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Enterprise Architect: Article

Software AG Buys Way Into BPM

Software AG seeks IDS Scheer in webMethods aquisition follow-up act

This guest post comes courtesy of Tony Baer’s OnStrategies blog

Who says there are no second acts in life? After having caught its breadth with the webMethods acquisition almost exactly two years ago, Software AG has struck again with an offer to buy roughly half the shares of IDS Scheer from the company’s founders. The offer, worth roughly $320 million, is still subject to regulatory review.

Both deals are similar in that they are major, but their impacts will be different. webMethods expanded the Software AG business horizontally, adding critical mass to a new SOA middleware business that it was only beginning to build. Additionally, webMethods was a less mature business with more headroom for growth.

By contrast, IDS Scheer simply deepens one of Software AG’s existing businesses: webMethods Business Process Management (BPM). It adds the ARIS process modeling language, which would provide yet another onramp for webMethods BPM customers. And IDS Scheer is a pretty mature business, with the brunt of its installed base being large SAP customers who have used the ARIS language to model their SAP applications. There obviously aren’t a lot of new SAP installations going in these days.

But in other ways, webMethods could give IDS Scheer the jolt that the ARIS business could use. While Software AG’s numbers continued to grow in spite of the recession, IDS Scheer’s business has flattened out with what little growth occurring attributable to maintenance streams.

For Software AG, IDS Scheer’s maintenance streams resemble those of its legacy ETS data management business, which has provided the company the annuity revenue

Just about the only thing that surprised us in this announcement was that SAP didn’t act first. Their customers only happen to form the majority of the ARIS base.

flow to fund its acquisitions. But that’s where the similarity ends. The webMethods BPM business, which is much earlier in its growth curve, represents a potential greenfield base for ARIS. Better yet for Software AG, it provides a foothold into the SAP customer base where the company has not been heavily present. And, although SAP is also a player in the middleware space with NetWeaver, it has not been terribly active with BPM.

More interestingly, it throws down a gauntlet to Oracle, which currently OEMs the ARIS language as one of the options for its Fusion BPM middleware stack. Although Oracle promotes Fusion’s “hot pluggable” best of breed strategy, probably the last place Oracle wants best of breed is in the BPM stack. With ARIS providing a direct onramp to webMethods BPM, and in turn the Software AG SOA stack, continuation of the OEM deal provides Software AG the opportunity for a wedge strategy.

As for IBM, making ARIS native to the webMethods BPM suite provides a line of defense against WebSphere incursion into the SAP installed base. Although hardly a show stopper, it provides Software AG yet another tool in its arsenal to compete with IBM WebSphere.

Just about the only thing that surprised us in this announcement was that SAP didn’t act first. Their customers only happen to form the majority of the ARIS base.

Postscript: Here’s hoping that maybe we’ll have a chance to hear Professor Scheer’s mean baritone sax at Software AG events.

This guest post comes courtesy of Tony Baer’s OnStrategies blog . Tony is a senior analyst at Ovum. His profile is here. You can reach him here.

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At Interarbor Solutions, we create the analysis and in-depth podcasts on enterprise software and cloud trends that help fuel the social media revolution. As a veteran IT analyst, Dana Gardner moderates discussions and interviews get to the meat of the hottest technology topics. We define and forecast the business productivity effects of enterprise infrastructure, SOA and cloud advances. Our social media vehicles become conversational platforms, powerfully distributed via the BriefingsDirect Network of online media partners like ZDNet and IT-Director.com. As founder and principal analyst at Interarbor Solutions, Dana Gardner created BriefingsDirect to give online readers and listeners in-depth and direct access to the brightest thought leaders on IT. Our twice-monthly BriefingsDirect Analyst Insights Edition podcasts examine the latest IT news with a panel of analysts and guests. Our sponsored discussions provide a unique, deep-dive focus on specific industry problems and the latest solutions. This podcast equivalent of an analyst briefing session -- made available as a podcast/transcript/blog to any interested viewer and search engine seeker -- breaks the mold on closed knowledge. These informational podcasts jump-start conversational evangelism, drive traffic to lead generation campaigns, and produce strong SEO returns. Interarbor Solutions provides fresh and creative thinking on IT, SOA, cloud and social media strategies based on the power of thoughtful content, made freely and easily available to proactive seekers of insights and information. As a result, marketers and branding professionals can communicate inexpensively with self-qualifiying readers/listeners in discreet market segments. BriefingsDirect podcasts hosted by Dana Gardner: Full turnkey planning, moderatiing, producing, hosting, and distribution via blogs and IT media partners of essential IT knowledge and understanding.