|By Avi Rosenthal||
|April 22, 2014 07:46 AM EDT||
If a vendor is not a monopoly, I am not happy to find that the probability that it will survive is lower than it was (Apple, HP etc.).
Even if it is a monopoly in specific markets and not a monopoly in others, I am not happy to find that its Survival probability is lower than it was (Microsoft).
The reason that I am not happy is that competition is good for my customers: They can buy better products and pay less.
This post is out of the ordinary. The probability that Software AG will Survive is now higher than it was when I wrote the post: Will Software AG Survive until 2019?
Software AG's Business Lines
In my previous Vendors Survival post on Software AG, I analyzed its two major Business Lines:
1. Mainframe DataBase, Development and Integration products
2. BPM and SOA products
I will repeat only the main point:
Software AG's Mainframe Business Line is gradually and slowly declining.
If another vendor will acquire Software AG, it will acquire it because of the BPM and SOA Business Line.
A company could be an Acquisition Target but it also could vanish due to inability to compete.
It looks like Software AG is not a potential failing or vanishing company.
It is a big, solid and stable company.
The following indicators support my view:
1. Software AG has more than 5,400 employees in 70 countries that serve 70 percent of the Global 1,000. (The information is updated to the end of 2012).
2. 1,047.3 million USDs revenues in 2012
3. Consistent revenues and earnings
4. According to the WikiPedia: "The company is the second largest Software vendor in Germany and the fourth in Europe and among the top 25 globally".
Transformation is the Name of the Game
In order to Survive and/or grow the company's difficult task is to transform itself from a Mainframe Software Vendor to Multi-Platform BPM and SOA Vendor.
There are two challenges types:
type 1: The Mainframe Software Business and Business models are unique
The Mainframe software uniqueness is hilighted in the following bullets:
- A limited number of customers and potential customers
- The customers are Large Enterprises, so each customer pays a lot more than a typical Open Systems customer
- Higher prices than prices in other software platforms. The minimal Software Products prices are tens of thousands USDs. Usually, DBMS's prices, such as Software AG's flagship product ADABAS prices are hundred thousands USDs.
- The Software prices are based on Site Licenses or on Computer models Groups. Larger Mainframes (more CPU MIPS) Groups prices are higher. Usually Capacity grows and new Mainframes with larger Capacity are included in larger Software Groups. The result is higher Software Products prices.
- A limited number of competitors. The main competition is IBM with its DB2 database and COBOL and Java programming languages. CA is another important competitor.
- A very limited number of new potential customers. Migration to Mainframe is unusual. There are few new Mainframe sites.
type 2: Competition in the BPM and SOA Markets
In a Press Release Software AG wrote: "Software AG's strategy has been strongly focused on growth in the Business Process Excellence (BPE) business line since 2012. AS a consequence, the company heavily invested in new products and the expansion of its sales teams."
The Business Process Management (BPM) market is a lot different. The following bullets highlights the BPM market:
- Growing. The BPM market is growing rapidly. The annual growth rate of Leaders could be two digits growth rate.
- Immature. Read my post: BPMS Next Generation: IBPMS and you will understand. It is a market that from time to time a new Use Case shakes the market. This time it was Intelligent Business Operation (IBO). Software AG was one of the Vendors, which were moved from Gartner Magic Quadrant Leaders Square (BPMS Magic Quadrant) to the Visionary Square in the IBPMS Magic Quadrant. Software AG was not alone: only three Vendors appear in the Leaders Square of IBPMS. Previous Use Cases added and changed vendors position, were Case Management and Human Processes.
- Crowded. In 2013, Forrester Research identified 52 different vendors competing in the BPM broader market (The Forrester Wave: BPM Suites , Q1 2013). Compare 52 to 2 (The significant competitors in the Mainframe DBMS market).
- Acquisitions. No wonder that Large Vendors acquire smaller vendors in a crowded market. BPM is not an exception. For example, IBM acquired Lombardi and FileNet. Software AG acquired WebMethods and IDS Scheer and Aurea Software acquired Progress Savvion.
- Competition. The competitors include Mega Vendors (IBM, Oracle), Pure BPM companies (Appian, PegaSystems) and Integration Vendors (Tibco, Vitria). I named only few strong competitors. Each of them has its Advantages (as well as Considerations) over other competitors, including Software AG.
As stated in the title of the previous paragraph: "Transformation is the Name of the Game". In the following sections I would try to evaluate Software AG's Transformation efforts.
