Magic Quadrant for Integration Service Providers

Transcription

1 Research Publication Date: 28 May 2008 ID Number: G Magic Quadrant for Integration Service Providers Benoit J. Lheureux, Paolo Malinverno Increasing automation, international e-commerce, business-to-business service-oriented architecture, cloud computing and vendor innovation are driving new offerings, infrastructure improvements and consolidation in the integration-as-a-service and B2B project outsourcing market segments. Reproduction and distribution of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although Gartner's research may discuss legal issues related to the information technology business, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice.

2 WHAT YOU NEED TO KNOW Previous market leaders have retained their leadership, as well as a majority of the integrationas-a-service (IaaS) and business-to-business (B2B) project outsourcing market share. One new market leader and several new challengers and innovators are enjoying substantial growth, strengthening their competitive position relative to the leaders, and presenting IT users and business managers with a greater selection of viable choices when selecting a vendor to help implement complex, B2B integration projects. MAGIC QUADRANT Figure 1. Magic Quadrant for Integration Service Providers Source: Gartner (May 2008) Market Overview In 2007, companies spent more than $1.5 billion on IaaS and B2B project outsourcing services. They will spend much more in the next five years (see "Market Trends: Multienterprise/B2B Infrastructure Market, Worldwide, 2008"). Given their growing spending on such B2B services, companies should be aware of how the B2B market is evolving to maximize their ability to take advantage of B2B services in their B2B projects. Changes include: Publication Date: 28 May 2008/ID Number: G Page 2 of 21

3 B2B Infrastructure Modernization: Integration service providers continue to make significant investments to improve the availability and disaster recovery capabilities of their IT stack and IaaS data center. B2B Project Outsourcing: Nearly all integration service providers have been increasing their investments and competing more aggressively to capitalize on the growth of B2B project outsourcing. Community Management: Providers are rapidly enhancing their community management and external business partner onboarding capabilities. Cloud Computing: As cloud-computing scenarios such as software as a service (SaaS) emerge, IaaS providers are beginning to target their services to help cloud-based service providers address B2B integration. Multienterprise Process Choreography: Many B2B service providers offer some form of multienterprise process choreography as B2B projects evolving from document- to process-centric scenarios. Multienterprise Applications: Although multienterprise applications are not a key evaluation criterion for this Magic Quadrant, a key trend in the B2B market segment is for integration service providers to offer e-commerce SaaS functionality. Multienterprise Business Activity Monitoring (BAM): Nearly all providers of IaaS and B2B project outsourcing offer some form of multienterprise BAM to help B2B project owners better monitor B2B process execution. Web Services and Service-Oriented Architecture (SOA): Companies are more frequently deploying Web services and SOA in their B2B projects. B2B Consolidation Projects: IT users are increasingly implementing B2B consolidation projects to rationalize diverse point solutions onto one B2B infrastructure as part of their overall IT modernization initiatives. Mergers and Acquisitions: B2B service providers continue to consolidate through mergers and acquisitions, and expand their international operations to improve market share and their competitive positions. IT Megavendor Involvement: For the first time in 2006 and 2007, some of the so-called "IT megavendors," particularly Microsoft and SAP, directly engaged B2B vendors. Growing IaaS Revenue: In 2007, revenue for IaaS reported by the larger integration service providers (EasyLink, GXS, Inovis and Sterling Commerce) was basically flat, marking the end of five years of precipitous declines. European B2B Market: Backed by rapidly growing B2B integration traffic, the integration service provider market in Europe is active and growing rapidly, fueled by a variety of economic trends. IaaS Innovation: Despite the prominence of traditional B2B projects for example, involving electronic data interchange (EDI) there is still remarkable technology and go-to-market innovation in the integration service provider market segment. All these IaaS and B2B project outsourcing market segment trends are described in more detail in "Market Update for Integration Service Providers." Publication Date: 28 May 2008/ID Number: G Page 3 of 21

