Category: Research

As anyone who’s gone to a party or movie theater knows, the social impact of the cell phone has been enormous. Cell phones have dramatically altered the social landscape, social etiquette (since when is okay to take a phone call in the middle of a face-to-face conversation?), and social networks.
– Originally, cell phones were just tools. They enabled individuals to make and receive calls when outside their office or home. Today, cell phones have morphed into the hub of an individual’s digital universe. While older consumers still mainly use cell phones for telephone calls, young consumers email, text message, purchase music, take pictures, make videos, watch TV, and surf the web on these all-purpose communication devices.
– Cell phones and mobile digital devices will increasingly shape the fabric, content and form of social interaction for years to come.
– At a macro level, digital devices are enabling market-changing options (digital downloads of videos, music and more), while at the personal level digital devices enable friends and family to share information, pictures, videos, voices at
– Cell phones and digital devices are reshaping every part of our lives—don’t be surprised if you walk into a funeral parlor at some point in the future and are offered digital downloads of pictures, videos or the favorite music of the deceased. From cradle (with instant pictures beaming out to family and relatives) to grave, cell phones are dramatically reshaping our social lives.

On Wednesday, August 1st, another merger was announced in the Business Process Management (BPM) market. Metastorm, a pure-play BPM vendor and one of the early leaders in the BPM market, acquired Proforma Corporation, a vendor of enterprise modeling and business process analysis solutions. The combined company will provide a unified solution that enables organizations to analyze, plan, and execute their enterprise architectures and models. After the acquisition, Metastorm will have roughly 300 employees, more than 2600 customers, and have projected revenue of $70 million for 2007.
Metastorm envisions that the new company will offer three different product lines to its customers, which can be purchased separately or together. Metastorm ProVisionEA will be the re-branded Proforma solution for enterprise architecture, enabling organizations to model their enterprise assets and relationships. Metastorm ProVisionBPA will be the re-branded Business Process Analysis suite from Proforma, offering process modeling, simulation, Six Sigma, and other optimization methods. And, Metastorm BPM is the existing Metastorm Business Process Management suite for lifecycle process management of both human-centric and integration-centric processes.
Metastorm’s goal is to provide the entire interoperable product portfolio by the end of 2007 using Common Interchange Format (CIF) to interoperate. By early 2008, Metastorm plans to have a common meta model and metadata platform for all products.
One of the main catalysts behind this acquisition is Metastorm’s belief that it can deliver more value to its customers if they start to think on a larger scale, moving beyond business process automation to creating an enterprise-wide strategy for business optimization, using BPM as the execution engine for an enterprise architecture. While customers benefit from automating individual processes, and there are many such processes within an organization to automate, Metastorm believes that the real value will come with an enterprise plan for business optimization, of which process automation is one component.
The Upside Uptake
This acquisition accentuates an undercurrent in the BPM market that Upside Research has been watching develop over the past year. As the BPM market continues to mature, there are a number of factors that make it ripe for consolidation. Not only are the initial pure-play vendors looking for ways to further define their value propositions, but large enterprise vendors from other related markets are looking to gain from BPM’s allure. Metastorm’s acquisition is a good example of the types of changes we will see as the BPM market continues to mature.
Since having a process execution platform is a pre-requisite for competing in this market, vendors are stretching themselves in various directions to make that platform more complete and able to meet the needs of the enterprise customer. BPM vendors have added modeling, simulation, testing, and optimization functionality, along with rules engines, portals, and a variety of back-end integration connectors. Some have done this organically, while others are looking for a faster means to an end, making acquisitions and mergers the perfect choice.
With the Proforma acquisition, Metastorm is differentiating itself from some of the other original, pure-play BPM vendors. While other BPM vendors have developed partnerships with enterprise architecture and modeling solutions, Metastorm’s acquisition of Proforma is a solid statement of their vision of the breadth of solution required for real, strategic business process management. The acquisition helps move Metastorm closer to competing against some of the infrastructure-oriented enterprise software vendors (i.e. IBM, Oracle, and EMC) that have made BPM their focus over the past year or two.
Upside Research believes Metastorm is taking a step in the right direction in seeking to expand its platform. The company successfully acquired CommerceQuest, a back-end transaction-oriented process management solution, two years ago, enabling its BPM platform to provide “round-trip BPM,??? an important differentiator in the growing BPM market. Previously, Metastorm had been known for its “human-centric??? BPM solutions, and adding CommerceQuest gave it some back-end legs and the ability to move further into the IT infrastructure.
Choosing an enterprise architecture vendor this time around brings a different focus. It will provide Metastorm with the ability to move its sales pitch further up the corporate ladder, and also more firmly toward IT, rather than the line-of-business managers that Metastorm has had success with in the past. However, this merger also brings a challenge for Metastorm to re-align its sales force to make that enterprise sale. The combination of enterprise architecture, business process analysis, and BPM is not necessarily an intuitive one, and therefore Metastorm faces a certain level of education in the market to convince its installed base and prospects that the three go hand in hand. Upside Research believes that all three technologies have merit and can optimally provide enterprises with a stronger value proposition than each separately. The key will be clearly defining how modeling enterprise assets can be more effectively and more quickly executed using a BPM platform.

