Links for 2007-10-30 [del.icio.us]
Labels: MWD
Putting customers first?
Most readers will by now be familiar with the recent sparring between Oracle and BEA (just see our
del.icio.us links over the past days to get an update if you're not up to speed). There's been plenty said about this already of course, but I thought it would be fun to look past the "industry insider" angle and consider what this piece of theatre says about the IT industry and what it means for the organisations that this industry sells to.
The original (publicly stated, but unsolicited) offer to purchase BEA came from Oracle on October 12th. It was surely no coincidence that after years of alleged courting by Oracle, the offer finally came once "activist investor" Carl Icahn had acquired a significant position as a BEA shareholder. Icahn started his BEA investment run-up in early September, and now owns around 13% of the stock. As part of his initial disclosure of stock purchase, Icahn's company stated that the purpose was to attempt to get BEA to sell itself in order to deliver more value to shareholders.
[Just to put some numbers on that "value", as mentioned
here, if BEA had sold to Oracle for $17 a share, Icahn would have stood to make a $217.1m profit (that's roughly a 33% return on his $663.8m investment) in just a couple of months.]
Of course it's fair to argue that BEA has sometimes failed to capitalise on technology and business trends in ways that it might have done, and as a result its technology could deliver more. Icahn does have a point when he says that ISVs in general face an uncertain future as business models in the ICT industry change and value flows increasingly away from hardware and software (catalysed by open source and commodity hardware) and towards services.
But is Icahn's prescription for BEA (a sale) the right one?
This article appraises Icahn's record and on that reading, he's certainly been far from infallible. For one minute, let's look past shareholder value in isolation, and consider the business that BEA is in.
BEA is a company that's built its business on being a
middleware provider that can operate independently from the other technologies that middleware has to interoperate with - databases, desktop software, packaged applications, hardware, management consulting services, and so on. Indeed BEA has often said itself that its position is as "the Switzerland of enterprise software".
Not every medium or large organisation needs its middleware provider to be "Switzerland" of course. But in a large number of organisations, particularly financial services firms, telecoms providers and governments with extensive, decades-long IT legacies, there's sufficient heterogeneity to warrant building a strategic relationship with a supplier that can operate independently of all the other stuff and is less likely than others to favour one technology over another. This is a sound strategy based on sound policy (in other contexts, it's called
separation of duties).
Many companies have built relationships with BEA precisely because it could offer them this kind of relationship. And middleware isn't like vacuum cleaners, or even
airline seats: companies (particularly large companies) want long-term relationships with their middleware providers. If BEA is sold - to Oracle, or pretty much anyone else - those customers are going to have the rug pulled out from underneath them. Customers who made strategic IT bets on an independent middleware vendor will have to reappraise their investments and quite possibly spend a heap more money trying to either rejig their strategies, or build new relationships with new suppliers (although options for those wanting a slice of Swiss neutrality are limited: there are only two other software companies of any real size with similar positions -
TIBCO and
Software AG).
So - to get to the point: what's troubling me is that in the IT industry, there's often much hand-wringing about how poorly IT and IT vendors are perceived by businesses, and how everyone needs to work harder to build bridges and raise a positive profile of how IT (and IT vendors) can add value to organisations.
But if the IT industry continues to shuffle deckchairs in the name of shareholder value, to the detriment of customer value, can anyone be surprised when business wallets remain tightly controlled and IT staff, and vendors, are viewed with suspicion by the global community of business IT buyers? If Icahn wants BEA to become more competitive and deliver more value to shareholders, there are more ways to go about it than selling the company. It might be that those prescriptions take longer to kick in than Icahn's current favourite, though. That probably makes them less likely to be pursued.
Am I being hopelessly naive? Let me know your take. It would be good to start a bit of a debate here, I think.
Labels: BEA, industry, interoperability, Oracle
Links for 2007-10-26 [del.icio.us]
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Links for 2007-10-25 [del.icio.us]
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Links for 2007-10-23 [del.icio.us]
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Links for 2007-10-22 [del.icio.us]
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Links for 2007-10-17 [del.icio.us]
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Links for 2007-10-11 [del.icio.us]
- Talking Identity :
Nishant Kaushik of Oracle drills into the Identity Oracle concept, focusing on some of the technology components (including, unsurprisingly, the Identity Governance Framework) - openptk: Home
Home page for Sun-initiated OpenPTK open source initiative focused on provisioning UIs that are independent of the backend identity management infrastrcture
Labels: MWD
Oracle proposes to buy BEA
Oracle
today confirmedthat it delivered a letter to the Board of Directors of BEA Systems, Inc. (NASDAQ: BEAS) on October 9 in which Oracle proposes to acquire BEA for $17.00 per share in cash. The $17.00 per share offer is a 25% premium over yesterday's closing price of $13.62.This acquisition has been long-discussed so I can't say I find the news particularly surprising, particularly with Carl Icahn recently
upping his stake in the company. I think this just makes it more likely that Oracle's proposal will be accepted.
