Has IBM Changed its Partner Strategy? The Hunt for OEMs

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.

Packaging SOA: What serves the customer?

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.

Can Experience and Performance Management Transform Business?

Just as I finished writing my last entry about how complicated it was to install my router I met with a company called Knoa that focuses on the customer experience. That got my attention.

The company was started by two engineers (Yee-Ping Wu and Dr. Philip Lui) in 2003 with experience in the consumer market. Clearly, the average consumer does not expect to require training to use products. In fact, the team’s last project before starting Knoa was creating a multimedia authoring tool for Microsoft Home project. A good background for tackling the customer experience in the enterprise application space. In essence, the company decided to follow the pain and has focused on customer experiences with SAP solutions and Oracle E-Business suite. I guess that if you are looking to solve customer problems you might as well start by focusing on real pain!

 

Knoa positions itself in the experience and performance management space. Big words that basically mean that the company focuses on how the end customer or user interacts with software. The software sits between the graphical interface of packaged software and the operation system. The software is intended to determine what is impacting the user’s ability to get their work done and is intended to pinpoint user adoption issues. There are some interesting distinctions. For example, there are mistakes that are user error such as inputting the wrong product code. This is a problem related to how that individual has been trained in their job. However, there are other errors that are related to a response time problems, poor navigation within the software, or problems related to the network or the operating system. Knoa’s focus is providing technology that monitors the behavior of the user as they are using these packaged applications.

The company uses a passive monitoring 864K agent that is implementing on each desktop. This agent intercepts any application that is running. The agent is mapped to a specific template designed to discover and monitor a core application from SAP or Oracle. In essence, these templates are intended to measure a specific set of metrics that are important to managing the end user experience. Knoa focuses on issues ranging from response time to what part of the application the user is actually using. What I thought was interesting is the type of metrics that the company focuses on. For example, the software can be used to track which parts of a CRM system a majority of the sales team is actually using. It could also be used to see where employees are having difficulty with a packaged application. Is the problem a bug in the software or is it that users do not understand how to use an application and therefore bypass it altogether. The application has obvious uses in support of call centers.

 

The company seems to be off to a good start. It’s 2007 revenues tripled from 2006. Knoa won’t state revenues, its revenue per customer ranges from $300,000 to several million dollars. It has an impressive customer list including brand names like BT, AstraZeneca, AOL, McKesson, Kimberly Clark, and Pfizer. In all the company has 50 customers and 50 employees.

I think that the company is in an interesting position in the market. It has wisely positioned itself as a packaged application in support of SAP and Oracle applications rather than a tool. Because of the design of the underlying engine, the company says that it can add support for a new packaged application in a few weeks. I like the fact that the company is not trying to be all things to all people in the application management space. It can integrate into an existing HP/Mercury dashboard and is planning to expand to support other vendors as well. The key question will be how well the company does in expanding its partner base. Clearly, customer experience management is an area that all of the major performance management/system management companies will like to have as a complementary capability. And Knoa is just scratching the surface of what is possible in this area.

 

 

 

 

 

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.

 

Should the SaaS customer beware and be educated?

I had a long talk the other day with a customer who had just decided to implement SAP’s Business by Design hosted solution. The company (it wouldn’t be fair to him to name the company) is about $150 million in revenue and made the decision to move away from a home grew, inefficient system and migrate to Software as a Service (SaaS). He was excited for several reasons: he would need fewer people in the IT organization, he would buy fewer new servers, he didn’t have to worry about the details. He was reassured that the Business by Design product was called a Service Oriented Architecture based offering.

Now, I am a professional troublemaker, so I asked him the type of questions that I ask my clients about the longer term implications of buying software (even if it is hosted). Here are the questions that I asked him:

1. How do you know that the product is based on SOA?

2. Where is your data? What is the underlying database for your company’s data. How do you know that your data is clean? How often is that data backed up and where it is backed up?

3. Do you actually own your data? Is it available to you on a regular basis? If you take your data can you move it to another platform if you need to?

4. How easy it is to integrate the SaaS platform with either existing software you plan to ocntinue to use or new software?

5. If you should outgrow the platform what are your options?

6. What if you suddenly decide to take the software in house? Can you do this with the same company?

7. Do you have an internal person who understands the software well? If not, you may just have to take the vendor’s word that the software does the job you expect.

