Software AG today announced its cloud strategy. It is based on services that are already available, one that will soon be available (H2 2013), as well as a service planned for Q1 2014.

Journalists have already been in touch with me, asking the following question: Is this an overdue “coming out” after many competitors have already announced or offered extensive cloud strategies — or is this a courageous act from a leading technology firm demonstrating its strength in innovation?

I've known Software AG quite well for many years and believe that today’s announcement marks the next stage in a 10-year corporate turnaround strategy. I well remember the time before Karl-Heinz Streibich took over a nearly bankrupt software vendor 10 years ago. Since then, the firm has been through a financial stabilization phase, which saw both a spending and innovation freeze in many areas. Then, Software AG started to renovate its existing products to stabilize its market share, innovating both carefully and cost-effectively. The third phase saw its acquisition of webMethods and IDS Scheer, which brought the firm sufficient scale in both current products and consulting services. For more details, see my earlier blog post.

Software AG then acquired smaller technology firms like Terracotta (in-memory, big data) and LongJump (PaaS). While these accelerated the pace of innovation, they weren't major milestones in the company's history. However, today’s announcement has the potential to represent another inflection point for Software AG. It goes beyond financial stability, size, and the continuous innovation of technology. It involves the Holy Grail that is the firm’s business model and paves the way for cloud services becoming a second pillar alongside the traditional license model. While most application vendors like SAP understood this market shift some time ago and took action with SaaS applications like Business ByDesign, Software AG's shift still offers early-mover advantage in the middleware space.

Forrester clients and journalists also often ask the following questions:

  • What is really being announced?
  • Who is this new product targeting?
  • What other vendors/products/cloud services is it competing with?
  • Why is this unique or new?
  • What’s the critical success factor for the vendor or for customers using the new offering?

Before I answer these questions for each of the three services that Software AG has announced — AgileApps Live, Process Live, and Integration Live — I’d like to point out that simply having a connected strategy for this cloud portfolio is already a key differentiator. Many major competitors are missing one of these three elements.


AgileApps Live

What: This is a PaaS offering with application-centric and process-centric capabilities based on the recent acquisition of LongJump. See my blog about PaaS capabilities for more details.

For whom: This mainly targets tech-savvy business users who will directly create applications at the departmental level for case management or composite apps that bring different cloud services together in one context. It really targets new buyers and is unlikely to cannibalize existing Software AG on-premises revenues.

Competitors: Cordys Process Factory, RunMyProcess (Fujitsu), (, and other case management tools.

Uniqueness: Most of its competitors are only available in the cloud. However, the LongJump technology is available as a multitenant cloud service and as an on-premises application environment. This enables customers to build a hybrid application strategy — for example, balancing legal compliance and total cost of ownership.

Critical success factor: Compared with, LongJump has a tiny ecosystem. Software AG needs to bring both larger ISVs and a community of many small ISVs into the LongJump app store.


Process Live

What: Process Live is a business process analysis (BPA) product provided as a SaaS offering. This report by Clay Richardson offers insight into the value of BPA and the typical process life cycle.

For whom: This offering addresses mainly new users who used to look at published process models alone. It now enables them to interact socially with the process author, make annotations, and change process models in a lightweight HTML5 user interface. It also enables exiting ARIS users to access their models on other devices, such as tablets. This improved interaction and accessibility might even stimulate sales of the new ARIS heavy-client installation, which is still the tool of choice for the professional modeling stage.

Competitors: IBM’s Blueworks Live is the closest competitor.

Uniqueness: Software AG’s Process Live is much more lightweight than the ARIS tool, but it is based on the same models shared in real time.

Critical success factor: The cloud service should not be an option; it should become the default approach to modeling in terms of both customer usage and Software AG's positioning. is a great example of how sophisticated clients (for power usage) and HTML5 access can come together uniquely via cloud storage. This should be the blueprint for BPA with ARIS and the Process Live cloud.


Integration Live:

What: Software AG announced that Integration Live will be available in Q1 2014, and we're assuming that it is an integration-centric PaaS offering. In combination with AgileApps Live, customers will gain enterprise-grade integration scenarios and the ability to write new apps in one cloud platform. This qualifies the platform to go beyond the simple cloud-based integration (CBI) that we see from vendors like Boomi and Informatica Cloud today.

For whom: Integration Live will complement the existing usage of webMethods. Sophisticated enterprises won't just integrate an on-premises ESB with SaaS apps in the cloud (Software AG already offers just such an add-on to the webMethods ESB under the name of CloudStreams); Forrester’s survey data shows that in two years, 21% of all enterprises will have some integration technology in the cloud combined with existing integration technology on-premises. That’s the target group; although this might cannibalize the current webMethods business in some accounts, it might increase on-premises traffic (and license demand) in others.

Competitors: CloudHub (MuleSoft), Tibco Silver (Tibco), Oracle Public Cloud (Oracle), IBM's smart cloud offerings, Pegasystems.

Uniqueness: If Software AG really brings the full webMethods runtime from the ESB to the BPM into this offering, it could be unique thanks to its completeness — as long as it carefully addresses the data security and privacy demands that regulated industries and EU customers have, similar to what Pegasystems is doing in the BPM space.

Critical success factor: Just hosting a webMethods suite in a managed service offering won't do the job. Customers can do this on their own via Rackspace or any other IaaS service that offers enterprise-grade support. Software AG needs to be more creative than SAP's HANA Cloud or Oracle’s public PaaS offering. Software AG could identify many components, such as the registry/repository CentraSite or identity management, where it could embrace full multitenancy or even collaborative tenancy and enable totally new business network scenarios.


The bottom line:

The combination of these three services (and potentially more) in a single Software AG cloud is the most important message from today. Seamless integration between all three has the potential to bring business and IT a step closer to a single business technology platform.