IBM acquires cloud software test service

IBM announced a deal this morning to acquire Green Hat, a cloud software quality and testing service.

IBM said this morning it will acquire Green Hat, a cloud and SOA integration testing service.

Green Hat, headquartered in Wilmington, Del. and London, virtualizes testing environments in the cloud to increase the agility and quality of application development. It will be folded into the IBM Rational Solution group.

Terms of the deal were not released.

“Green Hat has made a lot of progress in the ability to virtualize complex environments for the purposes of application development and testing,” said Charles Chu, director of product management and strategy for IBM Rational. “That’s tremendously appealing because what we’ve seen and the industry has seen is that the ability to be more agile has been limited.”

The deal is the latest in a string of lifecycle virtualization service acquisitions dating back to 2010 when Citrix acquired VMLogix and Quest Software bought Surgient. In the summer of 2011, HP announced a lifecycle virtualization project and CA Technologies purchased ITKO.

“IBM looked at this and realized what customers are really demanding is faster time to market and they want to lower their capital expenditures and also their operational expenditures,” said Theresa Lanowitz, founder of Portland, Ore.-based analyst firm Voke. “I think it’s important and it really is one of these things that’s going to be good for the market, because it makes the market start to ask questions and you’ll see others come to the forefront as well.”

The increasing complexity of service-oriented architecture has caused a rise in costly testing labs. That, in turn, leads to organizations having to trade off between quality and speed. By spreading virtualization to application lifecycle management, Lanowitz sees development teams being able to reap the same benefits that operations teams did with the virtualization of servers.

Chu agrees, saying that Green Hat will increase both quality and speed without the time and capital cost of building a physical testing environment.

“If you’re a developer, you are able to do continuous integration and continuous testing,” Chu said. “As you build and test your applications, the testing environment will be provisioned for you in a test cloud and you will be able to measure that in minutes.”

Chu cited a pair of case studies from Green Hat’s customers as success stories that helped convince IBM to buy the company. One came from a financial institution that was able to cut its testing time from 10 days to 10 minutes at a savings of $7 million with Green Hat’s software.

Another featured a European telecommunications company that needed to test an application that interacted with a provisioning application, an SAP application and a billing system. The company used Green Hat to virtualize those environments for testing and reduced test time by more than 50%.

“Our IBM Global Services is familiar with many competitors in the space,” Chu said. “We have done evaluations of multiple companies in the space and we believe Green Hat offers superior technology that provides this capability.”

Green Hat has been developing in this market for many years according to Lanowitz, though mainly in the U.K. In 2008, Green Hat gained a foothold in the U.S. when it purchased Wilmington, Del.-based SOA integration service Solstice Software. That acquisition bolstered Green Hat’s service and made it the commodity it became before IBM’s purchase. Lanowitz sees the acquisition as the next step for IBM in application lifecycle management.

“It helps to modernize [IBM’s] solution somewhat, it brings the application lifecycle solution into an era of modernization, where you can actually use virtualization,” Lanowitz said.  “It helps users of the IBM solution lower their capital expenditures.”

Lanowitz also sees the acquisition as good for the overall market. Three major companies have bought into lifecycle virtualization and she foresees that fostering a discussion about it and broadening its use.

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