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Middleware tools demand to peak in 2018, before iPaaS ascends

Gartner predicts that enterprise on-premises middleware will go out with a $30B bang this year. Ready to plan cloud middleware migration projects? Think iPaaS and MWaaS.

2018 is a big year for middleware technologies, as revenues peak and cloud alternatives woo customers away from legacy, on-premises middleware suites.

The maturation of cloud, IoT and digital development platforms overall will drive enterprise investments in middleware tools to an all-time high of $30 billion in 2018, according to Gartner. Although traditional on-premises middleware technologies will serve legacy applications for years, enterprise investments in iPaaS and MWaaS will eclipse the traditional market from now on.

Cloud middleware tools are enterprise-ready, which is good news for businesses that require both cloud and on-premises systems to support customers' and partners' digital touchpoints and application development.

"Businesses today need flexible, consumable and agile integration capabilities that enable more people to get involved in delivering solutions," said Neil Ward-Dutton, research director at MWD Advisors in Horsham, U.K.

End of the middleware suite era

MWD Advisors' Neil Ward-DuttonNeil Ward-Dutton

Investment trends signal a shift in enterprise business application development and integration. Revenues for traditional on-premises, ESB-centric middleware suites from such vendors as IBM and Oracle achieved only single-digit growth in 2016 and 2017, according to Gartner.

Meanwhile, spending is increasing for hybrid middleware tools from vendors such as Neosoft, Red Hat, WSO2 and Talend. The iPaaS market exceeded $1 billion for the first time in 2017 and grew by over 60% in 2016 and 72% in 2017, said Saurabh Sharma, principal analyst at Ovum, a London-based IT research firm. Common characteristics of these middleware technologies include an open source base, API integration, loosely coupled architecture, and subscription model.

Saurabh Sharma, principal analyst, OvumSaurabh Sharma

Businesses with on-premises, legacy middleware suites run these applications and do a lot of integration in their own data centers. However, many enterprises are migrating to a hybrid cloud environment and require both on-premises and cloud integration, said Elizabeth Golluscio, a Gartner analyst. These newer vendors replace traditional ESBs with lightweight, open source service busses, largely encompassed in iPaaS offerings.

Costs, flexibility drive iPaaS adoption

Businesses' shift away from traditional, on-premises middleware technologies is driven by lower costs, an inundation of new technologies, new digital business integration requirements, and faster time-to-integration particularly for SaaS applications. "Cloud integration platforms are now mature enough to deliver these flexible and speedy integration capabilities," Sharma said.

The era of perpetual licensing of expensive, on-premises integration middleware on a per-server basis is fading fast.
Neil Ward-Duttonresearch director, MWD Advisors

The cloud middleware subscription fee model aligns enterprises' costs with usage and return. "The era of perpetual licensing of expensive, on-premises integration middleware on a per-server basis is fading fast," Ward-Dutton said.

In the past few years, businesses were inundated with new technologies like AI and IoT, as well as shifts in enterprise architecture and explosion customer touch points. "To consolidate the middleware tools required to support and glue all of these things together, enterprise IT has to evaluate cloud middleware," Golluscio said.

Don't muddle through middleware modernization

In evaluations of cloud middleware tools, don't give in to the lure of one-size-fits-all products, Ward-Dutton said. First, get buy-in for hybrid projects from the IT team. In a business with a long history of enterprise middleware use, specialists may fiercely protect their roles. IT organizations with mature DevOps teams have an advantage because new integration models enable more open collaboration across different roles and require smooth teamwork.

To plan a middleware modernization project, determine the desired state of integration architecture, and account for the integration requirements of digital business processes, Sharma said. Create integration competency centers (ICCs) to facilitate the adoption of self-service integration tools and cloud middleware platforms. Then, plan to gradually migrate appropriate integration processes and workloads to cloud-based integration services to deliver greater agility with a lower cost of ownership.

Overall, the key theme in middleware modernization projects is API-led integration that uses both API management and service-oriented and microservices architectures to expose and consume REST APIs. Focus on adopting API platforms to implement API- and design-first principles and enable the rapid creation of APIs that can effectively meet the specific requirements of end users.

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