Now its IONA’s turn to be acquired – by Software AG?

IONA has just announced that it has received an unsolicited offer to be acquired by an unnamed company.

Over the last week there has been speculation that Software AG is the mysterious buyer.  Software AG buying would make some sense in that it is inline with its vision of building a major integration company through acquisition.  IONA does have an excellent customer base and an interesting SOA OSS play.  On the downside, IONA main business comes from the declining CORBA market and there would also be major overlaps on its closed source SOA side with the already crowded Software AG catalog post its WebMethods acquisition.

However, alternative buyers are less obvious as it is a company in the middle of a difficult transition – attempting to replace its rapidly decreasing CORBA revenue stream with lower than expected growth in its open and closed source SOA product lines.  Which means that I am putting my money on Software AG being the acquirer.


p.s. It is beginning to feel like this is becoming a finance blog – rest assured with only Tibco left out there, the current merger wave is bound to come to an end!

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.


Jitterbit kick-starts an OSS solution marketplace

An article in ebizq alerted me to Jitterbit’s just launched “Trading Post” for integration-specific solutions.

Jitterbit claims to the “World’s most popular Open Source integration platform” – which surprised me as I had not heard of them before.

The idea of setting up sites to enable the selling of software components is hardly new (although rarely successful) and of course sharing is precisely what an OSS community is supposed to be about. What is more interesting about the “Trading Post” idea is that

– It focuses on solutions: i.e. not just source code for the bits of the puzzle but also the patterns and knowledge essential to deliverying the complete solution.  And directs potential users to the services provided by “Trading Post” providers who can help to deliver the solution and

– It focuses on both application specific solutions (such as JD Edwards) and industry specific solutions.  Again moving the emphasis away from raw technology towards problem solving.

– It provides an interesting revenue opportunity for OSS service providers/vendors who often struggle to drive revenue from support/maintenance alone.  This is because it crisply defines the value they (as Trading Post providers) can give around specific solutions.

While just launched, it is already ‘pre-stocked’ with 50 solutions which demonstrates a certain amount of apparent momentum.  Perhaps it is a model other OSS vendors should take a look at…


IBM gets Cognos to fill the gaps

IBM has been on quite an acquisition spree of late, but the latest is perhaps the most predictable and potentially powerful.

IBM is buying Cognos, the business intelligence and performance management vendor, for $5B. This has been on the cards for some time, and increased in likelihood when SAP acquired Business Objects recently – Cognos and Business Objects were acknowledged as the two leading players in the BI space.

This looks to be a great deal for both companies, and users should be pleased. With 25,000 customers spread across some of the largest companies in the world, Cognos is a well established BI player, and shares many customers with IBM. On top of this, with the SAP acquisition of Business Objects, Cognos was the last big pure-play BI vendor and a major target for acquisition, so its users must have had concerns over potential new masters – however they are likely to be very comfortable with IBM since it does not really have competing products and will therefore keep the technology alive and moving forward. From an IBM point of view, it will be particularly keen to get its hands on the 1000+ BI-experienced R&D team in Cognos. as well as the 2000 or so customer-facing field force.

The key here is that the two companies mesh really well together. IBM’s Information on Demand initiatives have made every effort to ensure that data is accessible wherever and whenever it is needed, while Cognos concentrates on interpreting the data and generating business value from it. Combining the two promises to deliver even more accurate, timely and understandable information to support executive decision-making and business-driven data mining initiatives.

This also fills some gaps for IBM in its service-oriented architecture (SOA) strategy. At the moment, one of the few weak spots for IBM is its lack of an industry-leading BAM (Business Activity Monitoring) initiative. That is, IBM SOA can make programs visible in terms of business services, improving the propensity for getting a clearer understanding of business activity in IT operations, but it was not particularly good at interpreting the information in BAM terms. Now it will be able to deliver one of the best BAM solutions in the marketplace, making it possible not just to streamline and automate processes but also to continually improve their effectiveness.

