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Cloud-based integration platforms underpin digital strategy

The application integration market is dominated by IBM and Oracle, but AWS and Salesforce are changing the game with integration platforms as a service

The worldwide application infrastructure and middleware market grew by 12% in 2017, and is expected to be worth $30bn in 2018, according to analyst Gartner.

Fabrizio Biscotti, research vice-president at Gartner, said demand is being driven by digitisation initiatives. “The more companies move toward digital business models, the greater the need for modern application infrastructure to connect data, software, users and hardware in ways that deliver new digital services or products,” he said.

Gartner’s numbers show that AIM (application integration and middleware) market revenue reached $28.5bn in 2017, an increase of 11.9% from 2016.

Although the market is dominated by large on-premise AIM software platforms, cloud-based integration platforms as a service (iPaaS) are gaining momentum. 

IBM and Oracle achieved single-digit growth in 2016 and 2017, and Gartner expects this growth to continue through to 2022. “We can generally describe the products in this slow-growing segment as serving legacy applications,” said Biscotti.

While IBM, with a 21.5% market share and Oracle (11.1%) dominate the market, Salesforce and Amazon Web Services (AWS) saw the largest growth rate. AWS grew its application infrastructure revenue from $382m to $839m between 2016 and 2017, an increase of almost 120%, while Salesforce’s application infrastructure revenue grew by 32% from $1.35bn to $1.79bn.

Biscotti said the most successful challengers in the AIM market will be those that position their products as complementary to, rather than replacements for, the existing legacy software infrastructure that is common in most large organisations.

“While new agile challengers may seem a better fit for those pursuing digital initiatives, the underlying reality is that legacy middleware and software integration platforms will persist,” he said. “Pure-play cloud integration is a niche requirement today – most buyers have more extensive requirements as they pursue hybrid integration models.

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“The long-term market is likely to consist of a broad spectrum, from generalist comprehensive integration suites to more-specialised fit-to-purpose offerings.”

The iPaaS market is still a small part of the overall market, topping $1bn in revenue for the first time in 2017 after growing by more than 60% in 2016 and 72% in 2017, said Gartner. This makes iPaaS one of the fastest-growing software segments, it added.

“The iPaaS market is also starting to consolidate, most notably with Salesforce’s recent acquisition of MuleSoft,” said Bindi Bhullar, research director at Gartner. “There is still a lot of room for further consolidation, with more than half the AIM market held by vendors outside the top five. This ‘others’ segment is enjoying double-digit growth, which is likely to encourage acquisitions from big players losing market share to challengers.”

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