Top 10 Predictions: Innovation, ROI, Cloud Computing and more…

I love the end of the year. I get to sneak out of the office for a few days and stay off of airplanes. I also have a chance to look ahead to the new year. I like making predictions. Sometimes, I am years ahead of the market; other times I am able to hit the nail on the head. So, for what it is worth, here are my top ten predictions for 2008 (Hey, how did that happen? What happened to 2007? I thought it just started!)

1. There will be two hot buzzwords this year: innovation and ROI. Companies want to find ways to leverage the technology they have invested in, to do things in totally new ways. At the same time, companies are nervous about investing in technology. They want assurances that there will be a return on their investment — quickly. So, you will see a lot of discussion of both issues. But here is one prediction that I guarantee: most of the proof about innovation and ROI will be fluffy and devoid of any real meat!

2. Here come the clouds! I think that cloud computing, one of the latest versions of virtualization, will become one of the hottest trends of 2008. Any infrastructure company you can name will come up with a cloud computing strategy. No single leader will emerge in 2008 but you won’t be able to move without bumping into the hype.

3. Software as a Service goes mainstream. Sure, SalesForce.com has been the industry darling over the past few years. There can be no doubt that SalesForce CEO Marc Benioff’s imaginative adventure hit the bulls-eye. But I expect that in 2008 there will be numerous mainstream, innovative approaches to Software as a Service. We already saw SAP announce SAP By Design as its entry into the SaaS market. Expect a lot more from mainstream players. Now add a social networking twist and things really get interesting.

4. The world gets more virtual. VMWare’s spectacular IPO made the rest of the market wakeup and smell the roses. Maybe there is money in this virtualization stuff after all. There will be three virtualization market segments: client, server, and application. I can’t decide which one I think is more important. How about all three!

5. More vendors will make more acquisitions (that’s another one you can take to the bank). Yes, Oracle will certainly make more acquisitions, but I don’ t think that BEA will be in the mix. Nor will HP buy BEA. However, I do predict that BEA will probably go private. I predict that HP will buy more software companies, especially in the data management area. IBM will continue its buying especially in software — more companies in what they call information management, more in systems management, and in the collaboration space. I expect to see more action from EMC as well primarily in management and security. The list is too long for this entry but stay tuned, it is going to be a very, very busy year.

6. So, I didn’t mention Microsoft yet. This is the year when Microsoft’s server/enterprise business will get the respect it deserves. Therefore, I expect to see Microsoft continue to make small but strategic acquisitions that will fit into the forthcoming Oslo strategy. I would expect to see Microsoft look for information management picks (among others). However, I don’t expect that Microsoft will be buying big, traditional software companies. I expect that Microsoft will make interesting acquisitions in web collaboration, social networking, and advertising.

7. Online goes off-line. Companies like Zoho are starting to gain traction because they can provide both online services combined with offline usage. Being able to continue working when you can’t get connectivity is the tipping point for these collaboration offerings to challenge Microsoft in the office and collaboration space.

8. This is the year that Service Oriented Architectures (SOA) moves from IT strategy to business strategy. Therefore, SOA will officially move out of the hype cycle and into mainstream. CEOs and CIOs have bought into the importance of consistent business oriented services. Therefore, expect that customers will get down to serious business of moving out of pilots into slow, deliberate implementations. This doesn’t make for splashy headlines but it does make business sense.

9. Google will continue to move into any market that leverages the advertising revenue model — including collaboration software and various cloud computing options. No surprise there. I do not expect that Google will make a bid for the traditional enterprise applications. I do expect to see a strengthening partnership with IBM.

10. Partner ecosystems will reach a new level of intensity this year. Enterprise software leaders will be working hard to make sure the most popular emerging players support their platforms. They will be joined in the mix by Software as a Service players who are trying to build up their arsenal of partners. Emerging players will live or die by their ability to sign the best partnerships. At the same time, enterprise software leaders are upping the requirements for participation. The bottom line is: what’s in it for me?

11. I know I promised 10 predictions but I have to add one more. There will be at least a few trends that will come out of the blue. But that is what makes things interesting!

 

What’s SAP’s Plan: Innovation, SOA, and Winning?

I am back from SAP’s annual industry influencer conference. When I attend one of these meetings I typically take lots of notes on my laptop so that after the fact I can go back and make sense of what the executives actually said. It is a fascinating process. When I take these notes and analyze them I begin to see through the “show business” factor of an event intended to influence.

I enjoyed spending time with fellow blogger Michael Krigsman (IT Project Failures blog) who makes some interesting observations in his blog and the blog of his colleague, Joe McKendrick, who writes a SOA blog for ZDNet. Their perceptions on SOA and SAP are worth paying attention to.

Now, back to my point. So, what do my notes tell me? First, SAP leadership is obsessed with three things: innovation, service oriented architectures, and winning.

