Why did IBM buy Lombardi?

Just as I was about to start figuring out my next six predictions for 2010 I had to stop the presses and focus on IBM’s latest acquisition. IBM just announced this morning that it has purchased Lombardi which focuses on Business Process Management software. Lombardi is one of the independent leaders in the market as well as a strong IBM business partner. The obvious question is why would IBM need yet another business process management platform? After all, IBM has a large portfolio of business process management software — some homegrown and some from various acquisitions such as Filenet, ILOG, and Webify. I think that the answer is actually quite straight forward. Lombardi’s offerings are used extensively in business units, by business management to codify complex processes that are at the heart of streamlining how businesses are able to differentiate themselves. Clearly, IBM has recognized the importance of Lombardi to its customers since it has had a long standing partnership with the company.  I think there are two reasons that this acquisition are significant beyond the need to provide direct support for business management. The ability to use Lombardi’s technology to sell more WebSphere offerings and the connection of business process to IBM’s Smarter Planet initiative are the two issues that stand out in my mind.

Selling more WebSphere products. There is no question that the WebSphere brand within IBM’s Software business unit includes a lot of products such as its registry/repository, applications integration, security, and various middleware offerings. IBM likes to sell its products by focusing on entry points — the immediate problem that the customer is trying to solve. The opportunity to gain direct access to business buyers who start with business process management and then may be see the value of adding new capabilities to that platform.

Supporting the Smarter Planet strategy. Business transformaton often starts by reconstructing process. IBM’s smarter planet strategy is based on the premise that customers want to be able to transform their businesses utilizing sophisticated technology. Therefore, it is important to look at how business innovation can be supported by IBM’s huge hardware, software, and services portfolio. The fact that Lombardi’s technology is the starting point for business units looking at transformational process changes is an important marker in IBM’s evolution as a company.

Bureaucracy gone mad: when process gets in the way of service management

I had two interesting discussions over the past few weeks; one with an IT manager and the other with Rhett Glause and Matt French from Service-Now. Both discussions related to the issue of managing service processes in a complex computing environments.  Let me start with the IT manager. He is charged with taking his organization’s web presence from 1990s architecture into a modern Web 2.0 design that will enable better support for customers and partners.  It is a big effort with lots of interaction with the customer facing departments about what they want and with the IT organization about how this new environment will be supported.  Now, this part isn’t out of the ordinary and this is not what this manager was having problems with.  He was being driven crazy by process. The company he works for is devoted to ITIL (Information Technology Infrastructure Library). ITIL is a set of best practices designed to help companies create environments that have a common way to troubleshoot problems with managing complex services.  They are intended as guidelines – not step-by-step instructions about how to managing service processes. In fact, ITIL best practices mandate that you need to start with your strategy for managing services before you get involved in the details.

The IT manager’s problem is that his company’s IT department was so embroiled in process that it was causing excessive delays in getting to a solution. It has a Configuration Management Database (CMDB) —  a repository for all of the details about an application environment including who can change something; how a service or an application is configured and what the change management process is. This company’s problem is that it has set up a change review board that has to review and approve every change for the new environment.  Therefore, something that should take a few days to develop is taking six month of endless meetings.  In other words, the IT manager’s organization is too caught up in process so that it actually crippling the ability to get the job done.  According to the IT manager, “It’s bureaucracy gone mad! This approach will not help make IT more responsive; it will do the opposite.”

I thought about the discussion in context with a great call I had with Matt French, director of marketing and product strategy and Rhett Glauser, communications manager at Service-Now, an IT service desk software as a service company.  What did they think of my friend’s tale of woe? They agreed that this is a common perspective that they hear from customers.  Many customers are beginning to understand that they have to take a pragmatic view of process.  Their top recommendation was that companies should approach ITIL in a phrased approach.

So, here are some recommendations about how to handle process in context with driving business value:

• Establish a light-weight CMDB by only focusing on configuration items that the organization really needs. If a process isn’t likely to change, it might not be necessary to track that process.  You don’t need a change management process for everything.
• Get IT management to take a step back from relying too heavily on IT processes. Rather management needs to be focused on what is important to business management and then execute in a pragmatic way.
• Every service should have a business owner who can make decisions.
• When a change management process is required make sure that there is a change advisory board. There needs to be one person who has the authority to manage that change in the context of the business drivers. The change management board should expedite process and should not become a bottleneck.

