E-BUSINESS POWERS UNPRECEDENTED GROWTH IN EAI

E-Business Powers Unprecedented Growth In EAI As Integration Solutions Become Business Imperative

The European Enterprise Application Integration (EAI) Market E-business shines unforgiving spotlights on poor internal business processes. The main thrust of Enterprise Application Integration (EAI) activity used to focus on the integration of applications within organizational boundaries. The explosive growth of e-business has meant that integration increasingly involves outward-facing processes that touch more areas of a company's back-end systems than earlier point-to-point integration projects. Most organizations need application integration products and will migrate to their usage to meet the demands of e-business.

The rise of e-business has therefore forced companies to look outside their corporate perimeters to integrate their B2B (business-to-business) and B2C (business-to-consumer) applications with existing solutions, such as Supply Chain Management (SCM), Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM).

Guy Chaigneau, Research Analyst at Frost & Sullivan, reiterates that EAI is an absolute must for any company implementing an e-business strategy. "EAI provides the required infrastructure that will allow the application integration, supply chain integration, the streamlining of business processes," he points out. "The key benefit is the flexibility or agility that carefully architected integration brings to the enterprise, permitting rapid response to new business opportunities."

A new study by Frost & Sullivan, the international marketing consulting company, paints a bright picture of the European EAI market's growth potential. Licence revenues in the EAI products and B2B integration products segments are forecast to jointly amass revenues worth $2.15 billion in 2001.

However, a certain degree of confusion in the market, along with issues surrounding interoperability and standards - which have historically been growth-inhibiting factors - will persist.

In the long run the total market is forecast to flourish on the back of the B2B integration sector. Companies' fundamental need to retain their competitive edge and the prevailing fear of missing out on potential markets will stimulate investments.

From 2003 onwards, more European enterprises are expected to start integrating their business partners or join trading hubs, having already deployed EAI technologies. By the end of the forecast period, the EAI software segment, currently accounting for the majority of revenues in the total market, will slip behind the emerging B2B integration segment.

Mr Chaigneau further explains that because of the current market conditions and the doom enveloping dot-coms, integration-awareness has increased. "Dot-com businesses have traditionally sacrificed long-term success at the expense of short-term gain, explaining the rate at which these start-ups fail. Most of these failures can be related to poor business models and execution, rather than to the concept of B2C e-commerce, and has been a direct result of poor integration."

"The upshot of these failures," he adds, "has been the revision, by traditional bricks-and-mortar companies planning an e-business strategy, of the fundamentals of business success. Thus, we are optimistic that the demise of dot-coms will have a positive impact on the integration software market."

The current trend in B2B and B2C e-commerce requires companies to integrate and streamline their business processes. "Opening up shop" without the means to respond and scale to real-time demand will destroy you. Again, The only effective corporate armoury is the reduction and elimination of manual input and the streamlining of e-business process.

Currently, the market is awash with pure-play EAI software vendors, who enjoy the highest level of visibility in the market. These include Tibco, Webmethods, Seebeyond, Level 8, Vitria and Neon Systems.

"However", the study adds, "the more mature vendors, most notably IBM, BEA, Microsoft, Oracle and HP are securing a foothold in the EAI market and will capture a growing slice of overall sales by capitalizing on their experience, complementary technologies, financial strength, wide distribution networks and brand visibility."

The market is forecast to change as the application server and EAI markets converge and redefine the EAI space. Also, supply chain management, enterprise resource planning, and other application vendors are slowly penetrating the market. The most visionary and innovative new entrants are expected to garner market share from their dominant and more established rivals. Furthermore, the study highlights Europe-wide consolidation and verticalization as a major trend characterising the EAI space in 2001 to 2002. The author concludes that his analysis of EAI vendor strategies reveals a number of interesting developments which will manifest themselves in the predicted shake-out.

About Frost & Sullivan

Frost & Sullivan, an international marketing consulting and management training company, has been providing the business community with authoritative and timely market information covering a broad spectrum of industries for nearly four decades. The company's unrivalled expertise in research analysis, innovative business solutions and management training has placed it at the cutting edge of the business intelligence world. Frost & Sullivan has undergone significant growth in recent years and is now one of the fastest growing marketing consulting companies, with head offices in the US, Europe and Asia.

Contact Kristina Menzefricke, +44 20 7343 8376, kristina.menzefricke@fs-europe.com.