In the same way that Dell followed HP’s (NYSE:HPQ) example when it purchased Perot Systems (NYSE:PER) after HP acquired EDS, Dell is now copying IBM’s (NYSE:IBM) acquisition of Cast Iron Systems with its own move into the integration business.
Besides trying to keep up with other ’systems’ vendors, Dell is also attempting to fortify its Cloud Computing capabilities which hinge on helping potential customers cost-effectively migrate and integrate data from various legacy applications and databases into a new set of cloud services.
Dell indicated at an analyst briefing in Boston last week that it wants to ‘move up the stack’ and build a platform which can help enterprises and independent software vendors (ISVs) develop and deliver applications. Dell can’t compete with the other major Platform-as-a-Service (PaaS) vendors — including Salesforce.com (NYSE:CRM), Google (NASDAQ:GOOG) and Microsoft (NASDAQ:MSFT)— from a software development standpoint. But, it can challenge them and others, such as Amazon (NASDAQ:AMZN) and IBM, from an Infrastructure-as-a-Service (IaaS) point of view.
Because it is small enough for Dell to digest easily to test the integration market opportunities and requirements. It is still assimilating Perot Systems into its operations and corporate culture, and may not have been ready to acquire a bigger player, like Informatica (NASDAQ:INFA) or Pervasive (NASDAQ:PVSW).
Why is Boomi selling at this time?
My sense is the company was at risk of becoming a victim of its own success and its rapid growth was creating operational strains which would take significant new investment to offset. Rather than make this investment, Boomi’s investors and management team felt that the Dell deal would not only give them a solid ‘exit’ but also the corporate resources necessary to ‘cross the chasm’.
It will be interesting to see if Dell is able to do a better job assimilating and growing Boomi’s business than it has with some of its previous Software-as-a-Service (SaaS) acquisitions — Everdream, SilverBack Technologies and MessageOne.
By coincidence, I heard about today’s news while attending Pervasive Software’s IntegratioNEXTconference, down the road from Dell in Austin, TX. You can bet there were a lot of smiling faces among the Pervasive staff who expect Dell’s move to trigger additional integration vendor acquisitions. I’m sure Pervasive’s counterparts at Informatica, which is also hosting a partner conference this week, were equally excited about Dell’s move.
While speculation about a Boomi acquisition has been rising since the Cast Iron Systems purchase by IBM, Dell was not high on the list of potential suitors suggested by various industry observers, including myself. Instead, the clearer candidates seemed to be HP, SAP (NYSE:SAP), Oracle (NYSE:ORCL), EMC (EMC) or even Microsoft.
All these companies continue to be likely acquirers for the handful of remaining integration vendors, including Hubspan and SnapLogic, in addition to Pervasive and Informatica. Not to be overlooked as potential buyers are also Google and Cisco Systems (NASDAQ:CSCO).