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By eweek  |  Posted 2004-07-19 Print this article Print

Also, how does Rational play into IBMs on-demand strategy? Perfect. The key thing there is that software development is a core part of being on demand. The on-demand message is all about agility, the ability of a business to react to changes in the environment, either regulatory changes, or changes in the competitive environment or marketplace. That requires a development environment that allows you to react quickly. So it starts with our best practices, things like the Rational Unified Process, so all of our best practices map into the on-demand best practices. Weve always said you want to build a resilient architecture thats flexible in the face of changes. And that maps directly into the on-demand technology in that you want enterprise architectures and application architectures that are resilient in the face of changing environments.
So both our best practices and our tools are mapped into the on-demand environment. We show up in whats called the on-demand operating environment, which is the underlying technology infrastructure for building an on-demand technology enterprise. So thats been a core part of our marketing message.
Steve Mills [IBMs senior vice president and head of the IBM Software Group] has been quoted as saying that Rational has been the best software acquisition IBM has made in terms of integration. He also says youve exceeded IBM objectives. Why do you think he says this? The best case is financial results. Even going back to a year ago December after we announced the acquisition on Dec. 6 [2002], I think it was. And we were very concerned that that would cause a disruption with the December quarter a year ago. It didnt. We in fact made the Wall Street numbers, and when we reported our March numbers we were no longer a separate company; we were a part of IBM, and we exceeded the business case that IBM uses to track things and we exceeded the Wall Street estimates for Rational before the acquisition. But weve exceeded the business case every quarter, and compared to the quarter a year ago we have reported significant year-over-year revenue growth. Before the acquisition, revenue for Rational had been down or decreasing because of the downturn. So the amazing thing and I think the reason everybody views this as the most successful is that IBM executed a very fast integration, unlike Lotus and Tivoli, which were kept somewhat separate for a while; we were integrated very rapidly. We decided that to get the leverage of IBM we needed to integrate into their product development processes, integrate into their passport advantage IBM purchasing vehicles for customers, integrate into all of those things very quickly. And thats very disruptive for the team, but we figured wed get the pain out of the way; it would be better than stretching out over two to three years. And we were able to do that while taking a business that had been flat or declining and turning it around to have substantial revenue growth. Thats a pretty clear indication of success. And I would give the credit to two things. One is our team. Everybody in the company had two jobs over the last year. One was to continue to drive the business every quarter in terms of results and customer success. Their second job was to execute all these complex integration tasks, which with an acquisition of this scale were pretty daunting. So the team did a great job; not just the Rational team but the IBM team. But Ill give even more credit to our customers. And this even included customers who were large Rational customers but were IBM competitors, such as large systems integrators and other platform vendors. [They] were very positive and we continued to get substantial orders from them, even though there are parts of their business that compete with IBM they continue to rely on our products and be amongst our largest customers. Next Page: Reaction of scientific customers.


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