Will the process integrators integrate?
The recent 'Wheels within wheels' articles, by Philip Howard, on the data connector market, caught my interest. He wrote about the trend for mergers and acquisitions reducing the number of players and the possibility of '... a full scale collapse in the data connector market, with only very few of these vendors remaining independent in the longer term.' It begged the question is there any similar dynamic in the integration space I cover EAI, B2B, BPM etc.
The answer, if anything, is the opposite. The number of companies and products in this space is still expanding and specialist companies in the space are broadening the use of their technology. In fact one of my first questions when I speak to a vendor is 'Why are you in, or getting into, a market that already has so many players?' I try and dress the question up a bit so it is not quite so brutal but that is the question. The interesting thing is that most of them come up with cogent reason; this suggests that this market it not likely to collapse any time soon.
So here are some of the directions these products come from.
Industry Verticals expanding out: companies have specialised in the problems of a particular industry vertical such as finance, retail or health care. They develop products to help companies to integrate processes within the industry and as a by-product develop some technology that can solve any application/process integration problem. They have been coming under attack from the more generalist players. So they have looked at their integration technology, decided it is world class, repackaged it and gone for the bigger market. New Technology popping up: looking at the problem afresh and particularly with the advent of standards (XML, J2CA, BPEL…) the cost of entry has gone down in the last couple of years. Start-up companies without any legacy integration technology can develop innovative solutions and be able to sell them as modern, flexible, tighter and less expensive.
Messaging going up the stack: companies that started in the messaging layer and concentrated in assured delivery and publish/subscribe move up the stack into routing and then business process management. This is a logical progression and by building on their existing messaging expertise and technology they can often build well integrated and easy to use solutions.
Application Servers moving sideways: all the application server vendors have realised that it is not possible to draw a neat line between application development and integration. Also building integration solutions is simplified if it takes advantage of some base application server technology. This allows them to build a single Integrated Development Environment and also helps to integrate the operations' tools. In general these are the big boys and they are keen on getting as much of the cake as possible.
Pure plays breaking out: there are several pure players in this space that have been around for sometime. One of their problems is their legacy. They had to invent everything, some of which has now been subsumed into standards and some taken over by specialist connector firms. This has meant they have had to re-architect and re-develop much of their product line and are now emerging with new shiny products in a much more crowded market.
The future: so where will this market go over the next 24 months? It would appear that the market is over crowded and some rationalisation must occur. It is more difficult to predict how that will occur as mergers and acquisitions in general do not seem very attractive. The problem being that integrating integration products from two companies into one product line is difficult and the resultant product will have little extra functionality than either of its parents. So lots of expense and trauma for little gain and it would often be cheaper just to extend one of the products.
Some companies will just go to the wall or be bought at the last minute for the customer base and specialist knowledge of the employees.
Others will soldier on with a loyal, or locked in, customer base but be unable to successfully expand.
In any event it will be interesting times and I will enjoy continuing to track the changes and I wish all the vendors the very best of luck.
Copyright 2003. Originally published by IT-Director.com, reprinted with permission. IT-Director.com provides IT decision makers with free daily e-mails containing news analysis, member-only discussion forums, free research, technology spotlights and free on-line consultancy. To register for a free e-mail subscription, click here.
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