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The Monster's rise

In a not so distant past emerging providers of hosted integration services, also being referred to as B2B hubs or B2B networks emerged as an alternative to a software based approach of creating point to point connection from companies to their supply chain partners such as customers and suppliers. The benefit statement was clear: 

  • Connect once, reach all
  • No maintenance burden on internal IT organization on partner connection changes
  • Service based pricing model

Hosted B2B integration service providers were doing two things: Firstly, increasing the size of the market by offering a more efficient process at lower cost, thus increasing the number of B2B connections. Secondly, fighting the enemy: On premise EDI software packages and System Integrators making their living of establishing and maintaining these point to point networks. The interests of service providers, their customers and their supply network were aligned, hence the success of the model.

With the uptake of the B2B service providers the market forces started to change: Existing providers were acquired by IT megavendors to off-set loss of business in the traditional point to point market. Subsequently, vendor valuations based on the size of their networks and the recurring revenues generated sky-rocketed to near internet bubble years amounts. Even loss-making companies were acquired for multiples of their annual revenue.

Today the market is more mature: Consolidation is still taking place. Analysts like Gartner stopped following the original Magic Quadrant™ and now established a new Magic Quadrant for Integration Brokerage and this is now supposed to be a $ 1,5B market annually.