A stealth acquisition by Computer Associates confirms that HP's recent purchase of a web services management vendor is part of a trend.
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|CA and HP have beefed up their SOA management capabilities by acquiring technologies and skills from web services startups:|
- CA acquired technology and staff of Boston-based Adjoin
- HP bought Talking Blocks for similar SOA capabilities
- Neither deal was expected by competitors
- Lack of venture funding makes startups more amenable to acquisition
- Work on industry standards continues unperturbed
Glossary terms: services management, SOA, systems management, WSDM, W3C, lookup tool
CA last week confirmed to Loosely Coupled that it has made a "technology acquisition" involving Boston-based web services management startup Adjoin Solutions. The terse statement gave no further details of the deal, but Adjoin's website is no longer live, and key members of Adjoin's staff joined CA's payroll as early as July this year.
The timing of the staff transfers suggest that CA completed the deal at least two full months ahead of HP's acquisition of Talking Blocks, announced September 3rd, which is expected to close by the end of the month. Similarities between the technologies acquired in the two deals suggest that both vendors are following parallel tracks in their web services management strategies.
Privately-held Adjoin Solutions launched its SOMMA (Service Oriented Management and Monitoring Architecture) product family in January this year. The SOMMA software was designed to supplement existing systems management software from companies like CA, HP or IBM, by monitoring web services messages as they pass between participants within a service oriented architecture (SOA).
This ability to monitor XML messages as they pass within a services infrastructure is a common feature among web services management suites, but is typically absent from traditional systems management platforms, which have relied on embedding software agents in each system component. Buying up ready-made technology from specialist startups is the quickest way for the established vendors to plug that gap in their offering.
HP's primary motive for buying Talking Blocks was also to acquire this specific capability, according to Al Smith, CTO of HP's Web Services Management Organization. The number one attraction, he told Loosely Coupled
last week, was to acquire an SOA product with built-in mediation capability. Next in importance was bringing on board the Talking Blocks in-house team.
HP recently outlined a Web Services Management Framework developed with eight industry leaders including Sun, Oracle, Tibco, BEA Systems and webMethods which it submitted last month to e-business standards body OASIS. The Talking Blocks SOA technology now provides the backbone for that management framework, which forms part of HP's wider Adaptive Enterprise strategy, designed to help companies understand the business implications of IT performance. HP plans to release an integrated version of the Talking Blocks engine in its OpenView systems management platform by the end of the year.
The acquisitions leave smaller web services specialists contemplating the impact on their futures in two important respects:
- Are larger vendors more of a competitive threat now that they have started acquiring SOA technologies?
- Will there be more acquisitions, and if so, who will the deals involve?
The initial reaction on the question of competition is broadly welcoming. The acquisitions are seen as legitimizing web services management as a meaningful, necessary component of today's IT landscape, thus aiding the smaller vendors' sales pitches without posing an immediate competitive threat.
There is less certainty in respect to future acquisitions. "Is there going to be consolidation now? I don't know," says Rajiv Gupta, founder of Confluent Software. "I don't think so, but I don't know." He pointed out that the large number of partnership discussions taking place in the sector implies that there's an alternative way for the market to develop that falls short of outright acquisition.
But Mark Potts, CTO of Talking Blocks, revealed to Loosely Coupled that HP's acquisition of his company was the direct result of partnership discussions. The company had first contacted HP in February to discuss possible partnerships around the larger vendor's Adaptive Enterprise strategy, and over time "it became obvious that acquisition was the best strategy," he says. Talking Blocks had already made the decision to focus on one or two close partnerships, replacing its previous vendor-agnostic approach, and had also had partnership discussions with the likes of IBM, CA, BEA and Microsoft.
"We never had acquisition talks with anyone openly," says Potts. "It's one of those situations where everyone holds their cards close to their chests."
There was certainly no perception among other players that HP had been actively shopping for an acquisition. "[HP] had not done due diligence relative to the best technology out there", says James Phillips, chief strategist and senior vice-president of products and marketing at Actional, one of the larger web services management specialists, implying HP hadn't made contact with Actional and others like it.
Phillips believes the acquisition was opportunistic. Talking Blocks shareholders, he argued, were looking for an exit: the company had aligned with IBM, but perhaps because there was no buyer there, had turned elsewhere. He added that Talking Blocks' visibility has been comparatively low in recent months, pointing out, for example, that its website had not been updated for some time.
Talking Blocks' Potts agreed the company had scaled back its marketing this year, but claimed the reason had been that magazines and trade shows had not generated sufficient serious leads, while the best prospects had come from inbound contacts. HP's Smith, meanwhile, downplayed the significance of the Talking Blocks customer base in its decision to acquire the company. Its users would be complementary to HP's own customer base, he said, in as much as their purchase of web services management capability had demonstrated a commitment to building their own "home-grown" adaptive enterprise.
It seems unlikely, either, that Adjoin brought many customers to CA. It had planned to start shipping a basic version of its software in the second quarter this year, but never got as far as launching a marketing push. The company had been privately funded, mainly by its co-founders, led by former Lotus and IBM executive John Landry, who had been chairman, and by CEO Dennis Kelly, who first encountered a need for services management software as CEO of AnyDay.com, the Internet calendaring company acquired by Palm in mid-2000 for $80 million in stock.
Adjoin had hoped to raise venture funding by mid-year, but instead it appears that CA came knocking and the company's founders answered the call. Perhaps that's opportunism; perhaps it's a reflection of the current funding climate, which allows companies like HP and CA to pick up sought-after technologies and skills without having to get into costly bidding battles.
Meanwhile, Talking Blocks last week acted to complete some unfinished work begun in partnership with IBM and CA, long before it first received overtures from HP. Mark Potts has been the company's representative on the Web Services Distributed Management (WSDM) technical committee of OASIS, which is attempting to define standards that allow for true interoperability between different management applications. When HP had presented its management framework to OASIS earlier this summer, Talking Blocks had caused a stir by announcing it was drafting a rival submission called WS-Manageability in concert with HP's rivals.
In the aftermath of HP's acquisition announcement a month later, it became clear that Talking Blocks had jumped ship from the IBM/CA camp to join with HP. But it has continued to work with its former partners, and last week the trio formally completed their submission of WS-Manageability to WSDM, with just a few weeks to spare before the takeover formalities close. Pott points out that there had never been a conscious choice to join one camp or the other, but rather that IBM, CA and Talking Blocks had simply started working together to further the standards work.
HP's Smith endorses that view, stating that while HP had been involved as an observer in the WSDM committee for some time, it was only in the last year that it had been a proactive force, while IBM and Talking Blocks had been driving work forward in the body for longer. Either way, it's conceivable that by switching sides, the Talking Blocks technical team could now be in a position to help mediate agreement on a final joint standard.
In any case, standards committees are used to losing and gaining representatives as a result of the ebb-and-flow of commercial life. On July 22nd, a short message headed 'Introduction' was posted to the mailing list for the W3C's Web Services Architecture group. "Hello my name is Leo Parker," the message read, "and I will be representing Computer Associates in this working group replacing Michael Hui. I am a senior architect in the office of CTO. I was previously senior VP of product development for Adjoin Solutions, inc., a web services management start up."
What the message didn't say, of course, was that Parker's change of job had been due to an unheralded "technology acquisition" by his new employer.
More on this topic
Standards efforts on web services management ...
HP, IBM and CA have ambitious plans ...
HP's purchase of Talking Blocks, announced today ...
Official home page of WSDM
Home page for HP's systems management suite.
Home page for CA's management solutions.