In the end it is about common sense. If IT organizations are going to be effective in managing business requirements they have to look at service management in context with the overall priorities of the business. This was the key message our team was aiming for when we wrote Service Management for Dummies. Service management is increasingly defining not only how we manage IT environments but how we managed businesses. Therefore a streamlined view of process management will be the difference between success and failure.

What are the Unanticipated consequences of the cloud – part II

As I was pointing out yesterday, there are many unintended consequences from any emerging technology platform — the cloud will be no exception. So, here are my next three picks for unintended consequences from the evolution of cloud computing:

4. The cloud will disrupt traditional computing sales models. I think that Larry Ellison is right to rant about Cloud Computing. He is clearly aware that if cloud computing becomes the preferred way for customers to purchase software the traditional model of paying maintenance on applications will change dramatically.  Clearly,  vendors can simply roll in the maintenance stream into the per user per month pricing. However, as I pointed out in Part I, prices will inevitably go down as competition for customers expands. There there will come a time when the vast sums of money collected to maintain software versions will seem a bit old fashioned. In fact, that will be one of the most important unintended consequences and will have a very disruptive effect on the economic models of computing. It has the potential to change the power dynamics of the entire hardware and software industries.The winners will be the customers and smart vendors who figure out how to make money without direct maintenance revenue. Like every other unintended consequence there will be new models emerging that will emerge that will make some really cleaver vendors very successful. But don’t ask me what they are. It is just too early to know.

5. The market for managing cloud services will boom. While service management vendors do pretty well today managing data center based systems, the cloud environment will make these vendors king of the hill.  Think about it like this. You are a company that is moving to the cloud. You have seven different software as a service offerings from seven different vendors. You also have a small private cloud that you use to provision critical customer data. You also use a public cloud for some large scale testing. In addition, any new software development is done with a public cloud and then moved into the private cloud when it is completed. Existing workloads like ERP systems and legacy systems of record remain in the data center. All of these components put together are the enterprise computing environment. So, what is the service level of this composite environment? How do you ensure that you are compliant across these environment? Can you ensure security and performance standards? A new generation of products and maybe a new generation of vendors will rake in a lot of cash solving this one.

6. What will processes look like in the cloud. Like data, processes will have to be decoupled from the applications that they are an integral part of the applications of record. Now I don’t expect that we will rip processes out of every system of record. In fact, static systems such as ERP, HR, etc. will have tightly integrated processes. However, the dynamic processes that need to change as the business changes will have to be designed without these constraints. They will become trusted processes — sort of like business services that are codified but can be reconfigured when the business model changes.  This will probably happen anyway with the emergence of Service Oriented Architectures. However, with the flexibility of cloud environment, this trend will accelerate. The need to have independent process and process models may have the potential of creating a brand new market.

I am happy to add more unintended consequences to my top six. Send me your comments and we can start a part III reflecting your ideas.

What are the unanticipated consequences of Cloud Computing- Part I

Maybe I am just obsessed with cloud computing these days. I guess that after spending more than 18 months researching the topic for our forthcoming book, Cloud Computing for Dummies, I can be excused for my obsession.  Now that I am able to take a step back from the noise of the market, I have been thinking about what this will mean in the next ten years. Consequences of technology adoption are never what we expect. For example, in the late 1970s and early 1980s no one could imagine why anyone would want a personal computer. In fact, the only application people could imagine for a PC was a way to store recipes (I am not making this up). Keep in mind that this was before the first PC-based spreadsheet was designed by Dan Bricklin and Bob Franston(That’s them in the picture) . No one in those days could have predicted that everyone from a CEO to a three year old child would own a personal computer and its use would change the way we conduct business.  (I never did find a recipe storing application).

The same logic can be applied to the Internet. While the Internet has been used 40 years ago by researchers, it was not a commercially viable option until the mid-1990s. In the early days of the Internet it was a sophisticated communications technology with a command line interface. Once the browser came along, businesses tended to use it to share price lists, marketing materials, and job postings. There were certainly message boards but only for the real techies. There were environments such as The Well which was the first online community used primarily by academics and wild-eyed researchers.

