SoftwareAG Acquires AlfabetAG – What Does This Mean To The EA Vendor Landscape?

For the past few years of our enterprise architecture management suite (EAMS) coverage, we’ve noticed a trend that many of our clients are seeing in their own organizations: As the scope of the practice of EA expands, the range of what they need for tooling expands – and there is no one tool that accomplishes the full span of these needs. Though many vendors fly the flag of the full and broad EAMS, the reality is that they’re all bringing a different perspective to the mission and content of EA. I demonstrated this in The Forrester Wave™: EA Management Suites, Q2 2013, where I looked at four different EA value propositions, and found different firms were leaders in these different value propositions.

The news from this morning that Software AG acquired alfabet AG is an indicator that maybe this is about to change. The merger of Software AG’s business-process-centric view with alfabet’s strengths in IT planning and portfolio management mends one of the biggest divides in the market today between business process and enterprise architecture roles. There’s still plenty to learn about this acquisition, but I have a few initial reactions that are quite positive for the now united companies:

1.       If properly brought together, the new offering could be the power-player. Both are leaders in the EAMS market from a tool functionality perspective, giving fantastic depth and breadth to the future offering.

2.       From a company perspective, it’s a symbiotic relationship. Software AG needed to shed its “business process only” perception in the marketplace, while alfabet need a significant boost in sales and marketing dollars to break ahead of its competitors in terms of customer mindshare. As I mentioned, the Forrester Wave had each of them as a leader in a different scenario – now they can bring these together.

3.       From a marketing perspective, they’ve gained a leg up. Common competitors of both product sets are now missing something that the other has, whether it be the business process component or the IT planning and strategy component. Mega and Troux may be most affected. While Troux has geographic strength in the North American market to help muffle any potential impacts, Mega will certainly see some increased pressure to differentiate, as its already broad offering spanning both the process and technology worlds becomes less unique alongside this acquisition.

4.       Lesser-known European vendors are threatened if Software AG targets the mid-market. The top-tier vendors, which includes alfabet and Software AG, have targeted large firms with significant spend potential. There are a variety of EAMS vendors with similar offerings to either PlanningIT or ARIS (although less feature-rich) that have had an advantage in the mid-market. Alfabet had stated it would begin to chase this mid-market – should this acquisition continue that strategy, these vendors will see increased pressure from a heavily-funded competitor.

What does this mean for end user firms with any of these products in place today, or considering a purchase? The EAMS market is a highly fragmented one – and although this may herald consolidation, in my assessment, it shouldn’t change any near-term decisions by end user EA teams. The same criteria hold for selecting a product; there is simply one less vendor to consider.

So, if you’re a client of either company, what do you think? Do you share my positive reactions? What would you tell your vendor to be careful of?

Comments

I believe there is a huge gap

I believe there is a huge gap in the fragmented EA market. Its an opportunity for not only existing market players but also new players with innovative business model that would potentially sidestep the existing players approach altogether. The gap does not necessarily mean addressing tighter integration between process vs. planning but more importantly how new level of abstraction can be achieved at the industry level and how untapped market can play a role. Right now, the entire EAMS approach seems to be one that is of a herd mentality..... think of how companies like Waze and Google maps changed the industry for incumbents such as Tom Tom.