IBM scoops up FileNet for $1.6 billion

Big Blue continues its SOA-related buying spree with the purchase of business process and content management specialist FileNet

IBM continued its run of SOA-related acquisitions Thursday, agreeing to buy business process and enterprise content management specialist FileNet for about $1.6 billion in cash.

FileNet's technology can be integrated into IBM's existing SOA (service-oriented architecture) systems for business process management and information lifecycle management, IBM said.

Upon completion of the deal, IBM plans to fold FileNet's activities into its own enterprise content management (ECM) business, part of its information management unit, but will continue to support both platforms. It also plans to integrate its business process management (BPM) and SOA technologies with FileNet's software, it said.

FileNet sees the markets for BPM and ECM growing, but as they grow, they are also consolidating. Last week, Canadian ECM vendor Open Text Corp. agreed to buy local rival Hummingbird Ltd. for $489 million, while CA Inc. agreed in June to acquire records management software developer MDY Group International.

For IBM, the deal is another in a line of recent SOA purchases. Last week, it agreed to buy Webify Solutions for an undisclosed sum, and service management company MRO Software for $740 million in cash. Webify develops tools for linking business processes in an SOA, optimized for IBM's software platforms and aimed at four vertical markets. MRO Software develops software for managing services and assets, including IT assets.

FileNet, based in Costa Mesa, California, recently reported its financial results for the second quarter. Overall revenue totaled $117.1 million, with software accounting for $48.3 million of that, up from $40.6 million in the same quarter a year earlier, driven by demand for P8, the company's BPM software, it said.

IBM and FileNet expect the acquisition to close in the fourth quarter, subject to approval by regulators and FileNet shareholders.

Copyright © 2006 IDG Communications, Inc.

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