The 120-person Austin, Texas and Mumbai, India-based company produces vertical industry frameworks for building composite applications based on web services.

Webify currently offers composite SOA frameworks for delivering composite services in insurance and healthcare payments, and is currently working on new frameworks for banking, telecom, and later on, government. IBM said that ultimately, it intends to fill out these offerings in more verticals.

Webify’s products include a core middle tier fabric that provides a visual composition tool for assembling and managing domain-specific metadata and policies; a subscriber manager that creates, controls, and manages services packages; a services broker for dynamically assembling services; plus several management pieces that monitor performance, provide policy approval workflows, and provide business service repositories.

Atop the fabric are the actual composed services. For instance, in insurance, they include writing new business, managing the policy and claims lifecycles, channel or distribution management, and agency partner services.

According to CEO Manoj Saxena, who will remain with acquired unit, Webify’s offerings come in during the third phase of service enablement, where customers begin to compose and reuse the services that they have already exposed or built (the first couple phases are pilots and building services). It assumes that customers have already, not only gotten their feet wet, but are fully diving into service enabling their applications or business processes.

The company will become part of the WebSphere software brand, adding a vertical industry semantic layer that sits atop IBM’s existing SOA offerings.

The acquisition brings together IBM with a startup that it’s already pretty familiar with. Webify has been an active IBM business partner for three years, and according Saxena, IBM was responsible for introducing them to roughly two thirds of their existing customer base.

And it views the Webify offerings as providing ample fodder for its Global Services business. And Webify’s offerings have already been optimized for WebSphere.

A key issue is whether the Webify acquisition brings IBM into the applications space that it has deliberately avoided since divesting MAPICS and other applications over the past decade or more.

We don’t look at it as getting into the business applications market, responded Robert LeBlanc, who heads the WebSphere business for IBM. He said that the Webify offerings are not applications themselves because they require exposing and integrating services exposed from existing applications.

We deliver bits and pieces which the customer or the integrator must put together, LeBlanc added, conceding, We’ve moved a bit up the food chain.

Nonetheless, whether the Webify offerings constitute applications are in the eye of the beholder. SAP and Oracle may offer fuller-defined processes in their packages, but assembly and integration are still required there as well.

Besides, with Oracle Fusion and SAP NetWeaver, both are on the road to offering future versions as more loosely coupled composite services.

Although the vast majority of Webify’s engagements have been with IBM, and in many cases, IBM Global Services, Saxena claims it will still be able to maintain existing relationships with BearingPoint and Accenture, which are at a minority of its sites.

And, while the acquired vertical industry fabrics have been optimized for WebSphere, IBM claims that with industry standards, the products will also work atop other middle tier platforms such as BEA WebLogic, Oracle Fusion, or the various open source J2EE variants.

With the deal closed, IBM plans to announce a product roadmap in 30 to 60 days.