Software AG is about to complete its acquisition of IDS Scheer, but CEO Karl Heinz Streibich tells me that his company has its sights set on something bigger than business process management... "The enterprise process market is much, much bigger than the ERP market, and it's just at the beginning... "
Karl Heinz Streibich, the CEO of Software AG, is in New York this week, checking in on the North American sphere of the company's growing global empire. Software AG acquired WebMethods back in 2007, and it's about to complete its acquisition of IDS Scheer, which was announced in July. The deal that will increase the company's revenue and customer count considerably. IDS Scheer has been a pioneer in business process management, but Streibich told me yesterday that Software AG has its sights set on a bigger market:
"Let's not call it the 'business process management' market. Let's call it the enterprise process market. The enterprise process market is much, much bigger than the ERP market, and it's just at the beginning. Customers are migrating away from application silos or they are adding enterprise processes to those application silos. We're going to focus on enterprise process excellence, and that requires BPM, just as one part, it requires the [process models] that companies define, and it requires middleware to integrate everything together."
The enterprise process market will evolve over the next ten years, Streibich says, adding that it's all about implementing enterprisewide business processes. With WebMethods, Software AG already had the BPM and middleware pieces; IDS Scheer fills in the process modeling gap with its Aris suite. Last year Software AG, the IT infrastructure player, had €720 million in revenue (roughly $1 billion) while IDS Scheer's, the BPM tools provider, had €400 million ($560 million). Despite Scheer's lower revenue figure it's much larger than most of the so-called pure-play BPM vendors. It has lots of customers, too: more than 7,500 worldwide compared with Software AG's 4,000-plus.
For many years IDS Scheer thrived on its partnership with SAP, but with that vendor now delivering its own NetWeaver BPM suite, I asked Streibich if that would 'sap' demand for Aris products. "In theory, yes; in reality, not at all," he said. "NetWeaver is only a 5-percent solution compared to what we have with our middleware stack. For that reason, SAP with NetWeaver is not a competitor to us at all."
With the WebMethods and IDS Scheer deals completed, Software AG will derive 55 percent to 60 percent of its revenue from the "enterprise process management" market (should we establish the EPM three-letter acronym?), versus 35 to 40 percent from the Adabas (database) and Natural (development) businesses.
Streibich didn't rule out additional acquisitions, saying "you have to have an end-to-end stack… things are not stuck with one technology or product. When you look at companies like PegaSystems, for instance, they have also extended their technology base, step-by-step, beyond their rules engine… The companies that embrace everything required to support enterprise process solutions will prevail."
I'm not sure whether to interpret that as just a (rare) compliment between vendors, or perhaps it reveals that due diligence is in progress for yet another acquisition.Software AG is about to complete its acquisition of IDS Scheer, but CEO Karl Heinz Streibich tells me that his company has its sights set on something bigger than business process management... "The enterprise process market is much, much bigger than the ERP market, and it's just at the beginning... "
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