Workday buys Cape Clear – Where did the ESB market go?

Surprising news today – Cape Clear, the Irish ESB vendor, has been bought for an undisclosed sum by the Workday, SaaS start-up providing a range of enterprise applications. This is a significant event on a number of axes:

While the ESB as a term has grown in popularity, the new vendors touting ESBs have not grown at the same rate.  My former home, PolarLake, has repositioned itself to take advantage of a specific niche (Reference Data Distribution in financial services).  Now, Cape Clear has disappeared from the ’traditional’ enterprise middleware market to become part of a SaaS play. Other vendors continue to win ESB business of course, but it is fair to say that none have broken out into the major league as might have been expected 5 years ago when ESBs first appeared.

This is in fact more general than the ESB market alone: No middleware vendor of scale has emerged in recent years.  Instead, across the board the smaller middleware vendors are being squeezed between the industry giants with comprehensive software stacks and service arms on the one hand and OSS projects on the other.  The reason for the squeeze is also three fold:

• The increasing reluctance of end-users to take a chance on a smaller vendor:  The extremes of OSS or industry giants seem less risky.
• Consolidation in key industries such as financial services and telecommunications (key markets for new middleware vendors in the past) has reduced the number of potential customers and hence increased the competition in those markets.
• The increasing sophistication of the industry giants in dealing with new entrants:  A smaller vendor must face a wide variety of onslaughts from aggressive sales tactics such as the giving away of expensive software to the promotion of OSS projects allied with service delivery capabilities.

While both the concerns about vendor viability and the sales tactics used by the giants are entirely legitimate, one wonders about the impact on the overall rate of innovation in the IT industry.  The disappearance of Cape Clear must cause specific pain for existing enterprise customers now concerned about the future of the products upon which they depend.  However, one must wonder more generally what the impact longer term of the hardening of the markets against new innovators will be on all enterprise users.

Ronan

Comments

[Steve Craggs]

I have to add my own opinions to Ronan's thoughtful post - I fear he is being too charitable. While I agree with everything Ronan says, I believe that a major cause of Cape Clear's problems was the unrealistic belief that it could take over the world. Instead of reading the runes and retrenching in a defensible niche, it hired heavily based on funding that was brought in due to some excellent marketing activities that convinced many people it was doing better than it was. As reality dawned, its fate was sealed.

Steve