Filing Information: april 2004, IDC #660429, Volume: 1 Nordic: IP VPNs and Enterprise Networks: Special Study

S P E C I A L S T U D Y

A x w a y S p o n s o r e d R e s e a r c h , S w e d e n - B 2 B I n t e g r a t i o n B r o k e r M a r k e t - A n a l y s i s a n d F o r e c a s t 2 0 0 4 - 2 0 0 8

Per-Arne Sandegren Kristina Gahne

I D C O P I N I O N

After a massive wave of installations in the late 90's, the Swedish market for Integration Brokers had low activity during the hard years after the bubble burst 2000-2003. IDC now sees signs of the market taking off, and believes we will se good growth during the forecast period. This - the new way of doing same old business and handling the business administration - is spurred by a combination of a continuous need to integrate and replace current systems and an increasing confidence in the economy resulting in more investments.

BPM (Business Process Management) represents a move from the Integration Broker vendors higher up in the value chain. With an ability to survey, monitor, define and execute all steps in a company’s transactions over time, there is a potential to extend their systems offerings and add business-consulting services. We believe that the market acceptance will take some years, but eventually successful integration vendors will enjoy mutually profitable partnerships with management consulting firms.

ERP (Enterprise Resource Planning) companies have been severely hit during the economic downturn. As economy recovers, we will see increased sales of ERP systems. Integration capabilities in ERP systems are constantly improving. Although this will to some extent dampen the sales of the independent Integration Brokers, both market will co-exist and grow alongside each other. In particular, for highly complex integration tasks, ERP companies are already selling re-branded modules from Integration Broker vendors.

XML/ebXML delivers great promises to automate many of the sometimes cumbersome and expensive set-up tasks of electronic relationships between companies. In the foreseeable future, XML will co-exist with the more mature industry standards, but the concepts that XML introduce will gradually become very successful.

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T A B L E O F C O N T E N T S

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In This Study 1 Methodology ............................................................................................................................................. 1 Market Overview 2 Background .............................................................................................................................................. 2

The Standards ................................................................................................................................... 2 Topology............................................................................................................................................ 2

Trends ...................................................................................................................................................... 3 XML ................................................................................................................................................... 3 Business Process Modeling - BPM.................................................................................................... 4 And the winner is? ............................................................................................................................. 5

Vendor Profiles ......................................................................................................................................... 6 GENERALISTS ................................................................................................................................. 8

Ascential Software Corporation .................................................................................................. 8 BEA Systems ............................................................................................................................. 8 IBM............................................................................................................................................. 9 Microsoft..................................................................................................................................... 10 Sonic Software (part of Progress Software) ............................................................................... 10

SPECIALISTS ................................................................................................................................... 11 Axway......................................................................................................................................... 11 Icore Solutions............................................................................................................................ 12 Inobiz.......................................................................................................................................... 12 SeeBeyond................................................................................................................................. 13 Seeburger................................................................................................................................... 13 Sterling Commerce (part of SBC)............................................................................................... 14 TIBCO ........................................................................................................................................ 14 webMethods ............................................................................................................................... 15 Xware ......................................................................................................................................... 16

Market Value and Future Outlook 17 Market Shares, Value and Forecast ......................................................................................................... 17

Definition of the Market...................................................................................................................... 17 Market Value ..................................................................................................................................... 17

Market Positioning Grid ............................................................................................................................ 20 Appendix 22 Methodology for the Market Positioning Grid............................................................................................ 22 Forecast Assumption Table ...................................................................................................................... 23

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L I S T O F T A B L E S

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1 Overview B2B Integration Broker Vendors in Sweden ................................................................. 7

2 B2B Integration Brokers, Sweden, Number of Installations.......................................................... 18

3 Market Value and Forecast, Swedish B2B Integration Brokers, MSEK........................................ 18

4 2003 Value of New Sales, Largest Vendors Swedish B2B Integration Broker market (MUSD) ........................................................................................................................................ 19

5 Key Forecast Assumptions for the Swedish B2B Integration Broker market development 2004-2008.................................................................................................................................... 23

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L I S T O F F I G U R E S

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1 All-to-All vs. Star Topology ........................................................................................................... 3

2 Market Shares, B2B Integration Broker Sales 2003..................................................................... 19

3 Market Positioning Grid, B2B Integration Broker Vendors on the Swedish Market ...................... 20

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I N T H I S S T U D Y

This is a client-sponsored research by Axway Nordic.

The study describes vendors in the Swedish B2B Integration Broker market 2003 and provides vendor profiles with installed base and clients, and a future outlook in form of forecasts of market growth 2004/05, and a forecast 2004-08 on numbers of sold licenses.

The included vendors are chosen by Axway, together representing the essential players in this field on the Swedish market. The study also presents a market positioning grid, based on the definitions and limitations mentioned above, and shows IDC's view of the current market dominance of the vendors and the ability of the vendors to increase their share of the market.

The Market for B2B Integration Brokers, as we look upon it in this study, is defined in the following Market Overview sections including the above limitations. This is a changing market where standards and technologies are in constant development. The purpose of this study is to provide a better understanding of the Swedish market situation as of today, and also give IDC's view of the forthcoming market development.

M e t h o d o l o g y

The qualitative and quantitative findings of this report are based on an eclectic research approach that combines both primary and secondary research.

The main primary sources are interviews with the vendors included in this report.

Secondary sources include public information, which has provided valuable information both on specific vendor performances and on general development of the market, and the whole economy. The main media have been the Internet, press releases, news articles, financial reports and the press.

IDC's previous studies on the e-Business, enterprise application integration markets and Web Services have served as baseline information.

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M A R K E T O V E R V I E W

B a c k g r o u n d

The Standards

The history of business electronic information exchange dates back to the days when business information first was stored on computers. Early electronic interchange used proprietary formats agreed upon between two trading partners requiring new programs each time a new partner was added to the existing system.

Realizing the savings in time and administration, the idea of standardized EDI (Electronic Data Interchange) soon arose. In the 70's some industry groups began a cooperative efforts to develop industry EDI standards for purchasing, transportation, and financial applications. Many of these standards supported only intra-industry trading, which led to a large number of EDI formats.

In 1979, the Accredited Standards Committee (ASC) X12 was formed to develop a generic EDI standard. In 1993, it contained 192 standards. In the U.S., the most commonly used standard became X12, coordinated by the American National Standards Institute (ANSI). In Europe, it is the Electronic Data Interchange for Administration, Commerce, and Transportation (EDIFACT) standard by UN/ECE (United Nations/European Commission of Europe).

Topology

With standards, such as EDIFACT, gaining ground, more and more nodes could be added to the EDI network. It was soon realized that in a complex environment employing many applications that the administrative effort in keeping all applications and nodes updated grew larger and larger. In a all-to-all environment, every possible connected application had to be informed and updated about a change made to any single node.

The need for a central node in a star topology became evident with its potential to drastically reduce the task of updating and keeping all connected applications up-to-date. This led in the early 90's to the birth of the Message Brokers, collecting a majority of administrative tasks to a single point.

