Customers have been watching WebMethods closely in recent months. In addition to WebMethods being acquired in June by Germany's Software AG for $546 million, the company, earlier this year, introduced the latest generation of its flagship integration suite, WebMethods Fabric 7.0.

So far, customers like what they see. They look favorably on Fabric 7.0's process automation features, which some users had considered a gap in WebMethods' product portfolio. And they view the Software AG acquisition as a positive move—or at least a neutral one —saying the buyout boosts the company's product road map and long-term viability by acquiring mass and a broader customer base.

With the acquisition, WebMethods' center of gravity shifts from integration to SOA governance, notes Susan Ganeshan, vice president of product management at WebMethods. Governance software offers a registry for housing services and monitors the performance of services throughout their life cycle.

WebMethods' Fabric 7.0 already reflects that change in focus. The product includes a message broker for routing data requests among services, but it also contains governance components obtained through WebMethods' 2006 acquisition of Infravio. Software AG also offers governance software within its Crossvision product line, which will be placed under the WebMethods label.

Scott Prescott, senior information- technology analyst with Progress Energy, says the Infravio acquisition positioned WebMethods among the market leaders in SOA offerings. He notes that the subsequent Software AG deal keeps WebMethods "heading in the direction that we favor."

Progress Energy used WebMethods for enterprise application integration solutions and is now laying the groundwork for an SOA.

In the past, Fairfax County (Va.) Public Schools found it had to write custom code to work around WebMethods' process shortcomings. In one project, the district wanted to add an inbox feature to let users see tasks waiting to be processed. WebMethods provided an inbox feature, but the district's technology shop determined that it couldn't be used "out of the box," says Ted Davis, director of enterprise information services. Davis says the inbox provided information, such as the date and time of the transaction when presented in the queue. But, he says, "We wanted to present information from within the transaction, such as student name and ID." As a result, Fairfax wrote its own inbox.

WebMethods spokesman John Conley says Fabric 7.0, through its Designer component, offers pre-built support for inbox functions like sorting and searching inbox items, and delegating and escalating tasks. WebMethods supported those functions in the past, but they weren't pre-built into the product, he says. "They weren't as intuitive as they are today," Conley adds. Davis says the process and advanced workflow limitations appear to have been dealt with in Fabric 7.0, adding that the district plans to upgrade to it next year.

As for Software AG, the deal brings the company closer to its goal of becoming a $1.3 billion organization by 2011. The combined company has revenue of around $850 million.

Davis, of Fairfax County Public Schools, has been anticipating the company's acquisition for some time. "We've been holding our breath and waiting to see who was going to buy them," Davis says. "Right now, I don't see [the acquisition] having a big impact on us or our direction."

Toby Redshaw, corporate vice president for Motorola, says the acquisition brings greater security to WebMethods customers. WebMethods products provide the middleware layer for Motorola's SOA.

He says WebMethods was a sizable firm by software company standards, but "wasn't so big that you thought they were going to be there forever."

At A Glance WebMethods 3877 Fairfax Ridge Road., South Tower Fairfax, VA 22030 (703) 460-2599 www.webmethods.com TICKER: SOWG.DE (Frankfurt) EMPLOYEES: 1,600 David Mitchell President & CEO Marc Breissinger CTO PRODUCTS: Fabric 7.0, the latest release of the flagship product, includes a message broker and governance capabilities. CUSTOMERS: 7-Elven, American Electric Power, Corporate Express, Motorola, TD Banknorth, U.S. Department of Defense

FINANCIALS

2007FYTD* 2006FY 2005FY Revenue $149.88M $208.82M $200.60M Net Income ($15.54M) $149.96M $140.00M R&D Spending $34.44M $40.18M $44.52M

*For first nine months ended December 31, 2006. Fiscal year ends March 31. Software AG acquired the company in June 207.

Source: Company Reports