Software AG has agreed to buy SOA vendor webMethods Inc. for US$546 million in cash. This is 2.6x sales value. I was thinking that it could be HP. May be its systinet acquisition gave it enough. It may also be noted that Sun’s acquisition of SeeBeyond has not been any noteworthy success. For Software AG, long considered an XML specialist and the seen as strong in the integration of legacy systems, it desperately needed a makeover as a leading SOA (Services Oriented Architecture) company. WebMethods seemed to fit in well from that perspective. It shows three things:
A. European company paying cash to acquire a predominantly US strong company
B. In SOA space, you have to have scale to see success
C. The much awaited SOA uptick may indeed be happening in the near future.
A recent survey showed that SOA adoption is experiencing slow, but steady, adoption among large and mid-sized enterprises, it finds that SOA is still in very early deployment cycles. The report based on extensive structured survey finds that the early implementers of SOA are primarily taking a technology-led approach to SOA deployment as against the widely held belief that many early adopters were viewing SOA as needing to be a business-led initiative and many initiatives are at early planning stage or at trial deployment around legacy application integration.
How can these companies come together: On paper, it appears that should be able to leverage SOA capabilities to fuse together their offerings in such a way that the features & functionalities may be combined in intelligent ways. WebMethods BAM/BPM solutions could give a legup to Software AG in the fast growing BPM space. It would be very interesting to watch SOA players coming together and creating greater value. Watch out for more action in this space. Some may be centered around well known name like BEA, Tibco etc. They may choose to acquire smaller companies or they may run the risk of getting acquired.
The consolidation shall be accelerated due to the active interest shown by private equity players in the enterprise software. With hundreds of billions of dollars under management, private equity firms need toinvest and chalk up predictable returns, enterprise applications vendors have become an investment class as dependable as batteries and diapers for their steady revenue streams.
Labels: Consolidation, Enterprise Software, Private Equity