Analysts were predicting more consolidation in 2011, and it looks like the late-year acquisitions are happening again.

First, doc capture specialist Kofax has acquired Singularity, a BPM and case management provider.  Kofax has been part of many a BPM project, whether they realize it or not, as the doc capture element.  Almost every BPM project needs that transition from “physical world” to “electronic bits” or “process world” – and document capture is a common entry point.

Neil Ward-Dutton, of MWD, comments:

In a call first thing today, Kofax CEO Reynolds Bish highlighted that he expected the acquisition to double the size of the company’s addressable market – in large part through the expansion of sales coverage and effort for Singularity’s products, which Singularity itself had largely confined to the UK.

In other words, Kofax expects to expand the reach of Singularity, as well as of their product set itself.  Interesting, to me, was that Singularity’s revenue mix was 50% services, and that Kofax intends to adjust that downward.  Good news for Singularity partners or services experts.

Meanwhile, in another corner of the BPM world, Progress has acquired Corticon, a pure-play rules management (BRM) vendor:

Progress is pitching Corticon as a crucial ingredient as it continues to develop its RPM story, and this makes sense. Progress’ Savvion BPM technology already had a fair business rules capability (BizRules) as an integrated component, but my view is that Corticon’s technology is more widely-applicable, as well as being widely acknowledged for a very strong ease-of-use story, enabled by its heavily model-driven and graphical approach to rule specification. Its open stance towards rule management repositories will also serve it well, as Progress seeks to blend Corticon’s tools into broader capability mixes.

In a previous life, we used Corticon for rules for a while.  We didn’t find it particularly compelling and ended up writing our own, similarly non-compelling rules solution.  More often than not, customers would use ILOG or Fair Isaac or Drools. But it has been several years now, and no doubt Corticon has made some progress in that time (pun intended!) on their rules capabilities.

The conclusions I’m drawing from these acquisitions:

1.  BPM and Rules are a natural combination.  BPM seems to be the value driver, as it is the rules vendors getting gobbled up.

2.  BPM and Content Management or Document Management combinations are also happening.  But the major BPM vendors have (largely) already purchased Doc Management or Content Management solutions… So the remaining players in these spaces are forced to go pick off the weaker BPM vendors instead (OpenText acquired two of them, Lexmark acquired Pallas Athena, and now Kofax is in on the act).

3.  There’s still a lot of shakeout to occur in the market – and execution at a detailed level for each vendor is really going to matter.  At this point it isn’t all marketing fluff – real differences in product are apparent.  But the target keeps moving.  A well-integrated solution that is coherent to the end-user is going to win the day.

About a month ago, Sandy Kemsley attended Progress Revolution – first giving an intro-to-BPM course and then blogging about the sessions she attended.  The whole series of posts is worth reading, and I thought a few highlights from her coverage might convince you to read more…

On the importance of BPM (and CEP) to Progress, from opening remarks:

In spite of Progress’ long history with their OpenEdge software development environment, it’s clear that much of their future success is based on the Apama CEP and Savvion BPM acquisitions, and the integration of these product functionalities into a comprehensive solution.

On OpenEdge development methods and how they relate to BPM:

Does the integration of BPM just relegate OpenEdge to the scripting/coding language slaved to BPM? Maybe, but that’s not necessarily a bad thing. Instead of layering BPM on top of a monolithic application developed with OpenEdge, it’s about having an integrated development platform that includes BPM as a part of the toolkit. It will be interesting to see how well this message is received by the OpenEdge development community, and how long it takes to actually impact their development methods.

And, we can see that Progress took a similar approach to integrating BPM acquisitions as IBM did:

Although (Savvion) BPM Studio and the OpenEdge Architect development environment are both Eclipse-based, it doesn’t appear that they’ve been integrated in any significant manner. Similarly, there are two different servers – although a BPM process can call an OpenEdge functionality, using web services at least – and two different end-user portal environments, where the BPM server functionality can be surfaced in the OpenEdge portal.

