IBM Extends its Integration Portfolio by Acquiring Cast Iron Solutions
Based on its belief that the cloud computing market will continue to grow, IBM acquires a SaaS leader.
Posted May 15, 2010
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Banking on its estimate that the global cloud computing market will grow at a compounded annual rate of 28 percent until 2012, IBM has expanded its process and integration software portfolio by acquiring Cast Iron Systems. The acquisition - IBM's 55th since 2003 - will allow IBM to leverage Cast Iron's leadership in connecting SaaS applications to on-premise applications. This collaboration will allow IBM's clients to avoid complex and expensive hand-coding integration. 

Founded in 2001, Cast Iron Systems has thousands of deployed customer integrations across all industries. The California-based company claims its clients benefit from the simplicity, speed, and flexibility of the Cast Iron Integration Solution. The solution was designed to enable clients to integrate cloud-based and SaaS applications with the rest of the enterprise in a short period of time.

Cast Iron Systems will be joining a proven business process and integration software portfolio under IBM - a portfolio which grew more than 20 percent in the first quarter of 2010. IBM's software profit revenue has grown at 11 percent year-to-year in the first quarter. The industry titan also generated $8 billion in software group profits in 2008 (up from $2.8 billion in 2000).

"We're an industry leader in integrating services and applications and everything else that organizations need to integrate these days," says Steve Mello, IBM Director of Worldwide Product Marketing. "Cast Iron allows us to extend that leadership."

"Oftentimes now we're seeing organizations access Salesforce.com with a SaaS or cloud model," Mello continues, "but they need to integrate that application with other applications that the organization has on premise like SAP or JD Edwards to get a complete view of their customer and business. Cast Iron allows us to do this in a simple way."

The acquisition is indicative of IBM's future in cloud computing. According to the IBM press release, the company has already achieved the following:

  • IBM has 11 cloud computing labs around the world including the one that will open in Singapore later this week;
  • In November, IBM unveiled the world's largest private cloud computing environment for business analytics, providing developers and sales team with new levels of insight to better meet clients' needs;
  • IBM's internal cloud, Blue Insight, holds more than a petabyte of information; and
  • IBM is working with governments on cloud adoption, such as the US Interior Department's National Business Center, which has already realized a 40 to 60 percent improvement in productivity using the cloud model.

IBM believes it can quickly integrate all 75 Cast Iron employees.

"When we acquire a company," says Mello, "[we don't just acquire] the capability but the people as well."

Brad Shimmin, Application Platforms Principal Analyst at Current Analysis, predicts that not only will all the Cast Iron employees be integrated, he says they will be relied upon as the integration proceeds.

"The Cast Iron employees will be leveraged heavily to help IBM to connect with companies that are working with SaaS applications," Shimmin says, "and also with helping them better serve the SMB crowd. The employees they bring over - both the sales team and the engineers - will play a big role."

Shimmin says that the acquisition is mutually beneficial. IBM will gain Cast Iron's experience, technology, and business practices within the integration market, while Cast Iron will gain the benefit of IBM's multinational reach.

"IBM will internationalize Cast Iron to sell it to all the non-English speaking companies," Shimmin says. "And now IBM will have the experience, credibility, and the really strong ecosystem that Cast Iron has. The acquisition will have an immediate impact."

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