BriefingsDirect Analysts Make 2009 Predictions for Enterprise IT, SOA, Cloud and Business Intelligence

Edited transcript of BriefingsDirect Analyst Insights Edition podcast, Vol. 35, on how analysts see cloud computing, SOA, the economy, and Obama Administration in 2009, recorded Dec. 19, 2008.

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Dana Gardner: Hello, and welcome to the latest BriefingsDirect Analyst Insights Edition, Vol. 35. This periodic discussion and dissection of IT infrastructure related news and events, with a panel of industry analysts and guests, comes to you with the help of our Charter Sponsor, Active Endpoints, maker of the ActiveVOS visual orchestration system. I'm your host and moderator Dana Gardner, principal analyst at Interarbor Solutions.

Our topic this week, and this is the week of Dec. 15, 2008, marks our year-end show. Happy holidays to you all! But, rather than look back at this year in review, because the year changed really dramatically after September, I think it makes a lot more sense to look forward into 2009.

We're going to look at what trends may have changed in 2008, but with an emphasis on the impacts for IT users, and buyers and sellers in the coming year. We're going to ask our distinguished panel of analysts and experts for their predictions for IT in 2009.

To help us gaze into the crystal ball, we're joined by this week's BriefingsDirect Analyst Insights panel. Please let me welcome Jim Kobielus, senior analyst at Forrester Research.

Jim Kobielus: Hi, Dana. Hi, everybody.

Gardner: Tony Baer, senior analyst at Ovum.

Tony Baer: Happy holidays, Dana.

Gardner: Brad Shimmin, principal analyst at Current Analysis.

Brad Shimmin: Hi there, Dana, thanks for having me.

Gardner: Joe McKendrick, independent analyst and prolific blogger.

Joe McKendrick: Hi, Dana, and a happy Festivus to all.

Gardner: Dave Linthicum, founder of Linthicum Group.

Dave Linthicum: Hey, guys.

Gardner: Mike Meehan, senior analyst at Current Analysis.

Mike Meehan: Hello, all.

Gardner: And joining us for the first time, JP Morgenthal, senior analyst at Burton Group. Good to have you, JP.

JP Morgenthal: Thanks, Dana, and I'll jump on the Festivus wagon as well.

Shadow IT

Gardner: Let me start with the predictions. It gives me a chance to steal the thunder and get out there first.

My first prediction for 2009 is that spending from shadow IT activities will actually grow, and that the amount of money devoted to shadow IT activities will come from outside traditional IT budgets, from a variety of different sources, maybe even petty cash, and we'll see a bit of growth in these rogue activities.

At the same time, I think we will see a flattening, and in many cases a reduction, in officially sanctioned IT activities, but that the net result will actually be more spending overall across a variety of activities based on services and consulting as much as actual buying of licensed software and hardware products.

The risk is that these rogue applications can make it complex for governance, management, and even security, but that moving into these areas for business development purposes is going to be an overwhelming temptation. There will be more opportunities in the cloud, software as a service (SaaS), applications as a service, and for folks like marketers, business analysts, and business development professionals to take advantage and move in the market.

We're going to be looking at aggressive sales activities and new ways of reaching consumers of all kinds, across B2B and B2C activities.

I expect very little staff erosion in IT, but I think there will be a change in emphasis as to what IT is, defining it differently. Service-oriented architecture (SOA) is going to continue to grow, but Web oriented architecture (WOA) will probably overtake it and perhaps become a catalyst to some of these rogue activities. There will be a blurring between which WOA activities happen inside IT and outside.

So, my second prediction is that inside of traditional IT we're going to find a lot of new ways to quickly cut costs. This is going to be a drill for organizations to not spend money or spend less money. Virtualization will be a big part of that. Hypervisors will perhaps go commodity, and the value-add in the virtualized environment is going to be at the stacks -- virtualized stacks or containers at the applications level.

This could then lead to more direction toward a cloud operating system and a de-facto standard could begin to emerge, which would then spur even more adoption of virtualization.

We're going to see a lot more dumping of Unix and mainframes. We are going to sunset a lot of applications that aren't essential and save on the underlying costs of supporting them. There will be some modernization of applications, but only in areas where there is low risk.

There are still going to be a lot of organizations that aren't going to want to tinker with applications that are important, even if they are running on expensive infrastructure.

My third prediction is around extreme business intelligence (BI). There will be a move in scale, larger sets of data, larger sets of content, and more mingling or joining of disparate types of data and content in order to draw inferences about what the customers are willing to do and pay across both B2B and B2C activities.

We'll start to see an increased use of multi-core and parallelism to support these BI activities, and we will begin to see IT have a big role in this. This isn't something you can do as a rogue activity, but it might end up supporting rogue activities. That is to say, these new extreme BI activities might lead organizations to seek out services outside of IT. They then can execute on what they find through their analysis.

I also predict, at number four, that upgrades will suffer. Were not going to see a lot of swapping out of one system for another, unless there's a very compelling return-on-investment (ROI) scenario with verifiable short-term metrics. This is going to hurt companies like SAP and Microsoft, and Oracle and IBM to a lesser extent, given their diversification.

Trouble for Windows 7

I think Windows 7 is in trouble. People are not going to just run to Windows 7. They're going to continue to stay with XP, and this makes the timing around the Vista debacle all the more injurious to Microsoft. In hindsight, Vista needed to be a winner. Now that we're in a downturn, people are going to stick with what they have, and, of course, upgrades are essential for Microsoft to continue with its back-end strategy on data-center architecture and infrastructure.

This provides more of an opening for Linux and non-Microsoft virtualization, and that will continue. This could mean that Microsoft needs to move to its cloud offerings all the more quickly, which then could actually spell earnings troubles for the company, at least in the short to medium term.

My last prediction is that the role of social media and networks will continue to grow and be impactful for enterprises, as marketers and salespeople begin to look to these organizations from the metadata and inference about what customers are willing to buy, particularly under tight economic conditions.

There's going to be a need to tie traditional customer relationship management (CRM) and sales applications with some sort of a process overlay into the metadata that's available from these Web-based cloud environments, where users have shared so much inference and data about themselves.

So, I look for some mashups between social data and the sales and business development, perhaps through these rogue applications and approaches outside of IT, but IT activities nonetheless, in 2009. Thanks.

Jim Kobielus, you're up. What are your five predictions?

Kobielus: I need to go home now. You stole all my predictions. Actually, that was great, Dana. I was taking notes, just to make sure that I don't repeat too many of your points unnecessarily, although I do want to steal everything you just said.

My five predictions for 2009 ... I'll start by listing them under a quick phrase and then I'll elaborate very quickly. I don't want to steal everybody else's thunder.

The five broad categories of prediction for 2009 are: Number one, Obama. Number two, cloud. Number three, recession. Number four, GRC -- that's governance, risk, and compliance. Then, number five, social networking.

Let me just start with [U.S. President Elect Barack] Obama. Obviously, we're going to have a new president in 2009. He'll most likely appoint a national chief technology officer or a national tech policy coordinator. Based on his appointment so far, I think Obama is going to choose a heavy hitter who has huge credibility and stature in the IT space.

We've batted around various names, and I'm not going to add more to the mix now. Whoever it is, it's going to be someone who's going to focus on SOA at a national level, in terms of how we, as a country, can take advantage of reusing agility, transformation, optimization, and all the other benefits that come from SOA properly implemented across different agencies.

So, number one, I think Obama is going to make a major change in how the government deploys IT assets and spends them.

The maturing of clouds

Number two, cloud. Dana went to town on cloud, and I am not going to say much more, beyond the fact that in 2009, clouds are going to become less of a work in progress, in terms of public clouds and private clouds, and become more of a mature reality, in terms of how enterprises acquire functionality, how they acquire applications and platforms.

I break out the cloud developments in 2009 into a long alliterative list. Clouds will start up in greater numbers. They will stratify, which means that the vendors, like Google, Microsoft, and Amazon and others with their cloud offerings, will build full stacks, strata, in their cloud services that include all the appropriate layers, application components, integration services, and platforms. So, the industry will converge on a more of a reference model for cloud in 2009.

They'll also stabilize the clouds. In other words, they'll become more mature, stable and less scary for corporate IT to move applications and data to. They'll standardize, and the clouds will standardize around SOA and WOA standards. There will be more standards, interfaces, and application programming interfaces (APIs) focused on cloud computing, so you can move your applications and data from one cloud to another a bit more seamlessly than you can now with these proprietary clouds that are out there. And, there are other "S" items that I won't share here.

Number three, recession. Clearly, we are in a deep funk, and it might get a lot worse before it gets better. That's clearly hammering all IT budgets everywhere. So, as Dana said, every user and every organization is going to look for opportunities to save money on their IT budgets.

They're going to put a freeze on projects. They're going to delay or cancel upgrades. Their users, as you said very nicely, Dana, are going to dip into petty cash and go around IT to get what they need. They're going to go to cloud offerings. So, the recession will hammer the entire IT industry and all budgets.

As far as GRC, government is cracking down. If it has to bail out the financial-services industry, bail out the auto industry, and bail out other industries, the government is not going to do it with no strings attached.

Compliance, regulations, reporting requirements, the whole apparatus of GRC will be brought to bear on the industries that the government is saving and bailing out.

Then finally, social networking. Dana provided a very good discussion of how social networking will pervade everything in terms of applications and services.

