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April 22, 2004

Tibco signals BPM intent with Staffware buy

Integration company Tibco Software Inc has moved further into the business process management arena by announcing its intention to buy Maidenhead, UK-based Staffware Plc for 122.8m pounds ($217m) in cash and shares.

By CBR Staff Writer

Palo Alto, California-based Tibco said the acquisition will benefit customers because it will be able to offer Staffware’s BPM software alongside its own real-time integration platform, making it simpler for companies to model, deploy, manage and optimize their business processes.

There are obvious overlaps, however. Tibco already has its own set of process management tools it brands BusinessWorks. The company said it would combine the best of both products into a unified BPM suite by mid- to late-2005.

In an interview with ComputerWire, Staffware’s chairman and CEO John O’Connell, who is set to stay on at Tibco to run the Staffware operation, said the companies would not do anything to upset [their] existing customer bases with regard to the integration of the two product lines.

Staffware was by no means struggling in the BPM space. In the year to December 31, net income rose 36.8% to 2.2m pounds ($4m) on revenue 9.4% higher at 42.7m pounds ($76.9m). BPM license revenue leapt 128% to 16.4m pounds ($29.5m), evidence of the company’s successful transition from its heritage as a workflow software vendor to a serious force in BPM.

According to O’Connell, the decision to sell up was taken after the company decided that organic expansion into the US market was too risky, as was the strategy of making acquisitions of its own in the US.

The track record of UK-based firms expanding into the US is pretty mixed, said O’Connell. Also we believed that it would be quite expensive and a long drawn-out process. We think BPM is a dynamic market and we needed to get established fast. On balance we decided that being part of Tibco will meet our goals with less risk.

Specialist competitors in the BPM space include Metastorm, Savvion, Fuego, HandySoft, Intalio, Vitria, and Pegasystems. It is likely that there will be further consolidation in the sector, as larger companies see the wisdom in making business process management part of their existing enterprise application offerings. As well as their potential attraction for integration players such as webMethods and SeeBeyond, they could become takeover targets for the enterprise application suite players such as SAP, Oracle and PeopleSoft.

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As for Tibco, Staffware’s annual sales of about $80m in its latest fiscal year will again take it comfortably ahead of its closest two specialist competitors in the integration sector, webMethods and SeeBeyond. For fiscal 2003, Tibco posted total revenue of $264m, compared to webMethods at $196.7m and SeeBeyond at $137.8m. Tibco also faces stiff competition from IBM, which in recent times has made a number of acquisitions in the integration market to boost the capabilities of its WebSphere platform.

Tibco is offering a healthy premium over Staffware’s market value, 40% higher than the average closing price of 598 pence per Staffware share over the last 30 dealing days immediately prior to the date of the announcement.

Commenting on the offer, Vivek Ranadive, chairman and CEO of Tibco, said: We believe business processes are rapidly becoming the most valuable corporate asset. The combination with Staffware will provide Tibco with immediate additional reach into new and emerging markets including retail banking, insurance, public sector and telecommunications, as well as increased geographic presence within Europe and Asia Pacific.

Nevertheless, with sales in Tibco’s latest financial year down 3.4% year on year, Ranadive is also clearly hoping that some of Staffware’s growth will help the company he founded in 1985 to regain its own momentum.

This article is based on material originally published by ComputerWire

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