BEA Buys Fuego for $87.5 Million

By Darryl K. Taft  |  Posted 2006-03-01

BEA Buys Fuego for $87.5 Million

Continuing on its strategy of acquiring key technologies to build out its service-oriented architecture platform, BEA Systems Inc. on March 1 announced that it has acquired Fuego, a maker of business process management software, in a deal worth $87.5 million.

Plano, Texas-based Fuego specializes in providing SOA solutions to help companies orchestrate and continuously improve business processes.

Sources said the Fuego portfolio will become a part of San Jose, Calif.-based BEAs BEA AquaLogic product family and will serve as the foundation of the new BEA AquaLogic Business Service Interaction product line.

Fuego was founded in 1999 and has over 100 employees.

The companys customers include Southwest Airlines, United Healthcare, JPMorganChase and British Petroleum.

FuegoBPM is a comprehensive, advanced software platform for business process management.

Mark Carges, executive vice president of BEA, said BEA set out with a strategy of providing value in the SOA market, "and one of the key parts of that market is the business process management space. Fuego has been around for seven years, and this is an area they have pioneered."

Carges said BEA now can offer a unified SOA platform to integrate business processes, applications and legacy environments across the extended enterprise.

Click here to read more about BEAs efforts to position itself as a serious force in service-oriented architectures.

Moreover, he said the acquisition creates breadth and depth for a broader set of enterprise integration customer requirements, targets a high-growth market and new customer base, strengthens BEAs offering to line-of-business executives and IT, as well as establishes the foundation of the AquaLogic Business Service Interaction product line.

"Im ecstatic about this merger," said John Lauck, president and CEO of Fuego. "Its a perfect fit for our two companies."

Carges said that when BEA acquired Plumtree they found that Plumtree had a partnership with Fuego that BEA carried on. "It made sense to go into the BPM space."

"This acquisition is clear validation of the market size, growth rate and importance of the BPM category," said Rod Favaron, CEO of Lombardi Software Inc., an Austin, Texas-based BPM software provider and competitor to Fuego.

Marge Breya, chief marketing officer at BEA, said the business process management software market is one of the fastest growing segments within infrastructure software and is estimated to top $1 billion dollars by 2008.

Meanwhile, the acquisition will enable BEA to go after customers that dont have WebLogic or BEA technology.

"Well be looking to leverage new parts of existing customers or to get into completely brand new customers," Carges said.

Next Page: SOA strategy.

SOA Strategy

And while BEA, with its WebLogic Integration strategy has been strong with developers and IT architects, the Fuego acquisition will enable the company to target more end users, business analysts and line-of-business executives, because Fuego offers business service orchestration, process analysis and optimization, model-driven applications, and human workflows support, Carges said.

"Most large BPM deals are part of a larger SOA strategy," Lauck said.

"We are technology agnostic," he said. "We dont require everything to be in services and we dont require everything to be in a service bus. We have the ability to mix and match all kinds of software."

Indeed, Carges said that with Fuego in its grasp, BEA will target non-WebLogic application server users as well as Microsoft .Net users as potential customers.

Carges also said that as BEA is doing with its WebLogic Portal solution and the Plumtree portal software it acquired, the company will be continuing with a dual product strategy in the integration space—continuing on with both WebLogic Integration and Fuegos BPM solution.

"We have a broad suite of integration technologies," Carges said.

"WebLogic Integration is about building integration that is very much developer-focused. Its at a system-to-system level; its business process at the developer level. Fuego is more about the human interaction level and about tools directed at the business analyst."

Carges said the Fuego technology is different from the back-end, system-to-system technology and more of a front-end play.

Lauck, who said he will be joining BEA, along with more than 99 percent of the Fuego employees, said Fuego has worked with marketed its technology predominantly through direct sales, but is now looking forward to tapping into the BEA channel.

Lombardis Favaron said the BEA acquisition "also proves that traditional middleware doesnt provide enough capability to compete in todays BPM marketplace.

"For any Fuego customers who are uncertain about the future and wanting a truly process-centric enterprise, we will soon introduce a Lombardi TeamWorks migration program to help them reach their process improvement goals."

Favaron said he believes BEAs view that BPM is a subset of a SOA strategy "is backward to how we would think about it… They view BPM as a subset technology in a SOA… We see SOA as an enabling architecture, but BPM is a superset. We look at SOA being an enabler and BPM going over the top…"

A Forrester Inc. document dated Feb. 24 identified Lombardi, Pegasystems Inc. and Savvion Inc. as "the three market leaders that truly excel across the full spectrum of human-centric BPMS [business process management systems]—hitting the high mark with something the other vendors lack—a highly granular, iterative process design approach that enables rapid design, testing, simulation and optimization when building business processes."

Next Page: Questioning the move.

Questioning the Move

The Forrester report did list Fuego as a "strong performer" and among the top offerings in the market.

"Fuego brings powerful integration for system-intensive processes to human-centric BPMS," the report said.

Some market watchers questioned BEAs move.

Anne Thomas Manes, an analyst with Burton Group Inc., said BEAs move looks confusing.

"Sure, lets invest in another niche market," she said. "Our strategy is already confusing, lets make it more so... BEA is positioning Fuego/BPM as part of the red-hot SOA software market, but BPM pre-dates SOA. It has been and continues to be a fringe market, not main-stream SOA. BPM solutions may exploit standards-based SOA services, but they tend to be all-inclusive and proprietary."

Stuart Selip, Manes colleague and also an analyst at Burton, said: "U.S. forces used a multi-pronged strategy in the Pacific theater during WWII, attacking at many points and confusing the Japanese as to where and how to defend.

"Accordingly, the Japanese often reinforced the wrong island bases, deploying men and materiel that we simply bypassed. Im not suggesting that BEAs purpose is to obfuscate its true strategy, yet they do seem to be doing a good job of it."

However, Ronald Schmelzer, an analyst at ZapThink LLC, said, "Its clear that business process is a key part to making composite services in an SOA work. Indeed, you cant do service composition without business process. As such, acquiring a BPM company like Fuego makes a lot of sense for BEA, given that their existing process tooling wasnt particularly service-oriented, and service-oriented process is clearly a key element of the AquaLogic roadmap."

Meanwhile, "This is great news because it validates the strategic importance of the BPM market," said Shawn Price, CEO of Savvion.

"The BPM market is red hot and SOA is critical to market leading companies. Leading companies understand the need and the value of process management, and IT departments need a solution which is consistent with their SOA strategy.

"Savvion is already there, and we are the leader in BPM. BEAs claims about open standards and platform support dont add up. Savvion is the only enterprise class vendor providing BPM as an extension of the companys existing application investments in Oracle, SAP, Siebel, IBM and Tibco.

"Customers just arent buying this one stack equals the world philosophy."

Editors Note: This story was updated to include additional information about the acquisition and comments from the companies officials.

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