New Entrants Will Need to Position Themselves Carefully in the Composite Application Market
by Fern B. Halper
We anticipate that composite applications will be increasingly important to dynamically responsive organizations. Therefore, we were interested to learn that CommerceOne, a company that was an early pioneer in the procurement space was repositioning itself for this market. While we think that the company has some interesting ideas, it does not seem to understand how to play in a new world where the center of gravity has moved to platform vendors such as IBM, HP, Microsoft, SAP and the like.
Composite applications are important because they link together the right parts of applications in the right way to initiate a new business practice without having to start from scratch. CommerceOne calls its approach to this market Composite Process Management (CPM). CPM addresses the pain of the cost to build and manage cross- functional and multi-organizational business processes (i.e. composite applications). The product that CommerceOne offers is a single, unified services platform that enables companies to integrate applications from a centralized point, called a registry, so that the applications are logically, not physically tied together. The environment enables customers to leverage their existing Enterprise Application Integration (EAI) tools as well as their investments in other various integration technologies. However, the design of CPM is intended as a packaged standalone environment which will invariably try to compete against larger players ranging from packaged software vendors such as SAP and Oracle as well as platform vendors such as IBM, HP, and BEA. Considering the size of CommerceOne (about $5 million in revenue for the 4th quarter of 2003), it will be hard for the company to compete.
Hurwitz & Associates certainly believes that composite applications will play an important role for companies integrating business processes to become more flexible and adaptable. As we point out in our predictions column, architectures and tools to help create these flexible applications will start to take off in 2004. However many companies are confused as to the exact nature of a composite application and what it actually takes to build one. Today, composite applications can take months to build, depending on their complexity.
It is going to be difficult for new entrants to gain the attention of the CIO. These companies will have to articulate their value proposition clearly and be able to differentiate themselves from the bigger players such as IBM and HP who are already entrenched in this space and articulating “On Demand” and “Adaptive Enterprise” strategies. For example, a key differentiator for Commerce One is its registry. However, many vendors say that they have a registry so differentiating one registry from another will be critical. These newer entrants will also need to think carefully about how to approach the market and who to partner with. Otherwise it won’t matter how innovative and useful the technology is: they simply won’t survive.
Fern B. Halper is Principal and Senior Consultant of Hurwitz & Associates, a consulting, research, and analyst firm focused on emerging software markets. She can be reached at firstname.lastname@example.org.