Business Lines Contributions to Revenues
Software AG's revenues for 2012 were 1,047 Million USDs. The three major Business Lines contributions were:
Business Process Excellence 547 Million (52%)
Enterprise Transactions 375.2 Million (0.36%)
IDS Scheer Consulting 125.1 Million (0.12%)
The raw data was retrieved from Software AG's Annual Report 2012. I calculated the percentages.
Roughly, Business Process Excellence is BPM including SOA.
Roughly, Enterprise Transactions is Mainframe and Database, Development and Integration.
The ADABAS D and Natural business on other platforms is not significant.
Roughly, IDS Scheer Consulting is Business Process Analysis (BPA). BPA is a part of the BPM Life Cycle, so IDS Scheer Consulting is included in the BPM and SOA Business.
Conclusion: in 2012, BPM and SOA Business Lines revenues are more than 60% of Software AG's revenues. Mainframe revenues are more than 30%.
The Bottom Line: Software AG transformation from Mainframe Software company to BPM and SOA company was successful. It still has significant but gradually and slowly declining revenues from its Mainframe Business Line.
Acquisitions are complex you have to chose a suitable Acquisition Target and you have to execute the complex merging process. The complexity includes Organizational issues, Organizational Culture differences and Technological issues.
The wrong acquisition of Compaq by HP, many years ago, still hurts HP business.
You can also read my post: Acquisition is not simple: SAP-Sybase acquisition agreement, in order to understand the issues facing a company acquiring another company.
WebMethods acquisition was the first significant Software AG's acquisition. It looks like a plausible acquisition, because WebMethods was a Leader in the BPM, SOA and Integration markets.
Software AG branded its SOA and BPM suite as WebMethods and kept key WebMethods employees.
IDS Scheer was the second significant acquisition. A German company (Software AG.) acquired another German company (IDS Scheer). IDS Sceer's ARIS is a leading BPA product especially for ERP suites.
In order to improve its position in the new Intelligent Business Operation Use Case, Software AG acquired two companies:
Jackbe provider of Mashups and Real Time Business Intelligence platform and Apama a Complex Event Processing company. I already discussed these acquisitions in my post: IBPMS: BPMS Leader Software AG attempting to lead in IBPMS.
Bottom Line: Reasonable acquisitions and adequate merge execution.
WebMethod and Software AG products overlap: both companies had SOA products. However, Software AG did not develop a BPM solutions. The decision was to base the suite on WebMethods products.
Software AG's leading SOA Registry and Governance product: Centrasite (co developed with Fujitsu before WebMethods acquisition), is the Registry used in WebMethods suite.
After IDS Scheer Acquisition, its BPA products replaced WebMethods solutions.
The two BPM suites (WebMethods and IDS Scheer) were not integrated to a single suite, but tied the environments together. The quality of the mechanism of using artifacts from one environment in the other environment is good.
The Bottom Line:The technological decisions and implementations are reasonable.
In a previous post, I explained why SOA is implemented by more enterprises than BPM.
Few years ago, more than 50% of enterprises adopted SOA according to surveys results.
According to Forrester's survey results, only 26% implemented or expanding Business Process Management tools in 4thQ 2012.
According to The Forrester Wave: BPM Suites , Q1 2013, "Best Practices dictates that to get a good return on your BPM investment means scaling from project to program."
Program includes many Projects, is more strategic and more tightly coupled to Business.
SOA is not a Project it is a Program (or Initiative or a Journey). You may find positive correlation between SOA as a Project and failure in implementing it or not achieving enough Value for justifying the SOA effort.
Starting SOA or BPM by a project addressing a Pain Point is a good practice, however afterwards you should build a Program and not execute isolated and uncorrelated projects.
The main difference between SOA and BPM is the approach. SOA Program could be relatively slow and gradual. According to Best Practices, in BPM Program execution, shortening the time is more important than reducing costs.
The reason is that benefits could be realized quickly when the lack of Process Visibility is replaced by Process Visibility inherent in BPM.
As BPM will mature expect more BPM Programs.
According to Forrester Software AG major strength is "Software AG strikes good balance between project and program".
If other vendors will not catch up in "good balance between project and program", Software AG Market position could be improved.
Software AG's long transformation from Mainframe Software company to Business Process Management and Service Oriented Architecture was successful.
The largest Business Line in terms of revenues is BPM and SOA.
The company positioning in the crowded BPM market is good.