Now, don’t get me wrong. I like the SaaS model a lot. It is a very important trend that will be a lynch pin of many small and large companies strategies for many years to come. However, SaaS is not someone else’s problem. It is the customer’s problem to be on guard and educated. Ignorance and trust can sometime be dangerous bed fellows.

SAP’s Journey: SOA By Design?

I am attending SAP’s “Industry Influencer” conference this week. It is clearly an interesting time for SAP. The company’s platform is evolving both in scope, architecture, and markets. SAP is a company that likes control and likes to control its own world and the world of its customers. The message was clear. The customer is best served by adopting a homogeneous platform based on a business process layer and a repository based on SAP’s Netweaver. This is true whether you are a large enterprise or a mid-market customer.

SAP’s view of the world is quite interesting. It has appeal in many ways. If a customer buys in, they buy into a neat and clean view of the world where they can link into their accounting, CRM, multi-channel applications, logistical, shipping, etc. and have a process centric comprehensive view of the world. If the customer buys into the platform it does help the training and management of a very complicated world.  I can see how a customer that buys into an SAP centric world could find the strategy compelling.

What is impressive about what I am hearing this morning is that SAP has a well thought out architectural plan that integrates a business process platform with the application platform, with a repository and a meta data and master data layer. The idea is that the customer interacts with an underlying platform that they never touch. Rather, the customer composes work flows at the upper layers of the platform to create composite applications.

So, why does this bother me? I think that because that the strategy and platform assumes that customers will be willing to adopt a single vendor platform that everything in their enterprise will flow through. To its credit, SAP does expect that third party applications and environments can be integrated through well defined interfaces. These outside resources would be integrated through the repository. However, will a customer want to give a single vendor that much power? Perhaps? Will most customers overcome the internal political issues to have everyone agree on a single platform across departments, subsidiaries, and even partners? I would say that I am skeptical.

If this is indeed a pure service oriented architecture platform as SAP claims, where is the loose coupling of services that offers the customer the flexibility and modularity that encompasses a heterogeneous environment?

So, how would SAP react to a situation where the customer doesn’t buy into the grand vision? What if a customer wants two or three SAP ERP applications but relies on some Oracle applications, some IBM middleware and services, and a bunch of home grown solutions? Can that customer make use of the end to end process platform? Or is it all or nothing? Right now it feels like if you don’t buy into NetWeaver you can’t play in an SAP SOA world.

I will write some other entries over the next day or so as I get more insight into what I am hearing.

Five things I learned at IBM’s Software Group Industry Analyst Meeting

Every year at about this time I attend IBM Software Group IT Industry Analyst meeting. This meeting is attended by about 90 industry analysts and about three times that number of IBM software group leaders, managers, and support staff. It is quite the event! While I can’t possibly talk about everything I am hearing, but I will give you an overview of the events and some of the highlights.

Since I have been traveling to a lot of analyst conferences lately, I can compare the approach of different market leaders. Next week, for example, I will be at EMC’s analyst meeting and in early December I will attend SAP’s analyst event.

But I digress. Here is what I came away thinking about IBM and its software strategy. One of my first thoughts is to compare Microsoft’s SOA/BPM event the other week to IBM’s. One of the big differences is that while Microsoft is announcing new long term initiatives (Oslo) for SOA, IBM is executing on a long term plan that has been in the works for more than five years. I think the best way to understand IBM’s software DNA is to look at the perspective of its leader.

I start with an observation that is actually not new for me. Steve Mills, Senior Vice President and General Manager of the Software Group has been the force behind herding the multiple business areas within the software group to have a common set of underlying services. While this may make perfect sense, it not an easy achievement for a company with thousands of software offerings across hundreds of different business units. As an example, when I first met Steve he was grappling with a few hundred different data stores under hundreds of different products. Somehow he managed to get all of these groups to use DB2 as their underlying database engine. But that was just the start. Steve’s next big leap was to move out of the packaged software market and into the middleware and horizontal software market.

 

 

 

 

I thought Steve’s remarks were quite insightful: In essence, Mills pointed out that IBM’s focus with its horizontal software approach is on what he calls industry frameworks. With this approach he believes that IBM is armed with the right stuff to focus on what he calls “customer business outcomes.”

