Business Alliance Puts Squeeze On Small Software Vendors

By Heather B. Hayes

Contributing Writer

An alliance of major information technology companies is trying to boost the reliability of business e-mail, creating new dilemmas and opportunities for smaller software companies that now dominate the market.

"I don't believe it is a threat. If those companies look at this as an opportunity, they can expand the reach of their applications," said Chris Thomas, Intel Corp.'s manager of enterprise initiatives, based in Hillsboro, Ore.

Intel has joined with Microsoft Corp. and IBM Corp. to form the Business Quality Message alliance, intended to promote standard technical approaches for online communications software. If the plan works out, businesses will be able to send messages via a variety of different networks without worrying about whether the message might get lost, arrive late or be garbled, industry officials say.

The new approach could also give businesses new capabilities. For example, the technology will confirm that each message has arrived, eliminate duplicate messages, and allow "time-limited back-outs," in which a delayed message would automatically cancel itself after a preset deadline, said Thomas.

IBM's message reliability technology is included in its so-called MQWare, while Microsoft is slated soon to release its Falcon message-reliability software. Already, IBM has licensed its technology to Isocor, based in Santa Monica, Calif. Other large companies participating in the alliance include AT&T Corp., Basking Ridge, N.J., and Hewlett-Packard Co., Palo Alto, Calif.

The alliance creates a major dilemma for software vendors now selling middleware intended to ease communications within companies.

Middleware, often defined as the "/" in client/server computing, smoothes over frequent incompatibilities among various software programs by acting as a language translator. This translation saves software-developers the headache of having to understand and figure out the intricacies of each and every program, network and computer.

The new alliance will gradually eliminate the distinction between middleware for internal communications and middleware for Internet and external communications, said Karen Boucher, director of research for the Standish Group, based in Dennis, Mass.

"Middleware is going to be a big part of enabling the Web to become a robust platform," said Wayne Eckerson, an analyst with the Patricia Seybold Group, a research firm in Boston. "Without adequate middleware, it just won't happen."

But the smaller companies won't give up without a fight. "The winner in this market will be that vendor, that product, that can tie together these new Web applications with existing [internal messaging middleware] systems," John Deutsch, a product manager for Information Builders Inc., based in New York.

"Accomplishing that is not much different than what we've been doing for six years. We're the leader in enterprise middleware, and we plan to stay that way," he said.

Deutsch noted that BQM does have the potential to be a bridge between system messaging and e-mail messaging, but he does not expect the newly formed consortium's use of it to affect Information Builder's overall middleware business.

The consortium "appears to be a pretty reasonable marketing effort, but whether or not it produces products or impacts my business remains to be seen," Deutsch said this week. "We've seen a lot of these kinds of initiatives come and go, and so we are not too worried about it," he said.

Information Builders Inc., Sybase Inc. and Platinum Technology Inc. collectively provide most software used by companies to smooth the flow of internal messages among corporate divisions. Partly because of increased Internet activity, their market is growing 46 percent per year, said Boucher. By 2000, she expects such middleware products to bring in a half-billion dollars in sales.

To stay prosperous, "the best thing they can do is get involved with the initiative because they will expand their base" beyond corporate networking, said Thomas.

In 1991, Information Builders released EDA, and its revenues shot up 200 percent each year for three years running. Growth has since slowed to 25 percent annually, according to Deutsch.

Information Builders' annual revenues in 1996 were $55 million; officials expect the company to reach $70 million in 1997. Customers include more than 2,500 multinational corporations, and 10 percent to 15 percent of EDA sales are to the federal government.

The company's EDA software dominates this market now, and is running at 85 percent of Fortune 500 companies, mostly because it's the one middleware program that can talk the talk of just about every computer system.

The latest version of EDA can talk to all of the 65 known databases, more than two dozen types of metadata (a sort of dictionary that describes databases and their contents), and the bulk of the many networks, system monitors, applications and application servers out there, company officials say. The product has also been adjusted so that it can interface with Web browsers and Web object applications.

The move to a Web-based computing environment, Deutsch noted, only intensifies the demand for middleware.

"Effectively, the need for data access continues and will remain with us forever," he said. "Ultimately, all applications want to talk to a database, either by getting data out of or putting data into a database. What's changing is the nature of the client application."

And here's why. The Web browser running off a PC has become cheaper and easier to deploy, but once it arrives at the Web server, one or more application programs must be called, data must be accessed, integrity must be checked, and a host of other tasks completed.

Staff writer Neil Munro contributed to this article.

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