The Mainframe Software Business Line is declining slowly. Rapid decline could reduce the revenues significantly.
The company is one of the top 25 global software companies i.e only Mega Vendors can afford to acquire it.
The combination of all the factors cited in this paragraph is higher Survival probability in comparison to 2009.
However, inadequate strategy or inadequate execution could hurt its stability and profitability and reduce its survival probability.
It should be remembered, that even if Software AG will be as successful as it was in the last years, that does not guarantee that it will not be acquired.
Mega Vendor could acquire it. As long as the Mainframe Business Line is viable, it is unlikely that a Mega Vendor will do this.
For the Long Term, it is a possible scenario. If Software AG will become an Acquisition Target, I guess that the potential acquirer will probably be SAP.
IoT is rapidly changing the way enterprises are using data to improve business decision-making. In order to derive business value, organizations must unlock insights from the data gathered and then act on these. In their session at @ThingsExpo, Eric Hoffman, Vice President at EastBanc Technologies, and Peter Shashkin, Head of Development Department at EastBanc Technologies, discussed how one organization leveraged IoT, cloud technology and data analysis to improve customer experiences and effi...
Jul. 30, 2016 04:00 AM EDT Reads: 2,117
The Internet of Things will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, demonstrated how to move beyond today's coding paradigm and shared the must-have mindsets for removing complexity from the develo...
Jul. 30, 2016 03:00 AM EDT Reads: 1,641
SYS-CON Events announced today that MangoApps will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. MangoApps provides modern company intranets and team collaboration software, allowing workers to stay connected and productive from anywhere in the world and from any device.
Jul. 30, 2016 02:45 AM EDT Reads: 1,487
The IETF draft standard for M2M certificates is a security solution specifically designed for the demanding needs of IoT/M2M applications. In his session at @ThingsExpo, Brian Romansky, VP of Strategic Technology at TrustPoint Innovation, explained how M2M certificates can efficiently enable confidentiality, integrity, and authenticity on highly constrained devices.
Jul. 30, 2016 02:15 AM EDT Reads: 1,185
“delaPlex Software provides software outsourcing services. We have a hybrid model where we have onshore developers and project managers that we can place anywhere in the U.S. or in Europe,” explained Manish Sachdeva, CEO at delaPlex Software, in this SYS-CON.tv interview at @ThingsExpo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Jul. 30, 2016 02:00 AM EDT Reads: 1,688
The IoT is changing the way enterprises conduct business. In his session at @ThingsExpo, Eric Hoffman, Vice President at EastBanc Technologies, discussed how businesses can gain an edge over competitors by empowering consumers to take control through IoT. He cited examples such as a Washington, D.C.-based sports club that leveraged IoT and the cloud to develop a comprehensive booking system. He also highlighted how IoT can revitalize and restore outdated business models, making them profitable ...
Jul. 29, 2016 10:15 PM EDT Reads: 2,078
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with the 19th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world and ThingsExpo Silicon Valley Call for Papers is now open.
Jul. 29, 2016 08:00 PM EDT Reads: 2,749
We all know the latest numbers: Gartner, Inc. forecasts that 6.4 billion connected things will be in use worldwide in 2016, up 30 percent from last year, and will reach 20.8 billion by 2020. We're rapidly approaching a data production of 40 zettabytes a day – more than we can every physically store, and exabytes and yottabytes are just around the corner. For many that’s a good sign, as data has been proven to equal money – IF it’s ingested, integrated, and analyzed fast enough. Without real-ti...
Jul. 29, 2016 07:45 PM EDT Reads: 1,190
SYS-CON Events announced today that 910Telecom will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Housed in the classic Denver Gas & Electric Building, 910 15th St., 910Telecom is a carrier-neutral telecom hotel located in the heart of Denver. Adjacent to CenturyLink, AT&T, and Denver Main, 910Telecom offers connectivity to all major carriers, Internet service providers, Internet backbones and ...
Jul. 29, 2016 06:00 PM EDT Reads: 940
Big Data, cloud, analytics, contextual information, wearable tech, sensors, mobility, and WebRTC: together, these advances have created a perfect storm of technologies that are disrupting and transforming classic communications models and ecosystems. In his session at @ThingsExpo, Erik Perotti, Senior Manager of New Ventures on Plantronics’ Innovation team, provided an overview of this technological shift, including associated business and consumer communications impacts, and opportunities it ...