HandySoft was an early player in the pure-play BPM market. The company’s BizFlow solution gained attention early as a flexible process management tool that was particularly adept at helping organizations manage their compliance needs. After releasing several SOX-based and compliance solutions, BizFlow gained a large following in the government vertical, and currently 35% of its customers come from this market segment, including 40 agencies of the U.S. Government. Recently, HandySoft released OfficeEngine, a thin client application that is designed to enable all corporate users to bring workflow and task optimization to their existing business productivity environment, namely Microsoft Outlook. With OfficeEngine, HandySoft is positioning itself to bring BPM to every corporate user through a vehicle they are already using. The company hopes to recharge its BPM market visibility and add to the more than 300+ customers it has around the globe
Upside Uptake
The positioning of OfficeEngine is an important departure from traditional BPM solutions, where enterprises need the entire platform to enable the process automation and optimization. With OfficeEngine, HandySoft is encouraging all business users involved in workflow situations to capitalize on the promises of BPM without the heavy structure that is typical. By introducing a thin-client BPM application that can be embedded into the all-pervasive Microsoft Office, HandySoft is offering business users the ability to become their own process creators and optimizers. The challenge lies in adoption, because it is always difficult to convince someone to use a new productivity tool. However, if HandySoft can get business users to try OfficeEngine and they are able to easily accomplish what the product promises, than HandySoft may be able to recapture the attention of corporate process managers who are tired of the longer, more traditional route to business process optimization. Building referenceable customers will be a key to the success of OfficeEngine, and the faster HandySoft can do this, the more quickly adoption of OfficeEngine will be poised to take off.

The emergence of BPM software as a service is continuing with an announcement by Lombardi recently. On April 30th, Lombardi released its new Blueprint solution for general availability. The software is available in a hosted model to business customers, and reflects the move in the enterprise computing market to leverage software as a services-based solutions. Lombardi Blueprint is designed to promote collaborative process discovery, which equates to providing operational-level business managers with a tool to help determine the best place to start with a BPM initiative. As a hosted application, Lombardi Blueprint is free on a personal basis, or for a team account of up to ten members, is available for $500 a month.
According to Lombardi, the genesis for this product came from the goal to help customers shorten the average three to six months it takes for a business to prioritize its business processes and select one for an inaugural BPM project. Part of the time is spent discovering the business processes and determining which one will be best for BPM. Blueprint provides collaboration tools among team members for the discovery process, as well as a repository for users to document their regulatory needs. All of this information is stored in XML, making it easily exportable into any other BPM suite. Of course, Lombardi also provides seamless connectivity to Lombardi for Teamworks, the company’s comprehensive BPM suite.
The Upside Uptake
Software as a service is taking off in a big way, and it is no surprise that the BPM market is hopping on board.There are BPM companies that are considering or launching similar initiatives around hosted services, as a means of testing the waters. Upside Research has felt that this is a viable model for some time, and is encouraged by the recent attention to this model in the BPM space, especially by a pure-play BPM leader like Lombardi.
The advantages for the customer are significant, including the ability to get up and running quickly, the lower costs, and the flexibility of a web-based service. While a full-blown BPM suite would be difficult to offer in a hosted model, especially with all of the necessary integrations to back-end systems at the customer site, Upside Research believes there are a number of peripheral services and tools in the BPM arena that lend themselves well to a hosted or services-based model. We look forward to seeing the BPM market get creative with this software delivery channel as businesses become more comfortable using this model for enterprise-scale business tools.

BPM is about business and technology, but it’s also increasingly about standards. Over teh years different BPM-related standards have been developed and are continuing to be developed. One of the latest is OMG’s BPDM, approved in March at OMG’s San Diego meeting. While Phil Gilbert, CTO of Lombardi has a good analysis of this event in his blog, I think the topic is worth a few words of discussion.
BPDM, or Business Process Definition Metamodel, is a specification that works in conjunction with BPMN and provides the specfiication for how to serialize (or save) BPMN in a platform-independent way. In other words, it will provide a way to export, save, and import BPMN across different products and platforms. That’s a very good thing. Of course, it won’t solve anyone’s immediate process problems, nor will it necessarily make it easier for companies to select or deploy BPM-based solutions in the short term. But I believe that it’s an important step in the right direction for businesses (and software vendors) in the BPM space.

