Hot on the heels of news that IBM is buying business process management company Lombardi, Progress Software has announced it is buying fellow BPM firm Savvion.
Savvion is a privately held software company based in Santa Clara, California. Progress is buying the firm for around $49 million, net of cash acquired.
Savvion has15 years of market experience. The company offers what Progress calls a comprehensive, standards-based BPM suite that helps around 300 of the world’s companies – including 24 of the ‘Fortune 100’ – automate and improve critical business processes.
Dr John Bates, CTO of Progress Software, told me on a call not 15 minutes ago that the reason for picking Savvion rather than another BPM provider is that: “Savvion is a great fit for a number of reasons: it’s a very rich product, and the BPM platform is events based.” Progress, remember, has a complex event processing (CEP) product called Apama, and Bates hinted that there could be scope for some integration there.
As for why now was the right time for Savvion to sell, Dr. M.A. Ketabchi, founder, president and CEO of Savvion, told me: “We have a large customer base of leading enterprises, and for them BPM is increasingly becoming more critical, with more complex solutions. For Savvion to offer them multi-national support I thought we needed several years to get there, and by then it would be too late.”
Dr Ketabchi said that wheen seeking a buyer, he wanted to find a company where Savvion would fit well pretty much straight away, so that, “Customers do not face disruption like Lombardi customers will face at IBM” — IBM announced it is buying Lombardi just before Christmas.
Asked to summarise Savvion’s key differentiators from the BPM competition, Dr Ketabchi said: “The first thing is the extent and scope of our functionality: for example our BPM comes out of the box with a business rules management system, which Lombardi does not. IBM has the Ilog business rules but there is no integration between Ilog and Lombardi.”
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“Second, we made sure our BPM is enterprise BPM — Lombardi, Metastorm and those others are departmental BPM. Our BPM is event-centric and supports event-centric patterns, decision-centric operations, case management and so on,” Dr Ketabchi told me. “And thirdly we are unique among the companies you mentioned in that we have very efficient, very effective solutions tailored to verticals, such as a Telecom Foundation and a Life Sciences Foundation.”
Meanwhile Dr Bates confirmed that one area where additional integration might make sense is between Progress’ Sonic enterprise service bus (ESB) messaging technology and Savvion.
As for what Dr Ketabchi thinks about Lombardi’s Blueprint hosted modeling tool, he said: “Actually Lombardi Blueprint is hosted but it’s not BPM in any way. We believe BPM solutions on demand will be very important, but Blueprint is just a hosted modeler.
“We have been delivering hosted BPM through partners for some time,” Dr Ketabchi said. “We have very exciting plans ahead and lots of innovative ideas for hosted modeling and BPM on demand.” Dr Bates added that it is too early to give further details on those plans just yet.
Dr Ketabchi confirmed that he is “committed” to work for Progress now, though exact details of what his position will be are yet to be determined.
Dr Bates said Progress Software wants to become a, “Leading BPM player in its own right”, because “that’s what we’re hearing customers say they want and where we think it is going. Customers are asking for us to help make their business processes more responsive , and we of course want to make our customers successful.”
Dr Ketabchi told me that Savvion has been profitable for the last 8 quarters, and that he believes the purchase price of $59m is “fair”.
More from the press release:
Richard D. Reidy, president and chief executive officer, Progress Software said: “We believe that achieving operational responsiveness has become a business imperative, enabling businesses to achieve the highest level of operational performance. Our acquisition of Savvion enhances our goal to provide unprecedented business visibility, responsiveness and business process improvement, coupled with the highest degree of data integrity and integration.”
Dr. John Bates, Progress Software’s chief technology officer and head of corporate development added: “The Savvion BPM suite is a perfect fit for Progress because it offers leading capabilities for business process modeling and execution. The suite also uniquely includes other integrated key capabilities, including business rules management, document management, an event engine and an analytics engine.”
Dr. Bates continued: “In addition, Savvion has developed powerful industry-specific BPM solutions for financial services, communications, healthcare, life sciences, energy and manufacturing industries in which, Progress already has a broad customer base that will benefit from these capabilities. Each Savvion solution features pre-built business processes and dashboards based on industry best practices. These solutions are proven to accelerate customer deployments with a high return on investment (ROI) and a low total cost of ownership (TCO).”
Sandep Phanasgaonkar, president and CTO, Reliance Capital noted: “The Savvion BPM suite has quick deployment time. Reliance reduced turnaround time and increased adherence to SLAs after implementing the Savvion BPM solution. Savvion helped create an 86% reduction in policy generation time. Our ROI was realized in less than six months.”
According to Maureen Fleming, program director of IDC’s business process management and middleware research service: “As enterprises increase their focus on operational responsiveness – and most of them are — there is a need to build event-driven systems that adapt continuously to current and trending business conditions. We call these ‘business navigation systems,’ which converge visibility, event processing and BPM software. Vendors offering all three capabilities as a system are in a much stronger position to partner with their customers to build these new types of high value applications.”
The combination of Progress Software’s Business Event Processing (BEP), Business Transaction Assurance (BTA) and Integration portfolio, coupled with the Savvion BPM suite better enables enterprises to achieve the highest levels of operational responsiveness. With this set of solutions, enterprises can:
1. Ensure efficient execution of business processes by detecting system bottle-necks through visibility into process transactions and resolving;
2. Capture, analyze and respond to opportunities and threats to the business through business event processing in real-time;
3. Easily integrate existing disparate systems and processes; and,
4. Achieve end-to-end business process visibility to detect and resolve any system bottlenecks and exceptions ensuring every business process is completed successfully.
Progress Software is providing the following guidance, which reflects the anticipated impact from the acquisition of Savvion, for the first fiscal quarter ending February 28, 2010:
GAAP revenue is expected to be in the range of $124 million to $128 million.
Revenue, on a non-GAAP basis, is expected to be in the range of $125 million to $129 million.
GAAP diluted earnings per share are expected to be in the range of a loss of 20 cents to a loss of 1 cent.
On a non-GAAP basis, diluted earnings per share are expected to be in the range of 44 cents to 46 cents.
The outlook for the non-GAAP amounts excludes the amortization of acquired intangibles, stock-based compensation, purchase accounting adjustments for deferred revenue, restructuring charges and acquisition-related expenses.
