Category: Upside updates

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.

We recently spoke with Intalio’s founder, Ismael Ghalimi, to get the scoop on open source BPM. The company moved to an open source code model in February 2006, and has spent the past year making the transition. This includes eliminating a direct sales force and focusing on organic growth, acquiring new customers through training programs instead of traditional sales force initiatives.
Intalio BPMS Community Edition is an Eclipse-based development environment used by business analysts and developers. It is available free from Intalio’s web site, www.intalio.com, and includes a BPM server and workflow capabilities.
Once a company downloads and starts using the product, and they have a clearly defined process they are automating, Intalio recommends they purchase a subscription to Intalio BPMS Enterprise, which offers patch updates, extra features, and other standard enterprise software license protection.
We were intrigued by the thought that Intalio has streamlined its operations and cut out the entire direct sales/marketing component to make itself a leaner company. Ghalimi explained that the main revenues are coming from customers that convert to the Enterprise subscription. In addition, Intalio makes money from people attending the training sessions that Intalio schedules around the globe to help new customers get up and running more quickly with their first process.
The results of Intalio’s efforts are encouraging. According to Ghalimi, the company has grown from 12 customers two years ago to 125 customers today, in 22 vertical markets and from 23 countries. All this essentially without a traditional sales force. 7,500 companies are using Intalio BPMS Community today. The goal is to convert them over time into subscription customers. To assist in this effort, Intalio has recently added a vice president position to head up its telesales operations.
On the operations side, the company is also going lean and efficient. It had outsourced engineering initially to the Ukraine and now is working with developers in China. Ten engineers remain at Intalio headquarters in California to architect the product and manage the development efforts. Similarly, technical support is outsourced to India, where the staff rotates every three months between QA and technical support to improve service to the customers. With all of this operational efficiency, Intalio hopes to be profitable by the later part of 2007, an good feat for a company that has made such a tremendous transition over the past year.
Apparently, gong organic can be good for you after all.

IBM Announced today the latest version of its Enterprise Content Management solution, IBM FileNet P8 4.0. The solution reflects the successful integration of FileNet following its acquisition in 2006. The capabilities that IBM has focused on for this release center around three main areas: content, process and compliance.
Compliance is King for IBM Customer Base
IBM has made a significant focus on records management and compliance as the major drivers for much of its customer base in 2006. With 23 of the top 25 banks and 24 of the top 25 insurance companies, it is understandable that for IBM, compliance and records management are at the top of the list for its product functionality build-out. Upside Research has not seen this deep focus on compliance across the broader range of BPM vendors, but believes it makes sense given the strong content focus for IBM’s and FileNet’s ECM solutions.
Dual product lines continue to evolve for 2007
One of the areas that IBM emphasized was to reassure its customers using existing IBM content management products and those using heritage FileNet products that both product lines would continue to be supported and evolved through 2007. The company’s message for its sales force to take to market is that it will enhance and maintain the IBM heritage Content Manager product, but at the same time, see if there was an opportunity for BPM in the customer account, and what User Interface would be most appropriate. Thus, customers can keep using what they have and plug more in as they need new functionality.
Operation Tango
The 1,200 developers that are dedicated to the Enterprise Content Management space have begun to work together, under a strategy called Tango, to find commonalities and overlaps and work toward complete integration of the two solutions into one integrated Enterprise Content Management platform by Q3 2008.
Agnostic Platform
Another commitment that IBM made was to continue to build out its support for all the other market leaders in databases, application servers, web servers, and user interfaces. The company claims 19% market share for ECM currently, and understands that if it wants to grow that to 30% it will have to support a wide range of other platforms and applications.

