Despite being a growth market, current integration platform as a service (iPaaS) vendors are prime targets for mergers and acquisitions, according to a Gartner report.
Even though the market for integration platform as a service (iPaaS) shows growth, a new Gartner report states that the market is expected to consolidate through mergers and acquisitions, as well as firms exiting the market.
According to a press release, "Megavendors such as Oracle, Microsoft and IBM are better-equipped to handle those challenges as they offer more-competitive offerings with more-aggressive pricing and packaging options than smaller players in the market," likewise, Gartner senior research director Bindi Bhullar notes that "the challenge for most iPaaS vendors is that their business is simply not profitable."
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iPaaS as a vendor-provided benefit as part of a larger sale of hardware and/or services likely makes more sense, in terms of ensuring the longevity of the integration platform and continuing support.
One of the first iPaaS vendors, Boomi, was acquired by Dell in 2010 as part of their pivot toward enterprise computing services. Boomi has thrived under Dell's ownership, making them more responsive to the iPaaS market moving from application integration toward ecosystem integration.
Gartner predicts that two-thirds of iPaaS vendors will either merge, be acquired, or exit the iPaaS market by 2023. According to the aforementioned press release, "market consolidation means an increased risk that platform services will be discontinued due to the vendor exiting the market or being acquired." This should prompt a healthy amount of caution from buyers evaluating iPaaS services, as the discontinuation of a platform can be disruptive and costly for organizations.
That said, Bhullar noted that this consolidation "is good news," as buyers "can capitalize on the evolving market dynamics by solving short-term/immediate problems today and can prepare to adopt another iPaaS offering from an alternative vendor as the expected market consolidation accelerates through 2023."
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