In that context, I was thinking about what we might expect to happen with cloud computing? There is a lot to say, so I decided to break this into two parts — each one will have three consequences. Here are today’s top three:

1. Cloud computing will begin to change the way we think of an application. To be truly useful to large groups of individuals and businesses requires economies of scale in terms of massively scaled workloads. The only way to accomplish this is either to cherry pick a few big workloads (like email) or to branch out. That branching out is inevitable and will mean that vendors with cloud offerings with componentize their software offerings into modular services that can be mixed and matched with other services.

2. The prices that vendors will charge for cloud computing services will drop dramatically over the next few years. As prices drop it will become a lot more economically viable to substitute on premise environment for the cloud environment. Today this is not the case; large companies supporting thousands of users in an application environment cannot justify the movement to a cloud platform. What if the costs drop to the point where the economics (with the right workloads) favor cloud based services? When this happens there will be a tipping point that we might not even notice for a few years. But I predict that it will happen. We are already seeing Amazon dropping prices for its EC2 environment based on the competitive threat from Microsoft Azure services announcement.

3. The cloud will change the way we manage data. The traditional way we think about data neatly stored in specific databases to handle a specific business problem will inevitably change.  This won’t be an overnight change but it will happen. Data will increasingly be seen as a reusable resource that can be used in lots of different situations. There will continue to be strategic line of business applications but they will be more systems of record that keep track of the final result of actions that take place dynamically in the cloud. The value of data is not in its tight packaging as we have been used to for decades but it the flexibility to move, transform, and leverage data. The watch word for data in this new model will be Trusted Data in the Cloud.

I would love to know what you think of my top three choices; send me your comments and I will add them to my list for tomorrow.

As we deal with the cloud hype it is too easy to be dismissive and cynical. But we always treat complicated new trends that way — until one day they become the normal way of business and life.

Can we free process and data?

I am still at IBM’s Information on Demand conference here in Las Vegas (not my favorite place..but what can you do). In listening to a lot of discussions around strategy and products I started thinking about one of the key problems that customers are facing around business process and managing increasingly complex data. What companies really want to do is to have the flexibility and freedom to leverage their critical data across applications and situations. They also want to be able to change processes based on changing business models.

This is the core issue that companies will be facing in the coming decade and will be the difference between success and failure for many  businesses.  Here’s an example of what I mean. Let’s take the example of a retailer in a competitive market. Let’s say our retailer had five or six applications: Accounting, Human Resources, supply chain management, a customer support system, and a customer facing e-commerce system. Each of these systems has an underlying database; each one manages this data based on the business process that is the foundation of the best practices that is the value of these packages. Even if each of the packages are the best in their markets there is a core problem since each solution is a silo. Processes that move between these systems tend to fall through the cracks.  This is why we, as customers of such retailers, are often frustrated when we call about a product that wasn’t delivered, doesn’t work, or requires a change only to discover that one department has no ability to know what is happening in another area. For most companies the dream of single view of the customer is aspirational but not practical right now. In reality, it is hard for companies to mess with their existing applications. These solutions are customized for their business environment; they were expensive and complicated to implement — and change is hard. In fact, companies only change when it is more painful to stay with the status quo than it is to change. In a retail scenario, companies change their approach to process and data management when they must change their business model because the current processes will lead to failure. Retailers are currently faced with emerging approaches to selling and managing customer relationships that are challenging traditional selling models.  Look what a company like Amazon.com or Netflex have done to their slower moving competitors.

A number of customers I have spoken with understand this very well. They are looking at ways to separate their core data assets from the underlying applications. Many of these customers are at the forefront of implementing a service oriented architecture (SOA) approach to managing their software assets. They are increasingly understanding that the secret to their future success is the knowledge they have about their customers, their needs and future requirements within their own set of offerings and those from partners. These companies are setting a priority of making this data independent, secure, and accurate. These business leaders are preparing for inevitable change.  At the same time, I have seen these customers creating SOA business services that are, in essence, codified business processes. For example, a business service could be a process that checks the credit of a potential partner or links a new customer request for service to the set of applications that confirms the request, orders the part, and notifies a partner.

