CEBIT: Software AG lays out aggressive growth plan

Software AG executives said Monday the company will double in size every five years

Software AG will be among the world's 10 largest software companies within the next five years, executives said Monday at the massive Cebit show in Germany.

The company also plans to double in size every five years, both through revenue growth -- it anticipates a 24 per cent to 27 per cent increase in 2008 -- and acquisitions.

"This is a big statement, I'm aware of that, but I'm absolutely aware that being a global leader is the only way we are going to exist in the future," CEO Karl-Heinz Streibich said.

Software AG sees the IT industry as having entered a third long-term stage, with the first two phases oriented around the mainframe and the client-server architecture, respectively, according to Streibich.

Today, growth and innovation lie in business processes and SOA (service oriented architecture), he argued.

"This is the space where a similar player will rise and have a size similar to SAP today," Streibich said. "Software AG is perfectly positioned to play that role."

But Software AG's much larger competitors in the middleware space, among them IBM and Oracle, stand ready with product portfolios of their own. Oracle not only has its own Fusion Middleware suite, but recently plunked down US$8.5 billion for competitor BEA Systems, despite some overlapping product lines.

"This is exactly why the market requires a new and independent source for integration," Streibich declared, referring to consolidation in the space.

Software AG logged some US$951 million in revenue during 2007, and is predicting that figure will grow by 2010, according to a company document.

The company will make acquisitions a key part of its growth, according to Streibich, and has between six and 10 potential acquisition targets "in the pipeline" at any given time. While he declined to name any of the companies, they fall within the general SOA landscape, he said.

One of the company's recent moves came in December, when it paid US$26 million to buy Jacada's mainframe application modernization business. But its most strategic play in recent memory came in mid-2007, when it scooped up middleware player WebMethods for about US$546 million.

In addition, the company said Monday it is entering a new partnership with systems integrator GFT, which specializes in the financial sector. The partnership will focus on developing the Brazilian and North American markets and serving as a "near-shore" resource for North American customers.

GFT now has 70 employees working in a Brazil-based software development facility, and expects to add between 50 and 100 more to specifically handle Software AG-related jobs, according to a news release.

Software AG also intends to grow its long-standing ETS division, which consists of the Adabas database management system and Natural programming language, the company said.

In addition Monday, the company unveiled the WebMethods Application Modernization Suite, tools for using mainframe-based assets in the context of SOA.

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Chris Kanaracus

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