IBM laid claim to 11 software companies, filling technology gaps and grabbing customer accounts
IBM’s New Year’s resolution last year must have been to buy software companies. After all, it snapped up 11 of them.
Primary business: Network event and fault management software.
Founded: 1989
Headquarters: Palo Alto, Calif.
Employees: 650
Acquisition announced: Dec. 21, 2005
Deal closed: Feb. 15, 2006
Cost: $865 million in cash
What IBM gets: Products for managing converged data, voice and video networks, plus the ability to introduce Tivoli to Micromuse’s large carrier customers. IBM followed suit with fellow management software makers such as CA (which bought Concord Communications) in adding network-specific expertise to its product portfolio.
Rival HP has traditionally been seen as the leader in network management. Through its Micromuse purchase, IBM also picked up security event management vendor GuardedNet and Quallaby, a maker of performance management software that sold mainly to service providers.
CIMS Lab
Primary business: Technology that allocates enterprise IT hardware and software costs to business units, departments and cost centers, including capabilities to apply this to virtualized server and storage technologies.
Founded: 1999
Headquarters: Roseville, Calif.
Employees: 21
Acquisition announced: Jan. 25, 2006
Deal closed: Same day
Cost: Undisclosed
What IBM gets: The capability to financially match physical and virtual resources to Tivoli’s asset-management capabilities. The CIMS Lab software collects use data and associates a cost with it, IBM says. According to an IBM press release, the software “can help companies understand more easily how their technology resources are being consumed,” specifically across virtualized environments. Immediate plans were to ship the technology with IBM Director, “complementing the virtualization capabilities of xSeries, eServers and pSeries eServers,” IBM said.
Language Analysis Systems (LAS)
Primary business: Provides multicultural name-recognition software solutions for applications.
Founded: 1984
Headquarters: Herndon, Va.
Employees: 20
Acquisition announced: March 16, 2006
Deal closed: Q1, 2006
Cost: Undisclosed
What IBM gets: LAS specializes in applying business rules to data to determine the origin, cultural variations and meanings around names, including first and last names, nicknames, titles and company names, according to IBM. LAS software enables companies to work out whether two or more names spelled in different ways refer to a single individual or to a number of different people, for instance. IBM says the technology could be used to sort through names and aliases to uncover fraudulent claims, threats and other similarities across languages.
BuildForge
Primary business: Technology to automate, track, audit and analyze their application development life cycle.
Founded: 2001
Headquarters: Austin
Employees: 50
Acquisition announced: May 2, 2006
Deal closed: Same
Cost: Undisclosed
What IBM gets: Integrated into IBM’s Rational software unit, BuildForge provides software build process management and automation software for software development organizations.
Rembo Technology
Primary business: Windows and Linux operating systems installation software for desktops, laptops and servers
Founded: 1999
Headquarters: Geneva, Switzerland
Employees: 12
Acquisition announced: May 18, 2006
Deal closed: June 28, 2006
Cost: Undisclosed
What IBM gets: The technology fits into Tivoli as well as IBM virtualization tools to automate the provisioning of physical and virtual resources. IBM said the acquisition fills a small technology gap in its lineup, but what is more important, it addresses a “major pain point” among customers.
“The key point when looking at virtualization and IT service management is that they are both about simplifying the complexity of manual, time-consuming tasks IT is faced with every day,” said Kevin Leahy, director of virtualization strategy for IBM, when the deal was announced. “For organizations with tens of thousands of client machines and servers, the time, energy and effort put toward manually installing servers are just not acceptable.”
Internet Security Systems (ISS)
Primary business: Intrusion detection and prevention systems, and managed security services
Founded: 1994
Headquarters: Atlanta
Employees: 1,300
Acquisition announced: Aug. 23, 2006
Deal closed: Oct. 20, 2006
Cost: $1.3 billion
What IBM gets: The company significantly enhanced its security profile with the buy, but it remains unclear how well it will fair putting network security to work in its existing product portfolio. IBM could become a provider of large-scale managed security services.
“[IBM has] concentrated more on systems and applications than on network infrastructure in the past,” said Paul Stamp, a senior analyst with Forrester Research, when the deal was announced. “However, with [the Micromuse acquisition] they’ve stepped up their management of networks, so securing them is a natural extension. They’ll never be a Cisco, but for a company that’s approaching this from a unified management prospective, it’s a good choice.”
Webify Solutions
Primary business: Industry-specific software and services for building SOAs.
Founded: 2002
Headquarters: Austin
Employees: 120
Acquisition announced: Aug. 2, 2006
Deal closed: Same day
Cost: Undisclosed
What IBM gets: Webify complements and extends IBM’s SOA software portfolio, including WebSphere Integration Developer, WebSphere Process Server, and the WebSphere Service Registry and Repository. Webify’s technology will be integrated into the IBM Software Group under the WebSphere middleware brand.
