When I first started as an industry analyst in the 1980s IBM software was in dire straits. It was the era where IBM was making the transition from the mainframe to a new generation of distributed computing. It didn’t go really well. Even with thousands of smart developers working their hearts out the first three foresees into a new generation of software were an abysmal failure. IBM’s new architectural framework called SAA(Systems Application Architecture) didn’t work; neither did the first application built on top of that called OfficeVision. It’s first development framework called Application Development Cycle (AD/Cycle) also ended up on the cutting room floor. Now fast forward 20 years and a lot has changed for IBM and its software strategy. While it is easy to sit back and laugh at these failures, it was also a signal to the market that things were changing faster than anyone could have expected. In the 1980s, the world looked very different — programming was procedural, architectures were rigid, and there were no standards except in basic networking.
My perspective on business is that embracing failure and learning from them is the only way to really have success for the future. Plenty of companies that I have worked with over my decades in the industry have made incredible mistakes in trying to lead the world. Most of them make those mistakes and keep making them until they crawl into a hole and die quietly. The companies I admire of the ones that make the mistakes, learn from them and keep pushing. I’d put both IBM, Microsoft, and Oracle in that space.
But I promised that this piece would be about IBM. I won’t bore you with more IBM history. Let’s just say that over the next 20 years IBM did not give up on distributed computing. So, where is IBM Software today? Since it isn’t time to write the book yet, I will tease you with the five most important observations that I have on where IBM is in its software journey:
1. Common components. If you look under the covers of the technology that is embedded in everything from Tivoli to Information Management and software development you will see common software components. There is one database engine; there is a single development framework, and a single analytics backbone. There are common interfaces between elements across a very big software portfolio. So, any management capabilities needed to manage an analytics engine will use Tivoli components, etc.
2. Analytics rules. No matter what you are doing, being able to analyze the information inside a management environment or a packaged application can make the difference between success and failure. IBM has pushed information management to the top of stack across its software portfolio. Since we are seeing increasing levels of automation in everything from cars to factory floors to healthcare equipment, collecting and analyzing this data is becoming the norm. This is where Information Management and Service Management come together.
3. Solutions don’t have to be packaged software. More than 10 years ago IBM made the decision that it would not be in the packaged software business. Even as SAP and Oracle continued to build their empires, IBM took a different path. IBM (like HP) is building solution frameworks that over time incorporate more and more best practices and software patterns. These frameworks are intended to work in partnership with packaged software. What’s the difference? Treat the packages like ERP as the underlying commodity engine and focus on the business value add.
4. Going cloud. Over the past few years, IBM has been making a major investment in cloud computing and has begun to release some public cloud offerings for software testing and development as a starting point. IBM is investing a lot in security and overall cloud management. It’s Cloud Burst appliance and packaged offerings are intended to be the opening salvo. In addition, and probably even more important are the private clouds that IBM is building for its largest customers. Ironically, the growing importance of the cloud may actually be the salvation of the Lotus brand.
5. The appliance lives. Even as we look towards the cloud to wean us off of hardware, IBM is putting big bets on hardware appliances. It is actually a good strategy. Packaging all the piece parts onto an appliance that can be remotely upgraded and managed is a good sales strategy for companies cutting back on staff but still requiring capabilities.
There is a lot more that is important about this stage in IBM’s evolution as a company. If I had to sum up what I took away from this annual analyst software event is that IBM is focused at winning the hearts, minds, and dollars of the business leader looking for ways to innovate. That’s what Smarter Planet is about. Will IBM be able to juggle its place as a software leader with its push into business leadership? It is a complicated task that will take years to accomplish and even longer to assess its success.
