I had a very interesting conversation with Jeff Barr, the senior web services evangelist at Amazon. I have known Jeff for almost 15 years. In those days Jeff was one of the architects at a company called Visix, an early graphical development environment that was ahead of its time. Visix’s software development environment was designed as an abstraction of the underlying infrastructure. Visix came into the market before the Internet infrastructure became the defacto standard. But for me, it set the vision for where we are today. Jeff started at Amazon in the summer of 2002 with the Visix and some Microsoft experience in his consciousness.

Amazon’s business model is different than a traditional software company that often spends 18-24 months convincing customers to adopt new hardware/software or services. Amazon is leveraging a different computing model based on providing customers will a set of predefined services that can be bought without making a long term commitment. In a sense, Amazon has had the luxury (or good sense) to roll out service after service and see what sticks. As Jeff sees it, “people’s brains light up. They can build their business and applications in a positive way without having to worry about bandwidth, power and cooling.” His perception is that customers don’t think about whether the cloud provided by Amazon will support their needs. Clearly, he is able to talk this way because Amazon has made the investment in a scalable architecture to support an infrastructure that is designed for massive scalability. The other issue is that having built this architecture for its own retail requirements, Amazon had the foresight to exploit the technology to create a new line of business — in essence, a compute cloud based on providing a set of tools and product offerings to the market. The message to the market is straight forward, use these services so that you can innovate quickly without having to build from scratch. In taking this approach, Amazon creates both a test bed that allows the company to collaborate on new functionality with partners. In addition, and perhaps most importantly, it allows customers to buy incremental capability so they can scale up and down when they need to. According to Jeff one of the benefits of the cloud is that it isn’t dominated by the needs of one customer. In other words, one customer may have a spike in demand while another has less need at that point in time. Over the years, Amazon is able to understand usage patterns that are predictable.

Amazon’s business model follow this approach. A customer creates an account with Amazon that in essence gives them a charge account with Amazon. Customers get access to all of the Web services APIs. Their usage is tracked and they are billed for what they use. The business model is quite straight forward. Amazon charges 15 cents per gigabyte per month — not a lot of money even when you scale. What is interesting to me is there is no contracts to negotiate — everyone understands the rules. I asked Jeff if customers ever ask to buy a “private cloud”. While Amazon has been asked by customers, Jeff felt that because of the amount of experience that Amazon has with its hosted services discourages customers from explaining, “This is a business we want to be in. We have a lot of experience in our organization. We build highly cost effective data centers and sophisticated monitoring and operations.” He contends that Amazon has the expertise based on its 13 years in the business is enough to keep customers from walking away from its cloud. If you do the math, it would be difficult to argue. For example, if a customer needed 500GB of storage for two years, the cost would be $1800. In addition, it avoids the requirements for managing that environment.

Jeff makes a good point. If a customer needs to scale from 10GB to 100 TB in a month it might be hard to pull off. “This is routine for us,” Jeff claims. From his vantage point, the cloud changes the relationship between the customer and their hardware vendors. In effect, customers are sharing hardware resources with lots of other customers. So, the question becomes, who is your partner? It is no longer the provider of the hardware or the operating system. You probably still have a relationship with your software provider.

So, Amazon’s view of the cloud is pretty straight forward — it is a way to get value out of virtualization. Jeff points out that if developers uses Amazon’s elastic cloud service, for example, they pay to access servers on an hourly basis. Amazon allocates server to that account, provides a copy of the operating system they need to get started. That process takes a few seconds.

Another dimension of Amazon’s business revolves around the companies that actually build applications that sit on its infrastructure. Amazon has built a bunch of its own applications that it offers as services. In addition, there are a number of application companies that are building applications on top of the Amazon platform. One that Jeff mentioned to me is called RightScale, an automated cloud computing management system intended to help customers of Amazon’s Elastic Compute Cloud with issues such as load balancing. In addition to this type of company there is a community of 370,000 developers. Because Amazon sets the barrier to use so low, it is easy for a developer to try a service without making a long term commitment.

The more I think about Amazon’s platform and business model, the more sense it makes to me. I believe that Amazon and others such as Google, Salesforce.com, and eBay are a peak into the future of the new generation computing. In a sense, this model breaks every rule that the traditional computing industry has been built on. This movement towards enterprise software as a service and utility computing is beginning to redefine hardware, software, management and services. I predict that this new business model is going to slowly but surely turn the industry upside down. It isn’t only that the business model is different. The underlying technology platform based on standards and a service oriented architecture is propelling this change. The only thing that will slow this transformation is fear of change. But what else is new.

I was minding my own business and twittering (I think that is how you say it) when I noticed a breaking news story from the Wall Street Journal: HP would be acquiring EDS. This is quite a significant transition for HP that will help transform the company into a new position in the market. Now, at this time it isn’t official — no conference call yet on my calendar but it certainly looks probable. In fact, Mark Hurd has acknowledged that the companies are talking. I picked up that detail from Larry Dignan and Justin Perlow’s blog. So, what does this mean? There are a lot of issues at play. Here are my five top ten thoughts:

One. HP needs more significant help on services and consulting. When Carly Fiorina was HP’s CEO tried to buy PriceWaterHouseCooper’s consulting practice and failed. After that failure, IBM scooped up the consulting practice which became the highly successful Global Business Services. Since then HP has made small targeted acquisitions. To compete in a global market, HP needs the deep expertise and customer relationships of a major consulting operation. And EDS is one of the biggest. The deal is reported to be worth between $12-13 billion. EDS revenues are around $22 billion.

Two. Synergy looks good between HP and EDS. Both companies have chosen to partner with many of the same software players including Oracle, Microsoft, Tibco, and BEA (now part of the Oracle family). In addition, both companies have focused on big outsourcing deals. Therefore, the business philosophy of the two companies are close. The trick, of course, will be to bring these two organizations together in a way that keeps important consultants happy. This will be important since a services company is only as good as its people. Leveraging the EDS big tent will be key. Ironically, it might be easier for HP to integrate a company like EDS into the fold than to integrate a big software company. HP’s existing services organization will fit into and under the EDS umbrella. The big challenge will be to manage costs. IBM has done a good job over the last several years making Global Services profitable and it hasn’t been easy.