4 Market Definition/Description By 2011, midsize to large companies will at least double the number of multienterprise integration and interoperability projects they're managing and spend at least 50% more on B2B projects, compared with We define an integration service provider as an IT vendor that offers IaaS to IT users that want to fully or partially outsource their B2B projects. Vendors are considered for the Magic Quadrant if they offer IaaS as a stand-alone service or as a principal component of B2B project outsourcing. IaaS and B2B project outsourcing are two highly related forms of B2B infrastructure services (see "Taxonomy and Definitions for the Multienterprise/B2B Infrastructure Market"). For more than 20 years, integration service providers were generally called value-added network (VAN) providers; however, in recent years, traditional EDI vendors have evolved and new vendors have introduced new types of B2B infrastructure services. A highly diverse and growing set of IT vendors (more than 100 worldwide) offer B2B infrastructure services, including: Evolving EDI VANs for example, GXS, Inovis and Sterling Commerce Emerging Internet VANs for example, EasyLink, Hubspan and SPS Commerce Marketplaces and other industry-focused B2B providers for example, Descartes Systems Group, Elemica and Railinc SaaS providers for example, E2open System integrators for example, Atos Origin and IBM IT providers have labeled their B2B infrastructure services as VANs, transaction delivery networks, Web services networks, business process networks, business integration networks, business process hubs, integration service providers, marketplaces, EDI SaaS, integration SaaS and so on. Regardless of how vendors name their B2B services, we have considered and rated IT vendors as "integration service providers" for the purpose of this Magic Quadrant as long as they meet the inclusion criteria. Many IT buyers benefit from B2B infrastructure services that are fully embedded in other IT solutions, but our focus is on the IT vendors that are serving IT buyers of B2B infrastructure services to address general-purpose B2B project outsourcing requirements. For this reason, we only rate IT vendors that separately market and sell B2B integration services to such buyers, regardless of what other IT products or services they offer. Inclusion and Exclusion Criteria For a vendor to be considered for the integration service provider Magic Quadrant, it must: Separately market and sell IaaS as a discreet form of IT infrastructure SaaS: Vendors were not considered if their IaaS offerings were delivered only as bundled features along with other IT services (for example, hosted applications and business process outsourcing [BPO]), as is the case for some system integrators (for example, EDS) and SaaS providers (for example, salesforce.com). Vendors were considered, however, when IaaS was a predominant component of B2B project outsourcing. Generate at least $10 million a year from IaaS or the equivalent amount in a foreign currency: This figure excludes revenue from professional services and other sources of revenue related to IaaS. However, vendors that do not generate that much may be considered if they have the potential to significantly affect the B2B market. Publication Date: 28 May 2008/ID Number: G Page 4 of 21

5 Added Substantially support comprehensive IaaS features: Integration service providers were considered only when their IaaS offerings included substantial B2B capabilities in the areas of communications, integration and community management. Consideration was also given to multienterprise applications such as archival, online reporting, process visibility and supplier portals. However, this does not include e-commerce applications such as vendor management inventory or supplier relationship management. IaaS was only considered when delivered via a multitenant architecture. For example, this excludes traditional "managed EDI" delivered via single-instance, hosted EDI software. Have a substantial impact on the integration service provider market segment: This is determined by buyer demand for the vendor's solution, Gartner client interest and other factors. In 2006, Internet Commerce Corporation (ICC) acquired EasyLink Services and renamed the combined company EasyLink Services International. We have rated the new, combined company for this Magic Quadrant. In 2006, Indatex changed its name to Crossgate, which has been rated for this Magic Quadrant. For this Magic Quadrant, we initiated coverage of several U.S. and European-based vendors, including Elemica, Liaison, nubridges, T-Systems and SPS Commerce, because they now meet our Magic Quadrant inclusion criteria. Dropped In 2006, IBM's BPO organization acquired Viacore. For most of 2006 and 2007, it did not compete aggressively in the IaaS and B2B project outsourcing market segments. In recent months, Viacore has re-emerged as a competitor for B2B project outsourcing projects; however, it does not yet meet our inclusion criteria, so it was dropped and not rated for this Magic Quadrant, although we plan to monitor it closely. Seeburger keeps offering B2B services, but now considers them complementary to its core software offering, Seeburger's Business Integration Server. Because its focus for 2007 and 2008 will remain with its software offerings (having them complemented by integration services), Seeburger has been dropped from the Magic Quadrant. We will keep monitoring Seeburger's strategy and potential changes affecting its provision of B2B services. Notable Vendors Not Rated for This Magic Quadrant but Worth Watching Closely At the beginning of 2008, Atos Origin and Axway announced an alliance to jointly offer outsourced B2B integration services. The deal has potential, but will require staff retraining and greater focus outside Europe. We will monitor the effectiveness of this alliance throughout Boomi recently introduced an innovative, new IaaS offering targeted at emerging SaaS vendors; however, it doesn't yet meet our inclusion criteria, so it was not rated for this Magic Quadrant (see "Microsoft, Verizon and Other Vendors Drive IaaS Maturity"). Boomi's approach to the market is timely and differentiated. It is a vendor worth watching closely. In 2007, Microsoft introduced BizTalk Services, which provides a limited form of IaaS to facilitate multienterprise, composite application deployments. It did not meet our inclusion criteria, so was not rated for this Magic Quadrant; however, it is worth watching closely. StrikeIron offers a unique form of business information services that incorporates some elements of IaaS, although its emphasis is on the reliable delivery of business information services via Web Publication Date: 28 May 2008/ID Number: G Page 5 of 21