The buy furthered IBM’s commitment to SOA and was one among three IBM SOA-related deals within a span of 12 months. In October 2005, Big Blue announced it had acquired XML networking vendor DataPower for an undisclosed sum. And in December 2005, IBM laid claim to portal software maker Bowstreet, which developed technology aimed at helping companies to assemble composite applications from disparate enterprise applications and data sources.
“The IBM company has over 300 SOA-related patents. We will invest more than $1 billion this year in SOA-specific investments associated with both technology and the building of services practices,” said Steve Mills, senior vice president of the software group, during an October teleconference. “This is very much a cross-IBM initiative.”
MRO Software
Primary business: Enterprise asset management software
Founded: 1968
Headquarters: Bedford, Mass.
Employees: 900
Acquisition announced: Aug. 3, 2006
Deal closed: Oct. 17, 2006
Cost: $740 million in an all-cash transaction
What IBM gets: The buy strengthens Tivoli’s ability to manage enterprise systems and service. It rivals HP’s 2005 investment in Peregrine Systems for financial asset-management capabilities. With MRO, IBM acquired the technology that can link IT spending and investments with business outcomes. According to IBM, Tivoli software manages IT systems, and MRO’s Maximo software will enable customers to also manage and track their physical, financial and IT assets.
FileNet
Primary business: Business process management software
Founded: 1982
Headquarters: Costa Mesa, Calif.
Employees: 1,800
Acquisition announced: Aug. 10, 2006
Deal closed: Oct. 12, 2006
Cost: $1.6 billion
What IBM gets: The acquisition fits into its “information on demand” initiative, designed to help companies better use content scattered throughout their enterprises to make informed business decisions. For IBM, the deal offers a chance to grab a bigger share of the information-management market, but considering the size of the company and the considerable overlap between FileNet and IBM products, industry watchers speculate IBM may face challenges.
“It’s going to cause some trepidation among customers who are worried that what they’ve invested in FileNet will be overtaken by IBM, which has essentially been trying to sell the same stuff to them,” said Jim Murphy, a research director at AMR Research, when the acquisition was announced.
Palisades Technology Partners
Primary business: Provides consulting services and technology to the mortgage lending industry
Founded: 1999
Headquarters: Englewood Cliffs, N.J.
Employees: 70
Acquisition announced: Oct. 20, 2006
Deal closed: Nov. 10, 2006
Cost: Undisclosed
What IBM gets: Should boost its ability to deliver offerings that can reduce operational risk for finance and banking clients with complex lending processes.
Vallent
Primary business: Network performance monitoring and service assurance software for wireless service providers.
Founded: 1990
Headquarters: Bellevue, Wash.
Employees: 400
Acquisition announced: Nov. 28, 2006
Deal closed: Pending
Cost: Undisclosed (rumored to be about $200 million)
What IBM gets: As part of the Tivoli software unit, Vallent’s wireless technology expertise will further augment the network management technology IBM acquired with Micromuse. The buy could also help IBM transition more smoothly into managing advanced IP networks, industry watchers predict.
“The market is moving towards media — telecommunications convergence and the acquisition of Vallent spells out IBM’s waking up to the challenge of the multimedia telco,” says Simon Forge, a partner with Ptak, Noel & Associates. “There are not too many players around who have this experience and so capturing such a rare jewel must be rewarding for the long-term play for the highly varied range of service providers now appearing, especially those service providers launching into new infrastructures in the next generation networks space who will be looking for extra revenue streams, as well as reliable all-IP traffic management support, which is just where Vallent fits.”
Consul
Primary business: Policy-based user monitoring solutions to track, report on and investigate noncompliant behavior.
Founded: 1986
Headquarters: Herndon, Va.
Employees: 100
Acquisition announced: Dec. 5, 2006
Deal closed: Pending
Cost: Undisclosed
What IBM gets: Will incorporate Consul into its Tivoli unit, which will enable integrated security management and user activity monitoring across the entire IT infrastructure from devices and systems to applications in both traditional, mainframe and SOAs. Industry watchers argue IBM also gets more customers.
“I honestly think that IBM is more interested in customer lists,” said Jasmine Noel, a co-founder and principal analyst with Ptak, Noel and Associates, when the acquisition was announced. “It seems to me that IBM’s sales organization is much better at growing existing relationships than it is at developing new ones. Most of their acquisitions, starting with Micromuse, MRO Software, Vallent and now Consul, have lists of happy customers in the hundreds with little overlap with Tivoli’s existing customer base.”
