Application integration ripe for consolidation

Computer World –

As vendors of application integration software jockey for position, analysts predict the crowded market is ripe for consolidation.

"Ultimately, there aren't going to be as many vendors in this market as there are today, no question,"' said Dan Sholler, an analyst at Meta Group Inc. in Stamford, Conn. As a result, he added, the $1 million-plus investment that integration tools can require remains a risky proposition for users.

As many as 40 software companies have rushed to develop tools for tying together different systems. Now, some are starting to put together more comprehensive packages of integration technology so they can better meet user needs.This week, for example, Englewood, Colo.-based New Era of Networks Inc. announced its second acquisition in two months: a $42 million purchase of Convoy Corp. in Emeryville, Calif. Convoy makes software for linking PeopleSoft Inc.'s business applications to homegrown systems.

And earlier this month, Swedish consulting firm Frontec Group said its application integration software division is being spun off into a separate Atlanta-based company in an attempt to jump-start sales. Officials at the Viewlocity Inc. spin-off said they're close to making some acquisitions to expand on Frontec's technology.

AMR Research Inc. in Boston estimated sales of integration tools totaled $450 million last year and should grow at least 50% this year.

But the market "is still like the wild West,"' said Kimberly Knickle, an analyst at AMR. "We have no way of predicting who's going to be there in the long run."

Integration software "isn't very far along on the maturity curve," Sholler said. And most users have "a huge gap between their vision for what they want to do with the technology and what they've done so far," he added.

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