As I wrote after the Metamorphosis event, IBM’s acquisition of Cast Iron put the spotlight on the tremendous demand that cloud computing is creating for integration software to bridge the gap between on-premise and software-as-a-service (SaaS) applications—as well as between SaaS solutions. This drumbeat has continued to strengthen, leading Dell to the conclusion that Boomi’s integration capabilities are an essential ingredient to making its Virtual Era solutions and services strategy a success. Integration is very strategic and critical for both IBM and Dell, and each has vast marketing and technology resources to invest in these acquisitions. As a result, Cast Iron and Boomi are likely to become more formidable opponents for Pervasive.

So how will Pervasive, which has arguably been the market leader in the integration space to date, fare as competitive pressure continues to mount? Based on what Pervasive announced at IntegratioNext, and as importantly, the conversations I had with many customers and partners at the event, I think Pervasive will manage just fine, for several reasons.

1.     Pervasive has an innovative, stress-tested integration portfolio that’s growing stronger. Pervasive has been a leader in helping end-user customers, ISVs and channel partners solve the tricky problems of data and application integration since 2003. Today, Pervasive’s integration line-up includes a wide range of integration options for on premise, cloud to cloud, between cloud and on premise, including:

• Data Integrator, an integration platform that connects a plethora of databases, flat files and legacy formats and applications, including virtually any software-as-a-service (SaaS) and on-premises applications. With the latest release, Data Integrator V10 in now available the cloud as well as on-premise.

• DataCloud2, initially launched in 2009, is a fully multi-tenant, on-demand integration platform that combines the Data Integrator platform and DataSynch with Pervasive Integration Agent, a lightweight agent that sits behind a company’s firewall to connect on-premise apps with the cloud. Developers can tap into Pervasive data services, including its catalog of data adapters, to accelerate development.

• DataCloud Marketplace, where both customers and partners can shop for integration tools. End users only buy the solution the need, they don’t have to purchase other technology from Pervasive. Pervasive has already created several small business integrations, such as Salesforce.com to Intuit QuickBooks and Salesforce.com to Freshbooks–pricing starts ad $19.95 per month.  Developers that create integrations with Pervasive technology can put them the marketplace, set their own price, and create an ongoing annuity revenue stream.

2.     Pervasive enjoys a great track record with ISV partners. About 60% of Pervasive’s business today goes through the channel, mostly via ISVs that embed Pervasive integration within their solutions. Embedded ISV integrations are becoming a key differentiator for business software and cloud vendors because they ensure that the integration won’t cost more than the solution.

3.     More focus on the SI and consultant channel. While embedded ISV integrations are a great, friction-free way to provide integration, they won’t solve for an endless combination of integration scenarios—particularly in the SMB market. Pervasive is providing more tools and marketing programs that SI and consultant firms are also finding very attractive. Strategic Growth, for instance, uses Pervasive technology to provide reasonably priced, repeatable and easy to integration between Salesforce.com and NetSuite. Since these software vendors won’t integrate with their competitors, partners can seize on the opportunity to build new revenue streams by creating integrations to serve their own customers, which they can also sell in the Pervasive Marketplace.

4.     The integration challenge has always been complex, and is becoming more multifaceted. More applications need to be integrated both in the cloud and on premise. In addition, adoption of new mobile and social media solutions is on the rise. By providing more turnkey (and less costly) integrations Pervasive and its partners can alleviate the problems of one-off custom integrations and costly updates.

5.     Pervasive is taking significant strides to boost its marketing capabilities. Pervasive hasn’t always articulated what it does and how it helps as clearly as some of its competitors. But, the vendor has hired new marketing people to help it articulate its strategy, messaging, and the business value of Pervasive integration solutions in a clearer, more compelling way. At the event, I did notice that Pervasive sessions seemed much more tuned to business value than in the past–now they need to keep it going.

Finally, Pervasive enjoys its freedom. Although I don’t believe that IBM and Dell will squander their respective acquisitions of Cast Iron and Boomi, each of these acquired companies is now a little fish in a very big pond. As such, they are likely to sacrifice some agility as part of these larger, more bureaucratic companies. In contrast, Pervasive, as an independent company, can keep a laser-like focus on integration, without worrying about having its focus diluted and/or dispersed within a large IT company that has many other irons in the fire.

