Almost business as usual: Software AG upbeat despite global economic crisis
Software AG executives were upbeat at the company’s Innovation World 2008 user conference in Miami this month, with recently announced third-quarter operating profits up 50 percent, reflecting in part the successful integration of its $546-million webMethods acquisition in summer 2007. They also were uniformly consistent in their message that they are well positioned for growth despite the global economic downturn.
Software AG’s stated immediate goal is to help its 4,000 customers in 70 countries weather the current economic storm by exploiting the combo-value of its business process management (BPM) suite and service-oriented architecture (SOA) tools to improve business performance—without having to invest in new underlying business applications.
—Karl-Heinz Streibich, CEO of Software AG
Software AG, a German company, has long offered technology for building corporate IT infrastructures. The acquisition of webMethods , based in Fairfax, Va., brought Software AG into the enterprise application integration and BPM space, and also raised its profile among U.S.-based companies. Now it appears the company is poised to benefit from companies’ desire continue revising business processes without investing heavily in new applications.
“The webMethods acquisition was a lucky punch for us,” says Karl-Heinz Streibich, CEO, Software AG. “All the reasons why we bought them turned out more positive than we had thought.”
According to L. Frank Kenney, research director for application strategy & governance for Stamford, Conn.-based Gartner , “the webMethods acquisition was a brilliant move—and also gutsy. Software AG was incredibly fortunate to be in the right place at the right time. If you look at the combination of the webMethods presence in the U.S. and the lack of action on the part of other major vendors in the [business process management and application integration] space, it all enabled Software AG to really grow.”
Software AG bills itself as an agnostic business infrastructure software vendor, “and webMethods enables that through SOA and BPM,” says Ian Walsh, the company’s senior director of strategic product marketing. The webMethods SOA and BPM platform recently received exemplary marks from Gartner, which placed it at the pinnacle of its magic quadrant in SOA, BPM, and B2B gateway capabilities. Cambridge, Mass.-based Forrester Research, in its Q4 2008 Wave ranking for SOA and BPM, gave the company high scores across the board, and lauded it for providing “excellent customer references.”
Lockheed Martin Information Systems & Global Services (IS&GS) and Avnet
IS&GS is comprised of 10 companies doing $10 billion annually. Its IT systems number 240, with more than 4,000 ongoing projects. IS&GS is using Software AG tools to construct a robust, federated SOA architecture.
Avnet, a Fortune 500 industrial distributor of electronic parts and enterprise and computing products, has more than 300 facilities in 70 countries. It has applications from SAP , Oracle , Microsoft , Manugistics , RedPrairie , and others. Avnet is using webMethods to architect SOA-enabled integration to reap the benefits of BPM.
“We want to get to process optimization—to operational excellence,” says Sean Valcamp, chief architect of Avnet’s SOA initiative. “Our model includes trading partners, customers, suppliers, manufacturers, and resellers. Capabilities vary widely, so we want to ensure we can support them. We want to ensure our processes are efficient, effective, and operational—and make it all fit the business.”
Software AG maintains a strong commitment to the mainframe environment, which the company says continues to offer great growth opportunity in terms of installed applications worldwide, buoyed by mainframe server growth pegged at 25 percent annually, according to IBM.
“The mainframe is a growth platform because of the mission-critical information that is maintained and stored there,” says Joe Gentry, CTO and executive VP for Software AG’s Enterprise Transaction Systems (ETS). “The platform is highly scalable, secure, and reliable.”
Global companies are “not going to replace their core systems, but they want to bring those apps forward and they see SOA and BPM as a way to do that and reduce the risk of maintaining them,” Gentry says. He says 70 percent of applications in use today are written in COBOL, a programming language developed specifically for early mainframes.
“A lot of people think SOA is only good for new stuff, but SOA and BPM isn’t just about new stuff,” says Gentry. “The mainframe as an SOA platform is a viable piece of the Software AG strategy.”