So, here is the problem. These customers are implementing this new model of abstracting data and process based on specific projects or business initiatives.  These projects have gotten the attention of the C-team because of the impact on revenue. But, in reality, the real breakthrough will happen when the separation of data and process are the rule, not the exception.

This is going to be the overriding challenge for the next decade because it is so hard. There is inertia to move away from the predictable packaged applications that companies have implemented for more than 30 years. But I suggest that it will be inevitable that companies will begin to understand that if they are going to remain agile and change processes when they anticipate a competitive threat. These same companies will understand that their data is too important to leave it locked inside an application linked tightly to a process.

I don’t have the answers about what the tipping point will be when this starts to become a wide spread strategy. I think that the cloud will became a forcing action that will accelerate this trend. I would love to start a dialog. Send me your thoughts and I promise to post them.

Can IBM turn information management upside down?

I am here at IBM’s IOD (Information on Demand) conference. The keynote is interesting because of the focus on outcomes. IBM has invested more than $12 billion over the past five years in the information management market. More than $8 billion has come through acquisitions (Cognos, SPSS, etc.) and the rest from organic growth.

The biggest changes that I have seen over the past 20 years or so of watching IBM in the information technology market is the change in focus from the database engine and tools to a focus on a process centric approach to information management. In essence, this means that IBM is building a foundation based on outcomes through the lifecycle of information. Last year IBM called this movement to using information holistically to help companies anticipate the future the Information Agenda. Now, there is an interesting and subtle shift to what IBM is calling information-led transformation.  What’s the difference? I think that IBM is actually attempting to turn the information management market upside down.  There is no doubt that data and information management is a technical discipline. What IBM is saying is that the focus is on business transformation that is supported by information management technology. It is a subtle difference but really important. It is very easy to get caught up in the details about schemas, data cleansing, etc. But if information doesn’t support key business processes and business strategy needs, it is just a pile of technology.

With the growth of social networks, an ever expanding world of information sources – structured, unstructured, images, video, data feeds, and more, it is more important than ever that these sources of data be managed in context with the business goals.  The movement to cloud computing will add a lot more information to the mix.  It is going to be a complex journey. One only has to look at complexities of managing information in the healthcare industry to start to understand what the implications for managing costs and lives. Today we cannot easily look across information across individual doctors, hospitals, pharmaceutical companies, pharmacies, patients, medical equipment, digital images, and more. We don’t have consistent definitions of data; nor can we keep track of how effective a treatment might impact individuals with a symptom. Nor do we have the ability today to use information to determine what solutions could be used to reduce medical errors by 5% a year. If healthcare information management were focused on predicting outcomes rather than creating the next report, image what we could accomplish.

Ten things I learned while writing Cloud Computing for Dummies

I haven’t written a blog post in quite a while. Yes, I feel bad about that but I think I have a good excuse. I have been hard at work (along with my colleagues Marcia Kaufman, Robin Bloor, and Fern Halper) on Cloud Computing for Dummies. I will admit that we underestimated the effort. We thought that since we had already written Service Oriented Architectures for Dummies — twice; and Service Management for Dummies that Cloud Computing would be relatively easy. It wasn’t. Over the past six months we have learned a lot about the cloud and where it is headed. I thought that rather than try to rewrite the entire book right here I would give you a sense of some of the important things that I have learned. I will hold myself to 10 so that I don’t go overboard!

1. The cloud is both old and new at the same time. It is build on the knowledge and experience of timesharing, Internet services, Application Service Providers, hosting, and managed services. So, it is an evolution, not a revolution.

2. There are lots of shades of gray with cloud segmentation. Yes, there are three buckets that we put clouds into: infrastructure as a service, platform as a service, and software as a service. Now, that’s nice and simple. However, it isn’t because all of these areas are starting to blurr into each other. And, it is even more complicated because there is also business process as a service. This is not a distinct market unto itself – rather it is an important component in the cloud in general.

3. Market leadership is in flux. Six months ago the market place for cloud was fairly easy to figure out. There were companies like Amazon and Google and an assortment of other pure play companies. That landscape is shifting as we speak. The big guns like IBM, HP, EMC, VMware, Microsoft, and others are running in. They would like to control the cloud. It is indeed a market where big players will have a strategic advantage.