If there is a challenge for IBM in absorbing Cognos, it is in the area of organization. IBM has made the decision to keep Cognos in its own business unit – BI and performance management. However, this unit lies within the IBM Information Management division. While this makes sense at one level, in that BI is very related to information, the performance management part is closely linked to the IBM SOA initiative driven from another division. It will be important for IBM to manage this carefully, but it is not the first time it has had to deal with this sort of cross-divisional issue – for example, it had to handle this when Tivoli, the management software company, was acquired.

All in all, this acquisition looks to be good for just about everyone – IBM users, Cognos users, IBM and Cognos companies and employees….but perhaps not for the competition!


Why Tibco won’t be bought next

Ranadive, CEO of Tibco, has announced that Tibco board would of course consider offers.

And after the recent news about Business Objects and BEA, such offers may seen inevitable.  Jeff Schenider of MomentumSI for instance argues that we have entered a period of inevitable consolidation.  While I certainly think we are already in an era of big-4 and the rest, that does not necessarily mean that every ‘small’ software company (and remember these are only small in comparison to the giants) must be bought.

The Reuter’s piece covering Ranadive’s statement comments that “Analysts have said suitors for Tibco could include IBM (NYSE: IBM), Hewlett-Packard (NYSE: HP), Sun Microsystems (NSDQ: JAVA), and EMC (NYSE: EMC).”

I personally wonder.  On the one hand you could ask why not?  Tibco has excellent top tier customers who use its long standing messaging products for core business processing.  It also has some of the best SOA products in its BusinessWorks portfolio – combining enterprise grade reliability with good tooling.  However, I think you need to look a little deeper about the two acquisitions which sparked this consolidation talk:

BusinessObjects is in what should to be the hot growth area over the coming years – business intelligence – and thus is perfect for the vendors who want to find a new thing to sell to their customer base or a new way to justify their existing product line (by adding a BI layer on top).  Business Objects should have been a target for IBM and Oracle as well as SAP.

BEA was generally believed to be a long term target for Oracle – BEA had after all used the application server wave to capture business from so many of Oracle’s enterprise customers.  Oracle first took quite a while to take application servers seriously and then took quite a while to become competitive.  Buying BEA finishes the job off quickly and gets back ownership of all those straying BEA customers.

With Tibco, there is no obvious buyer (as Oracle was with BEA) nor is there a neat fit into one of the majors (as BusinessObjects was with SAP).  Of the 4 listed by the “Analysts” quoted above, only IBM would make any sense.  And Oracle, except that it is busy trying to eat BEA.  Therefore, I don’t see Tibco being bought except unless it is Skyped (bought for over the odds to avoid somebody else buying it).


SAP buys Business Objects

It was announced yesterday that SAP is acquiring Business Objects for $6.8billion in what is described as a friendly take-over (and leaked out a couple of weeks back as reported here ).

On the product side, the benefits are obvious from SAP perspective – although there will certainly be some integration and overlap issues for SAP to deal with (covered well by Forrester here).  Clearly, it also brings a large number of new customers to SAP – although it will be a long term project to bring them over to other SAP products.

From the vendor perspective, it reduces the choice for ISVs wanting to partner with a Business Intelligence vendor.  This should make Cognos (now the only significant independent BI vendor) in particular happy.  However, the big question is will IBM grab Cognos now to fill its own BI gap before Oracle gets there first.  Of course nothing may happen – Remember the speculation around Informatica and Oracle after Ascential was bought by IBM a couple of years back?

And finally… For the customers of BO, it will take a while for the smoke to clear.  However, SAP paying that amount of money should make BO customers very confident that their software has a strong future.  What it means to users of SAP’s existing BI product is equally obvious:  While it is very likely the products will be supported for a long time, it is equally very likely that they will not be the basis of SAP’s BI strategy going forward.


Private power for BPM

Yesterday I had the pleasure of having lunch with Jan Baan, a serial achiever in the IT industry and currently Executive Chairman and CEO of Cordys, a BPM vendor.

I went to the meeting wondering whether the BPM space really needs another player – my personal view is that the market is still immature in demand terms, but there are a number of well-established vendors already.

