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IBM munches BPM maven Lombardi

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IBM has acquired privately held business process management software niche player Lombardi, an outfit based in Austin, Texas. IBM says that its middleware stack needed some BPM tools that allowed for people and the departments they work in to be wrapped in the loving embrace of workflow software like ERP and content management systems are using other BPM tools.

While IBM has acquired or built BPM tools to orchestrate workflow across back-end systems and Web content as part of its services-oriented architecture (SOA) efforts, Craig Hayman, general manager of application and integration middleware within IBM's Software Group, said that it was missing applications that bring people and the work they do more fully into the BPM fold.

<p.Lombardi, as it turns out, was the partner that IBM's WebSphere people turned to when they needed this functionality, and according to Ron Favaron, Lombardi's chief executive officer, "a remarkably high percentage" of the 300 enterprise-class customers using the Teamworks tools are IBM shops.

Lombardi was founded in 1998 by Brian Cooper, who ran the company and raised $29m in the first three rounds of funding that allowed for the creation and initial sales of the Teamworks BPM tools, which went into production in 2002. The company has taken in a total of $49m in five rounds of venture funding from Austin Ventures, InterWest Partners, Palomar Ventures, Nationwide Mutual Capital, and Sanders Morris Harris.

Lombardi currently has 200 employees and doesn't report its revenues (being privately held), but did say last year that between 2003 and 2008 its sales had grown by a factor of eight and that it had no debts. As 2008 closed, the company said that its software sales had risen by 47 per cent that year and it had added dozens of new big customers using its Teamworks BPM tools, which started shipping in 2002, to reach that 300 customer count. Customers include Capital One, Hasbro, AFLAC, Sprint, T-Mobile, and Uncle Sam. If IBM itself is not a customer already, it probably will be a user soon.

Through the end of 2008, Lombardi had 4,500 customers using its Blueprint online business process documentation tool, an on-ramp to the more sophisticated Teamwork tool. Lombardi just put out its Teamworks 7 release and an updated Blueprint service in May. For what it is worth, Lombardi ranked as a visionary with the ability to execute in Gartner's BPM magic quadrant for 2009, surpassed only by Pegasystems and well ahead of IBM itself.

Hayman said that this is the 90th acquisition that IBM has done since 2003, and it is the eighth acquisition relating to software integration; this is also the eighth acquisition that IBM has done this year (two of them were for services companies and six were for software firms). None of them were particularly large or game-changing, as the failed acquisition of Sun Microsystems would have been, but then again, IBM is looking for profitable niche players it can scale up - as profitably as possible - with its global reach. Sun doesn't fit that bill, and never did.

IBM is particularly excited about BPM, and has been since acquiring the IT consulting arm of Pricewaterhouse Coopers for $3.5bn in cash and stock in July 2002. This was arguably one of the smartest acquisitions Big Blue ever did, and there was a significant amount of BPM expertise that came to IBM because of the PwC Consulting deal.

Citing numbers from IDC, Hayman said that global BPM revenues were expected to grow at a compound annual growth rate of nearly 15 per cent between 2009 and 2013, rising from $1.7bn in 2009 to $3bn in 2013. "This is a very hot area," Hayman said a number of times on a conference call going through the details of the acquisition. He added that IBM had over 5,000 BPM customers (making up the majority of the 8,000 SOA engagements IBM has done to date), and that it has 1,000 BPM specialists ready to start pushing the Lombardi products hard.

IBM did not disclose what it paid to get Lombardi, but did say that the Lombardi products would become a unit of the application and integration middleware division in Software Group and that Favaron would be a vice president of that unit, reporting to Hayman. The deal is expected to close in about a month, subject to the normal regulatory approvals. ®

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