The Obama campaign set the stage clearly for more WOA-style, Web 2.0, or social-networking style governance in this country and other countries. So, we'll see more uptake of social networking.

We'll see more BI become social networking, in the sense of mashup as a style of BI application, reporting, dashboards, and development. Mashups for user self-service BI development will come to the fore. It will be a huge theme in the BI space in 2009 and beyond of that.

That really plays into the whole cost control theme, which is that IT will be severely constrained in terms of budget and manpower. They're going to push more of the development work to the end user. The end user will build reports that heretofore you've relied on data modelers to build for you. Those are my five.

Gardner: Thank you, Jim. Tony Baer, you're up. What did we miss?

Cost savings, cost savings

Baer: It's going to be hard to top both of you folks, so I'm going to just add some things in the margins. If I were to make one elevator statement on this, I feel like the guy [Kenan Thompson as Oscar Rogers] from Saturday Night Live, the economic expert, who they interview on "Weekend Update." He starts to give all the causes. Then, he just says, "Well, just fix it!"

That's essentially going to be the theme this year. The top five are going to be cost savings, cost savings, cost savings.

That does involve a lot of the strategies that both you and Jim have just described. For one thing, it's going to put a lot more emphasis on using the resources and infrastructure that you already have. It's going to damp down entering into new long-term contracts for anything.

Ironically, one result of that is that for the moment, you'll actually see little less emphasis on outsourcing, because that does imply a long-term contract. The fact is, I don't think anyone is really doing any meaningful projecting beyond Q1. I was just reviewing Adobe's year-end numbers and projections. Normally, they project out for the full fiscal year, and they are only going to project out for the Q1.

I'll just go through a very quick laundry list. For one thing, as I mentioned, it's going to be a lot of low cost, no cost. There will be a lot more use of open source, a lot more. This is definitely the year that the cloud and SaaS come into their own, but with a key qualification.

I think it's going to be managed clouds. Essentially, to take advantage of raw clouds, like Amazon EC2 you have to put in more of your own management infrastructure. I don't see the use of what I would call "clouds in the wild." I see more managed clouds from that standpoint.

For IT organizations, it's going to dictate more attention to IT service management to show that we're not just keeping systems going and keeping the lights on, but more along the lines of, "Here are the services that we're delivering to the business," as they try to justify the system.

On the back-end, it will be "Use more of what you have," and huge renewed investments in BI. So, Jim, I do think you still have a job this year.

Finally, because it's going to take a while for this to unfold -- you just don't regulate overnight -- there will be much greater attention to GRC.

Gardner: Thank you, Tony. Brad Shimmin, you're up.

Shimmin: Thanks, Dana. For my predictions for 2009 I took a different tact in anticipation of a new analytical concern we're starting up here in January. It's going to focus on collaboration. So, everything I did settled on that.

All the predictions I have stem from the themes that you guys have been talking about: cutting cost, such as travel, and squeezing efficiencies out of the IT infrastructure, as well as the users themselves. So, bear that in mind as I go through this.

Collaborative social networks

The first one for me is vendors tackling enterprise-plus-consumer based social networks, a blended view of those. Enterprise-focused vendors are going to do more than simply sink info from public sites like Facebook. They're going to take that information and build into or out from the enterprise into those social networks and drive information from those. It's going to become a two-way street.

You're going to see folks like Facebook, and most notably, LinkedIn, working in the other direction themselves, and with third parties, to develop enterprise-bound social networks. Look for those to emerge next year.

The second thing for me is cloud software, now that it's jumped the shark. I know we've all been talking about it, but it's definitely jumped the shark for me. I see the vendors within the collaboration space settling beyond the small and medium business (SMB) market and looking more toward the larger enterprises that are looking to squeeze more out of their existing IT infrastructure or cut costs.

Folks like IBM and Microsoft have already shown us that they can hit the long tail with stuff like Bluehouse and Microsoft Online Services (MOS) for collaboration. But, you're going to see vendors like Cisco and Oracle take up this challenge with more of a focus on managed hosting services that look more like SaaS, but they are really managed.

That's something that will appeal to the larger enterprises, owing to security, manageability, and other assurances that you get from that, not just pure-play, do-it-yourself SaaS.

The third thing for me is that enterprises are going to move away from a steep hierarchy, or the word might be "oligarchy," of an organizational model internally. This is just about how enterprises structure themselves.

This goes back to what you were saying, Dana, with stuff going off the books, and what Tony was saying about driving revenue from places other than CAPEX. Instead, to become not just more efficient and agile, companies are going to want to self organize to create these internal ecosystems, if you will, where organizations are built around employee experience, associations, interests, and energy levels -- what they want to focus on.

That's going to allow companies to more efficiently harness the users. The people, as Jim was saying earlier, perhaps are going to be tasked with setting up their own BI queries and mashing up their own applications. It's really thinking about those people, giving them the ability to run the show inside of an organization, instead of waiting for everything to come top-down.

The fourth thing for me is -- speaking in terms of communities, both internally and externally -- I am seeing silos breakdown between those.

Gone are the days of consumer-faced social networking and enterprise-faced social networking existing as independent entities, as I was saying earlier. Thanks to user profile standards like OpenID and expansion of APIs, community providers and third-party aggregation and integration tool vendors are going to allow applications and users to flow between what were heretofore closed communities.

For example, you already have vendors moving in that direction with Yahoo's YOS, which now allows the My Yahoo start page to host third-party applications from nemesis Google.

The fifth and final thing for me -- and this might be more of a wish than a prediction; I'm an eternal optimist I guess -- I'm looking for virtual worlds to gain a foothold in the enterprise.

We've seen folks like [Cisco Chairman and CEO] John Chambers use Second Life to do a dog-and-pony show. Those are great marketing tools, but they're nothing compared to the efficiencies and benefits you can gain from using the software for other things. Dana, you alluded earlier to being able to leverage that mechanism for communication with CRM. I think we're going to see that change how virtual networks can be utilized inside the enterprise.

It's not just for marketing and sales, but also to support B2B and B2C communities, where effective communication between your supply channel members is really paramount. To date, nobody has tackled that.

So, we'll see virtual worlds actually make an impact in terms of allowing these global, loosely coupled entities communicate more effectively in 2009. That's it for me.

Gardner: Thanks. Joe McKendrick, how do you see things shaking out?

McKendrick: Thanks, Dana. You guys are a hard act to follow. My first prediction -- are you ready for this -- the government, the U.S. Treasury, is going to swoop in with the Troubled Assets Relief Program (TARP) funds and swoop up all the troubled IT assets across the country -- those IBM mainframes, older mainframes, DEC units, Windows NT.

Then, the Fed is going to come in with zero percent liquidity to help finance it, and that's going to raise all boats.

Gardner: Joe, are you defining a new sector called "Toxic IT?"

McKendrick: Toxic IT, there you go.

Gardner: Joe, April 1 is not for several months.

McKendrick: Okay, just kidding. My other prediction: President Obama is going to make Tony Baer the National CTO/CIO, because he wants to "just fix it," and that's a good philosophy.

It's the economy

Okay, all seriousness aside now. The top issue, of course, is the economy. It's going to dominate our thinking through 2009. But, recession planning is so 2008, because SOA, which I focus on as well as IT, is a long-term process. You need to look three years down the road.

The economy is going to turn around. I see it turning around at some point in 2009. That's what economists are saying, and companies have to prepare for a growth mode and the ability to grow within a new environment.

Let's face it. IT has already been tight. IT has been tight since the dot-bomb era of 2001-2002. As some of us have already been saying, there probably is not going to be a huge diminishment in IT departments, because of the fact that the budgets have been lean, things have already been tight, companies already know, or have been running very efficiently, and IT departments have been overworked as it is.

An interesting sidelight is the whole Enterprise 2.0. JP, you and I have discussed this a little bit. The recession and downturn isn't going to be like it's been in the past. People are more empowered with social networking tools, as employees and as people looking for jobs. They're looking to start new businesses

We have a lot of tools available to us now that we didn't have back in 2000, or we didn't have back in 1991 or 1982, or any of those previous eras. People don't have to be victims of an economic downturn, as they have been in the past. We have the capability to network across the globe. We have the capability to start new businesses.

I've talked on this webcast before about a company that started a business with an $80 investment in IT infrastructure, thanks to cloud computing. I just heard about another company that spent about $200 for its first two months of IT.

Gardner: The question is, Joe, are they getting their money's worth?

McKendrick: I think they are. They don't have to invest in servers. They don't have to go out and buy servers. They don't have to go out and buy disk arrays, and worry about the maintenance, hiring people, and know how to maintain those things. There are a lot of opportunities for companies, and we are going to see that. We are going to see folks -- maybe IT people, or people who work for vendors and have been laid off -- have the ability to start their own business at a very low cost of entry.

On the flip side of that, the whole social-networking and cloud-computing phenomena, companies have these tools as well to employ low-cost methods to reach their markets and to interact with their customers. We're going to see a lot more of that as well.

A marketing campaign doesn't have to cost $200,000 to reach your customers. You can use the social network, the Web 2.0 tools, to interact and collaborate and find out what's going on in your markets at a very relatively low cost.

Gardner: From your mouth to God's ears. All right. Dave Linthicum, we have the entire future before us. What should we expect?

