Dell Acquires Boomi to Provide Cloud-Based Integration Functionality
Dell purchases a cloud adoption firm in a move that analysts believe illustrates the personal computing company's desire to transform itself into a software and services company.
Posted Nov 22, 2010
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It's a bird...It's a plane...It's...Dell? Correct. With Dell's recent acquisition of Boomi, the personal computing company will now offer a pure software-as-a-service (SaaS) application integration platform to its clients. According to a Dell press release, the company will leverage Boomi's technology to address a top cloud adoption barrier — managing and integrating cloud-based applications with existing applications and databases. The move also aims to help Dell clients quickly and cost-effectively deploy application integrations and realize productivity and efficiency improvements over traditional models, according to Dell.

"Integration is a key element in Dell's future transformation into software and services," says Ray Wang, principal Analyst and chief executive officer at Constellation Research. "Companies like Dell, HP, and Cisco will need to be in software in order to grow."

Wang speculates Boomi will play a critical role in cloud-to-cloud and cloud-to-on-premises integration for Dell. He also predicts Perot Systems, which was acquired by Dell in September 2009, can leverage this for integration with legacy applications and put Boomi solutions into their modernization practices.

Bill McNee, founder and chief executive officer of consultancy Saugatuck Technology, predicts the Boomi acquisition will give Dell significant leading-edge, Cloud-based integration capabilities, and an entree into new markets. He views this move as "part of a growing movement by traditional on-premise vendors to redefine their portfolios with Cloud credentials and join Amazon, Google, and Salesforce.com as Cloud Master Brands," according to an article published on the Saugatuck Web site.

In the Saugatuck article McNee speculates that Dell may face a challenge in managing the transaction in such a way that the full potential of the acquisition can be realized. Because Boomi is a still a modest-size company — Saugatuck estimates to have an approximate annual run rate in the $10 million to $15 million range — McNee writes, "Dell would be smart to retain the Boomi brand for at least a year, and to continue to allow Boomi to maintain a semi-separate identity from a development perspective."

Jeff Kaplan, founder and managing director of consulting firm ThinkStrategies, argues Boomi's modest size was the reason Dell initially sought to acquire the company.

"Boomi is small enough for Dell to digest easily to test the integration market opportunities and requirements," Kaplan blogged. "[Dell] is still assimilating Perot Systems into its operations and corporate culture, and may not have been ready to acquire a bigger player, like Informatica or Pervasive."

Kaplan argued in his blog that Dell can't compete with the other major Platform-as-a-Service (PaaS) vendors, such as Salesforce.com, Google, and Microsoft, from a software development standpoint. But, Kaplan wrote, it can challenge them and others, such as Amazon and IBM, from an Infrastructure-as-a-Service (IaaS) point of view.

"For years, Dell has been working directly with our customers and SaaS leaders to understand the value cloud computing can bring and the issues customers face when contemplating this paradigm shift," said Steve Felice, president of Dell Consumer, Small, and Medium Business, via company press release. "Twenty-six years ago we helped accelerate the move to client-server computing; today we'll help drive a similar transformation with customers turning to the cloud to drive costs down and innovation up."

The financial terms of the agreement were undisclosed. The purchase is subject to customary closing conditions.

[Editors' Note: Managing Editor Joshua Weinberger's blog coverage of the Boomi acquisition can be found here.]

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