While previous integration service provider market leaders have retained their leadership positions, others have strengthened their positions, particularly in the area of B2B integration outsourcing. Increasing levels of availability, improved disaster recovery contingencies, more community management automation, more explicit (and reliable) B2B integration outsourcing task service-level agreements (SLAs), greater international fulfillment capacity and improved process visibility are just a few ways that integration service providers are increasing the quality and value of their integration services. This has raised the bar for expectations and confidence among IT end users that integration service providers can successfully implement and manage their B2B projects.

We estimate that companies worldwide spent more than $1.5 billion on integration as a service (IaaS) and B2B integration outsourcing. They will purchase and consume much more integration services in the next five years; thus, companies should be aware of how the B2B integration services market is evolving to take maximum advantage of B2B services in their B2B projects. Changes include:

• B2B Infrastructure Modernization: IT users are increasingly risk-adverse. Integration service providers have responded with significant investments to improve the availability and disaster recovery capabilities of their IT stacks and IaaS data centers.
• B2B Consolidation Projects: As part of their overall IT modernization initiatives, companies are increasingly implementing B2B consolidation projects to rationalize diverse point solutions onto one B2B infrastructure.
• Globalization: The overall globalization business trend means that more B2B projects are inherently international in scope, regardless of how many external business partners are involved. Integration service providers are responding with ever-larger international fulfillment capacity.
• B2B Integration Outsourcing: More companies are considering outsourcing. Integration service providers have increased their investments in B2B projects, and are competing more aggressively to win the business of managing those projects.
• IaaS Innovation: Despite the prominence of traditional e-commerce B2B projects — for example, involving electronic data interchange (EDI) — the widespread adoption of XML, Web services, service-oriented architecture (SOA), software as a service (SaaS) and cloud computing is driving rapid integration service provider innovation.
• E-Invoicing: E-invoicing is finally growing, especially in Europe. The savings have been proved, but the complexity of multinational e-invoicing projects is deceptively challenging.
• Community Management: IT end users managing large communities of hundreds or thousands of external business partners can't afford to manually administer initial project roll outs and ongoing change management. Providers increasingly offer tools that automate community management tasks.
• Web Services and SOA: As companies more frequently use SOA and deploy Web services for internal projects, they increasingly seek to also do so in B2B projects. Providers increasingly support at least basic Web services and SOA.
• Cloud Computing: As cloud-computing scenarios, such as SaaS, emerge and become one source for applications relevant to B2B projects, IaaS providers are beginning to support cloud computing/SaaS integration.
• Multienterprise Business Activity Monitoring (BAM): As B2B projects get larger and more complex, companies need better visibility into the execution of related multienterprise processes. Nearly all integration service providers offer some sort of multienterprise BAM.
• Multienterprise Process Choreography: Companies want more control over increasingly complex multienterprise processes. Integration service providers increasingly offer some sort of process modeling and business rules execution to support, for example, supplier compliance.
• Multienterprise Applications: Although multienterprise applications are not a key evaluation criterion for this Magic Quadrant, many integration service providers also offer SaaS functionality, such as vendor management inventory, in conjunction with integration services.
• Mergers, Acquisitions and Alliances: Integration service providers continue to strengthen their market share, enhance their integration service portfolios, and expand their international footprint via mergers, acquisitions and alliances.
• IT Megavendor Involvement: IT megavendors, including Google, IBM, Microsoft, Oracle and SAP, all directly engage various integration service providers as their customers increasingly need to link on-premises applications and data with that of their external business partners.
• European B2B Market: Backed by rapidly growing B2B integration traffic, the integration service provider market in Europe is active and growing rapidly, fueled by a variety of economic trends. European companies having to address B2B integration requirements must assess whether multienterprise B2B infrastructure vendors have sufficient resources and domain expertise to meet diverse and expanding country-specific project scope requirements.
• Pricing: Integration service providers continue to improve pricing models for IaaS and B2B integration outsourcing services, generally making them simpler (such as using unit-based pricing — per trading partner), which has made negotiations easier and facilitated more-productive side-by-side pricing comparisons.

Summary of Significant Changes to the Vendor Ratings Overall

This year, we're rating four new vendors: Comarch, Covisint, Exostar and Kewill. We've promoted one vendor, Liaison, to the Leaders quadrant. We've also promoted Elemica to the Challengers quadrant, and granted challenger ratings to two vendors, Kewill and Covisint, that are included in this Magic Quadrant for the first time. We've moved nuBridges to the Visionaries quadrant. Overall, the net affect of all these changes reflects our perception that the integration services market has matured significantly. More leaders, challenges and visionaries, in general, correspond to our perception that IT users have more and better choices than they've ever had, particularly when implementing complex, multinational B2B integration projects.

Additional observations:

• Security: Vendors including (though not necessarily limited to) Covisint, Exostar and nuBridges have particularly strong security (e.g., for documents at rest) and related compliance (e.g., International Traffic in Arms Regulations [ITAR] and Health Insurance Portability and Accountability Act [HIPAA]), and declare this as key areas of differentiation. Clients increasingly cite security and compliance as challenges they need to address in their B2B projects.
• Business Process Networks: Vendors including (though not necessarily limited to) E2open, Elemica, GXS, Hubspan and Sterling Commerce have specifically made the offering of their integration services in the context of business process networks a key area of differentiation. Clients increasingly wish to consume integration services in the context of specific multienterprise processes they are implementing.
• Fault Tolerance: About half of the vendors in this Magic Quadrant offer exceptional levels of fault tolerance (little to no impact for single points of failure) and near-real-time transaction replication across data centers with recovery point objectives (RPOs)/recovery time objectives (RTOs) of four hours or less (sometimes for a premium). Clients are increasingly risk-adverse and cite availability and reliability as key concerns regarding new B2B projects.
• Vertical Diversification: Vendors including (though not necessarily limited to) Covisint, Elemica, E2open, Kewill, Liaison and Tieto continue to significantly expand outside their original core vertical industries. Clients increasingly demand that B2B vendors understand their processes to ensure that their vendors can properly implement and support their B2B projects.
• Managed File Transfer: Vendors including (though not necessarily limited to) EasyLink, Hubspan, GXS, Inovis and nuBridges are introducing or enhancing their managed-file-transfer-as-a-service (MFTaaS) offerings and generating new IaaS revenue from this specialized service for bulk data movement. While moving bulk data isn't as attractive as Web 2.0 collaboration, B2B communities worldwide must exchange rapidly proliferating volumes of data.
• B2B Integration Outsourcing: Most of the vendors in this Magic Quadrant have emphasized the strategic importance of growing B2B integration outsourcing for their businesses and have correspondingly invested to improve their B2B integration outsourcing offerings, marketing and go-to-market strategies. Particularly during the worldwide recession, many companies simply do not have the budget to modernize their B2B infrastructures or hire more B2B staff.
• Channel Partnerships: Vendors including (though not necessarily limited to) E2open, Hubspan and GXS have announced specific new channel partners — Oracle, IBM and Verizon, respectively — through which they now sell their B2B integration outsourcing solutions. Direct sales of B2B integration services is relatively slow and resource-intensive, so channel partners are an essential part of an overall strategy for more effectively reaching your target market opportunity and driving B2B services revenue growth.

