Monday, April 23, 2007

BriefingsDirect SOA Insights Analysts on SOA Mashups and the Oracle-Hyperion Deal

Edited transcript of weekly BriefingsDirect[TM/SM] SOA Insights Edition, recorded March 2, 2007.

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Dana Gardner: Hello, and welcome to the latest BriefingsDirect SOA Insights Edition, Vol. 13, a weekly discussion and dissection of Services Oriented Architecture (SOA) related news and events with a panel of industry analysts and guests. I am your host and moderator Dana Gardner, principal analyst at Interarbor Solutions, ZDNet blogger and Redmond Developer News magazine columnist.

Our panel this week -- and that is the week of Feb. 26 2007 -- consists of Steve Garone, a former IDC group vice president, founder of the AlignIT Group, and an independent industry analyst. Welcome back to the show, Steve.

Steve Garone: Thanks, Dana. Great to be here.

Gardner: Also, joining us once again, Joe McKendrick, a research consultant, columnist at Database Trends and a blogger at ZDNet and ebizQ. Welcome back, Joe.

Joe McKendrick: Good morning, Dana.

Gardner: Also joining us, Tony Baer, principal at OnStrategies, and blogger at and ebizQ. Thanks for joining, Tony

Tony Baer: Hi, Dana.

Gardner: And also once again, joining us is Jim Kobielus. He is a principal analyst at Current Analysis.

Jim Kobielus: Hi, Dana. Hi, everybody

Gardner: Joining us for the first time, and we welcome him, Dave Linthicum. He is CEO at the Linthicum Group, an SOA advisory consulting firm. Dave also writes the Real World SOA blog for InfoWorld and is the host of the SOA Report podcast, now in its third year. He is also a software as a service (SaaS) blogger for Intelligent Enterprise, and has a column on SOA topics for Web Services Journal. Welcome, Dave.

Dave Linthicum: It is great to be here.

Gardner: We are going to have a couple of meaty, beefy topics today on the SOA and, interestingly enough, Enterprise 2.0 arena. We are going to be discussing and defining the concept around "mashup governance." We are also going to discuss some merger and acquisition news this week, with a deal announced between Hyperion and Oracle, whereby Oracle will acquire Hyperion for $3.3 billion.

First off, let's go to this subject of "mashup governance." Dave, I believe you defined this to a certain extent in a recent blog, and I wanted to give you the opportunity to help us understand what you mean by "mashup governance" -- and why it’s important in an Enterprise 2.0 environment, and perhaps what the larger implications may be for SOA.

Linthicum: Sure. Thank you very much. That was a feature article, by the way, that InfoWorld sponsored, and it’s still up on their website. It basically talked about how mashups and SOA are coming together, since they are mashing up. As people are becoming very active in creating these ad-hoc applications within the enterprise, using their core systems as well as things like Google Maps and the Google APIs, some of the things that are being sent up by Yahoo!,, and all these other things that are mashable. There's a vacuum and a need to create a governance infrastructure to not only monitor-track, but also learn to use them as a legitimate resource within the enterprise.

Right now, there doesn’t seem to be a lot of thinking or products in that space. The mashup seems to be very much like a Wild West, almost like rapid application development (RAD) was 15 years ago. As people are mashing these things up, the SOA guys, the enterprise architecture guys within these organizations are coming behind them and trying to figure out how to control it.

Gardner: An element of control to an otherwise ad hoc and loosey-goosey approach to creating Web services-based UIs and portal interfaces?

Linthicum: That’s absolutely right. Ultimately these things can become legitimate and very valuable applications within the enterprise. I have a client, for example, that has done a really good job in mashing up their existing sales tracking system, inventory control system, and also delivery system with the Google Maps API. Of course everybody and their brother uses that as a mashup example, but it's extremely valuable.

We are able to not only provide maps to do the best routing for delivery, but also Google Maps right now has traffic reports. So, they can give these to the truck drivers and delivery agents at beginning of the day, and productivity has gone up 25 percent. Over a year, that is going to save them more than $1.5 million. And, that’s just a simple mashup that was done in a week by a junior developer there. Now, they are trying to legitimize that and put it back into their SOA project, as well as other external API’s. They are in there trying to figure it out.

