webMethods gets MDM with Data Foundations acquisition

Software AG, the owner of the popular webMethods suite of SOA and BPM products, has acquired Data Foundations, the US-based Master Data Management (MDM) vendor. This is a great acquisition, because the single version of the truth provided by MDM technology is often an essential component of business process management applications.

The only issue is that there is an element of catch-up here, since major BPM/SOA vendors like IBM and Oracle have had MDM capabilities for some time. But putting that aside, the fit between Data Foundations, Inc. and Software AG looks very neat. There is no product overlap to worry about, and the Data Foundations solution excels in one of the key areas that is also a strength for Software AG – that of Governance. Software AG offers one of the best governance solutions in the industry, built around its CentraSite technology, and Data Foundations has also made governance a major focus, which should result in a strong and effective marriage between the two technology bases. From a user perspective, MDM brings major benefits to business process implementations controlled through BPM technology, because the data accuracy and uniqueness enables more efficient solutions, eliminating duplication of work and effort while avoiding the customer relations disaster of marketing to the same customer multiple times.

Good job Software AG.

Was Visions Solutions right to acquire Double-Take?

On May 17th Vision Solutions announced that it was acquiring Double-Take – bringing together its own IBM Power HA/Disaster Recovery business and Double-Take’s strength in the same market with Windows and to a lesser extent Linux. But did it do the right thing?

On the face of it, this was a natural move for Vision. Its strength was in providing availability solutions based on IBM’s 64-bit Power servers. This market is a strong and inflential market, but is nowhere near the size of the Windows market. Also, since there are few players in the more specialist IBM Power market, Vision already holds a reasonable share. For growth, it was essential for Vision to do something. It had choices – it was already partnering with Double-Take to supply Windows to its IBM base, and had other partners for Linux. But by choosing to acquire Double-Take, it is definitely buying a Windows availability provider who also does Linux rather than the other way around.

My concern is that my instincts tell me the Linux market is going to be much more interested in availability than the Windows one. UNIX in general is a more secure and robust operating system than Windows, and therefore people using Linux may have greater expectations of availability, provided through file mirrors, backups, network switchovers and disaster recovery scenarios. In contrast, any user of Windows knows that the system is always going to have its availability problems – just think how many times you have to reboot when you use your own Windows laptop or desktop. The question is therefore; how strong and widespread is the demand for availability on Windows?

At some level, there is demand. For example, a lot of people would like their office data backed up so the can get it back quickly if there is a problem. But beyond this basic data level, it seems to me demand may be limited. Indeed, this seems to be backed up by the fact that in the past year or so Double-Take has suffered slowing growth and market pressures on its finances. Maybe Vision would have been wiser to acquire a Linux availability provider, like SteelEye Software for instance.

Progress Software acquires Savvion

handshakeSo Progress Software has bought yet another software company; this time a BPM vendor, Savvion. But is this the right move for Progress?

Progress Software has spent most of its life growing through acquisition, making use of the piles of cash generated by its legacy mid-range database product to find new areas of growth. After all, the legacy business may be highly profitable, but its returms are dwindling by the year and Porgress desperately needs something else to shore up its balance sheet. Unfortunately its acquisitions have had a bit of a patchy record of success. Perhaps it will be different this time.

Savvion is a credible BPM (Business Process Management) software provider, and 2009 was a bumper year for BPM sales. Specialist companies like Pegasystems and Lombardi showed huge growth rates, bucking the downward trend triggered across many technology sectors by the economic upheaval. On top of this, Progress has been trying to establish itself as a viable SOA (Service Oriented Architecture) and business integration vendor ever since it launched the Sonic ESB in the early years of the last decade, and BPM was a glaring hole in its portfolio. For these reasons, it is easy to see why Savvion would seem a good fit.

There seem to be two problems for Progress, however. Firstly, BPM is now rarely a solution bought in its own right – hence the rapid consolidation of the BPM market with Pegasystems more or less the only major oure-play BPM left standing following IBM’s acquisition of Lombardi. Instead, BPM is deployed more and more as part of a business transformation strategy involving components such as SOA, application and data integration, business rules, business monitoring and business events management.  Secondly, the gorillas in the space are now IBM, Oracle and SAP. These companies all offer a full suite of products and more importantly services based around BPM and the rest of the modern infrastructure stack. Companies such as Software AG, TIBCO and Axway form a credible second tier, too.

In previous acquisitions, Progress has treated each acqusition as purely software products. This is not surprising, since selling databases is more about selling products than selling solutions. However, it is this factor that has been at the root of the patchy performance of Progress acquisitions. For instance, the Data Direct division of Progress, where it placed a number of acquisitions in the data space, has fared reasonably well. This is because it is more of a product business. However its attempts in areas such as ESBs and SOA governance have suffered due to a seeming reluctance to embrace a more industry-specific, services-based solution model.

