Monthly Archives: May 2009

Are we living in SOA?

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ebizQ is running a great complement of industry forums (www.ebizq.net/blogs/ebizq_forum/2009/05), which provide me with posting stimulus. I just posted a comment in the SOA forum, which I want to share here. The topic is “Do You Believe SOA Related Projects Will Increase or Decrease in the Future?”. It reminded me of the initial pitch we developed to explain SOA, and with the continuing noise around “is SOA dead” I think that it is a good occasion to bring it up again.

I want to give credit to my past colleague Avishai Shafir (presently Director of Product Marketing at BluePhoenix), who came up with the idea of the analogy: Imagine a world in which we have to supply all our needs on our own… – that would set us deeply back in time, won’t you agree? If you think about it, modern society is based almost exclusively on services: Trade, Health, Transportation, Finance, … and these services are founded upon Specialization, Standardization, Regulation and Scalability, among others. Come to think of it, we live in a SOA! Yet in the IT world, we’re still very much in the primitive autarchic era in which every solution/application has to supply all its needs on its own. Now, imagine how far could Business Technology (that’s the next thing beyond IT) evolve with SOA and ubiquitous services – may be as far or even beyond what modern human society achieved by building on a SOA.

So let me supplement this with a question of mine – Do you agree to the statement that we are living in SOA?

 

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Enterprise 2.0 Applications actually deliver their promised value

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Last week I spent a lot of time going over case stories around application platform, trying to crystallize drivers and benefits. Yesterday came up a very related question at the ebizQ Web 2.0 Forum (www.ebizq.net/blogs/ebizq_forum/2009/05), in which I am a regular commentator: In What Area of an Enterprise is Web 2.0 Most Underutilized?. Here’s my comment on that.

While collaboration at large (including wikis, blogs and networking) is probably the most widespread Web 2.0 practice to penetrate the enterprise, I find that Enterprise 2.0 applications and UI’s are the most underutilized. That is understandable, since it is in that area that enterprises have extensive investments and legacies, and changing and evolving applications is complex and expensive. Yet, that is probably the area that will have a very significant business impact. We start to see the first implementations, which are indeed delivering the expected benefits. Here’s a recent example I came across – a project which I think is pretty representative of Enterprise 2.0 applications – in the general context of Web 2.0 and “millennial” lifestyle.

The enterprise at the heart of this story produces an innovative “millennial” outdoors consumer product, which is taking its time penetrating the market. In order to accelerate the penetration, they decided to accompany the web and viral marketing campaigns with group events, in which they let groups experience the product. That required their channel partners to organize such events, publish details, register participants, and handle the logistics. The solution had to deal with a combination of requirements that are usually handled by distinct software product – Content Management, Process Management, Procurement, Accounting, Resource Allocation and more. The business case did not justify a long and expensive project and the acquisition and integration of several systems, and this was well beyond the scope of Situational Applications. so the CIO saw here an opportunity to use one of the new platforms that claim agile development and Enterprise 2.0 capabilities. The objective was to provide the various functions in a “cloud” manner, from a single location and a single application to partners and visitors wherever they are. The specification described a Rich Internet Application for the use of the channel partners and implementers, and a dynamic web portal to promote the events and handle registration. Using one of the new RIA platforms (Magic Software’s uniPaaS in this case), they were able to address in one project the varied user personas and use cases, with the appropriate mix of Browser based interaction for visitors and rich interactive clients for power users – all part of a single application. Moreover, given the pure Web Architecture, the entire deployment is in a single data center and no local installation is required. It enables to on-board new partners and scale up the channel with practically no IT hassle – a truly agile operation.

I think that one of the reasons for the slow adoption is also the scarcity of appropriate application infrastructure. But it is probably only a matter of time before this would change.

The widening gap between SaaS demand and supply

The growing customer demand for SaaS solutions and the shift from perpetual license models bears mostly bad news to the traditional software industry. The high margins of applications vendors cannot be sustained in a SaaS model, nor the extensive and expensive on-site consulting and services of large SI’s. Worse, the switch to the new models is very costly. In order to develop and deliver a SaaS solution, a vendor needs twice the capital – and it takes at least twice as long to break even. Vendors who already service a customer base have thus to more than double their costs by maintaining virtually two businesses – one to continue and serve their on-premise customers, and one to develop and later deliver the SaaS version. Once this is achieved, they have to maintain two code bases on two different platform and technologies.

