July 23, 2003 6:56 AM PDT

Web services spending down but not out

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January 29, 2003
Shrinking IT budgets have forced corporations to cut back on Web services spending, but such projects still remain a top priority, according to a Gartner report released Wednesday.

Web services is an umbrella term for a set of XML-based standards and programming techniques that make it simpler to share information between applications. Once touted as a boon to consumers conducting transactions with e-commerce providers, Web services have instead resonated with corporations as a relatively cost-effective way to integrate disparate systems.

In an Internet survey of 111 North American companies, Gartner found that 48 percent of respondents have had to pare back spending on Web services application development projects because of the economic slowdown. A full one-third of survey participants said they are continuing to invest in Web services over the next two years despite the grim economic environment.

Such findings indicate that corporate America has a strong commitment to using Web services, according to Gartner analysts.

"Web services development projects are at the top of the list of company priorities and (are) one of the last budgets to be raided when budget cuts are made," Gartner analyst Nicole Latimer said in a statement.

The survey found that in the next 12 months, 39 percent of respondents plan to use Web services to share data between internal applications, such as sales automation and order management systems. And 54 percent expect to use Web services for both internal applications and to share information with outside business partners in the next year.

Survey participants indicated they intend to use Web services increasingly for business-to-business communications: Sixty-five percent of respondents said that in the next two years, they plan to use Web services for both intracompany and intercompany communications.

The anticipated rise in Web services adoption will usher in a new way of designing corporate information systems, which has implications regarding how IT providers need sell to corporate customers, the Gartner report predicted. Providers will need to move away from selling "commodity technology" and beef up their expertise in how IT can be implemented to improve corporate business processes, the report said.


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