Highlights:

In May of this year, IBM acquired Cast Iron Systems (for an undisclosed sum) to help customers more effectively tackle the challenges of integrating cloud and on-premise solutions. Cast Iron, which was founded in 2001 and has 75 employees, provides hundreds of pre-built templates and a “configuration, not coding” approach to help streamline and shorten the time application integration. Cast Iron’s OmniConnect portfolio includes three deployment options, which all share the same interface, and deliver user interface mashups, process integration and data migration capabilities:

• Cast Iron Cloud2, a multi-tenant Integration-as-a-Service cloud offering
• Cast Iron Physical Appliance
• Cast Iron Virtual Appliance

Cast Iron has positioned itself as the “The #1 SaaS and Cloud Integration Company,” with more than 450 mid-market customers and an unspecified number of large enterprise accounts. Traditionally, Cast Iron has competed against rivals such as Boomi, Informatica and Pervasive in the integration market.

IBM will make Cast Iron’s solutions available worldwide as part of the WebSphere integration portfolio.

Quick Take:
IBM’s acquisition of Cast Iron was driven by a few fundamental market trends. First, cloud computing growth is exploding. IBM is forecasting global market CAGR for cloud computing is expanding by 28%, from $47BB in 2008 to $126B in 2012. In addition, data volumes are rising exponentially. IDC forecasts that data stores are growing an average of 60% annually, fueled by factors including the social media explosion, and the increasing trend to aggregate, mine and monetize data. More and more of this data will be stored in the cloud.

These forces ratchet up the need for simpler, cheaper integration alternatives. In the cloud, data and data control are widely distributed. And most companies will continue to operate in a blended or hybrid computing approach for the foreseeable future. Connectivity scenarios between cloud applications and data sources, cloud to on-premise, and between public and provide clouds are spiraling the number of possible integration scenarios. Developers, integrators and customers must deal with a staggering number APIs and technologies to accomplish these integrations.

While IBM’s WebSphere already includes a wealth of integration capabilities, Cast Iron enables IBM to provide more turnkey integration, which reduces cost and complexity, and removes significant barriers to cloud computing adoption. By leveraging this streamlined approach, IBM can strengthen its role as a integration hub for its existing enterprise customers, and more readily extend its integration footprint into the mid-market.

Of course, IBM had other acquisition options, most notably Pervasive, which is a significantly bigger company than Cast Iron, boasting more than 1,000 SaaS integration customers and dozens of integrations; and Boomi, which focuses exclusively on a cloud-based integration platform, and offers dozens of integrations. (Interestingly, Boomi, Cast Iron and Pervasive–all provide integrations for several of the leading SaaS vendors.)

So why Cast Iron? My take is that IBM took this route for a couple of reasons. First, I think IBM likes the fact that Cast Iron’s line-up features software, cloud and appliance options. IBM has been putting a lot of focus on appliances, in particular, as bridge between on-premise and cloud solutions. Cast Iron provides an appliance option, and also provides integration in a uniform way across all three delivery models. In addition, IBM likely viewed Pervasive’s PSQL database business, which still accounts for a majority of Pervasive’s revenues, as an asset it didn’t want or need.

For these and other reasons, the Cast Iron acquisition makes sense for IBM. But will IBM be able to successfully surface and leverage Cast Iron’s automated, simplified approach within the context of an increasingly complex and crowded WebSphere and Software Group portfolio–which, I’m told, is now comprised of more than 30,000 different offerings? IBM already has two disparate integration stacks, WebSphere for application integration, and InfoSphere for data integration. Smaller acquisitions have tended to get lost in the IBM shuffle in the past, and IBM Software has made additional, bigger acquisitions (such as Sterling Commerce and Coremetrics) since it acquired Cast Iron.

Meanwhile, what moves will Pervasive, Boomi and Informatica make to meet the challenges of a new integration gorilla in the mist? As important, what plays will IBM’s traditional competitors, such as Oracle and SAP, as well as cloud leaders such as Google, Amazon, Salesforce, etc. come up with as they pursue similar goals? Are other integration acquisitions in the works?

