ProcessMaker blog: 3 Reasons IBM acquired Lombardi

  • December 30, 2009
  • Scott
  • 1 Comments

Hint: it wasn’t about tech, or product overlap, or filling product gaps.

Brian proposes that the acquisition is actually about market, channel, and the great unknown (the end game).  The market is big and growing fast, and the companies within this market are small and growing fast (even the laggards).  This inevitably ends in some kind of merger frenzy or pileup (check out what happened to the EAI vendors 10 years ago, or CRM vendors 10-15 years ago).  Brian claims none of the technical issues matter – I’m not sure they don’t matter at all, but he makes a pretty strong claim that they might be irrelevant next to the market and business forces at play.

Second, he points out that the channel strategy is key.  As a Lombardi partner, we can attest that Lombardi was putting a fair number of partners into the field, and doubling down on that strategy in 2009.  We attended a very diverse partner conference in April that was affirmation of the strategy for both Lombardi and the partners.  But the bigger issue is – IBM has a massive channel of sales and partnerships through which to push product and solutions.  In the 90’s I saw IBM acquire Tivoli, which I believe was about $100M in revenue at the time, and in less than two years, it was generating $700M in revenue out of that business unit.  IBM can definitely turn the crank on certain software categories (past performance being no guarantee of future returns).  If Lombardi BPM gains a certain mindshare within that channel, then IBM will reap huge returns off of this acquisition.  Brian argues that this is the key driver of the acquisition.

Third, the end game – Brian argues that because no one knows what it will be, it makes sense to place more than one bet.  Again, he makes a compelling business argument for why investors (and companies) won’t be satisfied with just one offering that touches on the BPM space.

Its a good read, highly recommended, and I’ve also cross-referenced it in my running blog post on the acquisition.

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