So, here is my quick take on each of these issues:

Innovation. In the seven pages of pages I took during the opening keynote sessions of the meeting, I typed the word innovation 25 times. While I am sure that is not a record – every vendor meeting I have attended in the past six months has focused on innovation. SAP’s definition of innovation is not surprising — it is tied to innovation in process. In many ways, SAP is correct. You can have enormous potential for efficiency breakthroughs through a process approach. Here’s a quote that I liked from one of the keynotes, “

It is about continuous innovation. You take the process innovation and industry innovation in SAP, multiply that with the blueprint of SOA. This creates a possible incremental breakthrough. This approach can be adopted in a step-by-step way to create break through. You can bring in new processes and add more flexibility to create a business breakthrough..”

Since I don’t take dictation, this is as close as I got to a direct quote. But what is interesting here is that SAP is talking about innovation in terms of an incremental approach, an approach that assumes a structured service architecture, and the fact that the end result will create a business breakthrough. No one could argue with these points. However, what I kept waiting for and never got was examples that put these words in context with customers’ experiences.

Service Oriented Architecture. SAP loves SOA. In several conversations I had with SAP executives I was told that they were the leader in SOA. And I agree that SAP has done a good job in taking on the task of breaking down monolithic code into modular components. This is a good approach for SAP internally since it means less work for their own development organization when they need to move from one version to the next. Using standards based web services interfaces instead of proprietary APIs helps tremendously. SAP is strong on adhering to industry standards within their platform. What I question is the company’s ability to claim leadership in SOA if it is intended to be an SAP dominated architecture where they own and control all the moving parts.

In my view, SOA has to be based on a heterogeneous approach to architecture. Business services have to be loosely coupled — no matter what platform they were build for. SAP is not the only company I have a beef with on this point — Oracle, IBM, Microsoft, BEA, etc. all would like to have their platform become the SOA standard. This would be a dangerous move for customers.

Winning. I actually think that if any one vendor “wins” the architectural game, customers lose. If I write next year that SAP has accomplished its goal and become the standard for SOA, I will be there first to proclaim SOA is dead. While SAP is a smart, competitive, and technically sophisticated company, it needs to focus on winning based on their customers success in a highly fragmented, complicated, and heterogeneous world.

 

Will Oracle win BEA? And what next?

It has been quite a week. First, SAP sets its sights on Business Objects and now for about the same amount of money, Oracle is ready to swallow BEA. Indeed, it looks like the world of enterprise software is continuing to consolidate. So, what do I think? I actually think that Oracle’s decision to buy BEA is a smart move. Oracle needs the depth of middleware and business process software that are two strengths of BEA’s platform. I have spoken with Oracle customers who have not been happy with Fusion middleware. Therefore, the BEA acquisition should strengthen Oracle’s infrastructure assets. Remember that one of BEA’s original assets was AT&T’s Tuxedo distributed transaction processing software suite.

AcquaLogic , BEA’s services integration and business process management platform is well regarded among customers. A few years ago BEA bought Fuego, a very well designed business process management engine.

I could go on for a long time talking about the depth of the BEA software environment. Both its transaction management and business process platform are the jewels in the crown that will benefit Oracle — especially in its Service Oriented Architecture (SOA) strategy.

So, let me get to the bottom line. Here are my conclusions about the Oracle move:

1. Oracle is moving to pick up a strong middleware platform. It has the potential to fix some of the problems with the Fusion platform.

2. It will be a more complicated integration task than some of Oracle other acquisitions. Oracle will have to rationalize its work on Fusion middleware with BEA’s offerings. This will take some time.

3. The comparison between Oracle and SAP’s acquisition moves are very interesting. While SAP has bought a BI platform that will have to be kept separate from its ERP business, Oracle’s purchase will be much closer to its core strategy. The money isn’t that different.

4. BEA was in an uncomfortable position in the market. It has been a player with some impressive acquisitions and leadership. However, it was never able to break out as a leader in terms of revenue. It made its mark with WebLogic — the leading application server. However, it was never able to break out to be viewed by customers as a overall leader — despite some very nice acquisitions.

I expect that this acquisition will go through. I do not expect any other company to come up with an offer. HP, for example, that has been mentioned as a suitor, is unlikely to move in this direction.

I thought that Dana Gardner’s blog today was a well constructed analysis. I agree with many of his points. But don’t think that an HP counter offer is likely. I do think that his view of the interactions between other players will be impacted by this move.

My bottom line: I think that there will be major ripples from this move by Oracle. IBM will not sit still for long. Will IBM increase its alliances with other players — I think so. What does this mean for Tibco? I have talked to customers lately who have been buying Tibco for both its business process and scalable SOA middleware platform. Is Tibco in play? Will SAP and IBM strengthen their relationship?