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F I G U R E 1

A l l - t o - A l l v s . S t a r T o p o l o g y

Source: IDC, 2004

The potential savings that can be made is witnessed in many customer cases all around the world. Apart from the obvious benefits when it comes to updating and support of the network several other benefits can be achieved depending on the systems characteristics prior to the implementation of a Message Broker system. The main benefits include:

Faster service to business partners

Reduced support for updating/maintenance

Speed up of internal processes

Reduced down-time

Reduced development time

Reduced infrastructure cost

T r e n d s

XML

In September 1999 CEFACT (United Nations Centre for Trade Facilitation and Electronic Business) launched an international initiative to develop an open XML based framework, enabling the global use of electronic business information, in a consistent, interoperable, and secure manner. The purpose was to create a Global Repository for the translation of XML tags in UN/EDIFACT, to advance the use of EDI over the Internet. The repository is a location where shared Internet directories are stored and where users can manually or automatically look up the meaning and definition of XML/EDI Tags.

XML stands for EXtensible Markup Language and is a subset of SGML (Standardized General Markup Language), which is also the origin of HTML. The combination of XML and EDI semantic foundations, called XML/EDI, provides a complete and internet-friendly framework and creates a format that is usable by applications as well as humans (through a browser).

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The initiative, which was subsequently named ebXML, was undertaken in conjunction with the Organization for the Advancement of Structured Information Standards. (OASIS).

Today, ebXML is a suite of specifications that enables enterprises to conduct business over the Internet. With ebXML, companies have a standard method to exchange their business messages, conduct trading relationships, communicate data in common terms and define and register business processes.

Backed by UN/CEFACT (one of the four de jure standards bodies in the world) and OASIS, ebXML is already a de-facto standard for electronic commerce over the internet. RosettaNet, a consortium of more than 400 companies in information technology, electronic components and semiconductor manufacturing, plans to integrate support for the ebXML Messaging Services Specification in future releases of RosettaNet's Implementation Framework (RNIF). The Global Commerce Initiative, which represents manufacturers and retailers of consumer goods, chose to base their new Internet protocol standard for trading exchanges and B2B communications on ebXML.

Other industry organizations, such as the Automotive Industry Action Group, Health Level Seven, Open Applications Group, Open Travel Alliance, SWIFT and formal international and North American EDI standards bodies, have also been active participants in the ebXML initiative.

One of ebXML's greatest promise is not only to automate the information exchange between companies, but also to automate the often lengthy and costly process of setting up the communication channel (an "XML connector"). After initial contacts between companies agreeing on doing business, a Company A wishing to do business with Company B can automatically look up Company B's electronic capabilities in a registry available on the internet. In that registry, Company A will get all details about what XML schemes Company B can handle, what security mechanism that are at hand, address of its server and much more. A set-up procedure follows, where automated messages are exchanged configuring and confirming the connector and its characteristics.

As a final note on XML, some issues will have to be dealt with. XML is not a byte-effective format; messages tend to be larger than other existing alternatives. And in a future where companies' information exchange over the internet is expected to be enormous, size matters. Another issue is security. Although a number of initiatives exists, there is still plenty of work that needs to be done in order to be able to securely transmit information on public channels.

Business Process Management - BPM

The information exchange within different functions in a company is a critical function, which bears the evidence of the company's processes. Add to this an inter-company communication system that automatically sends and retrieves information to suppliers, partners and customers.

The vendors of integration systems moves higher up in the value chain when their products maps a company's business processes. This change has been an ongoing process and today several vendors offer functionality enabling a graphical top-down approach that starts with business process mapping and ends with code-generation for the Message Broker system.

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Again, the needs for standards in notation became evident and the BPMI (Business Process Management Initiative) was formed in 2000 by a group of IT vendors and Management Consultants. Today it has 90+ members. The communicated mission is to promote and develop the use of Business Process Management (BPM) through the establishment of standards for process design, deployment, execution, maintenance, and optimization. BPMI.org develops open specifications, assists IT vendors for marketing their implementations, and supports businesses for using Business Process Management technologies. Among the companies reviewed in this document members are: Axway, BEA, IBM, SeeBeyond, Sterling, Tibco and WebMethods.

A key result of the initiative is the meta-language BPML (Business Process Modeling Language) for the modeling of business processes. BPML provides an abstracted execution model for collaborative & transactional business processes based on the concept of a transactional finite-state machine. Whereas XML is a meta-language for modeling of Business Data, BPML models Business Processes.

Another component from the initiative is the BPMN (Business Process Modeling Notation), which is the notation standard for business process modeling. The first version of BPMN was released in August 2003. By March 2004 BPMN support was available in the following products: aXway Process Manager, ILOG JViews, ITPearls Process Modeler for Visio, Popkin’s System Architect, and SeeBeyond’s Integrated Composite Application Network (ICAN) Suite. Microsoft Visio 2003 also provides a BPMN. IBM plans to release BPMN in coming releases of WebSphere Business Integration Modeler.

Going back to the modeling language, BPML, there are at least one competing standard. Maybe the most significant one was launched by the unlikely alliance of IBM and Microsoft, plus BEA and SAP and is called BPEL (Business Process Execution language), BPEL is an XML-based specification for defining how you can combine Web-services to implement business processes. BPEL is developed through the previously mentioned standardization body OASIS. BPEL builds upon the Web Services Definition Language (WSDL) and XML Schema Definition (XSD) developed by W3C (Worldwide Web Consortium).

And the winner is?

In the field of integration and eBusiness, standards are numerous and in constant evolution. Some standards arise from de jure standardization bodies, others become de facto through broad installed basis. Even though open-source/royalty free standards attract positive attention, in the end the market will decide what becomes the standard – not standards bodies or consortia. Vendors that choose an agnostic view and closely adapts to the changing standards environment, should be well positioned for the future.

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V e n d o r P r o f i l e s

IDC estimates that the vendors included in this study together represents 95% of the current Swedish B2B Integration Broker market. The remaining market is covered by companies such as SAP and Oracle, which include or offer integration broker functionality or modules in their system offerings. The included companies can be divided into two groups, generalists and specialists. The specialists retrieve almost all of the revenue from the field of Enterprise Application Integration (EAI), whereas many of the generalists only have a few % or less of their turnover generated from this field.

Generalists generally offer the Integration Broker functionality as a part of a bigger software package that could employ a vast number of tasks. Example of this is IBM's suite WebSphere. Ascential is in this sense a smaller generalist than IBM, and their focus is on integration software though its successful acquisition of the Mercator mapping tool. Microsoft promotes its BizTalk server, which in turn is what the some of the Swedish vendors in this study use as base for their own offerings. Other specialists have developed their own platform from the start, e.g. WebMethods, but have then acquired companies to broaden their portfolio into a more complete suite of integration applications. Axway have their product XIB which trace its roots back to the originally Frontec-developed product AMTrix, through the acquisition of the product from Viewlocity. Some vendors started off by successfully providing solutions in a specific vertical, e.g. Seeburger started by integrating application in the German car industry, whereas SeeBeyond begun in the healthcare industry. They have then successfully entered new industries with widened product portfolios.

