Web services allow different computing systems and software programs to exchange data and conduct transactions. Both Microsoft and Sun Microsystems, which created the Java language, have developed software products and technologies to capture this market.
Two-thirds of the 100 U.S. and European CIOs surveyed by Merrill Lynch said they were investing in Web services. But they were about evenly split between Microsoft's .Net initiative and Sun's Java 2 Enterprise Edition.
Merrill Lynch analysts said independent software makers were more likely to favor J2EE's ability to run on any technology, even though it's written only in Java. Corporations, on the other hand, may favor .Net because programs can be developed in multiple languages, although they run only on Microsoft technology.
The survey found that 67 percent of the respondents run, technology that companies use to run e-commerce and other Web site transactions. The CIOs were equally split in their use of products from IBM, BEA Systems, Microsoft, Oracle and Sun. Among other findings:
As budgets get trimmed, companies are doing less outsourcing and using fewer consultants, the study found, with 60 percent of respondents saying they were doing more work in-house. Still, CIOs said they expect to increase spending on outsourcing by 6 percent over the next year, a bigger increase than they expect to see in systems integration or consulting.
Customer-relationship management software has not been as successful as CIOs had hoped. About 25 percent said they were working on CRM projects, but only 55 percent of those were happy with the results. "Disappointed users said the software was too pricey, full functionality was never realized and integrating legacy systems was difficult," the report said.
One of the largest chunks of the IT budget comes from people costs, which accounted for, on average, 42 percent of budgets. While IT managers have trimmed personnel, reducing staff on average by about 6 percent, they still see people costs going up by about 3.5 percent this year.