Updated: Software company Computer Associates announces plans to acquire Wily Technology, an application management company with depth in middleware for legacy and Web systems, for $375 million in cash.
In an effort to bulk up the application performance management component of its enterprise systems management business and institute greater focus on key vertical segments, Computer Associates International Inc. announced Thursday that it plans to acquire Wily Technology in an all-cash transaction for approximately $375 million.
Wily Technology offers software tools to monitor and manage the health of production applications and IT infrastructure.
The Brisbane, Calif.-based company manages application code and the application servers the data resides on, as well as the middleware carrying transactions from customers on the Web to legacy applications, according to Al Nugent, senior vice president and general manager of enterprise systems for Islandia, N.Y.-based CA.
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Once the acquisition closes in about three months, Wily will follow the model of CAs Niku acquisition of last year and operate as the separate Wily Technology division within CAs Enterprise Systems Management business unit.
CA said it expects to retain most of Wilys 260 employees, and Wilys CEO Dick Williams will join CA and lead the new division.
The company said product integration road maps should be available about 30 days after the acquisition is finalized. In addition, CA expects Wily to contribute approximately $72 million of revenue in CAs fiscal year 2007 on a ratable basis.
Nugent noted that Wilys strength and establishment in complex Web-facing applications such as hotel reservations, airlines reservation systems and retail banking systems will serve CA well as the company responds to customers who have put more aspects of their business processes online.
He also said CA has some ground to make up in the growing application management arena.
"Our internal work on doing application management, either custom or packaged applications, has always been underfunded and not in a sweet spot of technology weve done over the last few years.
It was an area where quite frankly we could really use a lot of good help from the outside.
"We all concluded that application management was going to be one of the biggest differentiations moving forward. Customers have been asking us to either develop something or pull something in from the market. Wily Technology has clearly focused itself on this market," he said.
However, the enterprise systems management industry has always had difficulty with solving vertical customer application and software woes with technology that is essentially horizontal in nature, said Cameron Haight, research vice-president for Stamford, Conn.-based Gartner.
Still, Haight said Wily Technologys software and its related middleware tools will be instrumental to fill a hole that CA CEO John Swainson has already admitted toan expanding and in-demand application management business, and more specifically the J2EE management arena.
Just as important, the new technology should help CA establish its offerings to a new set of customers along the software stack.
"Wily has been fairly effective selling to the pre-production part of [application] lifecycle with sales made through key developers and key architects at some of the leading companies," said Haight.
"[Wily] does give CA a potential reach into product lifecycle, where from a historical management standpoint, they havent focused very much in."
He did point out that while Wily does address an area where CA has greatly underperformed, its application management vision still must focus upon strategic application areas such as Microsoft Exchange, SAP, etc.
Haight said that decision, similar to CAs past acquisitions of Niku, Netegrity and Concord Communications, signals that the software company is recognizing the premium on executive talent and solid foundational structure.
"CA has done a relatively good job of the maintaining and retaining of key individuals that were crucial parts of recently [acquired] companies.
"Its not the CA of old where there was usually a substantial exit. Hopefully this move will continue this current trend," remarked Haight.
Mark Barrenechea, CA executive vice president of technology strategy and chief technology architect, confirmed that with Wily in tow CA will be more aggressive in terms of building out its software portfolio more in tune with vertical markets.
"I think you can expect more of CA from upcoming quarters and the coming year of more industry-specific announcements and more industry-specific focus," said Barrenechea.
"The combination of what CA has in terms of systems management, security and identity management, and storage capabilities, and what we really have when were done is a most comprehensive suite of management tools for our customer base. And thats what excited us at Wily," he added.
Wily already features several customers featuring enterprise environments running CA systems management and operations software tools, typically being application support teams. Wily does currently have integration of its product into CAs Unicenter systems management framework.
Editors Note: This story was updated to include analyst comments.
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