Category: Research

In September, IBM made announcements that strengthened its position as a leader in services oriented architectures and established its position in the important Business Process Management market. While the company has long espoused services oriented architecture (SOA) as a means for organizations to create flexible, business-oriented computing environments, the recent announcements build on IBM’s existing SOA capabilities and add specific BPM products and tools, tying the two closely together. The results are a BPM offering with a strong foundation based on SOA as well as a seasoned services team and partner network to ensure customer success.
The product announcements related to SOA and BPM are focused around IBM’s WebSphere software, tying in Rational and Tivoli software as well as acquired software such as the CrossRoads and Ascential solutions. Specifically, the following products were announced:
– WebSphere Business Modeler, a business-analyst level tool for modeling and designing process flows for SOAs, based on the Eclipse application development tool.
– WebSphere Integration Developer, an Eclipse-based application development tool for IT to build and deploy business processes based on a services-oriented architecture.
– WebSphere Enterprise Service Bus (ESB), an ESB that provides connectivity and integration for Web Services-based applications.
– WebSphere Process Server is a new process server powered by WebSphere ESB that forms the foundation for IBM?s BPM solution.
– WebSphere Message Broker, a new version of the message broker that provides advanced ESB functionality to provide connectivity and data transformation for non-standards-based applications.
– WebSphere Business Monitor has been enhanced to monitor business process performance and provide a way to track key performance indicators.
At the services level, IBM announced new services specifically created to provide ongoing support for SOA deployments as well as IBM’s products and services into a more cohesive and complete solution offering for enterprises. Specifically, IBM Global Services has created three new services: SOA Governance; SOA Industry Teams that are focused on key vertical industries; and the upcoming Common Services Delivery Platform (CSDP), a repository of reusable software assets based on IBM and
third-party software.
Rounding out the announcement was the expansion of its SOA Business Partner Community to include a number of support tools for business partners in the community. These tools will make it easier for the more than 4,000 partners in the network to more easily market, sell and support SOA-based initiatives.
Upside Uptake
Upside Research believes that IBM’s SOA and BPM announcements will have a significant impact on the BPM market from a number of perspectives. The very fact that IBM is announcing a comprehensive set of products and services linking BPM to SOA is recognition that the Business Process Management market is maturing and has now attracted the attention and commitment of a software giant. IBM has long been committed to SOA, and by tying BPM closely to its SOA offering, it is clearly tagging BPM as a critical area of growth for enterprise computing. The additional services and partnerships that are forming around SOA and BPM further solidify this commitment and provide a layer of support and services for BPM that is significant in the enterprise BPM space.
As Upside Research has stated over the past several years, most organizations want to manage their business processes at the business level, making Business Process Management software a unique solution that requires close alignment of business users and IT for ultimate success. With this announcement, IBM has conveyed its understanding of the close ties between business and IT for business process success, and IBM is providing the tools for both sets of stakeholders to participate in creating successful business processes. The alignment of its business modeling tool with its integration modeling tool is an example of how IBM is trying to make the hand-off from business to IT seamless, contributing to faster implementations and ultimate ROI for BPM projects.
In recent reports on the state of the BPM market, Upside Research has identified monitoring, management and process optimization as critical components of a successful BPM solution. While most businesses have identified monitoring and optimization as important buying criteria for BPM solutions, there is not as much use of these functionalities in the trenches today. IBM’s announcement of WebSphere Business Monitor conveys its grasp of the market, and the understanding that optimization and monitoring are key capabilities for enterprise BPM solutions. While most BPM deployments for the moment will continue to focus on automation and monitoring of the existing processes, IBM’s product offering enables its customers to move toward optimization and continuous process improvement when they are ready.
Upside Research believes that the overall solution that IBM outlined is comprehensive and built upon the strong services-oriented foundation that resonates with enterprise organizations. IBM’s BPM offering provides those large enterprises with the tools for moving toward BPM, and customers that are already WebSphere and SOA converts will have a particularly easy path for adoption. For some customers, there may be a challenge involved in trying to extend or integrate the different products that make up the overall IBM solution with their existing products and environments. While
there is a benefit to the reach of the IBM BPM offering, it also brings with it complexity, and IBM will have to clearly articulate for customers exactly what the solution entails, including offering customers tactical ways to deploy the solution. In this respect, Upside Research would like to see IBM continue to refine its BPM offering to make deployment and implementation as hassle-free as possible.