This is primarily as a market share grab by Oracle. It does plug some gaps in the portfolio - particularly around business process management (based on BEA's Fuego acquisition), where Oracle only has basic BPEL web services orchestration; adds some telecoms vertical market capabilities to complement Oracle's vertical market push and the virtualisation work that BEA has done with the WebLogic Virtual Server Edition. Also, there's the opportunity for Oracle to tap into the healthy Tuxedo base. With a significant chunk of Oracle's profitability coming from maintenance, the revenue from BEA's customer base will suit its business far better than it did BEA which was suffering with its inability to grow license revenues.
This is yet another example of the bigger specialist players getting squeezed out by the industry goliaths - IBM, Microsoft, Oracle, SAP - and the open source, smaller best-of-breed players. SAP's recent acquisition of Business Objects is another example (although that did plug a few more gaps). It leaves some of the other bigger specialist players - TIBCO, SoftwareAG (and to a lesser extent Progress and Red Hat) in an interesting position. On the one hand they will be more attractive, particularly for SOA and BPM, to customers looking for an application-independent infrastructure offering. On the other, though, taking market share for those customers from BEA is one thing: taking it from Oracle quite another. Ultimately, IBM is the big beneficiary in this regard.
In summary, then, I see: the acquisition going ahead; BEA's customers looking worried as they see themselves with an application-dependent infrastructure stack; IBM looking happy at the prospect of providing those customers with an application-independent alternative; the likes of TIBCO and Software AG pondering their options; and SAP and Microsoft carrying on in there own sweet way.
Labels: BEA, BPM, ibm, Microsoft, Oracle, Progress, Red Hat, SAP, SOA, Software AG, TIBCO
Links for 2007-10-10 [del.icio.us]
Labels: MWD
New On The Radar report: Erudine
Those of you with an interest in model-driven development and legacy system renewal might want to take a look at
our latest On The Radar report, which focuses on Erudine.
Erudine is a 55-person company headquartered in the UK whose core technology uses case-based reasoning techniques to provide a highly abstract software development environment and associated runtime engine. It should be of interest to you if you are dependent on data- and rules-intensive legacy applications, such as billing and scheduling, where the resources (both technology and personnel) required for ongoing maintenance and development are scarce.
Labels: development, Erudine, legacy migration, MWD
New On The Radar report: Arcot Systems
Those of you with an interest in authentication, online payment and digital document signing solutions might want to take a look at
our latest On The Radar report, which focuses on Arcot Systems.
Arcot is a 120-person company headquartered in California with a suite of four software-only authentication solutions, which should be of interest if you are required to provide large numbers of customers or business partners with strong authentication capabilities, especially if you are also providing commerce services. They should also be relevant if you are operating in a heavily regulated, document-centric environment.
Labels: Arcot, identity, MWD
Collaborative productivity makes its mark on the desktop
The last couple of weeks have seen a wave of product launches and announcements at IBM Lotus, coinciding with the Lotus Collaboration Summit which took place on 18th September. A new version of Quickr is expected in the spring, along with a new product, Quickr Content Integrator, which will enable import of content from Domino libraries and teamrooms, FileNet P8, Microsoft Outlook public folders and Microsoft SharePoint sites into Quickr. Tuesday also saw the release of Lotus Forms 3.0, IBM's XForms-based technology gained through its PureEdge acquisition in 2005.
Also announced was the release of Accelerators for WebSphere Portal - packaged portlets and connectors for integrating key IBM products into the portal, reducing implementation time (and cost). Five were shipped - Dashboard, Self-Service, Content, Collaboration, and Enterprise Software Suite. Of greatest interest to me was the Collaboration Accelerator, which provides integration for Sametime, Quickr and Connections.
Perhaps the most interesting announcement from IBM is the release of Lotus Symphony, a suite of office productivity tools which are available for free, and which are also shipped within the latest Notes release. IBM reported over 100,000 downloads during the first week of the beta availability of the Symphony software, highlighting the growing interest in alternatives to the ubiquitous Microsoft Office Suite. Based on OASIS' ODF (Open Document Format) standard, Lotus Symphony supports Office formats as well as Lotus Smartsuite formats, and runs on both Windows and Linux.