Gardner: So perhaps through this notion of combining what is available on an internal basis -- either as a Web service or moving toward SOA -- the enterprises can also start tapping into what is available on the Web, perhaps even through a software-as-a-service relationship or license, and put together the best of internal data content process as well as some of these assets coming off of the Web, whether it is a map, an API, or even some communications, groupware, or messaging types of functions.

Linthicum: I think you put it best that I have ever heard it. Absolutely. That’s the way it’s coming forward, as we are building these SOAs within these enterprises today. We have the added value of being able to see these remote services, deal with these remote APIs, and bring that value into the organization -- and that’s typically free stuff. So, we are using applications that we are gaining access to, either through a subscription basis in the case of -- and they are, by the way, hugely into the mashups that are coming down the pipe -- free services that we are getting from Google, or even services that cost very little.

Putting those together with the existing enterprise systems breathes new life into them, and we can basically do a lot of things faster and get applications up and running much faster than we could in the past. Ultimately, there is a tremendous amount of value for people who are using the applications within these environments. Typically, it’s the mid-market or the mid-sized companies that are doing this.

Gardner: Or even department levels in larger companies that don’t need to go through IT to do this, right?

Linthicum: That’s right. Absolutely. That’s how got started. In other words, people were buying with their credit cards and expensing it, and they were wiring it around IT. We are seeing the same movement here. It's happening at the grassroots level within the department and it's moving up strategically within the IT hierarchy.

Gardner: Okay, so it sounds straightforward: a good productivity boost, moving toward the paradigm of mashable services. Why do we need governance?

Linthicum: Well, you really need a rudimentary notion of governance when you deal with any kind of application or service that works within the organization. Governance is a loaded word. If you go to the Enterprise Architecture Conference -- and I am speaking at it the end of this month in New Orleans -- they consider governance as a management practice. It’s running around knocking people on their heads, if they are not using the correct operating systems, databases, those sorts of things. In the SOA world, as Joe McKendrick can tell you, it's about a technical infrastructure to monitor-control the use of services. Not only is it about control, but it is about productivity. I can find services. I can leverage services, and they are managed and controlled on my behalf. So, I know I am not using something that’s going to hurt me.

The same thing needs to occur within the mashup environment. For mashing up, there are lots of services that we don’t control or that exist outside on the Internet. It's extremely important that we monitor these services in a governance environment, that we catalogue them, understand when they are changed, and have security systems around them, so they don’t end up hurting productivity or our existing IT infrastructure. We don’t want to take one step forward and two steps back.

Gardner: I read your blog in response to this, Jim Kobielus, and you seem to think that bringing too much governance to this might short-circuit its value -- that it’s the loosey-goosey, ad-hoc nature that brings innovation and productivity. Do you think that what we think of as traditional SOA governance is too rigid and strict and requires some interaction with IT? Or are we talking about some other kind of governance, when it comes to mashups?

Kobielus: Well, Dave made that same point in his article, which is that the whole notion of mashups is half-way to anarchy, as it were, creative anarchy. In other words, empowering end-users, subject-matter experts, or those who simply have a great idea. They typically slap together something from found resources, both internal and external, and provision it out so that others can use it -- the creative synthesis.

This implies that governance in the command-and-control sense of the term might strangle the loosey-goosey that laid the golden egg. So, there is that danger of over-structuring the design-time side of mashups to the point where it becomes yet another professional discipline that needs to be rigidly controlled. You want to encourage creativity, but you don’t want the mashers to color too far outside the lines.

Dave hit the important points here. When you look at mashup governance, you consider both the design-time governance and the run-time governance. Both are very important. In other words, if these mashups are business assets, then yes, there needs to be a degree of control, oversight, or monitoring. At the design-time level, how do you empower the end-users, the creative people, and those who are motivated to build these mashups without alienating them by saying, "Well, you've got to go to a three-week course, you've got to use these tools, and you've got to read this book and follow these exact procedures in order to mashup something that you want to do?" That would have clearly stifled creativity.

I did a special section on SOA for Network World back in late 2005. I talked to lots of best practice or use cases of SOA governance on design time, and the ones that I found most interesting were companies like Standard Life Assurance of Scotland. What they do is provide typical command-and-control governance on design time, but they also provide and disseminate through the development teams a standard SOA development framework, a set of tools and templates, that their developers are instructed to use. It's simply the broad framework within which they will then develop SOA applications.

