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Software AG plots Valley invasion by Terracotta army

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Europe's second largest software company, Software AG, is reorganising in the US with a huge focus on the West Coast around big-data purchase Terracotta.

Chief executive Karl-Heinz Streibich told The Reg that sales growth in his company's US operation had to catch up to levels in the European homeland. Streibich is creating a federal business unit tasked with selling specifically to US national and local government customers to win extra business.

He also plans to increase Software AG's presence in Silicon Valley, both in numbers of customers and as a technology centre founded on the big-data shoulders of tiny Terracotta – the Java performance and caching specialist it bought in May 2011.

"That is the key – that we become more American and improve our image of a US based technology company," he told us. Streibich spoke to The Reg at the company's annual EMEA strategy kick-off conference in London on Thursday.

Enterprise software-maker Software AG will follow in the footsteps of fellow German shop SAP, which has a large development and sales presence in Palo Alto, which sits opposite SAP's biggest competitor, Oracle, in Redwood Shores.

The commitment to become not just more American but also more Californian came after Software AG shares took a hammering on news it missed fourth-quarter estimates.

That produced a chain reaction of reports that Software AG was an acquisition target and calls for a strategy reboot in the pages of British money men's favourite pink paper, the FT. Streibich reckons there's no need to refresh, just to "execute", as growth was strong at 7 to 8 per cent. 2010 was Software AG's most successful year, he says.

Streibich was unable to say how big Software AG's Silicon Valley presence would become but did hint at more purchases. "We have to define how fast we can grow in the US through acquisition and organisationally and then through that learn what our role is," he said.

He's putting a lot on the shoulders of tiny Terracotta, both physically and as a technology anchor for Software AG's aspirations to serve customers' needs in big data.

Terracotta was a Java caching and scaling start-up whose in-memory technology allows Java apps to scale smoothly and perform quickly across data centres. It sold BigMemory for Java apps to bypass garbage collection, Ehcache for caching, and the Quartz job scheduler. The company claimed it had 500,000 deployments, with the majority of these in the Fortune 2000. The company has 100 employees compared to the 5,500 at Software AG as a whole.

Streibich drew analogies with the 2007 purchase of web-services specialist webMethods and 2009's acquisition of IDS Sheer – which gave him the ARIS process management tools.

"I think of the development of the data management part our of Silicon Valley business around Terracotta as we did middleware around webMethods on the East Coast and as we did ARIS that was German-centric," he said.

"We must drive that forward. Driving that forward means we are now doing things differently from a West Coast point of view. Driving growth through the innovation focus on data management will be beneficial for the customer in managing their unstructured data."

Software AG has nine offices in the US but its HQ is on the East Coast in Reston, Virginia. That's a world away from the networking potential of Silicon Valley's money and start-up culture and far outside the shadow of the motherships of companies like Google and Facebook where the ideas du jour are cloud, big data, clustering and scaling.

In the short term there will be greater optimisation between Terracotta and Hadoop on big data. Hadoop "is definitely an important focus for us," Streibich said, because of its relevance to the future of NoSQL.

Long term, Streibich reckoned in-memory technologies such as that offered by Terracotta will be woven into database and server technologies, making them commodity. He added that the company was already "getting there", as SAP – a major Software AG partner – offers Hana while Terracotta is a supposedly more open and cheaper alternative to Oracle's TimesTen.

Once commoditisation kicks in, Streibich said Software AG could differentiate on real-time analytics and on reducing the costs of online transaction processing. ®

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