This news was followed last week by the announcement of Microsoft Office Live Workspace - a Microsoft-hosted SharePoint workspace which allows users to access and share documents online. Described as an extension to the desktop Office suite, it can also be accessed by other desktop suites such as OpenOffice, and will be available in beta sometime in November. Widely touted as Microsoft's answer to Google Docs and Spreadsheets, Microsoft claims it is not targeted at the enterprise market, rather at small businesses and home users.
These announcements, along with those services from vendors such as Google and Zoho, highlight the emerging transition in how people want to use their desktop software - personal productivity, which so successfully established Microsoft's stronghold on the desktop, is now giving way to collaborative productivity. It is no longer enough just to create, we now need to work with others to do this, and we are demanding that the software market catches up to support and enable this. All this activity is healthy for the desktop software market - which has been pretty stagnant for the last 10 years - and the entry into the market and buzz from players such as Google and Zoho are clearly making the giants sit up and take notice.
Labels: collaboration, ibm, Microsoft
Links for 2007-10-03 [del.icio.us]
Labels: MWD
Time to be honest about SaaS
I thought that those of you who aren't recipients of our monthly newsletter might be interested in this commentary (penned by the other Neil) dissecting some of the problems with the definition (or lack thereof) of software-as-a-service.
Over the past few days we’ve been having an interesting debate here at MWD, in conjunction with the analysts at our close partner
Freeform Dynamics. The question came from Dale Vile at Freeform: what's a good definition of software-as-a-service (SaaS)? The reason for asking the question was that SaaS is a hot topic, and it's something that's considered as a major growth opportunity for a lot of technology suppliers; but although there are a fair few forecasts of growth in demand, it's difficult to get a clear idea of what's actually included in these forecasts. Of course, if there isn't a consistent view of what does and doesn't actually constitute SaaS then that's not really helping anyone. The approach we took to try and provide that consistent view was to look at a long list of things (ranging from Google Search, Google Maps and hosted wikis to Skype's VOIP and messaging services, hosted voice PBXs, online travel agency services and remote backup services), and say whether we thought they "counted" as SaaS offerings.
What came to the fore very quickly was that there was no crisp set of attributes that we could agree characterised SaaS offerings. SaaS isn't defined (as some would tell you) by a particular type of distribution or access technology, a particular technology architecture, or a particular approach to charging for usage.
Yes, SaaS offerings do commonly exhibit particular choices in these areas (use of the web for distribution and access; a "multi-tenant" architecture to efficiently separate the data and customisations of each customer from those of others; and some kind of subscription license). But crucially, these choices aren't unique to what most people would call SaaS offerings. Google's services, and countless millions of other online dynamic websites, have made those same technology choices for distribution and access – and they're commonly lumped into that whole other can of slippery worms, "Web 2.0". Countless online portals (some hosted within organisations, others available to the public) allow users to personalise their experiences and use a multi-tenant architecture to store personalisation data efficiently and effectively. Lastly, all sorts of information- or IT-based capabilities are delivered on a subscription basis (not least, mainframe capacity, and analyst research ;-).
So what is it that marks something out as SaaS (or not)? The only answer that seems to tick all the boxes is that SaaS offerings are those which deliver online, hosted alternatives to things that we have historically experienced through the in-house purchase (or development) and deployment of software systems.
Let's take Customer Relationship Management (CRM) as an example. Historically, CRM capabilities were provided by software that was installed on premise, was managed on premise, supported one organisation, and was paid for through a perpetual license. When Salesforce.com delivers those CRM capabilities from a remote installation, manages them on behalf of multiple organisations, and is paid to do so on the basis of a monthly subscription, it needs a different name: that's "Software-as-a-Service". Following that example, remote backup/restore services, online word processing applications like Google Docs, the Zoho suite and (now Adobe's) Buzzword, and SAP's BusinessByDesign (formerly A1S) all count as SaaS offerings. Google Search and Facebook don't, because they're not delivering capabilities that you would ever have associated with on-premise, perpetually licensed software.
This helps us clarify SaaS' place in the IT industry, but we think it's a problematic conclusion, for three reasons. Firstly, most people use the label without really understanding how context-dependent it is (what you think of as SaaS is primarily defined by your own experience); secondly, if we continue down this road, there can never really be a consistent definition of SaaS that will work for everyone; and thirdly, this is a very IT industry- and supplier-centric way of looking at the world that is only likely to alienate or confuse a very important community – "users" (the people who pay all our salaries).
Perhaps we need to call time on SaaS, and think of some clearer terms and definitions that can really help IT organisations and IT buyers work out how everything fits together. At the very least, as an industry we need to be honest about SaaS – and explain that it’s an industry-driven marketing and positioning term that's primarily about separating "funky new stuff" from "boring old stuff".
Labels: Adobe, Facebook, google, SaaS, Salesforce, SAP, Skype, Web 2.0, Zoho
