Category: Research

IBM surprised the industry last week with an announcement of its acquisition of FileNET Corp., a leading content management platform provider. The $1.6 Billion cash deal is scheduled to close by the end of Q4 2006, and will provide a significant boost to IBM’s On-Demand Information Strategy, which seeks to provide customers with industry-specific, high-value solutions that capture and deliver content as part of a business process. This announcement follows less than a year after IBM announced its SOA and BPM Platform strategy, entering into the highly active Business Process Management market.
This combination of IBM and FileNET will create a massive powerhouse within the BPM market. Once the deal closes, FileNET will become part of IBM’s Information Software unit, with the senior management team at FileNET agreeing to help drive the business as it moves forward. Further details about product roadmaps or specifics about employee retention are not available at this time.
Among the goals of this acquisition is IBM’s desire to extend its BPM platform into more industry-specific applications. FileNET and IBM have both been successful with compliance-related applications of their respective BPM solutions, as well as some vertical success. Combining the content-centric side with the integration part of BPM will create more robust opportunities for industry-specific and compliance-based solutions that will benefit both IBM and FileNET customers.
IBM’s reason for pursuing the acquisition of FileNET is to capture the tremendous growth opportunities in the content-centric BPM market, of which FileNET is a clear leader. With more than 4,300 customers and a solid solution that has been around for twenty years, IBM is buying into a significant growth driver. The fit of the two companies will remain to be seen, but both FileNET and IBM claim they have very similar cultures, and the two companies have successfully partnered for a long while along a number of different product and solution lines, from DB2 to WebSphere and a successful installation track record.
Upside Uptake
Upside Research believes that this merger is a positive move on all counts. Both IBM and FileNET customers will ultimately benefit from the combined forces of leadership in BPM. IBM has long been an established leader in enterprise integration, and its evangelization of Services Oriented Architectures (SOA) as it relates to BPM has helped bring BPM to a new level in the past year. For its part FileNET has helped to build a new market for content-centric BPM out of a rather mature content management and archival market, propelling itself to the front of a burgeoning market. IBM has realized the benefits of acquiring an existing success in this market rather than trying to create its own solution in-house.
The nature of this merger brings to mind the merger late in 2005 of Metastorm and CommerceQuest, where Metastorm’s human-centric BPM platform acquired CommerceQuest’s strong, back-office BPM integration solution. At the time, Upside Research applauded the move as a strategic one for Metastorm to pull ahead in the pure-play BPM market. Since that time, Metastorm has been working diligently to integrate CommerceQuest’s product with its BPM platform, and its most recent release of Metastorm BPM 7.0 reflects the integration of the two companies’ solutions.
IBM is in a stronger position than Metastorm was with its acquisition, because the FileNET solution already runs on IBM’s platform, and will be easier to integrate once the merger takes place. This is a bonus for existing IBM and FileNET customers, because they will be able to readily leverage the combined entity after the merger. It will also enable IBM to focus on value-added services and enhancements rather than working at the integration level to get the products to work together.
Upside Research believes that the impact on the overall BPM market will be significant once IBM and FileNET combine. The two companies together will create a powerhouse that will have both breadth and depth, making it difficult for smaller companies to compete against it for larger solutions, especially if IBM is successful in creating more industry-specific solutions leveraging the FileNET technology. Upside Research believes that both pure-play BPM solutions and infrastructure BPM providers such as IBM need to continue to build their best practices and vertical expertise with pointed solutions that target their proven success areas in order to continue to grow the BPM market and their revenues.

Recently, Metastorm released an expanded and updated version of its BPM product line, Metastorm BPM Version 7.0. Metastorm is a well-established BPM company that has been working aggressively to expand its capabilities and customer base over the past few years. The company acquired transaction-oriented BPM vendor CommerceQuest in October 2005. The acquisition has added CommerceQuest’s strong system-oriented processing power to Metastorm’s existing human-centric business process management suite. The results are a “roundtrip BPM??? suite of tools that cover the full process lifecycle and are applicable to a wide range of deployment scenarios. Release 7.0 incorporates the technology acquisition (branded as Metastorm Integration Manager) with the Metastorm BPM suite and adds a Microsoft SharePoint client, enhanced Business Activity Monitoring features and integration with external event management engines. In addition, ease of use and the user interface capabilities have been streamlined and updated. With five consecutive years of growth, a track record of profitability, and more than 1,200 customers in 41 countries, Metastorm has grown to become a solid leader in the BPM market.