Linthicum: You guys took a lot of my better ideas, but I'll just expand on some of them.

The first thing I'd like to do is throw my firm out there for a bailout from the government. I think a billion dollars. I'm cash-flow positive, but I think I can do a lot with the money, including throwing one hell of a New Year's Eve party. So, hopefully the money will start coming in.

Cloud comes into its own

Number one is that the interest in cloud computing, which I have been focusing on in my career, at least for the last eight years, is finally going to come into its own, like everybody has been saying here. That's rather obvious at this point.

As far as what I can add to what's been said so far, what we're going to see in 2009 is a lot of startups, specifically some cloud-computing startups. You're going to see even more around what I call "cloud mediation." That is guys like RightScale, and a few other folks in the space that sit between you and the major cloud providers. They basically mediate issues around data semantics, performance management, load balancing, and those sorts of things.

One thing that's a big hole in the cloud computing movement so far is that most of the solutions out there, even the database solutions, are proprietary. They use different APIs, different interfaces, and different sets of standards. It's going to be a play for a lot of companies to get in there and provide more reliable infrastructure in and between these various guys out there.

I'm aware of one startup a week, and they're coming in through the funders, not necessarily through the entrepreneurs, which is unusual.

The links to social networking will be there. They're not going to be quite as pervasive as everybody thinks. Social networking is going to have its place, but once we figure it out, it will be, "Okay, yeah." It's going to have its value, but we're just going to move on as far as this revolution goes. I don't think that's going to happen in 2009.

People are going to use it as a marketing opportunity, just like they used email, Web sites and those sorts of things, and now blogging opportunities, but eventually it's just going to fall into place.

There will be a huge explosion in the rogue cloud movement, as you mentioned, Dana, and also the platform-as-a-service (PaaS) space. The architects and CIOs out there are going to be scrambling around trying to figure out how to place governance around that.

Everybody is going to be building applications, typically using free platforms like Google App Engine. They're going to start launching these things into production, and there is going to be no rhyme or reason around how they fit into the existing infrastructure. That's happening now and it's going to happen more in 2009.

In switching gears to SOA, there's going to be a larger focus on inter-domain SOA technology. The focus will still be on the short-term tactical and the ability to provide quick value in the SOA space to justify it, so you can get additional funding.

As we start building these things, people are going to look at the departments that are implementing their SOA projects and try to figure out how to bind these things at an enterprise level. I call this the micro domain versus the macro domain.

Technology doesn't scale typically to that point, as people are finding, and it's going to take a different set of technologies and a different set of architectural skill sets to solve that problem.

On the downside, the jig will be up for poor SOA technology out there. Guys who haven't been able to get acquired or haven't been able to hit that inflection point and are still stumbling along -- typically making $2-$5 million a year and burning about that much in cash -- are going to eventually just going to have the plug pulled. And, 2009 is going to be when it's going to happen. They're just going to run out of steam.

We have a few of them right now. Ultimately, they're going to have lots of cuts, start hemorrhaging cash, and they're just going to go out. Some of them may be bought on the cheap, but the majority of them are just going to shut their doors.

Decline of the SOA buzzword

Finally, the SOA buzzword out there is going to diminish in relevancy. I'm talking about the buzzword, not necessarily the notion of SOA. SOA predates when the buzzword was created, and it's going to postdate when the word "SOA" was created. It's going to morph into different things, and the cloud computing movement is going to get into it and define it in different directions.

Enterprise architecture had a chance to get in there and figure out how SOA relates back into their world. They're been fairly successful in some aspects of it, but they have been too slow in moving. The whole SOA movement is going to be more defined by the cloud. That's good for me and probably for everybody on this call.

Gardner: You predicted a couple of years ago, Dave, that SOA would get subsumed into enterprise architecture. I assume that's what you are talking about?

Linthicum: Yeah, that's what I am talking about. Most SOA is going to get practiced in '09 and '10, at least the new stuff, in the cloud-computing movement, even though it’s still SOA. Basically, It's going to encompass cloud resources. Enterprise architecture will ultimately morph with SOA, and they'll become fundamentally the same concept.

SOA, which has always been an architectural pattern under the domain of enterprise architecture, will be subsumed by enterprise architecture and will be an architectural pattern under enterprise architecture. But, we're not going to be talking as much about SOA in '09.

Gardner: Just one quick follow-up. In terms of startups, you don't seem to think that there is going to be much funding left, no IPOs to speak of. What's the business model for these startups that you're seeing, the ones that can take advantage of PaaS with low upfront costs? How do they get funded? Do they need funding? And, what's their end strategy as a business?

Linthicum: They do need funding, but they don't need as much as funding as a company a couple of years ago, just because of everything you can get on demand. The strategy for the business is basically to glom onto the cloud-computing movement.

Some of the larger enterprises out there, some of my clients who are moving into the cloud-computing space by leaps and bounds, are realizing there are huge holes in the area, such as monitoring, event management, security, data mediation, all these sorts of things that aren't built into the larger cloud providers out there.

They have an immediate demand right now, a pent-up demand that's being created by the desire to lower cost, and driving a lot of these enterprises out into cloud computing. They're seeing these holes, and they are looking for solutions to make these happen. Both the entrepreneurs and the funders have realized that these things exist, and they are scrambling around trying to get them up and running.

As far as funding goes, it doesn't take that much to get a company, the assets, and the infrastructure up and running. Most of these solutions you will find will be leveraging on-demand platforms themselves. So, they'll be coming out of the cloud, providing services to clouds.

Gardner: They might actually find some engineers to hire from all those other startups that went away.

Linthicum: There are a lot of them on the streets right now.

Gardner: All right. Mike Meehan, there must be something we've missed so far.

Meehan: I don't know if there's anything you really missed, but I am going to pretend like you have and try to get some stuff in there.

The first three have to do with the economy, because obviously everybody is dealing with what we expect to be a down economy.

Rise of the 'Yankee Swap'

The first one is going to be a blast from the recent past. If everybody remembers back in 2001, when that recession hit, all of a sudden you could buy wonderful amounts of gear on eBay for next to nothing. I remember talking to one guy who was smiling like a Cheshire Cat, because he had replaced $45,000 worth of Unix with $500 worth of Linux. I think you are going to see a lot of that.

People are going to be shutting down data centers. That's going to cause a glut of servers and storage gear and network gear, and you are going to be able to get it cheap and affordable. That's going to hit the storage and network and server companies.

New sales are going to be tough to come by, because you're going to be able to get previously owned gear at affordable prices.

Gardner: So, a great disruption to the existing channel then?

Meehan: Exactly. It's really going to hit the channel vendors. CIOs are going to be able to come in and say, "Hey, look, I'm genius. I bought all of this stuff for next to nothing." And, there are going to be other CIOs who come in and say, "Hey, you know what. I was able to get some money by liquidating our assets." That financial pressure is going to affect everybody in the hardware market.

Gardner: They use to call it a Yankee Swap. Didn't they?

Meehan: Yeah. I think you are going to see a big international Yankee Swap. So that's going to be out there.

The next one is license wars. The CIOs are coming in, they are going to be asked to cut budget, and there is only so much flesh you can cut out before you have to deal with that maintenance license budget. I think every company in the world is aware of the fact that they pay more in licenses than they want to. They have always theoretically wanted to lower those costs. The pressure now is going to be too great for them to not consider options.

This is going to be great for open source companies, which are going to be able to come in and say, alright, you don't have to pay me a rolling license, here is my support cost, see how much its going to lower your license.

It is going to be bad for Microsoft, because again, to a degree they are becoming commoditized across their portfolio, and that's going to hit them right in the breadbasket.

Gardner: Do you agree with me that in hindsight the fact that Vista didn't live up to its potential is really going to hurt them?

Meehan: Absolutely. There are still companies out there working on Windows 2000, and those companies are going to be looking to switch, that they haven't gone to Vista just makes them a free agent. And this is going to also apply to Office.

Gardner: Whoever that architect was on that Vista project, he's fired, right?

Meehan: I think he's long gone. I think he is running the charitable foundation. They not only missed it, but they reinforced every negative perception of Microsoft when they came out with Vista: The inability to meet a product deadline; the security flaws that have been long associated with Microsoft; you need a zillion patches just to get it to work and do basic things.

Everything that they were supposed to have addressed, they failed to address, and then they reinforced that. Now, companies are just sitting there asking, "Why am I paying this much money for bad software?"

Bad year on the sell side

Gardner: So, it will be a really a good year, if you are a negotiator on the buy side, but a terrible year if you're on the sell side.

Meehan: I'd think so. This should hit some enterprise resource planning (ERP) vendors too. Anybody who can sell SaaS in the ERP market is going to be doing better. I think you are going to see some erosion on the SAP and Oracle side, as far as enterprise apps go.

"Make my life easier or go away." That basically means, users are going to need productivity and ease-of-use integration. You're going to see those in requests for proposals (RFPs). If they're not stated explicitly, they will be there implicitly.

Referring to SOA projects, for example, don't come in and tell me how much work I'm going to have to do to make all of this come together. Come in and tell me how this is going to make my life easier on day one. The companies that can deliver that will be the ones making the sales. The ones who are telling you that you're going to need to do eight months of work to get this up and running are going to be pushed to the back burner.