4. The cloud is an economic and business model. Business management wants the data center to be easily scalable and predictable and affordable. As it becomes clear that IT is the business, the industrialization of the data center follows. The economics of the cloud are complicated because so many factors are important: the cost of power; the cost of space; the existing resources — hardware, software, and personnel (and the status of utilization). Determining the most economical approach is harder than it might appear.

5. The private cloud is real.  For a while there was a raging debate: is there such a thing as a private cloud? It has become clear to me that there is indeed a private cloud. A private cloud is the transformation of the data center into a modular, service oriented environment that makes the process of enabling users to safely procure infrastructure, platform and software services in a self-service manner.  This may not be a replacement for an entire data center – a private cloud might be a portion of the data center dedicated to certain business units or certain tasks.

6. The hybrid cloud is the future. The future of the cloud is a combination of private, traditional data centers, hosting, and public clouds. Of course, there will be companies that will only use public cloud services for everything but the majority of companies will have a combination of cloud services.

7. Managing the cloud is complicated. This is not just a problem for the vendors providing cloud services. Any company using cloud services needs to be able to monitor service levels across the services they use. This will only get more complicated over time.

8. Security is king in the cloud. Many of the customers we talked to are scared about the security implications of putting their valuable data into a public cloud. Is it safe? Will my data cross country boarders? How strong is the vendor? What if it goes out of business? This issue is causing many customers to either only consider a private cloud or to hold back. The vendors who succeed in the cloud will have to have a strong brand that customers will trust. Security will always be a concern but it will be addressed by smart vendors.

9. Interoperability between clouds is the next frontier. In these early days customers tend to buy one service at a time for a single purpose — Salesforce.com for CRM, some compute services from Amazon, etc. However, over time, customers will want to have more interoperability across these platforms. They will want to be able to move their data and their code from one enviornment to another. There is some forward movement in this area but it is early. There are few standards for the cloud and little agreement.

10. The cloud in a box. There is a lot of packaging going on out there and it comes in two forms. Companies are creating appliance based environments for managing virtual images. Other vendors (especially the big ones like HP and IBM) are packaging their cloud offerings with their hardware for companies that want Private clouds.

I have only scratched the surface of this emerging market. What makes it so interesting and so important is that it actually is the coalescing of computing. It incorporates everything from hardware, management software, service orientation, security, software development, information management,  the Internet, service managment, interoperability, and probably a dozen other components that I haven’t mentioned. It is truly the way we will achieve the industrialization of software.

Sometimes its the little business process mistakes — not the strategy

As an industry analyst I am always looking at new technology innovations and new approaches that help companies transform their business process. There are some technologies that I have been seeing that are really excellent at adding robustness and sophistication to help companies transform the customer experience. But every once in a while you come across a business process example that makes you stop in your tracks and think about the small business process issues that can undue all the innovation.

Let me give you a real life example that got me thinking about this issue. An individual I knows owns rental property. It is a multi-unit house in the middle of a city. Needless to say, it needed insurance against potential disasters. My friend, being a responsible landlord sent his payment into his insurance provider. In fact, he set up a process with his bank so that his payment would be automatically sent out each month. Things were going great until one day my friend got a check from his insurance provider for “overpayment”. This really puzzled my friend since a process was in place for automatic payment. That process seemed to be working fine.  After numerous calls to the insurance company he finally got to the bottom of this complex business process problem. It seems that the company has a funny way of creating customer account numbers. The first seven digits of the number are the account number; the next two digits are the number of years that the policy has been in place.  My friend has put all nine digits in the account number field in his online payment system. Unfortunately, for my befuddled friend, no where on the insurance company statement did it suggest that those last two digits had nothing to do with the customer account number. So, basically, the payment was rejected because the year field was added. The company simply had not anticipated that anyone would not understand their process.

Now, I am sure that my friend wasn’t the only customer on the planet that thought that all nine digits were the account number. The happy ending is that the insurance was reinstated.

