Launching a new software company into an already fast-consolidating market may seem a foolhardy venture, particularly in the current climate. But enterprise application integration (EAI) software vendor Axway is already on course to post revenues of more than EU60 million this year.

This is because while the company was only set up at the beginning of 2001, it has been implementing its integration software for almost 15 years as a unit within Paris-based Sopra, an EU516 million services group.

But within Sopra, there was a risk that Axway revenues might be diverted into other projects, instead of being re-invested into product development. “The strains were starting to show internally,” says Martin Stern, general manager of Axway in the UK and Ireland.

The loosening of the ties with Sopra has also left Axway free to pursue partnerships with other services companies. “As a result, we have done more projects this year with the big consulting companies than we have with Sopra,” says Stern.

Finally, while Sopra was successful at selling Axway integration software in its core markets in the financial and retailing sectors, particularly in France, it has made little impact elsewhere – even many analysts admit to knowing little of its technology.

Axway’s strengths lie in the modular nature of its software. This means that users can start by implementing basic modules before moving on to more complex integration.

For example, a project might start with straightforward file transfer middleware, which enables staff in one organisation to send files to staff in another, with Axway’s Extended File Broker (XFB) converting the data from the format of one company to the format of the other.

Users of this software include UK telecommunications giant BT, which is using the software to provide some integration for the disparate mainframe systems it runs.

After implementing XFB, businesses can move on to more complex message broking software with the Axway Enterprise Integrator. This provides a hub for connecting disparate applications, transforming messages from one format in one application to the correct format for another and routing the message accordingly.

However, Axway’s integration software has lacked the high-level business process management and workflow capabilities that major competitors have been rolling into their products in the last year. This enables the integration software to be used to orchestrate complex business processes across different applications.

This is one of three reasons for Axway’s first major acquisition – of the EAI assets of integration pioneer Viewlocity in March 2002.

In addition to Viewlocity’s business process management technology, which Axway is currently integrating with its core suite, it helped expand the company’s coverage and gave it a presence in North America and across the Asia-Pacific region – something Sopra has historically lacked. On top of that, Axway also acquired a base of 1,000 Viewlocity users.

However, the purchase did more to consolidate Axway’s position in Europe than it did to help it expand into the US and Asia/Pacific. This is because Viewlocity had been most successful in Scandinavia, reflecting the company’s heritage as a spin-off from Swedish services vendor Frontec.

Viewlocity was, however, never able to compete head-on in the US EAI market against such well-financed start-ups as WebMethods and CrossWorlds, says AMR Research director Kimberly Knickle. As a result, says Knickle, development of Viewlocity’s EAI software products took a back seat. “‘Neglected’ is probably too strong a word for it, maybe ‘not updated’ is a better phrase,” she adds.

Now, Axway has promised to develop Viewlocity’s AMTrix and TradeSync Integration Broker (TSIB) products. This helps explain the commitment to spend a hefty 22% of revenues on research and development in the short-term.

Investing so heavily in product development at this time is, perhaps, a risky strategy, but the testimonial of BNP Paribas, the world’s tenth largest bank, confirms the strength of Axway’s core technology. It said that without Axway’s integration software the 1999 merger of BNP with Paribas could never have taken place.