Three. Keeping services partners happy will be a challenge. HP has used the fact that it wasn’t IBM Global Services as a differentiator. If it buys EDS it will have to do some work manage channel conflict. This might take some fancy footwork.

Four. What about the mainframe business? EDS has a significant mainframe business. The mainframe has been something that HP has studiously avoided. Does this mean that HP will learn to love the mainframe? It might consider such a relationship given the complexities of scaling and managing high end data centers and clouds. It might take some convincing but if HP watches carefully what EDS has achieved with the mainframe it might change its tune.

Five. Will HP know how to leverage EDS’s expertise to enhance the software business? There is nothing like being close to the customer in difficult implementations to know where the pain is. If HP goes through with the acquisition it would be wise to leverage this expertise in the software group. Leveraging EDS’s deep customer expertise could add assistance to the software business.

A few months ago I wrote a blog entry criticizing Twitter . I was not sure I got the relevance of this micro-blogging site. So, I decided that it made sense to spend time getting deeply involved in a Twitter community to test it and see if my opinion would change.

Here are my thoughts now. First, I am finding myself intrigued by Twitter. It is a quirky environment. I see some comments like “I am drinking my first cup of coffee of the day” or “My airplane is delayed.” I think that I know too much about some people’s daily habits and not enough about others. I also get breaking news on twitter and find some fascinating links from political pundits. I am finding that I get some unique insights into people I know and people I don’t. Some entries are simply entertaining and make me laugh. My colleague, Robin Bloor, for example, has been posting haikus that are wonderful. I look forward to them. I exchange comments on topics with other analysts that I have gotten to know over the years. I am also reconnecting with people I haven’t talked to in years.

I was talking to John Simonds last week and he thinks that some bloggers are using Twitter in place of their regular blogs. It might be the perfect solution for bloggers with short attention spans!

So, I think I have changed my mind to a certain extent. Twitter does fill a role in a world where our time is sliced thinner and thinner and where we don’t always have the time to pick up the phone and call. It provides a way to create micro-communities that have intriguing possibilities.

I think this is just the beginning of what we will see in the next five years. It reminds me somewhat of the early commercial Internet days. It was an intriguing platform that has potential but needed to evolve. How will Twitter and other similar sites evolve? I think that we will see the refinement of specialized closed groups focused on either topics or issues. I could see, for example, a company setting up a Twitter-like capability to allow a team of scientists or researchers to ping each other with quick ideas. This is different than traditional communications methods used by these groups. In formal conversations or papers these participants feel compelled to write long and complicated explanations of ideas and concepts. If you are limited to a hundred or so characters you are forced to get the core of your idea out very, very quickly.

Like email in an older generation, Twittering could have the effect of quickening the pace of communication — but in a radically different way. Sometimes the most important innovation comes from a single phrase or idea that expands into a universe.

I spent part of last week at CA’s (Computer Associates in the old days) industry analyst meeting. My overall impression is very positive. CA is a complicated company with a complicated history. Often when a company has a near death experience, it either dies or changes. I have seen many companies that wither away — even if they don’t die completely. CA seems to be one of the exceptions. While it is hard to translate two full days of discussions and interactions into a couple of hundred words, I will put it in context with some of the ten key things I learned.

One. A focused approach. CA has selected three areas of concentration: enterprise management, governance, and security. This is a far cry from past decades where CA focused on hundreds of markets with thousands of product offerings. CA still has a boatload of mainframe products that it still sells but it has moved these products under a separate business unit.

Two. Enterprise IT Management remains a lynch pin offering. Management software has long been at the core of CA’s product offerings. The company has now divided its management portfolio into six discrete areas: service management, project and portfolio management (Clarity), application performance management (Wily), infrastructure management, security management, and datacenter automation (built on performance management and configuration management). Like IBM, CA is putting forth the idea that a customer can start with any one of these areas and then move to the next. Perhaps the fact that CEO, John Swainson started life inside IBM had something to do with that change. CA is building a case that it is architecting these product areas with a common foundation. It is an ambitious goal but a necessary one.

Three. The mainframe is still a money maker. CA remains committed to the mainframe market. It is experiencing strong growth — especially with the introduction of the z10.

Four. Focus, focus, focus. CA is getting very pragmatic under the operational leadership of president and COO, Mike Christenson. The company is focusing on its top 4,000 customers.

Five. Focus on systematizing governance. OK, so everyone is selling governance. CA is making good use of its Niku acquisition (reborn as Clarity) to become a player. In addition, the company is using some of its management technologies to support automation of governance. This is clearly an area where CA is investing.

Six. Security as core. The Netegrity acquisition has served CA well. It plays well in everything from SOA, governance, and virtualization. Securing highly distributed environments never goes out of style. ID Management is one of the key enablers across the portfolio.

Seven. Data Center Management is the most mature area of Enterprise Information Technology Management. I sat through a two hour deep dive about CA’s datacenter management offering. This is a big area, not just for CA but for everyone in the management space. The overall “vision” is to provide an overall unified infrastructure management platform. The offerings range from traditional systems management to network management. The focus of the team seems to be on providing integration points between modules across the product line — an ambitious plan.

Eight. CA likes Virtualization. CA is focused on virtual systems management. They are working to integrate virtualization management into their own offerings as well as offerings from partners. CA’s focus is around packaging management as a service — an obvious requirement if you are going to be a player in virtualization.

Nine. Getting focused on business services. CA is focusing a lot of attention on the area of business service management. I liked the approach of having a formal policy based automation engine. CA claims its differentiator is its ability to implement dynamic server provision.

Ten. CA does SOA. CA has been relatively quiet about SOA in the past. It was interesting that rather than producing a SOA product offering, CA is retooling its technology offerings as a set of SOA services with web services interfaces. Obviously, creating the interfaces is the easy part. But it is a step in the right direction.

The bottom line. CA is clearly a company on the move. It is living in a rough neighborhood with tough competitors. But I am impressed with some of the new thinking and some of the architectural approaches that are the foundation for the company’s product directions. CA has made the right acquisition moves that are paying off. Now, the proof will be in what acquisitions come next and the way CA will execute on the vision and directions.

