SOA consolidation ramps up with Software AG's purchase of webMethods

UPDATE: Some interesting ruminations on the possibility of a counter-bid to Software AG's offer. 

German IT software infrastructure vendor Software AG is buying webMethods for nearly $550 million in cash, pulling together a larger solution set but perhaps more importantly straddling the Atlantic to serve both the North American and EU markets in ways many U.S. SOA components firms alone cannot.
WebMethods has itself recently just absorbed its own string of acquisitions, including governance provider Infravio earlier this year. The swift consolidation of webMethods around SOA value (and timely addition of of SOA governance capabilities), and subsequent acqusition by a large and established IT vendor like Software AG, is highly reminiscent of the HP acquisition of Mercury not long after Mercury scooped up governance market leader Systinet last year.
The acquisition says a few things, that:

• Bigger is better in terms of SOA solutions provider survival, regardless of the chatter about the virtues of best-of-breed product approaches.

• Best-of-breed providers that build or buy a substantial piece of the SOA function and support equation will be eagerly courted by larger companies (Software AG paid a 25% premium for webMethods) in a hurry to be become top-tier SOA providers.

• Governance and management of SOA will become the tail that wags the dog of general IT management, and perhaps even the way businesses are managed, controlled and directed in total.

• SOA is not a fad or a marketing hype blip but the future of IT, and on a global scale.

While this acquisition buttresses some SOA trends and industry gravitas suppositions, it does also offer some pause for consideration. Cross-Atlantic mergers are a tricky business (can you say, Chrysler?) in any business. webMethods, based in Fairfax, Va., is itself a work in progress. The challenges of making these companies, with Software AG in Darmstadt, Germany, work together -- more than just a combined sales channel and mutual market penetration value -- will be substantial. German and U.S. IT vendors are culturally very different.
Indeed, whether this merger works in terms of product, technology, and solutions -- not to mention governance and management -- will be a key indicator of whether SOA doctrines and principles actually work, or at least are ready for prime time. Theoretically, SOA-based vendors such as Software AG and webMethods should be able to use SOA to composite their wares in such a way as to combine, extend and multiply their functions and value -- to reuse and adjust the IT service components with agility for business goals.
The companies say their combination will offer a SOA and BPM product portfolio with "unmatched depth and breadth." The Software AG and webMethods portfolio spans SOA governance and enablement, BPM and BAM, application integration and legacy modernization capabilities. Such an arsenal should therefore allow these vendors to swiftly and deeply integrate and manage their own technologies and solutions, and to manage their own assimilation of people, process, and ultimately competency perceptions. The risk of lack of success in this merger could therefore be a blemish on SOA writ large.
However, if these companies can eat their own dog food, leverage their own SOA visions, to become a petri dish of cultivating SOA in action, they could take such a hopeful message to the bank: "Here's our best SOA use-case scenario, us." One of the lessons of the Oracle acquisitions of PeopleSoft/JD Edwards and Seibel was that the technology issues seemed less daunting that originally thought, given the advances of XML-based interoperability, Web services standards, and common data services approaches.
We'll certainly be looking to this merger as a validation of the SOA principles, both in terms of what it takes to enter and hold large markets with a critical mass of functionality -- but more importantly on whether SOA principles and advanced governance can work at scale in the field among such serious challenges as extra-continental business mash-ups.
SOA vendor mergers must pass a higher litmus test -- if they can't combine themselves, how can they expect their customers to use their wares to better combine their own IT assets and processes?