I don’t have a crystal ball–or inside information–to know how the details of new developments will unfold. But as the drivers for more streamlined cloud integration continue to intensify, this promises to be a very interesting space and one I’ll be watching closely.

• Cast Iron Cloud2, a multi-tenant Integration-as-a-Service cloud offering
• Cast Iron Physical Appliance
• Cast Iron Virtual Appliance

Cast Iron has positioned itself as the “The #1 SaaS and Cloud Integration Company,” with more than 450 mid-market customers and an unspecified number of large enterprise accounts. Traditionally, Cast Iron has competed against rivals such as Boomi, Informatica and Pervasive in the integration market.

IBM will make Cast Iron’s solutions available worldwide as part of the WebSphere integration portfolio. .

Quick Take:
IBM’s acquisition of Cast Iron was driven by a few fundamental market trends. First, cloud computing growth is exploding. IBM is forecasting global market CAGR for cloud computing is expanding by 28%, from $47BB in 2008 to $126B in 2012. In addition, data volumes are rising exponentially. IDC forecasts that data stores are growing an average of 60% annually, fueled by factors including the social media explosion, and the increasing trend to aggregate, mine and monetize data. More and more of this data will be stored in the cloud.

These forces ratchet up the need for simpler, cheaper integration alternatives. In the cloud, data and data control are widely distributed. And most companies will continue to operate in a blended or hybrid computing approach for the foreseeable future. Connectivity scenarios between cloud applications and data sources, cloud to on-premise, and between public and provide clouds are spiraling the number of possible integration scenarios. And developers, integrators and customers must deal with a staggering number APIs and technologies to accomplish these integrations.

While IBM’s WebSphere already includes a wealth of integration capabilities, Cast Iron enables it to provide more turnkey integration, helping to reduce cost and complexity, and in doing so, removing significant barriers to cloud computing adoption. By leveraging this streamlined approach, IBM can strengthen its role as a integration hub for its existing enterprise customers, and more readily extend its integration footprint into the mid-market.

Of course, IBM had other acquisition options, most notably Pervasive, which is a significantly bigger company than Cast Iron, boasting more than 1,000 SaaS integration customers and dozens of integrations; and Boomi, which focuses exclusively on a cloud-based integration platform, and offers dozens of integrations. (Interestingly, Boomi, Cast Iron and Pervasive–all provide integrations for several of the leading SaaS vendors.)

So why Cast Iron? My take is that IBM took this route for a couple of reasons. First, I think IBM likes the fact that Cast Iron’s line-up features software, cloud and appliance options. IBM has been putting a lot of focus on appliances, in particular, as bridge between on-premise and cloud solutions. Cast Iron provides an appliance option, and also provides integration in a uniform way across all three delivery models. In addition, IBM likely viewed Pervasive’s PSQL database business, which still accounts for a majority of Pervasive’s revenues, as an asset it didn’t want or need.

For these and other reasons, the Cast Iron acquisition makes sense for IBM. But will IBM be able to successfully surface and leverage Cast Iron’s automated, simplified approach within the context of an increasingly complex and crowded WebSphere and Software Group portfolio –which, I’m told, is now comprised of more than 30,000 different offerings? IBM already has two disparate integration stacks, WebSphere for application integration, and InfoSphere for data integration. And, smaller acquisitions have tended to get lost in the IBM shuffle in the past, and IBM Software has made additional, bigger acquisitions (such as Sterling Commerce and Coremetrics) since it acquired Cast Iron.

Meanwhile, what moves will Pervasive, Boomi and Informatica make to meet the challenges of a new integration gorilla in the mist? As important, what plays will IBM’s traditional competitors, such as Oracle and SAP, as well as cloud leaders such as Google, Amazon, Salesforce, etc. come up with as they pursue similar goals? Are other integration acquisitions in the works?

I don’t have a crystal ball–or inside information–to know how the details of how new developments will unfold. But as the drivers for more streamlined cloud integration continue to intensify, this promises to be a very interesting space and one I’ll be watching closely.