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July 13, 2009

Software AG swoops for IDS Scheer

Adds rich modelling to webMethods BPM

By Jason Stamper

Infrastructure software vendor Software AG has bought 48% of the IDS Scheer shares owned by co-founders Prof. Dr. August-Wilhelm Scheer and Prof. Dr. Alexander Pocsay, giving it a platform to acquire the rest of the company in due course.

IDS Scheer is a business process management (BPM) modelling vendor, with a particularly strong position in the SAP applications modelling and consultancy space.

Software AG said it will offer €15 in cash per outstanding share of IDS Scheer capital, which equates to a purchase price for the entire share capital of around €487m. After obtaining regulatory approval, the formal offer period will start in August and finish before the end of September, Software AG said.

Software AG is no stranger to the business process management (BPM) space. It used to rely exclusively on partner Fujitsu Software for a BPM execution engine, though it co-developed a BPM management and governance framework with Fujitsu called CentraSite. Indeed CBR had the scoop on that joint development way back in March 2005.

But with the acquisition of webMethods in April 2007, Software AG added BPM execution capabilities of its own, as well as various other capabilities in the middleware arena. It hasn’t turned its back on the CentraSite product though, instead layering it above the webMethods technology as well as its own SOA management tools, the security tools of partner Layer 7 and so on.

But while webMethods undoubtedly gave it additional BPM capabilities, IDS Scheer has remained the de facto leader in the BPM modelling space. Though its ARIS modelling language has a reputation for being a complex language to grapple with for all but the most experienced IDS Scheer experts, few doubt its depth of capability in the modelling space.

IDS Scheer’s next nearest competitor for a while was probably Popkin Software, which was acquired by Telelogic before Telelogic was then bought by IBM. Today competitive products in the space come from the likes of IBM, Oracle, SAP, Pegasystems, Lombardi, Cordys, Savvion, the open source firm Intalio and at the lower end even Microsoft.

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Interestingly, IDS Scheer has always concentrated on the modelling space rather than on process execution, which it has tended to leave to partners. Via its acquisition by Software AG, of course, there will now be potential to cross-sell IDS Scheer to webMethods users and vice versa, and indeed give Software AG a far more complete story in the BPM space.

Software AG’s CEO Karl Heinz-Streibich told CBR shortly after he was appointed back in 2003 that he believed he could turn Software AG into what he called a “European software champion.”

“Why is there only SAP as a European software champion today?” Streibich asked back then. “I am going to try and do in middleware what SAP has done in applications.”

Software AG is based in Germany, though it did derive around a third of its €720m in total 2008 revenue from the North American market. IDS Scheer also has its headquarters in Germany.

Software AG has 3,500 employees, compared to IDS Scheer’s 2,840 staff. IDS Scheer reported €400m in revenue in 2008. The combined business will have over 6,000 staff and revenues of over €1bn, Software AG said. “The combination of the two business models is expected to be accretive to Software AG’s operating earnings per share already in the first full fiscal year of consolidation (2010),” the firm stated.

“Software AG and IDS Scheer complement each other perfectly,” said Karl-Heinz Streibich, CEO of Software AG. “With the merger of two technology leaders we will create a globally significant company. Our expertise in business process management will be unique and will increase our competitiveness in this growth market.”

“Our robust business model and stable business performance enables Software AG to make this significant investment. We want to drive the strategic development of the company even in economically difficult times,” Streibich said.

“After 25 years of success, the right time has come for IDS Scheer to look to new horizons,” added Prof. Dr. August-Wilhelm Scheer. “Together, Software AG and IDS Scheer will further establish Germany as an international IT location. The two companies, both in product as well as consulting – make a perfect strategic fit. The staff of IDS Scheer benefit from even broader prospects in the future and the ARIS methodology will be sustainably established globally.”


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