The traditional appeal of BPM was that it was a business stakeholder-friendly approach to developing solutions that didn't rely on IT programmatic logic. The mythology around BPM pure-plays was that these were business user-, not IT-, driven software buys. [Disclosure: Progress Software is a sponsor of BriefingsDirect podcasts.]
In actuality, they simply used a different language or notation: process models with organizational and workflow-oriented semantics as opposed to programmatic execution language. That stood up only as long as you used BPM to model your processes, not automate them.Consequently, it is not simply the usual issues of vendor size and viability that are driving IT infrastructure and stack vendors to buy up BPM pure plays. It is that, but more importantly, if you want your BPM tool to become more than documentware or shelfware, you need a solution with a real runtime.
And that means you need IT front and center, and the stack people right behind it. Even with emergence of BPMN 2.0, which adds support for executables, the cold hard facts are that anytime, anything executes in software, IT must be front and center. So much for bypassing IT.Progress's $49 million deal, which closes right away, is a great exit strategy for Savvion. The company, although profitable, has grown very slowly over its 15 years. Even assuming the offer was at a 1.5x multiple, Savvion's extremely low seven-figure business is not exactly something that a large global enterprise could gain confidence in.
Savvion was in a challenging segment: A tiny player contending for enterprise, not departmental, BPM engagements. If you are a large enterprise, would you stake your enterprise BPM strategy on a slow-growing players whose revenues are barely north of $10 million? It wasn't a question of whether, but when Savvion would be acquired.
[Editor's note: Savvion is bringing a new geographical footprint to Progress. Savvion is well positioned in India, where Progress is eager to tread. And Progress is prominent in Europe, where the Savvion-broadened portfolio will sell better than Savvion could alone. ... Dana Gardner.]
Of course that leads us to the question as to why Progress couldn't get its hands on Savvion in time to profit from Savvion's year-end deals. It certainly would have been more accretive to Progress' bottom line had they completed this deal three months ago (long enough not to disrupt the end of year sales pipeline). Nonetheless, Savvion adds a key missing piece for Progress's Apama events processing strategy (you can read Progress/Apama CTO John Bates's rationale here). There is a symbiotic relationship between event processing and business process execution; you can have events trigger business processes or vice versa.
There is some alignment with the vertical industry templates that both have been developing, especially for financial services and telcos, which are the core bastions (along with logistics) for EP. And with the Sonic service bus, Progress has a pipeline for ferrying events.
[Editor's note: The combination of Savvion BPM and Progress CEP help bring the vision of operational responsiveness, Progress's value theme of late, out from the developer and IT engineer purview (where it will be even stronger) and gets it far closer to the actual business outcomes movers and shakers.
The Savvion buy also nudges Progress closer to an integrated business intelligence (BI) capability. It will be curious to see if Progress builds, buys or partners it's way of adding more BI capabilities into it's fast-expanding value mix. ... Dana Gardner.] In the long run, there could also be a legacy renewal play by using the Savvion technology to expose functionality for Progress OpenEdge or DataDirect customers, but wisely, that is now a back burner item for Progress which is not the size of IBM or Oracle, and therefore needs to focus its resources.
Although Progress does not call itself a stack player, it is evolving de facto stacks in capital markets, telcos, and logistics. Event processing, a.k.a., Complex Event Processing (CEP, a forbidding label) or Business Events Processing (a friendlier label that actually doesn't mean much) is still an early adopter market. In essence, this market fulfills a niche where events are not human detectable and require some form of logic to identify and then act upon.
The market itself is not new; capital markets have developed homegrown event processing algorithms for years. What's new (as in, what's new in the last decade) is that this market has started to become productized. More recently, SQL-based approaches have emerged to spread high-end event processing to a larger audience. Acquiring Savvion ups the stakes with TIBCO Software, which also has a similar pairing of technologies in its portfolio. [Disclosure: TIBCO is a sponsor of BriefingsDirect podcasts.]
Given ongoing consolidation, that leaves Active Endpoints, Pegasystems, Appian, plus several open source niche pure plays still standing. [Disclsoure: Active Endpoints is a sponsor of BriefingsDirect podcasts.]
This guest post comes courtesy of Tony Baer's OnStrategies blog. Tony is a senior analyst at Ovum.
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