I have been thinking a lot about the evolution of virtualization lately and so I was intrigued when a company I had never heard of called Desktone asked to come in for a briefing. When I heard that the company specialized on desktop virtualization I was intrigued. I was even more interested when I learned that the founder came from Softricity, the OS virtualization company bought by Microsoft.

What I liked about Desktone is its focus on desktops as a service. The company has been around since 2006 and has its developers in Shaghai. The company has taken a $17 million investment round. I liked David Marshall’s overview of the technology.

What is important about what Desktone has to say is that the desktop environment can become a service offering. While I don’t expect the masses of Microsoft Windows desktops to all move en masse to desktop as a service, it is an approach that is a leading indicator of where the desktop is headed. Think back to when Windows became the platform for desktop computing. In those days, customers wanted a easy to use and pragmatic way to write letters, create a spreadsheet, follow up on email, and surf the web.

What has changed over the past five years is the growing complexity of the desktop environment. Simply put, the desktop moved from its role as a terminal for corporate applications and a tool for productivity applications into a true computing platform. The implications are complex and startling. Customers who thought of their desktop as personal where suddenly forced to deal with everything from viruses, security of stored data, updates to the operating system, the need to coordinate between service components on the desktop and the server. Now, add to this, the need to add more power on the desktop to support the growing needs for a growing number graphics and computing requirements — and of course power.

What Desktone is proposing is that service providers establish themselves as the provider of desktop capability. Clearly, an emerging player like Desktone couldn’t take on this goal but its partners are stepping up. In my discussion with CEO, Harry Ruda, the company has signed on partners including IBM, Verizon, Softbanks, and T-Systems. These companies all plan to use desktone to offer the virtual desktop as a subscription based service. Therefore, the desktone service provides an annuity stream for companies like Verizon as an alternative to the corporate desktop. Desktone has signed up a few high profile customers like Merill Lynch. Merrill Lynch are signing up for a very simple reason — they simply cannot get any more power in their data centers — even if they wanted to pay for it. Likewise, Verizon, which has substantial data center capacity in New York City simply cannot take on new co-location customers without a managed services approach.

What I found very interesting about Desktone is how the company positions the technology. The company seems want to from the traditional approaches to desktop virtualization right to the world of cloud computing — of course, for the desktop world. I am providing a link to Dana Gardner’s blog on the topic. Unlike some of the clouds that we hear a lot about, Desktone’s version is based on a private cloud that will be owned and run by the serivce providers. The approach is intended to treat the virtual desktop as PCs connected to a service provider that provides the “virtual container” for the desktops. This solves a lot of problems for both Desktone and service providers. In essence, the end customer is responsible for their own operating system and PC application licenses. Desktone is provide a virtual desktop grid — what Desktone called an access fabric. This fabric is intended to provide a management platform for desktop virtualization.

Desktone has an interesting opportunity. It is stretching what we have traditionally thought about for desktop virtualization. While desktop virtualization is not new but it is changing dramatically. One only has to look at the work that VMware, Citrix, IBM, Microsoft and HP are doing — to mention but a few of the players that understand the importance of virtualizing the device in front of the customer. I think that desktop as a service is the right conversation for the industry to be having just about now.

I was busily working away when I got a call from a hedge fund manager. Now, I don’t really know that many hedge fund managers so I thought this could be a good education. This fund manager — no I don’t remember his name — had a request. Could I spend an hour or at least 5 minutes (yes, that is exactly what he said) with him explaining the key trends in a SOA. Now, while I appreciated his thirst for knowledge, I have to admit I was perplexed. What exactly was he up to? I won’t keep you in suspense any more. Simply put, he wanted to know if SOA was passé. He was reading various blogs and articles that implied that SOA was fine while it lasted but it was basically over. Companies gave it the old college try but found it didn’t work and moved on.

Here is what I told my new friend. Clearly there are people who are proclaiming SOA dead. It is easier to get headlines that way. After all, who wants to write an article and say, it’s moving ahead slowly but surely — not a good headline. My perception is that from the many customers I have spoken with and continue to speak with, SOA is a continuing process. It is not a quick fix. It isn’t like building a single application. It is, as I have said many times, a business strategy and a different approach to building business services. It is not necessarily so easy because the IT group can’t go off and do it alone. The old style programmer who liked to sit in a quiet place and write code doesn’t do well with SOA. The new style developer is a business collaborator. That individual must partner with colleagues in the business units to determine what services and what business processes can be abstracted so that they can be used and repurposed to support business change. That is very different than other technology trends I have witnessed over my years in the business.

No not to belabor the point — SOA is not a fad. It is a business approach to software that is still in its first stage of development. There is a lot more work to be done in terms of products, services, and techniques. So, Mr. Hedge Fund Manager, SOA ain’t dead yet!

Last week I attending IBM’s Impact conference which Sandy Carter, VP of SOA for IBM contends is the largest SOA conference in the world. With more than 6,000 attendees all focused on SOA, I think she might be right. So, it is interesting to listen to see what the key messages and issues. I have some time to take stock of what I heard and saw at the meeting. This is the second year of the Impact conference and it is interesting to see the difference a year makes

While I could go on for a long time about the details of the conference, I wanted to give you my top three impressions of the meeting.

Impression One. SOA is about end-to-end business process. IBM is maturing with the market. When IBM first started on its SOA journey, the focus was primarily on the Enterprise Service Bus but that has changed. While the ESB is still important (although there are camps in the industry who think it isn’t so important anymore), there is a new focus that is more holistic. IBM is now much more focused on end-to-end business process. I think this is an important move for customers and for IBM’s go to market strategy. It is a more business centric view and approach to SOA. I think that this is a testament to the fact that SOA is starting to mature. Customers are beginning to think of SOA not just as a substitute for applications integration but as a way of managing business. This is a step in the right direction.

Impression Two. SOA gets Smart. IBM is using the Smart SOA brand as a natural evolution of its SOA strategy. I come away from the conference understanding that IBM is beginning to leverage its experience with thousands of customers into a set of best practices that are codified into a set of industry frameworks. Many of these frameworks are culled from IBM Global Services experience working with customers. Pre-defined and extensible frameworks are an essential solution to the problem customers face in trying to pull together the pieces of a SOA architecture from scratch. Part of IBM’s journey as a SOA vendor is to pull its elements of software together into a cohesive SOA approach. I observed that IBM is working to create a SOA approach that leverages its five software areas: Tivoli (service management, security, etc.), Rational (development and quality), Information Management (databases, search, content management, information infrastructure, information services, etc.), WebSphere (application server, enterprise service bus, etc.), and Lotus (collaboration and social computing). Implementing a long term SOA strategy really does require all of these areas to be intertwined. It is not an easy path for any vendor.