However, as a private company with a rich backer, Cordys benefits from something that public companies can often only dream about – the freedom (time and money) to do what needs to be done to deliver a ‘Version 2’ offering. Most public companies build a version 1 that most of us would call a version 0 (or even -1!). The pressure is on to justify the investment by delivering returns quickly. Even a VC-backed private company suffers the same problems, with anxious investors looking for assurance that their money is working for them.

But as Jan explained to me, he has been happy to bankroll Cordys with a desire to build a solution that addresses the real-world operational issues that many Version 1s ignore. As a result, Cordys tells an impressive story on subjects like performance, fault tolerance, scalability and usability. Perhaps BPM is about to benefit from a dose of Private Power.


Does Microsoft need a SOA strategy?

Whether or not Microsoft actually has a SOA strategy is far from clear (in the sense of actually committed to SOA in a strategic way as opposed to covering the bases in sufficient depth to be credible through alliances and product tweaking).

However, its latest announcements around BizTalk seem to have sparked off another wave of attacks from people who are deeply suspicious about its commitment and motives. For instance, Dana Gardener of Interarbor, really lets rip:

“My take is that inside of Microsoft its aggressor A-types are all about dissing SOA and promoting .NET ad nauseam. At the same time the Microserfs and developers must understand the inevitability of SOA for at last a portion of the most advanced and innovative enterprises’ and service providers’ architectures.”

To quickly jump off the fence: I don’t believe that Microsoft is as any way close to being as commited to SOA as most of the other industry majors (IBM, Oracle, Sun, SAP et al). However, this may not be a bad strategy for Microsoft right now. The reasons why this is so are well expressed by The CIO Weblog:

“Microsoft doesn’t have to have an SOA strategy now, anymore than they needed an Internet strategy before Netscape or a search strategy before Google. …A recent IDC research report shows them holding a comfortable lead in the architecture and platform development tools that will be used to build out whatever SOA most companies will bother to develop in the near future. And as frequently been pointed out, here and elsewhere, it’s not so easy to break the inertia that large corporate IT shops generate when they make those initial choices. Microsoft has plenty of time to manuever, and as of yet, little need to do so, clamoring of pundits aside.”

While many would argue that Microsoft’s lack of internet and search strategies significantly damaged the company, it is not an unreasonable argument for SOA if you consider their customer base: The smaller Microsoft only shops aren’t in the first waves of SOA adoption anyway, the larger Microsoft only shops will be bound to use Microsoft tools and finally the large enterprises which are a mix of Microsoft and others (I would suggest these are vast majority of the “the most advanced and innovative enterprises” mentioned above) will use Microsoft tools in their SOA strategy when needed.  Why? Because SOA is an architecture – not a product category: You can get started mostly using exsiting tools.  Therefore, Microsoft are guaranteed to be in the SOA programme frame anyway and so doesn’t need to try “to win” its share of initial projects.

So, are there risks for Microsoft and its customers associated with its take on SOA? Yes, I think there are major risks and these will become apparent over the next 12 to 18 months: Firstly, as customers who mix Microsoft with non-Microsoft get deeper into SOA, they will move beyond relying on existing tools and need more and more tooling designed specifically for SOA.  This tooling is more likely to come from vendors who have a deep SOA commitment. This will risk Microsoft’s share of the pie in the large mixed accounts.

Secondly, as IBM et al create SOA-based solutions for common emerging customer problems (think the next Basel II or Sarbanes-Oxley or CRM), Micosoft will be disadvantaged because the SOA based solutions will be more consistent with the customers’ existing architectural direction (i.e. SOA). This will not only limit their growth in the mixed accounts, it will also limit their ability to enter new large enterprise accounts.

Of course, this is all predicated on SOA remaining a popular and growing architecture … and however unlikely it may seem today to SOA advocates that SOA could hit a wall, this is probably Microsoft’s real bet.


The onward march of Linux falters – any lessons for OSS SOA?

Linux may be reaching a natural plateau with regards to corporate adoption as a UBS survey reported that 90% of CIOs not currently using Linux will not make the leap in 2007 (this is up slightly from 87% in 2006) according to a UBS survey reported on here and here.

