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A Winning Combination: Software-as-Services Plus Business Consulting and Process Services
By Laurie McCabe
January 30, 2004

Actional said it has merged with Westbridge Technology in a marriage of two small companies that specialize in managing Web services .

Financial terms of the arrangement were not disclosed. However, company officials called the agreement between the Mountain View, Calif., based firms a merger of equals, with Westbridge CEO Tom Ryan taking the helm as CEO for the conjoined entity that will retain the name Actional.

Actional President and Chief Executive Officer Frank Bergandi will leave to pursue other interests, company officials said. The combined company will have 75 employees and operate out of the new Westbridge office. The company has also soaked up $12.9 million in new funding from August Capital, Granite Ventures and NeoCarta, among others.

New Actional CEO Tom Ryan discussed the competitive landscape in light of the merger.

“I think if you’re talking about the privately-held management and security vendors — Amberpoint, Reactivity, Systinet and others, I think it changes the dynamics a little bit,” Ryan told internetnews.com. “This is truly a merger of two successful companies that both had a lot of momentum and wind at their back. That, compounded with the additional new funding puts us in a strong position. Within the scope of the privately-held companies, we feel we’re in a dominant position.”

The companies have been quietly working out the deal for the last several months, finding ways to integrate Actional’s Web services management software and Westbridge’s XML security software.

Actional CTO Dan Foody said the code bases were so similar that the engineers from both organizations were able to create a new flagship service-oriented architecture (SOA) suite, called SOA Command and Control.

The new flagship offering features key elements from both companies, including Actional’s Looking Glass Server, SOAPstation Service Broker, Looking Glass Console and Westbridge’s XML Firewall, Foody told internetnews.com.

The package is a complete suite for customers looking to accept and trade applications that conduct transactions such as purchase orders, providing users a total view of the transaction from start to finish in a secure environment.

The market for so-called SOA enablement, which includes all of the pieces of a distributed computing environment with reusable components, has been evolving in the last couple of years as Web services and SOA adoption has increased. IDC anticipates the market for Web services infrastructure will top $3.2 billion by 2008.

The evolution in the market includes several acquisitions as players try to position for the sector. Last week, Computer Associates bought security software provider Netegrity. Last month, Digital Evolution bought Flamenco Networks, which makes specialized network infrastructure for enterprises that want to install service-oriented architectures based on the SOAP messaging protocol.

ZapThink senior analyst Jason Bloomberg said the Actional-Westbridge merger changes the competitive landscape for SOA enablement providers.

“This acquisition definitely makes sense for both parties, as their technologies are reasonably complementary, and the combined offering is comprehensive and powerful,” Bloomberg told internetnews.com. “They will definitely continue to give Digital Evolution and AmberPoint in particular a run for their money.”

“But make no mistake — everybody was expecting continued consolidation in this space, so Actional’s competitors will not be caught by surprise,” he said.

One of the major concerns about a merger or acquisition is that a product will be discontinued. Foody said Actional knows that customers may only need certain components for their platforms and is prepared to offer customers either the original Actional components, or the Westbridge security software if customers do not wish to purchase both.

The engineer also knows that SOA composites, or “fabrics” are unlikely to feature products from one vendor. Actional is designed to fit into a heterogeneous environment.

“The more heterogeneous it becomes, the more important it is for an organization to have control over that diverse environment,” Foody told internetnews.com. “With the SOA Command and Control suite, we’ve made explicit decisions around being able to make sure it can tie into a wide variety of SOA fabric components.”

In addition to the new funding, products and employees, the two companies bring together some of the most lucrative partners specialists of their ilk can find in the business, including Microsoft (Quote, Chart), BEA Systems (Quote, Chart), IBM (Quote, Chart), HP (Quote, Chart) and Tibco (Quote, Chart).

While smaller companies like Actional and Westbridge are grabbing the headlines amid a flurry of consolidation, Microsoft, IBM and BEA have been equally aggressive driving home their SOA and Web services management platforms.


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