Impression Three: It’s about the customer. IBM made it clear that it was putting its focus on customers at this meeting. There were more than 250 sessions run by its customers. It was pretty overwhelming with often more than 50 sessions going on simultaneously. Our team ran a SOA for Dummies session and had standing room only. We weren’t sure what to expect. Were all IBM customers too smart to attend a introduction to SOA session? We found that, in fact, a lot of attendees that we met during our session are figuring out the basics: how to work with the business, how to think about governance, and what does it mean to capture code out of an existing application and make it into a reusable service. Many of the other customers we spoke with at the meeting are well along in their SOA journey. They are getting real business value because they are looking at SOA from a customer experience perspective.

I was struck by the comments made by Jim Haney, CIO of Harley-Davidson who started off the conference by driving onto the stage on a motorcycle (a Harley, of course!). His words were so good that I’ll quote some of what he said (If I got some words wrote, you’ll have to forgive me). He spoke about the customer facing SOA application the company has put into production. “SOA is not about technology, it is about how you use technology to change the business.” The application called rideplanner.com is designed to help Harley customers plan trips. The application is intended to enhance the customer experience. It is not as simple as providing a trip map, rather as Jim explained, “it is about defining the process and bringing all these technology together to create an end to end experience. It is about pulling everything together with soa to change the way the customer interacts with us.” He pointed to the need to determine the right route to travel and what sights are along the way. Is it a long ride or a short one? Are there events that a Harley rider might be interested in? “We are creating a different customer experience. It isn’t about the individual transactions. We had to look at the person behind the application — not just at the technology. It is a cultural change.” I think that says it all…

Every year for the past 20 years I have attended HP’s annual analyst meeting. The first one I attended was quite small with a couple dozen analysts with all the focus on hardware. Having spent so much time with HP over these years I am in a unique position to give a point in time report card. I thought I was going to write up each day but I decided that one assessment would be best. It is not an easy task especially since HP has made 16 acquisitions (mostly in software and services) in the past three years. HP will not buy packaged software, it will however invest in providing vertical offerings for its most important customer segments including financial services, communications, media and entertainment, manufacturing, public sector, health and life sciences, energy, retail and consumer packaged goods.

I also heard that HP has begun to revitalize its lab organization and invest more in R&D. HP Labs has been a source of innovation for HP. It will be interesting to watch what new software and hardware technologies come out of the resource over the next couple of years. Mark Hurd, during his discussion with us mentioned that HP is spending $3.7 billion on R&D. This could result in some interesting opportunities for HP.

My take on HP is complicated — HP is a complicated company. I am struck by four key issues about this point in time of HP’s transition:

1. HP has finally begun to understand that the combination of hardware, software, and services are synergistic. HP was rather quiet about this change but it was clear that there is beginning to be orchestration both at the sales level and just as importantly at the software level. I am starting to see that HP is beginning to leverage software assets developed in its consulting organization and moving them into the software group. Likewise, software that had been captive in hardware is being decoupled and potentially given new life.

2. HP hardware organization is changing in interesting ways. There are four focuses for the hardware business: blades, power management, storage, and overall next generation data center (called Adaptive Infrastucture). This is the traditional business for HP which should remain a strong pillar of the strategy. HP has a strong client side hardware business unit that is separate from the enterprise server and storage organization. It will be interesting to watch how HP leverages its blade enclosures across its many hardware blades to create a powerful go to market strategy.

3. The software business. I get lots of questions about the viability of HP’s software business. I think that this has been complicated for HP. After all, HP has purchased so many software companies over so many years that it can be confusing. I am beginning to see some signs that a strategy is emerging here. While HP has some work to do to make all of this understandable and digestable. One good move was that HP has divided its software business into two units: Business Information Optimization, Business Technology Optimization (Enterprise Management and Automation), and First, HP has a very focused information management strategy with a focus on its NeoView data warehousing offering. The company is starting to win some important business — especially against Teradata. The other component of this business unit is based on records management. This includes integrated archiving and e-discovery (HP just bought Tower Software). In addition, there are some interesting new offerings in this area such as Exstream Software, a new acquisition that turns document data into electronic form so it can become information services. The company is focused on managing the content/document ecosystem. This should be a very interesting acquisition.

The Business Technology Optimization area is the most complex. It encompasses most of the enterprise infrastructure software and it the least well understood. For example, HP’s SOA strategy is within this space. The crown jewel for HP is the Systinet registry/repository for SOA governance. The product was picked up as part of the Mercury Interactive acquisition and has given HP a great starting point. The Mercury Interactive acquisition also provided HP with a strong position in software quality and testing. It is a sign of the change the new HP software that HP has been able to keep the value intact and use it as a foundational technology in many of its initiatives.

HP’s legacy software platform: OpenView is also part of Business Technology Optimization. The business continues to grow well and over time I think it will be a better understood strategic management asset. But I imagine that traditional OpenView customers are probably a bit confused. Long term the new organizational software structure will help HP sell at a higher level in the organization.

The most interesting transition for Business Technology Optimization is the addition of Opsware into the mix. OpsWare has a lot of very interesting IP in data center automation and in overall integration. I am still learning about all the buried value but the underlying data model and integration technologies make it an interesting set of services to fill out HP’s SOA strategy. OpsWare has been part of HP for only about six months but it is clear that this set of resources and people are having a big impact on the HP software strategy.

4. HP’s Services. HP’s services organization which has grown steadily. The biggest change that I am seeing is the adoption of a common framework. There is a lot more synergy between the services organization and the software group. Services now exchanges its software services into software. This is one of the strongest areas where HP can demonstrate its SOA strategy.