Companies can choose either to implement B2B integration projects in-house using on-premises B2B-enabled middleware and their own IT staff, or to outsource such projects with the help of an integration service provider. Either way, the goal of B2B integration is to automate the execution of multienterprise processes, such as order-to-cash or claims adjudication. When outsourcing, this is accomplished by using IaaS to electronically link their applications, data and processes with external business partners, and by using B2B integration outsourcing to outsource the initial implementation and ongoing management of their B2B projects. We refer to any IT service provider that offers some combination of IaaS and B2B integration outsourcing as an "integration service provider."

Worldwide, we track over 100 vendors that in one role — typically in conjunction with other roles (e.g., as a SaaS provider or logistics provider) — are integration service providers. Integration service providers come from a wide range of backgrounds, industries and geographies. These include:

• Former EDI value-added networks (VANs) — for example, EasyLink, GXS, Inovis and Sterling Commerce
• Contemporary B2B specialists — for example, Crossgate, Hubspan and nuBridges
• Various e-commerce vendors — for example, Advanced Data Exchange (ADX), Kewill, RedTail Solutions and SPS Commerce
• Former marketplaces ("e-marketplaces" from the dot-com era) — for example, Covisint, Elemica, Liaison and Railinc
• System integrators — for example, Atos Origin, HP (which acquired EDS), IBM and Tieto
• SaaS providers — for example, E2open

Many of these providers have evolved dramatically. For example, the former EDI VANs don't just support batch EDI; some now annually process terabytes of EDI, XML and a wide range of other B2B data formats in batch and near-real-time interactions. Many providers are beginning to offer their large hub customers innovative Web 2.0-style collaborative tools to more effectively manage communities. As another example of how things have changed, nearly all the former marketplaces — most born out of a single industry — now support customers in multiple industries and have strategic year-to-year revenue growth targets outside their original core industry focus.

Due to the diversity of these IT vendors, we focus most of our evaluation for this Magic Quadrant on IaaS and B2B integration outsourcing services. While we gave vendors some credit (i.e., with less weight) for synergistic, but not directly integration-related, technical features and business attributes (e.g., such as e-commerce SaaS), our evaluation for this research clearly focused on each vendor's completeness of vision and ability to execute in order to deliver and compete aggressively for IaaS and B2B integration outsourcing business in the integration services market segment.

IT providers label their B2B integration services as VANs, transaction delivery networks, Web services networks, business integration networks, business process hubs, integration service providers, EDI e-commerce vendors, marketplaces, EDI SaaS, IaaS, and so on. Regardless of how vendors label their B2B integration services, we only rated IT vendors as "integration service providers" for the purpose of this Magic Quadrant, if they met the inclusion criteria (below).

For a vendor to be considered for the integration service providers Magic Quadrant, it must:

• Separately market and sell IaaS as a discreet form of application infrastructure SaaS. Vendors are not considered if their IaaS offerings are delivered only when bundled in other forms of SaaS, as is the case for providers such as Workday.com.
• Separately market and sell B2B integration outsourcing as a discreet form of IT outsourcing: Vendors are not considered if their B2B integration outsourcing offerings are delivered only when bundled in other IT services, such as business process outsourcing (BPO), as is the case for providers such as IBM.
• Generate at least $15 million a year of combined IaaS and B2B integration outsourcing revenue or the equivalent amount in a foreign currency: This figure excludes revenue from software, professional services and other sources. Exceptions may be made for vendors that do not generate enough revenue but still have the potential to significantly impact the B2B market.
• Offer comprehensive IaaS features. Integration service providers are considered only when their IaaS offerings are multitenant and substantive in all key categories of IaaS, including secure communications, integration services and community management.
• Offer a comprehensive B2B integration outsourcing service. Integration service providers are considered only when their B2B integration outsourcing offerings leverage IaaS and provide B2B integration project outsourcing for initial and ongoing project implementation, community management and operations.
• Have a substantial impact on the integration service provider market segment. This is determined by buyer demand for the vendor's solution (such as appearing on shortlists for IT end users' B2B projects, Gartner client interest and other factors).

Consideration is given to multienterprise applications, such as archival (fundamental for e-invoicing services), online reporting, process visibility and customer/supplier portals. However, the evaluation criteria for integration service providers do not focus in particular on e-commerce applications, such as vendor management inventory or e-procurement.

Consideration is given to internal (non-B2B) integration projects. The primary focus of this Magic Quadrant is on integration services applied to B2B integration projects. However, as the barriers between internal application-to-application (A2A) and B2B integration projects quickly fade, we are seeing more interest from IT users in — and more service offerings from IT providers that address — both A2A and B2B integration projects. Service offerings from vendors such as Cast Iron Systems, Liaison and Sterling Commerce take a blended approach. These developments are harbingers of a future in which service providers more regularly address IT projects that combine A2A and B2B integration.

Notable Vendors Not Rated for This Magic Quadrant but Worth Watching Closely

A wide range of vendors — such as Appirio, Boomi, Cast Iron Systems, Celigo and Informatica — deliver IaaS specifically for the purpose of addressing cloud computing/SaaS projects that integrate cloud-based services with each other, or between cloud-based services and on-premises applications and data. To date, none of these cloud-computing/SaaS integration specialists meets the Magic Quadrant acceptance criteria; their approach to delivering IaaS and B2B integration outsourcing is timely (to address new cloud-computing scenarios) and differentiated (often leveraging the latest in Web 2.0-style technologies). These vendors are worth watching closely, and some have the potential to meet the Magic Quadrant acceptance criteria as currently defined.

We find it somewhat remarkable that at this time none of the traditional IT megavendors — i.e., IBM, Microsoft, Oracle or SAP — directly offers a viable enough IaaS or B2B integration outsourcing services offering to meet our acceptance criteria. Notably, however, every one of these vendors has an active relationship with at least one integration service provider so that they can add some combination of IaaS and B2B integration outsourcing services to their own products and services for customers that require it. For example, IBM partners with Hubspan, Microsoft partners with GXS, Oracle partners with E2open and SPS Commerce, and SAP partners with Crossgate. As more of their customers require IaaS and B2B integration outsourcing to complete their IT projects, we believe that in the next year or two at least one of these IT megavendors will likely acquire or develop their own B2B integration services portfolio.

