Fortune 1000 Aggressively Adopting XML
Web Services, New Report Finds

Nearly half of respondents are piloting or implementing Web services applications, including a surprising number of external projects

SILICON VALLEY (June 20, 2002)—North American companies are adopting Web services at a faster rate than anticipated, and companies that hold back on this cutting-edge technology risk being bypassed by more nimble competitors, according to a new research report from The FactPoint Group and Outsource Research Consulting.

"Some IT-oriented research firms are advising clients to go slow on Web services, and that is exactly the wrong advice," said Tim Clark, partner in The FactPoint Group, a Silicon Valley research and consulting firm. "Almost half of the respondents to our survey this spring are already piloting or deploying live applications based on Web services. In fact, Fortune 1000 companies are the most aggressive adopters of Web services applications. They are clearly convinced that Web services are a strategic technology."

The FactPoint/ORC research, "Crossing the Boundaries: Early Adoption of Web Services," involved in-depth interviews with 50 enterprises plus 796 respondents to a Web survey in April. According to Clark, the research focused on capturing the "voice of the enterprise customer," not simply the perspective of vendors. The Web survey focused on mid-sized to large companies; 21% of respondents were line of business professionals, 11% were executives, and 58% were IT professionals. The 50 in-depth interviews were conducted primarily with line of business or C-level executives.

The research clearly identified adoption patterns, phases of deployment, value propositions, applications piloted and deployed, and accelerators and barriers to enterprise adoption of Web services. The report also describes which industries are quickly implementing Web services and which are lagging, what opportunities still exist for start-ups, and which platform and vendors are clearly in the lead.

Web services are software modules that use the XML standards (eXtensible Markup Language) to share data or software capabilities over the Internet. Web services are seen as a way to integrate incompatible computer systems or to share data, applications or business processes internally or with partners.

"Web services are a great example of innovation in today’s down economy. You get the cost savings first and the ‘vision’ later, unlike most technology innovations. Pilots are proving that Web services cut costs and accelerate delivery of new services," said Clark. Compared to complex and pricey enterprise application integration (EAI) tools, Web services can be a less costly way to integrate.

"Corporations can buy into the Web services vision on a small budget, since these tools are relatively cheap," Clark added. "Short term, companies should start using Web services today. Longer-term, this technology will eventually allow corporations to buy software functions as Web services, radically changing the economics of how enterprises build applications."

But Web services are not likely to generate a new wave of corporate IT spending, according to the FactPoint/ORC report. Instead, Web services-based technologies will supplant spending on older technologies, creating opportunities for vendors that build Web services into their products.

Security concerns remain the most intractable barrier to adoption of Web services, the report found. However, companies are not holding back to see whether security issues will be resolved quickly. 

Fortune 1000 companies are moving forward with pilots, and pilots are moving on to full-scale implementations, the report notes. These early adopters are likely to stick with their original Web services platform, so both vendors and enterprises sitting on the sidelines put themselves in danger.

Methodology

FactPoint Group's research involved in-depth interviews with 50 executives of large companies, half of them from the Fortune 1000. This study’s Web survey received a total of 2,544 responses. Based on company size and understanding of Web services, 796 qualified for the final tabulated target group. In addition, vendors were excluded from the final group. The sample provides a 99% level of confidence with less than 5% margin of error.

About The FactPoint Group

The FactPoint Group (www.factpointgroup.com) is a Silicon Valley-based research, publishing and consulting firm that helps enterprises adopt and vendors market new technology. For 2002, FactPoint Group has focused its research in the emerging areas of Web services and enterprise portals. The FactPoint Group is a new name for a team which has been producing world-class research, analysis, and consulting since 1993. The FactPoint Group can be reached at 650-559-2110.

About Outsource Research Consulting

Outsource Research Consulting (ORC) is a full-service marketing research firm helping enterprise technology companies make better decisions by using primary research. With online data collection and traditional quantitative and qualitative research strategies, ORC helps identify market opportunities, validate trends, visualize positioning vis-à-vis competitors, understand customer needs, and quantify buying behaviors. ORC offers research design, questionnaire development, data collection, panel management, statistical analysis and modeling, and actionable reporting and presentations. Contact ORC at 408-293-8882 or visit www.orconsulting.com.

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