5. Virtualization. HP started to talk a little bit about the importance of virtualization as part of the future for HP across hardware, software, and services. There were a few interesting comments about cloud computing. But HP has a huge opportunity in virtualization that I think did not come through in the way I would have expected. I imagine that by next year the volume for this strategy will be a lot louder (at least I hope). I was encouraged by Mark Hurd’s comment, “Virtualziation creates interruption of the server market. The more of the market that virtualizes, the better for HP.”

This is the beginning of another season of analyst meetings. Today I am at IBM’s Linux and Open Source meeting. Next week I will be with HP at their industry analyst meeting (hardware, software, services — no printers or PCs), that will be followed by IBM’s Impact (SOA conference), CA’s analyst meeting, and finally I will attend Microsoft’s tools and servers analyst meeting. I could attend many more but there aren’t enough days in the week and I still have to get some work done!

The overall Linux and Open Source meeting was quite interesting. But what I wanted to talk about is cloud computing. Irving Wladawsky-Berger started off with a fascinating discussion on cloud computing. I have known Irving Wladawsky-Berger for many years. For those of you who missed knowing him, he is one of the most interesting researchers /innovators and thinkers in the IBM organization. Irving retired from IBM last year and is now Chairman Emeritus of IBM Academy of Technology and a visiting professor at MIT. I first met Irving when he was the key thought leader in IBM’s e-business strategy and then the web strategy and autonomic computing — among others. So, it is always interesting to see what he is thinking about.

I wasn’t surprised when I found that he was thinking about Cloud Computing. From his view there is a continuum from the early internet days to clouds. He makes a connection between the disruptive qualities of IBM’s e-business strategy. However, he correctly points out that this strategy was not implemented in a vaccum. In fact, IBM both focused on innovation in context with legacy systems and applications that dominated the real world of its customers.

Today we are definitely at an inflection point. Irving makes an important observation that as we move to virtualized systems beginning with grids are simply a stage in a path to distributed computing. What links all resources together is Service Oriented Architecture based protocols. If you can encapsulate components and add clearly defined interfaces, you can move to a distributed world. The real challenge is how do you move from where we are today with virtualization to a systems wide approach to virtualization. To his credit, Irving concedes that this is going to be complicated and disruptive.

I am a firm believer that there is no such thing as brand new technology that emerges out of nowhere. Irving agrees and suggests that Cloud Computing is an evolution of everything that has been tried over the last 15 years — Internet, grids, clusters, etc. The cloud is massive implementation of virtualization.

Where do we go with this? One of the most important points that Irving mentioned that I think is at the heart of making cloud computing and any type of distributed computing a success is industrialization. In short, how do you make things work when workloads grow at an astronomical pace each year. Can you cram more and more servers into a traditional data center?

This thought opens up a lot of interesting debates that I will write more about in the next few days. What exactly is a cloud? Is it simply a new type of data center? Does it have to be multi-tenancy? Does it have to be “utility computing”? Because clouds are still new and are an evolution of vitualization, I think that the definitions will evolve over time. I don’t think there will be a single type of cloud in the market. I also think that because the cloud sits behind the view of most customers and users that it will not be clear what is a cloud and what is smoke and mirrors. That will certainly make the data center world an interesting place.

The reality, as usual, is more complicated. The real issues around clouds will be the same issues that we have always had in data centers — how do you manage at a massive scale without bringing on armies of people? How do you know which processes are allowed to exchange information with other processes safely? How do you remove the complexity?

One of the issues that Irving mentioned during his discussion is the ideas of ensembles. Basically these are a way of ordering components of the enterprise into like entities. These could be physical assets as well as software components (like business processes wrapped as business services). One of the keys to success is that these services must have clearly defined interfaces. What I find very interesting that in to create the next generation of distributed systems we must move to a service oriented approach.

IBM is clearly making a play for clouds as a path forward. It sees clouds as a way to manage increasingly expanding workloads by applying modularity and simplicity to the problem. IBM is making the connection between the movement towards clouds and autonomic computing. Obviously, if you are going to scale in this way an autonomic approach makes perfect sense (at least to me). In essence, IBM is presenting the view of clouds by three dimensions: simplified, shared, and dynamic. It is not clear how quickly IBM and others will be able to make this next generation of virtualization operational but these dimensions demonstrate that the thinking is on the right track.

Partners are getting more and more important to the major software players. IBM announced a very interesting relationship with Kana, a $60 million solution provider of multi-channel customer service software. This is indeed a growing area in the market. Kana sells its software to about 60% of the Fortune 100. The company started in 1996 and has managed to survive some rough times and come out strong.

While IBM, like other major industry players rely on their partner ecosystem as an important go to market strategy. Some partnerships work better than others. What I thought was particularly interesting about the Kana partnership is its depth. Kana has decided to embed IBM’s DB2, WebSphere (including the WebSphere Process Server) into its solutions. SOA is an important new direction for Kana and the two companies plan to do some joint development in this area. Relationships like this don’t just happen. More than half of Kana’s customers are also IBM customers. This is important because increasingly the customers that I am talking to are looking to buy solutions from one trusted provider rather than trying to get a bunch of individual vendors to work together.

IBM has had a strategy for more than a decade of partnering with packaged software providers rather than being in that business. On one level, this can be viewed as a risky strategy. One only has to look at the roles of Oracle and SAP in the market to wonder if these packaged offerings will swallow up the entire ISV partner ecosystem like a black hole. I guess that my conclusion is that it just isn’t that simple. Customers that I have spent time with look at software packages from a different vantage point than infrastructure software. Because Oracle or SAP provides an excellent package for supply chain management or accounting management does not necessarily mean that they are the right choice for middleware or SOA infrastructure.

IBM’s partner strategy with ISVs has evolved over the past several years. I see a change from the desire to have lots of partners who will enable their software to run one or more IBM software offerings to deeper more strategic relationships. The Kana relationship is an OEM relationship — not a simple membership in a partner program. In fact, IBM has more than 30 of these OEM partnerships with vendors including Fair Issacs, Cisco, Nortel, and PTC — to name a couple. I expect that OEM partners are going to became an important center focus of IBM’s partnering strategy in the coming year.

