Toronto firm sees opportunity in IBM-Telelogic deal

IBM’s US$743 million purchase of Sweden-based life cycle management software maker Telelogic, has put the spotlight on the often overlooked requirement management industry.

“IBM is realizing that to solve quality problems in IT, to ensure you can leverage outsourcing to the maximize efficiency, and to ensure that end-to-end systems function when you’re using SOA, the most important link in the chain is the requirements area,” Matt Morgan, chief marketing officer of Toronto-based Blueprint Systems, said. “Telelogic, from a market share perspective, is the de facto leader in requirements management, so IBM’s move to acquire Telelogic makes them a very large player in the requirement management space.”

Blueprint Systems, which has working partnerships with both IBM and Telelogic, is a requirement definition software vendor. Its clients include CIBC, Fidelity, TD Bank, Bank of Montreal, and AT&T.

Requirements definition is the initial stage of software life-cycle management and focuses on giving businesses the ability to create application definitions.

Telelogic’s business is software requirements or life cycle management, which involves getting a baseline request and managing it to completion to ensure IT builds the right solution.

As part of the deal, Big Blue announced it would incorporate Telelogic into its IBM Rational Software division. Industry observers have said that potential overlap among the two companies could occur.

Warren Shiau, senior IT analyst at the Strategic Counsel, echoed these industry concerns, but felt the deal will still work to IBM’s advantage. “If you look at the Rational Software division and Telelogic piece-by-piece, you could say there is some overlap, but really the market positions are different enough that I don’t think it will cause any problems,” Shiau said.

Blueprint’s CMO said the deal represents a breakthrough for its company, as well as the requirement definition and management industry.

“This is a huge validation of the market and it’s acceptance of requirements as a major thing and not just an afterthought,” Morgan said.

“This is something that can’t just be built into existing products, but rather, something that should standalone and be done right. It’s an unbelievable validation of our business model and it’s put the spotlight on companies like us, who are ahead of the requirement management wave.”

Shiau agreed, saying that attention will be on the industry for the foreseeable future.

“Application lifecycle management is becoming more important to the industry, because that’s where you tend to drive efficiencies in your development process by having better management over your development process,” Shiau said.

Blueprint sees the partnership benefiting corporate culture at IBM, allowing the firm to get a better focus on software life cycle management. “Telelogic was a standalone requirements vendor, so from our perspective, this was a company where everyone in the organization, from the CEO to the lead of R&D, woke up in the morning thinking about requirements,” Morgan said. “At the end of the day, their going to bring that culture over to IBM and it’s going to be a more interesting mix of people.”

In the weeks leading up to the merger, a number of software vendors and application life cycle providers were speculated to be in the talks, including HP, Compuware, Borland, and Serena.

Shiau said that IBM’s strong partnership universe helped ensure the deal was a success.

“Telelogic, when it goes under IBM’s umbrella, will have its product line pushed out to IBM partners,” Shiau said. “That will be one of the aspects that the Telelogic people themselves are looking at. So, in it terms of other people being interested in them, you have to also look at how it fits in to who the acquiring company is working with.”

In wake of the merger, Morgan said he sees IBM’s competition increasing their efforts and spending in the requirements market.

“If you look at the major players in the market, companies like HP are starting to make major requirement management announcements,” Morgan said. “Also, we’re seeing many of our partners’ bulk up in this area. So we’re building next-generation integrations to ensure that, as these super-vendors build, we are ready to provide that linkage to the business.”

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Jim Love, Chief Content Officer, IT World Canada

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