Intelligent Enterprise

Life in the Slow Lane

Stuck in between all the gloomy headlines about job cuts and stock dives, you can find integration software companies making big money deals and actually beating Wall Street forecasts.

In March, General Motors Corp. tapped SeeBeyond Technology Corp. as its global standard for enterprise application integration (EAI). In the same month, WebMethods Inc. completed a deal with Ford Motor Co. to integrate Ford's call center and another pact with i2 Technologies Inc. to embed WebMethods software in i2 products. WebMethods also increased its fiscal year 2001 revenue projections to $205 million.

All of this success comes during an economic downturn and low stock prices. According to AMR Research analyst Amy Hedrick, the integration software market is still relatively new and because of the benefits it offers companies, it will thrive.

"The return on investment for integration is easy to see ... with the wave of mergers and acquisitions in business there is a greater need for integration software to easily integrate [recently acquired companies]," said Hedrick.

Integration is also surviving because it gives companies the ability to cut costs in a slowing economy. WebMethods believes that its focus on the cost-saving ability of integration has helped it continue to gain customers such as Ford.

"Six to seven months ago, customers were coming to us looking for new sales channel opportunities, while now companies are looking to use WebMethods to cut costs. Companies are using more scrutiny when deciding [on integration software], but that doesn't mean they are not spending," said Mike Destein, WebMethods director of product marketing.

Another key factor is that B2B integration software companies have barely penetrated the market. Both Hedrick and Destein believe there is still a huge opportunity for growth.

"Mid-tier companies need scaled-down pricing. Most small companies don't make $100,000 investments. However, mid-range companies have the same needs as Fortune 500 companies," said Hedrick.

However, Destein believes that the way for integration software companies to continue to succeed is to focus on the Global 2000. Whether the economy is up or down, Destein believes integration will be needed, at least its cost-cutting abilities. This drive to save money could sustain the integration software market.

Jeanette Perez