The great thing about acquisitions is that it provides a lot of fodder for bloggers and pundits. And there have certainly been a lot lately. For example, just yesterday BMC finally got a data center automation company. It almost had landed OpsWare when HP swooped down and landed the deal. Now BMC is planning to purchase BladeLogic for about $800 million. This acquisition allows BMC to claim that it has all of the pieces to elevate its position in the data center automation market along side HP — its biggest rival. It also helps BMC demonstrate that it can use its cash to fund growth. BMC has more than a billion dollars in the bank and was under pressure to do something with the cash to fuel growth.

BMC has an interesting challenge. Much of the company’s growth has come from its acquisition of Remedy Software — which provides help desk automation solutions. While the company might have used Remedy as the center of its future strategy it decided to try for a bigger play. In 2004 it announced its Business Service Management strategy focused on providing measurement and management of IT resources from a business impact perspective.

The BladeLogic acquisition is a continuation of this strategy. BladeLogic adds more data center automation software into the platform. While this is a good move for BMC is not without risk. BMC has some much bigger and stronger competitors who seem the same potential for helping customers create a next generation computing environment. HP, for example, has a jump start on BMC through its Opsware acquisition. Ospware, now part of HP’s Business Technology Optimization (BTO) platform, adds to the depth of the HP management portfolio. In addition to HP’s some significant software assets for data center automation but HP has at least 15 of experience in both its consulting and outsourcing organization. In addition, HP picked up some significant talent from the Opsware team. IBM has been building its service management platform for years both through development and a slew of aquisitions too numerous to mention (I would definitely leave a couple dozen out if I tried). IBM has begun to leverage its resources to build a significant in Service Management portfolio under the Tivoli brand. Tivoli has been working over the last few years to rearchitect these assets into a platform. Some interesting assets that IBM has put into the mix include management software such as Netcool and Micromuse to ISS Solutions for security management. IBM has a significant consulting, services, and outsourcing organization in management as well.

Two other companies that BMC has to be worried about: CA which has been quitely rearchitecting its managment platform over the last few years with good results and EMC which has been buying management assets over the past several years and is putting together a potentially powerful platform.

Why is data center automation and service management suddenly the rage?

The next generation data centers is a big deal because organizations are trying to consolidate the number of data centers they are managing and they are trying to make those resulting data centers more efficient in terms of resources and energy. These companies also want to be able to treat all of their systems and software as though they are a set of assets that can be moved around and reused in a safe and predictable way. At the same time, existing data center technology has been aging. During the tech downturn during the last recession, companies stopped buying and updating their infrastructure until they figured out how to absorb what they had already bought. While customers were doing this, massive changes were happening in the industry — most notable has been the rise of virtualization –everything from grid computing to server virtualization to desktop virtualization. Now, combine virtualization of resources with the ability to manage this combination of resources as though it were an integrated environment based on business needs. This is where we are headed. It is little wonder that the acquisitions are happening. I think that it only the beginning of the big players buying the resources they need to win.

One of the hardest things for organizations to do is to retire old applications. Unlike hardware that tends to be replaced on a regular cycle, old software sticks around way too long. It definitely over stays its welcome. I remember when I worked at John Hancock decades ago and watching as departments struggled to replace aging systems. While they were ready and willing to make the change, they often didn’t know precisely how these old systems worked. The developers never documented what they wrote and those people had retired years earlier.

Now you would think that the problem had gone away. In reality, the problem got worse with the advent of client/server computing where there was less structure applied to the development process. I came across a very old article I wrote back in 1996 that talked about a lot of those issues (please ignore the picture). Just when you thought it couldn’t get any worse, web based development came along. Instead of having a few hundred developers, the web brought the advent of thousands of developers all provide changes and updates to applications. We are now at a cross roads that is quite unique.

While we still have many aging applications that cannot be easily updated, we also have the need to move to Web 2.0 to create Rich Internet applications (RIA). Web 2.0 offers a way to dramatically transform the user experience. Organizations are looking to this approach to development to make access to knowledge and information much more immediate and intuitive than ever before. But the transition isn’t easy.

I got thinking a lot about the transition from client/server applications and old web based applications when I met with Nexaweb a few weeks ago. The company has been around since 2000 and specializes in the Web 2.0 space. While there has been a lot of hype around Web 2.0 it actually is a very pragmatic technology infrastructure. While I think that a lot of customers assume that you can just approach Web 2.0 as though it were a simple web application. The reality is quite different. In fact, good Web 2.0 applications have to be well architected. What I liked about what Nexaweb is doing is their approach to application modernization with a Web 2.0 spin. In essence, Nexaweb is focused on modernization of aging client/server applications by providing tooling that documents the existing code. It is designed to identify bad code and provides a tool to generate a model driven architecture. Like any good consulting organization, Nexaweb has leveraged best practices used to help its consulting clients move old applications to Web 2.0. Nexaweb is selling a set of productivity tools that can generate a model driven architecture. It is intended to generate code as part of this process. The company claims that it can reduce the cost of transforming old code by as much as 70 percent.

The new product called Nexaweb’s Enterprise Web Suite including a UML modeling tool, a reporting tool that identifies repetitive processes, and code that is no longer used. Clearly, Nexaweb isn’t the only company taking advantage of modeling tools and an architectural approach. But the fact that the company is focused on helping companies transform their aging client/server applications into modular, service oriented approach is a step forward. It is one of the set of companies focused on not just updating applications by transforming into Web 2.0. What stands out is the fact that Nexaweb seems to be combining application transformation into business services (can you say Service Oriented Architectures). However, I must add that IBM has been on this track for quite a few years. Through its industry models, IBM has been helping companies transform its aging areapplications into industry specific business services. In addition, Microsoft’s Silverlight and Adobe’s Air are adding a new level of sophistication to the momentum. WaveMaker, that I discussed in an earlier entry is making a contribution as well.

The trend is clear and it is good for customers. We are finally seeing software companies providing a path to moving code into the new world that is based on reusable, modular services that are architected. The next stage in the movement towards a service oriented architecture is applying this approach to the new generation of Web 2.0. Let me add a disclaimer — this isn’t magic. There is hard work here. None of these approaches or tools are automatic. They give customers a head start but there is hard work to be done. The alternative is to hold your breath and hope that things don’t break too quickly. There are so many promises of easy solutions to hard problems. There are solutions and tools that take the drudgery out of leaving legacy applications behind. But there is worthwhile hard work that really has to be done.

