Software AG is reorganizing in the U.S.
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January 23, 2012
Europe's second largest software firm, Software AG, is reorganizing in the United States with a big focus on the West
Coast. Company CEO Karl Streibich says that sales growth in his company's U.S. operations have to catch up to levels in
the rest of Europe.
Streibich is creating a federal business unit tasked with selling specifically to U.S. national and local government
customers to win extra business.
Specifically, he plans to greatly increase Software AG's presence in Silicon Valley, both in numbers of customers and
as a technology center founded on Terracotta-– the Java performance and caching specialist firm it acquired last spring.
"That is the key-– that we become more American and improve our image of a U.S.-based technology company," he said.
Streibich spoke at the company's annual EMEA strategy kick-off conference in London on Jan. 19.
The enterprise software maker will follow in the footsteps of fellow German firm SAP, which has a large development and
sales presence in Palo Alto, which sits opposite SAP's biggest competitor, Oracle.
The commitment to become not just more American but also more Californian came after Software AG shares took a hammering
on news it missed fourth-quarter estimates.
That produced a chain reaction of reports that Software AG was an acquisition target and calls for a strategy re-config.
Streibich says there's no need for a refresh, just to "execute", as growth was strong at 7 to 8 percent. And 2010 was Software
AG's most successful year, he says, but certainly not 2011.
Streibich was unable to say just how big Software AG's Silicon Valley presence would become but did hint at more acquisitions.
"We have to define how fast we can grow in the U.S. through acquisitions and organizationally and then through that learn
what our role is," he said.
Streibich is placing a lot on the shoulders of Terracotta, both physically and as a technology anchor for Software AG's
aspirations to serve customers' needs in the enterprise segment.
Before Software AG came into the picture, Terracotta was just a small Java caching and scaling start-up company whose
in-memory technology allows Java apps to scale smoothly and perform quickly across data centers. The company claims it has
500,000 deployments, with the majority of these in Fortune 2000 companies.
Terracota has 15 employees compared to the 5,500 at Software AG as a whole. Streibich drew analogies with the 2007 acquisition
of web services specialist Web Methods and 2009's acquisition of IDS Sheer which gave Software AG's the ARIS process management
tools it wanted so badly.
"I think of the development of the data management part our of Silicon Valley business around Terracotta as we did middleware
around Web Methods on the East Coast and as we did ARIS that was German-centric," he said.
"And we must drive that forward at any cost. Driving that forward means we are now doing things differently from a West
Coast point of view. Driving growth through the innovation focus on data management will be beneficial for the customer in
managing their unstructured data."
Software AG has nine offices in the U.S. but its head quarters are on the East Coast in Reston, Virginia. That's a world
away from the networking potential of Silicon Valley's money and start-up culture and far outside the shadow of the motherships
of companies like Google and Apple where the current ideas are cloud, enterprise data, clustering and scaling.
Before Steve Jobs' death in October 2011, he had mentioned that Apple wanted to be a bigger contributor to the enterprise
segment of the IT industry, and Apple is now selling more and more Mac computers to big business, thanks in part to the iPhone
and the iPad.
In the short term, there will be greater optimization between Terracotta and Hadoop on big data. Hadoop "is definitely
an important focus for us," Streibich said, because of its relevance to the future of NoSQL.
Long term, Streibich says that in-memory technologies such as that offered by Terracotta will be woven into database and
server technologies, making them commoditized. He added that the company was already getting there, as SAP-– a major Software
AG partner already offers Hana while Terracotta is a supposedly more open and lower-cost alternative to Oracle's TimesTen.
Once commoditisation kicks in, Streibich said Software AG could differentiate itself on real-time analytics and on reducing
the costs of online transaction processing.
Source: Software AG.
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