Software AG carves new BPM space

IDS Scheer acquisition gives German software vendor size and tools to lead market combining business process automation and measurement, say company execs.
Written by Eileen Yu, Senior Contributing Editor

FRANKFURT--German software vendor Software AG believes its recent acquisition of IDS Scheer has carved a new market segment that marries business process automation and measurement, a combination that it says will differentiate the company from its competitors.

First announced in July 2009, the IDS Scheer acquisition is estimated to be worth US$320 million, though regulatory review is still underway.

Once approved, the merger will allow Software AG to offer products that not only help enterprise customers to digitize and automate business processes, but also provide the tools to measure the effectiveness of this automation, said Peter Kuerpick, chief product officer at Software AG.

Speaking to journalists here at the company's annual international press meet, Kuerpick said organizations need key performance indicators (KPIs) in place to monitor and measure the effectiveness of their BPM implementation, and determine if the automation has led to faster delivery and higher productivity. These KPIs will also enable businesses to identify processes that need to be further tweaked to optimize the benefits of automation, he added.

"You can only manage what you measure," he said.

Software AG CEO Karl-Heinz Streibich underscored the importance of digitization in enabling "a new paradigm of measurement". Just as x-ray machines proved a breakthrough in healthcare, providing new levels of measuring healthcare data, Streibich said the digitization of information--in the form of pixels and XML (Extensible Markup Language)--will facilitate the availability of information anytime, anywhere.

He noted that while applications led the digitization of business logic, BPM is the digitization of human workflow. Digitization, he said, "enables total business measurement".

The IDS Scheer acquisition, Kuerpick said, will provide Software AG the ability to analyze and measure business process automation, and pass that data on to application vendors so they can make the necessary tweaks to close any loopholes for the enterprise customer. This means Software AG could end up working with its competitors in the middleware software market such as SAP and Oracle, he said.

This, he added, gives customers the freedom to choose which middleware suppliers they want to work with--though, of course, Software AG's own middleware products have been optimized for its own BPM portfolio, he said.

Wolfram Jost, a board member at IDS Scheer, explained: "We can now take all these business events, pass it over to the business modeling or monitoring tool under IDS Scheer and evaluate how the business processes are performing.

"So at the end of the day, we're talking about managing and measuring business information, anytime, anywhere. You want to automate, measure and then act [to correct the bottlenecks]."

While these capabilities are available in the market, they are offered as individual products by separate market players. Jost said Software AG will be the first in the market to have this combined ability, offering a suite of products that can help customers to first integrate applications and automate business processes, then govern and measure the impact of this automation.

With the IDS Scheer merger, he said, Software AG now has the opportunity to provide a new architecture for BPM that the company coins, business process excellence--putting it ahead of middleware competitors that include Oracle's Fusion and IBM's WebSphere.

Jost added that the first integrated product from the merger will likely be available in 2010.

Challenged by BPM, SOA integration
But while the acquisition is a good move on Software AG's part, it remains to be seen if the German software vendor will be able to smoothly tie the various components together.

Patrick Chan, chief technology advisor for emerging technologies research at IDC Asia-Pacific, said the WebMethods acquisition in 2007 gave Software AG a sweet spot in the SOA space, and IDS Scheer will also prove valuable in extending the company's BPM capabilities.

Chan said in an e-mail to ZDNet Asia the merger will be "a good fit" and "a plus" for Software AG, and should benefit IDS Scheer customers as offerings from both companies will be leveraged and integrated. The "bigger solution stack" will also allow Software AG to compete with the big boys, he said.

"[But], much work for end-users is needed currently to integrate BPM and SOA stacks, and IDS Scheer has a large portion of their implementation business based out of SAP," he said. "Much work is still needed to harmonize and integrate these layers in a standardized manner and to bridge the cloud computing world of assets and services."

"Software AG will have to beef up their professional services and advisory team in the region to engage end-users much earlier in their planning cycle and to inculcate the solution mindset to win the game," he added.

IDS Scheer's presence is largely focused in Europe with large SAP customers accounting for the bulk of its installed base, using the company's ARIS language to model their SAP applications.

Architecture of Integrated Information Systems, or ARIS, is a framework that encompasses the design, deployment and management of business processes, and includes a methodology for business process modeling and management.

Enterprises in the Asia-Pacific region are starting to streamline and automate standardized business processes via BPM suites, said Chan. This is a significant change compared to five years ago when BPM was "all about drawing diagrams on papers and translating and mapping them later to digital processes", he said.

However, the analyst noted, BPM and SOA vendors face a challenge in helping their customers build a platform that integrates both internal and external IT services, and that is aligned to a BPM architecture that is agile regardless of whether it operates in an internal or cloud environment.

As the momentum around cloud continues to build, IT departments will need to further evaluate their SOA and BPM strategies to incorporate newer technologies such as virtualization and security control, into their existing architecture.

In IT, size matters
Jost believes Software AG's size and financial muscle will also prove to be a key competitive differentiator.

The company is currently Europe's fourth largest software vendor, in terms of revenue, which clocked US$1 billion in 2008.

Jost said: "In the IT industry, size matters. For example, we all know that Tibco is for sale. Why? Because I think they won't be able to survive with their current size. So smaller players need to be niche and have very specialized focus areas to survive in the market.

"It's not a question of technology but of global reach, size, customer base and investment power."

Asked if cloud computing will add complexity to how BPM is measured, since a company's business processes then may operate in a mixed environment of on-site and cloud-based applications, Jost told ZDNet Asia BPM monitoring tools should be built to work regardless of the delivery platform.

"A business process is still a business process, whether it runs in a private or public cloud. [Our products] will also be able to measure processes and KPIs of apps running on cloud so, for us, it's totally independent of how this process is implemented," he said.

Cloud, he said, is simply another way of executing business processes, he added.

Eileen Yu of ZDNet Asia reported from Software AG's international press day in Frankfurt, Germany.

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