This approach drew a lot of fire from analysts covering IBM’s integration a year in, but I don’t see the same angst in coverage of Progress-Savvion after 18 months.  In fact, I’d say although Progress has the same approach it doesn’t look like they’re quite as far along implementing their strategy.  I’m not saying there should be angst – I think both companies are simply taking realistic measures to integrate different product lines.

On her realization that this isn’t a BPM vendor conference, during her coverage of Dr. Ketabchi’s talk:

…which really drives home that I’m not at a BPM vendor’s conference, I’m at an application development tool vendor’s conference where they are introducing this hot new technology called BPM. This is, of course, the stage that most of the business world is at with respect to BPM understanding; I’m just so used to being in the BPM echo chamber that I rarely hear these messages unless I’m delivering them to a client.

Great material across 7 or 8 posts! Thanks to Sandy for capturing this for those of us who couldn’t be there in person.

Appian is again taking shots at others’ acquisitions from the sidelines in “Another Monster is Born”:

Bigamy is one analogy for what’s happening in the stack vendor land-grab for the BPM market. Another is “Frankenstein’s Monster.” And we all know how that played out…for the Monster and the townsfolk.

That’s only the beginning.  Appian is not impressed with OpenText’s acquisition of Global 360.  Frankly, I’m surprised they reacted at all (were they really competing that often with Global 360 or OpenText?)  But here’s a statement I strongly agree with:

BPM is not yet commoditized for the simple reason that BPM is not yet done evolving. Perhaps more than any other enterprise IT market right now, BPM is in a process (no pun intended) of innovation. BPM software is just now learning how to reach more people, drive more value and truly transform a business. Cloud BPM is driving a growing percentage of the market. Mobility has entered the game, as has social technology. This market is not yet complete.

In fact, there are other areas in which BPM is learning to reach more people and incorporate more mature technologies, as well as emerging tech.  But cloud and mobile are certain two big trends to watch (and, to Appian’s credit, two trends they bet on early… compared to other BPM vendors at least).  BPM is not yet commoditized.  But the demand is growing faster than the independents could satisfy it – faster than they could build their sales channels and development teams.  So it looks to me like a lot of interesting innovation will happen in pure plays or niche plays, but that bigger vendors are likely to acquire and incorporate those innovations (hopefully, not destroying them in the process). The question is, can BPM reach its true potential without the deep pockets of public market money or big company R&D?

But leave it to Appian to misunderstand what some of its competition are up to:

It seems to me that all the mega-vendors think BPM is simply a commodity. The mentality is that the more BPM technology you can acquire, the better; loosely stitching them together to create a creature that will succeed through sheer mass. OpenText is the latest example, but look at IBM, Oracle, Progress, etc.

I can’t speak to whether OpenText views BPM as “simply a commodity”.  However, I have some personal knowledge about Oracle, Progress, and IBM.  Oracle: guilty as charged.  They have a BPM strategy but it doesn’t feel like they are putting the gravitas behind it.  Ditto for SAP.  Progress has made BPM (aka RPM) the center of a coherent go-to-market strategy.  When a company reshapes their value proposition with BPM at the heart of it, I hardly call that treating it as a commodity or trying to succeed through sheer mass.  There are legitimate criticisms of the Progress approach, but they have brought together sound technical solutions across a range of product areas that pure plays don’t play in, and they’ve found a way to get behind a process vision for that.

Finally, looking at IBM – Appian is sadly mistaken if they think IBM looks at BPM as a simple commodity that it need not worry about.  Anyone attending IBM Impact in May can see how seriously IBM is taking BPM.  IBM’s customers and partners are taking it equally seriously.  In the very last session of the day on the third day of the conference, our own session at Impact was full to overflowing – as were nearly all the BPM sessions at Impact all week long.  IBM is hearing the message, and the investment in rationalizing their products into a much improved BPM offering is quite obvious to see for those of us in the trenches.

Good coverage of Progress’ analyst day by Neil Ward-Dutton:

My concern at the previous year’s event was that Progress was in danger of painting itself into a corner: by highlighting RPM as the “next step beyond BPM”, it was in danger of creating for itself a very specialised niche. It seems that the company understands this challenge, and is doing some things to try and avoid this particular trap. We heard about three specific initiatives, all of which are related.