Upside Uptake
Upside Research believes that the combination of the human-centric and system-based solutions resulting from the acquisition of CommerceQuest by Metastorm gives Metastorm a competitive advantage in the market (see Upside Update from 10/15/05). Version 7.0 reflects the combination of the two products, and provides a clear basis for existing Metastorm customers to leverage the system-based strengths of Metastorm Integration Manager (MIM-the former CommerceQuest technology) in the Metastorm BPM suite.
Metastorm continues to grow its referenceable customer base. With more than 1,200 customers, the company is an established player in the Business Process Management market. The company has recognized the increasing popularity of Microsoft in the enterprise, and has made a strategic decision to align itself with support for Microsoft’s .NET platform and portal, while still maintaining an independence to support IBM WebSphere, Java, and web services. Upside Research believes this is an important balance to maintain. One key to Metastorm’s further success will be on capitalizing on this relationship and turning Microsoft-oriented customers into Metastorm customers. An important component of this will be the degree to which Metastorm can enable the use of Metastorm BPM components (and not necessarily the whole suite) in combination with Microsoft environments.
For more information on Metastorm BPM Version 7.0 and a complete Upside Reserach product brief on the product, visit the Upside Research Website – www.upsideresearch.com

Recently, IBM made a significant announcement updating the progress of its SOA-related products and services. As readers may recall, this announcement follows on the company’s product rollout last September (See Upside Research Brief from October, 2005) of a number of solutions that closely linked SOA and BPM and put IBM squarely in the BPM market. The latest announcement reinforces IBM’s leadership position in SOA and provides a number of significant product and service enhancements that reflect the company’s experience of how to effectively incorporate SOA into business processes.
The latest set of announcements for IBM reflect an extensive customer survey, where more than 1900 customers were asked about their experience with SOA and what they were looking for to successfully bring SOA to the enterprise. Among the results of the survey is a shift in focus on IBM’s part toward a “business-centric” approach to services oriented architectures. While many customers believed that SOA is important and even critical to their continued success, they were looking for solutions from IBM that clearly identified how to incorporate SOA into their everyday business practices. IBM listened to these requests and announced a comprehensive set of products, solutions, and services that can help its customers get started with SOA.
The newest set of solutions for SOA focus on five entry points for SOA, broken down by business oriented aspects (information, people, process) and IT-oriented aspects (connectivity, and reuse). This marks an evolution by IBM away from the traditional model, optimize, deploy strategy for enterprise BPM. The new five-entry-point approach enables both business users and IT to work together to build new services and automate processes around the major components of the enterprise: information, people, and processes.
There are 11 new products and 20 enhanced products that are part of this SOA announcement, and they cover the spectrum of the IBM product portfolio. In addition, eight new service offerings were announced to facilitate SOA implementation, along with the announcement that more than 90,000 business consultants are to be trained to assist with SOA adoption. IBM also announced enhancements to its SOA roadmap, and stressed its continued support for effective governance and management of business services and processes.
Using the Portal to Drive SOA and Process Optimization One of the most significant areas of development and new enhancements in this latest announcement is around the portal. While IBM’s Portal is already a market-leader, the latest enhancements reflect a significant shift in purpose for enterprise portals. No longer just a window through which to view information and participate in business processes, IBM is now providing the business end user with the tools to help develop business services and composite applications. With its WebSphere Portal 6.0 release, the portal now becomes a powerful end user tool to build SOA-based applications at the end user level. By enabling users to create their own applications and services through the portal, IBM is taking the initiative to meet a long-standing customer request to give users more control to help encourage SOA and process-driven information consumption adoption.
Another important component of the strategy to empower end users with the tools to build their own services and create business processes is providing a centralized method for storing and managing the resulting services. This is especially important in a distributed enterprise, and is critical for the end-user driven development to be successful. IT needs a reliable, way of managing the services that are created. IBM has added a repository to its SOA offering that can effectively store and manage all aspects of composite applications. The Web Services Service Registry and Repository provides the ability to store and manage metadata across both the development and the deployment sides of composite applications. It supports lifecycle management of all corporate assets related to SOA and enables policy enforcement around use and organization of services. Although it will not be released until later in 2006, IBM’s focus on this area of SOA lifecycle repository support is a very important consideration for organizations committing to an SOA approach.
