IBM announced that it has acquired cloud integration specialist Cast Iron Systems to broaden the delivery of cloud computing services for clients.
announced that it has acquired cloud integration specialist Cast Iron Systems
to broaden the delivery
of cloud computing services for clients.
IBM Senior Vice President and Group Executive
for IBM Software Group Steve Mills announced
the acquisition at the IBM Impact 2010
conference here on May 3. Cast Iron, a privately held company based in Mountain
View, Calif., delivers cloud
integration software, appliances and services. Financial terms of the deal were
not disclosed. The acquisition expands IBM's business process and integration
software portfolio, which grew more than 20 percent in the first quarter of
2010, the company said.
IBM officials said Big Blue expects the
global cloud computing market to grow at a compounded annual rate of 28 percent
from $47 billion in 2008 to $126 billion by 2012. Thus, this acquisition
demonstrates how IBM is expanding its
software business around higher value capabilities that help clients run their
businesses more effectively. IBM's business
process and integration software portfolio grew more than 20 percent in the
first quarter of 2010.
In the past decade, IBM has undergone a
significant shift in its business model to focus on higher value, high-margin
capabilities through both organic and acquisitive growth. IBM's
software business is a key driver in this shift. With its software revenue
growing at 11 percent year-to-year in the first quarter, IBM
generated $8 billion in software group profits in 2008, up from $2.8 billion in
2000. The IBM Software Group has acquired
more than 55 companies since 2003.
And IBM is hoping the acquisition of Cast
Iron will play into that. Cast Iron Systems has completed thousands of cloud
integrations around the world for financial institutions, media and
entertainment companies, and retail organizations. The company's clients are Allianz,
NEC, Peet's Coffee & Tea, Dow Jones, Schumacher Group, ShoreTel, Sports
Authority, Time Warner, Westmont University
and many others, IBM said.
Moreover, a key challenge businesses face in successfully adopting cloud
delivery models is integrating the disparate systems running in their data
centers with new cloud-based applications. In the past, this involved
time-consuming and resource-draining coding work. Through Cast Iron Systems, IBM
is gaining the ability to help businesses rapidly integrate their cloud-based
applications and on-premises systems, IBM
officials maintain. The acquisition also advances IBM's
capabilities for a hybrid cloud model, which is attractive to enterprises
because it allows them to blend data from on-premises applications with public
and private cloud systems, IBM said.
IBM is already known for the application
integration capabilities it offers for both on-premises and business-to-business
applications. With the addition of Cast Iron Systems to its portfolio, IBM
will be able to offer clients a complete platform to integrate cloud
applications from providers including Salesforce.com, Amazon, NetSuite and ADP
with on-premises applications, such as SAP
and JD Edwards. In short, IBM will become
much more friendly with business partners such as Salesforce.com and Amazon
because of this deal.
Using Cast Iron Systems' hundreds of prebuilt templates and services
expertise, expensive custom coding can be eliminated, allowing cloud
integrations to be completed in the space of days, rather than weeks or longer.
And these results can be achieved using a physical appliance, a virtual appliance
or a cloud service, IBM said.
"The integration challenges Cast Iron Systems is tackling are crucial to
clients who are looking to adopt alternative delivery models to manage their
businesses," said Craig Hayman, general manager for IBM
WebSphere, in a statement. "The combination of IBM
and Cast Iron Systems will make it easy for clients to integrate business
applications, no matter where those applications reside. This will give clients
greater agility and, as a result, better business outcomes."
For example, Cast Iron Systems helped pharmaceutical distributor Amerisource
Bergen Specialty Group connect Salesforce CRM
with its on-premises corporate data warehouse, IBM
said. In doing so, the company has been able to give its customer service
associates access to the accurate, real-time information they need to deliver
the best possible customer experience while realizing annual cost savings of
In addition, Cast Iron Systems helped a division of Allianz, a global leader
in corporate insurance, integrate Salesforce CRM
with its on-premises underwriting applications to provide real-time visibility
into contract renewals for its sales team and into key performance indicators
for sales management, IBM said. Allianz
replaced labor-intensive custom code with Cast Iron Systems' integration
solution, beating its own 30-day integration project deadline, the company
"Through IBM, we can bring Cast Iron
Systems' capabilities as the world's leading provider of cloud integration
software and services to a global customer set," said Ken Com??Â«e, president and
chief executive officer of Cast Iron Systems. "Companies around the world will
now gain access to our technologies through IBM's
global reach and its vast network of partners. As part of IBM,
we will be able to offer clients a broader set of software, services and
hardware to support their cloud and other IT initiatives."
Consistent with IBM's software strategy, IBM
will continue to support and enhance Cast Iron Systems' technologies and
clients while allowing them to take advantage of the broader IBM
portfolio. And Cast Iron Systems' 75 employees will be integrated into IBM.