A growing integration service providers market gives customers better choices, lower prices

The number of viable integration service providers is rising, giving companies more choices and lower prices for help with business-to-business (B2B) integration projects, according to a Gartner report.

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A number of up-and-comers have joined market-leading stalwarts in Gartner Inc.'s recent integration service providers (ISP) Magic Quadrant report, offering customers a wide selection of viable vendors to assist with business-to-business (B2B) integration projects.

Further good news for customers: Increased competition among ISPs is also bringing prices down, according to the report, issued last month by the Stamford, Conn.-based analyst firm.

Companies spent $1.5 billion on Integration as a Service (IaaS) and B2B project outsourcing services in 2007, according to the report, and Gartner predicts that figure will rise considerably over the next three to five years. ISPs, eager to grab a piece of the pie, have responded by lowering prices and making significant upgrades to their offerings.

"Nearly all integration service providers have been increasing their investments and competing more aggressively to capitalize on the growth of B2B project outsourcing," the report states. Among the developments, ISPs "continue to make significant investments to improve the availability and disaster recovery capabilities of their IT stack and IaaS data center."

ISPs help companies navigate the various Internet protocols and other barriers to inter-enterprise communications, according to Benoit Lheureux, vice president of research and co-author of the report. They assist with electronic data interchange, process-to-process and application-to-application integration, in-line translation, and community management to let companies do business electronically.

With huge, multi-tenant data centers optimized for B2B integration, ISPs offer companies a hands-off approach to e-commerce compared with traditional, in-house B2B gateway software, Lheureux said. "B2B integration isn't the most exciting of IT projects," he said. "ISPs let companies 'throw it over the fence' and focus on more important projects, like implementing a new CRM [or ERP] system."

Other ISP market trends include the use of business activity monitoring to let companies better monitor B2B integration projects and an increasing focus on service-oriented architectures and Web services by ISPs, as more companies include them in B2B projects, the report stated.

GXS, Sterling Commerce lead the ISP pack

Gaithersburg, Md.-based GXS Inc. and Sterling Commerce, with headquarters in Dublin, Ohio, were placed atop the leaders' quadrant. Gartner's Magic Quadrant methodology places vendors that meet its inclusion criteria into one of four quadrants based on "completeness of vision" and "ability to execute."

Leaders are those vendors that excel in both ability to execute and completeness of vision; challengers have the ability to execute but lack strong vision; visionaries are market-thought leaders, but they struggle with functionality issues; and niche players concentrate on just one or two specific segments of the B2B integration market, but do it well.

GXS, which the report described as the top ISP in the marketplace, was cited for improvements in uptime and recovery point objectives for its flagship platform, called Trading Grid. Other innovations, including adding customer online reports and a community management portal, and the establishment of partnerships with Microsoft Corp., Software AG and Verizon Communications Inc., also helped GXS maintain its leadership position.

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A growing B2B software and service customer base and its dual on-demand/on-premises delivery model helped Sterling Commerce land just behind GXS in the leaders' quadrant. Helsinki-based TietoEnator Corp. led the challengers' quadrant, thanks to its sophisticated "knowledge and contacts" in financial services, despite failing to gain market traction outside the Nordic countries, the report said.

E2open Inc., Inovis Inc. and Crossgate AG joined GXS and Sterling Commerce in the leaders' quadrant, followed by EasyLink Services and Liaison Technologies Inc. in the challengers' quadrant. Niche players included Elemica Inc., nuBridges Inc., Advanced Data Exchange, and T-Systems Enterprise Services GmbH, while visionaries SPS Commerce Inc. and Hubspan Inc. rounded out the report.

ISP evaluation advice

Companies evaluating ISPs and B2B gateway software should eschew an either-or approach to B2B integration, Lheureux said, and instead consider a hybrid model combining outsourced integration services with internal B2B gateway software where appropriate.

For example, companies might consider handling B2B integration internally when dealing with suppliers and partners that use the same Internet protocol to communicate -- say FTP -- but outsource integration efforts to an ISP to connect with non-FTP-based companies, Lheureux said, adding that time to deployment and cost are also important factors to consider.

Lheureux also predicted that most companies will consolidate their B2B integration functions -- whether internal, outsourced or a combination of both -- within the next three to five years, as many have done with internal integration functions through integration competency centers.

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