6 services rather than horizontal integration services (see "Cool Vendors in B2B Integration and Managed File Transfer, 2006"). Thus, it did not meet our inclusion criteria, but it is still a vendor worth watching closely. Evaluation Criteria Ability to Execute Gartner analysts evaluate providers on the quality and efficacy of the processes, systems, methods or procedures that enable IT provider performance to be competitive, efficient and effective, and to positively affect revenue, retention and reputation. Providers are judged on their ability and success in capitalizing on their vision. Product/Service Core goods and services that compete in and serve the defined market. This includes product/service capabilities, quality, feature sets, and skills that are offered natively or through OEM agreements/partnerships as defined in the market definition and detailed in the subcriteria. For integration service providers in particular, we consider overall hosted integration capabilities in five categories. Communication Services: Secure, reliable electronic transaction delivery between trading partners and application systems. Features may include traditional capabilities for example, asynchronous/bisynchronous, frame relay, virtual private network and interconnect agreements and emerging capabilities, such as Applicability Statement 2 (AS2), Web services and RosettaNet. Community Management Services: Management of initial provisioning and change maintenance for external business partners and the multienterprise community. This includes community development services, billing, operational reports and dashboards, small and midsize business trading-partner support and (self-) provisioning capabilities. The focus is on community management as it applies to managing B2B integration and infrastructure that is, the provisioning of electronic connections to all external business partners, and the operational and technical aspects of maintaining such multienterprise connections in production with the entire multienterprise community. In this Magic Quadrant, we do not substantially focus on community management as it applies to managing external business partner relationships or related applications, such as CRM or supplier relationship management. Integration Services: We evaluate integration functionality on the network, such as in-line translation, ontologies for multienterprise data transformation using canonical forms, protocol mapping (for example, between AS2 and FTP), intelligent routing, IaaS service provider interconnects, Web services choreography, process model-driven choreography of B2B services, SOA governance and data validation. To a lesser degree, we also evaluate on-premises integration software, appliances and other solutions that facilitate external business partner application integration (for example, to integrate SAP applications with the network). Application Services: We evaluate SaaS features primarily used to support multienterprise integration and related B2B infrastructure. Examples include multienterprise document and transaction archival, online reporting, as well as tracking and analysis of end-to-end document and transaction delivery. We consider Web EDI, Web forms, and customer and supplier portals primarily with regard to how these applications are used to enable less IT-savvy external business partners to receive and send electronic documents and transactions. We do not substantially consider the ERP-related functionality included in many of these applications, such as order management. We consider multienterprise integration features, such as financial gateways and global data synchronization, but primarily focus on how these enable Publication Date: 28 May 2008/ID Number: G Page 6 of 21

7 multienterprise integration. We do not substantially consider e-invoicing or regional data pools. For this Magic Quadrant, we also do not substantially consider e-commerce applications such as catalog, vendor-managed inventory, logistics track and trace, regional data pools and order management. B2B Project Outsourcing: We evaluate discrete IT outsourcing service offerings that combine IaaS (as defined in the four categories above) with the people and processes necessary to manage the B2B infrastructure. Here, we refer only to outsourcing of the combined B2B infrastructure and B2B project (for example, supply chain integration outsourcing), not to morecomprehensive outsourcing (for example, outsourcing of procurement in its entirety). Overall Viability (Business Unit, Financial, Strategy, Organization) and Financials Includes an assessment of the organization's financial health, the financial and practical success of the business unit, and the likelihood of the individual business unit to continue to invest in the product, offer the product and advance the state of the art in the organization's portfolio of products. Because of the relatively high switching costs and potential impact integration service providers have on their users, we consider a vendor's relative size, financial stability and management commitment to this market. Sales Execution/Pricing The provider's capabilities in all presales activities and the structure that supports them. This includes deal management, pricing and negotiation, presales support and the overall effectiveness of the sales channel. For integration service providers, we track revenue and network use, such as the number of users, B2B projects implemented and network volume. We also evaluate whether contracts for fixed and recurring service fees, as well as B2B project outsourcing service fees, are expressed with clarity and predictability. Market Responsiveness and Track Record Ability to respond, change direction, be flexible and achieve competitive success as opportunities develop, competitors act, customer needs evolve and market dynamics change. This criterion also considers the provider's history of responsiveness. Market Execution The clarity, quality, creativity and efficacy of programs designed to deliver the organization's message to influence the market, promote the brand and business, increase awareness of the products, and establish a positive identification with the product/brand and organization in the minds of buyers. This "mind share" can be driven by a combination of publicity, promotion, thought leadership, word-of-mouth and sales activities. Customer Experience Relationships, products and services/programs that enable clients to be successful with the products evaluated. Specifically, this includes the ways customers receive technical or account support. This also can include ancillary tools, customer support programs (and the quality thereof), availability of user groups and service-level agreements (SLAs). For integration service providers, we track the specificity and quality of support (domestic and regionalized), as well as the quality of its contracts and SLAs. Operations The ability of the organization to meet its goals and commitments. Factors include the quality of the organizational structure, such as skills, experiences, programs, systems and other vehicles that enable the organization to operate effectively and efficiently on an ongoing basis. In particular for integration service providers, we are interested in the scope (for example, persons and data centers) and quality of their hosted integration service platforms, including metrics for efficiency and scale. Publication Date: 28 May 2008/ID Number: G Page 7 of 21

