May 3, 2010 – IBM announced today it has acquired cloud integration software and appliances vendor Cast Iron Systems for an undisclosed sum.

In an immature market with many outstanding data integration challenges, Cast Iron represents a key ingredient for IBM as the company seeks to move its cloud strategy forward, say industry analysts.

Data integration is the second biggest challenge for software as a service users, Liz Herbert principal analyst for Forrester Research says. “The state of today’s SaaS market is heavily fragmented and it frequently consists of a lot of small niche vendors, which presents substantial integration problems and concerns about risk for buyers.”

More and more large companies are looking to SaaS and looking to extend their integration technology and expertise because they are the first to face problems with SaaS-to-SaaS and existing in-house integration problems, says Herbert. Though it is a small provider, Cast Iron has worked to fill this space serving a number of large clients, including Allianz, NEC, Peet's Coffee & Tea, Dow Jones, Schumacher Group, ShoreTel, Sports Authority and Time Warner.

Other cloud integration vendors include Informatica and Boomi.

“The integration challenges Cast Iron Systems is tackling are crucial to clients who are looking to adopt alternative delivery models to manage their businesses,” Craig Hayman, general manager, IBM WebSphere was quoted to say.  “The combination of IBM and Cast Iron Systems will make it easy for clients to integrate business applications, no matter where those applications reside.”  

Cast Iron will offer IBM clients a platform to integrate cloud applications using a physical appliance, a virtual appliance or a cloud service, and from providers including Salesforce.com, Amazon, NetSuite, ADP, SAP and JD Edwards, according to the company release.

Frank Gens, senior vice president and chief analyst, for IDC emphasized the niche that Cast Iron will fill for IBM. “Data integration is one of the most important needs and one of the biggest issues holding people back,” he said “This acquisition fits IBM’s pattern and strategy, and it’s an area that the company and others need pay attention to.”

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