Metastorm acquired Proforma on Wednesday, combining two companies that make software for improving business processes in large organizations.

Metastorm sells BPM (business process management) software, used by companies such as Blockbuster and Fiat to automate and monitor their business processes, to help supply chains run smoothly, for example, or ensure invoices are processed on time.

Proforma sells a related product called BPA (business process analysis) software, which companies use to create visual models of their processes to see how they interoperate and to run "what if" scenarios to see what effect changes will have.

The goal of both products is to help large businesses run more efficiently and stay in compliance with industry and finance regulations.

Metastorm will combine the companies' product lines into a suite called Metastorm Enterprise, allowing customers to get their BPM and BPA products under one roof, said Bob Farrell, Metastorm's president and CEO.

The companies already have some joint customers, and their products currently work together, but Metastorm plans to tighten the integration over the next year.

"From day one, customers can do their models in the Proforma products and implement them in an execution environment with Metastorm," he said. "In the fourth calendar quarter, we'll integrate our repositories and design the framework for a common metadata model, which we'll implement in the first half of next year."

The products will also continue to work separately, Farrell said. That means customers could use Proforma's software with products from a rival BPM company such as Lombardi Software or Pegasystems.

"We recognize that some organizations will do modelling and analysis and never use Metastorm's execution environment. They might take advantage of open standards and use another execution environment, or what they're doing might not lend itself to automation," he said.

The companies are both privately owned, and the deal's financial terms weren't disclosed. The transaction was in cash and stock, and Metastorm recently raised $30 million in funding that helped cover the cash part of the acquisition.

The combined company will have 2,600 customers, mostly in the United States but with a significant portion in Europe, and annual revenue of $72 million, Farrell said. Metastorm hopes to increase that to $100 million next year and do an initial public offering if the market conditions are right, he said. Both companies are profitable today, Farrell said.

The company has many rivals, including pure-play vendors such as Lombardi, Pegasystems, and Savvion; infrastructure players such as BEA Systems, which recently bought BPM vendor Fuego; and applications vendors such as SAP and Oracle.

There seems to be enough business to go around, however. Gartner sees the BPM market growing by about 15 percent each year. Metastorm has been growing above that rate, at 20 percent or more, according to Farrell. It became one of the largest BPMs vendors when it bought CommerceQuest in 2005.

Proforma's president and chief operating officer, Ron Pellegrino, is not joining Metastorm, Farrell said. Its chairman and chief technical officer, Jerry Huchzermeier, will become its chief strategy and research officer.