LiteBytes from Lustratus Research

Breaking the SOA logjam

One of the 2008 forecasts in the annual Lustratus look ahead is that SOA decision-marking has become fractured in most companies, with clashes between architects / IT who 'get it', and business-oriented budget holders who don't. In fact, this problem is turning out to be so severe that it is causing SOA adoption to stall at many companies - although enterprise-wide decisions may have been taken to adopt SOA, projects steadfastly refuse to enact this because of the extra costs, at least initially.

The roots of the difficulty here are twofold: understandable cynicism and the need to reach critical mass of SOA deployment before benefits start to show. However, there may be a light on the horizon, as discussed in more detail in the Lustratus Whitepaper, 'Justifying SOA to the Business', available for free from the Lustratus webstore. For business audiences, it may be that the enhanced business visibility offered by SOA could be a compelling benefit to justify the extra investment, and this visibility becomes apparent immediately the project is complete - there is no need to wait for critical mass to be achieved before seeing the benefit.

Hopefully, this angle of attack may succeed in breaking down the SOA adoption log-jam, enabling companies to flow smoothly to widespread SOA adoption.

Steve

Will TIBCO be next on the acquisition block?

So, now that BEA has finally fallen to Oracle, who will be next? My money is on TIBCO.

TIBCO Software has done extremely well since it came into existence from its origin as as Teknekron. Initially an EAI (Enterprise Application Integration) company, it quickly expanded to take on challenges such as Workflow, Business Process Management (BPM) and service-oriented architecture (SOA). More recently it added Business Intelligence and Analysis to its portfolio, strenghtened by the acquisition of Spotfire last year. TIBCO products are well-respected, and it has a strong and loyal customer base.

But with BEA going, and webMethods being taken out by Software AG, it is more or less alone as a pure-play middleware player left. In addition, anyone looking at the results for its 2007 fiscal year (ended Nov 30th 2007) will immediately realize that it is an attractive target. The question isn't really whether TIBCO will be bought, but by whom.

Names being kicked about include all the usual suspects - IBM, Oracle, SAP....but I reckon that HP might snatch the prize. It missed out on BEA, but perhaps on reflection TIBCO is a closer match to its needs.

Steve

Trouble with evaluating SOA ROI

I was trying to think how to get another TLA in that title, since I think you get a prize for having three three-letter-acronyms in a row. However, the topic is definitely getting a lot of attention as companies try to decide whether SOA is worth the effort. The problem is, SOA benefits span a wide range, and are often difficult to assess. And yet, as John Soat notes in Information Week, real customers are showing major gains with SOA.

My take is that it is important to sort benefits into a spectrum of tangibleness (if such a word exists). So, reducing redundancy should have an actual dollar value reduction in maintenance costs - a tangible number. Delivering the agility to deal with new regulations more quickly is difficult to estimate in dollar terms, but could even be a survival issue. Seems to me the key is to find a way to include the full range of elements in any justification or evaluation.

Perhaps one way to add a dollar value benefit on some of the intangible benefits is to ask the executive in charge of the area most affected how much they would be prepared to pay to solve the issue. So, it might be interesting to ask the CFO how much he would invest to ensure the company could comply with new regulations within the assigned deadlines. This, then, becomes a tangible number that can be plugged into the case.

Steve

Proving the value of technology/business alignment

The holy grail for IT management has been to prove that IT investment makes the overall business more successful.  To those of us in the business this makes intuitive sense but can be hard to prove.  Unfortunately, those wishing to believe that IT adds nothing but cost have had a strong hand ever since Nicholas Carr famously kicked the IT industry where it hurts in 2003 in the Harvard Business Review by claiming that IT doesn't matter - backing up his claim with an analysis of business success against IT investment.  (To be fair, Carr argues that it is needed to be competitive but won't give one company a strategic advantage over another - which is a subtle point and one easily missed)

Of course one of the central planks of SOA is that of alignment between business and IT produces significant benefits for the business.  This again makes intuitive sense but can be hard to prove.  Therefore, I was delighted to see some research into the benefits of deep IT/business alignment by the BTM institute.  Their recently published report comparing Global 2000 with what BTM call "converged business technology management" and those without. While SOA isn't explicity mentioned, reading the report (available here) it is clear that a company succesful with a SOA strategy will tend to fall within this definition:

"[In such companys] This means that technology not only enables the execution of current business strategy but also anticipates and helps shape future business models and strategies"

In reviewing the study, CIO magazine highlights 4 dimensions:

"governance and organization; strategy and planning; strategic investment management; and strategic enterprise architecture"

Again very much inline with SOA thinking of what is important.  And finally, what is the win for converged business technology management?

