This morning, digital process automation (DPA) vendor Nintex announced the acquisition of bitter cross-town rival K2 Software. OK, let’s be honest: They were never bitter rivals. More like sibling rivals.
- Both reside in the same neighborhood in Bellevue, Washington, just one town over from Microsoft’s Redmond headquarters.
- Both have significant Microsoft DNA.
- Both were pioneers in establishing a market segment at the intersection of digital process automation and low-code development, a segment Forrester calls DPA wide.
- Both expertly navigated a major Microsoft market disruption when SharePoint came to prominence as a content management vendor.
- Lastly, together they will need to define their place in the exploding low-code automation space as Microsoft (oh, them again) and other giants look to capture this critical market.
These two are a great cultural match, and — let’s face it — culture is where most acquisitions fail. But, it goes deeper than that. While they’ve competed head to head for many years, they’ve also established very strong, and complementary, technology and market positions.
What K2 Brings To The Table
Let’s start with a very strong and savvy team, including a fairly recent influx of talent from Kony following its acquisition by Temenos. But, it goes well beyond that. K2 has addressed more sophisticated uses cases than Nintex. K2 has thrived in the area of medium- to medium-high-level process automation complexity. It has competed with DPA heavyweights like Appian and Pega at the high end of the market, while staking out a place in wide automation deployments. K2 brings the ability to address more sophisticated use cases and has professional services partnerships to help go to market and deliver them. K2 also has some very strong technology, and, without diving into detail, let’s just say that Nintex will benefit from K2’s SmartObjects technology for data and functional integration.
What Nintex Brings To The Table
Nintex has thrived at the wide end of the DPA market, with a huge customer base, many of which have deployed thousands of applications on the platform. It has leveraged an easy on-ramp and viral adoption model that is very hard to do. Nintex has also invested in a very broad intelligent automation portfolio, including native RPA capabilities through its EnableSoft acquisition, process modeling and documentation through its Promapp acquisition, and document generation through its Drawloop acquisition. Notice a pattern here? One more critical Nintex strength worth noting: They have a very good record of acquiring, and more importantly successfully integrating, key technologies. That said, integrating K2 and Nintex will be a larger and more complex job than they’ve taken on to date. And while the portfolios offer many complementary technology areas, the overlap can’t be ignored. Integrating these two stacks will be difficult and time-consuming and involve some tough choices along the way.
The Tech Heavyweights Are Not Missing This Opportunity
While this acquisition makes a great deal of sense, it must be considered in light of broader market trends. In our September 2020 report, “Navigating The Rapid App Delivery Market,” we predicted the low-code and process automation market will grow from $6.2 billion in 2019 to $14.5 billion by 2024. Moreover, low code is quickly becoming a differentiator in the much larger software-as-a-service and cloud platform markets. In January, Google acquired AppSheet, another Seattle-area, low-code vendor, to add low-code development to Google Cloud Platform. Amazon Web Services has jumped in with its Honeycode offering, which is not yet fully mature, but Amazon has been known to shake up a market or two. And, of course, just down the street, there’s Microsoft. The tech giant offers Power Platform, which includes Power Apps and Power Automate. Microsoft has aligned the Power Platform to Office, Dynamics, and Azure, creating a lot of entry points into the market. It has a very crisp product strategy that appeals to citizen developers, while leveraging its huge army of traditional software developers.
Nintex And K2 Have Done This Before
Rapidly growing markets offer great opportunities as well as risk. When SharePoint exploded in the 2008 time frame, both Nintex and K2 leveraged the moment and grew rapidly. As we now face another huge market shift, the two will have the opportunity to do it again as teammates instead of competitors. It should be fun to watch this story unfold. It’s moments like this I love being an analyst.