I really think that's the lure of the Web-oriented stuff. I take issue with the notion of WOA, because I don't necessarily buy into the architecture portion of it, but I do buy into the notion that it makes your life easier. It makes things easier to do. If you are a developer, it can get your stuff up and running quickly. If you can do that in some sort of organized governable fashion, then go with that.

What you're going to see in a lot of the SOA projects out there in particular is, "All right. Make it easy for me to assemble an application. Make it easy for me to reuse my assets. Make it easy for me to modify my existing applications. Make it easy for me to integrate different applications and even information between different divisions of my company."

Gardner: When you say "make it easy," are you talking about governance?

Meehan: I'm actually just talking about the mechanical process of doing it. You almost want it to be governable on the fly. What you really want is that you don't have to dedicate too much time and resources to undertake these functions. Users aren't going to have that much time or that many resources.

For example, imagine I'm a financial-services company and I've picked up a good loan portfolio from a distressed corporate loan company that had to sell their good loans off, because they were distressed, because they had made bad private loans. I got a good package of corporate loans from them. I need to integrate that quickly into my system, otherwise I am not going to be able to effectively govern that. I'm also not going to be able to effectively create the future programs around those customers, which is what I am looking to do.

So, how quickly can I do things now, as opposed to how thoroughly can I do things? You're going to want to be thorough to an extent, but really it's going to be speed to market and speed to end of project that's going to be a determinant in there.

Telecom shakeup. The U.S. government is going to start treating telecom like its our national road system, and you are going to see some serious investment in that area. That's going to become one of the key points in the economic stimulus package that you're going to see.

I also think you are going to see European telcos begin to encroach, either through acquisition or just through offering services into the U.S. market.

The last one, HP buys Sun. Somebody is going to get bought this year, somebody fairly big. I'm saying HP is buying Sun.

Gardner: They don't need to buy them. They can just replace all their servers in the marketplace.

Meehan: Basically.

Gardner: JP Morgenthal, you're up. The predictions swan song. We must be missing something?

Morgenthal: The funny thing is, I have had you on mute, listening to everybody, and struggling, because while this was going on, I had a visit from my media-services-in-the-cloud provider. He had to come set up my new entertainment in-the-cloud service box. We still need people is the point there. So, I found that very interesting and humorous to be going on when everyone was talking about clouds.

Age of reformation

Gardner: You're talking about the cable guy?

Morgenthal: Exactly, the cable guy. The cable guy was here setting up my TiVo box. I'm going to preface my five by saying that I see we're entering into a modern age of reformation, and there are some really interesting things that are going to start occurring this year, moving forward to 2012. I know. It's my own prophecy, and it's out there, hanging on a limb.

My first prediction is that we're going to see a greater focus on the business process. Not business process management (BPM) per se, although initially people will target that thinking they are doing business process, but eventually they will get it.

I think SOA is dead, and I believe companies have no stomach for IT initiatives that cannot immediately be attributed to a value. They're going to do some small-scale business process re-engineering, they're going to get tremendous value from it, and they are going to get it.

They're going to see that simplification is the way to go. Why are we doing all these complex things -- this hooking to that, hooking to this, hooking to that? I can just go into this one box and get everything done there. I don't care that it's not sexy, okay.

The age of disposable computing is here. We have had disposable electronics, disposable cars, and disposable appliances. The age of disposable computing is here.

Number two: The backlash of social networking. We're just on the precipice. Everyone is getting into it, having a little fun. Certain ones of us are on the leading edge. We're already getting bombarded and tired. We're already fried and overloaded from these social networks. The new people think it's a great new toy.

Give it a couple of years and you are going to see a tremendous backlash. You're going to see a rise of firms that will get paid to get people off the grid -- people who made big mistakes in thinking they were having fun during their early social networking experiment.

Gardner: This is sort of like tattoos, but in the cloud?

Morgenthal: Exactly. Angelina Jolie has got to get Bobby off her butt, and it's going to cost her. We're going to start to see that. We'll see the real backlash come into effect in 2010, but we'll start to see forms of it in this coming year.

Third, the pain from the economy is going to impact the open-systems market. We're seeing the rise of what I call the "anti IT." You hit upon that. You read about people reaching into petty cash, doing things on the cheap, finding other ways to get things done.

The one that's going to be the biggest impact is that people are treating open source like free software. That will destroy the open-source market for sure. It's the death knell. It's the stake in the vampire's heart.

People don't get it. I remind every one of my customers of that, when I talk to them, and they ask about an open-source solution. I've got to put my warning out there. Open source is not free software. You're either contributing dollars to the team that's doing it, or you are contributing your time and effort. It's not free software. You just don't take it and use it. That will be the death knell for open source for sure.

Gardner: Wait a minute, a death knell for open source or death knell for commercial open source as a business model?

Morgenthal: That's a good question. I won't differentiate at this point, because I'm looking at it from the perspective of the event horizon, where people are treating it like free software. There is no free lunch. Somewhere it's going to take hold. There's going to be a lack of support or a lack of desire to continue this thing, if people are abusing the system. It happens all the time. Nothing will drive greater abuse of open source than a bad economy, where there are no dollars.

Gardner: Okay. What else have you got?

Morgenthal: Number four: the millennial workforce is starting. This is going to change everything, and it's starting to already. These people have attitude that I haven't seen in a workforce since marketing people came out in the dot-com era.

They definitely feel like, "I want my toys. I want to be able to use my phone at work. I want to use my computer at work. I want to be able to access my sites at work." I see companies dealing with this issue in a unique way.

Their attitude isn't, "If you want a job, then you have to deal with it in our way." It's, "I'm scared. I don't know where I am going to get my workforce for the 21st Century, and I don't know how to deal with these people." Their first inclination isn't to push back with the old adage and the old way of talking about it, saying, "Hey, it's our way or the highway. We've got the money." It's "Okay, what do you want?"

This is going to really change things. How? It's yet to be seen, but clearly the introduction of a much more mobile force, more telecommuters.

Gardner: Most of us.

Morgenthal: That's a lifestyle choice. Yeah, it's pretty interesting. The millennial workforce is going to change things dramatically.

Shift in patent landscape

The last one is that there's a big change coming in Digital Rights Management (DRM) and patent and copyright. It's being lead by this initiative out of Harvard with the Recording Industry Association of America (RIAA). RIAA may have just started a war for everybody in the industry who has any copyright or any patent infringement suit. The judge in case said, "All you people, you big companies with big lawyers and big money, are taking on these poor little schnooks, and it has got to stop. They are coming in here and they don't even know what their legal rights are."

Gardner: Do you think this what Nathan Myhvold is up to?

Morgenthal: I didn't see his name associated with it. It was actually a Harvard law class, I believe, represented by a Harvard law professor [Charles Nesson], backing it. They're representing it as unconstitutional. So this case could be landmark for DRM, copyright infringement, and patent infringement.

Gardner: So, the basic message is kill all the patent trolls.

Morgenthal: It could be, and it would have a tremendous impact going into the potential for a startup economy. Dave talked about the startup economy, where downtime is a great time to start a new company and a great time to get out there and get your technology done early.

Landmark cases like this will do a lot to further the opportunities of these firms to go out there and build something without worrying, "Am I going to get taken out by Microsoft? Am I going to get taken out by Apple? I can't afford that." It's really interesting what could happen, given the cases like this are now falling on the side of the small guy, and not on the side of big companies.

Gardner: Right. Big companies were the victims of the patent trolls, now they are becoming patent trolls themselves.

Morgenthal: Yeah. They're hiring companies to go eat these things up, and then they are going after the small guy. We had multi-million dollar lawsuits over patent infringement for technologies that people hadn't even built or owned. I really think that the greed of Wall Street is also going to see that backlash, and it's going to lead to more of the same, or at least help those cases significantly.

People who have made big money pillaging the system over the years, in the age of reformation, are the ones that are going to get hung in the next two to three years.

Gardner: We're just about out of time. Let's go quickly down our list for any last synthesis insights.

Jim Kobielus, senior analyst at Forrester Research, thanks for joining. What's your synthesis of what you have heard?

Kobielus: My synthesis is that we are living in a very turbulent and volatile time in the industry. Things are changing on many levels simultaneously, and a lot of it will just be hammered by the recession. Approaches like cloud, social networking, and everything will be driven by the need to cut cost and to survive through fiscal austerity for an indefinite period.

Gardner: Tony Baer, senior analyst, Ovum, what's your takeaway?

Baer: It's hard to know where to start, but if there is one way to look at, it's back to basics. There are a lot of complex issues, and I think it's all going to be resolved locally, which in the long run, is going to present a huge governance challenge.

Gardner: Brad Shimmin, principal analyst, Current Analysis, what's your current analysis?

Shimmin: Currently, I'm thinking that the millennial generation and the down economy are converging like a perfect storm to wipe away what we have known for the last 10 years, and then ushering either perfect terror or a great new economy. I'm not sure which yet.

Gardner: Joe McKendrick, independent analyst and blogger, what's your toxic IT prediction?

McKendrick: We're definitely at a turning point. I agree with what everybody is saying out there about growth mode. Dana, I like your observations about the rogue or the shadow IT. You're going to see a lot more of that. It's been predicted for quite a few years actually that IT is going to be less of an entity onto itself and more of a function that's built into business units.

Business people are getting more involved in IT. Business people are getting more savvy about IT. JP talked about the millennial generation. They're very savvy about what IT and the power of IT can provide. We're going to see less of IT as a distinct area of the business and more part of the business, an enabler of the business. This year is going to accelerate that.