Rather than packaged software these frameworks are a combination of best practices and business services. For example, in the financial services industry these services would include financial services for payments platforms, high performance event processing, and large scale data mining and analytics. Therefore, the overarching strategy for the software business is to provide the building blocks that apply to business requirements across business domains.

Mills contents that the real benefit that customers are looking for is to gaining operational efficient and innovative business performance from this horizontal. He contends that the greatest benefit from a growth and cost containment basis comes from a focus on harmonizing business practices across the organization. Simply automating and re-automating vertical slides such as customer relationship systems, booking keeping, inventory, and the like not where the opportunity is. Could this be a swipe at companies like Oracle and SAP?

 

Like Microsoft, IBM is moving its focus to process and models-based approaches but with a horizontal flavor. Mills believes that transactions, messaging, information integration, management of an increasingly virtualized enviornment, data management, and collaboration are at the heart of the requirements to make this vision a reality. This is where IBM software is putting its money and its bets.

So, here are the five things I learned from this meeting (I probably learned more but I know that people who read blogs have a short attention span…):

1. IBM is focused horizonally and will not get into the packaged software market. The exception will be software packages that focuses on more horizontal requirements.

2. IBM is reinventing Lotus into a collaboration platform. There are many exciting initiatives unfolding in Lotus that focus on a true distributed platform. I expect to see some important Software as a Service initiatives come out of the new Lotus. I would like to see IBM move faster into Software as a Service.

3. Information Management is an increasingly strong part of the IBM platform that transcends the database. IBM is doing a good job at integrating a large number of acquisitions into a substantial SOA based information platform.

4. IBM is doing SOA well. Clearly, the investment in SOA is paying off for IBM. It has more than 5700 SOA engagements under its belt. It is now able to leverage its expertise across key verticals to present a sound strategy to customers.

 

5. Now, I don’t want you to think that everything is perfect at IBM. There are still areas of concern. For example, the Tivoli organization has plenty of work to do to explain its portfolio to the market and give customers better techniques to get started without getting indigestion . Like other parts of IBM software, it is, in essence a software company in its own right with hundreds of products that don’t always work together as they should. Likewise, IBM Websphere is a huge set of technologies — some better integrated that others. Sometimes customers get overwhelmed with the portfolio.

Trying to reduce IBM software strategy to under 1,000 words is a task few humans should undertake (without a stiff drink of something). I have left out a lot — and there is plenty to say. For example, I haven’t talked at all about the herculean task that Danny Sabbah (I have added a link to Amy Wohl’s blog. She has a good interview with Danny from the same meeting) has taken on to reinvigorate Rational. (Yes, he is making progress. The direction is well conceived — it will just take some time). I also have not talked about the important Express software platforms that are probably IBM’s best kept secret. There are a series of impressive product offerings designed for ease of installation and ease of use required by the mid-market. I always wonder why it is o.k. for big companies to have to do things the hard way (but that’s just me…).

I guess this means that I have to write more about IBM’s software strategy in future entries…

Why is SAP buying Business Objects?

The first time I made contact with Business Objects was in 1992 when I was hired by a venture capitalist to conduct due diligence on Business Objects. At that time the company was still emerging. At that time Business Objects was a tiny Paris-based that offered a windows based reporting product designed for use with the Oracle database. My advice to Atlas Ventures was that it would be a wise idea to invest in the company. I recommended that they improve their user interface, add more databases than Oracle, and learn how to partner. And as they say, the rest is history. So, more than 15 years later is to become part of the SAP empire.

So, what do I think? I have a mixed reaction. Here are my first takes:

1. Business Objects has a diverse and interesting base of technologies. For example, it has its traditional reporting platform that is a huge source of revenue (especially maintenance). Over the years it has added lots of products to its bag of tricks including the low end Crystal Reports to text analytics (acquisition of inxight Software ) and Cartesis for financial reporting. It appeared that the company was on a path to positioning itself as a full service information management player.

2 . Today, Business Objects is about $1.5 billion in revenue. While it is growing at about 20% a year in many areas, new license revenue is only about 9% of revenue. Many companies in the information management space are finding that it is hard to grow into a major player organically — or even with solid acquisitions.

