Software AG goes in an interesting direction for SOA governance

As part of yesterday's release of the latest iteration of its webMethods Insight product Software AG announced an OEM partnership with Progress Software. This announcement adds the Actional runtime SOA management and monitoring technology (which Progress acquired back in January 2006) to Software AG's existing Centrasite design-time governance capabilities (which were bolstered by the acquisition of Infravio in September 2006) and the runtime policy enforcement provided by its webMethods X-Broker and partner Layer 7's XML Firewall.

The incorporation of runtime SOA management and monitoring functionality into Insight is a necessary evolution of Software AG-webMethods integration strategy that we commented on just over a year ago. It's long been our position that SOA is more than a standards-based approach to software development and integration. The business value of a service-oriented initiative depends on a recognition that software services are experienced, just like their real-world analogues. The quality of that experience depends on a governance approach that extends throughout the service lifecycle, where the contracts defined when services are designed are subsequently enforced through policies once they are deployed and running - and where runtime metrics are captured to provide insight into the service level quality that is actually exeprienced. Furthermore, those metrics can be used to inform and support change management processes, so closing the SOA lifecycle loop.

Whilst the announcement doesn't come as any great surprise, the source of the runtime management and monitoring functionality does. When Oracle confirmed it's intention to acquire BEA, I said:

It [the acquisition] 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.

Software AG has gone to a potential competitor for the mantle of best-of-breed, specialist alternative to the likes of IBM, Microsoft and Oracle. If you had told me on Friday that Software AG was going to strike an OEM deal for SOA management and monitoring I'd have put my money on AmberPoint, which has historically been the OEM of choice for the likes of BEA and TIBCO.

I am not quite sure what to make of this decision. AmberPoint doesn't compete with Software AG directly and has established a healthy and growing customer base, as well as partnerships with some of the leading systems integrators - and a technology partnership with Software AG! Software AG's decision comes not long after Oracle's decision to drop AmberPoint. As we pointed out in our analysis of Oracle's roadmap for the BEA integration, we don't have any hard evidence for Oracle's claims that it had received negative feedback from BEA customers but it's something we will continue to explore. In light of the decision to go with Actional, it will be intriguing to see how the partnership evolves and how things pan out when Software AG and Progress are in a competitive situation.

This acquisition should be welcome news to Software AG customers that have invested in the company's SOA offerings as it will save them the time and effort of plugging the runtime governance gap that existed prior to the partnership. Those embarking on a significant SOA intiative should also give Software AG careful consideration, particularly if they are not wedded to one of the mega-platform providers.

Labels: AmberPoint, BEA, governance, ibm, Oracle, Progress, SOA, Software AG, TIBCO, webMethods

posted by Neil Macehiter @ 2:32 PM 6 comments permalink

If you want our take on where Oracle's taking BEA...

Read this new report.

I know we're not the quickest off the mark, but we wanted to get the whole team working together to author something comprehensive, and with travel and so on, that took a few days.

We'll admit to being pessimistic about BEA's prognosis going into the Oracle acquisition, but Oracle's early communications highlight its understanding of the strengths of the BEA technology, as well as of BEA's market footprint. What's more, the company is also openly committing to support BEA customers' existing working relationships and arrangements, and has pledged not to force product migration on any customer. There is more that Oracle needs to do, of course, but this is a good start.

Labels: BEA, MWD, Oracle

posted by Neil Ward-Dutton @ 9:25 PM 0 comments permalink

BEA and Oracle and "caveat emptor"

As someone who wrote a little on the potential acquisition of BEA by Oracle, I've been in a quandary since the news of the acquisition broke: frankly, I felt that I needed to write something - but there was already so much other commentary out there (much of it saying the same thing), I didn't want to just add another voice to the global egosystem. (The perils of writing in the age of the web, I suppose.)

So I asked our excellent partners Freeform Dynamics if they could help us look behind the headlines - to understand what regular IT people out there think of the deal. As it happened, they'd already kicked off a quick research effort on that precise topic without me knowing. Great minds think alike.

Freeform conducted a quick poll of readers of The Register (this is a big multinational IT news site, and its readers are typically IT managers, developers and ops people - people at the coal face of enterprise IT). They asked a couple of high level questions:

• Is the acquisition of BEA by Oracle positive or negative for the IT industry?
• Will the acquisition of BEA by Oracle be positive or negative for your business specifically?

They also asked respondents to provide "free form" answers to provide reasoning for the answers to the two main questions. The Freeform guys got just under 300 responses overall. So what did people think?

Well, there were no real surprises in the response to the second ("what does it mean for you") question. There appears to be a large degree of nervousness amongst respondents who are BEA customers (this is bound to be true whenever a company buys something you've already made an investment in). In this group, around 40% were "unsure" and a further 35% or so felt the impact would be "negative". For the Oracle customers, things look a lot rosier: around 40% felt the impact would be "positive", and a further 35% or so thought the outcome would be "neutral". Given Oracle's standing as a middleware provider (the technology is good enough if you're working within an Oracle environment, but not regarded as top-tier for cross-enterprise use in a heterogeneous environment) it's understandable that Oracle customers are keen to get their hands on some more beefy middleware alternatives.

