Web services could be second only to the internet in terms of its impact on corporate users, with e-commerce the killer application, according to new research from Yankee Group.

In a report entitled Top vendors already stake their claims in web services, the analyst acknowledges web services as more hype than substance and still in need of a killer application.

But it insists that web services "have the potential to be second to the internet in their importance and impact on corporate users".

Yankee Group believes that the killer application may well be e-commerce and it expects demand to peak in three to four years.

"The data and graphics intensive e-commerce applications may well be a $15bn [£9.35bn] market by 2005, and could very well propel the adoption of web services," said the analyst.

The report urges corporate customers to prepare existing infrastructures and legacy applications for a migration to web services over the next 12 to 18 months. Report author Laura Didio said she understood why most companies would move more slowly, but they needed to start now as there was a lot of work to do.

"It's the first day of school for everyone. Organisations are still trying to integrate legacy and non-web systems, and you need to web-enable your whole organisation. Companies are looking for practical, tactical advice," she said.

The analyst cited a survey of 1,500 IT professionals worldwide, conducted jointly with Florida-based Sunbelt Software, together with face-to-face feedback from Yankee Group US seminars over a 12-month period.

Only seven per cent of the respondents expected to deploy web services in the next 12 months, concentrated mainly in financial services, insurance and large-scale healthcare provider markets.

But Didio was relaxed at the slow adoption rate. "This actually helps web services. The industry at large really needs to do it right - and a steady, well-defined, knowledgeable transition is best," she said.

In keeping with this aim, the report stated corporate users were demanding "a network infrastructure that is dynamic, scalable, resilient, secure and highly available" before deploying web services.

Other reasons for holding back include:

• No compelling business need (32.3 per cent)
• Continuing with existing plans (24.5 per cent)
• Lack of skilled staff (20.6 per cent)
• Immature web services and standards (13.3 per cent)
• Complexity (9.4 per cent).

The report recommends corporates to carry out a full assessment of infrastructure to identify where upgrades are needed, analyse the likely costs of moving to web services and develop a business case justification.

They should then look at existing toolkits to familiarise themselves with web services theory and actual function.