Application integration market faces growing pains

Enterprise application integration (EAI) software offers users a packaged approach to tying together different corporate systems and applications. But the fast-growing EAI market is highly dynamic and ripe for change as numerous small vendors jockey for position, according to attendees at a Gartner Group Inc. conference in Orlando, Fla.

The EAI business continues to be beset by a “lot of turmoil,” said Gartner analyst Roy Schulte during a roundtable discussion at the conference. Packaged EAI software virtually didn’t exist just a few years ago, and now there are about 40 vendors vying for the budgets of users with integration projects in the works, Schulte said.

Stamford, Conn.-based Gartner predicts that sales of EAI software will total about US$2 billion next year, up from a mere $240 million in 1998. But Schulte and other Gartner analysts said they expect a lot of changes to occur in the future, including the emergence of IBM and Microsoft Corp. as dominant EAI vendors.

But the products offered by IBM and Microsoft are far from being completely mature, according to Schulte. IBM faces a potentially disruptive transformation of its MQSeries Integrator software, which is being updated in a new release that Schulte said differs sharply from the first version of the EAI tool and remains unproved.

Meanwhile, Microsoft has yet to release its BizTalk Server 2000 software, which will support EAI uses. At the Comdex/Fall 2000 exhibition in Las Vegas this week, Microsoft said it expects to make the XML-based BizTalk package available on a general basis in either January or February.

After IBM and Microsoft come a handful of other fairly sizable vendors and then a multitude of smaller ones, Schulte said. Some of them are struggling, despite the growth of the EAI market as a whole, he added. For example, Mercator Software Inc. in Wilton, Conn., had to restate its financial results for the first half of the year and then reported an $8.6 million net loss for the third quarter.

Some users said they aren’t overly concerned about the possibility that the EAI vendor they choose now could disappear tomorrow.

“I wouldn’t hesitate to go with a smaller company that might get bought out,” said Scott Rogers, a business systems integrator at clothing manufacturer VF Corp. in Greensboro, N.C. But Rogers added that VF – which makes products such as Lee and Wrangler jeans – chose EAI technology developed by New Era of Networks Inc. in Englewood, Colo., partly because of that company’s business relationship with IBM.

That deal made VF more comfortable with doing business with a relatively small vendor, Rogers said. He advised users who are evaluating EAI software to “do your homework and make sure the product has [good] technical support.”

Microsoft’s expected arrival as a major EAI vendor could help legitimize the technology in the eyes of many users, said Randy Reed, an application engineer at The Foxboro C., a Foxboro, Mass.-based maker of industrial control systems that expects to become a BizTalk Server customer.

“[EAI] is still an immature market,” Reed said. “The biggest inhibitor is confusion. People are waiting for a big player to come in.”