What was much more interesting to me were the responses to the first question, because they can't be explained away by understandable acquisition jitters.

When asked "is the acquisition positive or negative for the IT industry?" fewer than 30% of respondents felt the outcome would be positive (45% or so were negative, 10% or so were unsure, and 15% or so were neutral). Within the BEA customer base, two-thirds of respondents were negative - but given my earlier points about why people buy BEA, I'm not too surprised by that. Tellingly, though, even among respondents with no investment in BEA or Oracle, over 40% felt the outcome would be negative for the industry (around 35% were positive, just over 10% were neutral, and under 10% were unsure).

Looking at the respondents with Oracle investments and those with investments in both BEA and Oracle, both camps were decidedly ambivalent about the impact of the deal on the IT industry in general. In both cases, more respondents answered "negative" than "positive" on this question.

When we looked at the freeform responses supplementing the other questions, there was more food for thought.

The most common explanations for "negative" responses could be grouped into one common answer: "it'll lead to reduced choice in the market". Other popular comments can be summarised as concerns about the viability of existing investments (this was cited by both BEA and Oracle customers), and concerns about the potential loss of innovation within BEA's technology. Interestingly, the poll also threw up a significant number of respondents who were concerned about the degree of power that Oracle (after the BEA acquisition) would have over them as a customer.

There were, of course, freeform comments on the positive side (there were just fewer of them). The most popular positive responses could be best summarised as "a more mature solution will emerge". The second most popular category of positive response can best be summarised as "it'll enable the rescue of some good technology from a company that has lost its way".

Looking back over all this data (and a more comprehensive analysis will appear soon on The Register, courtesy of Freeform Dynamics), my message is this: whether you're the company buying BEA, or a company that has previously bought BEA technology, this shows the eternal truth of the phrase "caveat emptor".

If you've historically bought BEA technology because BEA was an independent middleware technology provider, the lesson is that just because your middleware supplier is independent today, doesn't mean it will be independent next year. If supplier independence at key points in your IT landscape is really important to your IT strategy, do a proper risk analysis and plan what you'll do if things change.

If you're an Oracle exec, the lesson is that many of the customers you're about to acquire might already be customers of yours - but they may well have bought BEA technology precisely to avoid getting too deeply attached to companies like yours. You're going to have to tread very carefully.

Labels: acquisition, BEA, Freeform Dynamics, Oracle, strategy planning

posted by Neil Ward-Dutton @ 2:36 PM 0 comments permalink

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

posted by Neil Ward-Dutton @ 10:33 AM 1 comments permalink

Oracle proposes to buy BEA

Oracle today confirmed

that 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

posted by Neil Macehiter @ 4:57 PM 2 comments permalink

MWD FM SOA interview: Martin Percival, BEA

Our second SOA vendor interview was with BEA's Martin Percival yesterday. Again we followed our standard format - and in the resulting 34'30" podcast we get into discussing:

• BEA's experience of delivering "information as a service" projects within SOA initiatives
• How SOA is about more than just WS-* technology
• BEA's transition from a pure Java implementation focus to a broader focus, re-embracing its "legacy" middleware platform Tuxedo, the Microsoft expertise of its Plumtree acquisition, and also pointing to the SCA/SDO effort that it's a member of
• Why it bought Flashline (a software development repository vendor) and didn't buy a SOA registry vendor (it partners with Systinet/Mercury/HP)
• How its SOA 360 initiative will impact on the admin & management of the BEA platform.

You can download the audio here or you can subscribe to the feed.

Labels: BEA, MWD, podcast, SOA

posted by Neil Ward-Dutton @ 8:53 AM 0 comments permalink

BEA announces strategic partnerhsip with CA: but where does that leave AquaLogic Enterprise Security?

BEA today announced a stategic partnership with CA, which will see the latter's access and identity management solutions (SiteMinder and Identity Manager) integrated with the former's WebLogic and AquaLogic application and service infrastructure platforms.

I agree completely with Wai Wong's (BEA's executive vice president of products) statement in the press release that

Identity and Access Management is critical within SOA

not least because we have said as much in our service infrastructure assessment model and our report on identity management.

Despite this agreement, I am still left a tad confused by this partnership as it is far from clear what this means for AquaLogic Enterprise Security (ALES), which BEA describes as

a fine-grained entitlement management solution that combines centralized policy management with distributed policy decision-making and enforcement. This combination provides management and control of your critical applications

How will SiteMinder integrate with ALES? Will ALES continue to integrate with other identity and access management solutions? Does BEA plan to provide a common policy definition and enforcement framework across ALES and SiteMinder?

We point out in our assessment of BEA's service infrastructure offerings that there are some important gaps when it comes to security and identity management, which explains why BEA felt the need to establish this partnership. However, as well as answering a number of questions from potential adopters, this partnership is going to raise a few more for existing customers with an investment in ALES. I for one look forward to learning more about the two companies' plans to

validate and further extend integration between CA SiteMinder and BEA WebLogic and AquaLogic technologies

Labels: BEA, CA, identity, SOA

posted by Neil Macehiter @ 5:30 PM 3 comments permalink