Upside Uptake
SOA is more than tools and technologies. In order for enterprise organizations to effectively start to implement an SOA approach and gain the potential benefits available, they need to apply SOA tools and technologies, but they also need to have their business strategy coordinated with their IT strategy-something that IBM clearly demonstrates it understands with this set of announcements.
Implementing a successful SOA isn’t simply deploying some tools or converting some applications. A successful SOA strategy will harness the power of people, process and information to help drive a more efficient and effective business model. Deploying an SOA infrastructure without changing the way you deal with information and collaboration will limit the effectiveness of the solution.
An important aspect of refining business processes and transitioning to SOA is taking an information-centric approach-both to people and processes. In today’s time-sensitive business environment, people (and processes) need real-time visibility into business processes-but not just data. They need trusted information, delivered in context, that can become the driver for transformation, so the business can make the right set of decisions to drive their products and services. For example, some organizations are using the opportunity of transitioning to SOA to rethink the management of customer data (or-perhaps more appropriately-they’re using the requirement to rethink their management of customer data to transition to SOA). Master data management, or the ability to create a single view of the customer without writing dozens of custom applications, continues to be a critical task for many organizations and an example of one that will be well supported by IBM’s new announcements.
For many organizations, our research highlights that often the best way to approach SOA is to start with an underperforming process, analyze it, model it, optimize it, and then deploy and refine it using SOA or BPM technologies. While it may not be a complete SOA solution, each individual project should help the business evolve their business models into re-useable services that can be reassembled and redeployed in a real-time or dynamic fashion.
Upside Research believes that the latest announcements from IBM continue to solidify the company’s leadership position in SOA, BPM and process-driven integration and information consumption . Upside Research has continuously mentioned the importance of placing the tools for business process management in the hands of the end user. Without strong, active involvement by end users, business process automation and application creation will inevitably fail. IBM’s latest announcements are in alignment with this philosophy, and Upside Research is impressed with the scope of IBM’s portal-based tools for end user participation in composite application development and BPM. The new WebSphere Portal 6.0 places productivity tools in the hands of the end user and enables them to create composite applications that reflect their most pressing business needs. The results are a win-win for the enterprise. End users are involved and the applications reflect business goals, while IT retains the ability to manage and control the repository of services that can be used to create applications.
The up-leveling of its SOA message to the business level is another strong point of this IBM announcement. Upside Research is a strong supporter of ensuring that any technology solution has close ties to the business purpose and ultimate business goals. By moving away from the model/optimize/deploy messaging and toward the five-points-of-entry for SOA, IBM is making a theoretical technology approach fully tangible and consumable by its customer base. The enhanced products and new offerings combine to provide end users with a multitude of different ways to begin adopting SOA today. This is a critical aspect of building customer success stories, and IBM clearly understands what is at stake. While all of the components of this latest SOA suite of solutions are not currently available, they will be rolled out over the next two quarters, into the eager arm of the customer and partner base. Throughout this time, Upside Research expects that IBM will continue to set the bar for SOA adoption in the enterprise, and continue to innovate its product offering as its substantial customer base becomes further involved in adopting services-oriented architectures with a business-centric approach.

Tune into this on-demand Webcast to learn how BPM technology can help your organization design and model routine business tasks to deliver high business value and increase return on investment. Join noted industry analyst Dave Kelly of Upside Research and Stephanie Wilkinson of IBM to discuss what technologies are involved in a BPM solution and specific ways it can be leveraged for business success.
You’ll learn:
– How to achieve business agility by developing a service-oriented architecture that allows you to respond more quickly to market changes
– How to create and model business roles to streamline tasks
– How to align business and IT goals so that process improvements serve strategic goals
To access this on-demand webinar sponsored by IBM, visit http://www.bulldogsolutions.net/IBMWebSphere/IBW02282006/

he threats to corporate security are numerous, complex and unfortunately growing. The need for security has blossomed as our business practices have become more global, more fluid and have increasingly extended beyond the physical walls of the corporation. No longer are discussions about border attacks on a corporate network or worm and virus protection enough when it comes to corporate security. The sophistication and complexity of attacks from hackers are getting harder and harder to deal with. New business models are emerging to drive business growth and improvement in the bottom line, but they bring with them opportunities for new security risks.
Today, in the current global economy, corporations need to be sure they are building a comprehensive security approach that covers physical and logical security threat and processes to manage them. At the same time the expanding definition of identity management and the need to meet regulatory and corporate compliance efforts are forcing business leaders to rethink security. Upside Research believes that it is important for enterprises to have a full understanding of the latest security issues and risks their companies face and to develop an actionable plan for incorporating the necessary security measures to ensure success.
