Almost business as usual: Software AG remains upbeat despite global economic crisis

Software AG executives presented a positive message at the company's Innovation World 2008 user conference held in Miami in early November: third-quarter operating profits up 50 percent, reflecting in part the successful integration of Software AG's $546-million webMethods acquisition in summer 2007.


Software AG executives presented a positive message at the company's Innovation World 2008 user conference held in Miami in early November: third-quarter operating profits up 50 percent, reflecting in part the successful integration of Software AG's $546-million webMethods acquisition in summer 2007. Execs also say the company is well-positioned for growth despite the global economic downturn.

The vendor's immediate goal is helping its 4,000 customers in 70 countries weather the economic storm by exploiting the combo-value of Software AG's business process management (BPM) suite and service-oriented architecture (SOA) tools to improve business performance—without having to invest in new underlying business applications.

A German company, Software AG 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 manufacturers' need to revise 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 more positive than we had thought.”

According to L. Frank Kenney, research director of application strategy & governance for Stamford, Conn.-based Gartner , “the webMethods acquisition was a good move—and also gutsy. Software AG was fortunate to be in the right place at the right time. If you look at the combination of 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 grow.”

"The webMethods acquisition was a lucky punch for us.…All the reasons why we bought them turned out more positive than we had thought."

—Karl-Heinz Streibich
, CEO of Software AG

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, also 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 are examples of satisfied Software AG customers. Both made presentations at the user conference.

IS&GS is comprised of 10 companies doing $10 billion annually. It has 240 IT systems, and is involved in more than 4,000 ongoing projects. IS&GS is using Software AG tools to construct a 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 uses applications from SAP, Oracle, Microsoft, Manugistics, RedPrairie, and others. webMethods solutions are being used now by Avnet to architect SOA-enabled integration and 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 know all our processes are efficient and operational—and make them 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. “The platform is highly scalable, secure, and reliable.”

Global companies “aren't 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.

Gentry adds that 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 aren't just about new stuff,” Gentry concludes. “The mainframe as an SOA platform is a viable piece of the Software AG strategy.”

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