In an interesting development last week, webMethods announced that it would be acquired by Software AG in a cash buyout deal valued at $546 million in cash, roughly a 26-percent premium over its stock price. The combination of the two formidable software companies is an interesting one, and brings with it many rich areas for discussion. At the highest levels, it appears that Software AG views this acquisition as a way to gain a stronger foothold and greater visibility in the US Market, something it has been less successful with in the past.
Software AG has a strong basis in SOA, enterprise integration (especially legacy integration) and has developed XML-based servers in recent years to match customer demands. In contrast, webMethods has done a remarkable job in the U.S. since its founding in 1996, growing its enterprise application integration (EAI) solution into a market-leading BPM/BAM composite application platform with SOA support.
The combined forces of the two companies will have 4,500 customers (doubling Software AG’s North American customer base) and potential revenues of about $1.3 billion/year. The combined company will focus on five technology areas: SOA governance, BPM/BAM, application composition, application integration, and legacy modernization. webMethod’s flagship product, webMethods Fabric, is positioned as an application composition platform, although it also incorporates the company’s strong integration capabilities with its equally impressive BAM solution. Fabric will be the second application composition platform for Software AG, which currently offers its own under the brand Crossvision.
Upside Uptake
What does this mean for the BPM/BAM market? In general, Upside Research has been a fan of webMethods’ solutions and its increasing foothold in the BPM market the past several years. webMethods Fabric has gained momentum and has become more recognized in BPM circles in the past several quarters. Software AG is a powerful company that has had limited success growing its visibility in the US, and the webMethods acquisition could position it well to be a major player. However, this will require a US-focused marketing approach and presence with a cohesive story to existing customers and prospects about how the newly merged technologies and products will meet market demands.
Key to the success will be the need for Software AG to establish a clear and concise direction to maintain the momentum that webMethods has achieved in the U.S. market. In short, we believe it’s critical for both companies that webMethods not fall into the “acquisition black hole.??? If the companies are successful in their merging of technology and product lines and plans, then Upside Research believes the new company will be a formidable competitor in the converging SOA/BPM/BAM markets. With strong enterprise and legacy integration capabilities, a composite application development environment, business process optimization functionality, and BAM tools, the new Software AG may finally have what it takes to step into the ring with some of the biggest enterprise software vendors in the U.S. Market (IBM comes to mind.). For this to happen, though, the execution of this acquisition will need to be seamless and the webMethods brand may need to be preserved and leveraged to its greatest potential.

On February 26th, EMC, a storage management leader, announced its comprehensive product offering for Business Process Management. The company, which is the sixth largest software company with annual sales of $4.25B in 2006, is bringing an impressive portfolio of integrated solutions for managing content and optimizing business processes. The solution, Documentum Process Suite, includes a number of organically grown process management components as well as the integration of ProActivity’s Business process analysis and business activity monitoring capabilities, which EMC acquired in 2006. The combined platform provides lifecycle BPM, including the ability to handle content management, business process simulation, process execution, process monitoring, and ultimately optimization.
While EMC is not currently a well-known name in the BPM market, the company does report that several enterprise customers are already seeing impressive results from using Documentum Process Suite. For example, computer manufacturer Gateway reduced its order-to-ship cycle time by 75% within six months by implementing an improved process. There are a number of other marquis customers that are building business-critical processes with EMC’s solution, including Wilmington Trust, Bear Stearns, SYSCO, and Morgan Stanley.
EMC is fully committed to entering the BPM market, and its goal is to become a leader in the space. The company puts process management at the top of its stack of comprehensive functionality, believing that it can differentiate itself within the market by providing the critical underlying infrastructure to that lifecycle BPM. For example, EMC offers content management, repository services, storage systems, and archival capabilities. It has made efforts to move BPM to the forefront through its partner network, and further investment in its marketing and sales initiatives.
Upside Research is intrigued by EMC’s endorsement of the BPM market. While we’ve seen many BMC pure-plays continue to build their niche in this crowded market, and some software giants (e.g. IBM) enter the fray, EMC brings an entirely different perspective to BPM. Could this perhaps mean that BPM is the uber killer app? This title is not new for BPM, and while that entire nickname reeks of trendiness and fads, Upside Research believes that BPM has staying power, primarily because it delivers results, within a reasonable timeframe. When Fortune 100 companies can use BPM to reduce their order-to-ship cycle time by 75%, that is worth listening to.
So, we’re glad to see EMC in this space, and believe it will only help the rest of the BPM market clarify what products and services it has to differentiate their relative offerings, making it ultimately easier for the customers to determine which solution is the best fit for them.