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By Kate Hanaghan, 27 April 2001 10:30

COMMENT Integration technologies have the power to bring to life islands of data held in databases and ERP and CRM systems. Research company Datamonitor claims they are "a must" for all companies that want to be profitable. (Quite a few companies, then.) Yet while this may be the case, committing the necessary sums of investment is a major plunge to take. The benefits of integration are understood by business, but knuckling down and getting on with it is something else. A survey of UK companies by integration software company Mercator found only 14 per cent of respondents have integrated the 'vast majority' of their core business applications. If the figures for application integration are so low, what does this mean for the next wave of B2B integration, already pounding at the door? This new generation of technologies builds on application integration in that it adds partner management, security, XML capabilities and managed ports to EDI. Larger companies are taking it very seriously. Every Global 500 company with operations in Europe is doing it. Guy Chaigneau, a B2B analyst at Frost and Sullivan, predicts that by 2004 there will be a 50/50 split in revenue between B2B integration and enterprise application integration (EAI). After which time, B2B will take the lead. But he is concerned that vendors are leaving the market behind. He said: "Vendors are rushing to B2B when they are still needed in EAI." So are we ready for B2B integration? In the mid-market tier there is a large degree of hesitation with only 20 per cent of companies involved, according to Forrester Research. Undoubtedly this is because of the significant investment required, with figures starting at £200,000. But according to Jaap Favier, a B2B expert at Forrester Research, the financial barriers should not mean companies shy away from B2B technologies. He said: "No companies can afford to ignore the trends." In the background, the tussle for standards goes on. XML might have a high profile but it's not everyone's cup of tea. Charles Saunders, VP of strategic planning EMEA at Mercator, said: "XML has its place but there are no standards and it is resource intensive. It requires bandwidth because it works by padding data with other data. I don't think XML is sufficient to deal with value chain management." Private marketplaces seem to be the most favourable environments for B2B integration because there is a central set of standards for integration between partners. But don't hold your breath. Forrester's Favier estimates it will be three years before there is a full integration standard. And clearly being an early mover carries risks. Vendors such as SeeBeyond have argued that Y2K paranoia forced companies to put internal application integration projects temporarily on hold. This, they claim, explains a subsequent sudden increase in B2B integration by some large companies. But this argument is dismissed by Favier. He said: "It was hype fed by tech vendors who were ultimately unable to deliver because of the lack of standards." A company called Transora said it would get the entire CPG (consumer packed goods) industry wired up. "But [until now] all they have established are a few auctions and reverse auctions," added Favier As a result, Unilever is now seeing the downside. Having made a huge investment in a public marketplace, the company is moving to a private marketplace model in the US. In Europe they are likely to establish a direct marketplace. But this has been no big loss for the company. It shared the public marketplace with 52 other companies, so its competitors have found themselves in the same boat. "It is just taking longer to fulfil the promises," says Favier. It could take something like four to five years as opposed to the one promised by Transora. By rushing into B2B integration, companies run the risk of pouring money down the drain because of the instability of standards. The advice to all the eager kids out there is to relax. Take a deep breath and then hop on that slow train to B2B central. It's an evolutionary thing - a gradual process that will take a number of years. As with many new technologies, the industry watchers are warning of over-hype and confusion. Supply chain efficiency is driving the need for integration. The view of Ian Howells at integration software company SeeBeyond is that the first thing to be done is internal. "You have to know what your processes are," he said. It all means that companies can get on with B2B integration, but open, well-structured ERP and CRM systems are a prerequisite. Otherwise, users are looking at long delays on top of what is at best a lengthy - albeit worthwhile - process.