Zona Studies Enterprise Internet Deployment Trends

When the Internet was identified as a potentially paradigm-shifting technology for business and commerce, organizations began developing Internet-related technologies without much regard for immediate returns. But according to a recent report by research firm Zona Research Inc. (www.zonaresearch.com), 1998 may have been the year in which organizations began to leverage their Internet-related investments.

Writing in Zona’s Enterprise Internet Deployment Update, vice president and chief analyst Clay Ryder characterized 1998 as a "transitional year for the Internet and Intranet marketplace." According to Ryder, the IT industry has shifted from a state of construction -- in which IT organizations simply lay down a corporatewide infrastructure necessary for Internet-related business and communications -- to that of exploitation, where IT organizations look to capitalize on the now proven infrastructure for the first time.

"Unlike years past when the furious pace of technological development and product introduction comprised the sum total of the Internet opportunity, 1998 witnessed an industry maturation whereby Internet-integrated business reached the front burner," Ryder writes, also noting that enterprises "made technology investments in 1998 which they believe will offer them a competitive advantage in 1999."

The Zona study also revealed corporate perspectives concerning Internet connectivity suppliers, value-added service providers and the deployment of Web application servers.

In the area of connectivity suppliers, Zona’s Ryder points to what he terms a "deployment gap" that exists between regional and international ISPs, the two forms of connectivity suppliers most often favored by businesses. "Although the budding national providers such as Netcom made quite a splash a few years past, it appears that at least for our sample, this tier of player has not captured the leading market position," Ryder notes. Zona also found that businesses are not deploying end-user dial-up services through large online services, such as America Online (www.aol.com) or CompuServe (www.compuserve.com), as was the case in years past.

To differentiate their product offerings from the competition, many ISPs in the marketplace are adding value-added or "premium" services, the Zona study finds. "Several of the larger, and now many of the smaller, providers are offering a surfeit of value-added and often premium-priced functions to complement their vanilla connectivity offerings," Ryder acknowledges. He observes that Web site hosting is the most commonly deployed value-added service that enterprises are obtaining from their service providers.

In addition, Zona found that ISPs are beginning to offer service-level-management services to enforce service-level guarantees, an attractive option for many enterprises. "This is yet another indicator that when Internet access becomes a business-critical part of the enterprise, service-level guarantees are expected, and that the enterprise is willing to pay for them," Ryder explains.

One of the most interesting findings of the Zona study covered the growing trend in Internet-related application outsourcing. Zona found that e-mail, electronic commerce catalogs and audio/video conferencing were the application types that enterprises most often outsourced to ISPs.

Not surprisingly, Zona discovered enterprises were less eager to outsource application types that could compromise corporate security. "Services that deal with more sensitive materials, such as sales force automation, collaboration, calendaring, etc., are less likely to be viewed as an activity that can be outsourced," Ryder writes.

In the area of Web servers, the Zona study identifies a transition from the deployment of vanilla HTTP servers to that of Web application servers. Although 19 percent of the study’s respondents indicated that their enterprises had fully deployed their Web application servers, 36 percent indicated that their organizations were in a limited deployment phase.

According to Ryder, the combined statistics mean that a majority of sites are currently developing Web application server-based solutions, and that "a sizable number of organizations [43 percent] are still in the trenches designing, implementing, and testing these solutions."

Not surprisingly, most Web application servers are deployed as the backbone for e-mail-based solutions, although Zona also found that Web application servers are being deployed in the e-commerce space for commerce transaction or order processing solutions.

Finally, the Zona study finds that the trend toward the outsourcing of services in many corporate IT departments has done much to erode the traditional separation between the enterprise LAN or intranet and the Internet. "We see this reflected in the increased interest in outsourcing segments of enterprise network services, such as e-mail, document management, internal and external customer assistance, and groupware and scheduling functions," Ryder writes.

Stage of Enterprise's Current Web Application Development

No Development 12%

Pilot Development 23%

Early State Development 10%

Limited Deployment 36%

Full Deployment 19%

Source: Zona Research Inc.