Axway acquires Vordel to expand its middleware play

OVUM VIEW

Summary

On November 26, 2012, Axway announced the completion of its acquisition of Vordel and its subsidiaries. Axway plans to exploit Vordel’s API management and service-oriented architecture (SOA) governance portfolio to offer an end-to-end security and management suite for a wide range of integration scenarios, including mobile, social, and cloud application integration.

Ovum believes that Axway has made the right move by acquiring Vordel because integration and governance are no longer disconnected capabilities, and organizations are increasingly interested in consolidated suites capable of meeting complex integration and governance needs for disparate applications deployed across different environments.

The acquisition complements Axway’s integration heritage

Axway, a vendor of B2B integration, managed file transfer (MFT), business operations monitoring, process management, and email and identity security solutions, has about 11,000 customers in 100 countries. The acquisition will enable it to expand its middleware play to a rapidly evolving API management market where governance of interactions between disparate applications (on-premise, social, mobile, and cloud applications) is fast becoming a mission-critical capability.

Axway has deep domain expertise in B2B integration, but its credentials in mobile and cloud application integration and governance are largely unproven. Using Vordel’s API server, Axway plans to offer a unified solution capable of enabling seamless and secure interactions between applications deployed across different environments, especially in a BYOD environment. In this context, Axway has a significant competitive advantage because Vordel’s middleware portfolio supports a wide range of application interfaces including RESTful APIs for web and mobile integration, SOAP web services for SOA, and EDI-style interfaces for B2B integration.

Over the last couple of years, several SOA governance vendors, including WS02, Layer 7, Apigee, and SOA Software, have added tools and functionality to their offerings to cover different requirements of API management. In the near term, competition in the API management market is expected to heat up as vendors focus on providing API management via the cloud. The Axway/Vordel combination is well placed to take advantage of this growth opportunity.

The Axway/Vordel combination should focus on expanding its geographic presence

Axway has acquired a company in good financial health. Vordel has registered strong growth over the last couple of years, and for the financial year 2011, revenues were in excess of $11.3m, a year-over-year growth of about 30%. Axway registered revenues of $307m in the last financial year.

A closer look at the geographic splits of the customer base and revenues of the two companies reveals that neither has a significant presence in the Asia-Pacific region. Ovum believes that the Axway/Vordel combination should target the fastest growing enterprise software market, and in this context, expansion of the existing business partner network to include new Asia-Pacific-based distribution and sales partners, especially managed service providers (MSPs) and system integrators (SIs), could well be a suitable option.

An effective marketing strategy is required for competing with larger and specialized vendors

The success of this acquisition will depend on the systematic integration of Vordel’s API management and governance solutions with Axway’s integration middleware portfolio. In addition to this, consistency in marketing messaging and the degree of alignment between product and marketing strategies will determine the extent to which Axway is able to leverage the functionality provided by Vordel’s offerings.

Mega vendors, such as IBM and Oracle, and specialized vendors, such as Tibco and Liaison/HubSpan, dominate this area. In order to compete in this rapidly evolving market, Axway should develop a marketing strategy that clearly emphasizes the wide range of capabilities offered by the Axway/Vordel combination. There are many opportunities for up-selling and cross-selling to the existing customer base, but these will only materialize if Axway develops and implements dedicated sales and marketing plans targeting the specific needs of different customer segments.

APPENDIX

Author

Saurabh Sharma, Senior Analyst, IT Solutions

saurabh.sharma@ovum.com

Further reading

2013 Trends to Watch: SOA and Integration (September 2012)

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