What Does Cast Iron Buy-Out Mean for Customers? Free Deal, for One

Loraine Lawson

Earlier this week, when IBM acquired integration company Cast Iron, the chatter naturally fell to what IBM gained from this deal.


I wrote about it, but afterward, different questions started to bother me: What did this deal mean for the companies and organizations interested in SaaS integration? What did it mean for the market?


And what will it mean for Cast Iron's existing customers, both on-premise and in the cloud?


I have to say, I don't think it looks too good for Cast Iron's appliance market. Although IBM has said it will continue to support Cast Iron's customers, it's clear IBM didn't buy Cast Iron for its integration appliances. First of all, IBM has its own such appliance offering already-DataPower. Second, according to James Governor, WebSphere GM Craig Hayman pretty much said during a briefing that the deal wasn't about the appliance space. "In the early days we said 'jeez- you could do that with Datapower,' " Hayman reportedly said. "But they had specific application integration patterns for the space."


And as our Mike Vizard points out over at CTO Edge, IBM is most likely to look at any opportunity first from a services revenue perspective -- again, not an "appliances" kind of thing.

That alone gives credence to IT analyst Alan Wilensky's comment on my initial post about the deal. "Not to be snarky," he wrote, "but IBM is where appliances and XML boxes go to die."


Then the more intriguing question is, what does this mean for the SaaS integration market and those customers?


Certainly, Cast Iron's competitors see this as an opportunity. After IBM's announcement, Jitterbit and Boomi issued statements about the deal. Both raised questions about what it meant for Cast Iron's customers-and both saw the acquisition as an opportunity to strengthen their position in the market.


In fact, Jitterbit is making an aggressive play for Cast Iron's customers, both on-premise and off, announcing today an incentive program designed to help Cast Iron customers migrate to Jitterbit Enterprise 3.0-an open source solution.


They're calling it the "Cast Out the Iron" swap-out incentive program, and it includes a free Jitterbit trial, a free migration path to Jitterbit 3.0, plus subscription discounts, professional services and maintenance for Cast Iron customers who make the switch.


"With Cast Iron's recent acquisition by IBM, customers with substantial investment in Cast Iron's integration products are understandably concerned about future product direction and support," Ilan Sehayek, CTO of Jitterbit, said via e-mail. "Selfishly, we see this as a great opportunity because we've had great success differentiating ourselves from the behemoths in the market by focusing on making integration accessible to the business analyst. It doesn't get any bigger than IBM. We're looking forward to offering a cost-effective, customer-friendly integration solution to the Big Blue."


For its part, Boomi used the acquisition as a chance to promote pure-play SaaS integration.


"Cast Iron did offer a cloud solution but it was introduced last month. Their core product is appliance-based, as is (IBM's) WebSphere," Moul wrote. "Boomi, on the other hand, has been focused exclusively on the cloud computing space and has built the industry's number-one integration cloud as pure software-as-a-service. We remain committed to the cloud and are convinced that this pure SaaS integration approach is the best model to drive the continued success and expansion of the cloud computing industry."


There's no question that integration remains one of the top issues for SaaS. It's cited time and tie again in surveys, right behind security issues. But here's the rub: Integration isn't just a problem for SaaS companies. It's an opportunity, possibly even the most significant opportunity. Fittingly enough, it was Cast Iron's vice president of Channel and Product Marketing, Chandar Pattabhiram, who explained this to me.


"Integration is the loyalty app for SaaS," Pattabhiram said. "The more integrated you are, the harder it is for customers to cut the cord and the less churn there is."


Still, the immediate impact on the SaaS market should be small. After all, Cast Iron's integration solution was primarily hardware- and software-based. Only recently-as in March-did the company unveil its cloud platform, OmniConnect. But if you read my interview with Pattabhiram, you'll see that one thing Cast Iron was offering was embedded integration. For instance, ADP had embedded Cast Iron's integration in its branded solution.


You have to wonder what will happen to embedded integrations when smaller players like Cast Iron are bought out.


There is another interesting SaaS aspect to IBM's Cast Iron acquisition. In a follow-up post, Redmonk analyst James Governor suggested what IBM may have really acquired is a way to manage APIs.


As I've written before, open APIs are the key to connecting in the cloud, but as Redmonk's Stephen O'Grady pointed out, APIs are proliferating at an unsettling rate. That, plus the fact different versions of APIs can create problems, means API management is going to become a hot topic. Cast Iron may have the solution, writes Governor:

"(Cast Iron is) an API management platform-IBM will do the work to track all these APIs and help organizations build apps that target them. Unlike many Web companies, enterprises don't really have time to concentrate on tracking API changes. Holy crap. I just realised its also an amazing data play. Cast Iron effectively instruments the world of APIs. IBM is going to know exactly what's going on in cloud development- what's hot and what's not. This really could be a transformative acquisition."


If he's right, that's good news for enterprises and SaaS companies.


Obviously, at this point, the full impact of this deal is still a guessing game, but it's fascinating -- and I think, revealing -- how much reaction it's generated.

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Add Comment      Leave a comment on this blog post
May 7, 2010 4:40 PM Dave Akka Dave Akka  says:

Great article, however Jitterbit and Boomi are not the only companies offering a special upgrade path for cast iron customers.

Magic Software are offering discounts of up to 50% for more info - http://web.magicsoftware.com/davidakka/bid/34731/Cast-Iron-customers-Magic-away-your-blues

All feedback welcome.


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