Enterprise Application Integration (EAI) vendors have to demonstrate they can still provide tactical solutions to users' short-term needs, as well as being a strategic partner for the future.
Trouble, what trouble?
As investors examine the "tech wreck", they should feel more comfortable putting their faith in software that satisfies a real underlying IT requirement, such as application-to-application integration. Connecting all those islands of information out there is one of the few software areas where growth is more or less guaranteed in both the short and long term.
So why has the recent market downturn affected EAI vendors the same as everybody else?
The problem with moving up the food chain
Without exception, all the EAI vendors have developed their products to provide increasingly sophisticated integration solutions, incorporating B2B and business process functionality. The reasons for this are:
- A genuine belief in the advantages of process-centric and B2B integration
- To differentiate themselves from vendors providing purely transformation, connectivity or messaging solutions, therefore justifying the value proposition that EAI is a new type of infrastructure software
- To make it possible to sell an integration solution to customers with little or no technical knowledge. By incorporating B2B and process functionality, vendors can illustrate the benefits of their product more readily to business leaders
The cumulative effect of EAI vendors' aspirations has been to drive their products towards providing strategic infrastructure solutions. Generally, they have successfully managed
to do this.
An unwanted side-effect of moving up the food chain to chase bigger (and recurring) sales with increasingly strategic solutions has been a lengthening of the EAI vendors' sales cycle. This has not been a good strategy in a flat market.
Customers are more tactical
The market downturn is affecting everyone. In many cases, only work that is seen as essential is undertaken. The current business mentality is "consolidate the position we have and make savings where possible". The excitement of entering new markets and changing the way you do business is currently an anathema to most business leaders. Customers no longer have the financial resources to think in the long term, but are conducting integration projects with a clear solution in mind. In particular, implementation in the shortest time possible, less regard for future requirements and a quick return on investment (ROI) are the current compelling requirements.
For many vendors, the longer sales cycles have inevitably caused cash flow problems. Given the current market conditions, cash flow difficulties can leave vendors increasingly exposed to internal and external fluctuations in business. Such problems may be interpreted as a sign of an underlying weakness, and scare off already jittery investors.
Who are the winners and losers?
Stretching your sales cycles in times of hardship is not a good idea. The likely winners in the current market will be those vendors that can still offer tactical EAI solutions. This is not necessarily a problem, because the more strategic aspects of an EAI solution, such as process management, can be dealt with at a later date, and often are.
However, vendors must work much harder on their marketing messages. Customers are often persuaded that an integration solution provides a full infrastructure for an organisation's e-business requirements, when more emphasis could be placed on the ability of the solution to provide a quick ROI. However, part of the problem of moving up the food chain is to increase the cost of the product, thereby making the former suggestion somewhat more difficult. Of course, it may be a little difficult to marginally reposition your products, but it is not insurmountable. Selling components of your EAI solution as a kind of "EAI lite" is a tried and tested marketing approach.
Marketing in the wrong market conditions
The success with which vendors have introduced new features to their integration solutions has led to some extraordinary claims. The consensus "push" has been to create an environment where integration vendors tell their customers how to meet the challenges of e-business - so far, so good. However, the tenacity with which vendors have made this point has led to a marketing overload. The combined strength of nearly every EAI vendor's claims that your business needs to have the correct infrastructure for e-business, and that they have the solution, may lead to something more than confusion, and of course delays in purchasing anything.
The marketing overload has been responsible for creating an atmosphere whereby integration vendors are telling potential customers how to run their business. Implementing business process automation is sometimes a tricky enough subject for an organisation to accept without receiving pseudo ultimatums from integration vendors, informing them that either they subscribe to the technology or they will be left behind.
A restructuring of vendor goals is required. They must concentrate on satisfying today's customer needs, rather than trying to create a need for the products that they now have.