Gardner: Dave Linthicum, founder of Linthicum Group, what are you seeing from what you have heard and what's your net-net?

Linthicum: I think it's going to be one of the most exciting couple of years in IT. Just by sheer cost pressure, we're going to have to get down to simplifying and solving some of these issues, and not just playing around with technology. Things are going to get more simplistic, more effective, and more efficient than they have been over the last 20 years of building layer upon layer of complexity. We just can't afford to do that anymore, and now we are going to have to go fix it.

Gardner: Mike Meehan, senior analyst, Current Analysis, any additional takeaways?

Meehan: There's a lot of panic out there, and in keeping with one of the great holiday traditions, I think the winner is going to be Mr. Potter. The future belongs to warped, frustrated old men.

Gardner: He's buying up all those mortgages for pennies.

Meehan: Exactly.

Gardner: Alright. JP Morgenthal, one last go. What do you see from what you have heard on a high-level takeaway?

Morgenthal: Opportunity and fear -- and it's a matter of which one is stronger. I have no prediction as to which will win out. They're both equally powerful right now, and it's going to be, as Dave said, exciting to watch these two clash and see which one wins.

Gardner: I guess my takeaway is that we don't know how long it's going to take, but we will come out of this period. Survive anyway you can, but be mindful that on the other end it's going to be something quite new, with a lot of opportunities, and it's going to look a lot more like Internet time, and the clicks will mean more than the bricks.

Well, thanks all very much. Have a great holiday season. Please take a few days off and relax with your families.

I also want to thank our Charter Sponsor for the BriefingsDirect Analyst Insights Edition podcast series, and that is Active Endpoints, maker of the ActiveVOS visual orchestration system.

This is Dana Gardner, principal analyst at Interarbor Solutions, thanks for listening. Have a good year in 2009, somehow.

Listen to the podcast. Download the podcast. Find it on iTunes/iPod. Charter Sponsor: Active Endpoints.

Special offer: Download a free, supported 30-day trial of Active Endpoint's ActiveVOS at www.activevos.com/insight.

Edited transcript of BriefingsDirect Analyst Insights Edition podcast, Vol. 35,on how analysts see cloud computing, SOA, the economy, and Obama in 2009. Copyright Interarbor Solutions, LLC, 2005-2008. All rights reserved.

BriefingsDirect SOA Insights Analysts on IBM's Information On Demand, SAP's Business Objects Grab, and How WOA Meets Guerilla SOA

Edited transcript of weekly BriefingsDirect[TM] SOA Insights Edition podcast, recorded October 19 , 2007.

Listen to the podcast here. If you'd like to learn more about BriefingsDirect B2B informational podcasts, or to become a sponsor of this or other B2B podcasts, contact Interarbor Solutions at 603-528-2435.

Dana Gardner: Hello, and welcome to the latest BriefingsDirect SOA Insights Edition, Volume 26, a weekly discussion and dissection of Services Oriented Architecture (SOA) related news and events with a panel of industry analysts, experts, and guests. I'm your host and moderator, Dana Gardner, principal analyst at Interarbor Solutions.

We’re joined by a crew of three analysts and experts this week (week of Oct. 15, 2007) to discuss three basic topics, some timely, some deep and interesting. We’re going to discuss the recent IBM Information On Demand Conference and some of the news that’s emerged from that.

We’re also going to discuss Business Objects, its pending acquisition by SAP, and the news that Business Objects has been making in a very hot business intelligence market.

We’re also going to take a quick look at the pending or I suppose "sought- after" acquisition by Oracle of BEA, and what that might portend for SOA-oriented vendors in the space or the consolidation trend that we’ve been seeing for several years now.

[UPDATE: Latest business story around BEA and Oracle.]

The rest of the show today is going to deal with SOA and what’s also called Web Oriented Architecture (WOA). We want to sort out how they relate to one another, look at the notion of RESTful and some lightweight approaches and whether that is a subset of SOA or an alternative parallel universe.

To help us sort out these interesting topics, we’re joined today by Tony Baer. He is a principal at onStrategies. Welcome, Tony.

Tony Baer: Hi, Dana. How are you doing?

Gardner: Doing great. Also joining us, Jim Kobielus, principal analyst at Current Analysis. Thanks for joining Jim.

Jim Kobielus: Thanks Dana. Hi everybody!

Gardner: Also joining JP Morgenthal, CEO of Avorcor. Welcome JP!

JP Morgenthal: Hello, everyone and thank you.

Gardner: Let’s first get into the more time-sensitive issues. Jim Kobielus, you just came back from an intense road trip, attending both the IBM event and a Business Objects event this week. Let’s start with IBM. What are the main takeaways from the On Demand event that you attended?

Kobielus: It was Information On Demand in Las Vegas. About two years ago, IBM established an organizing framework for their data management, database integration, and other data solutions, called Information On Demand, and it’s just a big catch-all for the products they already had, as well as lots of new projects they’ve been developing to address data management under the SOA big top.

Last year there was a big splash, when they brought together all of their data integration and data quality tools under the solution family called IBM Information Server and integrated it all through common metadata and tooling. That was an excellent show.

This year another excellent show. I’ve been to lots of industry shows and have never been to a show with this many announcements on one day. On Monday of this week, IBM released 10 press releases, and even those press releases didn’t capture every nuance of every product announcement, enhancement, and initiative they've got going on.

It was overwhelming and impressive. First of all, IBM is enhancing pretty much every single component of their Information On Demand portfolio. They announced upgrades or enhancements to their databases, data warehousing products, their master data management (MDM) products, their data integration products under the Information Server portfolio, their enterprise content management products, the FileNet products, plus the preexisting IBM content management products.

They announced enhancements to the pre-packaged industry-solution accelerated frameworks for banking, retail, telco and so forth, to enable quick deployment of data integration and MDM.

They announced a broader range of new global professional services geared toward Information On Demand and various verticalized project accelerator offerings in Global Services. I'm looking at my cheat sheet right now, because I have to keep reminding myself exactly what transpired.

They announced that they have integrated their recent acquisition of DataMirror and its changed-data capture and a real-time replication technology into the Information Server data integration suite and also their database warehouse products and their MDM Products for real-time business intelligence (BI), data warehousing, and so forth. They also announced that they had re-branded the recent acquisition of Princeton Softech products Optim family under the IBM brand, but didn’t make any significant feature enhancements beyond what Princeton Softech was already providing.

They did lay out a reasonably good roadmap for further integration of Optim into IBM’s overall data governance and data management solution offerings. One very important uptake is that IBM, which has multiple MDM products they acquired from vendor acquisitions, is converging them onto a single product platform. That will be extensible and will be their flagship MDM server platform fully integrated into IBM Information Server and fully integrated into the DB2 9.5, the new version of the database and into the DB2 Warehouse 9.5 Data Warehouses. That’s a work in progress.

They’ve basically taken one of the existing MDM products, IBM WebSphere Customer Data Integration offering and they’ve made that essentially the DNA underlying this new converged MDM server, which will address more than just customer data integration for product information management, financial hubs, etc. So they have clearly designated a convergence platform that will be released sometime in the first quarter of 2008.

Gardner: Let me pause you right there. Now, just for a little historical context, IBM, which was very strong in databases for years with DB2, went on a bit of a buying spree a few years ago, including Ascential and some others, elevating the value of data, as a precursor to the move toward SOA. They recognized there were several major trends taking place that people wanted to cleanse and consolidate data, wanted to look at data as something separate from specific applications, and move towards the services-layer approach to data as well as MDM, and data warehousing, which is intelligence.

So, a number of industry-wide trends have buttressed IBM. They’ve been aggressive just recognizing that if they can offer a complete, integrated, and simplified approach to data as a separate resource unto itself, it gives them great entree into other aspects of SOA, as well as taking advantage of the hardware and storage requirements beneath this, the storage area network (SAN) requirements and also the management that helps their other management products such as Tivoli. Does that make sense?

Kobielus: Everything you said applies directly to IBM. One of the most exciting things from the show was that IBM is getting deeper into mashups with their tooling and their overall product and solution portfolio. In other words, everything in the IBM Information Server and the latest enhancement through all the databases is very SOA-focused, but now IBM seems to be getting into what someone call WOA through a mashup toolkit, IBM Mashup Starter Kit.

They have a mashup hub, this mashup online community called QEDWiki. And, more than just the tooling, they laid out a very interesting overall organizing framework to address this area called Info 2.0. It’s not a product, but simply a vision. They had a very good discussion of where they’re going, and it’s equivalent to some of the other interesting visionary mashup offerings in the data mashup.

Gardner: Just hold that thought. I want to go to Tony Baer. Tony, given what Jim has said about IBM and what you know about their emphasis and approach to data information, content, and almost any objects now, when you bring in FileNet and its capabilities, where do you put IBM in the greater scheme of things.

Do they really have a leadership position here or they’re trying to bite off too much? How do they compare to the other big data players, particularly Oracle?

Baer: What's really interesting is the whole idea of IBM biting of more than they can chew. IBM and Oracle are among the few organizations that could pull off something like this and not be overwhelmed by it. You and I saw this several years ago when Ascential had it’s analyst conference right after the acquisition by IBM and they revealed the roadmap. What's impressed me is that it’s been a very deliberate plan.