What I am getting at here is that when you are dealing with the end users who build the mashups, you need to think in terms of, “Okay. Tell them in your organization that we want you to very much be creative in putting things together, but here is a tool, an environment, or enabling technology that you can use to quickly get up to speed and begin to do mashing up of various resources. We, the organization that employs you, want you, and strongly urge you, to use these particular tools if you wish your mashups to be used far and wide within the organization.

"If you wish to freelance it internally, go ahead, but doesn’t mean we are necessarily going to publish out those mashups so that anybody can see them. It means we are not necessarily going to support those mashups over time. So, you may build something really cool and stick it out there, but nobody will use it and ultimately it won’t be supported. Ultimately, it will be a failure, unless you use this general framework that we are providing."

Gardner: I think we need to re-examine some of these definitions. I'm not sure what we are talking about with mashup governance is either "run time" or "design time." It strikes me as "aggregation time." Perhaps we don’t even need to use existing governance and/or even federate to existing governance. Perhaps it's something in the spirit of Web 2.0 and Enterprise 2.0, as simple as a wiki that everyone can see and contribute to, saying, “Here is how we are going to do our mashups for this particular process."

Let’s say, it is a transportation process, "Here are the outside services that we think are worthwhile. Here are the APIs, and here is a quick tutorial on how to bring them into this UI." Wouldn’t that be sufficient? Let us take that over to Steve Garone.

Garone: I am going to push back on that a little bit. What we are wrestling with here is achieving a balance between encouraging creativity and creating new and interesting functionality that can benefit business, and keeping things under control. The best way to look at that balance is to understand what the true risks are.

The way I see it, there are several major areas. The first has to do with what I call external liability, meaning that if you, for example, publish a mashup to a customer base that has a piece of functionality you got off the web, and for some reason that has wrong information and does the customers some harm, who is responsible for that? How are you going to control whether that happens or not? The second has to do with what I call internal risk, which has to do with making available to the outside world information that is sensitive to your organization. In that case, a little more than what you described is going to be necessary, and can also leverage some of the governance infrastructure that people are building generally and relative to SOA.

Gardner: So, you are thinking that these mashups would be available not only to an internal constituency in the organization but across its users, its visitors, and the public?

Garone: Absolutely. Well, I think they can be, and I think there will be organizations and groups within organizations who will want to do that, driven primarily by the business opportunities that it can afford.

Gardner: But, if this is the general public accessing some of these mashups, wouldn’t the risk that they would take accessing the individual services on the web on their own be sufficient? Why would you need to be concerned about liability or other risk issues when these are already publicly facing APIs and services and so forth?

Garone: Conceptually, you wouldn’t, but we all know that in this world anybody can sue for anything, and the reality is that if I go to a company’s website and use a function that incorporates something that they grabbed off the web, and it does me harm, the first place I am going to look is the site that I went to in the first place.

Gardner: Well, you might have stumbled upon the category here that will warm the cockles of many lawyers’ hearts -- mashup risk and assessment.

Garone: Exactly. And, it's one of the problems that governance in general attempts to solve. So, it is relevant here. My bottom-line point is that achieving balance is going to involve some careful consideration of what the true risks are. Maybe resolving that involves a combination of the kinds of solution that you just talked about in some cases. In other cases, they are going to have to leverage the governance infrastructure that exists in other areas within a company.

Gardner: Your point is well taken. This is business, it is serious, and it needs to be considered and vetted seriously -- if it is going to be something that you are using for your internal employees’ use, as well as if it becomes public-facing. How would you come down on this, Joe McKendrick? Do you see the balance between something as unstructured as a blog or wiki being sufficient, or do we need to bake this into IT, get policies and governance, and take six years to get a best practices manifesto on it?

Garone: I did not recommend that, Dana.

Gardner: I know. I'm going from one extreme to the other.

McKendrick: If we do it in two years, that would be fine. But what I’d love to know is, what exactly is the difference between a mashup and a composite application that we have been addressing these past few years within the SOA sphere? The composite application is a service-level application or component that draws in data from various sources, usually internal to the organization, and presents that through a dashboard, a portal, or some type of an environment. It could be drawn from eight mainframes running across the organization.

