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CA Technologies today announced it has signed a definitive agreement to acquire Rally Software, a provider of Agile development software and services, for approximately $480 million in a move that helps round out CA’s portfolio.
The acquisition of Rally is a strategic move that bears out CA’s continuing focus on Agile development and DevOps. The transaction has been unanimously approved by both companies’ boards of directors, and is expected to close in the second quarter of CA’s fiscal 2016.
Indeed, the acquisition of Rally is a significant milestone in CA’s strategy to help customers thrive in the application economy, in which software applications are ubiquitous, CA officials said.
Based in Boulder, Colo., Rally has about 500 employees across four continents and fiscal year 2015 sales of $88 million. The company has users in more than 135 countries across many industries, including some of the world’s largest and most respected brands, including more than 35 of the Fortune 100. Rally offers a cloud-based Agile development platform along with experienced transformation consultants and Agile coaches.
As Internet pioneer and entrepreneur Marc Andreessen famously said: “Software is eating the world.” It’s true that as software is driving every facet of business in every part of the world, there is more demand on developers to deliver ever more applications faster, better and more secure.
“Software applications are changing the world, disrupting established business models and bringing in completely new experiences in areas from travel to banking,” said Mike Gregoire, CEO of CA, in a statement. “In order to compete, businesses need to develop high quality software quickly and reliably. Rally is a leading provider of Agile development software and services, with offerings that complement and expand CA’s strengths in the areas of DevOps and management cloud. Every developer dreams of creating truly transformative software that responds to a business challenge extremely quickly. Joining forces with Rally makes this dream a possibility for millions of developers worldwide, and in turn opens up the possibility of a whole new range of experiences driven by software. At the end of the day, this deal is about enabling speed and flexibility, about how we can make the most demanding enterprises truly agile.”
Industry analysts from Forrester and IDC list the Agile methodology among the major trends in developing software. According to Forrester, 69 percent of respondents out of 560 surveyed decision-makers in the annual Forrester Forrsights Software Survey said they have interest, plan to implement, or have already implemented Agile for their custom development. Sixty-three percent of respondents of the same survey answered similarly for packaged software development and maintenance.
“In a world driven by software, the powerful combination of Rally and CA will help our combined customers to better navigate changing markets, improve performance and deliver value faster – while accelerating the pace of disruption and developing a competitive advantage through technology,” said Tim Miller, chairman and CEO of CA, said in a statement. “CA and Rally have more than four years of history working together, and we are thrilled to be taking this next step in our relationship to deliver unique value to both CA and Rally customers.”
IDC expects strong growth for Agile application lifecycle management (ALM) software. In an analysis of the Agile ALM market, IDC reports that worldwide Agile application life-cycle management software revenue in 2012 reached $211.9 million, and, with a forecasted compound annual growth rate of 39 percent, will reach $1.1 billion by 2017.
CA has a history of building its software portfolio through acquisitions. In the 1980s the company grew quickly via acquisitions of companies such as Capex, Uccel, Applied Data Research and Cullinet under co-founder and then CEO Charles Wang. In 1989, CA, then known as Computer Associates, became the first software company to reach $1 billion in revenues. CA continued its acquisitive spree into the 190s and beyond, acquiring companies such as Legent, Cheyenne Software, Platinum Technology, Sterling Software and Wily Technology, among others. In 2010 alone, CA acquired eight companies to support its cloud strategy.