IBM Softek Acquisition Plays to SaaS 2.0 and IT Spending Trends - Saugatuck Technology
IBM Softek Acquisition Plays to SaaS 2.0 and IT Spending Trends
What Is Happening? IBM announced on January 29, 2007 that it will buy privately held Softek -- a former Amdahl/Fujitsu subsidiary -- for an undisclosed amount and intends to complete the deal by the end of March.
Softek's Transparent Data Migration Facility (TDMF) makes data available while moving it between heterogeneous storage systems. IBM plans to integrate Softek's data mobility software with IBM storage and data managed services, as well as selling it as a product. The companies have been partners since 1996. Softek also has OEM deals with EMC, Hewlett-Packard, and Sun Microsystems (via StorageTek).
Why Is This Happening? Saugatuck sees several factors driving this important move by IBM. First, IBM sees new combinations of software and services as a key driver of revenue growth, and is pursuing this in part through what it calls "service products" - standardized, pre-integrated software and services suitable for multiple user situations.
Second, this strategy, and this particular acquisition, plays well into emerging software-as-a-service (SaaS) markets as profiled in previous Saugatuck Research Alerts, Perspectives, and Reports. It reflects IBM's realization that SaaS can be defined -- and deliver increasing revenue streams -- in ways other than simply business applications software delivered and used on a demand basis. Saugatuck has framed this emerging set of offerings and technologies as "SaaS 2.0," and profiled key user and vendor strategies in our research throughout 2006, beginning with our initial research report, SaaS 2.0: Software-as-service as Next-gen Business Platform (SSR-239, 26Apr06).
Third, IBM is positioning itself as a key strategic provider for top user IT spending priorities at least through 2007. As noted in recent Saugatuck Research Alerts, (IT Insights & Trends: Spending to Focus on Integration, Efficiency and Effectiveness through 2007, RA-307, 10Jan07), the top IT spending priorities for user executives through 2007 are those that leverage data across multiple systems, platforms and applications (see Note 1 in sidebar). Improved data migration ability -- within and across storage systems as well as across other systems and applications -- is a key enabler of the user goals of IT and business innovation and improvement, accomplished through integration and enhancements.
Market Impact: IBM -- as it did with such previous acquisitions as Ascential (RA-155: IBM Essentially Cuts SOA Competition, RA-155, 16Mar05) -- will now control another key (practically de facto standard) tool/technology used by other key IT vendors, and which is in increasing demand by users. IBM therefore gets closer to other leading storage vendors -- and their customers, and helps those customers remove barriers to migration off existing storage platforms. Customers will certainly take advantage of this, and EMC, HP and Sun -- and others -- need to take creative steps to prevent this (from pricing changes to customer satisfaction improvements to developing and offering competitive storage management and virtualization software + service offerings).
Finally, vendors need to continue to pay attention to user IT and business spending priorities -- and the technology and business behind them. As can be seen in the simple chart in Note 1, importance can shift significantly over relatively short periods of time. While we don't suggest (or condone) chasing trends, awareness of the business importance of IT investments, and the resulting IT spending prioritization, should be a key factor in vendor technology and services strategy.
Note 1:
Top IT Spending Trends
Item
2005
2006
2007
Bus. Intelligence
5
3
1
ERP SW/Upgrades
3
7
2
Data Warehousing
10
13
3
New Custom Apps
11
10
4
Portal/Collab SW
7
11
5
Security SW/Svcs
1
2
6
Network Upgrades
-
-
7
Application Integ.
2
1
8
DBMS SW/Upgrades
8
12
9
Bus. Process Mgmt.
-
-
10
SOA
13
5
11
Source for 2005 and 2006: Two separate Saugatuck Technology surveys, each with over 200 senior business and IT executives, from mid-to-large size enterprises (predominantly US-based), Nov. '04 and '05.
Source for 2007: see Sourcing at the bottom of Figure 1.
The author invites your comments and inquiries on this Research Alert. Please contact Bruce Guptill at bruce.guptill@saugatech.com
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Gary E. Smith
SAAS Network Architect
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