Obviously, the governance that we have been working so hard on in recent years to achieve in SOA is being applied very thoroughly to the idea of composite applications. Now, what is the difference between that and a mashup? Other than the fact that mashups may be introducing external sources of data, I really don’t see a difference. Therefore, it may be inconsistent to "let a thousand flowers bloom" on the mashup side and have these strict controls on the composite application as we have defined in recent years.

Linthicum: The reality is that there is no difference. You are correct, Joe, and I point that out in the article as well. There are really two kinds of mashups out there: the visual mashups, which are what we are seeing today, where people are taking basically all of these interface APIs and using the notions of AJAX and other rich, dynamic clients, and then binding them together to form something that is new.

The emerging mashups are non-visual. It's basically analogous, and is not exactly the same, as traditional composite applications that are -- if you can call them traditional -- in the SOA realm today. They have to be controlled, managed, governed, and developed in much the same way.

Kobielus: There is a difference here. I agree with what Dave just said that mashups are not qualitatively different from composite apps, but there is a sort of difference in emphasis, in the sense that a mashup is regarded as being more of a user-centric paradigm. The end-user is empowered to mash these things up from found resources.

It relates to this notion that I am developing for a piece on user-centric identity as a theme in the identity management space. The whole Web 2.0 paradigm is user-centric -- users reaching out to each other and building communities, and sharing the files and so on. Mashing up stuff and then posting that all to their personal sites is very much a user-centric paradigm.

There's another observation I want to make. I agree that the intellectual property lawyers are starting to salivate by mashups invading their clients or encroaching on their clients’ rights. Actionable mashups are good from a litigator’s point of view. In terms of governance then, organizations need to define different mashup realms that they will allow. There might be intra-mashes within their Intranet -- "Hey, employee, you can mash up all manner of internal resources that we own to your heart’s delight. We will allow intra-mashes, even extra-mashes within the extranet, with our trusted partners. You can mash up some of their resources as well, whatever they choose to expose within the extranet. And then, in terms of inter-mash or Internet wide mashing, we’ll allow some of it. You can mash Google. You can mash the other stuff of the folks who are more than happy to let you mash. But, as an organization, your employer, we will monitor and block and keep you from mashing up stuff that conceivably we might be sued for."

Gardner: So you could take six years and require a manifesto. Thank you, Jim Kobielus. Tony Baer, let's take it to you. Do you see this as a problem in terms of the governance, or should we keep it loosey-goosey? Should we not get into the structure, and do you think that -- to Jim’s point -- a mashup is conceptually different from a composite application because of the user-centric, user-driven, keep-IT-out-of-it aspect?

Baer: We've got a couple of questions there. I’ll deal first with the technical one, which is that composite apps and mashups are basically trying to do the same thing, but they're doing it in different ways. Composite apps, at least as I've understood the definition, came out of an SOA environment. That implies some structure there, whereas mashups essentially merged to Web 2.0 with the emergence of AJAX-style programming, which lets anybody do anything anywhere with this very loosely structured scripting language. There are practically no standards in terms of any type of vocabulary.

So, there is a bit of a "Wild West" atmosphere there. As somebody else said, you really need to take a two-tiered approach. On one hand, you don’t want to stifle the base of innovation, a kind of a skunk works approach. Having a walled garden there, where you're not going to be doing any damage to the outside but you are going to promote collaboration internally, probably makes some sense. On the other hand, even if the information did not originate from your site, if you're retransmitting it there is going to be some implication that you are endorsing it, at least by virtue of it coming under your logo or your website.

Gardner: Yeah, the perception of the user is going to be on you, regardless of the origins of the service.

Baer: Exactly. So, you need a tiered approach. I was taking a note here earlier. You really need to exert control on the sources of information. Therefore, for the types of information that are exposed internally -- for example something from an internal financial statement -- you need to start applying some of the rules that you've already developed around internal databases. Different classes of users have a right to know and to see it and, in some cases, some read-write privileges.

You need to apply similar types of principles at the source of information. Therefore, if I have access to this, this means implicitly that I can then mash it up, but you have to really govern it at the original point of access to that information, at least with regard to internal information. With external information, it probably needs to go to the same type to clearance that you would exert for anything that goes out on the corporate website, the external website.

