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The future of the integration market

Using a fairly general definition of the integration market, there appear to be a very large number of companies all fighting in the same space, writes Peter Abrahams of IT-Director.com.


Market Analysis

The future of the integration market
I have been asked several times about the future of the integration market. Using a fairly general definition of the market to include messaging, adapters, BPM, BAM etc the concern is that there appear to be a very large number of companies (in the order of 100) all fighting in the same space and it is not possible for them all to survive.

There are predictions that the number will drop to around 30 over the next three or four years. Even thirty seems a lot for this market.

However, my prediction at the moment is that the number will stay about the same for a mixture of the following reasons.

  • The technical cost of entry into the market has gone down with the advent of standards such as XML, Web services and BPEL. I am still seeing new companies being set up to enter the market. Standards are enabling companies that are successful in adjoining technologies (application development, application suites, networking etc.) to move someway into the integration space. They may not become full players but will offer a partial solution, which will mean that they have to be counted in the market.
  • Many of the integration vendors have started in a specific niche, a particular industry vertical or geographic solution. They have built up a viable company within that space with a sufficient legacy revenue stream to keep them alive if not thriving.
  • Given a viable base in the integration space many companies will diversify into related areas, such as business activity monitoring, optimisation, business modelling. The company will therefore expand and will still be in the integration space.
  • Migration from one integration product to another is not easy and most firms will not wish to do it because there is little if any pay back. They will continue to use the product they have even if they put another product alongside it. They will still spend money with the original integration vendor.
  • Mergers and acquisitions do not look attractive. The merged firm will land up with two overlapping product sets that are difficult to merge and a client set that will be unwilling to migrate. The cost effectiveness of the acquisition is uncertain at best and quite possibly negative. Rather than buying a company, it will normally be more effective to extend existing products.
So my prediction is that a few companies will go to the wall, some others will reinvent themselves and stop actively marketing their integration products, a few will be bought and merge, and a few new entrants will emerge. Therefore, the number of players will not change greatly.

The major software vendors will increasingly understand the importance of the integration market, show the benefits of a complete suite in this space, and take the lion's share of the market between them. But the market will grow fast enough for the smaller players who remain active to make a good living.


Copyright 2004. 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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