8 Table 1. Ability to Execute Evaluation Criteria Evaluation Criteria Product/Service Overall Viability (Business Unit, Financial, Strategy, Organization) Sales Execution/Pricing Market Responsiveness and Track Record Marketing Execution Customer Experience Operations Source: Gartner Weighting high high high standard low high standard Completeness of Vision Providers are evaluated based on their ability to convincingly articulate logical statements about market direction, innovation, customer needs, competitive forces and how well they map to the Gartner position. Providers are rated on their understanding of how market forces can be exploited to create opportunity for the provider. Market Understanding Ability to understand buyers' needs and translate those needs into products and services. Vendors that show the highest degree of vision listen and understand buyers' wants and needs, and can shape or enhance those wants and needs with their added vision. For integration service providers, we also assess how well they understand the evolution of horizontal, hosted integration services and the emergence of process- and industry-specific business process networks, multienterprise business process platforms, and their role relative to these market changes. Marketing Strategy A clear, differentiated set of messages consistently communicated throughout the organization and externalized through the Web site, advertising, customer programs and positioning statements. Sales Strategy The strategy for selling products that use the appropriate network of direct and indirect sales, marketing, service and communication affiliates that extend the scope and depth of market reach, skills, expertise, technologies, services and the customer base. Offering (Product) Strategy A provider's approach to product development and delivery that emphasizes differentiation, functionality, methodology and feature set as they map to current and future requirements. For integration service providers, we assess the integration service platform architecture, how integration features are implemented, the use of third-party technologies and multitenant attributes. Business Model The soundness and logic of a provider's underlying business proposition. An example of what we look for from integration service providers is what types of fees (fixed and recurring) they charge. Vertical/Industry Strategy The provider's strategy to direct resources, skills and offerings to meet the specific needs of individual market segments, including vertical industries. In particular for integration service providers, we look at what industries they focus on and what industry-specific solutions they offer. Publication Date: 28 May 2008/ID Number: G Page 8 of 21

9 Innovation Direct, related, complementary and synergistic layouts of resources, expertise or capital for investment, consolidation, defensive or pre-emptive purposes. For integration service providers, we consider innovations seen by end users (for example, in-line translation and community management), as well as features not necessarily visible to end users (for example, special management tools to administer fault-tolerant systems). Geographic Strategy The provider's strategy to direct resources, skills and offerings to meet the specific needs of geographies outside their native geography directly or through partners, channels and subsidiaries, as appropriate for that geography and market. For integration service providers, our evaluation includes nondomestic business and network points of presence, such as data centers, support centers and sales offices. Table 2. Completeness of Vision Evaluation Criteria Evaluation Criteria Market Understanding Marketing Strategy Sales Strategy Offering (Product) Strategy Business Model Vertical/Industry Strategy Innovation Geographic Strategy Source: Gartner Weighting high standard low standard standard low standard standard Leaders In the highly evolving IaaS and B2B project outsourcing market segments, leaders must have a critical mass of users (community) in selected industries; a comprehensive and compelling service offering vision; a significant geographic reach (or be likely to establish one); secure, reliable and efficient hosted integration service operations; sustained profitability (or likely to establish it); and strong account management and customer loyalty. They must also be regularly on organizations' shortlists for new B2B projects and be agents of change to the evolving market segment. Crossgate: Building on a good client base in the German automotive, chemicals/process manufacturing, consumer packaged goods and logistics supply chain industries in the past years, Crossgate (formerly known as Indatex) is one of the few European integration service providers aggressively targeting the diverse requirements of multinational organizations throughout Europe and beyond, which is a growing market with few players. Crossgate is also a business process network, offering the automation of classical B2B processes over a variety of media (paper, fax, EDI, Web, Short Message Service, , radio frequency identification and global positioning system) through its Business-Ready Network. A recent partnership with SAP (see "Crossgate Challenges B2B Market With Tight Alliance With SAP") has boosted considerably Crossgate's visibility and its reach outside Central Europe. Among European integration service providers, Crossgate is the only leader, but it faces steep challenges mainly related to its expansion strategy. Sustaining its growth, proving its ability to execute its good vision for the B2B service market and scaling to support new customers (maintaining their current satisfaction level) will be the keys for Crossgate in 2008 and Publication Date: 28 May 2008/ID Number: G Page 9 of 21