Gardner: So, your existing policies and access privileges, your federated ID management brought up into a policy level, that will all play into this and it could help mitigate this concern around the right balance.

Baer: Well, put it this way, it’s a step toward that direction.

Gardner: I want to offer another possibility here. I was thinking about the adage that nobody was fired for using IBM, which was a common saying not that long ago. What if we were to take that same mentality and apply it here -- that if you're going to do mashups, make sure they are Windows Live mashups, or Google mashup services for mashup; or maybe So, is there is an opportunity on the service provider side to come up with a trusted set of brands that the IT people and the loosey-goosey ad-hoc mashup developers could agree on to use widely? They could all rally around a particular set of de-facto industry standard services? That would be perhaps the balance we're looking for.

What do you think about that, Steve?

Garone: That can certainly be a realistic part of how it’s done, and it gets back to something someone mentioned earlier about composite applications. We talked about the similarities and the differences. One of the differences I see is when I think back to when people started building applications from software components. There was a flood of products put on the market to manage that process in terms of cataloguing and putting into libraries trusted components with descriptions and APIs that conform to standards, to try to sort of reign in people’s ability to go all over the place and pick software from the sky to build into an application that could be used in a business context.

What you're saying sort of conforms to that, in that you come up with a trusted set of applications or a trusted set of vendors or sources from where you can get application functionality, and an attempt to enforce that.

Gardner: It strikes me that this is a slippery slope, if people start using mashups. That includes the more defined and traditional developer using it through governance and vetting it properly with command and control, as well as across a spectrum of project-level, third-party developers, and even into department-level folks who are not developers per se. The slippery slope is that, suddenly more of the functionality of what we consider an application would be coming through these mashups and services, and perhaps increasingly from outside the organization.

Therefore, the people who are providing the current set of internal services and/or traditional application functionality need to be thinking, "Shouldn’t I be out there on the wire with a trusted set?" We're already seeing Microsoft move in this direction with its Windows Live. We're seeing Google now putting packaging around business-level functionality for services. is building an ecology, not only of its own services, but creating the opportunity for many others to get involved -- you could call them SaaS ISV’s, I suppose.

And I don’t think it’s beyond the realm of guesswork that Oracle and SAP might need to come up with similar levels of business application services that create what would be used as mashups that can be trusted to be used in conjunction with their more on-premises, traditional business applications. Does anyone else see any likelihood in this sort of a progression? I’ll throw it out.

Linthicum: There's a huge likelihood of that coming up. People are moving to use interface-based applications through software-as-a-service. All you have to do is look at the sales of to monitor how that thing is exploding. And, they are migrating over to leveraging services to basically mix-and-match things at a more granular level, instead of taking the whole application interface and leveraging those within your enterprise. This is what I call "outside-in" services. I wrote about that three years ago.

People are going to focus on that going forward, because it just makes sense from an economic standpoint that we leverage the best-of-breed services, which typically aren’t going to be built within our firewall. We don’t want to pay for those services to be built, but they're going to be built by the larger guys like, Google, and Microsoft. It's going to be a slow evolution over time, but I think we are going to hit that inflection point, where suddenly people see the value. It’s very much like we saw the value in the web in the early '90s -- that it really makes sense not only to distribute content that way, but distribute functional application behavior that way.

Gardner: Thanks, Dave. Any contrarians out there? Does anyone think that this back-to-the-future, in terms of the major players stepping up and providing best-of-breed services, is not likely?

Kobielus: Well, I think it's likely. But the fact is that, given the accessibility of this technology, it will encourage independence to startups, and provide unique new services too that may fall between the cracks. It’s the classic long tail here.

Gardner: I’ll be contrarian in this, because I don’t think that these sets of players, with the possible exception of Google and, are going to be interested in having this occur sooner. They would rather have it come later, because their on-premises, licensed software businesses are far more profitable, and it gives them a more entrenched position with the client and the account than these mashups. Those can be switched in or out quite easily, and are either free or monetized through advertising or in a subscription fee format that is still not nearly as profitable for them in the long run as an on-premises, licensed affair.

