Application Integration Ripe for Consolidation

By Craig Stedman, ITworld |  Opinion

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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