|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.
SYS-CON Events announced today that BMC Software has been named "Siver Sponsor" of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2015 at the Javits Center in New York, New York. BMC is a global leader in innovative software solutions that help businesses transform into digital enterprises for the ultimate competitive advantage. BMC Digital Enterprise Management is a set of innovative IT solutions designed to make digital business fast, seamless, and optimized from mainframe to mo...
May. 26, 2016 08:00 PM EDT Reads: 2,054
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, will provide an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life ...
May. 26, 2016 08:00 PM EDT Reads: 1,866
As cloud and storage projections continue to rise, the number of organizations moving to the cloud is escalating and it is clear cloud storage is here to stay. However, is it secure? Data is the lifeblood for government entities, countries, cloud service providers and enterprises alike and losing or exposing that data can have disastrous results. There are new concepts for data storage on the horizon that will deliver secure solutions for storing and moving sensitive data around the world. ...
May. 26, 2016 08:00 PM EDT Reads: 1,217
Join us at Cloud Expo | @ThingsExpo 2016 – June 7-9 at the Javits Center in New York City and November 1-3 at the Santa Clara Convention Center in Santa Clara, CA – and deliver your unique message in a way that is striking and unforgettable by taking advantage of SYS-CON's unmatched high-impact, result-driven event / media packages.
May. 26, 2016 08:00 PM EDT Reads: 2,278
SYS-CON Events announced today that EastBanc Technologies will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. EastBanc Technologies has been working at the frontier of technology since 1999. Today, the firm provides full-lifecycle software development delivering flexible technology solutions that seamlessly integrate with existing systems – whether on premise or cloud. EastBanc Technologies partners with p...
May. 26, 2016 08:00 PM EDT Reads: 2,078
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo 2016 in New York and Silicon Valley. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 17th Cloud Expo and will feature technical sessions from a rock star conference faculty ...
May. 26, 2016 07:45 PM EDT Reads: 2,505
SoftLayer operates a global cloud infrastructure platform built for Internet scale. With a global footprint of data centers and network points of presence, SoftLayer provides infrastructure as a service to leading-edge customers ranging from Web startups to global enterprises. SoftLayer's modular architecture, full-featured API, and sophisticated automation provide unparalleled performance and control. Its flexible unified platform seamlessly spans physical and virtual devices linked via a world...
May. 26, 2016 07:30 PM EDT Reads: 2,011
SYS-CON Events announced today that Commvault, a global leader in enterprise data protection and information management, has been named “Bronze Sponsor” of SYS-CON's 18th International Cloud Expo, which will take place on June 7–9, 2016, at the Javits Center in New York City, NY, and the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Commvault is a leading provider of data protection and information management...
May. 26, 2016 07:15 PM EDT Reads: 2,983
SYS-CON Events announced today that ContentMX, the marketing technology and services company with a singular mission to increase engagement and drive more conversations for enterprise, channel and SMB technology marketers, has been named “Sponsor & Exhibitor Lounge Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York City, New York. “CloudExpo is a great opportunity to start a conversation with new prospects, but what happens after the...
May. 26, 2016 07:15 PM EDT Reads: 987
The essence of data analysis involves setting up data pipelines that consist of several operations that are chained together – starting from data collection, data quality checks, data integration, data analysis and data visualization (including the setting up of interaction paths in that visualization). In our opinion, the challenges stem from the technology diversity at each stage of the data pipeline as well as the lack of process around the analysis.
May. 26, 2016 07:00 PM EDT Reads: 1,334
The 19th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Containers, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportunity. Submit y...
May. 26, 2016 07:00 PM EDT Reads: 1,921
18th Cloud Expo, taking place June 7-9, 2016, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterprises are using some...
May. 26, 2016 06:45 PM EDT Reads: 3,056
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 New York Call for Papers is now open.
May. 26, 2016 06:00 PM EDT Reads: 1,752
The IoTs 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, will demonstrate how to move beyond today's coding paradigm and share the must-have mindsets for removing complexity from the development proc...
May. 26, 2016 04:30 PM EDT Reads: 1,863
SYS-CON Events announced today that Tintri Inc., a leading producer of VM-aware storage (VAS) for virtualization and cloud environments, will exhibit at the 18th International CloudExpo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, New York, and the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
May. 26, 2016 04:30 PM EDT Reads: 2,224
The IoT is changing the way enterprises conduct business. In his session at @ThingsExpo, Eric Hoffman, Vice President at EastBanc Technologies, discuss how businesses can gain an edge over competitors by empowering consumers to take control through IoT. We'll cite examples such as a Washington, D.C.-based sports club that leveraged IoT and the cloud to develop a comprehensive booking system. He'll also highlight how IoT can revitalize and restore outdated business models, making them profitable...
May. 26, 2016 04:15 PM EDT Reads: 2,746
SYS-CON Events announced today that Enzu, a leading provider of cloud hosting solutions, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Enzu’s mission is to be the leading provider of enterprise cloud solutions worldwide. Enzu enables online businesses to use its IT infrastructure to their competitive advantage. By offering a suite of proven hosting and management services, Enzu wants companies to foc...
May. 26, 2016 04:15 PM EDT Reads: 2,180
Customer experience has become a competitive differentiator for companies, and it’s imperative that brands seamlessly connect the customer journey across all platforms. With the continued explosion of IoT, join us for a look at how to build a winning digital foundation in the connected era – today and in the future. In his session at @ThingsExpo, Chris Nguyen, Group Product Marketing Manager at Adobe, will discuss how to successfully leverage mobile, rapidly deploy content, capture real-time d...
May. 26, 2016 03:45 PM EDT Reads: 1,494
SYS-CON Events announced today the How to Create Angular 2 Clients for the Cloud Workshop, being held June 7, 2016, in conjunction with 18th Cloud Expo | @ThingsExpo, at the Javits Center in New York, NY. Angular 2 is a complete re-write of the popular framework AngularJS. Programming in Angular 2 is greatly simplified. Now it’s a component-based well-performing framework. The immersive one-day workshop led by Yakov Fain, a Java Champion and a co-founder of the IT consultancy Farata Systems and...
May. 26, 2016 03:30 PM EDT Reads: 3,937
IoT generates lots of temporal data. But how do you unlock its value? How do you coordinate the diverse moving parts that must come together when developing your IoT product? What are the key challenges addressed by Data as a Service? How does cloud computing underlie and connect the notions of Digital and DevOps What is the impact of the API economy? What is the business imperative for Cognitive Computing? Get all these questions and hundreds more like them answered at the 18th Cloud Expo...
May. 26, 2016 03:30 PM EDT Reads: 2,190