IONA Technologies' purchase today of LogicBlaze -- while directed at the open-source development and business models for SOA -- also further demonstrates the prevailing diversity of SOA consolidation activities. There seem to be as many variations on the SOA consolidation theme nowadays as there are vendors lining up to provide some kind of SOA value.
Part of the consolidation attraction comes from newer SOA players hooking up with older enterprise software players, with their established businesses and still rich veins of revenue to mine. Think of it as a diversification or hedging maneuver between promising SOA startups with a need for cash and a set of existing firms in need of a fast-track to SOA-based capabilities and developers.
And this pairing of revenue-generating established companies with still burgeoning SOA-facing concerns is not limited to mergers and acquisitions. We've seen just in the past few days more innovative partnerships and traditional OEM agreements that point to the same "all-for-one, one-for-all" SOA value attainment trend.
Because SOA adoption is a long, slow and for many companies transformative occupation -- something to take many years and extend across many IT initiatives -- the business of "selling SOA" is not a business for the weak-kneed or the cash-flow lean.
At the same time, established enterprise software vendors recognize that their older businesses and business models will be under growing pressure, that is that growth will slow and revenues will likely decline across the older per-server licensed lines. Over the next three to five years they will need new products and services, many of which must support the long-term trend toward SOA methods and principles, not to mention more integrated use of SaaS -- and accelerating moves toward more communications, infrastructure, storage and desktops as pure services.
The recent proposed acquisition of webMethods by Software AG supports my observation. Among geographic and technical/product symmetry in the deal, we can also see the old, established business (Software AG) providing the cash flow and R&D resources to support the SOA-focused up-and-comer (webMethods). Combined they offset respective weakness, a way to ameliorate risk for each very quickly. The fact that both their publically traded stocks rose on the news supports this mututal-benefit synergy. Many times one of the stocks in such acquisitions (especially after a 25% premium for the acquired party) will drop significantly. That investors recognize such benefits will hasten more deals among the SOA-inclined vendors.
We saw the same type of match up last year with Progress Software, with an established application server/tools business, acquiring SOA starts-ups of Actional, NEON and Sonic -- again, an older established cash flow endows newer SOA business development to the benefit of all the vendors. Ditto with Mercury buying Systinet.
And now, interestingly, we've seen partnerships that create similar synergies. AmberPoint's announcement today, for example, that BEA will now OEM its functionality as part of BEA's AquaLogic SOA offerings. More governance fusion in the market! This governance thing is sure hot. Why buy if an OEM relationship does the trick?
What's more, we also saw a recent partnership between SOA Software and Red Hat/JBoss, such that additional SOA functionality -- not to mention sales and service support -- extend between the two companies. SOA Software has also been an acquirer. These types of activities point to yet another variation of the SOA consolidation theme, and that is the SOA ecology of partners approach. Worried about lock in? Worried your lone or major SOA infrastructure provider (or SI, or both) will price gouge you in three years? The swappable ecology approach can be attractive.
We should therefore expect more of this variety of mash-ups between old software money and the SOA nouveau riche wannabes. Only a handful of vendors -- IBM, TIBCO, Oracle, HP, Microsoft -- will be able to fully devote the resources, provide the geographic reach, offer full product and professional services, and the critical sales reach into their existing accounts to usher the Global 2000 into the age of SOA. And even these titans of early SOA are aggressive in the SOA-oriented acquisitions.
That leaves the second tier of established enterprise IT vendors (from Sun to Sybase to Sterling Commerce, among others) to seek out the SOA component start-ups players on some level. And those SOA startups, perhaps investor-backed, need an exit into the larger means of weathering the SOA transformation slog. The SOA consolidation game is just in the opening innings.
But wait. There's another hitch for these ponies to tie to, and that's open source SOA. Which brings us back to the news of the day, the IONA purchase of LogicBlaze. Open source also played into the partnership between SOA Software and Red Hat/JBoss.
Another way for mid-tier (and top tier) vendors to engage the SOA market is via the use of and support of open source SOA projects and code bases. The unique evolution of open source SOA in tandem with the commercial development of the "picks and shovels" of SOA allows for a fast and effective means to enliven commercial product lines, augment development of SOA resources in general, and partake in the market-penetration and go-to-market efficiencies of a developer-driven, community network, open source approach.
So IONA's purchase is a combination of many of the current aspects of SOA consolidation -- all in one. We have a case of bulking up for SOA value, pairing old money streams with newer SOA functionality, and exploiting open source at what it's so good at. I guess we could call this a cross value matrix approach to SOA M&A.
Meanwhile, another development today adds an interesting twist to the advance of SOA. Rogue Wave Software has announced a new generation of its high-performance service grid approach, with HydraSCA. Did you get the name? They've built the Service Component Architecture (SCA) nomenclature right into their product's name.
You may recall that SCA is newly heading to OASIS, and with its sibling SDO, could create an open standards-driven software infrastructure growth category and ecology -- sort of what the J2EE specifications did for the application server and distributed computing middleware market in the mid- to late-1990s.
Rogue Wave sure thinks there's a segment here. They are also using the SDO acronym in their other newly updated products, too. This use of SCA/SDO in a product names marks with SOA the equivalent of WebLogic having named it's new server in 1997: the Enterprise Java Logic Server. Actually that may have been a neat trick, and beat Sun to the punch on baking Java into a product name by many years. Nahhhh.
Should we expect IBM now to deliver "WebSphereSCA" into the market? Perhaps that would make a better name for the Apache Geronimo server, now that I think on it.
So given all of the above, do you think SOA is all hype? Not a chance.
Disclosure: IONA, HP, and Cape Clear have been or are a sponsors of BriefingsDirect B2B information podcasts, which I produce and host.