Webmethods

Market position

A pioneer of web services and B2B integration that became the flagship integration product line of Software AG and, after 2024, part of IBM. Forrester named Software AG a Leader in its Q3 2022 API Management Solutions Wave and Q3 2023 Integration Platforms As A Service Wave; analysts characterized webMethods as offering more connectors than IBM and a well-integrated B2B user experience, while IBM was seen as ahead on event-driven and AI-supported capabilities. IBM cited an integration software market projected to exceed $18 billion by 2027.

Early adoption and authorship of web services standards (XML-RPC and the Web Interface Definition Language), a broad connector library, and a tightly integrated B2B experience within a single integration suite spanning ESB, BPM, API management and SOA governance.

Technology

Web standards-based integration technology using HTTP and XML to connect applications in real time. The company was an early developer and promoter of web service standards, contributing to XML-RPC, a precursor to SOAP, and creating the Web Interface Definition Language, a precursor to WSDL. The webMethods Integration Server is the central runtime executing synchronous and asynchronous integrations, complemented by ESB, B2B gateway, BPM, BAM, API management and SOA governance capabilities, more than 300 pre-built connectors for SaaS and legacy systems, drag-and-drop workflow design, a unified control plane for hybrid and multi-cloud deployments, support for microservices and event-driven architectures, OpenAPI conformance, and AI-assisted, low-code automation features added after the IBM acquisition.

Go-to-market

Direct enterprise sales supported by technology partnerships, such as the 1999 SAP AG collaboration that produced the SAP Business Connector, and distribution through successive parent companies' global software channels after the Software AG and IBM acquisitions.

Large enterprises needing to connect applications, data and business processes across on-premises, cloud and hybrid environments, and to integrate with external trading partners; early customers included DHL Express, Dell, Dun & Bradstreet and Hewlett-Packard, and StreamSets and webMethods together served more than 1,500 companies globally at the time of the IBM acquisition.

Geography

Founded in Fairfax, Virginia and later headquartered in Reston, Virginia, with operations extended internationally through Darmstadt, Germany-based Software AG after 2007 and through IBM from 2024.

History

webMethods released the Web Automation Server in 1996, followed by the B2B Server (later Integration Server) with version 1.0 in June 1998 and version 2.0 in October 1998. By 1999 customers included DHL Express, Dell, Dun & Bradstreet and Hewlett-Packard, and the company had completed several venture rounds with investors including Mayfield Fund and FBR Technology Venture Partners. A March 1999 partnership with SAP AG produced the SAP Business Connector. Revenue grew from about $500,000 in 1997 to $14 million in 1999 and $202 million in 2001. The February 2000 NASDAQ IPO priced above plan and the stock closed its first day over $212, raising $175 million at a valuation of nearly $7 billion, later cited as an example of dot-com bubble excess. Stock proceeds funded the August 2000 purchase of Active Software for an estimated $1.3 billion and the January 2001 purchase of IntelliFrame Corporation for about $31 million. Losses continued through the early 2000s downturn; in October 2003 the company bought three integration companies (The Mind Electric, The Dante Group and the former DataChannel assets from Netegrity) for a combined estimated $32 million, and Deloitte ranked it the fourth fastest growing technology company in North America on the 2003 Fast 500. Phillip Merrick was replaced as CEO by David Mitchell in October 2004. Acquisitions of Cerebra (August 2006) and Infravio ($38 million, September 2006) followed. Software AG bid for the company in April 2007 and closed the $546 million cash deal in June 2007, doubling Software AG's North American revenue. Version 8.0 shipped in 2009. IBM agreed in December 2023 to buy webMethods and StreamSets from Software AG for €2.13 billion and completed the deal on 1 July 2024; IBM webMethods Integration Server 11.1 was released in October 2024.

Risks & controversies

The company posted continuing operating losses during the early 2000s recession that followed the dot-com crash, and its share price fell sharply from its IPO peak, though executives, directors and investors still realized large gains on their shares. In April 2007 activist shareholders Augustus Oliver and Clifford Press disclosed a 6% stake and argued the company was undervalued, one day before Software AG's bid. Analyst commentary following the IBM deal questioned whether IBM, which already sells competing API management and integration products, would invest in webMethods or let one of the overlapping product lines decline.