Tuesday, June 20, 2006

Giving Management Tools

WEBMETHODS INC (NasdaqNM:WEBM) offers SOA (Service-oriented architecture), and BPM (Business Process Management) tools which is used in the planning and integration of Sarbanes-Oxly and Patriot Act compliance into the business processes. Clearly for those reason its obvious why this companies products could be in demand right now.

what is not as obvious is the companies main focus, which is not compliance, but strategic business and IT process modeling, integration and monitoring (then rinse and repeat). With management styles getting more sophisticated (Six Sigma, Performance Management), a pen & pad may no longer cut it, even an excel spreadsheet will get messy.

Usually I would be quick to dismiss such hard to understand business model, but with 1,300 customers, earnings growth and coverage by 11 analysts (which is unusual for a smallcap) I see potential. Mainly the hard to understand business model which seems to have created a mispricing, even with 11 analysts, it has beat estimates the past year. From a growth prospective WebMethods products are in use by several big management teams, and no one wants to leave an edge on the table for the competition.

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