IBM has announced that it will bolster its e-business infrastructure offerings by purchasing customer relationship and supply-chain management software company CrossWorlds Software for $US129 million in cash.
IBM and CrossWorlds have been integration partners for four years, which has permitted IBM's WebSphere e-business infrastructure products to work closely with CrossWorlds' software. IBM intends to absorb CrossWorlds into its software group, then market and sell CrossWorlds' products with a joint sales force under the WebSphere brand, said Tim Breuer, an IBM spokesman.
Analysts said that the acquired technology fills holes in IBM's application server and Web services strategies. "They really needed something in this category," said Shawn Willett, a principal analyst at Current Analysis.
Willett added that most of the Web services vendors, Microsoft and BEA Systems included, have been talking about integration as a key piece of Web services. "By adding EAI to WebSphere, they can better compete with Microsoft and BEA."
The deal could be seen as a rescue operation for an IBM partner. Since its founding in 1996, CrossWorlds has yet to turn a profit and needed financing within the next year in order to stay afloat, according to filings with the US Securities and Exchange Commission. If the company went under, CrossWorlds' customers would have to seek another vendor, potentially leaving IBM as well.
CrossWorlds makes integration software that is very specific to certain industries, Breuer said. The majority of its revenue comes from software sales and services in four industries: complex industrial manufacturing, process manufacturing, financial services, and telecommunications.
"WebSphere is handling transactions and integration at a horizontal level," he said. "You can use the CrossWorlds software to integrate in very specific industries."
IBM announced in April that WebSphere would form the basis of its Web services offerings. WebSphere is application server software, pushing the functions of other software out to network-connected users. Because it works on top of a server's operating system but also functions as a layer of software underneath application programs, it is called middleware.