Application Management Merger Mania
The game of musical chairs in the application management space just got a bit harder today as IBM announced that it had acquired one of the leading players in the space, Cyanea. The Cyanea acquisition is just the latest deal in the space which has seen Veritas buy Precise , Mercury buy Performant , and ASF buy Dirig. Only two independent companies of note are now left in the space, Wily and Altaworks.
Houston, We Have An Application Problem
Why all the interest in application management? Because, as many companies have unpleasantly discovered, getting distributed component-based applications to work correctly is a major pain in the neck. Unlike traditional mainframe applications, distributed applications are composed of many small pieces of software. What’s more, these pieces of software are often distributed across several servers. Throw in some web services and you can have an “application” that spans multiple computers in multiple locations. This may sound cool, but when something goes wrong in such complex system even if you are a rocket scientist it’s almost impossible to figure out what code is actually “broken”.
By monitoring the inner-workings of applications, often down the method and thread level, application management programs attempt to not only figure out what, if anything is broken in a distributed application, but they also attempt to identify resource and performance problems before they end up taking an application down.
The Great Debate: Horizontal vs. Vertical
One major problem for application management software is that there are a lot of factors that can affect application performance outside of the application code itself. Even if the code is perfect, problems with other parts of the technology stack such as database resources, network performance, message brokers, etc. can still seriously affect application performance.
Given the inter-dependence of all these items, the holy grail of application management (and for that matter systems management in general) has always been to build a holistic map of all the hardware, software, and network resources associated with a particular application and to, somehow, build a management solution that can identify the actual root cause of any particular problem no matter where it lies in the stack.
Unfortunately, like most IT holy grails such as universal object libraries, consistent semantics, and stable Windows machines, the vision of a completely unified application management stack is a long way from reality.
In the interim, vendors have generally decided to focus on either horizontal or vertical management strategies. Horizontal strategies stress the importance of following a transaction “in-flight” as it flows throughout its life-cycle, no matter what platforms it may decide to travel on. To support this strategy, vendors must make their software compatible with as many application servers as possible including modern ones (such as J2EE and .NET) and legacy ones (CICS and IMS). The horizontal view is particularly important inside large companies with complex legacy systems as most of their new distributed applications must still interact regularly with legacy platforms.
Other vendors a pursuing a vertical strategy of trying to link together information from the database, network, and application layers in order to derive a view of all of the technology components that affect a particular application. This strategy is better suited to “self-contained” applications that don’t interact with legacy platforms.
The reality is that for most Global 2000 corporations, horizontal solutions are much more practical given the topographical and political realities in those organizations. Most of those companies still have lots of legacy applications and they generally have very complex IT infrastructures. This means that distributed applications not only have to play nice with other platforms, but managerial and budgetary control over IT resources is often widely dispersed throughout the organization. While it might be nice in theory to instrument all of the databases in a company with a particular application management platform, just try telling the database administrators that they are going to be forced to use the same tool as the application managers. In general, that’s just not going to happen.
As it happens, Cyanea was pursuing a horizontal strategy. It had a unique “probe/repository” architecture that makes it easily extensible to multiple platforms and it was the first player in the space to support IBM’s venerable CICS and IMS mainframe “app servers”. Given this, plus IBM’s early investment and reseller relationship it’s really not surprising that IBM decided to bite the bullet and buy the rest of the company it didn’t already own.
For me personally, the acquisition wasn’t surprising because I was actually the first investor in Cyanea and had seen the IBM relationship grow in size and importance first hand. While it’s a bit bittersweet to seen one of my promising investments swallowed up by Big Blue just as it is hitting its stride, I must admit that the ample return on investment provides me with more than a little comfort.
One of the big remaining questions following the Cyanea deal is what will become of Wily. Wily was the pioneer in the space and has always been the largest player (though Cyanea was rapidly catching up to them). It’s rumored that Wily turned down a $100M buy-out offer from Mercury in early 2003 before Mercury bought Performant for $22.5M (that may just be some good underground marketing on Wily’s part though).
On the one hand, Cyanea’s sale looks like good news for Wily. Not only does it leave Wily as the only substantive independent player in the space, but it removes a competitor that was increasingly beating it in competitive bake-offs.
On the other hand, with IBM buying Cyanea and integrating it more closely into its product lines, Wily will now face all-out competition from IBM, a platform that supposedly accounts for a majority of their sales. In addition, Veritas recently signed a wide ranging partnership with BEA making Precise the recommended application management solution for WebLogic. Thus with Cyanea at IBM and Precise at BEA, Wily faces the unappetizing prospect of having to face “in-house” competition for every WebSphere and WebLogic sale. In addition, Wily’s core product architecture, which relies on code “wrapping” to instrument it, is dated and not readily extensible outside of J2EE environments.
Despite this, some have suggested an IPO is imminent, but that does not seem likely until Wily figures out a growth story beyond J2EE. Fortunately, on the M&A front there are a few large players that have yet to make a major move in the space, most notably HP, Oracle, SAP, and Sun, so Wily may yet have an opportunity to make it to the alter on time. Whatever Wily decides to do they will have to do it quickly as they are now going from a situation of being top dog to underdog against some of the strongest software sales forces in the business, which is not an appealing prospect not matter how you look at it.
Many Miles Still To Travel
For the application management space in general, the consolidation of the independent players into the major platform players, represents a logical and necessary industry evolution. While the industry is still a ways away from the holy grail of unified management it is making steady progress. Attention will now likely shift towards integrating a few other pieces of disparate infrastructure software, such as business activity management, dependency mapping tools and cluster management tools into the overall application management framework. While each step will take the industry closer to management nirvana, new technologies and corresponding challenges will undoubtedly emerge and thus push the goal further out into the future.
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The thoughts and opinions on this blog are mine and mine alone and not affiliated in any way with Inductive Capital LP, San Andreas Capital LLC, or any other company I am involved with. Nothing written in this blog should be considered investment, tax, legal,financial or any other kind of advice. These writings, misinformed as they may be, are just my personal opinions.