IBM Acquires Business Event Processing Startup AptSoft

1/23/08Follow @wroush

For Boston-area software firms with a focus on business applications, it’s become a classic strategy: build a technologically advanced platform, prove that it works on a handful of customers, grow for five to 10 years, then sell the company to IBM.

The latest company to go this route is AptSoft, a Burlington, MA, firm that makes “complex event processing” software that can help other businesses track and respond to events in their environments—from an intrusion in a secure computer network to a spike in customer complaints. IBM announced today that it has purchased the five-year-old startup for an undisclosed sum, and that AptSoft’s business event processing tools will be reworked as an enhancement for the IBM WebSphere e-business product family.

Complex event processing is a busy sub-discipline of academic computer science that seeks to identify the patterns in disparate events. (An elephant walks down the boulevard, followed by a clown, a calliope, and a fat lady. The pattern? The circus is in town.) IBM and competitors have been working for several years on business process management software that can recognize and automatically act upon events in the business world, such as price fluctuations or supply chain interruptions, but this software tends to be unwieldy, highly customized, and difficult to adapt from one realm of business to another. AptSoft, which has collected $12 million in venture capital funding from Lazard Technology Partners, Portage Venture Partners, and Egan Managed Capital, has incorporated insights from complex event processing into a software development platform that makes writing event-driven business software faster and cheaper.

IBM executives say the company has already invested $1 billion in the development of business event processing software and that AptSoft’s tools will make it easier for IBM customers to adapt various WebSphere applications to help them succeed in dynamic, unpredictable, fast-changing marketplaces. “IBM is bringing event processing to business, but typically, today, only engineers understand event processing,” Sandy Carter, IBM’s vice president of service-oriented architectures and WebSphere marketing, strategy, and channels, said in a conference call this afternoon with journalists. “We want to make sure that the line-of-business, the managers, can understand these signals,” Carter said. With 19 customers and undisclosed revenues, AptSoft is still small, but it “has the best business-user tooling in the marketplace for business event processing,” said Carter.

Frank Chisholm, founder and CEO of AptSoft, explained that the company’s system helps managers define patterns of interest and specify actions that should be taken when software recognizes those patterns in business data. One AptSoft customer, an Australian real-estate investment trust with operations in New York, used the technology to define exactly what should happen at each step in the lease application and renewal process. “It’s a very complicated process driven by a series of events, such as when a broker or sales person fields an application on behalf of a customer, and that is submitted to headquarters for legal review, and so on,” Chisholm said. “The benefit is that the company now knows it is complying with internal as well as regulatory requirements, significantly reducing the time and cost and resources applied to the entire review process, and dramatically improving turnaround times.”

“We see this as completely complementary to what we’re doing and extending capabilities we already have,” said Ed Lynch, a WebSphere product manager and transition executive who will be helping to integrate AptSoft’s tools into WebSphere. AptSoft “will show up as a standalone product but it will be an extension of the [WebSphere] portfolio—a piece of capability that the customers can purchase when they want to see patterns and correlations like this,” Lynch said. As part of IBM, Chisholm said, AptSoft’s engineers may now have the opportunity to develop templates that make it easier for people in specific industry areas to create event-driven process management software.

Carter said that Chisholm’s team would be kept together but that AptSoft’s operations will likely be relocated from Burlington to one of the facilities in Westford and Littleton, MA, where IBM is consolidating its Bay State software groups (you can find our Boston area IBM location map here).

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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