In September, just as the takeover battle between PeopleSoft Inc. and Oracle Corp. was heating up (again), PeopleSoft announced its largest ever strategic alliance: a $1 billion, five-year technology deal with IBM Corp. At the time, the alliance appeared to some as an attempt to thwart Oracle's long-running hostile takeover of PeopleSoft. But while some may have hoped that IBM could be PeopleSoft's white knight, the alliance brought to PeopleSoft something just as valuable: the IBM middleware technology known as WebSphere.

A family of revolutionary software, middleware acts as a working link to enable different, otherwise incompatible computer programs to run seamlessly together. At a time when companies are struggling to automate and allow real-time data exchanges among internal departments, suppliers and customers, this is business technology's Holy Grail. The market, only five years old, is already at $6 billion and growing, and for a vendor trying to sell pricey ERP systems that in the past have struggled to integrate with other legacy systems, not being able to offer such a package could spell disaster as fast as any takeover.

IBM's WebSphere and Microsoft's .Net come close to owning the market, making software sellers come to them to buy the privilege of linking up with their packages. BEA Systems Inc. also offers middleware called Weblogic.