Platinum buys LogicWorks

Week of March 16, 1998

In a $175 million stock swap, Platinum has coopted the data modeling market with its purchase of Logic Works, the Princeton, N.J.-based segment leader. Meta Group estimates that ErWin, Logic Works flagship product, dominates with a 42% share of the pie.

What's driving the deal is the opportunity for Platinum to add the last missing pieces of an application life cycle tool suite. ErWin, and its process modeling counterpart, BPWin, provide the complementary modeling views to Platinum's Paradigm Plus object modeler. The modeling tools add to Platinum's existing configuration management and database management tools, and its jointly developed version of the Microsoft Repository (which Logic Works was already committed to supporting). "By the end of 1998, there will be only two places to get that suite, Platinum and Rational," predicts Andrew "Flip" Filipowski. Platinum president.

A Logic Works survey of its own customer base buttresses Platinum's arguments for the combination. Twenty percent of ErWin users are already conducting some form of object modeling, while another 40% are actively considering it.

Filipowski added that the data warehouse modeling capabilities recently added to ErWin 3.5 will in turn buttress Platinum's data warehouse offerings.

Today, the Platinum tools can exchange files with the Logic Works products via CDIF, a basic file exchange standard. In the future-Platinum did not yet have a date-they will add APIs to allow import and export of models. Further off, the tools will still be offered separately. But Platinum will also offer an integrated suite where users could switch between business process, object, and data model "views" from the same interface and repository.

Platinum views the deal as "accretive"-claiming it should not damage shareholder value, since Logic Works is expected to generate $60 million revenues and $8 million income to the bottom line this year.

"The deal will bolster Platinum's ability to deliver a complete solution to users," said Davie Kelly, vice president for the Hurwitz Group, who views the combination of ErWin with Paradigm Plus, and other Platinum application life cycle technologies, including configuration management, the joint repository with Microsoft. "In the longer term, this could be seen as a bottom feeder strategy for the Microsoft/Platinum repository, since meta data about databases and object modeling is crucial."

Could Platinum's gain be Rational's loss? Just about the only piece missing from the expanding Rational suite of products is data modeling. Prior to the acquisition, Rational and Logic Works signed an alliance for supporting the exchange of each other's models. Platinum promises to continue honoring the alliance, but as of press time, rational was not yet available for comment. "It will probably be hard for them to work out a mutually beneficial relationships," said Hurwitz's Kelly, who predicts this may be "the next battlefield."

The tempting question to ask: Does this present the opportunity for Sybase to promote PowerDesigner, a data modeling tool that is currently an also-ran, as a kinder, less competitive alternative? "Object modeling vendors who have worked closely with Logic Works will look at this [deal] twice," said Steve Clark, Sybase vice president of enterprise application platforms. But, given that the deal was only a few hours old, Clark said that Sybase has not yet drafted any marketing response.

- Tony Baer