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The Winds of Change

The Winds of Change

The portal product market has matured significantly since its birth in 1998. In the early days, 'pure-play' vendors provided the only options for enterprises evaluating portal products. This situation quickly changed as existing software vendors came to recognize the market desire for the functionality that the portal promised. Many of these companies, however, either misjudged the resources that would be required to thrive in this technology space or found themselves going down a path which few would-be customers were willing to follow. In either case, the result has been the same - while demand has increased for horizontal portal products, the market has refused to reward vendors lacking solid functionality or a strong vision. Pure-play portal vendors have been the primary casualties to this point. However, consolidation in the horizontal portal product market continues, and is likely entering its most critical stage. 2002 will bring major consolidation among the portal product vendors and some key, new lessons about portals.

Generally, vendors in the horizontal portal market are members of one of three groups - "pure-plays"; middle-tier, indepen-dent software vendors; or the large, independent software vendors, the "800 lb gorillas" of the technology world. For the most part, the pure-plays are pre-initial offering, with annual revenue of less than $40 million, fewer than 300 personnel, and under 200 customers, but they are focused on portals. Typically, a technology pure-play is not strong enough to field multiple complex products, although there are exceptions. The pure-plays were the pioneers of the portal market, and several continue to have significant mind share.

The middle-tier independent software vendors are mostly publicly held, have existed for longer than five years, and have revenues in the hundreds of millions of dollars from products that predate portals. Several of these vendors' interest in the portal market should be viewed as purely opportunistic, as they provided many of the cases of legacy applications with a Web front end suddenly being touted as "enterprise portals." However, this segment also contains vendors from backgrounds like middleware that have provided credible products.

The 800 lb gorillas are vendors with multibillion-dollar annual revenue, an established presence in multiple markets, and diverse product lines spanning systems, applications, consulting services, and software infrastructure. In many cases, these vendors entered the horizontal portal product marketplace later than those from the other two segments, but there is evidence that it's becoming their jungle.

Starting in the second half of 1999, the large, independent software vendors began to enter this market, but it's only in the last nine months that the market has felt their full weight. Gartner has seen a major power and momentum shift in the portal product market during this time. In the summer of 2001, the pure-play vendors held most of the market share and momentum. Since then, however, the balance of power has shifted to the 800 lb gorillas. The first round of consolidation of the portal product market was driven by the overcrowded nature of a market populated predominantly by small, privately owned, venture-capital-funded, unprofitable companies. One somewhat surprising trend within this shakeout has been the method. Rather than closing their doors, most of the pure-play vendors affected by the first round of consolidation were acquired. Examples of pure-plays that have been acquired since the beginning of 1991 include Sagemaker, Sequoia, DataChannel, TopTier, KnowledgeTrack, and Octopus.

This first round of consolidation is concluding with the departure of several middle-tier independent software vendors from the portal product market. Examples include Autonomy, Ascential, divine, and Verity.

Gartner expects the second round of consolidation to begin before the conclusion of this year. Driving this consolidation will be the bundling of licenses and technology by the large, independent software vendors. This business strategy will be coupled with a technology approach - the "portal-enabled application server," the merger of the application server with basic portal services. As a result of these two trends, functionality requirements for future portal products will increase. The victims of this second round of consolidation will be more pure-plays and middle-tier software vendors.

Gartner's Four-Generation portal functionality model identifies a robust application framework as one of the key attributes of Generation-Two portals and their descendants. Either bundling an application server or running on top of a variety of application server platforms constitutes a key part of this framework. As the large, Java-centric platform vendors (e.g., IBM, Sybase, Oracle, BEA Systems, and Sun Microsystems) add basic levels of portal services to their Java 2 Enterprise Edition (J2EE) application servers, other portal vendors will be forced to enhance the functionality of their own products to remain competitive. The required technical expertise and resources will serve as barriers to many existing portal product vendors.

Although many application servers currently contain personalization features, they don't provide portal services. However, almost all application server vendors have a portal product. These vendors will "move the bar" between their application servers and their portal products, thus causing the portal product industry as a whole to change. By 2004, the majority of platform providers will include basic portal functionality in their application servers.

Over time, the platform vendors will separate their future portal products from their application servers, offering both the portal application server, including basic portal services, and a prime portal product delivering Generation-Three and Generation-Four functionality. The portal application server will provide enough functionality for a basic portal, while the prime portal product will serve up the "bells and whistles." The pure-plays and middle-tier vendors will be faced with a dilemma. They will be forced to enhance their portal products to go well beyond the basic portal services that will become bundled into portal-enabled application servers. This effort will drive many vendors out of the portal product market, or will force them to focus on price competition. These vendors will also have to start leveraging the built-in portal services provided in the portal-enabled application servers. Additionally, while the large, Java-centric platform vendors will leverage J2EE standards in a way that will result in consistent definitions of portal services, they will each create extensions. This will require the pure-plays and middle-tier vendors to write to each platform separately. Also, some pure-play vendors may take the opportunity to court the large platform providers.