Although Google has increased its commitment to application platform as a service (APaaS) via the Google App Engine (GAE), it offers only a rudimentary mechanism, its Secure Data Connector (SDC), to address cloud computing/SaaS integration. It relies heavily on third-party integration solution providers, such as Appirio and Cast Iron Systems, to leverage SDC and fill the gap of other essential functionality (e.g., adapters and mapping) that's essential for doing B2B integration. In similar fashion, salesforce.com has delegated the problem of integrating its hosted functionality with other cloud-based services and on-premises applications entirely to a wide range of third-party integration specialists. While neither Google nor salesforce.com directly offers its own viable integration services, it is notable that both rely extensively on third-party integration partners to fulfill the requirement. We believe that while Google and salesforce.com will likely continue to rely on third-party providers for some B2B integration requirements, they will eventually likely implement more IaaS functionality to meet users' needs.

StrikeIron offers a unique form of business information services that incorporates some elements of IaaS, although its emphasis is on the reliable delivery of business information services via Web services, rather than horizontal integration services. Thus, it did not meet our inclusion criteria, but it is still a vendor worth watching closely.

In Europe, two phenomena are worth watching:

• The first is the emergence of a new breed of small vendors in the U.K., probably the largest national IaaS and B2B integration outsourcing market in Europe after Germany, that aggressively develop new and innovative offerings in this space, and start enjoying growth and market success (like OmPrompt and WeSupply).
• The second one is the growth of e-invoicing as a phenomenon (largely a European affair, but with interesting ramifications in South America and Asia), with new vendors (such as Anachron, Basware, Maventa.com, OB10 and TrustWeaver) targeting the complexity of international e-invoicing projects, and a plethora of smaller vendors targeting national e-invoicing projects, in countries where the growth is very sensible (such as Spain).

In addition to the vendors in this Magic Quadrant, there are many other B2B/e-commerce vendors that deliver some combination of IaaS and B2B integration outsourcing services either as stand-alone offerings or in conjunction with e-commerce-related SaaS. Examples of these vendors include, but are not limited to, DiCentral, Dinet, EC Outlook, Emergis, Extol, eZCom Software, GCommerce, GroceryEC, Hubwoo, Influe Group, iTradeNetwork, Ivans, Kleinschmidt, Mincom, Perfect Commerce, Posten Sverige AB, Railinc, RedTail Solutions, Softshare, T-System, Tie Commerce, Trade-Van Information Services, TradeCard, Tradelink and TrueCommerce.

Additionally, many system integrators also deliver some form of B2B integration outsourcing services as stand-alone offerings or (as is usual in their cases) as a component of broader IT services engagements, such as BPO. Examples of these vendors include, but are not limited to, Accenture, Atos Origin, Bluewolf, HP (EDS), IBM and Wipro.

The following vendors have been added to the Magic Quadrant for Integration Service Providers, because they either meet our acceptance criteria for the first time, or due to increased interest from our clients and relevance to our research:

• Comarch
• Covisint
• Exostar
• Kewill

• T-Systems — IaaS and B2B integration outsourcing are not of strategic focus anymore for T-Systems, and it has exited this market.

Gartner analysts evaluate providers on the quality and efficacy of the processes, systems, methods or procedures that enable IT provider performance to be competitive, efficient and effective, and to positively affect revenue, retention and reputation. Providers are judged on their ability and success in capitalizing on their vision.

Product/Service

These are core goods and services that compete in and serve the defined market. It includes product/service capabilities, quality, feature sets, and skills that are offered natively or through OEM agreements/partnerships and detailed in the subcriteria. For integration service providers in particular, we consider overall integration service provider capabilities in five categories:

1. Secure Communications: Secure, reliable electronic transaction delivery between trading partners and application systems. Features may include traditional capabilities — for example, asynchronous/bisynchronous, frame relay, virtual private network and interconnect agreements, and emerging capabilities, such as FTP, Applicability Statement 2 (AS2), Web services and Web application programming interfaces (for connecting to cloud computing/SaaS providers, such as salesforce.com and Google). Supported data types should include EDI, XML, flat files, large batch files and various e-invoicing formats. To support large files, integration service providers are also expected to support hosted managed file transfer (known as MFTaaS).
2. Community Management: Capabilities within IaaS and B2B integration outsourcing related to B2B project campaign/deployment and ongoing support. Community management capabilities are evaluated in four categories, including member provisioning, campaign management, compliance monitoring and collaboration. Member provisioning includes managing trading partner and connection profiles and configurations, and their testing and certification. Campaign management includes defining the B2B project rollout tasks and workflow, communicating these to community members, then monitoring and managing the B2B project rollout progress. Compliance monitoring includes traditional reports and billing and increasingly defining, monitoring and enforcing B2B community SLAs and policies. Collaboration includes traditional and Web 2.0-style community engagement, such as self-provisioning, self-testing via e-mail, instant messaging, social networking, test beds and content management, to facilitate B2B project roll out and operations.
3. Integration Services: Hosted integration functionality (IaaS), such as in-line translation, B2B document repositories and ontologies for data transformation using canonical forms, protocol mapping (e.g., between AS2 and FTP and SOAP or REST), intelligent routing (based on in-line rules), service provider interconnects, Web services choreography, process model-driven choreography of B2B services, SOA governance (including registry/repository and SLA and compliance), multicountry e-invoice secure processing, and format translation and data validation. To a lesser degree, we also evaluate on-premises integration software, appliances and other solutions that facilitate external business partner integration and connection provisioning (e.g., to integrate a B2B community member's SAP application into the network).
4. Application Services: SaaS features primarily used to support multienterprise integration and related B2B infrastructure. Examples include multienterprise documents (such as e-invoices) and transaction secure archival, online reporting, and tracking and analysis of end-to-end document and transaction delivery. We consider Web EDI, Web forms, and customer and supplier portals primarily with regard to how these applications are used to enable less-IT-savvy external business partners to receive and send electronic documents and transactions. We consider integration features like financial gateways and global data synchronization, but primarily just on how they enable multienterprise integration projects. We also consider lightweight forms of process visibility (aka business activity monitoring [BAM]), including the monitoring of key performance indicators. For the purpose of the Magic Quadrant for Integration Service Providers, we do not evaluate full CRM-, catalog- and ERP-related business applications, such as order management, vendor-managed inventory, logistics track-and-trace, etc.
5. B2B Integration Outsourcing: IT outsourcing service offerings that combine multitenant IaaS with the people and processes necessary to initially implement, then manage, the B2B integration project on an ongoing basis. An example is supply chain integration outsourcing; but B2B integration outsourcing is not, for example, procurement BPO. Key outsourcing tasks evaluated for initial B2B project implementation include basic B2B integration development and community management tasks, including development and testing of translation maps, ERP integration, creating trading partner (and connection) profiles, testing various B2B protocols and data, and B2B campaign/project rollout management. Key outsourcing tasks evaluated for ongoing B2B project operations include all forms of B2B project and communication management activities, including change control (such as adding new maps, trading partners or connections, or transactions and documents), problem escalation and support, dispute resolution, and incremental new B2B campaign/project rollouts.

