SMEs to turn to brokers for app integration

Integration brokers will flood the application integration market within 10 years, according to research group Gartner.

While application integration products for enterprise costing between $US400,000 to $700,000 for a development tool, Gartner predicted that small-to-medium enterprises (SMEs) will become reliant on services providers.

IT architecture is moving from internal "single building" pieces to large "citywide" systems, said John Roberts, a research director with Gartner. "E-businesses are asking, 'how do you build all the hooks that will enable these disparate systems to somehow talk to each other when you're never fully in control?'

"The real challenge for where we're going in the future is: now I want to architect the world - and you can't," he said. "Application integration becomes a world wide web of all sorts of interdependencies. Everybody wants to do it independently, but nobody is in control across all of this."

Roberts attributes this to the SME sector's lack of IT skills to adequately implement integration systems. "With an average of 10 or 20 IT staff, they are not going to pick this up - they don't have the capability. They will rely on service providers.

"Australia must understand that we're different. We only have 10 or 20 large organisations with 1000-plus IT staff, and they are organisations like the banks, Centrelink, the ATO, and Telstra. These tend to be earlier adopters of IT and they're up with the state of play of the rest of the world."

He said Australia's "middleman" integrator market is set to grow, industry by industry. Examples Roberts named included Yesresources.com, a high-profile early intermediary for the mining sector, which has clients like Western Mining. Its profit in the last financial year was $400,000, Roberts said.

"These companies will form with the idea or concept. Some will try it, some will die, some will succeed," he said.

Ross Altman, Gartner's research director for application integration, suggested businesses can cut costs by reducing the number of interfaces that need to be built in an integrated application.

Accounting for cost of goods, licensing and employee training, businesses would see a return on investment in three to four years, Altman said.

Unless companies have built an internal "enterprise-right application", which offers a single data store with real-time data, "they've got no hope of showing (outsiders) the information they'd really like", Roberts asserted.

But only 5 to 10 per cent of organisations' business units are using integration tools, which are most popular among airlines, banks, insurance companies and government departments, the analysts said.

Established vendors in this space will not be threatened by intermediary groups, according to Altman. He recommended vendors exploit existing accounts for all the business their worth, forecasting that the market would be "saturated" in 10 years.

Long-time vendors in the field are IBM, Mercader Software, Web Methods, Vitria and Software Technologies. "Hot new entrants" include Sun, New Era of Networks, Siebel, Oracle and PeopleSoft, Altman said.

The local integration application market is currently worth $1 billion, up from $490 million in 1999.

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More about CentrelinkGartnerIBM AustraliaIntegration SystemsOraclePeopleSoftTelstra CorporationVitriaWeb MethodsYesresources

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