Like Neil, I like(d) the definition of RPM, but worry(ied) that it would paint them into a corner if they became only about a special subclass of BPM.  I think this is the danger to the vendors pursuing ACM vis-a-vis BPM as well (less so to those vendors who claim to do both).  Neil’s assessment is that they’ve avoided that trap, which is good.

The biggest transformation still facing Progress is to be more business-facing in both sales and delivery.  They have a well-respected technical heritage, but appealing to the business hasn’t been the reputation historically, and sounds like something that still has room for  improvement.

So the new Forrester Wave is out.  What’s that? you hadn’t heard?  If not, you haven’t talked to anyone in the analyst or BPM vendor community in the last 24 hours!

As usual, there are a raft-load of vendors declaring victory:

Appian: “Appian Still Leading the Pack”

Pega:  “Pegasystems ranked #1 as one of two BPM vendors that ‘lead the pack with the best overall combination of modeling, design and development features for business and technical roles driving process improvement’ “  (bonus, their article includes the image of the Wave graphic itself)

Metastorm: “Metastorm Recognized as a Leader in Business Process Management Suites Report…”

IBM has several congratulatory tweets about being in the leader quadrant, but I haven’t seen a press release yet.

Judging by the wave, I should be able to add links to Progress and Software AG press releases or blog posts by this time tomorrow.

Every one of these vendors will crow that the analysts have confirmed that they’re as smart as they thought they were – that they’re leaders (or even, “number 1″).

So, I’ll let you in on a little secret.  The Wave won’t tell you which BPMS makes the most sense for you.  Some of these offerings are actually so different that they rarely, if ever, compete for the same customer projects, and often corporations own more than one product because they aren’t viewed as doing the same thing.  For example, Appian’s strength in SaaS means that will compete more often for SaaS deployments – the decision “to SaaS or not to SaaS” was probably made before any vendors were called.   Metastorm’s strength in EA may play well with customers who are doing a lot of modeling, but for projects that are more focused on implementation, or who already own other EA tools, that offering won’t be as compelling as something more targeted at executing processes.  Even Pega (apparently depicted as #1 on the Wave), isn’t as often in competition for general-purpose BPM platform purchases – they tend to be in the finals for more vertical processes, where their investment in specific templates or verticals or applications can really pay off.  A friend once described Pega as more a company that sells rules- and BPM- enabled applications, rather than BPM itself (it wasn’t a criticism, my friend thought it was good strategy for the company).

Of course the meat of these things is in the written words inside the report, but it is hard to get there when there is that tasty graphic that everyone can look at.  I wonder what would happen if Forrester withheld the scoring and the graphic for a couple of weeks, and just revealed the more in-depth analysis.  Another interesting data point would be the number of times (that Forrester can determine) any two vendors were finalists in the same evaluation – which would allow for a 2×2 grid/heatmap that shows you who is competing with whom.  I was happy to see Forrester give up on separating BPM into various different flavors of BPM – that approach never really worked for me, personally.

So everyone is happy now.  But in the morning, we’ll humbly get back to work and get some processes built and deployed, and improve some processes.  Which is, after all, the whole point of BPM.

Update: as expected, a few announcements today:

Software AG announces their leadership status here.

And Progress’ blog entry can be found here.

There’s been a lot of gnashing of teeth about the state of BPM vendors, and the BPM segment, ever since IBM announced its acquisition of Lombardi (and followed quickly by Progress’ acquisition of Savvion).  Even before then, there was much discussion over whether BPM really was a bright spot in the enterprise software space – could it really be growing when everyone else was struggling to tread water?

And since these acquisitions, the attention has often turned to case management (or, the nom du jour, “Adaptive” Case Management), and some have argued that “BPM” as imagined by advocates of BPMN is in trouble.   Of course, as with many things, one way to measure “success” is by whether the businesses advocating a particular approach are doing well – and doing well is typically defined as increasing revenue (and/or profit).  Ironically, if such a firm makes money, critics will say this only proves that the firms are good at making money, not that the software or approach to BPM is adding value for customers.  But we have to accept that in the long run, averaged over *many* decisions, the market assesses value by assigning dollars (or euros, etc.) to the products that are perceived to add value, and starving the products that don’t add value by not making purchasing decisions.