Overall Viability

This includes an assessment of the organization's financial health, the financial and practical success of the business unit, and the likelihood of the individual business unit to continue to invest in the product, offer the product and advance the state of the art in the organization's portfolio of products. For integration service providers in particular, because of the relatively high switching costs and potential impact that they can have on their users, we consider a vendor's relative size, financial stability and management commitment to this market. We also consider the size and quality of the Integration service providers' active B2B community relative to their target market.

Sales Execution/Pricing

This is the provider's capabilities in all presales activities and the structure that supports them. This includes deal management, pricing and negotiation, presales support, and the overall effectiveness of the sales channel. In particular for integration service providers, we track revenue growth and network utilization, including the number of users, B2B projects implemented and transaction/message volume. We also evaluate whether contracts for fixed and recurring service fees, as well as B2B project outsourcing service fees, are expressed with clarity and predictability.

Market Responsiveness and Track Record

This is the ability to respond, change direction, be flexible and achieve competitive success as competitive opportunities develop, competitors act, customer needs evolve and market dynamics change. This criterion also considers the provider's history of responsiveness. In particular for integration service providers, we also look for evidence that the provider has been responding and continues to effectively respond to evolving B2B market conditions (e.g., its role in B2B market consolidation and in addressing emerging requirements such as e-invoicing and cloud computing/SaaS integration).

Marketing Execution

This is the clarity, quality, creativity and efficacy of programs designed to deliver the organization's message to influence the market, promote the brand and business, increase awareness of the products, and establish a positive identification with the products/brands and organization in the minds of buyers. This "mind share" can be driven by a combination of publicity, promotion, thought leadership, word of mouth and sales activities. In particular, we assess to what degree the integration service provider has captured mind share and is included in shortlists for B2B integration projects.

Customer Experience

These are the relationships, products and services/programs that enable clients to be successful with the products evaluated. Specifically, this includes the ways customers receive technical or account support. This also can include ancillary tools, customer support programs (and the quality thereof), availability of user groups and SLAs. In particular for integration service providers, we track the specificity and quality of support (domestic and regional), as well as the specificity and quality of its contracts and SLAs for the availability of IaaS functionality and B2B integration outsourcing services rendered.

Operations

This is the ability of the organization to meet its goals and commitments. Factors include the quality of the organizational structure, such as skills, experiences, programs, systems and other vehicles that enable the organization to operate effectively and efficiently on an ongoing basis. In particular for integration service providers, we are also interested in the scope (e.g., people and data centers) and quality of their hosted integration service platforms, and the scalability and adaptability (e.g., through SOA) of the software platforms used, including metrics for efficiency, speed of change, or implementation of new features and scale.

Providers are evaluated based on their ability to convincingly articulate logical statements about market direction, innovation, customer needs, competitive forces and how well they map to the Gartner position. Providers are rated on their understanding of how market forces can be exploited to create opportunities for themselves.

Market Understanding

This is the ability to understand buyers' needs and translate those needs into products and services. Vendors that show the highest degree of vision listen and understand buyers' wants and needs, and can shape or enhance those wants and needs with their added vision. In particular for integration service providers, we also assess how well a vendor understands different IaaS and B2B integration outsourcing requirements for small, midsize and large B2B integration projects. Additionally, we assess how well providers understand the evolution of horizontal, hosted integration services (such as in-line translation, self-provisioning and cloud computing/SaaS integration) and the particular needs of process- and industry-specific business process networks, multienterprise business process platforms, e-invoicing networks, and the provider's role relative to these opportunities and market changes.

Marketing Strategy

This is a clear, differentiated set of messages consistently communicated throughout the organization and externalized through the website, advertising, customer programs and positioning statements. In particular for integration service providers, we also look for evidence that they clearly articulate their IaaS and B2B integration outsourcing value propositions, in the context of higher-order IT initiatives (such as multienterprise applications and process improvement, outsourcing, cost optimization, cloud computing and SaaS) via an effective marketing channel to their target markets.

Sales Strategy

This is the strategy for selling products that uses the appropriate network of direct and indirect sales, marketing, service and communication affiliates that extend the scope and depth of market reach, skills, expertise, technologies, services and the customer base. In particular for integration service providers, we also look for evidence that the provider is leveraging the right balance of direct and indirect sales, and targeting the right mix of small, midsize and large prospects appropriate for its target markets.

Offering (Product) Strategy

This is a provider's approach to product development and delivery that emphasizes differentiation, functionality, methodology and feature set as they map to current and future requirements. In particular for integration service providers, we assess the integration service platform architecture; how flexible it is; how easily integration features are implemented, changed or extended; and the use of third-party technologies and multitenant capabilities. We also assess whether the provider offers the optimum bundling of organic and third-party IaaS capabilities and B2B integration outsourcing services for its target markets.

Business Model

This is the soundness and logic of a provider's underlying business proposition. In particular for integration service providers, an example of what we look for is what types of fees (fixed and recurring) they charge, whether those are sustainable, and the way the providers recognize revenue and leverage investments in R&D and their growth strategy.

Vertical/Industry Strategy

This is the provider's strategy to direct resources, skills and offerings to meet the specific needs of individual market segments, including vertical industries. In particular for integration service providers, we look at what industries they focus on, what industry-specific solutions they offer, and how those solutions are, or will likely be, successful in the market.

Innovation

This is the marshaling of resources, expertise or capital for competitive advantage, investment, consolidation or defense against acquisition. In particular for integration service providers, we consider innovations seen by end users (e.g., advanced community management, e-invoicing support or level of SOA implementation of their infrastructure), as well as features not necessarily visible to end users (e.g., fault tolerance and administrative application programming interfaces).

Geographic Strategy

This is the provider's strategy to direct resources, skills and offerings to meet the specific needs of geographies outside its native geography directly or through partners, channels and subsidiaries, as appropriate for that geography and market. In particular for integration service providers, we look for evidence that the provider is engaging the right geographies relative to its capabilities and opportunities. Our evaluation also assesses the provider's nondomestic B2B integration outsourcing fulfillment capacity and IaaS network points of presence (such as data centers, support centers and sales offices), and its ability to support complex international requirements and features (such as e-invoicing, local languages, regional-specific B2B formats and protocols, adherence to local laws and regulations, etc.).