In the current business and investment climate, it is almost impossible for vendors to engage in such transitions and investments – they are more busy with survival.

So at present we have a growing demand for SaaS, and a stagnant supply of some 40 successful SaaS solutions that has little chance to grow and match the demand for more variety, due to the technical and financial barriers mentioned above. Consequently, we could expect some M&A activity as successful SaaS vendors would acquire failing traditional vendors with good IP, and then start porting that IP to their platforms. But that would take a few years – until new solutions become available in quantity.

Which means that we have a growing vacuum – on one hand stagnant supply, and on the other growing demand. Hence the increasing recognition of hybrid models and the appearance of application platforms such as Longjump and Magic Software’s uniPaaS, positioned to can take advantage of that vacuum and grow on it.

SaaS Enabled Application Platform (SEAP) vendors who already have an ISV ecosystem, like Magic Software, might alleviate this situation. I’m familiar with Magic Software’s ecosystem, so I’ll use it as an example. It consists of quite a lot of ISV’s (about 2500) with a broad variety of vertical solutions. Many of them are small, but their continuing existence over the years means that they have good competence in their line of business and loyal customers. Some of them are more professional and have compelling and leading solutions, such as Intelys (French market leader in Real Estate ERP), Creativ (Swiss market leader in NGO ERP) or Dove Tree Canyon (US leading provider of Warehousing and Distribution solutions). Many of these ISV’s see the expansion of their offering to SaaS as their growth path. To do so, they’ll have to migrate to uniPaaS and RIA they will have to improve their User Experience and processes to match current best practices. Yet all this effort would require a fraction of the cost and time compared to traditional vendors, and be much more sustainable. They would be able to pursue a more balanced business model with both short-term on-premise revenues and longer term SaaS based revenue, and fill up the growing vacuum in SaaS solutions.

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“Private Cloud” and RIA gain momentum alongside SaaS

I wanted to share with you some results from a campaign we’re just concluding. The campaign targeted at CIO’s and Chief Architects of Switzerland’s large enterprises. We asked them about their interest or experience with RIA and Cloud development and implementations. Over 16%  responded positively – are both developing in-house and considering RIA’s.

I think that we see here a fundamental architectural shift, which is more visible perhaps in the SaaS application market but is nevertheless gaining significant foothold as “private cloud”.

It might be useful to segment the SaaS phenomenon between the Usability aspect and the Business Model. Private Clouds and RIA go after the Usability, which I start to think is a stronger driver than the Business Model.

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The coming out of the hybrid SaaS model

The current controversy that considers SaaS as mutually exclusive with On Premise is, in my view, more related to the current state of technology, than to business or functional issues.

Clearly, if On Demand applications have to be developed and deployed on entirely different platforms and technologies (RIA and multi-tenant) than On Premise applications (Windows and JEE or .NET), then it is difficult, cumbersome and costly to support both.

 The topic is not a theoretical issue – I consider it the critical enabler for the growth of SaaS. The majority of ISVs are facing a tough challenge when it comes to offering SaaS as they and their customers are looking to cut costs, yet to offer a SaaS portfolio an ISV is faced with a potentially large upfront investment needed to offer a SaaS version of their products. I will expand on the ISV challenge in a separate post.

 That is not a pipe dream – the first application platforms that supported this proposition (Magic Software’s uniPaaS) hit the market almost a year ago, and just recently PaaS provider Longjump announced an On-premise version of their PaaS. There’s even persistent speculation that Force.com would follow suite.Clearly, on-demand business requires a different business approach than on-premise – but I view it rather as a super-set than a mutually exclusive path. And as we see in the SaaS integration business, many vendors offer a SaaS pricing models to on-premise installs – and doing so for applications should not be much different (assuming customers provide a compliant infrastructure and operate it).

 Now, consider the proposition in which the same application platform (and consequently application) supports various deployment modes (single and multi tenancy, Fat, Browser or RIA client). The Client appliance aspect becomes immaterial. A software vendor using such a platform can unify its development and support cycles and have a single cycle of updates and upgrades. The SaaS hosting center (and not necessarily only one) becomes yet another “on premise” customer, hopefully with many more users than a “regular” on premise customer. And customers have the power of choice and can evolve and migrate their software usage in accordance with the evolving business requirements.