Fast, furious Web services spending expected

Market research firm Radicati Group predict Web services spending to reach $6.2 billion by 2008 as companies invest heavily in development tools and security.

Enterprises will open their wallets and embrace Web services in a big way during the next four years, predicts

technology market research firm Radicati Group Inc.

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Web services buying decisions will be a challenge

Evolving security standards are helping enterprises get into Web services

Companies sorting out their strategies around Web services and service-oriented architectures (SOAs) need to decide which development platform and tools they'll employ and how they'll extend services and composite applications to partners and customers.

If this activity manifests, Radicati senior analyst Masha Khmartseva expects the market to reach $950 million by the end of 2004 and $6.2 billion by 2008. That estimate combines totals for Web services creation, management, integration and security products.

Khmartseva said leading vendors like IBM, Microsoft, Oracle Corp. and others will invest in educating customers that Web services and SOA are not to be ignored.

"From what we've seen, a lot of companies are not aware of the business and technology benefits of Web services," Khmartseva said. "Companies are not realizing the benefits that Web services provide, namely cutting development time and integrating existing applications. A lot of companies are still trying to figure out how they're going to use Web services and what development platform and tools they'll use."

Khmartseva cautioned that security remains a barrier that must be hurdled. Authentication and encryption mechanisms that conform to ever-evolving security standards need to mature before high-volume Web services transactions are securely carried out.

Companies are not realizing the benefits that Web services provide, namely cutting development time and integrating existing applications.


Masha Khmartseva
Senior analystRadicati Group, Inc.

"Development of those standards will allow companies to do sensitive transactions," Khmartseva said. "I see that happening over the next two years."

OASIS recently ratified WS-Security, a fundamental building block for Web services, and vendor adoption is expected to accelerate. Other security specifications like WS-Trust, WS-SecureConversation, WS-Policy and WS-Federation are expected to deepen enterprise trust in Web services transactions.

The maturation of security standards is also giving enterprises the confidence to expose Web services to partners and customers, Khmartseva said. Most services projects remain in-house, especially at the outset, as companies choose to expose legacy data between departments via an XML Web services interface. But 28% of the decision makers surveyed said they were sharing Web services beyond the firewall.

Most Web services, meanwhile, are being built on top of either Microsoft's .NET platform or J2EE. A recent Forrester Research Inc. survey concluded that 56% of enterprises will do the majority of their development on .NET, and 44% said Java. Radicati research indicates most of the spending boost expected between now and 2008 will be concentrated on development environments and tools, and agrees that .NET and J2EE are the platforms of choice.

"They can be a big revenue generator," Khmartseva said. "Customers need to understand that development tools can cut development time by as much as 50% and allow developers without much experience to build Web services. Development environments are very visual. Drag-and-drop environments make these features easy to use."

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