10 E2open: In the past two years, E2open has continued to execute well in delivering comprehensive IaaS, often embedded in B2B project outsourcing services. It has established a good reputation for implementing large-scale, international B2B projects involving custom business processes, complex in-line data translation and direct back-end system integration to ERP systems, such as SAP. Its growing customer base is driving substantial revenue growth and has expanded E2open out of hi-tech manufacturing into "near neighbor" industries, such as telecommunications, aerospace and defense. Its modern, best-of-breed IT stack and operations are highly available, and include emerging features such as self-service community management. Although E2open has strengthened its leadership position on both axes in the Magic Quadrant relative to its competition, to sustain leadership growth, it must sustain growth and substantially expand its international operations and growth outside its hi-tech manufacturing comfort zone. GXS: This vendor is still by far the leading provider of integration services, as measured by its integration service revenue, international reach and customer base. All new IaaS and B2B project outsourcing customers are deployed on its flagship platform, the Trading Grid. Although total revenue was slightly down in 2007 from the prior year, GXS has finally arrested the precipitous revenue declines of prior years, and it is anticipating modest year-to-year total revenue growth in Importantly, most growth comes from the Trading Grid, and recent innovations include Trading Grid Ultra (availability in excess of 99.9% and optional best-of-breed recovery point objectives [RPOs] and recovery time objectives [RTOs] of two and four hours, respectively), Trading Grid Online (customer online reports and community management portal), and Trading Grid for BizTalk Server (which enables BizTalk Server users to manage direct-connected and GXS-connected external business partners in one community management administrative environment). GXS has also established viable alliances with prominent companies in their respective industries, including Microsoft, Software AG and Verizon. Challenges include revenue growth in line with our estimates for IaaS and B2B project outsourcing market growth (see "Market Trends: Multienterprise/B2B Infrastructure Market, Worldwide, 2008"), sluggish adoption of its regional data pools and persistent network outages affecting customers on legacy platforms. Although all new GXS customers are deployed on the new Trading Grid, only about 50% of the total GXS customer base runs on the Trading Grid; many customers still run on legacy platforms (see "Outages Tarnish Reputation of GXS's Trading Grid"). Inovis: In the past few years, under new leadership (including CEO Sean Feeney), Inovis has evolved from being a company that was responding to change to a company that is planning for the future. Feeney helped to stabilize the company's financials, restore customer satisfaction (particularly with support) and complete the migration of all its customers onto its innovative, new MESH platform. His forward-looking actions included data center modernization (including bestof-breed availability and disaster recovery RPO/RTO objectives), acquiring U.K.-based Freeway Commerce (Inovis' first substantial presence in Europe) and recently acquiring BetweenMarkets (which gives Inovis best-of-breed, in-line data quality and compliance). Although Inovis' actions have helped it to moderately strengthen its leadership position, we believe that to retain its leadership rating in the future, it will be essential that Inovis expand its international presence, and significantly grow revenue and market share. Sterling Commerce: In the past two years, Sterling Commerce has increased the fault-tolerant levels in its data centers, introduced new functionality (such as its Supply Chain Visibility) and has made incremental improvements to its rebranded Sterling Collaborative Network (SCN). It has also arrested precipitous declines in VAN revenue and has substantially grown its emerging B2B project outsourcing business. It continues to sustain a good reputation for quality services and products, and has been experimenting with simplified integration service pricing. Although these actions helped Sterling Commerce sustain its ability to execute, it has not strengthened its position on completeness of vision, in part because of its distraction with recently acquired applications (such as those from Yantra, Nistevo and Comergent), the limited introduction of new Publication Date: 28 May 2008/ID Number: G Page 10 of 21

11 SCN features, the limited expansion of its international operations, and persistent challenges with contract renewal and account management. Challengers Challengers are viable providers that serve their users and execute well overall, but they are not strongly differentiated enough, and do not have enough resources or commitment to the market to be recognized as leading innovators and agents for change in this market segment. Challengers appeal to relatively risk-averse users whose B2B project requirements are well met by the vendors' mature integration service offerings but generally less-differentiated (perhaps niche or eclectic) B2B solutions or approaches. EasyLink: This is one of the few prominent international integration service providers, recently formed through the merger of ICC and EasyLink Services. EasyLink runs a modern, reliable, high-performance IaaS service and emerging B2B project outsourcing services. It also offers a wide range of diverse B2B integration services, such as integrated desktop messaging, bidirectional fax optical character recognition (OCR)/electronic document processing, production messaging for and legacy messaging services (such as Telex). It has a substantial international presence, particularly in the U.S. and Europe, and a foothold in the retail and automotive industries. Its challenges include an eclectic customer base, an equally eclectic portfolio of B2B solutions and more than a dozen data centers that likely should be consolidated to improve operational efficiency. Liaison: Born out of the forest products industry and one of the few marketplaces to successfully emerge out of the dot-com era, Liaison has established a good reputation for implementing large, complex multienterprise projects that typically combine IaaS and B2B project outsourcing with application functionality. Liaison has established a reputation for acquisitions to grow market share and secure technology via its acquisitions of Expresso and Anilinker (to strengthen its European presence), as well as Contivo (to secure best-of-breed, vocabulary-based mapping technology). Although Liaison is making significant investments to strengthen its international presence and expand out of the forest products industry, in the highly competitive integration service market, it will need to do more to help grow its market share and secure a significant presence in other industries. TietoEnator: TietoEnator is a large IT services company (annual turnover is 1.7 billion pounds), mainly operating in Nordic countries (Finland, Sweden, Norway and Denmark) in Europe. In addition to the other services the company provides, TietoEnator is an integration service provider, offering integration inside the firewall and B2B with clients' trading partners. In the past, for B2B project outsourcing, TietoEnator has tried to break out of its Nordic region shell to offer integration services in Central Europe by using offices in Germany and the Netherlands; however, so far, the majority of TietoEnator's revenue (and visibility) still stays in the Nordics, despite growing success in Eastern Europe. TietoEnator approaches all the vertical industries in the B2B service market from an innovative financial services angle, and its success in utilities and retail banks (sometimes white labeling its service) is a proof of that approach working. TietoEnator faces difficult challenges in its plan to grow B2B services out of the Nordic region, including a potentially disruptive, ongoing internal restructuring program to cut costs and fight falling profits, a largely unrecognized brand name and competition from national established players in the main European countries. Visionaries Visionaries have a unique and promising approach to hosted integration services, or the way they approach the market, but they have inherent constraints in their ability to execute (too late or too early to market; limited commitment, financial strength or geographical scope). Visionaries appeal Publication Date: 28 May 2008/ID Number: G Page 11 of 21