The different origins and focus actually very well pictures what is a fragmented market in constant development. Some of the vendors are globally recognized with very capable product portfolios, but can still be very small on a specific market such as the Swedish. Axway is a particularly successful player on the Swedish market, much due to Frontec's many AMTrix installations in the 90's.

For this industry, competition can be found from the ERP companies that constantly improves their integration capabilities. Since recently, Seeburgers integration broker can be found as a re-branded module offered by SAP. Another form of competition comes from IT service providers that by-pass a central integration broker solution and directly connects applications to each other. We do not measure this market as it does not fall under the definition of an Integration Broker. Several of the vendors covered in this report have sold Integration Broker solutions to IT service providers, such as WM-data or TietoEnator. They in turn, offer B2B functionality in a VAN service (Value Added Network) to 3rd party customers. In this case, a single Integration Broker will handle many customers needs.

As a last form of "competition", we note that we've seen an increasing interest from large companies to support their smaller customers and suppliers with their B2B needs. In these cases they provide services to their partners via their own B2B Integration Broker installation.

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T A B L E 1

O v e r v i e w B 2 B I n t e g r a t i o n B r o k e r V e n d o r s i n S w e d e n

Company Country of Origin

Global Revenue

2003 (Change over 2002)

Swedish Revenue

2003 (Change

over 2002)

Employees/ in

Sweden

Primary Integration Platform Sales Split Direct / Partner

GENERALISTS Ascential US 186 MUSD

(+66%) 25 MSEK

(+50%)

639 / 3 DatastageTX Ascential Enterprise Integration Suite

40 / 60

BEA US 934 MUSD (-4%)

(+10%) 3173 / 30 BEA WebLogic Integration BEA WebLogic Enterprise Platform

90 / 10

IBM US 89 131 MUSD (+9%)

320 000 / 4 000

WebSphere Suite

Microsoft US 32 187 MUSD (+14%)

140 MUSD 55 000 / 380

Microsoft BizTalk Server Commerce Server

10 / 90

Sonic US 23 MUSD (+54%)

(+75%) 1 200 / 16 Sonic ESB (Enterprise Service Bus)

50 / 50

SPECIALISTS Axway France 75 MEUR

(+7%) 4.6 MEUR

(+45%) 600 / 30 Axway Integration Broker

Axway Integration Platform 25/75

Icore Sweden 7.4 MSEK (-8%)

7.4 MSEK (-8%)

8 / 8 iCore Process Server

30/70

Inobiz Sweden - 6 MSEK (+-0%)

9 / 9 Inobiz Integration Server

5 / 95

SeeBeyond US 138 MUSD (-9%)

2 MUSD (+31%)

673 / 6 SeeBeyond EAI / ICAN Suite

100 / 0

Seeburger Germany 275 MEUR 0.4 MEUR 350 / 1 Seeburger Business Integration Server

50 / 50

Sterling US Part of SBC Communica-

tions

15.6 MUSD (+25%)

2 000 / 14 Gentran Integration Suite (US), Sterling Integrator (Europe) Connect

100 / 0

Tibco US 264 MUSD (-3%)

4MUSD 895 / 11 Tibco BusinessWorks / Business Connect

75 / 25

WebMethods US 197 MUS (+-0%)

6.5 MUSD (-30%)

845 / 6 WebMethods Integration Platform

0 / 100

Xware Sweden 20 MSEK (+-0)

20 MSEK (+-0%)

15 XTrade Business Communication Suite

0 / 100

Source: IDC, 2004

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GENERALISTS

Ascent ia l Software Corporat ion

Ascential Software Corporation, headquartered in Westborough, Massachusetts, US, since July 2001, provides enterprise data integration solutions. Their offering, the Ascential Enterprise Integration Suite, is used by more than 3,000 customers from different industries, including many industry leaders. Their ambition is to become the leading provider of enterprise integration software. The company also offers a full range of consulting, educational and support services. Ascential Software expands their product offerings basically through business acquisitions. Their acquisition of Mercator Software complemented their product portfolio specifically and made them a successful Integration Broker Vendor. Their product for B2B integration is named DatastageTX.

Started in 1986 they operated under the name of "Informix Corporation''. In early 2001 they consolidated their business units into two operating segments: Informix Software and Ascential Software. Later the same year the database business assets, including the name "Informix'' was sold to IBM. In connection to this they also changed their name to "Ascential Software Corporation'' (NASDAQ: ASCL), since then their sole operating segment.

Major contributions to the company's technology integration strategy include the following acquisitions: 2003 Mercator Software. In 2002 INTEGRITY data quality management and cleansing technology from Vality Technology and MetaRecon data profiling technology from Metagenix, 2001 Torrent Systems, 2000 Ardent Software, 1999 Prism Solutions and in 1998 Dovetail Software.

Ascential Software distributes products through four main channels: direct sales end-user licensing, value-added resellers, systems integrators and embedded resellers. IBM, one of their value-added reseller partners, accounted for more than 10% of revenues 2002. Another partner is SAP. Principal geographic markets for their products are North America, Europe and the Asia/Pacific region.

Total revenues for 2003 were $186 million (+8%). Ascential Software had a total of 639 employees during 2002. Of these 421 were located in the United States.

Ascential Software has a regional sales office in Stockholm, Sweden, with 3 employees. Their total revenue 2003 was 25 milion SEK, half of which came from B2B integration. The revenue growth in Sweden has been around 50% during 2003. They have about 25 customers of whom 15 have chosen B2B solutions. Some examples are Vattenfall, the Post Office Administration, Nordea, Enskilda Securities, OMHEX, SHB, Sydkraft and Arla Foods.

BEA Systems

BEA Systems, Inc. was founded in early 1995 by Alfred Chuang, Bill Coleman and Ed Scott, all three of them coming from Sun Microsystems. The name BEA is composed of the initials of the company's three founders.

BEA is one of the worlds leading application infrastructure software companies with more than 15,000 customers around the world, including the majority of the Fortune Global 500. BEA’s products have been adopted in a wide variety of industries. The company is headquartered in San Jose, Calif., and has 93 offices in 34 countries.

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The BEA WebLogic Enterprise Platform provides the application infrastructure foundation that converges application development and integration. It is also the standard for more than 1,600 systems integrators (SIs), independent software vendors (ISVs), and application service providers (ASPs) who partner with BEA. Their B2B IB product is named BEA WebLogic Integration.

BEA sells primarily through an enterprise sales force covering geographic territories. An important lead generator is developers’ ability to download a free trial copy of BEA’s products. BEA employs telesales and geographic sales professionals and sells through or along with indirect channel partners. To broaden its capacity and customer coverage, BEA has formed strategic alliances with many of the world's top SIs, ISVs and hardware OEMs. ISV partners build applications on BEA’s infrastructure, or provide solutions that complement and complete BEA’s product.

Total revenue 2003 US$934 million (-4%), net income $83.9 million. Total number of employees worldwide are 3,173.

