IBM Gets Its Head in the Cloud with Cast Iron Buy

IBM Buys Cast Iron
IBM Buys Cast Iron

Over the past year, businesses such as CA Inc. (CA) have been aggressively acquiring cloud-computing companies, and the reasons why are obvious: The technology tends to be easier to use than the alternatives, generates lower costs and allows for improved collaboration.

But as with anything that's new, there are doubters who wonder: Is cloud-computing another example of high-tech hype?

Increasingly, it looks like the answer is "no." In fact, even IBM (IBM) is getting its head into the clouds. This week, the company announced its acquisition of Cast Iron, a privately held company that provides cloud integration software, services and appliances, for an undisclosed price. The company will become a part of IBM's WebSphere division.

The Download on Cast Iron

Founded in 2001, Cast Iron is one of the pioneers in the cloud-computing business. At first, the company built technology that allowed companies to integrate data across traditional software applications.

But with the emergence of Web-based companies such as (CRM) and NetSuite (N), Cast Iron saw a big opportunity. Why not use software to help integrate these technologies with on-premises solutions, such as those offered by Oracle (ORCL), SAP (SAP) and Microsoft (MSFT)?

At the same time, Cast Iron made its software easy to use, integrating drag-and-drop features and templates, among other improvements. But underneath the simplified user-interface, the technology was doing some complex operations. As a testament to its products' quality, Cast Iron has pulled off data integrations for companies like Dell (DELL) and and Dow Jones.

The Opportunity

IBM already had a strong suite of data integration products, and of course, the company's Global Services division also plays a key role in providing such solutions. Yet, when it comes to cloud-computing, IBM has been lacking.

This needs to change. According to IBM, cloud computing will go from $47 billion in 2008 to $126 billion by 2012.

What's more, IBM's deal for Cast Iron is likely to lead to other deals in the industry. Companies such as Informatica (INFA), Boomi, Jitterbit and Pervasive Software (PVSW) may ultimately sell out to big players like HP (HPQ), Microsoft and Oracle as those big players bulk up their cloud offerings.