A solid security approach is one that follows a continuous loop of evaluating and assessing security needs, planning and building improved security measures and managing those security programs once they are implemented. Because security is such as fluid, fast-moving area for the enterprise, it is important to understand that a corporate security framework needs to be continually changing and adapting to the changing security landscape. Therefore, building constant feedback and input into the security model will help organizations to keep up with the latest security developments.
IBM Announces Two New Security Offerings Understanding the challenges that many enterprises face on the security front, IBM recently announced the addition of two new products for corporate security. The IBM Information Security Framework is an intellectual asset for organizations to use to build a comprehensive security plan that will address both the business risks associated with specific situations as well as the corporate risk-level and level of comfort for managing those risks. Using the framework, managers can identify what risks they face, and make informed decisions about how to address those risks. The framework helps enterprises identify the capabilities that are necessary to implement and prioritize security efforts, and measures improvements that result from the resulting security initiatives.
Another area of security that many organizations are paying increased attention to is identity management. IBM announced its Identity Management Services, designed to assist organizations in more effectively managing the entire identity lifecycle. Historically, identity management has been focused on managing user ID’s and passwords. However, in today’s fluid business environment, identity management extends beyond password management to enabling businesses to manage their access control from a physical and logical standpoint, incorporating new security technologies that go far beyond the scope of passwords and user ID’s. Additionally, many organizations are grappling with increased regulatory compliance, and they need to create security systems that support the latest regulations. IBM’s Identity Management Services are designed to assist organizations in managing and optimizing the entire identity management lifecycle.
Upside Uptake
Upside Research believes that the right approach to security isn’t just about sinking money in to prevent problems and looking around the next corner for trouble. It’s about understanding, quantifying, and measuring your current level of risk — both from an IT and business perspective – in appropriate areas, and then planning accordingly. Rather than throwing money or products at the problem without really understanding what that problem is, organizations should spend the time to assess their current security risks, and make informed decisions about where they should invest in security measures first. IBM has demonstrated a similar approach to security, and with Information Security Framework and Identity Management Services, customers can effectively assess their risks and act on that assessment.
IBM’s announcement addresses security from a number of critical angles. Because it is focused on the business-related aspects of security, Upside Research believes it does a good job of avoiding the technology trap, where new technologies and services are released for their own sake, rather than being tied to the direct goals of the business.
There is no question that enterprises are struggling with larger security problems, and offering frameworks and services that tie results back to the business goals is an important strategy for IBM to adopt. The framework avoids being too theoretical by providing organizations with a focused way to determine their security status and offering actionable ways they can improve their security. That being said, it still may be overwhelming to some organizations that are not as security-savvy as others. IBM provides an extensive list of products and other partners it works with to assist organizations in overcoming any trepidation. The key for the organization is to be sure to verify IBM’s ability to work with any existing products it has in place already.
The Identity Management Services offer a comprehensive portfolio of capabilities that will benefit a wide range of enterprises. As IBM has reported, many of its customers have been able to utilize the services to perform discrete and independent identity management projects. This is an important distinction to make, and Upside Research believes it is a particular strength of the offering, because it enables customers to target the exact areas where their identity management needs are most pressing.
Offering discrete solutions and components is particularly helpful for those enterprises that may be further behind the entire security curve than others. Tapping into IBM’s expertise in the security area enables those enterprises to adopt a solution that meets their current need but also fits into a larger overall identity management lifecycle, something that is nearly impossible to achieve with point solutions from niche vendors. Additionally, customers can choose whether outsourcing the identity management piece of their security infrastructure makes sense for their situation, and IBM is prepared to provide those services if necessary.
As we stated earlier, Upside Research advocates that enterprises spend the time to understand, quantify, and measure their current level of risk, and then develop an appropriate plan of attack. With its Information Security Framework and Identity Management Services, IBM is an experienced partner that can help overcome many of the security burdens that today’s computing environment presents.

Overview
While businesses continue to try to adjust to changing economic and market conditions, interviews conducted by Upside Research with leading global 2000 executives continue to highlight the role that process-oriented and rule-driven IT solutions can play in both increasing business opportunities and reducing business costs. In fact, Upside Research has seen several new products in the past few months that reiterate our prediction that one of the top trends of 2006 will be the impact that business process management and related technologies (including business activity monitoring and business performance management) have on an organization’s ability to proactively address IT and business concerns. As organizations implement successful process-oriented IT or business solutions, they begin to realize the benefits that effective process automation and management can bring to any area of the organization.