So, who could argue that we need a smarter planet. I certainly couldn’t. I am at an IBM software analyst meeting. I have been attending this meeting for many years. The focus, as you might imagine is on the software strategy. But there was something this time that I think is worth talking about. Rather than providing us analysts with a laundry list of products and go to market strategies (yes, they did some of that too), the focus this year is around vertical solutions and markets. But more than that, there is an overarching theme that is about to become the major theme that will envelope IBM over the coming years – Smarter Planet. This initiative is driven by Sam Palmisano not just with his operational good sense, but his ability to provide vision for the company.
In his address to the Council of Foreign Relations in New York City on November 6, 2008, Palmisano proclaimed that the next challenge as our world gets more interconnected, hotter, and challenged for growth we need to leverage a new approach to innovation that is smarter.
This approach according to Palmisano, “This isn’t just a metaphor. I mean infusing intelligence into the way the world literally works – the systems and processes that enable physical goods to be developed, manufactured, bought and sold…services to be delivered…everything from people and money to oil, water, and electronics to move…and billions of people to work and live.”
Good thinking but what does this mean from a technology lens? It is clear that we have an overabundance of technology. What we lack right now is the right way to leverage technology to truly focus on customer benefit from both an agility perspective (being able to change quickly and without too much pain) and the ability to support an increasingly connected world. It is interesting to think about looking at the world this way.
If you think about it, the world is, in fact, a system. To make the concept even further, the world can be viewed as a biological system. The human body itself is an interconnected set of sensors, actions that trigger other actions. The body interacts with other humans, with the physical world as well as the virtual world. We take actions based on the information we are given or intuit from our experiences.
IBM is trying to tap into one of the most important transitions in our world today. And they are not shy about focusing these transformations to their products and services (it is a commercial world, after all).
Here’s a quick view of this idea of the Smarter Planet. If we look at the idea of a Smarter Planet, it starts with the idea that everything is an asset that takes inputs processes them and produces outcomes. Therefore, we can look at this from Smarter Planet from five different perspectives:
• Innovation can transform companies, countries, and governments to lower costs and increase revenue
• Intelligence that provides an ability to learn from the vast amounts of information in the world (I call this anticipation management). In essence, this means managing information, predicting outcomes, leveraging information across partners, suppliers, and customers
• Optimizing, managing, and changing based on the customer experience. Organizations no matter how big or small are looking for ways to transform themselves so they are ready for whatever happens. Companies that focused on this type of change are better able to weather very tough and complicated times.
• Greening of business. You can’t talk about the planet without thinking about the impact of green on everything we do. This includes everything from saving cash by better usage of energy to protecting the climate.
• Leveraging smart people. I think that people makes or breaks this noble goal. Leveraging all these innovative approaches to doing things smarter and more responsibly typically fail if people don’t work together as effective teams. Politics can kill innovation more quickly than anything else.
Now begin to take this concept out of the general view and apply it to specific industries, their problems, and opportunities. That is precisely what makes the idea of the Smarter Planet intriguing. For example, manufacturing itself is being transformed as we speak. Manufacturing has been transformed by technology with sensors and actuators so that the information produced is helping smart companies better control the manufacturing process both in terms of innovation, efficiency, and energy conservation. In retail, companies are leveraging new processes and technology to leapfrog the competition. If a retailer can optimize the way they change inventory based on an early understanding of changing buying habits of customers they can become a leader.
I think it is important that IBM is talking about this idea now. This idea of a Smarter Planet is really tailor made for a time when the natural inclination is to hide until things get better. There is no question that we are in very challenging time. It isn’t the first time that we have found ourselves in this position and it certainly won’t be the last. But in my experience, the companies that take action when everyone else is hiding under the bed to innovate, change, and learn will win. When the world comes back, these companies will be way ahead and everyone else will be playing catchup.
What a difference a year makes. The past year was filled with a lot of interesting innovations and market shifts. For example, Software as a Service went from being something for small companies or departments within large ones to a mainstream option. Real customers are beginning to solve real business problems with service oriented architecture. The latest hype is around Cloud Computing – afterall, the software industry seems to need hype to survive. As we look forward into 2009, it is going to be a very different and difficult year but one that will be full of some surprising twists and turns. Here are my top predictions for the coming year.
