NEW YORK, July 14, 2004 – A large majority of enterprise organizations achieved return-on-investment (ROI) sooner than anticipated on their externalization initiatives, according to the Nemertes Research benchmark research series, "Extending the Enterprise". 80% of benchmark participants achieved ROIs sooner than anticipated, with a typical break-even point of less than a year. Moreover, many companies are likely to obtain 3-year ROIs of more than 200%. IT executives cite the use of leading-edge technologies--particularly XML/Web services, security, and identity management--as key to achieving these ROIs.

"Identity management, web services, and effective security infrastructure are critical in ensuring the success of an externalization initiative," says Andreas M. Antonopoulos, Principal Research Analyst at Nemertes.

The benchmark documents the migration from user-to-system connections, with which external users access internal applications, to system-to-system networks that allow data centers to exchange data directly between systems. The report also covers the security and organizational challenges introduced by the migration to system-to-system networks, including increased pressure on the network perimeter to adapt and become more "porous" as applications are allowed to traverse it, and the potential organizational friction generated by business process changes.

• 100% of enterprises interviewed have externalized a non-core function, while 89% have also externalized a core function.
• Extending the enterprise will introduce business-process change into the organization. Although 93% of companies had to make changes to their business processes, a staggering 23% did not plan for change. As a result of this and other factors, 17% of companies faced “significant resistance to change” when deploying an extranet.
• “Conducting transactions faster” is a key driver for the trend to externalize the enterprise.
• XML and Web services are technologies currently used by 75% of participants in deploying extranets. Meanwhile, EDI is still widely used by 83% of participants.
• The two most-critical technologies that IT executives say “you must get right” are perimeter security and identity management. They were rated at 4.8 and 4.2 respectively on a scale of zero to five (five being the most important).

The report contains input from IT executives across a range of industries, including financial services, healthcare, manufacturing and government. More than half of the participating companies had annual revenues of $1 billion and up.

Founded in 2002, Nemertes Research specializes in analyzing the business value of emerging technologies for IT executives, vendors, and venture capitalists. Recent and upcoming research includes Web services, IP telephony, collaboration, and bandwidth optimization.

For more information, contact:
Shirlene Browne
Nemertes Research
Phone: 888-241-2685
Cell: 718-877-0074
shirlene@nemertes.com

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