Nemertes Research LLC worked with 45 companies to benchmark how they're deploying Web services, what benefit they're achieving, and how they're measuring and monitoring the performance of these services.
The companies spanned a range of industries: financial services, pharmaceuticals, healthcare, retail, manufacturing, distribution and others. They also ran the gamut from small (less than US$10 million in annual revenue) to large ($10 billion and greater), although most had $1 billion or more.
We uncovered several key trends:
-- Business goals for Web services extend beyond reducing the operational cost and improving productivity of IT departments. Companies want to reduce costs within IT and across the company as a whole; improve customer satisfaction; and increase revenue by increasing channels and improving productivity. Are they succeeding? It's too early to say definitively, but early indications are promising. Companies that can measure results reported an 80 percent to 90 percent decrease in the cost of application deployment, with even greater cost reductions anticipated overall in conjunction with other IT initiatives such as standardization, centralization and consolidation.
-- Functionally, the single largest application for Web services is the creation of internal or external "application portals." This lets companies reduce support costs and improve productivity by providing users (whether employees, partners or customers) with a single source for all their applications.
-- Most companies are in the prototype stage. Many have been pleasantly surprised by the low cost and ease of rolling out their initial Web services frameworks. However, they anticipate that the real cost and challenge lies in "fleshing out" these frameworks to support production applications. For example, a majority of respondents said they have not yet made their Web services deployments redundant.
-- Web services deployments are expensive, but worth it. While prototype deployments cost in the $50,000 range, full deployment of a Web services architecture, including hardware, software, labor and ancillary costs, typically run on the order of $10 million. Many organizations are undertaking Web services deployments in conjunction with other initiatives, particularly data center centralization and application consolidation. The overall ROI of these initiatives is anticipated to be extremely high, with Web services playing a critical role.
-- Web services is driving the deployment of "N-tier" architectures, in which data, legacy applications, Web applications and presentation services reside on disparate machines. The tiers in an N-tier architecture serve similar purposes to the layers in the Open Systems Interconnection model by providing clearly defined interfaces. They let users enhance and modify each tier independently of the others.
-- Finally, Web services deployments are helping to accelerate key organizational changes both within IT organizations and between IT organizations and companies. Within IT organizations, Web services generally are construed as "infrastructure" - and therefore are most often managed by infrastructure, rather than application-development groups. Web services also are driving corporations toward viewing IT as a strategic business unit rather than a cost center or services organization, highlighting the need for better ways to quantitatively measure the value of IT investments.
Johnson is president and chief research officer at Nemertes Research, an independent technology research firm. She can be reached at email@example.com.
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