In effect this means that those who are open to Linux are already using it and the hold-offs are mostly not about to change their minds any time soon.  This should not be regarded as some sort of ‘peak Linux’ type event as organisations already using Linux in some places will continue to extend their usage of the OS.  The report also reinforces the point that Linux is mostly replacing Unix rather than taking market share from Microsoft which is sometimes characterised as the target of Linux.  All of which really means that Linux is coming to the edge of its natural market – UNIX shops which can easily switch – and will struggle to break into organisations which are traditionally Microsoft only.  This does not mean that Linux is not wildly successful and making a lot of money for companies selling services around it.

Turning to OSS and Service Oriented Architectures, are there any lessons to be learnt?  At one level the Linux story bears very little relationship to SOA based projects – Linux was about the commoditisation of very mature specifications and technologies while software associated with SOA is comparatively immature (when compared to Linux/UNIX) and lacking in any specifications in many cases. Also, with Linux  the old established industry giants now rule (IBM et al with the exception of Red Hat as a new giant).  In contrast, OSS SOA is still mostly the preserve of startups (such as Mule Source , Bostech and  Sopera, as well as some integration specialists (IONA) and … Sun and Red Hat.

As I said above, Linux may be plateauing but at a huge scale.  Inevitably, OSS SOA will also reach its natural extent but the risk is that it may reach it before the service providers can achieve viable scale because right now the market for OSS SOA is large enterprises with java skilled developers who are willing to even consider the risk of replacing closed source integration products.  This is a finite market with a lot of incumbent solutions.  Moreover, this is a very tough market for any new solution:  evaluation processes are becoming more and more extended and even if selected the project may well be dumped as IT budget continue to be stretched.  [One could argue that the same challenges face the ‘closed source’ vendors but in their case they are able to extract more revenue from a small pool of customers and remain financially viable.]

Am I therefore saying that OSS suppliers are doomed in SOA?  Not at all – I believe that there is an opportunity for these businesses to succeed (and become the RedHat of integration perhaps?) but it will be a tough going.  In particular, it is a lot harder than suggested by most coverage of OSS which focuses on huge download rates and arguments such “Its free, developers love it, everybody will use it” and ignoring the real world issues around adopting any enterprise integration technology (which are mostly not related to the license fees).

Of course the OSS suppliers already know this and are developing different strategies to address the problem.  For instance, Mule Source is particularly focused on promoting community based development of additional components such as application adapters and transports – thereby deeping their engagement with customers and making it easier for customers to get a ‘complete’ integration solution – and has recently launched MuleForge to support this effort. IONA has been buying OSS expertise and has relaunched its OSS efforts (now called Fuse) deliberately focusing on the most popular Apache SOA-related projects with the obvious benefits of existing customer base and large pool of developers.  RedHat is also acquiring technology to provide strong data management capabilities by open sourcing MetaMatrix which is currently closed source.  Other suppliers have different ways to crack this nut but whether any of these strategies will succeed or fail is of course more complex than can be easily covered in a blog entry of reasonable length – however we will be addressing the area in upcoming Lustratus papers.


SAP relies on SOA to meet top customer need

SAP recently delivered a new wave of enhancements to its suite of business solutions, but as CNN Money points out, it is using service-oriented architecture (SOA) to address the top customer need of being able to bring new functionality on stream without impacting current workloads.

The point is that many companies use SAP packages to power their businesses, and anything that threatens to disrupt these key operations represents a major source of risk. So the problem becomes – how can you take advantage of new technology advances without jeopardizing your mission-critical operations? The traditional answer is to rely on extensive testing, both of the new function and, more importantly, regression testing to ensure existing workloads continue to function as expected. But the problem is that with large-scale deployments, such as often found with ERP packages like those provided by SAP, this testing cycle has to be so extensive that migration to a new product release can take years.

SOA offers another answer, as SAP has realised. Using a service-oriented approach, it becomes possible to handle migration activities in a piece-by piece mode. New functionality can be deployed, and new applications can take advantage of it, but at the same time these applications can drive functionality in the existing implementation ‘transparently’. Also, as existing applications become ready to exploit the new advances, they can be changed bit by bit rather than lock, stock and barrel.

I expect SOA to become used more and more by package vendors in particular as they strive to address what is often the top user requirement – don’t screw up my current operations.