But here is the issue that I started thinking about. I suspect that this company spent a lot of money on its business process strategy, buying technology and tools. And they are pretty proud of their efforts. But it is so easy to get caught up in the broad process issues and forget the small issues like the structure of the customer account number. However, the reality is quite important. Take the example of my friend’s insurance company. If there were a few hundred customers who all made the same mistake it could result in an unanticipated loss of revenue. And in the future, those customers may decide that they really can’t trust their insurance provider and will choose to move to another insurance company.

An account number confusion problem will probably never be noticed by the management team. No one is going to call a meeting to discuss the fact that customers are confused by how we print our account number on our bills. But the reality may be that this small business process mistake made by an innocent programmer somewhere in the world can impact a company in a big way. I guess it isn’t a huge momentus issue in the full spectrum of world economies or technology evolution and it certainly isn’t the most exciting topic. But I think it is worth stepping back and thinking about.

Where is HP headed?

Every year HP holds an industry analyst summit that includes everything but PCs and printers. While in the past HP has made quite a tidy profit with ink times are changing. The PC industry is also moving into a new era where margins are shrinking as well. So, increasingly, HP is looking to its server business, its software, and its services businesses to keep the company moving forward.  Having just spent two days at this meeting, I would love to say that I could encapsulate everything that I heard — and didn’t hear. You simply can’t be everywhere at once. So, instead, I will give you some of my observations on where HP is at this point in time.

I think that HP is at a crossroads. Today it is the largest technology company. This is a wonderful opportunity because size gives customers comfort. You don’t have to worry that a $100 billion plus company will wither away. On the other hand, it provides a challenge. When you are this big, you have to act big and bold. You have to set a leadership agenda that the market and the customers take note of.

I wish I had the time to tell you all of my observations but instead I will try to encapsulate my observations and conclusions in ten key points. If I miss something, you will have to forgive me. So, I’ll start by mentioning seven different points worth mentioning. I’ll then conclude with some general observations.

Point Number One.  Be Top Dog in Selected Markets. HP’s overall strategy remains consistent: it’s objective is to be either number 1 or 2 in each product category it participates in.  While HP has made some strides in achieving this lofty goal, it is still a work in process. For example, HP has achieved leadership in hardware — both in PCs, servers, and storage.  In fact, the company is doing a very good job in the blade market (that’s all I’ll say about hardware since I didn’t have time attend those sessions).  In services, HP’s bold move to buy EDS is a work in progress. EDS is obviously a big player in the services market — especially data center and process outsourcing.   The question is how well HP will transition EDS from a standalone company to become a part of HP.  Software, which I’ll discuss in more detail later, has the potential to be big but still has a way to go before becoming the number 1 or 2 player.
Point Number 2. EDS is larger than HP’s printer business. With EDS as part of the portfolio, the amount of revenue from printers and ink has started to diminish. In fact, HP executives proudly announced that EDS is as large as  HP’s printer revenue. Not only did EDS give HP a boost in overall revenue but it has been able to bring new customers into the HP fold.  It will be interesting to watch how EDS evolves under the HP umbrella.  Initially after the acquisition, EDS was positioned as an HP company. That will be changing this year as HP moves to integrate EDS into HP.  HP describes EDS’s value as owning the run time environment. In other words, outsourcing.  EDS will be charged with outsourcing infrastructure, process, and applications.  HP has taken its traditional consulting services business and aligned it with its software business. The combination of EDS and the strengthening of the consulting business will help HP gain credibility with customers.
Number 3. Procurve chases Cisco in network management. While HP has been in the networking business for decades, it has been a well kept secret. Because of HP’s tight partnership with Cisco, HP has been wary of appearing to compete. However, it appears that HP is now willing to take on Cisco in the networking switching arena. It should be interesting to watch as  Cisco takes on HP in the server business.

