To improve efficiency and save money, European financial service firms and telecoms will be early adopters of Web services, implementing the technology en
masse by 2004, according to a new report from The Yankee Group.
Other sectors, such as retail, manufacturering, hospitality, media and government will follow by the end of 2005.
While Web services spread across the continent, U.S. companies are only just starting to explore the technology. Watching the trends in
Europe may provide insight into how Web services will be adopted here.
One factor driving adoption overseas is the need for companies to standardize multiple applications and legacy systems, said Landry Fevre, a senior analyst with Yankee, a
Boston-based IT market research firm.
Another is the need for banks, brokerage houses, telecom carriers and Internet service providers to meld systems after a wave of consolidation.
“Companies that grew externally via mergers and acquisitions will derive benefits from Web services with lowered cost of integration by 50 percent to 66 percent, with transaction costs being driven down as well,” Fevre said.
Broadly defined, Web services allow different applications from different sources to communicate with each other without time-consuming custom
coding. And because all communication is in XML, Web services are not tied to any one operating system or programming language. For example, Java can talk
with Perl, Windows applications can talk with UNIX applications.
The Big 4 of Web Services — Microsoft , IBM
, BEA Systems
and Sun
Microsystems — are in the best position because they have “established channels and it is an easy up-sell from existing
customer base,” Fevre said.
All are making a marketing push because it represents a new source of revenue. Second-tier players, including Novell
, which wagered on Web services when it bought SilverStream
Software, may have a hard time breaking into the market, Fevre concluded.
There are some factors which might slow Web services spread across Europe. The most important is security. Because of security concerns, many of the current
Web services installations are “inside-the-firewall” or with trusted partners.
In addition, regulators have voiced concerns about Microsoft’s .NET Passport offering and its single sign-on function.
In the next three years, however, most of these stumbling blocks will have been cleared.
“Web Services are still in the exploration stage and the standards and development phase,” Fevre said. “The technology will become ubiquitous due to network
effects by 2005.”
