What now for the remaining integration players?

Now that CapeClear has been scooped up by Workday, what of the handful of credible independent players left in the integration and business process management market? Fellow Irregular and investment fund manager Jason Wood had this to say:

Go back and look at how TIBCO was talking up Matrix eight quarters ago, and then slowly but surely as it came time to deliver they started backing off of it, until the point when it wasn't even mentioned on the last few calls. The Spotfire acquisition was an egregious attempt to mask slowing organic growth; yet there are absolutely zero synergies that I can discern.

Vivek [Ranadive, CEO TIBCO] has long stood as someone unwilling to sell his company' but methinks that's changed now that he sees the writing on the wall. The question becomes, who is the white knight? You wouldn't be buying TIBCO for technological supremacy or a new market opportunity. I think the only real value is acquiring their installed base and is that enough to justify a nice premium to the current stock price? Maybe, but not a bet I'm making.

As to Progress they've held up remarkably well in a toxic U.S. tech tape, and somehow defied critics in the process. The idea of rolling up a bunch of disparate SOA and integration tools into one corporate umbrella sounds like a disaster, but Progess has pulled it off, at least for now.

Devastating stuff you might think in a market where shareholder value is measured by the degree to which your company is likely acquisition fodder. Even so, TIBCO continues to win marquee customers like Carphone Warehouse and Calor while expanding existing business with Air France-KLM, UBS and Delta. It's last reported saw record sales. Next week TIBCO will announce technical updates to its suite of products.  In EMEA, TIBCO's marketing team is extremely busy. Progress is doing very nicely positioning Apama as a leading edge event processing play in financial services.

I spoke with Giles Nelson, the man who originally developed the Apama engine at Progress. He said: "We view CapeClear and BEA's being acquired as good for us because it gives us an opportunity to become a more distinctive choice. CapeClear gives Workday much greater reach while removing from market a cmopany that was looking increasingly isolated. In the BEA case, you've got to ask whether Oracle is getting best value given the degree of overlap and relative underperformance of Aqualogic."

The rhetoric is understandable but what about others. Phil Wainewright says:

I would class Progress more as a complete stack provider with a future as a platform provider to SaaS providers -- in competition with Microsoft, Oracle, IBM, Sun and open source alternatives. Though expect some consolidation in that field, too.

More vulnerable are the vendors who are middleware only - TIBCO and IONA in particular but lets throw in another couple names for discussion. What about Software AG? I know it has other strings to its bow but it's very much an infrastructure company lacking a complete platform story. HP is more systems management, monitoring and governance than integration but is that something that can remain independent or does it get sucked up into the stack too?

Although TIBCO will raise issue with Phil on his positioning, the discussion raises an interesting question around best in class versus one stop shop buying behavior. This is a perennial topic of conversation with no clear resolution. If you prefer one throat to choke then you buy into Microsoft, IBM, SAP and Oracle (MISO.) Doing so inevitably leads to compromises in consolidating markets. Once acquired, vendors lose the innovative edge which kept them vibrant. That's OK if your business is relatively slow moving or stable and does not require a constant diet of innovation. But, as seems to be the case today, integration is not going away, then an independent company that continues to develop would be an apparently obvious and logical choice. Whether that's a viable proposition in a market where the financial engineers smell blood is another matter.

But then Vinnie Mirchandani asks:

What is wrong in companies staying independent? I have yet to see a compelling value prop from CA and IBM and Oracle and HP from a buyer perspective after 100 acquisitions between them over the 15 years.

That's worth bearing in mind when thinking about the next integration deal you might wish to do. I'd rather have a healthy, vibrant and independent market where choice helps keep the remaining software application market competitive than see the companies mentioned succumb to the temptation of a premium on their current stock price.