Does this notion of the business model, rather than the technology model or the branding model, change anyone’s opinion on the speed in which this happens? Do we need to have a small group of interlopers that comes in and actually forces the hands of the larger players into this mode?

Garone: Dana, I’ll take that. There clearly has to be a business reason for these major players to do it, and the two that I see are, one, that the functionality that they're making lots of money off of is suddenly available as a mashup at little or no cost, in which case they have got to deal with that. The other is to be able to add interesting functionality to their existing products in order to be more competitive with the other enterprise app players out there. Other than that, you're right. There has to be a stimulus from the business standpoint to get them to actually jump into this.

Gardner: Any other thoughts on the pressure in the marketplace and in terms of business and cost?

Linthicum: If they don’t do it, somebody else is going to come up and do it for them. Look at the pressures that has put on the CRM players in the marketplace. It’s a similar type of market transition. was never an internal enterprise player, and yet look at their revenues in contrast to the other CRM guys that are out there. The same thing is going to occur in this space. They are either going to step up and provide the new model, or they're just going to get stomped as people run over them to get to the players that will do it.

Gardner: Yeah, Dave, I agree, especially with Google. They’ve got a market cap of $144 billion, and a portion of that market cap depends on how well Google can sell business services to businesses. That’s going to put pressure on the traditional players, right?

Linthicum: Yeah. Google is moving aggressively in that space, and I think they're going to not only provide their own services, but they're going to broker services that they validate and basically recast.

Gardner: And that’s governance isn’t it?

Linthicum: It is going to be governance. You are going to see some aggregators out there. Right now, you’re seeing guys like StrikeIron, which is a small company, but they aggregate services. They are basically a brokerage house for services they control, validate, and make sure they are not malicious. Then, you rent the services from them, and they in turn pay the service provider for providing the service. I think Google is going to go for the same model.

Gardner: It’s about trust ultimately, right?

Linthicum: It’s about trust ultimately. If I were a consultant with an organization and my career was dependent on this thing being a success, I'd be more likely to trust StrikeIron and Google than some kind of a one-off player who has a single service which is maintained in someone’s garage.

Gardner: So that notion of a cottage industry for some little developer out there creating their own widget probably still isn’t going to happen, huh?

Linthicum: It will. What’s going to happen is that they are going to do so through brokerage -- guys like Google. I don’t think Google is going to take a whole lot of money. They're going to take the normal pennies per transaction, and you will see millionaires that are made in a few months -- people who are able to send up killer services that Google and guys like StrikeIron are able to broker out to those who are setting up SOAs. Then, suddenly, they are going to find themselves a hit, very much like we’re seeing the Web 2.0 hits today.

Gardner: We have Google AdWords and AdSense. So, soon we should have "ServicesSense"?

Linthicum: Right, and everybody in that space, whether they say it or not, is building that in the back room right now. They know that’s coming.

Baer: I was just going to add that StrikeIron really has an interesting business model. I have spoken with Bob Brauer, the CEO of StrikeIron, several times. Their message is that there is going to be this marketplace out there. They are looking at SOA and services, perhaps Web 2.0 and mashups may come into play as well, but it’s a notion that rather having corporations worry about building their own internal functionality, they can go out to some kind of marketplace and get the best deal for the functions they need and the types of services they need. Your typical corporation may be run on a combination of internally built services and externally brokered services.

Linthicum: When I was CTO at Grand Central, we had a few companies that were run entirely on external services -- these new startups. They did all their accounting, their sales management, and everything else through external services. That’s probably too much for the larger Global 2000 to bite off right now, but there is going to be a functional changeover. As time goes on, they are going to use more external services than ever before.

Gardner: "Free" is a compelling rationale. All you have to do is look at a little text ad associated with the service and that page for the service and the provisioning and governance of the service becomes fairly compelling, right?

Linthicum: Absolutely.

Gardner: Well, thanks very much. That was an interesting discourse on this whole notion of mashups, SOA, and how it might evolve in the marketplace. For the last 10 minutes today, let’s discuss the deal announced this week whereby Oracle is going to acquire Hyperion for $3.3 billion, bringing the possibility of more analytics and business dashboard functionality into the growing Oracle stable. I believe this must be their tenth or twelfth acquisition since 2002.