Dennis Byron says the big enterprise software firms are well-positioned to take advantage of the BPM “explosion.”  Meanwhile the independents don’t appear to be suffering.  The latest report from MWD summarizes results from Appian and Active Endpoints, two vendors who wholeheartedly support BPMN (Appian with a SaaS model, and Active Endpoints with a BPMN-up-front and BPEL-in-the-back approach).

Key data points:

Appian highlighted the growth of customer orders by 58% from Q4 2009 to Q1 2010 (and this isn’t a seasonal thing with Appian; in 2008 its Q4 was its largest quarter). Active Endpoints highlighted revenue from new customers: it tripled in Q1 2010 over the same quarter in 2009 – contributing to an overall doubling in revenue against the same period a year earlier.

Bigger firms like Pega are doing just fine as well, according to their quarterly reports.  So this is a good indicator of increasing demand for BPM software.  The increased demand for BPM skills, education, and even consulting is sure to follow.  It is an exciting time to be in the BPM market. Congratulations to these firms for having good Q1 results.

Good coverage of Progress Software’s analyst day by Sandy Kemsley.  In particular, the coverage of the John Bates CTO talk and the wrap-up were the most interesting reads.  There’s obviously a good product-fit for Progress and Savvion and so their go-to-market is shaping up quickly around this RPM concept (Responsive Process Management).

On March 15th, Progress put out an official release on the Responsive Process Management suite.   Its a great packaging of the strengths Progress brings to the table, generally available in late April.  We’ve noted before that it is pretty easy for other companies to copy market positioning and marketing, without following through with real product changes required to support that positioning.  I’m curious to see how quickly the new, bigger BPM vendors will now coalesce around a new set of product position statements.  Progress has put their flag in the ground.  What will the positioning of IBM, Tibco, Pega, Appian, and others be?

Just yesterday, Mark Palmer (of StreamBase, but formerly GM of Apama at Progress), gave a tough critique of Progress’ new strategy.  Of course, being a former GM there, and currently running a competitor (StreamBase) – colors his view.  On the one hand, he has a lot of insight into the company’s strengths and weaknesses, and the market itself.  On the other hand, he’s somewhat pre-disposed against Progress, and that tone comes across pretty well in his post.  Not that he doesn’t raise some legitimate concerns for Progress to address – but the clear assumption in his post is that Progress won’t be able to address his concerns.  And while he points out “problems” one could also flip it around and see “opportunities.”  Example:  He points out three customers who presented (Southwest, 3Italia, and State Street) each only use one Progress product.  So, that could be an example (as he uses it) of how Progress won’t be able to sell their suite.  Or, looked at a bit differently, it looks like the Opportunity Progress has to sell 6-7 more products to happy customers of at least one product… and it makes their effort to unify their sales force look that much smarter.

As much as I might like the scrappy start-up mold of company, and the innovation that comes out of it, Progress (and IBM, Tibco, Oracle) are in a realm where they have to increase the yield on a captive (and channel) sales team.  Adding Savvion to the mix is beneficial to that efficiency argument, in the same way that adding Lombardi to IBM’s mix was beneficial to their sales yield.  But it sounds like Progress had sales org changes to make which Mark criticizes, but which, I have to say, make a lot of sense for a company with 7 products to sell.  It may hurt Progress’ ability to compete in certain niche segments of CEP with the likes of StreamBoat – but it also means they’ll sell CEP to customers who will never even pick up the phone to call StreamBoat because they were really talking to Progress because they wanted BPM and ESB products, and CEP was a nice-to-have for them.

A more balanced take is Neil’s writeup at MWD Advisors: making the Next Big Thing big enough.  I think the best part of Neil’s blog post is summed up here:

I think I know what Progress is trying to do with RPM – it’s trying to show how CEP, transaction monitoring, SOA infrastructure and BPM taken together can make the business value of each investment more compelling.

