IBM i Vendors to Watch in 2011
Corrected: January 11, 2011
by Alex Woodie
The new year is upon us, and what 2011 may bring to the IBM i software market is on people's minds. While the IT industry is always in a state of transition, this year promises to be especially disruptive. With a dwindling customer base, some IBM i vendors will go belly up, while others will make moves to shore up their businesses with innovative new products and acquisitions. Here's the beginning of a list of influential IBM i software vendors that should be interesting to watch as the new year unfolds.
Is 2011 the year Infor goes public? The Atlanta, Georgia-based software company, which is mostly owned by the private equity firm Golden Gate Capital, has dropped hints in the recent past that it intends to make an initial public offering of stock, and the October 2010 hiring of former Oracle president Charles Phillips seems a strong indication that the company is leaning that way. As the third largest ERP software maker (behind Oracle and SAP), Infor would command a good deal of attention from the financial press if it did an IPO. It could also mean an infusion of capital into the operation, which currently brings in about $2 billion per year in revenue and is profitable, according to Infor. Public investment could be good news for the 17,000 or so IBM i shops that use Infor products like BPCS, MAPICS, PRMS, System 21, Infinium, and KBM, and those customers should be happy to see more investment and a stronger future for their chosen solutions. (Or it could backfire and result in decisions to scale back investments in "legacy" programs.) Even without an IPO, 2011 could bring a major strategic realignment for Infor, as it seeks to thrust itself into the burgeoning demand for cloud applications. This would also help to compete with Oracle, which is pushing ahead with a soup-to-nuts integrated hardware and software stack that could alienate customers and partners (including HP and IBM). The management under former CEO and chairman Jim Schaper seemed to do a good job in recent years of shoring up the IBM i products, including the launch of new IBM i products (such as CRM for IBM i and the Electronic Banking for System i), and giving customers positive incentives to move the three preferred IBM i products (BPCS, MAPICS, and System 21) through its innovative "Flex" programs. Hopefully this will continue under Phillips and the direction he takes Infor this year.
As a result of the acquisitions of iTera (2006) and Lakeview (2007), privately held, equity-backed Vision Solutions enjoys a dominant position in the market for IBM i high availability and disaster recovery software and solutions. And thanks to its acquisition of Double-Take Software in 2010, Vision also has a pretty good seat at the X64 HA and DR table. In September, Vision followed through on its commitment to begin merging its Orion HA software with the MIMIX product from Lakeview with the launch of MIMIX Availability 7 for IBM i. Vision hopes 2011 will mark the start of a mass migration of Orion customers to the new converged product. And while the company has created detailed plans to help these customers, such product mergers don't always go smoothly. It will be interesting to see if Vision can incorporate some of its new X64 technology into its solid line of IBM i products to help its customers simplify the protection of complex cross-platform environments--a holy grail of sorts for the HA and DR crowd. The company also has its hands full battling smaller IBM i HA software vendors, such as Maxava (which is currently suing Vision for allegedly damaging its business). And to make matters even more interesting, Vision must keep its vigilant eye on business partner/patron/competitor IBM, which seems to be selling more and more hardware-based HA solutions that compete in some ways with Vision's logical replication solutions.
What will the big dog do in 2011? With the acquisition of Sun Microsystems complete, Oracle now commands its own vertical slice of enterprise computing, and appears eager and willing to wage all-out war against its competitors in the enterprise software space, including IBM, Hewlett-Packard, and SAP (and maybe Microsoft, which is coming on strong with Dynamics ERP). The big question is how forcefully the Northern California company will foist that integrated stack of hardware, OSes, middleware, databases, enterprise apps, and tools upon its new and existing customers. With its recent decision to drop IBM i support with its MySQL database and the pending end-of-life for its "Blue Stack" of middleware for JD Edwards EnterpriseOne, it would appear the IBM i platform is set to become cannon fodder in a wider war as Oracle seeks to conquer and hold ground in the lucrative Global 1000 market. The company could counter the appearance that it's indifferent to the wants and needs of IBM i customers by pledging support for the IBM i platform with its full offering of Fusion middleware and applications--but don't hold your breath on it.
Private Equity Firms
Over the last five to 10 years, large private equity firms have gobbled up large swaths of the business software market, including some big chunks of our cozy little niche we call IBM i. Equity firms making sizable investments in the IBM i world include: Thoma Bravo (which owns all or part of Attachmate, Sirius Computer Solutions, and Vision Solutions), Golden Gate Capital (Infor), Summit Partners (Infor), Hellman & Friedman Capital Partners (Kronos and IRIS Software Group), Marlin Equity Partners (Aldon, Solarsoft, and I/O Concepts), Cerebrus Capital Management (GXS/Inovis), Adams Street Partners (Rimini Street), and Candescent Partners, which just bought Quadrant Software last month (although IntelliChief lives on as its own company). There's no reason to expect private equity money to stop flowing into the software market in 2011. The only question is this: Who will be next?
Undoubtedly there will be other vendors making big splashes in the IBM i pond (from a news-flow perspective, the IT Jungle editorial team certainly hopes so!). If the economy improves significantly and investors seek higher returns for their cash, you could expect to see some of the smaller software firms make big moves to step up and acquire their competitors to consolidate their segment of the market. The IBM i market may not be as vibrant as it once was, but the little blue engine still has life, and you can be sure that wily IBM i entrepreneurs will be looking to apply innovation to better their customers, and themselves.
This article has been corrected. Infor says its revenue is about $2 billion per year, not $1 billion as stated in the article. IT Jungle regrets the error.
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