The office in Sweden has 30 employees. They also have partner relationships with around 30 other companies some of which are Accenture, Cap Gemini, EDS, HP, WM-data, Tieto Enator and Kentor.

Customers in Sweden with WebLogic installations are the Social insurance administration (RFV), Nordea, Vattenfall, the National Police Office, TeliaSonera, Comhem, the Swedish Television, Apoteksbolaget and The Motor Vehicle Inspection.

IBM

The history of the International Business Machines Corporation (IBM), the world's largest technological company begun in New York in 1911. Nearly all of the company's products have since been designed and developed to record, process, communicate, store and retrieve information -- from its first scales, tabulators and clocks to today's powerful computers and vast global networks. The business nowadays includes computer systems, software, networking systems, storage devices and microelectronics as well as services and consulting.

Organizationally, the company’s major operations comprise a Global Services segment; three Hardware product segments (Systems Group, Personal Systems Group and Technology Group); a Software segment; and a Global Financing segment.

With some 320,000 employees worldwide and thousands of partners in more than 160 countries, IBM made a total revenue 2003 of US$ 89,131 million (+9%). Net income: $7,000 million.

IBM’s clients are found in every major industry and the public sector. From sole proprietorships to the world’s largest organizations, governments and companies. Over the last decade, IBM has greatly de-emphasized its involvement in consumer markets to concentrate on the enterprise market.

The WebSphere portfolio is composed of several solutions for e-business either developed at IBM on demand or buy acquisition of other software companies. WebSphere includes application servers, development tools, portals, business integration, e-commerce, and software for mobile applications. IBM WebSphere Business Integration provides methods of integrating both inside and outside the

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enterprise. To ensure the use of this product IBM has built extensive relationships with a wide variety of application and solution providers as well as system integrators.

In Sweden the WebSphere portfolio is a market leader within middleware and, according to IBMs own information, the product have a market share around 30%. Among the customers today we find FöreningsSparbanken, Sony Ericsson, SAS, and IKEA. IBM Svenska AB has a total of 4,000 employees.

Microsoft

Microsoft, the global software giant also offers services and integrated solutions. Microsoft was founded in 1975 by Bill Gates and Paul Allen. The Corporate Headquarter is in Redmond, Washington, USA but the company has market presence with subsidiaries in more than 85 countries and regions and some 55,000 employees. Total revenue $US 32,187 million (+13,5%). Net income $US 9,993 million.

The seven core business units at Microsoft are: Windows Client, Information Worker, Microsoft Business Solutions, Server and Tools (which includes the BizTalk Server), Mobile and Embedded Devices, MSN, Home and Entertainment.

The latest version of BizTalk Server, BizTalk Server 2004, launched in February 2004, is available in four versions: Enterprise, Standard, Partner and Developer. This is their main B2B integration product. The price will be about the same as for the earlier version, BizTalk Server 2002. They also have the Commerce Server that is partly used for integration. BizTalk server is integrated with Visual Studio .NET, which is a clear advantage from development perspective in the creation of services.

Last year Microsoft Server and Tools revenue increased 16 percent. Microsoft is optimistic about the company’s long-term growth opportunities and are today investing to improve their integrating computing platform. Many enterprises are migrating their server networks from proprietary hardware to less expensive alternatives.

Microsoft AB in Sweden has 380 employees and made a total revenue 2003 of 140 MUSD. The Swedish market has been very important for a long time since it represents a region with a very high usage of personal computers and the Internet. Microsoft has developed many projects in co-operation with companies, authorities and other organizations. For example to certify experts on their software and to sponsor IT projects for different groups in society.

In Sweden there are 7 persons working with B2B integration solutions. Today they have around 50 customers. Some examples are Flextronics, Volvo, Sandvik Coromant, SSAB, Skandia Banken, Lindab, Ericsson, Vattenfall. They also have a few customers in retail and banking. Partners in this business are Datavis, SYSteam, KnowIT, AcandoFrontec, Cap Gemini, Ernst&Young, WM-data, Stratiteq, altogether 15.

Sonic Software (part of Progress Software)

Sonic Software is an independent operating company of Progress Software Corporation, a US$309 million software industry leader. Sonic Software’s total revenue fiscal year 2003 was US$ 23 million (+54%), representing 7% of the total revenue for the whole corporation (previous year 5%). Sonic Software is headquartered in Bedford, Mass., US.

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Sonic Software is a very fast growing integration and middleware company who provides integration products and services for the real-time enterprise. They offer a business integration suite that is, according to their own information, based on the world's first enterprise service bus (ESB), along with services and support. One competitive advantage they like to point out is that ESB enables their integration broker solution to be is distributed, as opposed to centralized, but still serviced centrally. Just recently they released the latest version of their enterprise messaging system, the SonicMQ 6.0.

Sonic Software counts global leaders among over 700 customers in financial services, retail, energy, telecommunications and manufacturing. Axfood is a Swedish customer. Some other examples are Ericsson, TeliaSonera, Posten, Svensk Exportkredit, Intersport, AFA (former AMF) Spray, Vivo.

The company works with both integration and technology partners to deliver and complement their solutions. In Sweden, Sonic Software's products are distributed through Progress Software. Some of their certified partners are WM-data, Applied, Netlight, Zait and Stamford. There are 16 employees in Sweden.

SPECIALISTS

Axway

Axway Software SA, headquartered in Puteaux, France, was created in 2001 as a spin-off from the parent Sopra Group. Axway is wholly owned by Sopra Group, one of the larger European IT corporations, with 525 MEUR in annual revenues.

Axway main activities are within Enterprise Application Integration. The business is the result of 15 years of software development, strategic corporate synergy, and international systems integration. Their flagship software is the Axway Integration Platform (XIP), a modular set of progressive, inter-operating software components to provide a total integration solution. The core component in their integration offering is the Axway Integration Broker (XIB). Axway also provides a full suite of services from consulting to expertise through training and support.

Axway have have subsidiaries in 17 countries, affiliates in all the major European countries, and a wide spread network with multiple categories of partners. The total number of employees are over 600. Axway solutions are used by some 5,000 companies and organizations around the world, in a diversity of sectors. Total revenues 2003 74.8 MEUR (+6.1%), net results 6,7 MEUR. The company’s share of the Sopra Group’s total revenue is 14%. In Sweden Axway's revenue 2003 was 4.6 MEUR.

Axway Nordic in Sweden employs 30 people today. The origin of XIB is the old Frontec product AMTrix obtained through the acquisition of Viewlocity in 2001. Through this transaction Axway also got some 420 Swedish customers.

Examples of Swedish customers are the Karolinska Hospital, Tetra Pak, Volvo, Electrolux, SEB, Nordea. Some Swedish partners are Markanda, AcandoFrontec, TietoEnator, EDB Unigrid and ATOS Origin.

Icore Solut ions

iCore Solutions AB is a Swedish software development company that develops, markets and implements the iCore Process Server concept and complementing professional services. The iCore Process Server is a solution for e-business and

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application integration (eAI) and the 5th generation of the software developed by the iCore Solutions team. iCore's solution is based on the Microsoft platform but not Microsofts BizTalk.