In the highly evolving integration services market, leaders will have more of the following types of characteristics (among others):

• A critical mass of integration service users (community) in selected industries
• A comprehensive and compelling integration service offering vision
• Significant geographic reach (or at least a good start on establishing that)
• Secure, reliable and efficient hosted integration service operations, with services hosted in multiple geographies
• Sustained profitability (or the ability to establish it)
• Strong account management and customer loyalty
• Appear regularly on organizations' shortlists for new B2B projects
• Be agents of change to the evolving integration services segment
• Provide collaboration and automation tools for community management
• Demonstrate agile behavior by flexibly responding to customers' evolving commercial and B2B project requirements
• Substantially diversified vertical industry market share
• Substantial year-to-year integration services revenue and market share growth
• A clear commitment to the integration services market
• Sufficient differentiation to attract new business away from other providers

Challengers are viable providers that serve their users and execute quite well overall, but they are not sufficiently differentiated, and do not have enough resources or commitment to the market to be recognized as leading innovators and agents for change in this market segment. Challengers appeal to relatively risk-adverse users whose B2B project requirements are well met by the vendors' mature integration service offerings but generally less-differentiated (perhaps niche or eclectic) B2B solutions or approaches.

Visionaries have a unique and promising approach to hosted integration services, or the way they approach the market, but they have inherent constraints in their ability to execute (too late or too early to market; limited commitment, financial strength or geographical scope). Visionaries appeal to relatively risk-tolerant users whose B2B project requirements are well met by the vendor's unique B2B solutions or approaches.

Niche players may be executing well in a narrow market, in a particular industry, or with a particular service or feature that is good at solving a particular class of B2B integration requirements, but they may not be as applicable to the greater market overall. The vendor may be having trouble expressing its vision to the greater market, or is less likely to acquire a critical mass in or unilaterally drive significant change in this market. Niche vendors will appeal to users when there is a strong match between the vendor's offering and the particular B2B project requirements (e.g., geographical fit and a close match between the vendor's solution and B2B project requirements).

Advanced Data Exchange (ADX) continues to evolve its go-to-market approach and IT stack. It still offers simple Web EDI-style integration services, but has introduced its CommerceView solutions, which combine embedded IaaS with e-commerce SaaS functionality, such as order management and invoice presentment. It has begun closing new business with CommerceMail, a pragmatic approach to "onboarding" less IT-savvy or occasional suppliers via e-mail messages that include PDF-based "smart forms" that allow small suppliers, for example, to easily "flip" purchase orders into advanced shipment notifications. Its new marketing slogan, "High-Touch — Low Cost — Simple," accurately and concisely conveys ADX's value proposition to customers in the small or midsize business (SMB) market segment.

Although ADX's bundled approach to e-commerce functionality is appreciated by users and may be a great fit for many users, its impact on the integration services market is constrained by limited market share and awareness, as well as concerns about viability following executive-level changes and substantial downsizing in early 2009.

• Holistic solution approach, combining e-commerce functionality with embedded IaaS and B2B project outsourcing
• SMB-friendly (simple, value-priced) integration solution bundling and pricing
• Promising CommerceMail rollout
• Foothold in mining industry

• Limited "mind share," market share and international presence
• Eclectic vertical penetration
• Sustainable differentiation
• Vendor viability

Comarch, a new entry into this year's integration service providers Magic Quadrant, is an IT firm based in Poland that offers IT solutions for telecommunication and financial services industries, government, large enterprises and SMBs. Applications include billing, network management, ERP systems, IT security, CRM, loyalty management, EDI, sales support and business intelligence. Targeting mainly retailers in Eastern Europe, Comarch has built a comprehensive set of solutions, which it has marketed and sold with success, especially in Poland, Russia and the Ukraine. In 2008, Comarch acquired SoftM Software and Beratung in Germany, giving it a good base of clients in Germany, Austria and Switzerland, and completing its ERP offering. Based on its ERP expertise, Comarch offers the usual B2B services master data management (MDM), product information management and archiving services, which meet some Eastern Europe national policies for e-invoicing. Although mainly focused on retail and fast-moving consumer goods, the majority of services that Comarch offers can be successfully sold in other verticals, giving Comarch a bright outlook for the future, if it can manage to diversify its sales proposition in other verticals and geographies.

• First-mover advantage for cross-border Eastern European projects
• Very focused proposition for retailers and fast-moving consumer goods
• Executed well in sales throughout Eastern Europe
• Good set of support languages

• IaaS and B2B integration outsourcing are a small unit within Comarch, about 5% of the revenue of the whole company
• Coming out of "small company" practices as Comarch grows
• Some of the support practices might need to be propped up for viability in more-historical markets, such as Western Europe
• Comarch marketing needs to be more visible in Western Europe

Covisint was acquired in 2004 by Compuware (just after selling its legacy sourcing business to FreeMarkets) and since then has been applying its domain expertise in managing large B2B projects to the traditional auto supply chain business and to emerging B2B initiatives within the healthcare industry, such as securely exchanging patient data and electronic medical records. Covisint has a mature and fairly typical IT stack and B2B messaging platform that leverages OSGIS-based canonical message formats as a foundation for B2B integration outsourcing projects. It has also enhanced basic B2B infrastructure with a platform for implementing collaborative business processes, AppCloud, that emphasizes end-to-end security and provides identity management services and single sign-on access for securely exchanging data and access to external customer applications. Some of its healthcare solutions, such as master patient indexing, are still in early adoption and subject to change with the evolution of a (U.S.) national healthcare policy, but Covisint reports that healthcare-related business already represents 35% of its revenue.

Covisint continues to expand its B2B integration outsourcing business. It has 60 employees in Shanghai specifically for onboarding suppliers (primarily for automotive and manufacturing) throughout greater China. With its strong automotive and emerging (and promising) healthcare business and solid financials, Covisint has earned a position in the Challenger quadrant.

• Substantial B2B revenue and solid overall financials
• Strength in manufacturing (auto) and healthcare
• Strong security and compliance (e.g., for U.S. Health Level Seven [HL7] standards)
• Experience with large, global B2B projects
• Innovative collaboration platform

• Limited indirect sales channel
• Limited mind share and traction outside — and limited leverage between — auto and healthcare industries
• Fully exploiting its global fulfillment capabilities
• Sustained revenue growth

Crossgate (formerly known as Indatex) has been building on a good client base in the automotive, chemicals/process manufacturing, consumer packaged goods and logistics supply chain industries in Europe, the Middle East and Africa during the past years. It is a leading European integration service provider aggressively targeting the diverse requirements of multinational organizations throughout Europe and North America. A recent partnership with SAP, followed by a direct investment by SAP, has considerably boosted Crossgate's visibility and its reach outside Central Europe.

