Heavy spending in sales and marketing, plus the general costs of running the platform, will cause two-thirds of integration Platform-as-a-Service (iPaaS) vendors to vanish by 2023, according to Gartner.
Despite the PaaS market showing strong growth – IDC says PaaS spending will be the second-fastest growing category (29.8 per cent compound annual growth rate) led by purchases of data management software application platforms – Gartner says we’re seeing “first signs of market consolidation” forcing iPaaS vendors to merge, be acquired or exit the market.
Bini Bhullar, senior research director at Gartner, put it pretty bluntly this week after the report’s release.
“The challenge for most iPaaS vendors is that their business is simply not profitable,” he said in a statement.
Gartner said megavendors such as Oracle, Microsoft and IBM are better-equipped to keep up with customer demand and offer more-competitive offerings with aggressive pricing, even with the heavy spending in sales and marketing looming over their heads. IDC projects that by 2022, the top four cloud-based megaplatforms will host 80 per cent of IaaS/PaaS deployments.
“For organizations looking to purchase an iPaaS solution, this is good news,” said Bhullar. “They can capitalize on the evolving market dynamics by solving short-term/immediate problems today, while preparing to adopt another iPaaS offering from an alternative vendor as the expected market consolidation accelerates through 2023.”