Jul. 29, 2016 05:15 PM EDT Reads: 405
You think you know what’s in your data. But do you? Most organizations are now aware of the business intelligence represented by their data. Data science stands to take this to a level you never thought of – literally. The techniques of data science, when used with the capabilities of Big Data technologies, can make connections you had not yet imagined, helping you discover new insights and ask new questions of your data. In his session at @ThingsExpo, Sarbjit Sarkaria, data science team lead ...
Jul. 29, 2016 04:45 PM EDT Reads: 1,263
WebRTC is bringing significant change to the communications landscape that will bridge the worlds of web and telephony, making the Internet the new standard for communications. Cloud9 took the road less traveled and used WebRTC to create a downloadable enterprise-grade communications platform that is changing the communication dynamic in the financial sector. In his session at @ThingsExpo, Leo Papadopoulos, CTO of Cloud9, discussed the importance of WebRTC and how it enables companies to focus...
Jul. 29, 2016 04:15 PM EDT Reads: 1,093
ReadyTalk has expanded the capabilities of the FoxDen collaboration platform announced late last year to include FoxDen Connect, an in-room video collaboration experience that launches with a single touch. With FoxDen Connect, users can now not only engage in HD video conferencing between iOS and Android mobile devices or Chrome browsers, but also set up in-person meeting rooms for video interactions. A host’s mobile device automatically recognizes the presence of a meeting room via beacon tech...
Jul. 29, 2016 04:15 PM EDT Reads: 467
Manufacturers are embracing the Industrial Internet the same way consumers are leveraging Fitbits – to improve overall health and wellness. Both can provide consistent measurement, visibility, and suggest performance improvements customized to help reach goals. Fitbit users can view real-time data and make adjustments to increase their activity. In his session at @ThingsExpo, Mark Bernardo Professional Services Leader, Americas, at GE Digital, discussed how leveraging the Industrial Internet a...
Jul. 29, 2016 03:15 PM EDT Reads: 701
On Dice.com, the number of job postings asking for skill in Amazon Web Services increased 76 percent between June 2015 and June 2016. Salesforce.com saw its own skill mentions increase 37 percent, while DevOps and Cloud rose 35 percent and 28 percent, respectively. Even as they expand their presence in the cloud, companies are also looking for tech professionals who can manage projects, crunch data, and figure out how to make systems run more autonomously. Mentions of ‘data science’ as a skill ...
Jul. 29, 2016 03:00 PM EDT Reads: 550
IoT generates lots of temporal data. But how do you unlock its value? You need to discover patterns that are repeatable in vast quantities of data, understand their meaning, and implement scalable monitoring across multiple data streams in order to monetize the discoveries and insights. Motif discovery and deep learning platforms are emerging to visualize sensor data, to search for patterns and to build application that can monitor real time streams efficiently. In his session at @ThingsExpo, ...
Jul. 29, 2016 02:00 PM EDT Reads: 1,214
"delaPlex is a software development company. We do team-based outsourcing development," explained Mark Rivers, COO and Co-founder of delaPlex Software, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Jul. 29, 2016 01:00 PM EDT Reads: 2,135
Amazon has gradually rolled out parts of its IoT offerings in the last year, but these are just the tip of the iceberg. In addition to optimizing their back-end AWS offerings, Amazon is laying the ground work to be a major force in IoT – especially in the connected home and office. Amazon is extending its reach by building on its dominant Cloud IoT platform, its Dash Button strategy, recently announced Replenishment Services, the Echo/Alexa voice recognition control platform, the 6-7 strategic...
Jul. 29, 2016 11:15 AM EDT Reads: 700
SYS-CON Events announced today that LeaseWeb USA, a cloud Infrastructure-as-a-Service (IaaS) provider, will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. LeaseWeb is one of the world's largest hosting brands. The company helps customers define, develop and deploy IT infrastructure tailored to their exact business needs, by combining various kinds cloud solutions.
Jul. 29, 2016 11:15 AM EDT Reads: 1,353
The cloud market growth today is largely in public clouds. While there is a lot of spend in IT departments in virtualization, these aren’t yet translating into a true “cloud” experience within the enterprise. What is stopping the growth of the “private cloud” market? In his general session at 18th Cloud Expo, Nara Rajagopalan, CEO of Accelerite, explored the challenges in deploying, managing, and getting adoption for a private cloud within an enterprise. What are the key differences between wh...
Jul. 29, 2016 09:45 AM EDT Reads: 2,163