Gartner believes that if an enterprise has already invested in the application server of a large platform provider, the enterprise should closely examine the future portal and application server strategies of that vendor. Enterprises seeking to deploy the portal product of a pure-play or middle-tier vendor should carefully examine the their strategies for evolving their products, and strategies for leveraging the features of the portal-enabled application servers of the large, Java-centric platform vendors. This advice is particularly important given the current state of the portal product market and the large number of enterprises that will be moving from running departmental portals to deploying portals across the enterprise.

The portal product market is approximately four years old, but it wasn't until 2000 that large, enterprise-wide deployments began in earnest. Most enterprises that invested in portal products are still running departmental portals, or are in the process of deploying them across the enterprise. The three most common issues identified by enterprises deploying large-scale portals are scalability, the total cost of ownership (TCO) of portlets, and the consequences of the lack of portal governance.

Portal products that evolved from thin, Web-presentation architectures may be hidden time bombs. A thin Web-presentation layer will not grow into a mission-critical environment that scales to large numbers without some major re-architecting. Vendors who took the time to redesign their architectures along the way have a solid chance of deploying a mission-critical infrastructure. The products of vendors that incrementally changed their architectures, rather than redesigned them, will likely run into issues of reliability and scalability as portal use grows. Many users who invested in this latter set of vendors could see their portals "blow out" in 2002 and will be forced to abandon the original portal product and invest in a new, more robust one.

There are two major mechanisms for integration in the portal product market: prebuilt integration components (a.k.a. "portlets") and abstraction approaches. Portal products with a long list of portlets are very desirable because they provide a rich portal experience almost overnight. However, portal products that rely exclusively on the portlet model will be more costly to support over time because portlets are inherently a less-sophisticated architecture. In the words of one experienced portal developer, "portlets are brittle," reflecting the fact that as back-end systems and repositories change, the front-end portlets that access them must change at the same time, and breakage frequently occurs when changes aren't synchronized. In 2002, many users who invested in portal products that are heavy in portlets and light in abstraction will realize that the overall TCO of these portals is much higher due to portlets' brittle nature.

A lack of portal governance in large enterprises is common. Without appropriate governance, the possibility of multiple horizontal portals in a single enterprise is high. Because of the lack of interoperability standards, portal products from different vendors don't work together. Therefore, stovepipe portals are the result - which will become an increasing problem for large enterprises with autonomous business units/geographic units. While standards-creation efforts like JSR 168 are attempting to address these issues, Gartner doesn't expect a full range of portal interoperability standards to exist until at least 2004. This lack of interoperability standards will lead organizations to implement an "uberportal" as the only solution. The need for uberportals will become very clear in 2002, as will the difficulty in building them.

An uberportal is a lightweight, thin portal framework that overarches other portals. The uberportal is a horizontal portal, while the underlying portals may be horizontal or vertical. The key integration points between the uberportal and the underlying portals include directory, security, personalization profiles, metadata, and the portlets. The uberportal becomes the initial entry point, and user interface personalization will likely be handled there as well. An uberportal can't be bought "out of the box." It must be built on top of the framework of a horizontal portal product. The effort to tie an uberportal to its underlying portals is significant, so the need must be great to justify the effort.

Currently, the best positioned set of technologies to deliver on the hope for portal interoperability standards is Web services. Over the next 12 months, Web services will become the de facto standard for invocation of portlets. Vendors will have to wrap their portlets in Web services-compliant wrappers. This will be the first step for interoperability standards in the portal product market. Another aspect of Web services that will affect the portal product market is the user interface. Portals will likely be the genesis of emerging standards in this area. In fact, one of the pure-play vendors, Epicentric, has been pushing the envelope of Web services user interface standards with WSIA, which recently has been endorsed by IBM.

The portal product market has undergone some significant changes in the last year, and will continue to undergo further changes. In spite of the volatility of the market, Gartner feels that a strategic investment in a portal product is possible. Risk-averse companies should continue to invest tactically until late 2002. Enterprises that can accept and mitigate risk should feel safe in making strategic investments. However, extreme due diligence must be done.

More Stories By David Gootzit

David Gootzit is a senior research analyst in Gartner's Internet Strategies Practice.

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