Analyst: Consolidation to Continue in Enterprise Software Space

Forrester analyst John Rymer also is predicting Microsoft's growing influence and IBM's entrance into enterprise apps.

HOLLYWOOD, Fla.—Consolidation will continue in the enterprise software space over the next three years, Microsoft's influence will grow and IBM will get into the enterprise applications business.

Those were among several scenarios Forrester Research analyst John Rymer laid out Dec. 13 during a talk at the Spring Experience show here.

As far as consolidation goes, BEA Systems and Tibco Software are among the most likely acquisition targets "unless they get bigger fast," Rymer said. BEA already this year was the target of a failed takeover bid by Oracle.

He also said that BEA is one of several top enterprise applications vendors that face growth imperatives. The company must reach a $21-per-share stock price and show license growth outside of WebLogic to see any true growth, Rymer said.

That will be particularly important as larger companies continue to target the market. For example, Microsoft's enterprise strength will continue to grow, Rymer said. "They're just good; they penetrate," he said.

In addition, it's not just Microsoft's strength that's growing, but its overall influence in the enterprise, Rymer said. "And it's become a real factor for the Java providers," he said.

According to a survey of enterprises, 65 percent said they used .Net, while only 17 percent said they were using the Spring Framework, although "Spring had the fastest growth rate over the last two years," Rymer said.


Click here to read more about Spring's disruption of the Java world.

Meanwhile, Rymer also predicted that IBM will get into the enterprise applications business.

"IBM can't afford anymore to ignore enterprise applications if they want to continue to grow," he said.

Other Rymer predictions include open source becoming "simply part of the fabric," portability standards waning while interoperability standards rise, and business units and IT departments increasingly working together to build applications.

In addition, he said what he calls the "big four"—Microsoft, IBM, Oracle and SAP—will remain, but new "coopetitors" will rise from the specialist ranks. There are three roles of players in the enterprise market: packagers, like the big four; commoditizers, like open-source communities such as GlassFish; and specialist innovators like Ruby on Rails, he said.

Meanwhile, like BEA, other big vendors in the enterprise market face a series of growth imperatives. IBM has to lock down enterprise budgets and expand its presence in the SMB (small and midsize business) market, he said.

Oracle has to get 100 percent growth in its Fusion middleware and Sun Microsystems needs to regain relevance, Rymer said.

In addition, since the Java space has separate markets for runtimes and for programming models, that makes it possible to mix things like the Spring Framework with things like IBM WebSphere, he said. "So there are two facets of innovation here," he said.

He said big vendors will watch for innovations like Spring to reach a point of adoption and then they will look for a way to embrace it.

Yet, SpringSource, as it approaches ubiquity, will provide a layer across the big four, "or deep integration into a specific application platform, such as Oracle—integrating the Spring Framework into Oracle's stack," Rymer said.

Moreover, it is the specialists, like SpringSource, that are providing breakthrough programming models and frameworks, breakthrough components, and support for programming shops, he said.


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