One. Software as a Service (SaaS) goes mainstream. It isn’t just for small companies anymore. While this has been happening slowly and steadily, it is rapidly becoming mainstream because with the dramatic cuts in capital budgets companies are going to fulfill their needs with SaaS. While companies like SalesForce.com have been the successful pioneers, the big guys (like IBM, Oracle, Microsoft, and HP) are going to make a major push for dominance and strong partner ecosystems.
Two. Tough economic times favor the big and stable technology companies. Yes, these companies will trim expenses and cut back like everyone else. However, customers will be less willing to bet the farm on emerging startups with cool technology. The only way emerging companies will survive is to do what I call “follow the pain”. In other words, come up with compelling technology that solves really tough problems that others can’t do. They need to fill the white space that the big vendors have not filled yet. The best option for emerging companies is to use this time when people will be hiding under their beds to get aggressive and show value to customers and prospects. It is best to shout when everyone else is quiet. You will be heard!
Three. The Service Oriented Architecture market enters the post hype phase. This is actually good news. We have had in-depth discussions with almost 30 companies for the second edition of SOA for Dummies (coming out December 19th). They are all finding business benefit from the transition. They are all view SOA as a journey – not a project. So, there will be less noise in the market but more good work getting done.
Four. Service Management gets hot. This has long been an important area whether companies were looking at automating data centers or managing process tied to business metrics. So, what is different? Companies are starting to seriously plan a service management strategy tied both to customer experience and satisfaction. They are tying this objective to their physical assets, their IT environment, and their business process across the company. There will be vendor consolidation and a lot of innovation in this area.
Five. The desktop takes a beating in a tough economy. When times get tough companies look for ways to cut back and I expect that the desktop will be an area where companies will delay replacement of existing PCs. They will make do with what they have or they will expand their virtualization implementation.
Six. The Cloud grows more serious. Cloud computing has actually been around since early time sharing days if we are to be honest with each other. However, there is a difference is the emerging technologies like multi-tenancy that make this approach to shared resources different. Just as companies are moving to SaaS because of economic reasons, companies will move to Clouds with the same goal – decreasing capital expenditures. Companies will start to have to gain an understanding of the impact of trusting a third party provider. Performance, scalability, predictability, and security are not guaranteed just because some company offers a cloud. Service management of the cloud will become a key success factors. And there will be plenty of problems to go around next year.
Seven. There will be tech companies that fail in 2009. Not all companies will make it through this financial crisis. Even large companies with cash will be potentially on the failure list. I predict that Sun Microsystems, for example, will fail to remain intact. I expect that company will be broken apart. It could be that the hardware assets could be sold to its partner Fujitsu while pieces of software could be sold off as well. It is hard to see how a company without a well-crafted software strategy and execution model can remain financially viable. Similarly, companies without a focus on the consumer market will have a tough time in the coming year.
Eight. Open Source will soar in this tight market. Open Source companies are in a good position in this type of market—with a caveat. There is a danger for customers to simply adopt an open source solution unless there is a strong commercial support structure behind it. Companies that offer commercial open source will emerge as strong players.
Nine. Software goes vertical. I am not talking about packaged software. I anticipate that more and more companies will begin to package everything based on a solutions focus. Even middleware, data management, security, and process management will be packaged so that customers will spend less time building and more time configuring. This will have an impact in the next decade on the way systems integrators will make (or not make) money.
Ten. Appliances become a software platform of choice for customers. Hardware appliances have been around for a number of years and are growing in acceptance and capability. This trend will accelerate in the coming year. The most common solutions used with appliances include security, storage, and data warehousing. The appliance platform will expand dramatically this coming year. More software solutions will be sold with prepackaged solutions to make the acceptance rate for complex enterprise software easier.
