For years, Progress Software, the 30-year old veteran of the applications development market, has maintained consistent growth through selling development tools to independent software vendors (ISVs), serving medium-sized companies. But the company seemed reluctant to take on competitors in the more lucrative enterprise in-house development market, despite the apparent strength of its technology.
Consistency is highly valued by investors, though, especially when compared to more volatile technology companies, whose ambitions involve greater risk to shareholders. This goodwill from the financial markets affords Progress the flexibility – and the capital – to fuel acquisitions. And now, Progress is taking full advantage of it.
More an umbrella organisation than a single technology brand, Progress has drawn a number of significant acquisitions into its divisional structure in the past few years, including data connectivity specialist DataDirect in 2003. But its recent acquisitions mark a more aggressive approach. At the back end of 2005, it acquired mainframe integration vendor Neon Systems; in January 2006, the company announced a $32 million deal to buy web service management (WSM) tools provider Actional.
Actional will become a division of Progress’s Sonic Software unit. Although Actional products, such as its service monitoring tool LookingGlass, will not be rebranded as or welded onto Sonic products, (so as not to constrain customers’ choice of SOA tools), the two organisations will share resources.
The acquisition reflects two shifts: one in the service-oriented architecture (SOA) market; and one in Progress’ outlook. The combination of tools that Sonic and Actional can offer constitutes an enterprise-ready standalone SOA toolkit. Whereas the application integration competitors, such as BEA and Tibco, have added SOA-functionality to existing products, Progress Software’s SOA platform comes with no baggage.
"There's a real need for governance and visibility across the SOA infrastructure."
Dave Chappell, Sonic Software
“We’ve seen that SOA projects are moving out of the pilot phase, and are now underpinning mission-critical services,” explains vice president and chief technology evangelist at Sonic Software, Dave Chappell. “There’s a real need for governance and visibility across the SOA infrastructure right now, and that’s what Actional’s tools provide.”
As SOA matures in its usage, there is an opportunity to be an application vendor-independent, SOA platform and management tools vendor – potentially a gateway into the in-house enterprise development teams. And in spite of past form, this is the market Progress has its sights on.
Although the rest of Progress Software’s audience is predominantly in the ISV space, Sonic already mostly sells directly to in-house developers, a lead upon which Progress looks intent on building. Despite the relative independence of Progress’ divisions, there is still plenty of opportunity for cross-selling its multiple products.
Some observers, however, believe that Progress might encounter some difficulties as it tries to present a united SOA front. “Whilst Progress may be getting good value for money, its not going to come without some effort,” says Neil Macehiter of analyst firm Macehiter Ward-Dutton.
“Although the integration of [Actional’s] management and security capabilities with the Sonic ESB should be comparatively straightforward, significant effort is going to be required to provide customers with a common policy/configuration framework.”
Integration issues or not, Chappell believes that the deal is the first of many consolidation moves in the SOA market – the combination of Sonic and Actional puts pressure on other vendors to broaden their offerings. “This deal is going to change the SOA game,” he says.