Icore Solutions has the head office in Göteborg and a sales office in Stockholm, eight employees and total revenue 2003 of 7.4 MSEK.

Although the firm is young, the people working there have had long experience from the e-business and integration market, being involved in more than 1000 e-business implementations in over 20 countries. Their experience originally comes from market segments such as automotive, electronic, transportation and retail industries. Amongst their clients you find companies such as Assa Abloy, Telia, Cardo, Poolia, Biltema, KG Knutsson, ICA, Bergsala (Nintendo), Fyrstadskraft and Gustavsberg. The market focus for iCore Solutions is in Europe.

iCore Solutions has established corporate relationships with industry leaders whose products and services complement their solutions ensuring that members of the iCore Solutions Partner Program have access to a completely integrated business-to-business electronic commerce and integration solution. iCore Solutions is a market player in both the sell- and purchase-side of integrated B2B e-commerce solutions.

Their partner classifications include: Sales Alliance Partners, Integration Partners, Technology Partners, and OEM Partners. Of their sales 30% is direct and 70% goes through sales partners. Their revenue is almost all SW, the service side is done by partners.Partners in Sweden include Cybercom and Cap Gemini.

Inobiz

Inobiz AB, founded in 1996, is another Swedish software company that develops products for system- and application integration based on Microsoft BizTalk.

From the beginning Inobiz wanted to make it possible for SME businesses to use electronic Data Interchange (EDI) and developed a platform for file format conversion that was easy to use. Today Inobiz has developed a new product family and a new integration platform - Inobiz Integration Server - that makes it possible for Inobiz to reach the entire market for integration and conversion with Enterprise Application Integration (EAI), Business to Business Integration (B2Bi) and Web Integration.

Inobiz has sales offices in Stockholm, with 9 employees, and London but their product distribution is primarily handled by partners. The partners handle the business deals, the implementation and the relationship with the customer. Total revenues in Sweden was around 6 million SEK in 2002 and 2003. Expected growth In 2004 is plus 30%.

Inobiz has established partnership with industry leaders with focus on delivering a total solution including education. Inobiz currently has over 80 trained/certified consultants working wiht integration solutions throughout Sweden and there are more than 200 installations of the Inobiz Integration Platform made for customers in Scandinavia, UK and Benelux, of which the main part are in Sweden. Some of Inobiz Swedish customers are Assi Domän, Atlas Copco, Ericsson, Svea Skog, Svenska Spel, Sveriges Radio, Systembolaget, Vin & Spirit AB and Nordea.

Examples of integration and sales partners in Sweden are Formaster, WM-data, AcandoFrontec and HiQ. Some of their technology partners are Tieto Enator, IBS, Jeeves, Monitor, Stråfors, Primelog and Viaduct.

©2004 IDC #660429 13

SeeBeyond

SeeBeyond was founded in 1989 and was an early integration broker vendor. In the very beginning their customers came exclusively from the healthcare industry, but today they have a broad representation of industries amongst them. Altogether 1,880 customers worldwide, including Swedish ABB, Ericsson and Capio.

The SeeBeyond Integrated Composite Application NetworkSuite 5.0 - The ICAN suite is SeeBeyond’s platform for developing, executing and managing end-to-end integrated business processes as composite applications.

Along with an well integrated and extensive product line, SeeBeyond has built a sales and support infrastructure with great geographical coverage. Corporate headquarters in Monrovia, Ca, USA and offices of their own in Australia, Belgium, Sweden, France, Germany, Italy, Japan, The Middle East, The Netherlands, South Africa, Switzerland, United Kingdom and United States

They are also being present through 82 Strategic Alliance Partnerships of which Key global business and technology consulting partners include Accenture, EDS, Computer Sciences Corporation, Cap Gemini Ernst & Young, KPMG Consulting and PricewaterhouseCoopers. Software partners include BroadVision, Commerce One, Oracle, Retek, SAP and Siebel Systems.

Total numbers of employees are 673. In 2003 total revenue $137.8 million (-9%), which is less than the two previous years, but the company made a more than 100% rise in revenue during 2000.

In Sweden total revenue 2003 was $2.050 million (+30%). They have 6 employees taking care of the Scandianvian market. Some of their swedish customers are Ericsson, Bombardier (former AdTranz), SKF, ABB and Capio. Partners in Sweden are Accenture, Cap Gemini, Ernst and Young, EDS, AcandoFrontec and TietoEnator.

Seeburger

Seeburger AG was founded in Bretten, Germany, in 1986. The same year they launched the EDI solution in the automotive industry, where they have their background. In 1993 the EDI solution was extended into other industries. Today a vast variety of industries are represented among their 6,000 customers in 35 countries. Revenue 2003 was 275 MEUR.

Seeburger’s market focus is mainly on Central- and Western Europe. Among the Swedish and Scandinavian customers we find Corporate Express Sweden, Forever Living Products Scandinavia, Johnson Controls Sweden, Kämmerling Verktygs, Kärcher, Stora Enso and Autoliv.

In 2000 Seeburger launched the Seeburger Business Integration Server, a platform based on the latest technologies (XML, J2EE) for seamless integration of business processes and their underlying software systems. They also provides additional services such as outsourcing, consulting, rollout, support and partner integration programme.

The company claim worldwide presence and have 10 subsidiaries. They have a group of selected business and application partners for joint use of core competencies and application know-how. Seeburger market highly around their SAP relationship and in 2003 SAP selected them to provide B2B Adapters for SAP XI

14 #660429 ©2004 IDC

(Reseller Agreement). Seeburger also have parterships with several other ERP companies like IFS in Sweden, JD Edwards and Navision (now Microsoft).

Sales in Sweden is 50-50 split on partners and direct sales. Much due to the close SAP relationship, sales through partners is expected to increase. Seeburger Sweden have 2 partners plus SAP.

Ster l ing Commerce (part of SBC)

Sterling Commerce Inc. came into existence in 1996 as a result of a spin off from Sterling Software. The company's roots trace back to the late-seventies, the pioneering days of electronic data interchange (EDI) software and service solutions. In the beginning with focus on specific customer needs in healthcare, banking and financial services. Later expanding into more industries. In 2000 SBC Communications (NYSE:SBC) acquired Sterling Commerce and made it a wholly owned subsidiary, headquartered in Columbus, Ohio, US. SBC Communications Inc. is a data, voice and Internet services providers.

The company has 38 direct sales offices and more than 50 distributors worldwide, including presence in 18 European countries. Customers sums up to more than 50,000 worldwide, in a vast range of industries and company sizes, including more than 80% of the Fortune 500. The total number of employees are over 2,000. Sterling Commerce is represented in Sweden but has not been much marketed. There is an office in Stockholm and 14 employees. Some Swedish customers are the Swedish Customs, Maersk, IKEA, Electrolux, Ahlsell, Folksam, OnOff, DFDS, Statoil, and four large banks SEB, SHB FS and Nordea. Sterling in Sweden has a total revenue around 117 MSEK today, from growing 25% yearly since 2000.

