International companies are so keen to gain entrance into the local integration market that some are prepared to cut their product prices significantly to get in.
This is according to at least two US-based integration companies which recently concluded distribution deals in SA.
One of the new investors, US-based e-business company Netmanage, recently announced that it would distribute its new integration software, Onweb, through local Web-enablement company Dax Data.
Another international business, US-based integration solutions company Jacada, launched its integrator product as well as an interface Web-to-host server locally in October last year. The products are distributed in SA by solutions provider CommerceQuest.
CommerceQuest MD Alex Steyn believes there "is significant room for growth in terms of the South African integration market" and that this could be the reason behind the increased interest from international companies.
Steyn also indicates that Jacada is willing to cut 25% off its worldwide pricing to be competitive in the local market.
While Netmanage senior VP of strategic development Peter Havart-Simkin stresses that "the integration challenge is the same around the world", he says the local market situation did present certain unique benefits to both sellers and users.
"SA has definitely gained from being slightly behind First World countries by being able to learn from their mistakes with regards to integration. It is not as far down the track as some First World countries are, and therefore can make a change more easily. Consequently, I think that maybe this market is better positioned to go forward."
Steyn says local companies also benefit from having a good understanding of why integration is necessary. "I think companies understand that integration is very important to them. As a result of being isolated, SA has more home-grown development than a lot of other countries. Integration in the banking and insurance sectors are very strong here - probably even further ahead than the European and US market."
Havart-Simkin adds that various factors, such as decreasing costs of integration packages and the hesitance of companies to simply replace technology, could make integration more favourable to South African companies.
"What is happening now, along with the squeeze of IT budgets, is that companies are looking to make better use of their assets. So this will be a year of leveraging assets as opposed to trying something completely new."
SA integration hurdles
Despite all the positives, launching products in SA still poses various obstacles, and the increasingly competitive nature of the market makes it more difficult.
In terms of launching Jacada products, Steyn says CommerceQuest aims to use the products' track record on the international market. "Launching a product - like Jacada - in SA is not an easy job... We are hoping to prove by example how the products have been successful in different countries and industries."
Suppliers and service providers must also be alert to the changing trends in the market, as the integration needs of companies change. According to research group Gartner: "Web services will be the catalyst for the standardisation of most innovation in the software and IT professional services industries during the next five years."
Further backing up this claim is the fact that a number of companies - including Jacada - are now catering to the Web services area.
Harvart-Simkin also believes there is a growing preference for Web services. "In the future, I think there will be considerably more work done in this area. Even IBM and Microsoft are cooperating in such regions with respect to the standards, particularly things like Web services, security and transactions on the Internet."
Jacada CEO Gideon Hollander underlines the importance of companies adapting to the changes in the market. "In terms of company demands, expediency is becoming an increasingly important issue," says Hollander.
"The world today wants quicker results. Companies are now opting for shorter projects with shorter ROI [return on investment]. It forces us to make changes. We try to provide quick solutions which allow companies to reuse existing systems, or build a quick new user interface."
Most companies agree that the need for integration will remain the one constant in the market. "There will always be a need, it will just get easier. As soon as one company buys another, you have a need for integration. I spoke to one CIO who said, 'I am retiring in 2011, and let me tell you none of this stuff will go away by then. It will still be there when I retire," says Harvart-Simkin.
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