With its acqusition of Savvion, Progress once again has the chance to try to show the market that it has learnt from its mistakes. BPM is absolutely an area where companies need to be offered solutions – products together with services and guidance to develop effective and affordable business solutions. It will be hard enough for Progress to cut a share of the BPM pie with all the big players involved, but it does have one outstanding advantage; it has a strong and accessible customer base in the mid-range market where the larger companies struggle. However, if it fails to take on board the need to hire industryvertical skills and solution-based field and service professionals then this acquisition could prove to be yet another lost opportunity.


IBM acquires Lombardi to reinforce its BPM solutions

contractIBM has agreed an acqusition of Lomardi, one of the few remaining pure-play BPM suppliers, with target of closing the deal in 2010.

IBM has reaffirmed its position of strength in the burgeoning Business Process Management (BPM) space with this acquisition. Lombardi has three assets that IBM is particularly interested in; its human-centric BPM capabilities, its extensive professional services resources and its reputation and success with BPM at the departmental level.

For the uninitiated, business processes tend to span some or all of three distinct areas of usage – human-oriented processes, document-oriented processes and prorgram-oriented processes. Human processes involve such aspects as task lists that people use as they carry out their assigned tasks, document processes upgrade traditional paper-oriented models and program-based processes involve the dynamic interaction of applications. IBM has always been most experienced at dealing with program-to-program interaction, delivering its own WebSphere BPM offering. A few years ago it also acquired FileNet, a major player in document-based processing that had document-related BPM products. Now it is making the Lombardi acquisition to strengthen its human interaction BPM capabilities.

This is an exciting acquisition, closing out the weakest areas of IBM’s BPM solutions. However, the challenge for IBM will be to properly integrate the new product set with its existing BPM offerings. Frankly, IBM has not done a good job to date on this with its previous BPM acquisition of FileNet – IBM marketing collateral exhibits confusion over what are essentially two differnent product solutions that both claim to be BPM. Hopefully it will handle the Lombardi acquisition better.


Is the time right for Progress Software to be bought?

In the course of my ongoing analysis of software infrastructure vendors I was intrigued by the recent earnings release from Progress Software…

…and it caused me to dig a bit deeper. Basically, Progress is holding its revenue stream although not growing it, and I guess in today’s environment that is OK. But when the performance of the company over the last few years is considered, a different picture starts to build up.

Basically, Progress made a lot of money from its OpenEdge database product, and this business is still providing a rich ‘cash-cow’ revenue stream. However, not only has this stagnated but it is starting to decay, with Q109 showing a sharp drop. Admittedly this is probably in part due to currency movements, but the trend is clear – this is not a growing business ans the writing is on the wall, at least in the longer term. Progress knows this, and so over the past few years it has been on the acquisition trail, trying desperately to find a new business that can grow sufficiently to become the new OpenEdge. It has tried the area of Data, with its DataDirect division growing through acquisition, but this business has reached a steady state with little or no growth. It tried the area of messaging, being the company that brought the term ESB (Enterprise Service Bus) to the world through its SONIC line of business, but having got a great mindshare and market position it lost focus and this business is now fatally damaged, with others such as IBM, Oracle andMicrosoft taking up the mantle. Recently it acquired the APAMA complex event processing business, Actional (SOA management) and IONA (a datedintegration business based in Ireland). It has since found some success with the excellent APAMA offering in the heartland of financial market data processing, but has struggled to replicate this success in other industries and use cases. Actional has also had some success but it is immutably tied to the SOA star which is having its own problems. And IONA, similarly to Progress, has a nice legacy integration business based around Orbix but has failed utterly over the years to create anything else worthwhile.

The result is that although the IONA purchase has increased revenues in the Progress ‘integration infrastructure’ business unit, this is likely to be a one-off improvement and once again Progress is going to be stuck with an aging cash-cow and no clear rising star to take over responsibility for driving growth.

This might seem a recipe for Progress itself to be acquired. Up to now, this has been unattractive due to the share price, but in thecurrent climate the acquisition looks a lot more interesting. My view is that there are probably two strong candidate acquirers for Progress:

  • Companies looking for attractive maintenance businesses where profit can be maximized by cutting expenses and taking the money until the product line sunsets
  • Companies not currently in the integration space but wanting to get into this lucrative area and looking for a ready-made product set (perhaps to underpin a professional services business)

Who knows what will happen in the current turmoil? I may be way off the mark, but if I was a company fitting either of these two categories, and I had the money, I think now would be a good time to strike. After so many false dawns, I suspect the Progress management team might not resist too hard….