CA set to acquire Wily Technology

CA Thursday announced it has signed a deal to acquire application management software maker Wily Technology for $375 million in cash.

CA will use Wily’s Introscope – which provides transactional management capabilities for packaged applications such as SAP and Oracle, as well as homegrown and Java 2, Enterprise Edition (J2EE) apps – to pump up its weaker application management software within its Unicenter business unit, company executives say.

“Most large-scale, transactional applications are customer-written within enterprise shops. And now application vendors like Oracle and SAP are aggressively building their platforms on J2EE and migrating to Web-based technologies,” says Alan Nugent, senior vice president and general manager of CA’s Enterprise Systems Management (ESM) business unit. “Wily understands not just the application code, but also the application servers and the middleware in the environments. CA’s management technology is strong in other areas such as databases. Couple that with Wily and we can offer a holistic view for customers.”

Industry watchers say the buy is positive for both companies, if CA can keep Wily’s technology moving forward and customers happy with development efforts.

“It’s a good deal, but CA must prove to Wily customers that it will continue to invest in Wily’s technology and sales strategy, which was heavily driven by partners,” says Stephen Elliot, a senior analyst with IDC. “Wily’s technology is very solid, and the sales execution was strong. However, the larger Unicenter sales teams must come up to speed on how to position the application management technology.”

CA had detailed its plans to make a buy in this area late last year and company officials say the technology will help CA address a broader application management market for its customers. In fact, Gartner forecasts that application management market, based on new license revenue, will exceed $1 billion in 2007 and is estimated to reach nearly $1.4 billion by 2009.

“Most of our application management components in the suite were focused around vertical apps such as Lotus Notes and Microsoft Exchange,” Nugent says. “Wily’s technology will help CA give customers the opportunity to look at application management from a more business process approach, as opposed to coming up through the infrastructure management tools.”

CA, which says the deal is set to close within 90 days, for now will sell Wily’s Introscope application management software side-by-side with its Unicenter portfolio. Nugent says the technologists will be looking at potential integrations among the technologies over the next few weeks, and he expects to see Wily integrated across CA brands, helping the software maker get a “more holistic view of application performance” across technology stovepipes, such as security, databases and more. Product integration roadmaps are scheduled to be available about 30 days after the close of the acquisition, CA says.

For now the company will operate as a complete stand-alone operation with CA’s ESM business unit and report to CA executives, similar to CA’s Niku acquisition. For example, Wily CEO Dick Williams will report to Nugent as well as financial executives at CA. Wily founder and CTO Lewis Cirne will also stay on with the acquired company and report to CA executives, along with some 265 employees of the Brisbane, Calif., company. Nugent says that CA hopes to retain the talent of Wily to keep the technology moving forward.

“We want Wily to stay very focused,” Nugent says. “We aren’t going to do any shuffling of people back and forth and we realize there is a lot of talent there that developed its technology.”

Wily, which reports it has between 450 and 500 customers to date, says the acquisition will give it capabilities to better develop its technologies and a broader reach to potential new customers. The companies do have some customer overlap and will be looking to sell into each other’s accounts, but Nugent says the technology overlap is minimal.

Wily is a privately-owned company, but according to a CA press release, Wily’s revenue grew by 48% in 2004 and 2005 revenue are expected to increase 75%, “a rate that is more than three times as fast as the overall growth of its market segment.” CA CEO John Swainson said in a press conference call today that Wily reported approximately $53 million in revenue for 2005. CA expects Wily to contribute approximately $72 million of revenue in CA’s fiscal year 2007 on a ratable basis. CA reported more than $3.5 billion in revenue for fiscal year 2005.