As we stated earlier, Upside Research believes that the announcement by IBM provides validation for the Business Process Management market, while at the same time changing the competitive landscape. IBM has added itself to the fray, and represents a large competitor focused on enterprise deals, one that is intimately familiar with the needs of the enterprise for solution selling and support. This announcement will force pure-play BPM vendors to better articulate their particular value and strengths, playing up the value of a best-of-breed solution. And, it remains to be seen how this announcement will impact the BPM solution providers that are tied in closely to the IBM partner network and have relied on the network for business opportunities

The Details
Consolidation in the BPM market came this month in the form of a merger between a BPM pure-play and a relative newcomer to the BPM space. On October 5th, privately held Metastorm announced that it would acquire CommerceQuest, a longtime back end processing vendor who recently tried to gain a foothold in the emerging BPM market. The goal of the merger for Metastorm is to create an expanded BPM solution under the Metastorm brand, using a combination of Metastorm’s existing Metastorm e Work BPM suite and CommerceQuest’s EAI and BPM technology.
The combined privately held company will have a headcount of 160 and combined revenue of over $40 million. Metastorm will retain its corporate headquarters in Columbia, MD, and will continue to operate CommerceQuest’s former headquarters in Tampa, FL for product development, training, and professional services. The combined customer list for the new company will total more than 1200 across industries including retail, financial services, government, and manufacturing.
Metastorm is positioning the merger as a way to cement its leadership position in the BPM market, with increased size and financial stability as well as a more comprehensive technology offering. With the combination of the two companies’ technologies, Metastorm will be able to offer the market a BPM platform that includes tools for modeling and designing human-oriented as well as system-to-system processes, executing them across .NET and Unix/Java platforms, handling integration with back-end legacy and host environments, and supporting high-volume transactions. The company also plans to leverage the different customer bases and verticals that CommerceQuest has focused on to offer broader and deeper vertical market solutions.
Upside Uptake
Upside Research believes the results of this merger can have a significant impact on the BPM market if Metastorm executes its vision well. The two entities are complementary, filling in gaps for each other quite nicely.
Please note: This is a special, abstracted version of this Upside Update. For the complete analysis of this merger, including customer, technology, and sales implications, email us at info@upsideresearch.com.

BPM adoption continues to spread across all industries, as we hit the
halfway mark of 2005. No longer limited to obvious verticals like financial
services and manufacturing, BPM’s broad appeal is spreading to any company
with processes that require a workflow involving information, people, and
systems. Today, BPM solutions can be found in such diverse markets as
pharmaceutical, government, transportation, and healthcare. In our most
recent informal market survey, Upside Research saw the continuation of
previous patterns for adoption and implementation of BPM solutions, as well
as some interesting trends that highlight BPM’s impact on the greater
enterprise software solutions market. The following results indicate that
BPM is becoming an effective solution for many enterprises.
Sales growth continues but pace is more moderate. After several years of off-the-charts growth for many BPM pure-plays as they quickly ramped up their efforts and started signing marquees customers, the most recent check of revenues for BPM vendors indicates the growth has become more moderate.The average growth from the survey respondents between Q4 2004 and Q1 2005 was 20%, with many vendors adding between 10-20 new enterprise customers. A few vendors actually had no growth in the first quarter because of extended sales cycles, but have seen that business close in the second quarter.
EMEA seeing greatest increase. The majority of BPM sales continue to occur in North America, but there has been a significant increase in sales to Europe, the Middle East, and Africa (EMEA). This can be attributed to the efforts on the part of the vendor community and industry-driven organizations to educate global enterprises about BPM’s role in business strategy. Similarly, as many early adopters roll out enterprise-scale process automation, BPM is showing up in all corners of the world, sparking the global interest.
Adoption rates hampered by market confusion. While general awareness of BPM as a technology by the end user population has risen over the past several quarters, there still exists a significant level of market confusion. Because a variety of technologies are calling themselves “BPM, including Enterprise Application Integration, ERP, and Content Management, end users are confused by what constitutes a business process management solution and what components are necessary to solve specific business problems. Vendors are seeing more awareness of BPM, but are challenged by the market confusion, which is leading to longer sales cycles in some cases.