The last time I used an apple computer was the Apple Lisa when I worked at John Hancock Life Insurance many decades ago. Hancock was the type of company that liked to try every new technology. I was lucky enough to work in the department that was in charge of trying out any new innovation. But when it came to my personal productivity, I stayed with the PC.
After more than 20 years I have broken the old habit and moved to the Mac. However, over the past few years I have watched my colleague, Robin Bloor use his Mac as the foundation for his personal approach to information management. Finally, I decided to take the plunge. I have to say that I am happy with my decision. Since I am typically very critical of customer experience mishaps and poor customer service, I am pleased to report that I have actually had a great Mac experience.

I wanted to share some of what I have experienced with Apple. First, when I started thinking about switching platforms I went to the local Apple store in my area. It was swarming with people. I anticipated that I would have to wait to talk to someone who would be impatient with my long list of questions. To my surprise, someone helped me right away. The young woman who was quite knowledgeable about her product spent at least an hour with me answering questions and introducing me to the Mac environment. I never felt rushed. I never felt as though she was waiting for my order.

What I found about the Mac that made me decide to buy was the integration of functions and the ease of use. I loved the fact that Apple treats sound and motion as though they are a natural part of the computing experience. There is thought behind how the user moves from one function to another. Initially the Mac is intimidating as anything that is new and different from the old ways. But after that first hour I began to appreciate the elegance of the platform. It felt to me as though someone looked at the functions in a holistic system rather than a set of independent functions.

I didn’t buy my Mac that day. I did, however, come back the following week and purchase my MacBook. Here are a few of my observations after my purchase. Like any system, I had a few problems. I couldn’t quite get my mail working. I called and got an appointment at the store with a “genius” (I actually think this guy might have been a real genius!). In about 20 minutes he got everything working like a charm and was able to explain and fix a dozen other things that I hadn’t figured out yet. When Microsoft Word wouldn’t open, I called customer service and only waited less than five minutes. I just reinstalled the application and was back in business.

The last experience I wanted to mention related to the newest version of the Macbook Pro that was introduced this week. When I read that a new system had come out with almost twice the disk space that I had purchased for the same price, I was upset. Why didn’t they tell me about the impending product introduction? I happened to be in the store and explained what happened. The sales rep told me she would have to talk to the manager. OK, I thought, now these guys are going to start acting like a normal company. They proved me wrong. Within two minutes the sales rep returned and told me to bring in my Macbook and it would be exchanged for the new model. I would just have to pay a restocking fee.

So, I am a convert. I know understand why people who love the Mac are so devoted. It is not just about a well engineered hardware and software platform. It is about an attitude towards the customer that is respectful. It is the fact that the customer experience actually makes you want to do business with the company.

In the old days when mainframes roamed the world, there were things called dumb terminals that enabled users to connect to server based applications. These dumb terminals were — as their name suggests — dumb. They had almost no intelligence other than displaying code from an application. Fast forward to today. As we moved from traditional mainframe computing, the personal computer became the interface of choice for most users. Client/Server technologies provided the capability of having a graphical front end that could communicate with backend databases and logic. Now we are faced with an interesting and interesting twist of fate. It has become apparent that in many situations, computer users actually don’t need much intelligence on the front end. They need the logic and data that sits on the server (the customer service application, the call center application, the classroom application used to teach skills to students).

Ironically, we can’t go back to the good old days of the dumb terminal. Instead we have moved to the thin client, the locked down PC, and the virtual display interface. These approaches are part of the hot new area — virtualization. Now don’t get me wrong. I think that virtualization is quite important and will become an important way that customers will find ways to utilize existing resources in a much more pragmatic way. It will provide better protection for data and resources that might be compromised if too many users have free access to too much.

But I think it is important to keep in mind that this is not a new issue. The computer industry has a way of thinking that the old ways are always wrong and backwards. Yet unintended consequences are a fact of life — even in an industry that loves the future and is skeptical of the past. Now, with virtualization on the rise, we are reinventing what the industry had taken for granted in the mainframe days.

I have been doing a lot of thinking lately about virtualization and cloud computing. The more I look at the foundational requirements for virtualization the more I am convinced that there is a close relationship. How can I say this? In the simplest terms, if you think about the fact that the foundation of SOA is a loosely coupled approach. So, if you are going to combine components from various systems into a “virtual application”, how do you maintain state of this entity? While there are many techniques used today for SOA implementations (some are more loosely coupled than others), the reality is that it will come down to virtualization.

Let’s start with a definition.

Virtualization is a technique for abstracting the physical characteristics of computing resources in order to more easily leverage hardware systems, applications, operating systems,networks, graphics, data, or storage so they can be repurposed based on customer need. In addition, in order to virtualize a resource, it is basically put into a “container”. This is the same technique used in the traditional approach to SOA. What makes virtualization important for SOA is the ability to move the presentation and availability of these resources across physical networks and devices.

Don’t get me wrong — this is not simple and we won’t see virtualized SOA in the next few months. However, this is the direction that any vendor that is really serious about creating an environment that will allow customers to have the flexibility to leverage their intellectual property across customers, partners, suppliers, and employees.

While much of the focus over the past few years has been around server and presentation virtualization, I suspect that the future discussions over the coming years will be around the management of virutalization. In other words, you have physical resources, data, images, application components in containers, etc. How to you make sure that they maintain the state that you desire? How do you ensure that this version of your resources acts like a well oiled machine? Clearly, it will be by management software. This is the same discussions the industry has been having around SOA manageability. In fact, it is the same exact discussion. The names may change — the jargon may change but the issues are a continuum of solving the problem of making the right resources available in the right manner to the right entity at the right time with the right response.

I can’t say that I was startled when I heard that Microsoft had put in a bid for Yahoo. It makes perfect sense to me given the tremendous momentum behind Google. As I wrote last week about the Google Sneak Attack, it is clear that Google is both a media company and a company that is setting down a software foundation that challenges Microsoft in the market.

In Microsoft’s official press release, the focus of the proposed acquisition was advertising revenue. Advertising has indeed been the engine that has propelled Google to its current position and has enabled the company to offer intriguing software assets to customers without cost. As I mentioned last week, these assets have the potential to enable Google to create a ubiquitous platform to build upon. Google which has been quick to buy companies itself has disappointed Wall Street.