Riding the growth of international e-invoicing projects in Europe, Crossgate has rapidly developed a set of additional e-invoicing services, and opened another already fruitful line of offerings. Among European integration service providers, Crossgate is the only leader, but it faces steep challenges, mainly related to the way it will grow.

Disciplining its growth, managing SAP's influence and diverse plans for the future, proving its good vision for the B2B service market and scaling to support new customers (maintaining their current satisfaction level) will be the keys for Crossgate's growth in 2010.

• Strong and fruitful partnership with SAP (which has opened a very wide sales channel and has generated substantial B2B market mind share, particularly among SAP users)
• Quick in providing and getting profit out of advanced and international e-invoicing services
• Growing steadily year to year
• Focused, extremely attentive approach to reuse and process refinement (key in community management, and more)

• Small, but fast-growing player
• Sustaining the current aggressive growth rate, while maintaining good service to established customers
• Risk of becoming too SAP-dependent
• Disciplining and managing international growth

E2open continues to execute well, delivering comprehensive B2B integration outsourcing services, increasingly bundled for specific multienterprise processes in the form of business process networks. It has established a good reputation for implementing large-scale, international B2B projects involving custom multienterprise business processes such as Vendor Managed Inventory (VMI), complex in-line data translation, configurable business rules and extensive direct back-end system integration to ERP systems, such as SAP. It continues to expand its customer base out of its dominant (50% of its business) vertical, high-tech manufacturing, into "near neighbor" industries such as telecommunications, aerospace and defense. Its modern IT stack and operations are well proven, include innovative features such as self-service community management and automated testing, and users cite E2open's flexibility and ability to implement timely and reliable SLAs around tasks such as provisioning and mapping as a differentiator.

E2open has just announced an alliance with Oracle, which will co-sell E2open's integration services bundled along with Oracle's transportation management system application, Oracle Transportation Management (OTM), all bundled in the form of a business process network, called the E2open Logistics Network (ELN). This alliance adds to several of E2open's other such channel partnerships, including its long-standing commercial relationship with Exostar.

For E2open to maintain a leadership position in the increasingly maturing integration services market, it will at least need to continue to expand its international fulfillment capacity and make more progress on revenue and market share growth.

• Strong B2B integration outsourcing practice wrapped in business process network bundles
• Customer quality (large multinationals) and satisfaction, particularly from an agility and SLA-compliance point of view
• Dominance in complex, high-tech manufacturing and expansion into "sister" industries (e.g., telecommunications)
• Growing indirect channel for its integration services (e.g., Exostar and Oracle)
• Financial stability

• Limited mind share among non-high-tech manufacturing prospects
• Potential fulfillment challenges associated with rapid growth
• Restoring revenue and market share growth
• Expanding fulfillment capacity in Europe and Asia

EasyLink Services International is one of the few integration service providers with substantial international operations, formed two years ago via the merger of Internet Commerce Corporation (ICC) and EasyLink Services. EasyLink runs a modern, international high-performance IaaS service and recently introduced a new MFTaaS service and reintroduced its B2B integration outsourcing offering as "EasyLink EDI Managed Services." It offers a wide range of diverse B2B integration services, such as integrated desktop messaging, bidirectional fax optical character recognition (OCR)/electronic document processing, production messaging for e-mail, legacy messaging services (such as Telex) and its new Web EDI Portal (WebForms) solution for SMBs. It has substantial operations in the U.S. and Europe, and a foothold in the retail and automotive industries. Compared with other providers, EasyLink runs many offices and data centers. Gartner believes that EasyLink should consider consolidating more of these offices and data centers to improve operational efficiency.

• International presence
• Modern, reliable and high-performance IaaS service, growing B2B integration outsourcing business and new Web EDI portal
• Differentiation (e.g., regionalized B2B solutions, flexible SMB onboarding options, hosted MFT and fax OCR processing services)
• Financial stability

• Eclectic customer base and solution portfolio
• Consolidation of its many data centers
• Persistent revenue decline
• Perception as a legacy vendor

Elemica is one of the few successful vendors born out of the chemical industry in the dot-com era. It has established a good reputation for implementing large, complex multienterprise projects that typically combine IaaS and B2B integration outsourcing with application functionality, such as order management and logistics. It recently acquired RubberNetwork, the dominant B2B services provider in the rubber and tire industry. This acquisition nearly doubled Elemica's size and is its first significant action relative to its long-declared intention to grow B2B market share and diversify outside its core focus on the chemical industry.

While much of its value-proposition is its core competency in B2B integration outsourcing, Elemica differentiates its integration services via support for complex B2B canonical mapping and business rules and by bundling them into business process networks for various forms of supply chain optimization functionality, including order management, VMI and logistics visibility. While Elemica runs a strong B2B integration outsourcing practice, it has limited functionality for community management collaboration, workflow and task delegation. Elemica's growth and dominance in a couple of industries, combined with its holistic approach to delivering integration services, are factors that contributed to our positioning Elemica in the Challengers quadrant.

To achieve a leadership position, it will need to continue to expand outside of its core verticals, develop an indirect sales channel and consider developing more automated community management functionality.

• Domain expertise with complex B2B projects involving strong, canonical-form-based translation and business rules
• Delivering integration services bundled as business process networks for processes including order management, VMI and logistics
• Dominance in the chemical, rubber and tire industries
• International presence, primarily in the U.S. and Europe
• Revenue growth and financial stability

• Domain expertise and traction outside core industries
• Limited automation of community management
• Lack of an indirect sales channel
• Pricing (expensive)

Exostar is the dominant B2B service provider to the aerospace and defense industries. Rather than build its own B2B platform from scratch, Exostar has heavily leveraged best-of-breed technology from providers such as Software AG (for webMethods Trading Networks) for its B2B infrastructure and the E2open integration platform for implementing collaborative multienterprise processes, such as supply chain visibility and VMI. Exostar developed its own B2B integration outsourcing practice; and to meet the special requirements of its compliance-sensitive customer base, it implemented identity assurance/federation services and achieved ITAR compliance. Among vendors in this Magic Quadrant, Exostar has the smallest customer base in terms of the number of specific multienterprise communities supported (eight), but the largest ones (e.g., Boeing) involve thousands of suppliers worldwide that execute complex, long-running, mission-critical supply chain projects.

• Dominant position in aerospace and defense
• Experience with large, global complex supply chains
• Identity assurance/federation services and ITAR certification

• Small customer base (by the number of hubs)
• Negligible traction outside of aerospace and defense
• Limited operations outside the U.S.
• No indirect sales channel

GXS is still by far the leading provider of integration services, as measured by integration service revenue, international reach and customer base. All new customers, and more than 80% of its IaaS and B2B integration outsourcing customers, are deployed on its modern flagship IaaS platform, the Trading Grid. Although we are increasingly concerned that, for several years, the company has not arrested persistent total annual revenue declines (driven down, in part, by continued price reductions on its large user base of legacy IaaS services — i.e., its EDI VAN traffic), GXS still has the largest known customer base and reports strong revenue growth in the fast-growing and profitable B2B integration outsourcing market segment.