12 to relatively risk-tolerant users whose B2B project requirements are well met by the vendors' unique B2B solutions or approaches. Hubspan: Among all the providers of integration services rated, Hubspan has consistently been the most "pure," with a solution and business that are focused exclusively on B2B integration services (not diluted by selling software and applications). It has a holistic B2B project outsourcing offering with a strong embedded IaaS capability that is well-suited for custom multienterprise process choreography and complex multienterprise integration, such as customer integration (typically requiring diverse mapping and external business partner connectivity). Despite these strengths, Hubspan lacks significant market share in any vertical industry and has limited capacity to support international projects. To make its mark on this market segment, Hubspan will need to maintain recent revenue growth rates. SPS Commerce: Originally spun out of Saint Paul Software, SPS Commerce has effectively used supplier EDI testing as a lead generator to help establish a reputation as a cost-effective provider of B2B project outsourcing for small to midsize businesses (SMBs), which it positions as "EDI SaaS." It delivers low-cost, bundled B2B project outsourcing services, including scalable inline translation services to map B2B documents from large e-commerce hubs into formats required by SMBs for their back-office systems. Although SPS Commerce has established a prominent foothold among SMBs in the retail and grocery business, it will be challenged to sustain growth and differentiation as larger providers encroach on its SMB core competency with their own bundled solutions. Niche Players Niche players may be executing well in a narrow market, in a particular industry or with a particular service or feature that is good at solving a particular class of B2B integration requirements, but they may not be as applicable to the greater market overall. The vendor may be having trouble expressing its vision to the greater market, or is less likely to acquire a critical mass in or unilaterally drive significant change in this market. Niche vendors will appeal to users when there is a strong match between the vendor's offering and the particular B2B project requirements (for example, geographical fit and a close match between the vendor's solution and B2B project requirements). Advanced Data Exchange (ADX): In the past two years, ADX has transformed its go-to-market approach, IT stack and data center operations. It still offers simple Web EDI-style integration services, but it has introduced its CommerceView solutions, which combine embedded IaaS with e-commerce SaaS functionality, such as order management and invoice presentment. Additionally, ADX just introduced Commerc , which provides a pragmatic "smart form" PDFbased approach to onboarding less IT-savvy or occasional suppliers via . Its new marketing slogan, "High-Touch Low Cost Simple," accurately conveys ADX's value proposition to customers in the SMB market segment. Although ADX's bundled approach to e-commerce functionality may be a great fit for many users, its impact on the IaaS and B2B project outsourcing markets is constrained by limited market awareness, market share and the relative immaturity of its new solutions. Elemica: This vendor established one of the few successful marketplaces born out of the chemical industry in the dot-com era. Elemica has established a good reputation for implementing large, complex multienteprise projects that typically combine IaaS and B2B project outsourcing with application functionality, such as order management and logistics. Although Elemica has a flexible B2B solution and is beginning to target other industries, its customer base is largely comprised of large chemical companies. Publication Date: 28 May 2008/ID Number: G Page 12 of 21