A cornerstone of that was Information Server, the whole information-server strategy. Ascential itself was kind of a mini IBM, a company that was glued together by acquisition. What they realized was they had all these disparate tools that ultimately related to the lifecycle of data in all those different forms, and, prior to the acquisition by IBM, they had a roadmap which, I believe, was called Hawk.

Kobielus: Hawk and Serrrano. They had two roadmaps, Tony. They had to converge last year.

Baer: Thanks, Jim. The interesting part was that it was all going to become metadata driven and that would drive all the data-integration and data-access strategies. So, I see that as the unsung hero of all this. It provided a more global perspective IBM needed and rationalizes all of these other initiatives. It’s not that everything is acting off of Information Server as a hub, but it provides a logical core or gut unification theory.

Gardner: Oracle, also dominant with their database and installed base, moved aggressively into middleware and business applications, particularly back office applications. Did Oracle give short shrift to this whole notion of warehousing, cleansing, canonical views of data and the whole BI area? Is Oracle catching up to IBM?

Baer: Oracle has had an obviously different focus, which is more at the application layer, whereas IBM has been more focused at the integration layer. Yes, Oracle now has the integration strategy called Fusion, but Fusion is like a big, blank space waiting to be filled. I don’t want to get ahead of ourselves here, but it’s part of what underlies the BEA acquisition.

Gardner: Of course, they paid a pretty penny for Hyperion trying to catch up in that.

Baer: Up until about a year-and-a-half or two years ago, Hyperion was IBM’s OLAP data-warehousing partner. One surprising thing during all those years was why IBM didn’t acquire OLAP. IBM eventually grew that capability themselves, but to answer your question, Oracle has been clearly focused on application integration, and they have all these application lines that are becoming the critical mass, the core focus of their business. So, from that standpoint, they probably have taken their eye off the ball in terms of data as a service, per se.

Gardner: Let’s go to JP Morgenthal. JP, as a CEO of a professional services and consulting organization, you are in the field. Rather than talk about this through the eye of vendor sports and who is doing what versus another, what are the users interested in, and how important are all these exclusive advanced data issues to them?

Morgenthal: You always have two different communities -- one very active, very leading-edge groups like financial services, and then there are always on the lookout for new technologies that are going to help them do their business faster and better, doing lots of more. They are not risk averse they are willing to throw some additional capital at those projects and see what they’ll bear. Right now they are the primary community that I see that’s really gung-ho on this.

The other group, let’s call them the moderates or the laggards, definitely view this technology as questionable. There are a number of people who walk the line, especially in IT, and say, "Oh yeah, SOAs the future," but have no idea why they are saying that. They have no understanding exactly how they would leverage it in an organization and, when given the opportunity to gain a better understanding, are more likely, at least in my experience, to push it off, stick with their existing environments, and not worry so much about SOA. In fact, they still lean towards, "I want a complete application. I really don’t want to play with this stuff."

Gardner: What about this issue of creating a comprehensive strategy around the lifecycle of data and about how that would be a precursor to SOA activities, but in the meantime getting the benefit of things like BI, data warehousing, data mining, and a better view across all the data that’s available into what's going on in the business?

Morgenthal: They love the idea. Right now, a majority of business management is focused on the business, the economy, and the other things affecting them. Those are nice to have right now, but aren't critical for most of them and that’s the way they view it.

Gardner: That's an interesting take, because this notion of getting your data act together isn't trivial. It’s very complicated, and there are a lot of interdependencies. It’s costly and it smacks of doing your homework in preparation for something that might pay off later. It's like eating your peas. Nobody wants to do it, but this is a discipline.

Therefore, people might be pushing it off, which relates to what IBM is doing, which is trying to make this comprehensive, more simplified, and more integrated, so that, in addition to those cutting edge organizations in such fields as financial services, this could be more palatable for the larger bell curve of enterprises. Does that make sense?

Morgenthal: From their perspective, yes. My concern for the industry as a whole is that people are going to view it as throwing a lot of consulting dollars down the drain and not seeing any value for it. I’ve recently joined the camp, at least academically, not in any way physically or throwing my weight behind it, but Guerrilla SOA is what I have been doing in my business. I just haven’t put a title to it.

I'm much more in favor of small, non-enterprise oriented, focused projects that deliver value within 30 to 90 days. I see that’s the greatest value right now for using these technologies based on SOA, Web services, and the like, because the enterprise stuff is nice, but right now it is too fluid for the industry to grab hold of. It’s resulting in potential large-scale problems for companies that have no idea how to build the distribution.

It all comes down to distribution. The problem with distributed environments is that very few people actually know how to manage them. In IBM’s case, they are one of the founders of distributed computing. At their core, they understand it well, but they buy too much into their own marketing hype and don’t tell customers well enough, "Hey, look, at the core of all this, of what you’re trying to do, trying to get more agile, we lived there. We built the first computers that became agile and communicated across network."

Gardner: Okay hold that, because we’re going to come back to that with our WOA discussion. That was very good. Let’s circle back quickly to Jim Kobielus. You also attended the Business Objects show, what was the big news there and what were people saying about the SAP acquisition?

Kobielus: The big news there of course was the pending acquisition by SAP. One of the good things was, at the very start of the keynote, Bernard Liautaud, the founder of the Business Objects, reassured the customers, employees, and partners that Business Objects will be a standalone product group under SAP. It will autonomous. It can continue to pursue its vision.

Right after Bernard spoke, they has a video from Henning Kagermann, the Chairman of SAP, issuing the same set of reassurances. Kagermann went into a little bit more detail in that video than they did the previous week when they announced that they are planning to acquire Business Objects. He said explicitly that SAP will not force Business Objects to use SAP technology.

It will up to Business Objects whether it makes sense to use a particular piece of SAP technology in any given product, but he reassured everybody that there will be growing integration between Business Objects and SAP offerings.

But Kagermann intends to have it both ways, because he then said, “We will also make sure that Business Objects maintains an equivalent level of tight integration with all of our competitors.” He's trying to have it both ways, but at least Kagermann was speaking the right speak. From my discussions afterwards, everybody said, "Yeah, I think they are speaking in good faith. So far, so good. We’ll wait and see." The deal has not been closed yet, and it will be a couple of months.

Gardner: This proposed merger, I think, caught some people by surprise. There is continuing consolidation in the BI space, and there are a couple of other players out there, including Cognos, that people are curious about. SAP seems to have maintained for some time that they didn’t need something like this, that they had already a sufficient visibility into operations and intelligence. What changed in the world or what changed in SAP that required them to go out and get this company?

Kobielus: Oracle. Oracle is into aggressive acquisitions and continuing to bulk up performance management, BI and everything else. I think SAP saw the writing on the wall. If you look at Business Objects, its total product portfolio, in many ways, overlaps with what SAP already has under the NetWeaver umbrella, but SAP has much more, of course. They are complete SOA vendor and a complete application vendor.

I see the convergences that are going on are all being driven by SOA mega brands that are continuing to bulk up on the full range of best-of-breed tools that enterprises are asking for. SAP, although it has BI, data warehousing, and data integration under NetWeaver, none of that is best of breed. It’s all primarily just in the box when you license their CRM or ERP applications.

Gardner: Not a lot of market presence for those yet, is there?

Kobielus: No, not really. SAP’s BI tools aren't on anybody's short list -- "Oh, I have to get BI and, therefore, I want to evaluate NetWeaver BI." SAP realizes that to go after Oracle or defend themselves against Oracle, they needed to bring in a BI mega brand under their big top, which is what they are doing.

Then again, there are a lot of complimentary aspects between the two companies in terms of product portfolio, but clearly there is a lot of head-on competition. Performance management is getting crazy now, because SAP acquired OutlookSoft, Business Objects acquires Cartesis, and several other companies, and now they've got excessive duplication of financial analytics applications under the SAP family.

Gardner: Speaking about mega brands and vendors, let’s move to this BEA-Oracle, proposed acquisition. Oracle apparently making a maybe not hostile, but not seemingly friendly, bid for BEA. BEA doesn't necessarily say "Go away," but, perhaps, "Sweeten the deal and we can talk."

Again, we don’t know how this is going to pan out over the several weeks, but we do seem to be having a bifurcated approach in the market. On one hand we've got the Larry Ellison view that it’s only going to be two or three IT companies in the world in 10 years, and he's going to be one of them.

Then we have this other view around WOA. What JP mentioned. Let’s just do Guerrilla SOA. Let’s do what's going to make sense for us and have a relatively short return on investment, something that brings us agility. It explains why stacks around LAMP and Open Source have been popular and why tools have moved to more of an open source in an Eclipse framework. It explains why things like Amazon’s EC2 are popular with people -- just make something, load it up, and use it -- and the advance of things like scripting languages and Ruby on Rails. This is a different approach to the market.

Let's go first to Tony Baer. Tony, do we need both? Do we need the big-vendor, top-down, mega-brand -- "We’ll do it all for you and in fact, we won’t even be your vendor, in a sense, we’re going to be a partner of your company. We are going to be linked at the hips for the next 50 years?" Do we need that, and, if so, at the same time, do we also have to have this grassroots, "Let’s do it with what we can -- simple, down and dirty?"

I believe Adam Bosworth a few years ago jumped on this and said, “Geez, let’s just do what we can do, use the Web, use the simple protocols, keep it simple.” How do these two things relate, top down and bottom up?

