IBM has moved to expand its presence in the cloud computing environment by acquiring Cast Iron Systems. The IBM WebSphere team is leading the acquisition, driven by IBM's need for technology to enable application integration through services across the cloud and then back into the enterprise. This is no small matter: Organizations increasingly are realizing the importance of being able to automate the integration in a cloud computing environment of the data and services associated with the applications they have been renting and using over the last three to five years. Over the last nine years Cast Iron made good progress with brand-name customers like Allianz, Amerisource Bergen, Emerson and Peet's Coffee - organizations, among many others, that have come to understand the importance of dedicated integration technology (See: "Data Integration - Using Technology to Manage your Data Assets Efficiently").
For many organizations interconnecting systems across the cloud and the enterprise is no easy task. This is because of the heterogeneity of the applications that are being rented by business and the complexity of the resulting infrastructure. Cast Iron Systems provides an integration and data migration technology called OmniConnect that supports application mashups, among other enterprise needs. It has provided integration interfaces connecting salesforce.com, Oracle CRM On Demand, NetSuite, RightNow and Taleo to a number of large on-premise enterprise applications. The technology is available in a variety of forms from physical hardware appliances to a rented integration service called Cast Iron Cloud2.
The addition of Cast Iron Systems to IBM's portfolio could be a strategically valuable acquisition. The IBM Information Management group has badly needed to address the integration of data across cloud computing environments, which is a rapidly growing market. I am not sure if the IBM WebSphere team will use Cast Iron also to advance IBM InfoSphere, but it would make a lot of sense. Only time will tell.
This acquisition by IBM bodes well for others that provide integration across the cloud computing environment - for Boomi, Informatica, Jitterbit and Pervasive. That's because acquiring products from IBM easily in small, digestible price chunks is not usually a straightforward experience. I recently looked at Jitterbit, which competed against Cast Iron Systems with its cloud-to-enterprise offering (See: "Jitterbit Streamlines Cloud Data Migration and Enterprise Integration"), and at Informatica, which has been doing cloud integration for many years ("The Sky is Bright for Informatica in Cloud Computing"). I haven't seen any signs of Microsoft, Oracle or SAP getting progressive on the integration of data from across the cloud, but maybe we will see more from them in 2010.
IBM made this acquisition very quietly, merely publishing a press release and doing a website update. It offered little dialogue on the future placement and use of Cast Iron Systems. This is quite unusual. Maybe it found the overlap with existing on-premise application and data integration too much to deal with right now, or it is still working out how it plans to use the acquired product assets.
I expect there are companies that will be waiting with much interest to see how IBM positions this acquisition. In the last several years the demand for integration technology has been intensifying significantly; The application integration of data is important for process improvement, which yields efficiency gains, but also for performance improvements in business effectiveness. Let's see if IBM can successfully leverage this acquisition to engage with public and private computing environments.
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Mark Smith - CEO & EVP Research