Number 4. The software business is (still) important. HP has long had a love/hate relationship with software. HP has selected management and automation to focus its software business. Therefore, it has proclaimed that it wants to be number one in data center automation, functional testing, service and software for ITSM (Information Technology Service Management).  HP has also made a commitment to what it calls information management and business intelligence (records management, backup, etc. and NeoView — data warehousing . The Knightsbridge consulting organization has been melded into this group, adding a lot of implementation knowledge. Service Oriented Architecture is included in the software group primarily with a strong focus on governance, risk, and compliance. HP has evolved its OpenView platform into a business service management business that it calls Business Technology Optimization. Within this framework is all of the management technology ranging from service optimization to network management. The integration of the Opsware technology into the fold has been complicated but it appears to be coming together as part of the overall data center management and cloud initiatives

Number 5. HP does the cloud. Like all the other vendors in the market, HP wants to be a big cloud player. HP defines the cloud as the next evolution of the Internet in which everything will be delivered as a service from basic compute services to power and business process. HP considers its Opsware acquisition from last year as the credential it needs to claim leadership in the cloud.  HP has a broad definition of the cloud and plans to approach cloud services from a broad perspective. It’s strategy is still evolving as we speak. The nacent management team seems to be smart and ready to move. But it is still early days.    Like other major vendors, HP would like to be the arms merchant to vendors who will resell cloud services to end customers. Clearly, the cloud strategy is a work in progress. But HP is thinking about the right issues as it makes its way into this important emerging area. HP’s intent is to leverage its software assets to create a common framework for its cloud strategy. HP anticipates that it can leverage EDS’s expertise to gain a cloud framework that it can leverage with customers.

Number 6. HP expands Software as a Service. When HP acquired Mercury it also picked up a growing SaaS business. The company is planning to continue to focus on this arena both in the enterprise market and the SMB market. SaaS offerings will continue to focus both on the testing and the remote monitoring markets. Most of these services are focused on the upper end of the SMB market.  Just today, HP announced what it called Cloud Assure, a SaaS offering intended to help SBMs prepare to adopt the cloud. It provides services that scan and validate the performance and security of applications.

So, what’s next?

As I have indicated, HP is a complicated, multi-dimensional company. On one hand, it has been able to innovate over the years, sometimes well ahead of the market. I remember spending days with HP in the early 1990s talking about a future where a customer could get computing capacity on demand. But over time HP has become a much bigger company with a large and complex portfolio of offerings.  At the same time, HP is very focused on being a provider of IT services, hardware, and software.  It has no desire to be a business management or a business consulting organization.  While HP  is most  comfortable in the hardware arena,  it is making important strides in this part of the business.  It is finally pushing its networking business and taking on Cisco directly.  The data center business seems to be well positioned to appeal to the IT operations management group that has been its traditional constituency.  The software business, on the other hand, is still at a transition point. While HP has done extremely well with its performance management and testing business, it has had a hard time creating an overall software portfolio. Opsware is clearly being used to provide the foundation for cloud computing but it will take some more time and cycles for this platform emerges as a power.

I think the most important acquistion that HP has done is really EDS because it brings in a new set of customers who would have never considered HP in the past. EDS also brings in a wealth of home grown enterprise software technologies, frameworks, and best practices that will help mature HP’s software portfolio. In my view, there will be more aquisitions to come for HP. I suspect that most will be in software and will have to fill the gaps in data management and security. HP is still learning to be comfortable in its skin as the biggest IT company in the market. It will have to work hard to maintain that position by executing big and buying big.

Yes, Virginia, there is a SOA!

It has been only a few weeks since Ann Thomas Manes wrote her blog stating that SOA is dead.  Since then there has been a lot of chatter about whether this is indeed true and if SOA vendors should find a new line of work.  So, I thought I would add my two cents to the conversation.

Let me start by saying, I told you so.  Last year I wrote in a blog that we would know when SOA had become mainstream when the enormous hype cycle ended. Alas that has happened. What does this mean? Let’s keep this in perspective. Every technology that comes along and generates a lot of hype follows this same pattern. Why? I’ll make it simple. The hype machine is powerful. It goes like this. There is a new technology trend with thousands of new companies on the scene.  All of them vie for dominance and a strong position on someone’s magic universe.  They are able to gain attention in the market. Then the market takes on its own momentum.  The technology moves from being a set of products focused on solving a business problem to the solution to any problem.  We saw this with object orientation, open systems, and Enterprise Applications Integration – to name but a few.  Smart entrepreneurs, sensing opportunity, stormed onto the market, promising huge promises of salvation for IT. Now, if I wanted to write a book I think I could come up with 100 different scenarios to prove my point but I will spare you the pain since the outcome is always the same.
So, what happens when each of these technology approaches moves from hype heaven to the dead zone? In some cases, the technology actually goes away because it simply doesn’t work – despite all of the hype.  But in many situations an interesting thing happens – the technology evolves into something mainstream. It gets incorporated and sometimes buried into emerging products and implementation plans of companies. It becomes mainstream.  I’ll just give you a few examples to support this premise:
•    Remember open systems? In the early 1990s it was the biggest trend around. There were thousands of products that were released onto the market. There were hundreds of companies that renamed themselves open something or other.  So, what happened? Open became mainstream and the idea of designing proprietary technologies without open interfaces and standards support became unpopular. No one creates a magic quadrant based on open systems but I don’t know many companies who can ignore standards and survive.

