Big-Bang EAI Projects No Longer Heard

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July 02, 2003 (12:34 PM EDT)

Current trends in the EAI market show that corporations are no longer interested in deploying corporate-wide integration infrastructure capable of managing complex interactions among disparate applications, market research firm the Yankee Group said Wednesday in a research note.

Instead, corporations are buying integration tools to meet the requirement of specific projects, such as tying customer service software to financial applications.

As a result of this corporate preference, business application companies and web infrastructure vendors are embedding adapters, process modeling tools and integration brokers into their products. Examples of the former are SAP AG, PeopleSoft and Siebel, while the latter include Microsoft, IBM, BEA Systems and Oracle.

The Yankee Group said Wednesday that so-called "big bang" deployments of EAI technology are becoming as unpopular as huge deployments of enterprise resource planning applications, which were welcome in the 1990s.

The reason is EAI software seldom delivered on its promise of a single, unified integration architecture that could tie a company's old and new applications. Problems often arose when IT systems inevitably changed within individual divisions or through mergers and acquisitions.

"For most organizations, that implementation approach was too difficult," Jon Derome, Yankee analyst and author of the research note, said. "The reason being, you need to force certain behaviors. Everyone has to agree at a divisional level that they'll tie into this architecture and they won't change their systems."

Changes in technology didn't help either. Companies that bought EAI software found their investments devalued sooner than expected as new integration standards emerged, Derome said.

Therefore, by the end of 2004, 50 percent of total integration software sales is expected to go to business application vendors that provide their own tools and web application platform companies, the Yankee Group said. By 2006, 76 percent of sales is projected to go to those vendors.

To survive, pure-play EAI vendors will have to focus on industries that use lots of proprietary software to manage their business, such as financial services, health care, telecommunications, utilities and government. The deeper the domain expertise of EAI vendors in specific industries, the more likely they'll be able to find work.

"One or two best-of-breed EAI vendors will survive as horizontal solution vendors -- most likely TIBCO and WebMethods," Derome said. "Competitors should seek acquisition partners or find an attractive vertical market to serve."

Other EAI vendors, such as Vitria, SeeBeyond and Mercator, are already focusing on product for specific industries.

"The demand in the marketplace won't be sufficient to sustain more than two (horizontal) vendors," Derome said. "The pie won't be big enough to spread across the full collection of vendors."

Web application platform vendors, on the other hand, will be able to decrease the total cost of ownership of their products through the inclusion of integration tools, which will attract more business.

In its recommendations to the enterprise, Yankee Group advised companies looking to standardize around a business application suite, such as ERP or customer relationship management (CRM), to assess their vendor's ability to reduce long-term integration expenses.

"Siebel, PeopleSoft and SAP tell compelling application integration TCO stories in the sales cycle, but their products are new and lack significant customer references," Derome said.

For enterprises looking to automate business activities with suppliers and partners, the Yankee Group recommended considering platform vendors like BEA, IBM, Microsoft and Oracle.

"These vendors bundle mature integration software with portal and application server technology, creating effective edge-of-the-enterprise solutions," Derome said.

The research note is based on the Yankee Group's "2003 Integration Expense Survey" scheduled for release in August.