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AS OF 7/4/2008 8:25PM EST
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IBM Extends ALM With Acquisition of Telelogic
US$745 million purchase adds embedded tools
By Jeff Feinman
July 1, 2007 —
With IBM’s expected acquisition of development tool maker Telelogic for US$745 million, one industry expert said that IBM Rational might be taking steps to redefine ALM. At the same time, executives at competing companies said the acquisition is a way for IBM to strengthen parts of its ALM offering.
IBM is making a long-term bet that the requirements of the embedded world are going to converge with those of the traditional IT space. Telelogic’s product line covers a broad range of software used in developing complex embedded systems such as aircraft radar and antilock braking systems. Those tools include the Doors requirements management family, the Rhapsody systems engineering environment, the Synergy change and configuration management suite, and the Tau modeling environment.
Upon the close of the acquisition, Telelogic will become part of the IBM Rational business unit, according to Danny Sabbah, general manager of IBM Rational. IBM has stated that it will retain Telelogic’s products, employees and prior acquisitions, including the most recent Popkin Software and I-Logix purchases. The main motivation behind IBM’s purchase of Telelogic is to penetrate the embedded systems market, which Sabbah described as a growth area.
One market that IBM has set its sights on is the recently coined “System-of-Systems,” which focuses on the orchestration of command-and-control, communications and information systems and is being looked into for the areas of defense, space exploration and transportation.
“Embedded systems is an integral part of not only the development of products, but also this whole notion of System-of-Systems, which we believe is growing,” Sabbah said.
WHAT ABOUT OVERLAP?
Theresa Lanowitz, founder of analyst firm Voke, said that Telelogic would fit well into the IBM Rational brand, as it extends IBM Rational’s idea of a software life cycle into the embedded space. Even though there is a significant amount of overlap, IBM Rational will have the opportunity to pick and choose the better tools from Telelogic and its own product line, she added.
IBM was criticized by some in the industry for the way in which it handled the acquisition of Rational, as it took quite some time for the merged product lines to line up properly. According to Lanowitz, many of the complications with that acquisition had to do with the assimilation of a new brand. In contrast, she believes that the Telelogic offerings will fit into the Rational brand, particularly in areas such as requirements management and testing.
Kevin Parker, vice president of market development for Serena, claimed that with its attention focused on the Jazz collaborative development project, IBM has lost focus on some of its ALM product lines. As a result, companies like Serena and Telelogic have been able to pull ahead, and the only way for IBM to catch up was through acquisitions, he argued.
Parker shared Lanowitz’s feeling that the acquisition will boost IBM Rational’s requirements management lineup.
“In the requirements management space, there are really only three vendors—Serena, IBM/Telelogic, and Borland—and IBM was starting to slip in that space, so they had to do something,” he said.
Now that IBM Rational has grown by removing a significant competitor in the ALM market, other players in the space seemed cautiously enthusiastic. Borland Software’s Marc Brown, vice president of product marketing, said that in the long term, an acquisition such as this removes straightforward ALM companies and leaves customers with no option but to deal with industry juggernauts such as IBM. At the same time, the deal opens opportunities for “neutral” ALM players such as Borland and Serena to gain customers.
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