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Will the Plumtree acquisition pay off for BEA?

In this first part of a two-part column, Preston Gralla looks at what analysts say about why BEA wanted Plumtree and whether the move is a good one.

Portals powered by Web services and service-oriented architecture (SOA) have become central to many enterprises....

Whether used internally or for customer- or partner-facing applications, portals have become a key way to gather information, provide services and conduct commerce. And they have long been used for application integration, and extending the life of legacy applications by tying them closer into the enterprise and to other services and applications.

At one time, portals and Web services were a red-hot topic, but in more recent times they have come to seem old hat. But the recent BEA acquisition of enterprise portal maker Plumtree for $5.50 a share, or about $200 million, has put the spotlight on portals again.

In this first part of a two-part column, we'll look at what analysts say about why BEA wanted Plumtree and whether the move is a good one. In the next column, we'll take a closer look at what the move may mean to the future of Web services and SOAs.

Why make the deal?
At first glance, the BEA purchase of Plumtree may have seemed merely to be so that BEA could buy out one of its competitors and kill competition. Plumtree is all about portals, and BEA has its own popular WebLogic portal product. So cynics might say that the BEA purchase was merely a chance to solidify its hold on the market. But that superficial analysis is well off the mark, say analysts.

"BEA's portals are external-facing and transactional, while Plumtree portals have collaboration capabilities and are more inward-facing," contends Jim Murphy, research director of AMR Research. "They offer complementary functionality."

Matt Brown, senior analyst for Forrester, agrees. "Plumtree is much stronger for business-user facing portals, and for collaboration -- for departments like Human Resources in corporations," he says.

Christopher Harris-Jones, principal analyst, information management for Ovum, expands on this idea, saying "BEA knew that their portal really appealed largely to the developer community, whereas the Plumtree portal appealed to the user community. The acquisition therefore brought them into a new market with some interesting possibilities for cross-sell and up-sell."

The idea, then, is that the buy would give BEA a whole new set of customers, as well as a quick expansion of its portal line and capabilities, without having to invest in expensive research and development.

But it wasn't only customers that BEA was buying. It had Web services-related and .NET-related concerns as well, and buying Plumtree helped plug the gap.

BEA Chief Technology Officer Mark Carges told SearchWebServices.com that its WebLogic portal technology doesn't handle .NET front-end development, but that Plumtree does.

If a company says, "'Well, we're doing a lot of front end stuff in .NET,' then WebLogic doesn't play there," he explained. Plumtree technology does, however. This is particularly important, he says, in companies where "over half of their deployments are on .NET, meaning their portal server runs on .NET and a lot of where the information is coming from could be a mix of .NET and Java, but it's hosting the portal in a .NET environment."

So the acquisition gives BEA portals capabilities they don't now have -- and BEA won't have to pay to develop that capability, or face a competitor who already has it. Analysts also say that the purchase may help BEA fight off Microsoft and IBM, who are increasingly building portal-like collaboration tools. With the Plumtree acquisition, BEA will be able to build these kinds of collaboration tools.

"One big trend we're seeing is workgroup and team collaboration," Forrester's Brown says. "Microsoft has Sharepoint and IBM has IBM Workplace. Forward-looking companies are thinking about collaboration processes, document control, offline awareness and presence aware(ness)."

But while Microsoft and IBM were busy building those capabilities into their portals, BEA wasn't. The Plumtree acquisition gives BEA the tools to do that.

But will it work?
The reasons for the acquisition sound fine in theory. But will they really work? Analysts are generally taking a wait-and-see attitude.

"The acquisition looks good on paper, given the relatively inexpensive price BEA paid for Plumtree," Murphy says. "And they got some good customers, including Boeing and Pratt & Whitney among others. But in the long run, will it really mean increased business for BEA? Only if they're able to cross-sell companies to the BEA platform."

Brown agrees. "The question is how many Plumtree customers will stick around and stay with BEA," he says. "Also, keep in mind that many companies have multiple portals from different vendors. So many Plumtree customers may already have BEA portals, and in those instances, BEA hasn't gotten a new customer."

Beyond that, he warns, "acquisitions always cause disruptions, so the question is how well BEA will be able to handle the disruptions." He adds that BEA will have to come up with a compelling marketing strategy allowing the company to sell the two different types of portals. Finally, managing two sales forces, and allocating research and development dollars between the companies may be problematic as well."

Brown concludes, "Overall, the net is that they have an uphill battle for this acquisition."

No matter how the acquisition works out for BEA, though, it has long-term consequences for the future of Web services and SOA. That's what we'll look at in my next column.

About the Author

Preston Gralla is an expert on Web services and the author of more than 30 books, including How the Internet Works. He can be reached at preston@gralla.com.






This was last published in October 2005

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