•    Object orientation was as big a rage as open systems – maybe even bigger. There were conferences, publications, magic quandrants and lots and lots of products ranging from operating systems to databases to development environments.  It was a hot, hot market.  What happened? The idea of creating modular components that could be reused turned out to be a great idea. But the original purity and concepts needed to evolve into something more pragmatic and in fact they did.  The concepts of object orientation changed the nature of how developers created software.  It moved from the idea of creating small granular pieces of code that could be used in lots of different ways to larger grain pieces of code that could create composites.  Object orientation is the foundation that most modern software sits on top of.

•    Enterprise Applications Integration probably had even more companies than either open systems or object orientation combined.  The idea that a company could buy technology that would allow their packaged software elements to talk to each other and pass data was revolutionary at the time.  This trend was focused on providing packaged solutions to a nasty problem. If vendors could find a way to provide solutions that allowed customers to avoid resorting to massive coding, it would result in a big market opportunity. Vendors in this market promised to provide solutions that allowed the general ledger module to send data to and from the sales force application. What happened? There were hundreds of vendors telling into this market.  However, it was a stopping off point.  There are newer products that do a better job of integration based on a service oriented approach to integration and data management.  In addition, this market evolved into technologies such as Enterprise Service Buses that did a better job of abstraction. There are plenty of Enterprise Application Integration technologies out there but they have emerged as a part of a loosely coupled environment where components are designed to send messages between them.
Now, I could go on for a long time with plenty more examples. But I think I have made my point. Technology innovation just works this way. The products that took the market by storm one year become stale the next. But the lessons learned and the innovation does not die. These lessons are used by a new generation of smart technologists to support the new generation of products.
So, Virginia, Service Oriented Architectures will do the same thing.  But it is also a little different.  It is not the same as a lot of other technology shiny toys because so much of SOA is actually about business practices – not technology.  Sure when SOA started out a few years ago it was about specific products – hundreds of them. These products were eagerly adopted by developers who used them to created service interfaces and business services.
Today, business leaders are taking charge of their SOA initiatives. The innovative business leaders are using business focused templates to move more quickly. They are creating business services – code plus process. They are creating business services such as Order-to-Cash services that in the long run will be mandated as the way everyone across the company will implement a process according to corporate practices.  Some of these companies would like to rid themselves of huge, complicated and expensive packaged software and replace them with these business services.
Today these products are becoming part of the fabric of the companies that use them. They are enablers of consistent and vetted business processes. They are the foundation of establishing good governance so that everyone in the organization uses a consistent set of rules, data, and processes. This is not glamorous.  It is hard work that starts from a business planning cycle.  It is the type of hard work where teams of technologist and business leaders determine what is the best way to satisfy the company’s need to implement order to cash processes across business units.
And yes, Virginia SOA is not stagnant.  It is evolving because it offers business value to companies.  There are new initiatives and new architectural principles that have value within this service orientation approach.  There are architectures such as REST that helps make interaction within a business services approach more interactive.  There are emerging standards that enable companies using SOA to be able to exchange information without massive coding. There are information services and security services evolving for the same reason. There are new approaches to make SOA environments more manageable based on the emerging idea that, in fact, everything we do with the world is a service of some type that needs to work with other services.  The physical and virtual words are starting to blend – which makes service orientation even more important.
Maybe ten years from now, we won’t use the word Service Oriented Architecture because it won’t be seen as a market segment or a quadrant – it will be just the way things are done.  So, stop worrying about whether SOA is alive, dead, or comatose – I have. So, relax Virginia, and get back to work!