To help sustain this growth, GXS has introduced its own community management functionality, TeamBook, which partially automates workflow and collaboration between GXS and its large B2B integration outsourcing customers. It has also partnered with RollStream, which provides innovative Web 2.0-style hosted functionality to automate trading community collaboration and collection of information (like a Facebook application for e-commerce). Several years ago, GXS was the subject of Gartner research focused on its network outages. In the last 18 months, however, customers have been reporting substantial improvements in GXS network reliability and availability, as well as substantial improvements in customer notifications when exceptions occur.

To retain its leadership position, GXS will need to reverse year-to-year revenue declines, continue enhancing its tools for automating the administration of large B2B projects, expand its indirect channel for its integration services (e.g., with system integrators such as Accenture, a GXS partner since year-end 2008), and do more to build a barrier to entry in its current international footprint leadership.

• Leading integration service revenue and customer base
• Large and fast-growing B2B project outsourcing business
• Innovative Trading Grid (new TeamBook, RollStream and MFTaaS) with exceptional levels of availability
• Viable alliances (e.g., Accenture, Microsoft, Software AG and Verizon)
• Large international presence

• Persistent year-to-year total revenue decline
• Complete the transition of 100% of its customers off legacy platforms
• Debt (approximately $450 million)

Among all the providers of integration services in this Magic Quadrant, Hubspan has consistently been the most "pure," with a solution and business almost entirely focused on B2B integration services (i.e., not diluted by selling B2B software or e-commerce applications). Its flagship solution is a comprehensive B2B integration outsourcing service that leverages embedded IaaS, and is well-suited for custom multienterprise process choreography and complex multienterprise integration, such as customer integration (typically requiring diverse mapping and external business partner connectivity).

Earlier in 2009, Hubspan and IBM jointly announced a B2B integration outsourcing reseller solution called WebSpan, which bundles Hubspan's B2B integration outsourcing with IBM's WebSphere capabilities, sold via the worldwide IBM channel. Ariba is another strategic partner and emerging new channel for Hubspan integration solutions. IBM and Ariba are important new channels for Hubspan, which effectively leverages its core competencies similar to its long-standing channel relationship with TradePlace in Europe. We believe that Hubspan is capable and well positioned to close additional similar channel deals, which is a better approach than direct sales for a relatively small vendor like Hubspan that lacks the market mind share to consistently place on IT users' shortlists.

• Exclusive focus on B2B integration outsourcing, increasingly bundled within business process networks
• Domain expertise in complex B2B projects involving process choreography, complex mapping and diverse connectivity
• Emerging indirect channel (e.g., IBM WebSphere, Ariba and TradePlace)
• Solid financials

• Limited mind share and market share
• Limited international operations and fulfillment capacity
• Lack of dominance in any vertical industry

Inovis has maintained its extroverted focus in the last few years and has emerged as an aggressive IT and business innovator. In association with its flagship BizManager and Inovisworks.net B2B integration solutions, it now also delivers MFTaaS and a plethora of new rule-based portfolio and community management solutions and multienterprise composite applications (e.g., for supplier compliance) under the umbrella "Inovis Business Community Management." Its new capabilities are based, in part, on intellectual property it acquired with BetweenMarkets (e.g., for the rule engine) combined with new capabilities delivered via agile development methodologies. Although until recently it significantly lagged other B2B providers in its class on global capabilities, Inovis recently expanded its international fulfillment capacity to over 20 countries, albeit via partners in most cases (e.g., regional service providers and resellers). The net result of these technology and business changes is that Inovis is now capable of delivering innovative B2B solutions for (usually U.S.-based) companies with global supply chain projects.

While total revenue and market share growth remains a persistent challenge, Inovis is otherwise executing well, is growing revenue for strategic integration services, including B2B integration outsourcing, and has established itself as a formidable competitor in the B2B integration services market segment.

• Hybrid combination of on-premises integration software or cloud-based integration services
• Modern, proven IT stack and data centers
• Differentiated community management, compliance and project portfolio management
• Strength in retail (e.g., via catalog and synchronization)
• Sustained operational and financial stability
• Strength with SMBs

• Firmly establishing its international presence
• Limited mind share (not helped by frequent chief marketing officer turnovers)
• Re-asserting revenue and market share growth

Kewill, a new entry into this year's integration service providers Magic Quadrant, is a U.K. company focusing on order fulfillment, transportation, warehousing, forwarding and compliance to customs declarations (increasingly needed in electronic form by a variety of transportation and customs government agencies in Europe and North America) and visibility across these various processes. Established in 1972, Kewill offers software (generally operating on a SaaS basis), IaaS and B2B integration outsourcing, and collects the majority of its revenue outside the U.K. (mainly in the U.S., Germany and the Netherlands), due to a successful execution of a diversified international strategy. The level of optimization of the supply chain that Kewill offers makes it applicable to a variety of verticals like retail, discrete manufacturing, shipping and freight forwarding, logistics and insurance. Because of its size, its potential and its established position in the market, Kewill enters the Magic Quadrant as a challenger, a position that will improve if Kewill keeps executing as effectively as it has done in the past years.

• Kewill clears over 25% of all U.S. imports and over 50% of all German imports through its customs systems
• The majority of Kewill revenue is recurring
• Strong partnership with Oracle

• Late in international e-invoicing offering
• Very lean on marketing
• Mainly focused on software revenue

Liaison is one of the few providers to successfully emerge out of the dot-com era. It has established a good reputation for implementing large, complex multienterprise projects that typically combine IaaS and B2B integration outsourcing with application functionality. Over the last few years, Liaison has made several acquisitions that demonstrate its commitment to growing market share, diversifying its industry expertise and differentiating its solutions; these include Expresso, Anilinker and 1st Thought (which strengthened its European presence and fulfillment capacity), as well as Contivo (to secure best-of-breed, vocabulary-based mapping technology).

Its recent acquisition of 1st Thought has provided Liaison with on-premises integration project services capabilities. These capabilities combined with Contivo (for internal and B2B mapping) and its core strength in B2B integration projects give Liaison a substantially differentiated level of hybrid A2A (internal A2A) and B2B integration services domain expertise and fulfillment capacity. While a combination of year-to-year growth, increasing fulfillment capacity in the U.S. and Europe, numerous acquisitions and a substantially differentiated hybrid on-premises and B2B approach to integration services have contributed to this year's move of Liaison into the Leaders quadrant, this vendor needs to do more to increase market share and mind share.