Baer: It really reflects the state of the software-development world today. Parts of this argument we could have had 10 years ago, the whole idea of the big umbrella vendor. If nobody wanted a big umbrella vendor and wanted best of breed, SAP would not be what it is today.

I remember during the emergence of the ERP market about 10 or 12 years ago, there was a debate: “Shall we go best of breed, versus an umbrella approach?" The market has clearly spoken. However, what you've gotten at the same time is a revolution that picked up steam with the original Borland IDEs and the popularity of bottom-up development, and was energized by the original Visual Basic. There is a powerful constituency of organizations that need Guerilla SOA and need to get it done now. It’s also behind the rise of agile development.

So, you're always going to have the two, because no matter how heavily an organization enforces enterprise architecture standards or has a standard reference architecture or preferred vendors and sources and technologies, there are always going to be people within the organization's small pockets doing their own thing. That was very much behind the rise of Linux.

So, the two will coexist, and the degree of presence within organization will reflect the internal culture and politics. I don’t think in any organization you are going to have a 100 percent of one and 0 percent of the other. They are going to co-exist, and the challenge is reconciling the two.

Gardner: Jim Kobielus, isn't there the likelihood that there are going to be some organizations that are centralized, that are going to make big strategic decisions and say, "We are an IBM shop, a Microsoft shop, or an Oracle shop?" And they will go to a full across-the-board partnership with that vendor. There might be certain advantages to that over time, in that they’ve only got one or two skill sets to maintain for development and deployment, and they can make deals with the vendor, but there is also risk. They get lock-in and they can be told what they are going to pay for IT, and not get a chance to bid for it.

So, there’s one type of organization, and we've seen plenty of examples of that. At the same time we've seen organizations that say, "Listen, we want to have a variety of technologies, to be experimental, to innovate, and to take advantage of the latest and greatest. We'd like open source, we like visibility." Are we talking about bifurcation between one kind of a company and another kind of a company or are these going to be influences that happen inside the same company, and but might lead to tension and even discord.

Kobielus: I don’t think it’s bifurcation between one type of company versus another. Most companies will continue to standardize on a limited range of strategic vendors for their core infrastructure. However, in every organization you have alternate sourcing approaches that different individuals and groups and functions pursue at various times.

Everybody is going to run around the corporate standard, if the corporate standard doesn’t meet their needs. It’s the actual knowledge workers, the end users. If IT can't give them what they need, they are going to find it some other way. If what the knowledge worker needs is not being funded out of capital budgets and being supported by IT, they're going to pay for it our of their monthly expenses. They are just going to grab it for free on the Internet and mash it up.

One of things that I liked at the IBM show was, as I said, the Info 2.0 strategy. They explicitly said, "We recognize that our core customers, the Fortune 500, the IT groups, etc., are very top down in terms of, "We would love them to go with the IBM mothership, but we recognize that the people on the front lines are feeling the pain points."

The knowledge workers don’t necessarily subscribe to that top-down, monolithic approach. They will go out and grab what they need from the Internet. IBM would love to provide the basic tools, be they closed source, open source, or whatever, that becomes de facto standard for knowledge workers meshing up everything allover creation. Different individuals in organizations take different approaches to get the solutions they need ASAP.

Gardner: JP, in the field, do you find that some of the clients you work with are of a mind to be either centralized and big-vendor oriented, comprehensive and strategic, or do they have a culture that tends to be more of the Guerilla SOA approach. Is it a shift from one company to another and how they do this? Or are these things happening simultaneous inside the same organization, both the top-down and bottom-up approaches?

Morgenthal: In the past year and a half, I've been focusing more on the small and mid-sized market, and these guys just want to get something done. The interesting thing is that they don’t spend their time sitting there wondering, whether they're going to do Web services or SOA. It’s more like 1,500 calls coming in a day, they’re being bombarded, and yet they still have to get stuff done. So, it’s the backlog.

Then you come in and you tell them, "Hey, in three weeks I can give you a completely new wrapper around everything you have, leave exactly what you have in place, but allow you to do everything you wanted to, the way you want to do it." At first, they say, "Right, show me." Once you show them, it opens up a non-stop flow. They get it the minute they see it.

The biggest and most exciting thing I have seen is that the end users, who have been using the same system the same way for maybe 5 or 15 years, get a whiff of this new stuff. At first they’re hesitant, but they approach it, they grab it, and they absorb it. A week later, they're asking you, "Can we do this, can we do that, can we do . . . " All of a sudden, it just starts a fire, and that is really the most amazing thing I have seen a long time.

The alternative in my world is to spend a year implementing Red Prairie, Manhattan Associates, JDA or something like that, and, maybe after painful process of learning how to use all the new screens and new data, you might get something good out of it. You can just almost feel the "running on ice" that the end users are getting through this process, versus the modern quick, "Wow, this is amazing. Let’s build it and let the business drive it." They take hold of it and they take the responsibility. They're hungry and they start asking for new features within a week

Gardner: It really opens up innovation at a level where people in IT can have a complementary relationship, rather than a sequential one.

Baer: Yeah, it’s a cool development by so-called amateurs, facilitated by their social network-- the whole Web 2.0 thing. It has a Facebook paradigm almost.

Gardner: Lets do a little primer stop here on WOA. As I said, my first smell of this in the market was probably four or five years ago, when Adam Bosworth, who, I think, at the time was with BEA, and who recently just left Google, brought a sort of manifesto. "Enough with all this distributed Java stuff, the heavy lifting, the intense object orientation, and these long, sequential development projects that take 6-12 months. Let’s get down and dirty with the lightweight, take advantage of open source, start using scripting and being 'of, for and by' the Web."

That sort of led to talk of rich Internet applications (RIAs) and we had the arrival of and wildfire around AJAX, that was related to SOA activities, where we could have mashups and front ends of Web services that would relate to a SOA backend or architectural approach.

Then about a year or year-and–half-ago, we started seeing WOA. I believe it was a Gartner acronym -- they are very good at acronyms -- and it’s also been called Enterprise Web 2.0 or Enterprise 3.0. But, it’s really putting emphasis on REST, as a way of leveraging HTTP as a Web service, and now WOA is becoming more of an emerging best practice. Guerrilla SOA better captures what it’s up to or about than WOA. We have seen a number of people, including Dion Hinchcliffe, be prolific on this.

So, this notion of an application with a REST style for building Web services based on straight HTTP and XML sort of applies to what JP has been talking about. Are we talking about the same thing? Are Guerilla SOA and WOA the same thing, Tony Baer?

Baer: I would say that conceptually they're similar. I'm sure there are probably purists who would probably come up with their own unique definitions to reflect the idiosyncrasies of each of the terms, but, I think it refers to an overall style that JP describes very well from his experiences in the field. It’s the same drive that’s basically made agile-development techniques so popular.

The idea is that we have pain points we need to address today, but we need a planning methodology that’s robust enough so that we don’t keep chasing our tails. At the same time, we also need technologies we can use to make this simple.

For example, when you look at just the difference in style between conventional Web service and RESTful, there is a little bit of an irony. Conventional Web services were touted as a simpler alternative to an earlier incarnation of SOA, which was CORBA. This reflects a growing maturity in the field. As we started getting a little more experience working with some of those Web-services technology, we realized that maybe we didn't always need those complicated SOAP headers. So, why not dispense with that, because most of our needs right now are for simple things like fetching data.

So, going back to some of the old SQL metaphors, a lot of the RESTful style owes a huge debt to SQL, simple commands for getting, inserting, and changing data. So, if it gets the job done, who cares about trying to do these complex, composite, orchestrated applications? Let’s just use some REST style, and by the way, why don’t we just mash up the results on a screen.

Kobielus: Can I say a few things?

Gardner: Yes, please.

Kobielus: I could out-acronym Gartner any day of the week, so I'm going to call it GOA. We have Guerilla Oriented Architecture versus Governance Oriented Architecture. When we talk about standard SOA, it’s GOA, for governance, software development lifecycle, and so forth. Until a couple of days ago, when you guys told me of this acronym, I hadn’t even realized that there was a new acronym here.

The ‘W’ in WOA stands for Web. If you think about the new paradigm, the ‘W’ could stand for Water cooler, it’s Water cooler Oriented Architecture. It could stand for Wow!, the user doing something and saying "Wow, hey, I'm going to share this with you in my social network. Look at this that I just built. Can you add on to this? It could stand for Wiki . .

Gardner: Or Widget.

Kobielus: Yes, Widget, exactly. Hey, I’m going to write this down. It could stand for Wiki Oriented Architecture, that sort of governance-light, or governance-free style. It could stand for Widget…

Gardner: Wisdom Oriented Architecture, wisdom of the crowds, right?

Kobielus: Yeah, I'm agreeing with everything that Tony, JP, and you, Dana, have said. This is coming on like gang busters. If IBM feels that it needs to assertively establish its own framework in this new paradigm, and then to provide multiple tools, and to really put a high-level mucky muck to talk about this vision with the analyst community, I think it’s pretty serious.

Gardner: All right. Is this a case of barbarians at the gate, where we have got the water-cooler folks, who are just technically savvy enough that they can do mashups? Some of the younger folks who come into organizations from colleges where they have been building their own pages for years are very adept at working with scripts, HTML, and XML. Are they just going to say, "Listen, we’re not going to have anything to do with IT. You just give us the APIs, give us access to the data, and we'll make the business processes, the Guerilla SOA happen." Is that what we've got here?