3. SAP is paying a lot of money; making this a big gamble. Unlike Oracle, SAP has not made a lot of big acquisitions. Perhaps the company felt that Oracle was simply getting a bigger piece of the information management pie than was comfortable. SAP will have its work cut out for it as it tries to learn to sell at the low end of the market. Yes, it has introduced its mid-market platform but it still has a steep learning curve. It will also have to rationalize its existing offerings with those from Business Objects. For example, now SAP will have two financial reporting systems — Business Object’s Cartesis and Outlook Soft, a company with a similar product that SAP purchased.

4. I think that integration is very tough to full off. The plan mentioned in the announcement is to integrate the Business Object suite with SAP’s NetWeaver middleware. While this might be a good long term strategy, it might not be a high priority for customers who just want to get their reports done.

I plan to keep an open mind. My old friend, Josh Greenbaum, who is one of the most knowledgeable SAP watchers around is pretty bullish on the plan. So, it is definitely worth a second look as the acquisition moves forward.

I’ll make an obvious prediction right now — business intelligence vendors will continue to be targeted for acquisition by the big players. As this happens, the strong vendors that do remain independent will be attractive to customers who want to work with an independent player and to vendors who are looking for good ecosystem partners. Who is on my list as attractive independents: Information Builders and SAS Institute. Ironically, both companies are around Business Objects size and neither are public. Now there is some food for thought…

SOA and Unintended Market Consequences

Now, I have been around the software world for longer than I would like to admit (I would be giving away my age if I told you). I have watched many trends come and go. The one consistent pattern that I see is the slow progression over the last 20 years towards distributed computing. There has been a lot of innovation – some that has resulted in some pretty interesting products and companies that made their mark on the world and then went away.

 

The advent of service-oriented architectures is not simply another fad with another set of products and services. I really believe that it will have the same long-term impact as the Internet did when it arrived on the scene as a commercial venture in the early 90s. If one thinks back to those days, many people had no idea of how this quaint piece of technology would actually be used in the commercial world. And, as we say, the rest is history.

 

Just as the Internet produced unintended consequences for the future of computing, I expect that SOA will too. It is my prediction that Service-Oriented Architectures will force a dramatic change in the balance of power in the software world – both on the vendor and the customer side. Why do I make this rash statement? Start by thinking about the implication of SOA. It is a dramatic change in the way software is created, reused, recombined, managed, and sold. From a customer perspective, SOA puts power in the hands of the business user.

 

So, what could change? First, in time, SOA will level the playing field. Today the major infrastructure vendors are all vying for control over who owns the customer’s infrastructure. Will SAP, Oracle, HP, IBM, Microsoft or an open source play, like JBoss be the winner? Will one of these companies convince enough customers to do it their way? Perhaps.

 

But I am envisioning a different possible scenario. Imagine that we get to the stage where vendors converge around codified standards such as XML and everything necessary for creating this highly distributed architectural framework. Imagine that there are enough good adapters that allow components from various environments to easily connect to each other. And now imagine that what customers really want to do is to reuse their existing software assets by encapsulating them into business services that are used over and over again to create new virtual applications.

 

If you follow my thinking here, it opens up interesting opportunities. Here are a few thoughts worth considering:

 

• Customers will take SOA seriously – not just as a technology initiative but as a business strategy – they will demand that industry leaders cooperate to make the customers’ job easier.
• New vendors will emerge that can leverage the SOA work done by infrastructure leaders to provide commercialized services address specific problems in specific vertical markets.
• The first era of the industrialization of software is initiated. Vendors will begin to create modular offerings based on a SOA model that are designed to fit into existing frameworks (kind of like steering wheels that can be used on 20 different car models).
• The packaged application that has been the mainstay of the software industry for the past 25 years begins to transform into these industrial packaging. In time – give us another 10 years – the traditional software package disappears.
• SOA opens the door to a new world where Software as a Service is the norm. This transition will take at least 15-20 years. But it is real and will have a dramatic impact on the entire industry from financial models to the importance of comprehensive hosting providers.

 

This is a lot to consider. A lot of companies are trying to figure out whether SOA is real or just a passing fad. Will the words Service-Oriented Architectures soar as a lynch pin of the future or be edged out by new hot silver bullets? Given the history of the computer industry, it’s not surprising that people are nervous. After all, trends come and go at a rapid pace. I predict that this one is real. But let me warn you: it is not a quick fix. We are, in fact, at the beginning of a big emerging market trend that will have ripples in the software market for the next decade and beyond.