AMR Says Companies Spend Big on SOA Software

Published: April 9, 2008

by Timothy Prickett Morgan

IT vendors haven't had something so exciting to salivate over and rub their hands about since the advent of Java more than a decade ago. Every new layer of abstraction in the information technology sprawl always leads to more flexibility, but it usually also comes at a price: more iron, and more software and services expenses. The question that IT vendors are wondering about now is will service oriented architecture, a means of leaving legacy applications and databases in place and then extending them with a new abstraction layer of services, be the money pot they all act like it will be.

To try to get a handle on what companies are really spending on SOA projects, AMR Research did a survey of a bunch of companies engaged in SOA efforts, ranging in size from 500 to 10,000 or more employees. The companies were from a variety of industries, including process and discrete manufacturing, retail and wholesale distribution, telecommunications, and financial services. Companies located in the United States, Germany, and China were chosen as representative of the global economy, and 53 percent of the companies polled in those regions had SOA projects underway by the end of 2007.

And lo and behold, this early in the SOA adoption cycle, there is no consistent pattern across industries, geography, or company size in terms of SOA project spending. Such was the way with the adoption of Internet-style computing technologies more than a decade ago, of course, when some new, small companies did a lot of investing as did some very large, established companies, with others just spending a little. But eventually a new, pervasive software technology becomes normal and spending patterns start to follow company size and employee counts and diverge based on industries.

But that is certainly not so for SOA today, says Ian Finley, research director at AMR Research. "SOA adoption and interest varied by industry in some surprising ways," says Finley. "Financial services, the top revenue vertical reported in vendor interviews, came in at the bottom in our SOA adoption tally. Upon further analysis, we discovered that while a smaller percentage of financial services companies have adopted SOA, those adopters are spending a great deal more on SOA than their peers in other industries. In other sectors, more of the industry has adopted SOA, but the average company spends a more modest amount."

Across all of the companies surveyed by AMR Research for its SOA Spending Report 2007-2008, the average company spent $1.4 million for software and services related to SOA. Survey respondents who are making SOA investments are more than doubling their spending each year, and 45 percent of those polled said they spent over $500,000 on projects. These numbers suggest some big companies are spending many millions of dollars on projects, thereby raising the class average.

The main reasons companies were investing in SOA was to more quickly and economically change their applications, and to do so with less risk--a reason cited by 22 percent of respondents. Another 18 percent said that the SOA approach was specifically required by management for a development project (without elaborating the reason behind the decision) and another 17 percent said SOA projects were driven by the desire to reduce IT costs through the reuse of software components (how this is different from the first category is beyond me).

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