Jim Kobielus, you’re data-centric in your studies and research. Does the fit between Hyperion and Oracle make sense to you?

Kobielus: It makes sense knowing Oracle. First of all, because [Oracle Chairman and CEO] Larry Ellison has been very willing in the past to grab huge amounts of market share by buying direct competitors like PeopleSoft, Siebel, and so forth, and managing multiple competing brands under the same umbrella -- and he is doing it here. A lot of the announcement from Oracle regarding this acquisition glossed over the fact that there are huge overlaps between Oracle’s existing product lines and Hyperion’s in pretty much every category, including the core area that Hyperion is best known for, which is financial analytics or Corporate Performance Management (CPM). Oracle itself provides CPM products for CFOs that do planning, budgeting, consolidation, the whole thing.

Hyperion is a big business intelligence (BI) vendor as well, and Oracle has just released an upgrade to its BI suite. You can go down the line. They compete in master data management (MDM) and data integration, and so forth. The thing that Oracle is buying here first and foremost is market share to keep on catapulting itself up into one of the unchallenged best-of-breed players in business intelligence, CPM and so forth. Oracle bought the number one player in that particular strategic niche, financial CPM , which is really the core of CPM -- the CFOs managing the money and the profitability.

It’s a great move for Oracle, and it definitely was an inevitable move. There will be continuing consolidation between the best-of-breed, pure-play data management players, such as Hyperion and a few others in this space, which are Business Objects and Cognos. They will increasingly be acquired by the leading SOA vendors. Look at the SOA vendors right now that don’t have strong BI or strong CPM, and look at the pure-plays that have those tools. The SOA vendors that definitely need to make some strategic fill-in acquisitions are IBM, Microsoft to a lesser degree, BEA definitely, and a few others, possibly webMethods. And, look at the leading candidates. In terms of CPM and BI and a comprehensive offering, they are down to three: Business Objects, Cognos, and SAS.

Now, SAS's Jim Goodnight has been doing it for over 30 years. It’s a great company, growing fast, with very loyal customers. Those product lines are very private, very stubbornly private, and I think they want to stay that way. So, I don’t think they are on the blocks in terms of being an acquisition candidate. But Business Objects and Cognos definitely are in play. So, it’s just a matter of time before both of those vendors are scooped up by some of the leading SOA vendors.

Gardner: So, Oracle has created a little bit of an auction atmosphere? Joe McKendrick, what's your take on this? You’re also a data personage.

McKendrick: Either Neil Macehiter or Neil Ward-Dutton, one of the Neil’s, mentioned on a couple of occasions that Oracle really isn’t playing up its database strengths. Lately, a lot of the activity, a lot of its announcements, and a lot of its acquisitions have been focused on the fusion, the middleware. And this [Hyperion buy] is definitely a play to its strength in the database market. Jim made some great observations, and there are a lot of overlaps. My sense is that Oracle is buying a huge, prominent customer base as part of the acquisition.

Gardner: Even though there is overlap in customer base and in some functionality, isn’t there the ability to integrate on an analytics basis by extracting value from data, rather than providing the data services themselves and/or a business application set? Doesn’t that make for an integrated approach that they could bring these two perhaps overlapping product categories together easier in this category, than they would either in database or business applications?

Garone: Yeah, Dana, I think that’s correct; and I also agree that this is less about database and more about middleware and fusion and building up that software stack. Oracle has clearly got an eye on doing that. This kind of an acquisition in the short term is always a double-edged sword, for Oracle especially. If any of you have been to some of their events as an analyst, you've seen what they’ve gone through in convincing the analyst community that they're going be able to both support all the customer bases of representing the products they acquire and integrate things well into their stack ...

Gardner: And they did seem to do a pretty good job at that between J.D. Edwards, PeopleSoft and Siebel, right? There wasn’t the big brouhaha in the installed base that some people were expecting.

Garone: Right. And that turned out to be true in those cases. It remains to be seen, of course, what will happen here, but it’s always a short-term hurdle that Oracle has to get over, both in terms of perception as well as the actual integration process and business model process. Again, this is really very promising, if Oracle pulls it off. But to me it’s really about their bigger picture of taking what they call Fusion middleware out beyond just middleware to the applications themselves, and essentially creating an entire integrated stack of software.

