New META Group Study Finds Web Application Development Outsourcing Market Fragmented and Immature

Business Wire, Dec 15, 1998

STAMFORD, Conn.--(BUSINESS WIRE)--Dec. 14, 1998--

Total Solutions Do Not Exist and Vendors Struggle to Integrate

Creative and Technical Service Expertise

META Group Inc. (Nasdaq:METG) today announced preliminary results of an ongoing study of Global 2000 companies that outsource their Web application development efforts. The results show increasing popularity for Web application development outsourcing. However, the study also indicates that the Web application provider market remains fragmented and immature, with no clear market leaders yet emerging.

The outsourcing study, including a Web application vendor ranking system, is the latest component of META Group's Outsourcing Index. Designed to help clients make better sourcing decisions, the Outsourcing Index is based on information gleaned from META Group's integrated research, advisory services, and consulting. A summary of the Web application vendor rankings can be found on the Web at www.metagroup.com.

According to META Group, few outsourcing firms truly combine proven creative, technical, and business strategy/process skills necessary to design and construct increasingly complex Web applications (i.e., customer relationship management, electronic commerce). In addition, many companies struggle internally with this problem -- further fueling outsourcing demand. Accordingly, META Group predicts that, by 2003, more than 75% of Global 2000 companies will outsource a portion of their complex Web application development efforts.

The recent META Group study, which ranked the capabilities of Web application development outsourcers, found the majority of vendors are receiving mixed reviews from clients. For example, large traditional IT service firms have exhibited skills in technical development and systems integration, but are weak in creative content development and design. These firms were also found to deliver inconsistent services across their organizations.

The study revealed that many small "boutiques" excel in creative services, but lack the technological expertise to integrate the applications in legacy environments. The study also shows these firms are poor at project management. Overall, however, the highest-rated firms were typically smaller, more nimble companies, as well as specialized service organizations.

"Organizations must first understand specific project needs and the skilled resources available in-house before considering outsourcer selection," said Stan Lepeak, vice president of META Group's Advanced Information Management Strategies (AIMS) service. "Extensive due diligence is also required in the selection process. Traditional IT service firms are not always the best option, yet many smaller, specialized boutiques are inconsistent and difficult to assess, and may not prove viable partners for large, G2000 firms."

The META Group study ranks vendors according to their overall viability, usability, and geographic reach, as well as their ability to deliver Internet business and creative strategy/content, technical expertise, and operations. Vendors that were evaluated include USWeb, Andersen Consulting, KPMG, Ernst & Young, Electronic Data Systems (EDS), Computer Sciences Corp. (CSC), IBM Global Services (IGS), and Cambridge Technology Partners, among others.

About Advanced Information Management Strategies (AIMS)

AIMS pragmatically analyzes technologies and trends impacting business and organizational transformation, including electronic commerce, knowledge management, process management, information management (e.g., documents, images, text, HTML, video), and creation of content-centric Internet applications and environments. AIMS evaluates supplier, consultant, and integrator offerings and methodologies, while providing strategic insight about when and what to source across the above areas.

About META Group

META Group helps companies make better information technology (IT) decisions by providing research and unlimited analyst consultation relevant to their specific business needs. Offering advisory services, consulting/benchmarking, and publications that span the full spectrum of IT, META Group addresses the latest technologies, industry trends, and business challenges. With more than 1,600 client companies worldwide, META Group differentiates itself from other information providers through its commitment to highly personal service (enabling "analysis in context"), bottom-line answers, and objectivity. To support this promise, META Group maintains a client-to-analyst ratio of 50:1 -- the lowest in the industry -- and reinvests almost 50% of its revenue back into research and client services. For details, connect with www.metagroup.com.

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