Baer: Yeah, pretty much.

Gardner: JP, what do you think? Is that what you’re seeing?

Morgenthal: We can’t help but to constantly be impacted by the knowledge of students coming out of school more and more technologically savvy. My kids started using a computer at three years old. They were already programming at 13-14 years old. So, are you telling me that they’re going to sit around and wait for Joe up in IT to come down and fix something? Are you kidding me? These kids are setting up their own network. They’re hooking up wireless. They’re using cell phones as tools.

These people are not going to sit around waiting for some guy in a glass house, and businesses better learn that now, and better start preparing for it now.

The way to do that is to start looking at their existing systems and figuring out where things are bottlenecked, where things are log jammed, and let them run with it. Otherwise, they’re going to get frustrated and they’re going to go to the places where they can do that.

Gardner: So, it’s almost a radical departure. We’re looking at innovation almost like we’ve seen in markets. Venture capital will spend dollars across multiple startups, knowing that a large percentage of them will fail, but that they get innovation and they get disruption as a result, and they are willing to accept that risk.

It seems as if we could take this a radical step further, which is to say, we need to decompose and change the actual structure of corporations, to not be large assemblages of reusable and extendable and scalable resources; whether it’s logistics, shipping, manufacturing, energy, or IT. Instead, we should look at this more like an ecology, a universe of different folks -- either individuals or small groups -- going out, being innovative, letting some of them fail, but when something sticks and works, then start using it as a standard operating procedure.

Does anybody share my view that this could really move towards a radical change of how corporations are actually structured?

Kobielus: What it comes down to is that a corporation innovates, differentiates, and survives based on the initiative of individuals taking the bull by the horns and solving problems. So, in a sense, BI could stand for Business Initiative.

It comes down to the knowledge workers and the people who are in the operational front lines. Generally they feel the pain, and, therefore, they have the greatest personal stake in implementing a solution ASAP at some micro level that addresses at least their local pain point.

So, you want to empower these people. You want them to feel that there is a quick time to a solution, that the solution is within their control, and that they can implement it without too much paperwork and bureaucracy.

Gardner: The recent The Economist magazine that came out October 15 has a special section on innovation. Interestingly enough, they sort of pointed out the same conundrum. The corporations traditionally needed to exist because of the requirement of huge capital brought together in large R&D budgets to solve massive technical problems. They're being overshadowed by groups of 8 to 10 people that then create a startup using their credit cards, access to Web services, and low-cost computing, storage, and networking. Innovation is happening among these small groups.

It almost negates the advantage that large corporations have had. If it's the case that the structure of the corporation shifts towards grassroots, be it inside the organization or from small companies that they look to as suppliers, or potential acquisition targets, then what does that say to the view of somebody like an Oracle or an IBM which are bulking up and trying to become everything to everyone, particularly those large corporations?

Kobielus: Well, it comes down to the fact that the centers of initiative or centers of excellence need to be encouraged. When I say "centers," actually decentralized centers of excellence, need to be encouraged, empowered, and have control over the tools available to them. They need to be able to mix and match across the SOA universe. They're not going to necessarily want to buy everything from Oracle, SAP, or IBM. It comes down to: they need their money and they need to be able to control the purse strings locally to meet their local requirements.

Gardner: What I’m getting at is that the rationale, or one major rationale, for the very existence of corporations was that they needed to have scale. They needed to be able to create enough capital under one roof to create efficiencies for all the participants in the corporation to leverage. Now, it's shifting away from "under one roof" to the Web, so that you can now get a lot of the resources. The scale and efficiency actually works more in your favor, when you go decentralized. That much you needed to do before under a large cap-ex expenditure kind of environment.

Does anybody following me on this? The Web itself and the WOA and the Guerilla SOA are all part of the same trend, which is away from the need for a large corporate umbrella, but that you can get things done, satisfy customer needs, be innovative and agile in new markets, and can go global, all based on not needing one big umbrella, but leveraging what’s able across a rich, fertile, open ecology?

Kobielus: You hit on the important metaphor there, and it’s a horticultural metaphor, away from the walled garden, toward more of a wildflower meadow. Let a thousand flowers bloom. A vibrant corporation is one that can to sustain an ecology of wildflowers. The beautiful ones pop-up and get cultivated, and, hopefully, it’s a prettier meadow, generation after generation, through natural selection.

Gardner: We’ve discussed on the show many times how SOA is disruptive, requires cultural and organizational change in companies, and it’s really hard. We’ve had the discussion of the culture within IT, and the culture within business. How are we ever going to get them to come together?

Maybe we ought to take the disruption discussion to another abstraction level, which is to say, "To hell with the big corporation, and the central IT department. Let’s create small, independent companies, where people can live and work anywhere, can contribute their expertise, can be innovative, and, in a sense, we're talking about the deconstruction of the monolithic corporation that’s been with us for a couple of hundred years.

Baer: Dana, if you look at the evolution of the manufacturing sectors versus the automotive industry, it’s a great case in point. There's been a devolution from the classic, "build everything under one roof," which was epitomized by the Ford River Rouge Complex to today's auto industry, where essentially they're putting together what could be called agile coalitions of suppliers. The companies that best tap that are the ones that can reduce time to market.

Gardner: What do you think, JP? Does that make sense, given the small and medium-sized companies you work with? Are they becoming aspects of various business change, and that it would never make sense for them to be all trying to bulk up under one large roof?

Morgenthal: I think they are years behind focusing on that. There are two aspects. There are small companies that have started in the last five years with the paradigm on their side. Then, there are hundreds of thousands of small companies that were started let’s say prior to the end of 1990s, not born of the paradigm, focusing on how to survive day-to-day. I think a Tsunami is coming their way, and they have no idea how to get out of the way, and they’re going to drown.

Gardner: Interesting! Well, I would like to take these technology discussions up a notch and see how they affect economics and behavior. I agree that we’re up against a real sea change. It’s not just the use of SOA or the changing relationship between IT and business within large companies, but the very notion of how capital can best be used, productivity be best leveraged and extended, how people can be made happy and fulfilled in their lives, make enough of a living, and have a stake in what they are doing?

It's going to take years or decades, but we really seem to be at more than just a shift here technologically. It really seems to be a shift in how business is done and how people relate to one another.

Baer: I'll add something to that, because I wrote a white paper, and this was one of my actual ROI propositions to these people. They have to face -- and nobody wants to face this key issue -- the labor shortage we're facing as the baby boomers start to leave the IT environment.

Everyone thinks that India, northern Asia, and Eastern Europe are going to be able to pick up the pieces of this old code, and keep running with it, as people start to leave the workforce here in America. The truth of the matter is that maybe in 15, 20, or 30 years they might be ready to, but there is more to understanding codes than just reading it. It’s understanding the context behind it.

I worked with an offshore India team quite closely. They get the code. They can do anything you tell them to do, but they don’t understand the business context behind the code. You can explain it 20 times, and they still won’t get it. They absorb things most times at a very, very technical level. They can be excellent development teams, but there is a difference between being able to understand the business context of why something is done and doing it just because this is the sequence of events.

Therefore, you’re going to have a huge gap in about 10 years of people who understand the business context behind the stuff leaving the workforce. Nobody wants to face that. Nobody wants to invest in it. Nobody wants to understand it. And, nobody wants to think about how do I move from where they are to where they need to be, so that they're never impacted by this again? That is our next "millennium problem." The millennium bug, the year changeover, the devastation it caused, that’s nothing compared to people leaving the workforce in droves.

Gardner: We have this big labor swap out, and they’re not fungible. One can’t replace the other. It has to be a shift toward something new and different.

Baer: It doesn’t have to be new or different. You need to get to a point where the business context isn’t so tightly encapsulated in the working system, but with the people. You can’t lose knowledge. Right now that knowledge is heavily entwined.

Gardner: All right, let’s leave it there. Again, another great discussion. I appreciate your time. We’ve been talking about the announcements from IBM at their Information On Demand Conference, the pending merger of Business Objects with SAP, the proposed merger of BEA and Oracle, and how all those things relate to what we now know as Web Oriented Architecture, but what I like better is Guerilla SOA.

To help us work through this, we’ve been talking to Tony Baer, a principal at onStrategies. Thanks again, Tony.

Baer: Dana, thanks much.

Gardner: Jim Kobielus, principal analyst at Current Analysis. Thanks again, Jim.

Kobielus: Always a pleasure!

Gardner: And JP Morgenthal, the CEO of Avacor. Thanks, JP.

Morgenthal: Thank you, and I’m glad this time I could have more input and value than I did in the last conversation.

Gardner: You were fine before too. Don’t worry about it. The last time, we had seven people on, so, a smaller group is better.

I want to thank you for listening, this is Dana Gardner, principal analyst at Interarbor Solutions. You’ve been listening to the latest BriefingsDirect SOA Insights Edition, Volume 26. Come back next time. Thank you.

Listen to the podcast here. 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.

Transcript of BriefingsDirect SOA Insights Edition podcast, Vol. 26, on industry mergers and acquisitions, Guerilla SOA, and Web Oriented Architecture. Copyright Interarbor Solutions, LLC, 2005-2007. All rights reserved.