• Domain expertise with complex B2B projects, including best-of-breed Contivo-based canonical-form-based translation
• Dominance in the forest products industry, plus expanding references in other industries such as pharmaceuticals
• Decisive innovation and market share expansion via acquisitions, including Expressor, Contivo, Anilinker and 1st Thought
• International presence, primarily in the U.S. and Europe
• Financial stability

• Sustained market share growth
• Sustainable differentiation
• Limited mind share among potential customers
• Complex pricing model

NuBridges has combined its own community management technology, acquired technology (including AS2 and MFT software) and best-of-breed security and compliance solutions into its flagship integration service offering, nuBridges Exchange Network. Key areas of differentiation include its hybrid software and/or services delivery model for B2B solutions, and its emphasis on various aspects of B2B security, including "data at rest" security, MFTaaS (secure, high-performance data movement), 100% secure connectivity (for all inbound and outbound IaaS traffic) and various forms of compliance (e.g., ISO 17799 and Payment Card Industry Data Security Standard [PCI DSS]). This makes nuBridges particularly suitable for companies with B2B projects that must move lots of data and are risk-adverse to various forms of potential security breaches.

In the last 18 months, nuBridges has introduced various additional solutions, including TradeSmart (BAM), nuBridges Data Sync (product MDM) and a point-of-sale analytics offering. The company has limited mind share among IT end users in the highly competitive integration services market, but it has a growing indirect channel for basic IaaS (EDI VAN) services among a half-dozen B2B service providers in the U.S. and Europe. Compared to other vendors in this Magic Quadrant, nuBridges is relatively small and its revenue is spread across an eclectic mix of customers, solutions and industries, which limits its impact on the B2B market overall. Nevertheless, it continues to be a capable vendor run by B2B industry veterans who are comfortable supporting a mix of innovative and traditional B2B solutions.

• B2B domain expertise
• Hybrid on-demand and on-premises delivery model for B2B integration capabilities
• Differentiation, including strong security, MFT, compliance and community management
• Expanding indirect channel, selling basic IaaS capacity to other integration providers such as SPS Commerce and Hubspan
• Financially stable

• Limited mind share and market share
• Eclectic technology and customer base
• Limited international presence

SPS Commerce continues to use supplier EDI testing effectively as a lead generator to drive growth, particularly among SMBs in the retail and grocery businesses. It has recently introduced its own BAM solution, Trading Partner Intelligence, which will appeal to SPSCommerce.net users that are familiar with SPS Commerce's bundled approach to B2B integration outsourcing. SPS Commerce continues to expand its extensive knowledge base of retailer and grocery EDI implementation guides, and delivers scalable in-line translation services to map B2B documents from these organizations into file formats bidirectionally exchanged via the SPS Integration API and consumed by SMBs with various back-office systems.

While the majority of SPS Commerce's customers are still in the U.S., the company is expanding operations and has a few thousand non-U.S. suppliers (most in Canada and China) and a direct presence in Beijing to onboard suppliers across China. Despite our belief that there is a low barrier to entry for other competitors in its target markets, SPS Commerce has maintained double-digit year-to-year revenue and customer base growth for several years, likely driven at least in part by the quality of its support, which is frequently cited by its customers as a key differentiator.

Based on its growth, new features, quality of execution and emerging international fulfillment capacity, we have promoted SPS Commerce to a challenger position in this market. To strengthen its position in this market, SPS Commerce needs to sustain its revenue growth, develop more international fulfillment capacity and incorporate other B2B innovations, such as e-invoicing and community management.

• Focus and domain expertise in B2B integration outsourcing, including scalable in-line translation
• Growing reputation and market penetration, particularly among SMB suppliers in retail and grocery business
• SMB-friendly pricing and support
• Sustained profitability and growth
• New Trading Partner Intelligence offering

• Continued reliance on third-party providers for B2B transport (for some customers)
• Limited community management/SOA functionality
• Limited international fulfillment capacity, particularly for larger B2B customers outside the U.S.
• Sustainable differentiation and barrier to entry
• Relatively few large B2B customers (compared to its peers)

Sterling Commerce is finally leveraging a valuable corporate asset: its parent, AT&T. In the last two years, Sterling Commerce has begun selling its integration services through AT&T's substantial worldwide enterprise customer channel — Sterling Commerce's largest and fastest-growing indirect line of business. From a technology point of view, Sterling Commerce has maintained its credibility as a formidable provider of B2B integration solutions via the introduction of Community Manager, a collaboration solution that substantially reduces the effort required to manage trading-partner communities via the increased automation of community member collaboration in e-commerce campaigns. This new solution is now available as part of its B2B software portfolio and is also being deployed in the Sterling Collaboration Network.

Sterling Commerce maintains a good reputation for quality B2B services and products, and its network has an increasing international footprint. However, its not incorporating SOA governance technologies is conspicuous, given Sterling Commerce's other areas of innovation. While Sterling Commerce has recently addressed some of its ongoing challenges in account management, we still occasionally hear from users that complain about responsiveness and aggressive (high) pricing.

• Large B2B software and service customer base
• Hybrid on-demand and on-premises B2B solutions delivery model
• New offerings, including Community Manager, MFTaaS, e-invoicing
• Sterling Collaboration Network service quality, reliability and reputation
• Market penetration and awareness
• Strong parent (AT&T)

• Restoring overall revenue growth; driving more international revenue
• B2B services market share growth
• Persistent complaints about account management and (high) prices
• Limited synergy between B2B and application solutions
• Product management and marketing staff turnover and restructuring

Tieto, formerly known as TietoEnator, is a large IT services company (annual turnover is €1.9 billion), mainly operating in the Nordic countries (Finland, Sweden, Norway and Denmark). In addition to the other services the company provides, Tieto is an integration service provider, offering integration inside the firewall and B2B with clients' trading partners. In the past, for B2B integration outsourcing, Tieto tried to break out of its Nordic region shell to offer integration services in Central Europe by using offices in Germany and the Netherlands; to date, the majority of Tieto's revenue (and visibility) remains in the Nordic countries, despite growing success in Eastern Europe.

Tieto approaches all the vertical industries in the B2B service market from an innovative financial services angle, which pushed Tieto in having advanced services like international e-invoicing available ahead of its non-Nordic competitors. Tieto keeps facing difficult challenges in its plan to grow B2B services out of the Nordic region, having to cope with national established players in the main European countries. However, Tieto has returned to growth, and several brand recognition efforts are on their way.

• Sophisticated knowledge and contacts in financial services
• Strong parent, and solid growth in the past years on B2B integration outsourcing
• Innovative approach to create market opportunities
• Support practices and general client care

• Breaking out of the Nordic region; revenue still localized
• Targets only big contracts and large customers; the bulk of today's deals are not huge
• Adapting a financial services approach to other verticals (such as energy/utilities or telecom/media)