The cloud M&A chess game continues to heat up with Dell announcing this week that it was acquiring data integration vendor Boomi. Being a relatively small acquisition for Dell, there wasn’t a ton of industry commentary, but there were some pretty divergent opinions. GigaOm was mostly positive and saw this as a move to enable seamless data exchange between private and public clouds, all powered by Dell servers. Phil Wainewright on the other hand was pretty scathing saying that “it doesn’t make sense.”
Here’s our take: Dell has been trying to fortify its hardware business with adjacent software businesses for a while. Their strategy has been to acquire software that lives close to infrastructure, e.g., infrastructure management, scaling, etc. With this move, they’re broadening the vision to include the data that lives on their servers. For most enterprises, Dell servers will be used to host their on-premise applications, but as the world becomes more cloud-centric, these on-premise applications will need to talk to cloud applications. Therefore it makes logical sense that Dell would expand into that space.
So, like IBM’s acquisition of Cast Iron, this acquisition shows an industry giant acquiring a cloud foothold in an area that’s very closely tied to their core business. Both Dell and IBM’s acquisitions are great for cloud to on-premise integration – it will be interesting to see which combination will be more successful in the large enterprise, but given IBM’s strong customer base and software experience, it’s hard to bet against them.
But what most of the coverage misses is that cloud to on-premise integration is today’s problem, not tomorrow’s. Consider these data points from a recent Appirio survey of 150+ mid to large-sized firms that have already adopted cloud applications:
- While integration from cloud apps to on-premise was up there as a challenge, we saw almost 75% of adopters highlight cloud to cloud integration as an important priority.
- Current cloud adopters plan to have 55% of their applications and platforms in the public cloud within three years, which implies that the need for cloud-to-cloud integration will only intensify.
- ~40% of cloud adopters highlighted current technology as the reason they are unable to achieve better integration among their cloud applications.
- There’s also a desire for deeper integration among cloud applications. To date, only 4% of cloud adopters have fully integrated their cloud applications at the UI, process and data layers. Within 12 months, over 50% of cloud adopters want to have their cloud applications fully integrated with each other.
Cloud-to-cloud integration is very different than cloud to on-premise integration. The principle problem of integrating to on-premise applications is building technology that enables data exchange with hundreds or even thousands of on-premise applications. This is nearly impossible problem to solve given the number of permutations of on-premise applications out there, and only shallow integrations are even possible. At its core, this is exactly the same “plumbing” that’s caused so many headaches between on-premise applications. Isn’t getting out of the plumbing business why companies are moving to the cloud in the first place?
With cloud-to-cloud integration, there are fewer and more stable end points since SaaS applications have stable APIs and are all the “same version”. This means that it’s possible to build broker technologies and cross-cloud solutions that provide a much deeper level of integration, all the way from data integration to identity management and even into the business process.
It’s smart of Dell and IBM to stay focused on the “ground to cloud” data integrations that are close to their core businesses and capabilities… its a different question altogether who will venture into the brave new world of cloud-to-cloud business process integration!