13 nubridges: Founded by industry veterans in 2001, but a relative newcomer to the IaaS market, nubridges has combined its own community management technology (originally called truexchange ebusiness Community Manager) with a VAN acquired from MCI and technology acquired from isoft (AS2 software) and TrailBlazer Systems (managed file transfer [MFT] software) to create a new solution for B2B integration projects, which is now branded as nubridges Exchange. The solution combines traditional EDI capabilities with strong security (it claims to be the only service provider that does not accept unsecured connections), MFT and innovative community management, all delivered as software or as a service (just IaaS or that combined with B2B project outsourcing). Its challenges include limited mind share, diluted market share and an eclectic customer base that reflects its diverse technology lineage. T-Systems: One of the biggest European IT outsourcing firms, T-Systems offers B2B project outsourcing as one of a wide set of outsourcing options. It has built a successful B2B revenue stream by augmenting its B2B services with sizeable general outsourcing contracts. Admittedly, this strategy is not B2B-focused, and might not offer the latest functionality, but it is effective, and T-Systems executes it well, especially for clients in the automotive and healthcare industries. The main challenges for this type of offering will be keeping it current and protecting it (and the customers using it) against possible radical changes in strategy as European IT services companies navigate turbulent market conditions. Vendor and Advanced Data Exchange Holistic solution approach, combining e-commerce functionality with embedded IaaS and B2B project outsourcing SMB-friendly (simple and reasonable) pricing Recent IT stack and data center modernization Limited mind share and market share Limited international and vertical penetration Sustainable differentiation Crossgate Focused, extremely attentive approach to reuse and process refinement Structured and well-organized approach to automation Partnership with SAP based on enterprise SOA by design Already providing multinational e-invoicing services Still a small, fast-growing player Publication Date: 28 May 2008/ID Number: G Page 13 of 21

14 E2open Sustaining the current aggressive growth rate, while maintaining good service to established customers Growing nondomestic revenue outside Germany, Austria and Switzerland Best-of-breed, B2B project outsourcing that supports large-scale, international B2B projects Modern, reliable IT stack and data center operations Customer quality (large multinationals) and satisfaction Revenue and B2B project outsourcing market share growth Dominance in complex, hi-tech manufacturing Financial stability Relatively small customer base Potential fulfillment challenges during rapid growth Establishing dominance outside hi-tech manufacturing Expanding its international presence beyond its strength in Asia EasyLink International presence Modern, reliable and high-performance IaaS service Differentiation (for example, regionalized B2B solutions, hosted MFT and fax OCR processing services) Financial stability Eclectic customer base and solution portfolio Consolidation of data centers and support centers Shifting revenue growth to enduring lines of business Image as a legacy vendor Publication Date: 28 May 2008/ID Number: G Page 14 of 21

15 Elemica Domain expertise with complex B2B projects involving strong, canonical-form-based translation Dominance in the chemical industry International presence (primarily in the U.S. and Europe) Financial stability GXS Traction outside of the chemical industry Sustainable differentiation Pricing Leading integration service revenue and customer base Large and growing B2B project outsourcing business Innovative Trading Grid, with exceptional levels of availability Viable alliances (for example, Microsoft, Software AG and Verizon) Large international presence Legacy platforms (the source of persistent network outages) Revenue growth Debt (approximately $450 million) Hubspan Exclusive focus on a strong, holistic B2B integration service solution that combines IaaS and B2B project outsourcing Domain expertise with complex B2B projects involving process choreography, complex mapping and diverse connectivity Solid references Solid financials Publication Date: 28 May 2008/ID Number: G Page 15 of 21

16 Inovis Mind share and market share Sustainable differentiation Limited international presence Sustaining recent double-digit revenue growth Hybrid software or service approach to B2B projects Modern, proven IT stack and modernized data centers (including best-of-breed disaster recovery) Differentiated by catalog, community management, as well as in-line data quality and compliance Strength in retail (for example, via catalog and synchronization) Sustained operational and financial stability Strength with SMBs Liaison Expanding their International presence Limited mind share and market share Revenue growth Domain expertise with complex B2B projects involving strong, canonical-form-based translation Dominance in the forest products industry, plus references and acquisitions in other industries Modern IT stack including just-acquired (and differentiated) Contivo for vocabularybased mapping International presence (primarily in the U.S. and Europe) Financial stability Sustained market share growth Sustainable differentiation Publication Date: 28 May 2008/ID Number: G Page 16 of 21

17 Pricing nubridges Domain expertise Hybrid on-demand and on-premises delivery model Differentiation, including MFT and strong security, compliance and community management Financially stable Late to market Muddled marketing Eclectic technology and customer base (Trailblazer, isoft, truexchange and MCI VAN) Limited international presence SPS Commerce Domain expertise in B2B project outsourcing, particularly its scalable in-line translation Reputation and adoption among SMBs Market penetration in the retail and grocery industries SMB-friendly (quickly deployed, relatively low-cost) pricing Profitability and revenue growth Limited IaaS capabilities (rely on third-party providers for transport) Sustainable differentiation and barrier to entry Limited international presence Sterling Commerce Large, growing B2B software and service customer base Hybrid on-demand and on-premises delivery model SCN service quality, reliability and reputation Profitability and revenue growth Publication Date: 28 May 2008/ID Number: G Page 17 of 21