“This is not about a project or ROI, but it’s about overall performance of the company,” Hoque [chair of the BTM Institute] says. For example, those companies with converged business technology management had 12 percent average annual revenue growth, compared with 4 percent for their industry groups. They also achieved 36 percent average annual earnings per share growth versus 7 percent for the industry groups.

Pretty impressive.  Of course, this report covers a period when SOA was only emerging and did not focus explicity on SOA.  What will be interesting to see over the next five years is whether firms where SOA is entrenched do better than those who have not taken the SOA route.

Ronan

IBM, DataMirror ... and Teilhard?

When IBM announced it wanted to acquire DataMirror, they probably didn't even notice that there is an ongoing lawsuit between DataMirror and Teilhard Technologies - after all, this 'battle of the midgets' would hardly register on the giant's radar. For the vast majority of people who don't know what I am talking about, Teilhard is a tiny Canadian company that has a patent to do with heterogeneous data exchange. I previously blogged about this when Oracle announced a settlement with Teilhard, earlier this year. Those people with a life probably do not know that this same company has a lawsuit running with DataMirror (actually, it has been running for three years now).

However, it seems to me that IBM coming into the game could well stir the pot. Would IBM mind if a company it had acquired were to lose an infringement case? Would it decide to get its own legal behemoth involved? If a settlement was agreed, would IBM's presence inflate the figures? In the end, would IBM care at all?

If IBM did decide to take an interest, things could get quite amusing. After all, although Teilhard is suing DataMirror, DataMirror has filed a counter-claim. If IBM chose to notice this tiny irritation and do something about it, perhaps this whole thing could backfire on Teilhard.

Steve 

The delicate art of transitioning your software business model

I was recently discussing with a friend of mine in a VC firm what the biggest challenge facing young enterprise software companies was.  The answer from the VC side was simple but deadly: companies are still struggling to grow fast enough to generate the required return required to keep their investors happy.  Faced with a business model that is not delivering, businesses can fall into two equally fatal traps:  keep using what is in fact the wrong model for too long or jump too fast into another wrong model without planning for the required changes.

Going back 5+ years, the decisions were simpler as the revenue parameters were license fee, annual maintenance fees and consultancy/training with channel strategy providing the other dimension.  Today, there are much more fundamental choices to be made between the traditional enterprise model, Open Source, Software as a Service (SaaS) and even subscription based pricing.  In actual fact the enterprise model was far from easy on its own– and the appearance of the alternatives makes the job of selecting and tuning the right business model even harder.  Additionally, transitioning between these models can be extremely difficult: Coming back from OSS to license-based is nearly impossible, switching to SaaS requires significant business and technology changes.

The first trap to avoid in reviewing your business model is failing to recognise that in the future each of the models will continue to be viable for the right company at the right time.  Sometimes this can be a tough discussion as some investors have been convinced by commentators who seem to believe that the enterprise software license model is dead and only OSS or SaaS is viable.  More sensible commentators, such as Bill in XAware’s blog provide a plausible rationale for the greater diversity within a bigger picture:

The “enterprise software business model” that software vendors adopted during the 1990s and largely continued to use in this decade compounded this barrier to adoption of SOA. These models treat software as capital infrastructure, emphasizing large up front license payments and professional services heavy implementation. Given large up front costs to acquire new more productive technology and the low labor costs, rational buyers have stayed with older technologies and methods.

Bill believes that increasing skill shortages and labour costs will reignite the enterprise software market – all be it with a broader mix of business models.  Even if you disagree with Bill, it is clear that there is a more complex purchasing environment which means that there is no straight forward answer to what business model should be used.  In particular, it is not sufficient to cry the world has changed and we are all doomed– it is about analysing the value of the solution and how best to deliver that value to the customer and get paid for it. 

The trick is to keep the open mind, avoid religious fervour for any particular model and in essence follow good product management practises and focus on the 4 Ps: Product, promotion, price and placement.  Having selected the business model that seems the best bet for the business, the second part (the actual transitioning) is equally short of universal solutions:  It needs to be treated as the business relaunch process it is and planned for across every aspect of the business from dealing with existing partners and customers to ensuring the product works in its new business model. 

Of course this all sounds too easy and the decision and planning process can be a major piece of work on its own.  However, from our experience of participating and guiding such processes we find that even when the outcome is steady as you go, it can reignite faith in the business for management and investors alike.

Ronan