Eleven. Companies will spend money on anticipation management. Companies must be able to use their information resources to understand where things are going. Being able to anticipate trends and customer needs is critical. Therefore, one of the bright spots this coming year will be the need to spend money getting a handle on data. Companies will need to understand not just what happened last year but where they should invest for the future. They cannot do this without understanding their data.
The bottom line is that 2009 will be a complicated year for software. There will be many companies without a compelling solution to customer pain will and should fail. The market favors safe companies. As in any down market, some companies will focus on avoiding any risk and waiting. The smart companies – both providers and users of software will take advantage of the rough market to plan for innovation and success when things improve – and they always do.
I had an opportunity to have a chat with Ambuj Goyal, General Manager of IBM’s Information Management division about the idea of an information agenda — an initiative that IBM recently announced. The company intends to make a major investment in methodologies, best practices, and technologies over the coming years as way to help its customers implement the information on demand strategy.
While it may seem confusing at the outset, I think that the idea of an information agenda makes sense. But first, I want to clear up a confusion that I have seen. I asked Ambju to define the difference between information on demand and the information agenda. While he agreed that both ideas are aspirational goals, he distinguishes between the two. Information on Demand is really the specific techniques and technology that help companies architect their information assets so that they can be able to deliver business value on time and in context. In contrast, he explains that an information agenda is really the business strategy for information that becomes the road map for the future. While the distinctions are subtle it is interesting to think about these two concepts.
Here are my thoughts. This problem is not new, it has been around for many generations of information management. I won’t use this blog to remind you that we have so many disconnected information sources, with differing definitions of what the simplest concepts – what’s a customer and what’s a price – just to name a few. And the problem is really getting worse. It isn’t enough anymore to just do joins across relational data sources. There is so much information that is stored in documents, on websites, in social networks, and customer service sites. And you can’t just throw everything into one massive warehouse.
I think that the initial instinct of most technically oriented organizations is to react. They embark on a Master Data Management strategy to quickly get one consistent view of data across relational sources. Or in many situations, they might go out and buy a tool that makes it easier to query many different sources. In some situations, customers are apt to invest in a massive data warehouse. Each one is a valid strategy and will work to solve one specific problem. But here is the difference that I see — reacting to one problem at a time is what has always gotten us into a mess with enterprise software in the first place.
Our team has been finalizing the second edition of Service Oriented Architectures for Dummies. One of the key lessons we have taken away from this project is that customers who are successful are those that have moved away from being reactive to the crisis de jour to creating a business focused strategy. For example, rather than taking on a project in isolation, these managers will make that project fit into an overall strategy for managing their business services or managing data across lots of business units. So, while they are solving problems on an incremental basis, they are ensuring that these problems are solved in context with the overall business strategy.
What I like about the idea of an information agenda is that it focuses customers on the idea of having a strategy and a plan. So, here’s my view of the top three things that should be in a customer’s information agenda:
1. Starting with an honest assessment. Companies need to start by taking a step back and determine how they use information as part of their business strategy. Information is used in different ways – both formal and informal. It is used as part of structured databases, document management systems, warehouses, and informal paper based workflows. Companies still use spreadsheets as their formal information management strategy. Taking stock is critical.
2. Imagining success. What would it look like if information could be available on demand and if that information could be trusted? I think this approach could become a strategic differentiation for companies. In fact, many of the companies that were interviewed for the second edition of SOA for Dummies were in the process of creating a strategy based on this idea. Most of these companies were looking for ways to leverage information as part of the strategy to proactively engage customers.
3. Fit small steps into a roadmap. I think this is the most important issue for companies. It is so easy to devolve into a reactive state – especially in complex financial times. I suspect that many companies will dump the idea of having a strategy and just try to do only what is necessary to survive. You can’t blame them. But, it is dangerous to take this approach. Yes, companies should implement pragmatic projects that match their current pain. However, they should be a step in a journey towards a strategic approach to managing information.