18 Strong parent (AT&T) Market penetration and awareness Distraction of various acquired applications Restoring IaaS revenue growth Expanding SCN's international presence Account management T-Systems Extensive, full-service B2B project outsourcing offering High-performing technical platform (hardware, software and network) Good infrastructure and support practices Expanding its market presence outside Germany No B2B focus; is a general IT outsourcer Undifferentiated service portfolio TietoEnator Sophisticated knowledge and contacts in financial services Financial approach to new markets Strong innovation Support practices and general client care Potentially disruptive, ongoing restructuring program to cut costs and fight falling profits Breaking out of the Nordic region; revenue still very localized Targets only big contracts and large customers; the bulk of its deals are not huge RECOMMENDED READING "Magic Quadrant for Integration Service Providers, 4Q04" "Magic Quadrants and MarketScopes: How Gartner Evaluates Vendors Within a Market" Publication Date: 28 May 2008/ID Number: G Page 18 of 21

19 Acronym Key and Glossary Terms ADX Advanced Data Exchange AS2 Applicability Statement 2 B2B BAM EDI IaaS ICC MFT OCR RPO RTO SaaS SCN SLA SMB SOA VAN business-to-business business activity monitoring electronic data interchange integration as a service Internet Commerce Corporation managed file transfer optical character recognition recovery point objective recovery time objective software as a service Sterling Collaborative Network service-level agreement small to midsize business service-oriented architecture value-added network Vendors Added or Dropped We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope may change over time. A vendor appearing in a Magic Quadrant or MarketScope one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. This may be a reflection of a change in the market and, therefore, changed evaluation criteria, or a change of focus by a vendor. Evaluation Criteria Definitions Ability to Execute Product/Service: Core goods and services offered by the vendor that compete in/serve the defined market. This includes current product/service capabilities, quality, feature sets, skills, etc., whether offered natively or through OEM agreements/partnerships as defined in the market definition and detailed in the subcriteria. Overall Viability (Business Unit, Financial, Strategy, Organization): Viability includes an assessment of the overall organization's financial health, the financial and practical success of Publication Date: 28 May 2008/ID Number: G Page 19 of 21

20 the business unit, and the likelihood of the individual business unit to continue investing in the product, to continue offering the product and to advance the state of the art within the organization's portfolio of products. Sales Execution/Pricing: The vendor s capabilities in all pre-sales activities and the structure that supports them. This includes deal management, pricing and negotiation, pre-sales support and the overall effectiveness of the sales channel. Market Responsiveness and Track Record: Ability to respond, change direction, be flexible and achieve competitive success as opportunities develop, competitors act, customer needs evolve and market dynamics change. This criterion also considers the vendor's history of responsiveness. Marketing Execution: The clarity, quality, creativity and efficacy of programs designed to deliver the organization's message in order to influence the market, promote the brand and business, increase awareness of the products, and establish a positive identification with the product/brand and organization in the minds of buyers. This "mind share" can be driven by a combination of publicity, promotional, thought leadership, word-of-mouth and sales activities. Customer Experience: Relationships, products and services/programs that enable clients to be successful with the products evaluated. Specifically, this includes the ways customers receive technical support or account support. This can also include ancillary tools, customer support programs (and the quality thereof), availability of user groups, service-level agreements, etc. Operations: The ability of the organization to meet its goals and commitments. Factors include the quality of the organizational structure including skills, experiences, programs, systems and other vehicles that enable the organization to operate effectively and efficiently on an ongoing basis. Completeness of Vision Market Understanding: Ability of the vendor to understand buyers' wants and needs and to translate those into products and services. Vendors that show the highest degree of vision listen and understand buyers' wants and needs, and can shape or enhance those with their added vision. Marketing Strategy: A clear, differentiated set of messages consistently communicated throughout the organization and externalized through the Web site, advertising, customer programs and positioning statements. Sales Strategy: The strategy for selling product that uses the appropriate network of direct and indirect sales, marketing, service and communication affiliates that extend the scope and depth of market reach, skills, expertise, technologies, services and the customer base. Offering (Product) Strategy: The vendor's approach to product development and delivery that emphasizes differentiation, functionality, methodology and feature set as they map to current and future requirements. Business Model: The soundness and logic of the vendor's underlying business proposition. Vertical/Industry Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of individual market segments, including verticals. Innovation: Direct, related, complementary and synergistic layouts of resources, expertise or capital for investment, consolidation, defensive or pre-emptive purposes. Publication Date: 28 May 2008/ID Number: G Page 20 of 21

21 Geographic Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of geographies outside the "home" or native geography, either directly or through partners, channels and subsidiaries as appropriate for that geography and market. REGIONAL HEADQUARTERS Corporate Headquarters 56 Top Gallant Road Stamford, CT U.S.A European Headquarters Tamesis The Glanty Egham Surrey, TW20 9AW UNITED KINGDOM Asia/Pacific Headquarters Gartner Australasia Pty. Ltd. Level 9, 141 Walker Street North Sydney New South Wales 2060 AUSTRALIA Japan Headquarters Gartner Japan Ltd. Aobadai Hills, 6F 7-7, Aobadai, 4-chome Meguro-ku, Tokyo JAPAN Latin America Headquarters Gartner do Brazil Av. das Nações Unidas, andar World Trade Center São Paulo SP BRAZIL Publication Date: 28 May 2008/ID Number: G Page 21 of 21