Technology synergies are emerging. As with any technology market, as the market progresses, complimentary technologies emerge as important areas of overlap. BPM is no exception, and the market has seen a growing interest over the past six months in several synergistic technologies. The greatest interest has been in business rules engines, either providing the ability to integrate with an organization’s existing rules engine or providing an OEMed rules engine to customers. Two other technologies, process modeling and simulation capabilities, have found themselves increasingly a part of the core BPM offering from vendors.
The Upside Uptake
The most recent survey results continue the trend that Upside Research has been following for more than two years: Business Process Management is a noteworthy solution for many enterprises. As the most recent survey results indicate, BPM continues to gain ground and grow from a trendy technology into a viable, enterprise-strength solution. The slower pace of growth indicates some of the bumps that BPM is hitting as it moves along the road toward mainstream technology solution. Enterprises are kicking the tires of BPM, but once they determine it can help solve some of their process issues, they are buying in a big way.
The continuation of development in emerging markets for BPM is also encouraging for BPM’s longevity. As the global market for BPM expands, so will the best practices and understanding of how to best leverage the technology. Upside Research expects this to continue, and for organizations to continue to find unique ways to apply BPM to their business problems. Because of the market confusion, Upside Research believes it is important for the BPM market to consolidate around several important pillars of functionality in order to firmly establish itself as an easily recognized class of technology solution. This consolidation should take place over the next 12 to 18 months and continue to sharpen the core focus of Business Process Management.
To read more about Upside Research’s analysis of its latest State of the BPM
Market survey, look for our upcoming report.

Details on the Deal
On March 14, 2005, IBM announced a definitive agreement to acquire Ascential Software, in deal valued at $1.1B and expected to close in the 2nd quarter of 2005. Once acquired, Ascential Software will report to Janet Perna, the GM for IBM’s Information Management solutions and is expected to be integrated into IBM’s WebSphere Information Integrator set of products. Ascential has partnered closely with IBM over the past few years on everything from joint engineering to joint sales to joint customer support. Originally an offshoot of the database company Informix, Ascential has leveraged its core ETL product as an engine for growth. Since 2001, the company has acquired numerous data integration-oriented technologies and companies, including Torrent Systems in 2001, for its parallel processing capabilities for managing large volumes of data, Vality for data quality capabilities, Mercator for transactional data transformation capabilities, and numerous other companies. Ascential and IBM share over 550 joint customers worldwide.
From IBM’s perspective, this acquisition completed IBM’s information integration offerings and rounds out their capabilities to cover both real-time, event-driven, access-in-place data movement and integration as well as high-speed, high-volume, parallel data movement, transformation, and data quality capabilities.
Key Success Factors
In order to make this acquisition a success, IBM will need to deliver on a few key success factors:
Maintain and strengthen its partner play, for both existing IBM partners and Ascential’s partners, as Upside Research believes that both will continue to play a key role in delivering information integration solutions to market.
Create a practical roadmap for Ascential’s products and how they will be rationalized against existing IBM information integration products. Build upon key integration points which already link IBM and Ascential products.
Outline how Ascential’s technologies and solutions will be integrated with the rest of IBM’s WebSphere software products, specifically in the areas of enterprise application integration and process integration, which are key focus areas for many organizations.
Help customers and prospects understand how to pick and choose which IBM/Ascential products to use when, and what the limitations are. Since Ascential has already acquired numerous companies over the years, IBM isn’t necessarily acquiring a complete product set that has a single, completely unified architecture, and thus it will need to move to help customers understand how the Ascential products it carries forward will mesh with both IBM’s products and the customer’s specific needs. Of course, Ascential has previously announced unified architecture initiatives (Hawk, Rhapsody) aimed at product unification with a common UI and integrated metadata repository, expected to be available in late 2005 and beyond. This unified architecture was one of the key factors for IBM in making the decision to acquire Ascential, and it will be important for IBM to re-affirm these initiatives and provide any additional details on changes that might occur in from leveraging parts of the IBM stack.
Upside Uptake
Upside Research believes this is a great acquisition for IBM, as well as for Ascential Software customers. For years, IBM has had a hole in its integration product offering in the high speed ETL area. With this acquisition, IBM has one of the broadest, if not the broadest, offerings in the data and information integration arena, with comprehensive capabilities for real time and historical information analysis. The acquisition compliments IBM’s existing WebSphere Information Integrator product line and we expect Ascential’s technologies to play a key role in future business integration offerings from IBM.