Sterling Commerce have an International Partner Program for making alliances with partners in various forms. They pair Sterling Commerce offerings with solutions designed by other software or service providers for a more complete business integration solution. Their key solutions partners are Baan, HP, IBM, Microsoft, Oracle, PeopleSoft and SAP.

Sterling Commerce engages in the e-business economy by providing Business Integration Solutions, including Enterprise Integration, Partner Integration and Data Integration, as well as related Outsourcing Solutions, and Professional Services. They have over 100 products and services. The Gentran Integration Suite, also named Sterling Integrator in Europe, is a flexible, java-based integration platform for both B2B and EAI integration. It supports all major B2B standards and protocols and includes a graphical process modeler, a web enabled module, and over 250 application adapters. Another B2B product is Connect.

One of the noteworthy deals was announced in October 2002 by Wal-Mart to use Steriling Commerce, IBM, and iSoft to migrate all of their communications with suppliers from EDI to an Internet-based environment.

TIBCO

TIBCO Software, headquartered in in Palo Alto, CA, USA. In January 1997 TIBCO was established as a separate entity to create and market software solutions for use in the integration of business information, processes and applications outside the financial services sector. Before that TIBCO was part of the business of Reuters Group PLC through the acquisition of Teknekron Software Systems, Inc., in 1994. Teknekron was founded in 1985 and started the development of the software known

©2004 IDC #660429 15

as The Information BUS (TIB). The software was used for the integration and delivery of market data in trading rooms of large banks and financial services institutions. Reuters continued the development of TIB software and expanded its use in the financial services markets

TIBCO sells a wide range of products that address different elements of business integration and optimization. There are three key areas: Business Optimization, Business Integration and Enterprise Backbone. All products can be sold individually but the emphasis is on complete solutions that interoperate seamlessly. The TIBCO portfolio includes the TIBCO BusinessWorks for connectivity between internal applications (EAI) and the TIBCO BusinessConnect for connectivity with partners (B2B Integration).

The products are sold through a direct sales force and through alliances with software vendors and systems integrators. For many years TIBCO has been developing an extensive system of partnerships - Tibco Alliance Program (TAP). TIBCO operate through subsidiaries and offices throughout North America, Europe and the Pacific Rim. Approximately 2,100 companies worldwide in diverse industries currently license TIBCO´s products.

TIBCO has 895 employees of which 150 are located in Europe. Total revenues 2003 were $264,3 million (-3%).

In Sweden TeliaSonera has been one of TIBCO´s customer since 1998. TIBCO is also involved in a partnership with Ki Consulting, formerly part-owned by Telia, recently acquired by TietoEnator. Other Swedish clients are AvestaPolarit, Nordea, SAS, Mölnlycke and 3GIS. Total revenues 2003 for TIBCO in Sweden were 4 MUSD, out of this 25% was in the field of B2B Integration Brokers. They have 11 employees. Some of their partners are Siemens, HP, Cap Gemini, Teleca, Dynabyte and Eman.

webMethods

webMethods pursue a mix of building, acquiring and partnering to offer an mix of strategic technologies to their customers. Thus in their product portfolio there are products originating from different firms. The webMethods Integration Platform is the foundation for linking business processes, enterprise systems, databases, workflows and Web services.

webMethods was founded in Delaware in 1996. They completed their initial public offering at a favorable time early 2000. The same year in August they acquired Active Software, Inc. and their enterprise application integration software. The following year, 2001, they acquired IntelliFrame, its workflow technology and its research and development team.

webMethods have more than 1050 customers worldwide in all kinds of industries including many major business enterprises, like the Global 2000 companies, and government organizations. Total revenue in 2003 US$ 197 million (+/-0%), with no individual customer accounting for more than 10% of their total revenue. 845 employees. The total revenue has been fairly constant during the past three years, following after a significant growth in 2000 and 2001.

They have approximately 20 offices throughout the US and Canada, nine in Europe, seven in Asia Pacific and Japan. They license their software primarily through the direct sales organization but in the Asia Pacific region and Europe also through resellers. webMethods have built strong partnerships with application vendors such

16 #660429 ©2004 IDC

as SAP, Oracle, Peoplesoft and Siebel. Partners among major systems integrators active in Sweden include WM-data, Sogeti, ATOS and IBM. They also pursue joint promotional and selling efforts with strategic partners and major systems integrators. The main reseller and service partner in Sweden is Component Software. Sales are done though a joint effort with the partner.

In Sweden webMethods had a turnover around US$ 6-7 million in 2003. There are 6 employees at the office in Sweden. Among their 20 customers (with unbundled SW) we find Findus, Stora Enso, Hydro, IKEA, Electrolux, ICA and Vodafone.

Xware

Xware AB is a Swedish company founded in 1991. They develop and market business communication and strategic integration solutions for the civilian market and the military sector. Total revenue in 2003 was 20 MSEK. They have 15 employees.

Their product concept, the xTrade Business Communications Suite provides solutions for integration, EDI/Internet, communication and security. Their focus is on e-commerce and B2B solutions, including wireless communication.

In 1994, without previous experience from this field of data communication, xWare developed a message-based communication system for tactical and e-commerce applications for the Swedish Armed Forces. The system was later to be known as CAMA. In 1996 the Swedish Armed Forces purchased a new CAMA, based on Windows NT and WAN communication using TCP/IP. Later, in 1998, Xware AB developed the CAMA system into a commercial product. Initially it was used in an electronic marketplace for the paper industry and as a clearinghouse in a VAN service (Value Added Network). Its first name was xTrade, and from 2002 The xTrade Business Communications Suite.

Xwares market focus is in the networking economy, i.e. based on Internet, and customers as system integrators, IT organizations and military organizations. They have around 15 customers. Some examples: the Swedish Armed Forces, WM-data (who uses xTrade Business Communications Suite as platform for their eBusiness Service), Strålfors, Wilson, Åhléns, Nexus, IBS and Hogia.

©2004 IDC #660429 17

M A R K E T V A L U E A N D F U T U R E O U T L O O K

M a r k e t S h a r e s , V a l u e a n d F o r e c a s t

Definition of the Market

IDC have been investigating the market mainly through interviews with the system providers. The market is not coherent, and the range of included products (hardware, software and services) in a deal vary extensively. In order to estimate the market size, IDC has defined the market size by counting number of systems sold, and the mean price for a system including installation services. Yearly fee for maintenance and/or planned upgrades excluded.

Different vendors use different terminology, and in the discussions with them IDC has counted an Integration Broker deal to be a B2B installation if there is a component installed with B2B functionality. Hence, even if the main purpose for a deal was to integrate internal applications, as long as there is a B2B component up and running, the system will here be counted as a B2B Integration Broker installation.