What will it mean for Microsoft assuming that it will be successful in landing Yahoo? I think that it will be a challenge for Microsoft to integrate Yahoo into its organization as it stands today. Typically, Microsoft has purchased small focused software assets that neatly fit into their overall platform. Yahoo is different. There are overlapping infrastructures that will have to be rationalized. What about the software services that Yahoo offers? Will they be integrated into Microsoft Live? Will Microsoft work to build a strong link between Yahoo online services to its on premise office software? I suspect that Microsoft will have to move slowly in integrating Yahoo into the company. One does not swallow an elephant in one swallow (without choking…).

Robin Bloor, one of my business partners who writes a very popular blog, plans to write extensively about this new development. We have had some fun discussions about the technology infrastructure that will differentiate these two industry giants. So, Robin, Let’s hear what you have to say!

I was talking to a CIO the other day about the whole area of Service Oriented Architectures. It was one of those interesting probing discussions around key players, emerging technologies and the like. One of the interesting topics that came up was around packaged software. This CIO was confused about a major issue. What is the benefit and danger of implementing a package software offering that has all the industry best practices, business process, and middleware integrated together. What are the opportunities and risks of this approach? Likewise, what are the risks of buying piece parts and integrating them together?

This is an important question and one that I have obvious opinions about. I think that it can be dangerous for companies to buy a too well integrated SOA environment from a single vendor. While it might seem like the path of least resistance might be to just buy an entire software suite from a company like SAP or Oracle and be done with it. While this may seem like a pretty straight forward question it actually is much more complicated. On the plus side, a customer could get a head start by using a SOA model where everything is designed to work together. On the other hand, I would submit that this approach is antithetical to the reason companies are approaching SOA in the first place. Companies are moving to SOA in order to create a flexible, modular environment where it is easier to add or subtract components based on either a new business initiative or a new innovative technology. If the SOA platform is too well integrated, change becomes hard.

So, what did I suggest to my CIO friend? I told him that it is better to look at packaged software as components in an overall SOA strategy rather than the lynch pin of that strategy. It is better to begin with the overall business strategy and an Enterprise Architecture and select technologies that are designed with standardized interfaces. The foundation should be based on loose coupling of services.

A packaged offering can work if customers finds a package that is standards based and extensible does not lock them into one perspective on the world. I think we’d all like to have a world where you just buy what you need off the shelf and life is good. But unless you are buying a commodity, I think the world is still too complicated for packaged SOA. Are there SOA commodities? Of course, for example, a set of best practices that are well understood across a broad spectrum of customers can be packaged as a business service and used broadly. Even a large service such as those offered by ADP is an example of a service offering that is well understood and not differentiated. Who would want to write their own service for managing payroll.

I do think that there will be a time when the SOA software market has matured to the point where building blocks are mature and well structured enough to be able to link together services smoothly and easily. But I don’t think we are there yet…do you? Let me know what you think.

Google is a unique software organization. A lot of their success in the market is different than a traditional software company that creates software, tests it, markets it and waits for momentum to create a successful ecosystem of partners and customers. Read any marketing book and the process is well documented. Google, on the other hand, uses a process unlike anything the computer industry has seen. I call this process the google sneak attack process. What is a Google Sneak Attack: design an elegant piece of software such as Google News, Google Finance, and Google Apps. These are applications that are often in beta for years. These applications are offered free of charge for the individual. Google doesn’t do massive marketing campaigns. It leverages its media brand to draw individuals and companies to try out these applications. In other words, it markets by word of mouth. By leveraging this approach, it can actually sneak under the radar and begin to build momentum. It is also interesting to read the terms and conditions for the use of Google Software. Clearly, Google is happy for you to use the software and tell all your friends and neighbors about it. But if you read the fine print, this changes if a software company wants to use any of the assets in a commercial manner. That is one of the key ways that Google will make money from its software assets — either in OEM arrangements or corporate licenses. In addition, many of these applications are supported by advertising.

But my point is not really to talk about the monetary approach that Google is taking — that is a topic for another day. The real issue is that being the benign purveyor of useful software to customers creates a foundational platform that gives Google clout in the market without traditional marketing engines. It is a good lesson for the software business to pay attention to. Long live the Google Sneak Attack engine!

While there were many interesting product announcements at Lotusphere, I was intrigued by some of the innovations and experimentation in collaboration. One example is a project that comes out of a IBM research. I attended an interesting talk by Irene Greif, IBM Fellow and Director, of and Joan DiMicco, Research Staff Member of the Collaborative User Experience Group. Their session focused on the future of gaining business value from social computing. This is a very interesting group within IBM combining software designers, developers, computer and social scientists.

The focus of this talk centered on collaborative visualization. In other words, how do you combine some of the interesting technologies from virtual worlds (like Second Life). This work has been going on within IBM for the past several years. Now, IBM research is working to apply this virtual world technology to social computing and the way people collaborate in the business world. How can you create the same level of collaboration in a virtual world that happens when people are co-located? Indeed with so many companies creating collaborations across the globe.

One of the interesting project profiled during the session is called Beehive. In essence, this is a social computing system intended to make it fun to keep profiles updated. Rather than focusing on the public facing sites like FaceBook, Beehives is an intranet focused social network. In general, the more you know about people, the more you trust those people. So, if you apply this to the business world, what happens? The theory is that within a safe (i.e., not exposed to the entire Internet) environment the more connected you are with colleagues the more likely you are to trust those people and therefore collaborate more effectively. This is what this group is focused on understanding.

With the Beehive project, the users choose to join. Users establish their own categories for what they want to share with their colleagues — what Irene and Joan call “soft branding”. Users might decide to share everything from family photographs, lists of ideas, and comments on technical topics. The goal with Beehive is to create a destination site for conversation and collaboration. So far the experiment has been running for about eight months with very positive results. So far 6500 people from within IBM have created profiles that are a blend of personal and professional content. Because Beehive is an Intranet based social network, it provides a safe environment for IBMers to share opinions about emerging technologies and product evolution.

It will be interesting to watch the progress of projects like Beehive. Bringing the innovation of the virtual world together with an expert virtual network could have dramatic implications for businesses looking to innovate in tough economic times.