This acquisition is especially important for IBM because organizations are continuing to struggle with the integration challenges across their organizations. Even with existing data, application, and process integration technologies, organizations continue struggling to gain enterprise-wide views of the critical data, such as customer or product data. Solutions, such as Ascential Software’s Master Data Management solution which provide the capability to rationalize customer data across an enterprise through the use of repository, data transformation, and data access capabilities, are continuing to grow more critical as a result of this need for 360-degree views of customer or product data.
From the Upside Research perspective, Ascential Software compliment’s IBM existing offerings, specifically in the area of data placement, data transformation, and in delivering a robust infrastructure for meta data management. Its parallel engine and common meta data infrastructure provides a very scalable architecture for IBM and customers to use for high volume data movement, transformation and data quality management. In addition, some organizations have been struggling with the increasingly blurry line between different integration functions and software architectures, as EAI, ETL, and EII have all started adding complimentary capabilities to their core functionality and focus that blur the distinctions between competing products. As we’ve seen across the broader technology landscape, organizations are looking to consolidate their IT architectures, reduce the number of products and vendors, and work toward more integrated and strategic solutions. By acquiring Ascential, IBM positions itself well to address this increasing important market need and offer its customers a very scalable and comprehensive information integration architecture that spans from real time to high-volume mass data transformation and movement.
This acquisition will also put some competitors, such as Microsoft and Oracle, on the defensive in the area of information integration. In particular, Oracle has been developing robust data and information integration capabilities, as seen in their business integration products such as its Customer Data Hub and Product Data Hub, two solid products that enabled heterogeneous, enterprise-wide views and analysis of data.
Overall, Upside Research believes this is a strong acquisition for IBM, and although it will take some work for IBM to rationalize and integrate Ascential’s products with their broader integration and software product families, and that IBM, its customers, and Ascential’s customers will benefit from this purchase. By acquiring Ascential, IBM has the foundation for a universal information integration platform and one of the broadest integration offerings that the market has seen.

The applications of Business Process Management cross industries both vertically and horizontally. Opportunities to improve processes that run the business exist in all pockets of an organization, from back-office functions to customer-facing processes. Upside Research continues in its efforts to discover how companies are leveraging BPM for business advantages, and this Update takes a closer look at a company who is using BPM to continue its rapid business expansion plans.
If you’ve ever needed an affordable, quality haircut, than you’ve most likely heard of (or perhaps visited) Great Clips. With more than 2,300 salons across the United States and Canada, Minnesota-based Great Clips is the largest franchiser in the nation’s $50 billion hair care industry. With over 200 employees and more than 1,000 franchisees, Great Clips spends a significant amount of time establishing new franchises and managing its existing franchisee base.
Because expansion is such an integral part of Great Clips’ business goals, finding ways to better manage the many challenges that arise through adding new locations has been a key focus of the company in recent years. Like almost any franchise, there are hundreds of business processes associated with the establishment and launching a new store or a new franchise. Reducing the time required to open a store or to get a new franchisee up and running translates directly into additional revenue, for both Great Clips and the franchisee.
The Vice President of IT at Great Clips undertook a methodical approach to determining the best way to improve the current business processes at the company. He enlisted the help of a local consulting firm to assess the current environment and analyze current business processes, determining the best type of solution that would fit. The company considered building their BPM solution, but after looking at what needed to be accomplished, it quickly realized that building would exceed project budget and time constraints.
After an extensive evaluation process, Great Clips chose Metastorm’s BPM solution to assist in bringing efficiencies to its business processes. Great Clips liked the combination of a process environment with an application solution and the fact that Metastorm could integrate easily with the document management solutions the company was evaluating for purchase in the next year.
Upside Uptake
The “homework” that Great Clips accomplished prior to making its product selection is an important best practice that Upside Research believes others should study. By understanding exactly what the existing environment was doing and how it could be improved, Great Clips was able to move very quickly into production with its new BPM applications once it selected Metastorm. One of the biggest challenges that organizations have told Upside Research they face when embarking on a new BPM project is the discovery process, where they uncover processes and business rules that they hadn’t realized existed and must first take the time to understand them and incorporate them into the project plans. This causes unnecessary delays in BPM projects and can bring frustration on the part of team members as well as impatience by management looking for faster results.
Because of its thorough approach, Great Clips was able to get started with the Metastorm product the day the contract was signed, and is well on its way to meeting its eighteen-month project goal of automating almost 75 processes. Upside Research encourages other organizations to apply some of Great Clips’ best practices to achieve similar success with BPM projects.