Market Value

Market shares are based on 2003 share of new sales according to market value above. Only the largest vendors are included. IDC estimates the number of B2B Integration Broker systems sold 2003 was 173. A system is typically defined as the central application (integration broker) communicating with external business partners. In some instances this pose a problem when defining the market. For example, a retail chain (one customer) can be either individually connected ("many systems") to business partners – or – through a central server taking care of the external communication (one system). Vendors' topology differs and hence terminology and often they communicate the higher number of systems/installations. For these occasions, IDC has individually decided whether this should be counted as one or several systems. Typically, but not always, IDC counts this as one installation/system.

Installations come in various forms. Some system providers have sold their system to an IT Service provider, who in turn use it as a VAN service making business on taking care of their customers B2B integration needs. This enables smaller customers being able to access advanced B2B functionality at lower price points, hence introducing B2B Integration Functionality far down in the SMB segment. In these instances, one Integration Broker system will handle many customers, potentially 100's.

IDC estimates that the total number of installations of B2B Integration Brokers at the end of 2003 was 935. Note that Axway has by far the largest share of the installed base (420 B2B installations). Not taking into account value of the deals, in sheer numbers Axways share is almost 50%.

18 #660429 ©2004 IDC

T A B L E 2

B 2 B I n t e g r a t i o n B r o k e r s , S w e d e n , N u m b e r o f I n s t a l l a t i o n s

Number Sold 2003 Total Installed Base

B2B Integration Brokers 173 935

Source: IDC, 2004

Sales are sometimes done solely by the system provider (100% direct sales), and sometimes a split between direct sales and sales through partners. All sales through partners, including sales by a VAN service provider are counted as that particular system providers market share.

System prices vary a lot. Some of the niche vendors' price (for a system put into operation) starts as low as 100.000 SEK, and in the upper end of the market we find deals worth 40-50 MSEK. A "typical" B2B Integration Broker system would cost a customer between 500.000 SEK to 2.5MSEK, obviously depending on functionality requested, capacity etc.

Vendor's business models differ. As been said, we measure the value of systems sold, including price for bringing it into operation. Some vendors will provide service of installation along with the product itself, others rely completely or partly on partners for the installation task. For other systems, the client can bring their systems up and running themselves, at a very low cost added to the system itself. Variations are due to many factors such as the complexity of the system involved, skill of client and so forth. The service and installation part in the deals we examined range from a few percent to 2/3 of total value of the deal.

Hence, the market value below include the service part of bringing the system into operation. Although the vendors share vary of the service part, we believe this more accurately reflects the market size of B2B Integration Brokers. This also means that the market share figures also include the service fees for bringing the system into operation, regardless of if that service charge is collected by the vendor or not.

T A B L E 3

M a r k e t V a l u e a n d F o r e c a s t , S w e d i s h B 2 B I n t e g r a t i o n B r o k e r s , M S E K

2003 2004E 2005E 2006E 2007E 2008E CAGR 03-08

Value 213 232 260 270 279 287 6%

Growth 9% 12% 4% 3% 3%

Source: IDC, 2004

IDC believes that we will face continued price erosion for software and platforms. Customers will get more for less. One important driver are the VAN services offered

©2004 IDC #660429 19

by IT services companies. Generally they are offered at a lower price point, albeit with lesser flexibility and capacity, and will increase the pressure on platform prices. In the short-term, this will be compensated by the until now suppressed investments in this area from following the turmoil of the IT bubble burst.

We do not see dramatic changes in the service part, price erosion will be compensated by higher functionality demands from customers and the general move towards a networked economy. A complete set of forecast assumptions can be found in the appendix.

Market shares for the active players in the Swedish market are found below. Shares are as discussed above the vendors' part of total revenue generated by new sales 2003, including the service part for bringing the system into operation. Hence, it does not mirror the vendor's revenue in the cases where partners are used for partly or fully install and customize the system.

F I G U R E 2

M a r k e t S h a r e s , B 2 B I n t e g r a t i o n B r o k e r S a l e s 2 0 0 3

Axway (28.2%)

IBM (16.9%)

Sterling Commerce

(14.1%)

Microsoft (9.3%)

SeeBeyond (5.8%)

Ascential Software (4.7%)

Others (21.0%)

Source: IDC 2004

Out of Others, all have 4% or less market share. BEA and Tibco coming closest with 4.0% and 3.3% respectively out of the total market value for new sales in Sweden.

T A B L E 4

2 0 0 3 V a l u e o f N e w S a l e s , L a r g e s t V e n d o r s S w e d i s h B 2 B I n t e g r a t i o n B r o k e r m a r k e t ( M U S D )

Company Axway IBM Sterling Commerce

Microsoft SeeBeyond Ascential Software

Others

Value 60.0 36.0 30.0 19.8 12.4 10.0 44.8

Source: IDC, 2004

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M a r k e t P o s i t i o n i n g G r i d

The Market Positioning Grid is a tool that graphically depicts the leadership potential of various vendors by assessing two major competitive factors with specific inputs:

Market opportunity alignment. Parameters evaluated here is to show how well a vendor is aligned to the actual market situation and is a short-term description of the actual position in the market.

Ability to gain share. Parameters included in the ability to gain share takes a view of the vendor compared to the way the market is moving and describes how well the company may perform compared to other services vendors. It is a long term perspective on the vendor.

In the appendix the complete set of evaluated parameters can be found.

F I G U R E 3

M a r k e t P o s i t i o n i n g G r i d , B 2 B I n t e g r a t i o n B r o k e r V e n d o r s o n t h e S w e d i s h M a r k e t

Source: IDC, 2004

©2004 IDC #660429 21

Typical interpretation of placement in the four quadrants:

Upper-right quadrant: This is most desirable for vendors that are pursuing maximum revenue and broadest market reach. It reflects very successful past performance and points to promising futures.

Upper-left quadrant: This is desirable for vendors focused on becoming leaders in specific target markets. It reflects poorly to moderately successful past performance and points to promising futures. Here we will find players equipped to challenge to the upper-right quadrant. Niche players could also be found here.

Lower-right quadrant: This is somewhat less desirable for vendors, because while it can reflect a successful past performance, it points to less-promising futures unless changes are made.

Lower-left quadrant: This is the least desirable for vendors looking to achieve market dominance, because it reflects poorly to moderately successful past performance (possibly due to recent market entrance) and points to less promising or uncertain futures. However, here we can find new successful niche players.

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A P P E N D I X

M e t h o d o l o g y f o r t h e M a r k e t P o s i t i o n i n g G r i d

Below the parameters evaluated are listed below. The different factors are weighted according to how important IDC believe they are to reflect vendors performance in this particular industry in Sweden. Factors are also adjusted to reflect the Swedish situation, e.g. for the market share and geographical presence we primarily compare the Swedish situation.

Market opportunity alignment This term defines a vendor's ability to meet current market demands. Variables evaluated include:

Ability to set industry standards. Innovativeness, though leadership, flexibility etc. The ability to set standards will mean the ability to introduce new concepts, models and influencing market development, or to influence standardization bodies.

Market Position (revenue, customers, and users)

Potential for market dominance (ranking first). This parameter has to do with size, staff, local presence.

Potential for place or show (ranks second or third). This parameter has more to do with mind share and brand recognition than the more size related parameters. Typically niche vendors with a strong market profile may do well on this parameter. Large companies may as well, but companies that may have a large success but live a more quiet life does not score high on this.