Think about it as adding probabilities: 0.2 + 0.2 + 0.2 + 0.2 = 0.8. (to use some random numbers).

The danger with the tack it’s currently taking is that it could end up multiplying those probabilities, not adding them. (0.2 x 0.2 x 0.2 x 0.2 = 0.0016).

Of course, we’re not really talking about probabilities – we’re talking about yield: revenue per sales rep.  And while each new product added does not typically create a case of 1+1 = 2, it can very well be the case that a sales rep with two complimentary products sells 150% or more than what they would sell with only one product.  If you hit the “suite” just right, and solution sell, a rep may actually be able to sell something that is more than the sum of the parts:  a solution to a hard problem, for a customer who values that solution quite highly (customers will generally pay more for a solution than they will for a collection of parts that can be tied together… and they’ll pay more for a packed product solution than a bespoke solution – that’s not a scientific analysis that’s just based on observational experience and understanding risk).

Also, while Progress painted a future vision of RPM that might be too aggressive for many customers, the more modest vision of having “best of breed” technology in several core areas combined into a suite that matches up with your business processes really well, is actually a pretty compelling offering.  It seems like a reasonable way to leverage the years of trust Progress has developed with its individual product brands.

As Neil lays out:

Key to Progress succeeding in its endeavour will be its ability to lay out the RPM vision to industry in a non-threatening way – showing how customers and prospects can get from where they are to ‘RPM nirvana’ and showing how value can be added at each step on the journey.

That’s just it – there has to be a way to get from square 1 to “RPM Nirvana”.

Well, as predicted, the news of IBM acquiring Lombardi was quickly followed by more acquisition news:  today Progress Software announced an acquisition of Savvion.

I can’t say that I’m surprised – adding BPM is a logical step for Progress, and has been for some time (in fact, they were a good technology partner for Lombardi when I worked there).  BPM could help progress sell more than one product in one sale -because the sale is more about a solution to the process problem than it is about a specific product.

The price tag is certainly reasonable – $59M essentially.  Feels more like a technology buy than a business buy, but then, Savvion was also considerably smaller than Lombardi at time of sale (when I joined Lombardi, Savvion was much bigger than we were, and Staffware was the “800-pound gorilla”, but Staffware got picked up by Tibco, and Lombardi grew faster than Savvion in the meantime).

Sandy Kemsley’s analysis is that the most likely opportunity is CEP + BPM (since Progress has the Apama CEP offering).

Bruce Silver worries that this is the beginning of the end of BPM:

If we go back just a few years, four vendors on the business-centric end of the BPMS landscape stood out by empowering business to play a direct role in process implementation:  Lombardi, Savvion, Fuego, and Appian.  Their software featured model-driven design based on the BPMN standard.  It encouraged a new agile iterative design style based on business-IT collaboration rather than tossing business requirements over the wall.   Where most BPMS vendor projects operated in a bubble disconnected from their customers’ larger business process modeling and analysis efforts, these four vendors stood out by saying it would be better to unite them, to put business at the center of BPMS, not just at the center of process modeling and analysis.  If Smith and Fingar’s 2002 BPM: The Third Wave was the vision, these four vendors came closest to fulfilling it.

What a great way to sum up the concerns with the string of acquisitions.  In the comments to Bruce’s post, Appian’s CEO does a little grave-dancing, which continues in his own blog posting.  One might argue that he doth protest too much “we are not for sale!”  He tells some stories about how the founders’ work ethic.  I have to tell you, Mr. Calkins, that these stories do not make you unique among the BPM vendors, by any stretch.  I think it is these qualities of determination (and often sacrifice) that allowed the four companies named by Bruce to get to the size they each achieved – but determination and hard work is not a guarantee of any degree of success, just one of the necessary ingredients.  Similar stories are in the lore of these other BPM vendors. Mr. Calkins paints the outcome as being Appian vs. Pega for BPM dominance. It will be interesting to see if he’s right, or if the stack vendors (one or more of them) will double down on their investments.  The key thing that the larger vendors have that has been very hard on the pure play vendors is a much larger sales channel through which to move product – resulting, in many cases, in a customer already having a competing product before you even talk to them.  And then you have to prove your product is enough better that they should buy a second BPM tool.  That requires a sales staff worth their commissions, and an R&D team that is nimble and efficient.

