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Tuesday, 05 June 2018 12:52

Application infrastructure, middleware spend rising steadily: Gartner

Application infrastructure, middleware spend rising steadily: Gartner Image courtesy of jscreationzs at FreeDigitalPhotos.net

A significant shift toward digital business models that harness technology trends such as cloud computing, Internet of Things (IoT), analytics and artificial intelligence (AI) is boosting worldwide spending – including in Australia - on application infrastructure and middleware (AIM), according to a new market report from Gartner.

The AIM market in Australia grew 8.4% to reach A$881 million in 2017, with IBM having 25% of AIM market revenue in Australia in 2017.

Gartner forecasts the Australian market to grow 7.9% in 2018 and exceed A$1 billion in 2021.

And in New Zealand, AIM market revenue grew 7.7% in 2017 to reach NZ$123.8 million, and is forecast to grow 7.7% again in 2018 – with IBM also the largest vendor in New Zealand, with 31.5% of market revenue in 2017.

Globally, Gartner reveals that the AIM market revenue reached US$28.5 billion in 2017, an increase of 12.1% from 2016.

Gartner says the wider technology trends driving the AIM market are commonly accepted, with migration to cloud platforms and services, ever-increasing demand for near-real-time data and analytics, a shift toward an API economy, rapid proliferation of IoT endpoints, and deployment of AI.

tavle gartner peter

"A new approach to application infrastructure is the foundation organizations build their digital initiatives upon, and therefore robust demand in the AIM market is testament to the occurrence of digitalisation," said Fabrizio Biscotti, research vice president at Gartner.

"The more companies move toward digital business models, the greater the need for modern application infrastructure to connect data, software, users and hardware in ways that deliver new digital services or products."

Gartner forecasts that the AIM global market will grow even faster in 2018, after which spending growth will slow each year, reaching around 5% in 2022, and it says momentum in the AIM market is shifting from market incumbents to challengers.

The report found that licensed, on-premises application integration suite offerings that make up larger segments served by market incumbents such as IBM and Oracle achieved single-digit growth in 2016 and 2017.

And Gartner expects this growth to continue through 2022. "We can generally describe the products in this slow-growing segment as serving legacy applications," Biscotti said.

Gartner says small challenger segments — built predominantly around cloud and open-source-based application integration (iPaaS) offerings — will continue to enjoy double-digit growth.

"In iPaaS we find the groundwork being laid for a digital future, as the products in this segment generally are lighter, more agile IT infrastructure suited for the rapidly evolving use cases around digital business," said Bindi Bhullar, research director at Gartner.

"The result is that well-funded, pure-play iPaaS providers, open-source integration tool providers and low-cost integration tools are challenging the dominant position of traditional vendors."

Gartner reveals that the iPaaS segment is still a small part of the overall market, topping $1 billion in revenue for the first time in 2017 after growing over 60% in 2016 and 72% in 2017, making iPaaS one of the fastest-growing software segments.

"The iPaaS market is also starting to consolidate, most notably with Salesforce's recent acquisition of MuleSoft," said Bhullar.

"There is still a lot of room for further consolidation, with more than half the AIM market held by vendors outside the top five. This "others" segment is enjoying double-digit growth, which is likely to encourage acquisitions from big players losing market share to challengers."

Biscotti notes that that the most successful challengers in the AIM market will be those that position their products as complementary to — rather than replacements for — the existing legacy software infrastructure that is common in most large organisations.

"While new agile challengers may seem better fits for those pursuing digital initiatives, the underlying reality is that legacy middleware and software integration platforms will persist," Biscotti said.

"Pure-play cloud integration is a niche requirement today – most buyers have more extensive requirements as they pursue hybrid integration models. The long-term market composition is likely to consist of a broad spectrum, from generalist comprehensive integration suites to more-specialised fit-to-purpose offerings."

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Peter Dinham

Peter Dinham - an iTWire treasure is a mentor and coach who volunteers also a writer and much valued founding partner of iTWire. He is a veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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