Product/service breadth. Product characteristics, e.g. is it industry specific, or cross-industry compared to competitors? Cross selling and close customer relation increase their importance, e.g. one-stop-shops can score high here.

Ability to gain share: This term defines a vendor's ability to gain market share in the future. Factors evaluated include:

Company Perception is a crucial factor: how is the vendor's reputation in the industry - for service, for flexibility, for expertise, for industry knowledge etc. References are an important part of this - references are success stories.

Financial Strength. Following the turmoil, short life cycles, restructurings, shift in strategies etc financial strength has become more and more important. A company with strong financials is not likely to go bankrupt within the next few years.

Geographical/Global presence (sales and support offices, customers, and resellers)

Market Expertise. This parameter has to do with the vendor's expertise in the customer segment and in the solution segment. It has to do with his position in value chain and combination of expertise areas related to the important issues in the market. High scores will be combination of business and technical expertise, combined offering of systems, development and support, SLA offerings, no of experts etc.

©2004 IDC #660429 23

Market Momentum. This parameter looks at the vendor's development. What are the growth rates, which new contracts have been won etc. It takes a more dynamic view on the market position than the market share that is part of the opportunity alignment.

Partnerships / Sales Channels / Reseller Position.

Versatility / Scalability / Openness. This is a technical factor, were the dynamic abilities of the product/portfolio to adapt to a changing environment is assessed.

F o r e c a s t A s s u m p t i o n T a b l e

T A B L E 5

K e y F o r e c a s t A s s u m p t i o n s f o r t h e S w e d i s h B 2 B I n t e g r a t i o n B r o k e r m a r k e t d e v e l o p m e n t 2 0 0 4 - 2 0 0 8

Market Force IDC Assumption Impact

Accelerator/ Inhibitor/ Neutral

Certainty of Assumption

Macroeconomics

International economic uncertainty

The economic uncertainty will continue during beginning of 2004 but will increasingly stabilize

Strong. Enterprises will hold back investments and recovery will only come slowly

↓

Low growth in GDP Swedish economy will have low growth and only slowly recover

Moderate. Investments postponed ↓

Number of bankruptcies

In Sweden the number of bankruptcies is declining

Moderate. Company profitability is a good indicator for IT spending

↑

Investment index positive

Investments have been postponed and there is a broad need for new functions

Moderate. Growth in solution investments ↑

Technology/service development

Software complexity

Software systems tend to increase in complexity, but demand for higher quality and productivity will be unabated.

Moderate. The complexity crisis will maintain the need for integration but the demand for high quality and productivity could deter skeptical buyers from existing product offerings. Increasingly, this functionality may be delivered as an IT or business service

↔

Standard Solutions Enterprises move away from custom developed applications to standard software that is

High. Enterprises concentrate on standardized software. Services

↑

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T A B L E 5

K e y F o r e c a s t A s s u m p t i o n s f o r t h e S w e d i s h B 2 B I n t e g r a t i o n B r o k e r m a r k e t d e v e l o p m e n t 2 0 0 4 - 2 0 0 8

Market Force IDC Assumption Impact

Accelerator/ Inhibitor/ Neutral

Certainty of Assumption

customized opportunity in customization large

Application Management & hosting

Service vendors increasingly offer to take over responsibility of hosting and maintenance of application

Moderate. AM and hosting are opportunities to enhance services revenue in a mature market.

↑

Software licensing There will be increased attention to building predictable revenue streams through nontraditional software licensing models

Low. Short term, there will be less of an impact on overall software revenue. Towards the back end of the forecast period a higher impact on software revenue is expected

↑

Labour supply

Availability of internal expertise

Internal IT organizations are stretched as a result of layoffs and increasing workloads. Despite unemployment, there is still a shortage of key technology expertise, which will continue to drive usage of external service firms and outsourcing.

Moderate. The cost of labor/recruiting will affect the cost of operations, fueling interest in using external services firms and outsourcing to take advantage of cost differentials. Beyond 2003, a return to IT professional labor shortages will favor services firms.

↑

Market Characteristics

Buyer sentiment Buyers will be cautious but willing the investment can be justified economically.

Moderate. Any new investment will need to be justified by short-term payback achieved through cost savings. Vendors have changed their pitching approaches accordingly.

↑

Cost cutting The emphasis will remain on solutions that cut costs rather than grow revenue.

Medium. Cutting Opex and Capex is key focus for most large enterprises but they will be under pressure to grow revenues in the later years of the forecast

↓

Spending Users will continue to moderately upgrade functionality and seats

High. Affects 70% to 90% of most enterprise applications markets, especially the more mature back-office application markets

↑

©2004 IDC #660429 25

T A B L E 5

K e y F o r e c a s t A s s u m p t i o n s f o r t h e S w e d i s h B 2 B I n t e g r a t i o n B r o k e r m a r k e t d e v e l o p m e n t 2 0 0 4 - 2 0 0 8

Market Force IDC Assumption Impact

Accelerator/ Inhibitor/ Neutral

Certainty of Assumption

Leverage of existing technologies

Users will turn to investments already made in solutions and focus on better leverage of the existing applications

High. This will tend to have a negative impact in the short term. But in combination with other market assumptions and time, the opposite effect will occur as users realize a need to update with new functions and technologies

↔

Extended sales cycles

Potential customers will increasingly demand justification for software purchases in terms of ROI or reference accounts

Moderate. Sales cycles will increase and deal sizes will continue to be smaller and taken in a phased approach

↓

Price Pressure Price pressure will remain a feature of the software-, and to some extent of the consulting market for some time to come.

Medium. Consulting rates remain depressed but could creep back up as firms roll out new technology such as web services

↓

Vertical pressure The downturn in financial services and telecom continues for a while. Other verticals such as government will take a bigger proportion of the solutions market

Low. Financials and Telecom are big spenders and their turnaround will drive growth of the market as a whole

↔

VAN services The emergence of VAN services offering B2B Integration Functionality will result in lower revenues for the same service

Moderate. Vendors that do not undertake timely measures by being part of the VAN service market will become too expensive in the long run

↓

Consumption

Complexity of sales cycle

Market conditions will continue to require longer, more complex decision-making processes on the part of buyers, leading to long sales cycles for suppliers.

High.

↓

Large Enterprise software renewals

There will be high price pressure on large enterprise software renewals

Moderate. This will have an impact on changing software revenue growth

↓

Legend: very low, low, moderate, high, very high

Source: IDC, 2004

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C o p y r i g h t N o t i c e

This IDC research document was published as part of an IDC continuous intelligence service, providing written research, analyst interactions, telebriefings, and conferences. Visit www.idc.com to learn more about IDC subscription and consulting services. To view a list of IDC offices worldwide, visit www.idc.com/offices. Please contact the IDC Hotline at 800.343.4952, ext. 7988 (or +1.508.988.7988) or sales@idc.com for information on applying the price of this document toward the purchase of an IDC service or for information on additional copies or Web rights.

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