For example, one area that stands to benefit significantly from process automation and management is corporate finance. How well an organization manages its finances can ultimately determine success or failure of the company. Areas like accounts receivable and cash flow may not garner as much attention as sales and R&D, but they can be critically important to the success of the company. In a time when business leaders are looking for every way possible to cut costs and improve effectiveness, shining the spotlight on corporate finance is one of the best places to achieve real, noticeable results quickly. Consider the fact that reducing the days it takes for its customers to pay their bills by just 10 days can free up millions of dollars annually for an organization. The return on investment for a solution that can help optimize the business processes surrounding accounts receivables is measurable and can be significant.
While many large organizations rely on their ERP applications to manage financial components of the business, many of these ERP solutions fail to provide enough specific tools geared toward cash flow management. Understanding this situation, and the fact that corporate finance managers are being tasked with finding ways to tighten payment cycles and maximize positive cash flow, one vendor is offering a solution that speaks to the business need for financial performance management. Emagia, an eight-year veteran of financial management applications, announced in January 2006 a specialized process- and business rules-driven solution for helping corporate finance managers make the most out of their working capital.
Putting Working Capital to Work
Emagia’s Cash Flow Performance Management Suite is designed to help organizations optimize their cash flow-related processes and manage their working capital performance. The solution builds on the expertise Emagia has developed in its existing product suite, including Cash Outflow Manager and Cash Inflow Manager that are designed to provide intelligent automation and collaboration for accounts receivable and accounts payable processes. The suite can gather financial data from multiple systems throughout the enterprise, and consolidate the views of the performance of various financial applications into a cash flow forecasting tool and management dashboard that highlights performance and enables simulation, forecasting, and close monitoring of working capital performance.
While most of Emagia’s existing customers have been using its solutions that focus on process automation and optimization, the new Cash Flow Performance Management Suite offers the next step toward cash flow optimization. Adding a management dashboard and tools for forecasts and simulation, Emagia is targeting corporate finance directors that are eager to find ways to maximize working capital. According to Emagia, most customers can be operational in twelve weeks using Emagia professional services, and the solution is geared to be hands-off for IT, enabling business managers to modify goals, and conduct simulation and forecasting exercises independently.
Upside Uptake
Throughout the next few years, Upside Research believes that we’ll see an increasing number of specialized enterprise solutions (such as Emagia’s Cash Flow Performance Management Suite) taking advantage of new process- and business rules-oriented technologies.
Using Emagia, corporate finance managers can more easily view consolidated data about cash flow performance and make more accurate forecasts and predictions. This is critical information that can make a significant difference in the day-to-day operations of a global enterprise. Emagia’s solution replaces Excel spreadsheets held by various departments and locations that are often inconsistent and error-prone. Several of Emagia’s customers have seen impressive results from using the company’s cash flow management tools. For example, a large enterprise reduced its Days Sales Outstanding by 15 days using Emagia, saving roughly $14 million annually. Another company used the solution to consolidate all of its accounts receivables into one system, automating country-specific accounts payable processes and enabling cash flow forecasting and decision support that was previously impossible with the old systems.
Upside Research believes that solutions such as Emagia highlight one of the next chapters in business process management and process-oriented applications. As BPM vendors still work diligently to claim real estate in enterprises with a broad solution that can solve many process-related issues across departments, we believe there will continue to be a growth of specialized software vendors that focus on specific vertical markets or vertical areas within the enterprise. Emagia has demonstrated its singular focus and expertise in the finance area of the enterprise. The resulting solution is intended for IT to install it once and then let it run relatively hands-free.
As a result, the buyers of this type of solution are predominantly finance managers, credit and collections executives, CFO’s, controllers and VPs of Finance. IT’s minimal involvement make it an easier sale directly to the business side of the organization, whereas traditional BPM platforms must successfully marry business and IT participation. Upside Research believes this may be a way for specific point applications to be more quickly adopted into the enterprise, and it makes sense from a sales strategy perspective for vendors such as Emagia. Look for other similar specialized applications to expand the edges of BPM and BAM technologies as organizations continue to look for ways to quickly and cost-effectively streamline manual processes and achieve business optimization.