IBM agrees to buy software testing firm Telelogic

$745m deal will give Big Blue more developer muscle

IBM has agreed a deal to buy Telelogic in a $745m deal that gives it access to application lifecycle management tools that span the testing, building and governing of software development projects.

Danny Sabbah, IBM Rational general manager, said the move would boost its presence in developing embedded systems for automotive, aerospace and other sectors as those markets demand more complex product designs. Telelogic will operate as part of the Rational developer family, he added.

In a statement, Telelogic CEO Anders Lidbeck said the deal would “provide clients with enhanced capabilities to develop and deploy complex systems on a global basis [through the ability to] leverage a broader set of capabilities".

IBM’s capture of Telelogic will have a huge effect on the software testing world, experts said.

“For both Telelogic and IBM customers [the combination] should ultimately be viewed as offering great potential,” wrote Ovum analyst Bola Rotibi in a research note.

“IBM Rational's testing facilities … have for sometime taken a back seat to the advance facilities offered by Compuware, Mercury and even Borland. Telelogic further strengthens the embedded capabilities [and] provides the boost that IBM Rational guys need to rework their wider testing portfolio. Watch out HP (Mercury), Compuware and Borland.”

Rotibi added that IBM would gain in requirements management where Telelogic’s Doors product is strong, contrasting with IBM’s Rational RequistePro, which has “languished untouched and with no clear strategy or vision of direction”.

However, she cautioned that IBM took a long time to create a roadmap after its acquisition of Rational.

IBM’s purchase of Telelogic also provides it with a greater say in IT governance, the booming sector that aims to help align business and IT processes, for example by visualising integrations and dependencies. Telelogic gained a foothold in IT governance with the acquisition of Popkin Software and its System Architect line in 2005. IBM’s Sabbah said the tools would be “complementary” to its plans.

James Rogers, chief marketing officer of another IT governance firm, Troux Technologies, said, “Popkin was a very strong leader but we have seen Telelgoic moving it towards application lifecycle management. But Doors is the gorilla in requirements management and Telelogic gives IBM access to some vertical markets.”

More broadly, Sabbah noted that IBM “is increasingly relying on software as its engine of growth”, adding that it expects software to generate half of its total profits in three years. The giant has spent about $16bn on over 50 acquisitions over the last five years and Sabbah said that aggressive strategy will continue, including deals that extend “beyond the traditional IT space”.