Artisan Acts Rational, Acquiring Companies to Broaden Solution Set

 

What Happened

 

Artisan Software Tools announced that it has acquired EXTESSY, a software tool and professional services company based out of Germany.  With this acquisition (Artisan’s second in the last month and third in the last 17 months), it is clear that Artisan is committed to expanding its product offerings and services capabilities in order to support the needs of its core customers as well as positioning itself for future growth in new markets.

 

 

VDC’s View

 

VDC has been covering Artisan’s core market, the standard language-based modeling tool market, since 1999.  Over that time, industry consolidation – IBM’s acquisition of Rational Software in 2003, Telelogic’s acquisition of Popkin Software in 2005, Telelogic’s acquisition of I-Logix in 2006, and IBM/Rational’s acquisition of Telelogic in 2008 – has placed over 80% of the embedded market revenue for standard language-based modeling tools in the hands of one company, IBM.

 

Although Artisan has emerged as the primary competitor to the IBM/Rational/Telelogic/Popkin/I-Logix powerhouse, IBM has had the ability to offer prospective customers a wide range of application lifecycle solutions and services (well beyond just a UML or SysML tool).  Whereas the drawn-out merger and antitrust proceedings around IBM’s acquisition of Telelogic certainly presented Artisan an opportunity to recapture some lost market share, the company’s mil/aero legacy, geographic footprint, and available human resources capped its potential growth.

 

Since the Management Buy-Out of Artisan in 2007, President and CEO James Gambrell has steadily positioned the company to expand its product suite and professional service capabilities.  In June of 2008, the company announced the acquisition of High Integrity Systems and its Vds (V-Design System), a fully integrated engineering framework from which the company built it Artisan Workbench.  Workbench, which is intended to provide an integrated access portal for an engineering organization’s embedded design tools (beyond just Artisan Studio), thus provided the foundation upon which Artisan could expand and integrate its own product offerings. 

 

The recent economic climate has simultaneously created a buyer’s market, most likely presenting Artisan with the opportunity to accelerate its acquisition/expansion aspirations.  The value in the Extessy acquisition, however, has less to do with its products than it does its client base, Automotive OEMs – a market where Artisan has only had limited success as compared to its core market, military/aerospace, but that holds a substantial amount of potential revenue due to the industry’s broader adoption of other types of modeling tools and the growing conformance around the AUTOSAR standard.  Furthermore, similar to the Brass Bullet acquisition, Extessy helps Artisan enhance the professional services capabilities and resources that it can offer potential customers in conjunction with its products.

 

Engineering teams across the globe are being forced to reassess their tool choices in light of budgetary reevaluations and restrictions.  The ability of ISVs to enhance their consulting capabilities and networks and to offer tighter integration with other application lifecycle management (ALM) solutions is becoming an increasingly critical ingredient to maintain and increase relevancy in the market.  We expect that the lagging effects of the recession will continue to foster M&A activity within the embedded market and present participants with the opportunity to potentially shake up the competitive landscape over the coming years.