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REDWOOD CITY, Calif.—Security, enterprise data integration, health care and regulatory compliance are some of the areas that will attract investment during the next few years, according to IT technology company executives and venture capitalists who spoke here this week at the Dow Jones VentureWire Enterprise Ventures conference.
For years enterprises have looked for silver bullets that would allow them to solve their data integration problems, and that search for such technology will continue for years to come, said George Gilbert, principal with Tech Strategy Partners, a consulting and research firm focused on enterprise software and service.
“Silver bullets are good for killing werewolves, but not good for solving your data integration problems,” Gilbert said.
He recalled a time in the early 90s when object programming technology was going to provide a way to integrate data across heterogeneous data management systems. Object technology was the “pixy dust” that was sprinkled over everything to get applications to talk to each other.
Object technology didnt work as promised, Gilbert said, because objects written for one application were not readily transferable to a second application, even when developers tried to “force-fit it into another application,” because it was like fitting a square peg in round hole, said Gilbert.
He suggested that the software industry is going through a similar phase, hoping that SOA (service-oriented architecture) will provide a comprehensive solution to application and data integration.
“We are going to see over the next five-plus years a very labor-intensive effort to get applications to talk to each other and liberate the data” thats locked in disparate applications and databases, Gilbert said.
“This is by no means an easy process, and there is plenty of room for startups” that can come up with innovative ways to solve this problem, he said.
Thomas Reilly, vice president of enterprise information management with IBM, referred to his own experience as the former CEO of a data integration startup, Trigo Technologies Inc., to illustrate what is going on in the current market. IBM acquired Trigo, which developed data management middleware, in March 2004.
One of the ways that Trigo, a small Brisbane, Calif., company that was founded in 2000, demonstrated its potential in the market was by building a data exchange hub that would allow Proctor & Gamble to introduce a new product to Wal-Mart Stores Inc.
“P&G wanted to introduce a new product to Wal-Mart, and we automated that process,” Reilly said. “That is how a small company gained traction in this area.”
A number of startups are investing in technology that deals with the problem of disparate structured and unstructured data within an organization and within different companies that want to do business, he said.
The key will be whether startups will be able to solve the problems in ways that differentiate themselves from their competitors, Reilly said.
Data integration and protecting the integrity of data will become increasingly important as new regulatory compliance legislation goes into effect, noted William Conroy, CEO of Initiate Systems, a data integration software maker based in Chicago.
Under the provisions of the Graham-Leach-Bliley Act, financial services and other companies have to know the location and status of customer data and how to securely link applications and retrieve it, Conroy said.
Another underserved industry is health care, Conroy said. Hospitals, insurance companies and other health care companies in the United States are “going to spend billions to catch up with the UK and Canada” in managing and securing patient data, he said.
Integrating and updating patient records will be a key means of reducing medical errors, which cause the deaths of as many as 98,000 patients a year, he said. As a result, Conroy said he believes software entrepreneurs and venture capitalists will be “flocking into health care” over the next several years.