IBM Acquires Cast Iron, Expands Cloud Integration Lineup

IBM has acquired Cast Iron Systems, a developer of cloud application integration services, in a move that will expand IBM’s business process and integration software portfolio.

Financial terms of the deal were not disclosed, but IBM said Cast Iron’s approximately 75 employees would join the company. Privately held Cast Iron Systems is based in Mountain View, Calif.

IBM expects the global market for cloud computing technologies to grow at a compound annual rate of 28 percent from $47 billion in 2008 to $126 billion in 2012.

But difficulties linking Software-as-a-Service applications with on-premise systems are a potential hurdle to broader adoption of cloud computing. Such integration work can be time consuming and a drain on IT development resources.

"IBM's acquisition of Cast Iron directly targets the largest customer pain point associated with cloud computing," said a report from Technology Business Research, pointing to a TBR cloud-adoption study in which 45 percent of non-cloud adopters cited integration as the main problem.

IBM said the acquisition would broaden the range of cloud computing services it can offer its customers, particularly those adopting a hybrid cloud model that combines data from on-premise systems with information generated by private and public cloud systems.

"For IT vendors, the business opportunity is not only selling cloud services to the majority of the market that has yet to adopt [cloud], but also providing the solutions that will entice those customers to adopt," the TBR report said.

Next: IBM Adds To Strong Technology Portfolio IBM already has the biggest portfolio of technology for integrating IT systems inside of a company and for linking business-to-business systems, said Steve Mills, senior vice president of IBM’s Software Group, speaking Monday at the vendor’s Impact 2010 conference in Las Vegas.

Cast Iron "does inter-enterprise integration better than anyone else,’ he said. The combination of IBM’s products with Cast Iron’s ’represents the largest portfolio in the industry in both domains.’

Cast Iron’s OmniConnect software allows businesses to integrate on-demand applications running in public and private clouds with on-premise systems. The company’s products are delivered as an on-demand service, an on-premise application, and as a physical or hosted appliance. OmniConnect can integrate information from disparate sources and display it within a single application’s native user interface.

One customer, pharmaceutical distributor Amerisource Bergen Specialty Group, is using Cast Iron to connect Salesforce CRM to its on-premise data warehouse system. And a division of corporate insurance giant Allianz is likewise using the technology to integrate Salesforce with its on-premise underwriting applications to provide real-time visibility into contract renewals for its sales team.

IBM will continue to offer Cast Iron as a distinct product, but will also port the software to IBM’s DataPower appliance platform, said Kareen Yusuf, director of WebSphere software. Cast Iron currently runs on Dell servers.

Along with Cast Iron’s technology, the acquisition brings to IBM the ecosystem of partnerships it had developed with SaaS vendors and solution providers. IBM executives vowed to maintain and expand that ecosystem.

The acquisition reduces the risk for Cast Iron partners, such as Astadia Consulting, of working with a small company, said Simon Peel, senior vice president of strategy and marketing at Cast Iron. And the addition of Cast Iron to IBM’s product lineup provides opportunities for IBM’s channel partners.

Cast Iron also has an alliance with Hewlett-Packard under which HP makes Cast Iron's integration tools available to its channel partners.