing, and overlapping Web services standards."

O'Grady added a cautionary warning.

"Web services standards are in many cases the single biggest impediment to widespread adoption and deployment," he continued. "Because of the advantages Web services offers, the technology will remain saleable in all but the most severely restricted economic climates. But it can't achieve it's full potential until clients can plan according to an easily communicated, understood and broadly vendor supported standards roadmap."

But Latimer said the uncertainty of Web services standards has done little to impact customer thinking. Survey respondents were asked to indicate whether they expected the percentage of their total IT budget spent on Web services development projects to increase, decrease or remain the same.

"49% of respondents stated that the portion of their IT budget for Web services development projects would remain the same, 33% said that it would increase, but only 16% said that it would decrease," Latimer said. "I think the numbers speak for themselves. Most organizations have opted to continue with these projects regardless of what is going on with Web services standards."

Looking forward, Latimer said Gartner expects consolidation of vendors among each Web services platform category: consumer, producer, provider and management. Software vendors that are among the top three in each Web services category are likely to remain in the top three to five through 2007, she said.

Additional information is available in the Gartner Dataquest report "2003-2003 Web Services Development, North America."