Software AG to buy WebMethods as middleware boils down again

Yet another mid-sized middleware firm is to be acquired after Software AG said it would purchase WebMethods for about $546m.

Software AG said the deal would aid its progress in developing service-oriented architecture (SOA) and business process management (BPM) deployments. The transaction will also have the effect of adding a much larger base of users to Germany-based Software AG’s US organisation.

Additionally, the enlarged scale provides a way for WebMethods to compete with larger firms such as IBM, Tibco and Oracle.

In a recent research note, Neil Macehiter of analyst firm Macehiter Ward-Dutton wrote that, “WebMethods has done a good job of exploiting its heritage in application integration and combining it with facilities for implementing and managing a SOA initiative to offer a comprehensive set of service infrastructure capabilities … Despite these strengths, the challenge for the company is to exploit its current advantage and remain relevant in the face of competitors with far greater resources at their disposal.” Today’s deal may help resolve that issue.

“The only surprise is that another mid-tier is buying them rather than a larger firm but there’s a geographical value to the deal,” said Steve Jones, head of SOA in Capgemini’s global outsourcing operation.

“The question for users is how they merge their roadmaps. It’s the same problem BEA has had and Oracle.”

Neil Ward-Dutton of Macehiter Ward-Dutton said, “Software AG has never cracked the global market despite a strong customer base in middleware. On paper there’s an awful lot of overlap. It’s not like they’re buying technical capabilities they didn’t have.

Software AG has struggled to go beyond its heritage customer base so I’d be surprised if WebMethods products were deprecated. This means the last application infrastructure pure-play remaining is Tibco and I can’t see them being bought.”

On a conference call today, Software AG CEO Karl-Heinz Streibich said the deal would help his from compete in SOA and BPM and achieve its goal of becoming a euro 1bn firm.

WebMethods CEO David Mitchell said the firms shared a culture that is focused on getting customer deployments up and running.