– First, a big event in 2006 was Oracle’s announcement of direct support for Linux, the same level of support it provides for its database, middleware and applications. By charging substantially less for Linux support than it’s partner, Red Hat, Oracle made a dramatic move that will affect how organizations purchase Linux.
– 2007 will be a big year for Open Source and Linux, with new Linux releases expected from Red Hat, Novell and other important Linux players.
– Linux will make greater penetration into the appliance market.
– Oracle will become an even more important Linux player. With Red Hat, Oracle pulled a Microsoft “we’ll love you to death??? approach, where it’s cozied up to them, obtained a strong relationship and build customer demand and then taken over and undercut its partner in delivering Linux support.
– However, a key remaining question is how little (or much) the Linux market may fragment as a result of this type of move by Oracle—as happened with Unix a decade ago, the pull exerted by individual vendors to serve their own interests, rather than the community’s interests, may eventually cause incompatibilities among different Linux varients.
– Linux on the desktop, as a replacement for Windows or Windows-applications, will continue to be a non-starter-even with (or perhaps, in spite) the roll out of Microsoft’s Vista Operating system and the next generation of applications.
– Open Source vs. Microsoft. Microsoft release of their new operating system will suck a lot of oxygen out of the room for the first half of the year. Most organizations will be too wound up in analyzing their opportunities or costs of upgrading to make Linux decisions. I do expect some companies to migrate to Linux after the evaluate the new Microsoft OS, but I believe that Microsoft will be offering a compelling combination of functionality and pricing that will not make the “move to Linux??? decision any easier.

– I believe that digital recording of television programming is going mainstream in 2007. As more and more people receive video-enabled iPods or Microsoft Zune portable audio/video players for the holidays this year, they’ll need digital content to put on those devices. Since (in most cases) it’s still difficult, if not illegal to put copy (or rip) your existing DVD movies into formats for these players at the moment, a great place fill up your devices is by using digital recorders (DVRs such as Tivo or media-enabled PCs) to record TV shows or movies and transfer them to your device.
– For many consumers, all-in-one devices such as Tivo (the traditional Tivo unit, or the new high definition one) is a great starting point. I believe that Tivo has one of the most intuitive and easy to use interfaces available for selecting and recording shows. Once set up, even grandma can use the peanut-shaped remote to easily record a single show or set up season passes to record all episodes of any show.
– More technology-minded consumers may want to consider a media-enabled PC, for recording TV shows directly to your computers hard drive or a networked server. This option is typically cheaper (no monthly service fees, such as with Tivo), but may require a bit more work to use.
– Many cable and satellite companies offer their own, integrated digital video records with their set top boxes. These are also good alternatives for non-tech savvy users, but they may be more difficult to use than an independent product like Tivo, with less intuitive menus or fewer options. However, some companies (such as DirectTV) offer the option of transferring recorded shows to portable media players, which make them great for people that want to take content with them on the go. Tivo also offers a great option called “TivoToGo??? that allows you (on the older/traditional Tivo units) to transfer recordings to laptop PCs and other devices.

Please consider joining us next week for a special Upside Research webinar on maximizing return on investment using business process management with SOA
Date: Wednesday, September 20, 2006
Time: 8:00 AM Pacific | 11:00 AM Eastern
Duration: 1 Hour
Register at: http://www.bulldogsolutions.net/IBMWebSphere/IBW09202006/index.aspx
Many businesses today are struggling to eliminate manual paper-based processes and progress toward more efficient workflows to automate and streamline everyday tasks. Business Process Management technology can help your organization improve overall capabilities, resulting in lowered costs and an increase in competitive advantage. BPM solutions not only allow you to automate processes by making them more efficient and less expensive, they also provide visibility into your business to help you capitalize on market opportunities.
In this complimentary Webcast, David A. Kelly of Upside Research and Stephanie Wilkinson of IBM WebSphere will analyze three characteristics of high ROI BPM projects, based on discussions with industry executives and interviews with organizations that have deployed BPM products. They will also highlight the types of solutions that can help your organization maximize the benefits of BPM.
You will learn how to:
– Identify and prioritize projects that can deliver high payback
– Enable collaboration to drive process improvement initiatives
– Discern BPM products that can help maximize productivity (Modeling, Monitoring)
– Align business and IT goals so that process improvements serve strategy
– Incorporate SOA into your BPM strategy
To sign up, visit:
http://www.bulldogsolutions.net/IBMWebSphere/IBW09202006/index.aspx

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.