Gardner: How about you, Dave Linthicum? Do you believe that these services and analytics and creating business insight into operations are an essential part of SOA, as Jim Kobielus believes?

Linthicum: Absolutely. In fact, if you look at my stack, which is actually on Wikipedia right now, one of the things I have on top is Business Activity Monitoring (BAM) and analysis, because once you have those points of service -- both the behavioral visibility and also information visibility into all these different points, and you create these abstraction layers on top of it -- you have a great opportunity to actually monitor your business in real-time. And you have the ability not only to monitor it in real-time, but you can actually go back historically to see how what you are doing now relates to what you did in the past.

A lot of businesses can benefit from that. It's key technology. Oracle did the right thing strategically, and I think this stuff is going to be a necessity going forward for SOA, and it’s a necessity for business going forward as well. It’s one of the things where, if you look at the business, it’s just so huge, but you just don’t hear about it anymore.

Gardner: So, we're saying that the feedback loop becomes more essential for SOA, and that these BI tools are essential ingredients in creating a near real-time feedback loop, as well as a historical perspective feedback opportunity to then fine-tune your SOA, perhaps through a policy-driven governance capability?

Linthicum: Right. Fine-tune your SOA by fine-tuning your processes. I can imagine the potential here. I can see not only the health of my business, but also how my business produced things in the past, or how things were done in the past and how that relates to what I'm doing right now. I even have a rules engine, which is part of my SOA to make adjustments automatically to things that I know will have a positive effect on my business processes. You can get this automatic state which is hugely valuable for these large-product-intensive companies.

Gardner: The last word from Tony Baer, Do you see the analytics as important as some of our other guests?

Baer: Well, put it this way. Analytics is the necessary icing on the cake. All the other pieces tell you what you are doing, and the classic question of analytics tells you why. A lot of folks look at this as an extension to the database business. I see this as an extension of the applications business.

SAP, for example, has had BI for a number of years. Oracle has had some limited analytics starting back with the acquisition almost a decade ago of, I think it was, IRI Express as an OLAP database. Now, that was merely an extension to the database business, but if you look at how this is really going to end up playing out, it’s not that customers are looking for another database to just slice-and-dice their data. They are looking for a way to look at their business processes, which are represented through their application stacks and think, "How are we doing?" So, it’s a logical add-on to that.

In terms of worries about or concerns about a customer -- I guess customers getting dissatisfied when Oracle comes in -- the fact is that in ERP, just as in database, it’s a foundation buy. The fact is that regardless of what your personal feelings are about Larry Ellison, that technology is entrenched in the organization. The pain of migrating from it is greater than just sticking with it. Oracle has also improved its track record in terms of trying to be a little more customer friendly. It still has plenty of work to do. So, in the long run, I don’t see a lot of migration here, and I see this as being a very logical add-on in the apps business.

Gardner: Yeah, I agree. Strategically, this has a lot to do with the business applications. Do you think that this puts significant pressure on SAP?

Baer: It puts some pressure on SAP. I wouldn’t be surprised to see them make the play for one or the other two big ones. I also expect IBM to play in there, because even though IBM says it’s not in the apps business, the fact is that they do have products like master data management.

Gardner: And a lot of BI, too.

Baer: Exactly. And actually what's really ironic about all this is that years ago, IBM and Hyperion had actually had a very close relationship, and it was bordering almost on acquisition. I'm surprised that IBM actually never went the last mile and acquired them. It would make sense for them to make a move with one of the other players today.

Gardner: Interesting. Well, thanks very much. I want to go through our group for today, and we appreciate all your input. There’s Steve Garone, Joe McKendrick, Jim Kobielus, Tony Baer, and Dave Linthicum. We appreciate your joining us. I hope you come back. This is Dana Gardner, your producer, host and moderator here at BriefingsDirect SOA Insights Edition. Please come back and join us again next week.

If any of our listeners are interested in learning more about BriefingsDirect B2B informational podcasts or to become a sponsor of this or other B2B podcasts, please fill free to contact Interarbor Solutions at 603-528-2435.

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Transcript of Dana Gardner’s BriefingsDirect SOA Insights Edition, Vol. 13. Copyright Interarbor Solutions, LLC, 2005-2007. All rights reserved.

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