Although the market for integration platform as a service (iPaaS) looks like it’s booming, many players are opting for mergers and acquisitions to avoid consolidation. So much so, Gartner predicts that by 2023, two-thirds of existing iPaaS vendors will be gone.
The big vendors such as Oracle, Microsoft and IBM have a tight grip of the market; they can offer more-competitive offerings and pricing.
“The challenge for most iPaaS vendors is that their business is simply not profitable,” said Bindi Bhullar, senior research director at Gartner. “Revenue growth and increasing customer acceptance can’t keep up with the costs for running the platform and the heavy spending in sales and marketing.”
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According to Gartner, this is a trend that shows no sign of slowing down; therefore, we can expect to see more M&A.
“For organisations looking to purchase an iPaaS solution, this is good news,” said Bhullar. “They can capitalise on the evolving market dynamics by solving short-term/immediate problems today, while preparing to adopt another iPaaS offering from an alternative vendor as the expected market consolidation accelerates through 2023.”
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What does this mean for existing services?
Gartner believes this market consolidation is opening the risk of platform services being discontinued due to the vendor exiting the market or being acquired.
“Buyers should minimise exposure to vendor risk by adopting platforms that can deliver short-term payoffs so that the cost of any eventual replacement can be more easily justified,” warned Bhullar.