John Pyke, of Cordys (and formerly Staffware), offers his assessment of both the Lombardi and the Savvion buys. Understandably, it isn’t in his interest to look favorably on either one.  He discounts the value of the Lombardi and Savvion offerings to the companies that acquired them. Of course, he discounts the value of Staffware to Tibco too.  Interesting to say the least…

Tony Baer’s take is that pure play executable BPM’s days are numbered.  He may be right.  But some of his explanation doesn’t reflect what we’ve learned at BP3 from deploying BPM in the field.  As he puts it:

Consequently, it is not simply the usual issues of vendor size and viability that are driving IT stack vendors to buy up BPM pure plays. It is that, but more importantly, if you want your BPM tool to become more than documentware or shelfware, you need a solution with a real runtime. And that means you need IT front and center, and the stack people right behind it. Even with emergence of BPMN 2.0, which adds support for executables, the cold hard facts are that anytime, anything executes in software, IT must be front and center. So much for bypassing IT.

Well first, these tools were hardly documentware or shelfware.  And the execution of processes can be achieved with these tools (in fact, it is the whole point of these tools).  Tony infers that execution requires IT to be front and center – but I would argue that this is a straw man that isn’t relevant. If IT is front-and-center and delivering the right value and process to the business, I’m sure everyone would be happy.  The holy grail of BPM is that business and IT can speak the same language with respect to business process requirements.  That even after the requirements become a deployed system, someone from the business could still look at the BPM models (which are actually executing in a model preserving approach), and understand them.  Never was IT going to be out of the picture, but for the first time in a long time, the business could be involved in a meaningful way, rather than a “throw those requirements over the wall” way.  The rest of his analysis I can’t take issue with.

In yet another forum, Jason Stamper has a great article and a few quotes from executives at Savvion and Progress. Dr. K takes shots at Lombardi:

Asked to summarise Savvion’s key differentiators from the BPM competition, Dr Ketabchi said: “The first thing is the extent and scope of our functionality: for example our BPM comes out of the box with a business rules management system, which Lombardi does not. IBM has the Ilog business rules but there is no integration between Ilog and Lombardi.”

“Second, we made sure our BPM is enterprise BPM — Lombardi, Metastorm and those others are departmental BPM. Our BPM is event-centric and supports event-centric patterns, decision-centric operations, case management and so on,” Dr Ketabchi told me.

Well, I just would guess that if Lombardi was only departmental, that Savvion would have sold for a higher price than Lombardi.  I would have been more interested in how Dr. K would see the new combined entity competing with the new terrain of providers, rather than rehashing the old Lombardi-Savvion debate.  I think being part of Progress gives Savvion new life and potential relevance in the BPM space, because Progress’ other offerings are well-respected in the industry.

Finally, Neil Ward-Dutton of MWD Advisors, weighs in with his analysis:  Progress is looking for acquisitions to help grow the business, and organizing around a new principle called “organizational responsiveness”.  A Savvion acquisition fits.  As Neil writes:

The obvious challenge: until now, Progress had a number of assets (Apama, Actional, DataXtend, etc) to help companies capture and analyse intelligence about changing conditions and customer interactions – but it had no direct way to tie this to a system to help customers drive responses in business processes. The Savvion acquisition plugs this gap – and at the same time, it helps Progress more directly engage business executives in conversation.

This reminds me of several years ago when Cognos was partnering with Lombardi to build a new application suite that would combine their existing strong analytics with the ability to actually effect change in the process or organization (what they previously had was rear-view mirror insight, without a direct tie-in to go-forward decisioning).  Unfortunately Cognos was purchased just before that solution saw a General Availability release.  But the story sounds familiar and relevant to me.

As an expert service provider in the BPM space, we just hope that BPM continues to evolve and improve – and hopefully these acquisitions will bring some new capital and resources to bear on the BPM space.  If not we’ll have to wait for another generation of products, or for open source solutions, to carry the torch.