Book Review Discussion: 'Total Architecture' Elevates SOA to its Business Benefits Potential

Edited transcript of BriefingsDirect[TM] podcast on the book "Succeeding with SOA: Realizing Business Value Through Total Architecture," with author Dr. Paul Brown, recorded Aug. 24, 2007.

Listen to the podcast here. Sponsor: TIBCO Software, Inc.

Dana Gardner: Hi, this is Dana Gardner, principal analyst at Interarbor Solutions, and you're listening to BriefingsDirect. Today, a sponsored podcast discussion about an interesting book called "Succeeding with SOA: Realizing Business Value Through Total Architecture."

We're going to be reviewing the book and discussing some of its implications for businesses and IT departments -- that Total Architecture impacts the very notion of enterprises and IT. With us is the author of the book, Dr. Paul Brown, a principal software architect at TIBCO Software. Welcome to the show, Paul.

Paul Brown: Hello, glad to be here.

Gardner: Also joining us to discuss the implications of, and gather some insights from, the book is Todd Biske, enterprise architect at MomentumSI, an Austin, TX consultancy. Welcome to the show, Todd.

Todd Biske: Thanks, Dana.

Gardner: I really took a lot away from this book, and one of the big things that it reaffirmed to me is the impact that Services Oriented Architecture (SOA) has across an organization. We talk about the technology implications and the need for alignment between business and IT issues, but it seems to me that we really need to address a total enterprise situation.

I think that’s what you drive at with this concept of "Total Architecture." Am I getting that right, Paul?

Brown: Yes, definitely. Our enterprise business processes and our enterprise systems have become so hopelessly intertwined that we can’t really talk about designing one without designing the other. We’re moving lots of activities that used to be done manually either completely or partially into IT systems.

Yet we still have to have people involved for the exception handling, even when we try to do a fully automated system. So the idea is that you have to explore the design of both together -- and you can’t separate them.

Gardner: I suppose we’ve gotten to this position because there are new realities that enterprises face. Many of them are 20 or 30 years into managing and producing IT and systems, and deriving productivity from those systems.

But it seems that things are not progressing, that there are scaling and complexity issues. You say in the book that there we are "stressing" existing architectures. Can you elaborate on that?

Brown: There are a couple of things going on. The structure and organization of IT is very often not completely aligned with the business. The care and feeding of the IT infrastructure has become a focal point of a lot of the IT investment.

What we’ve lost is the connection between what’s going on in IT and what’s going on in the business. It’s somewhat analogous to when we started exploring object oriented design (OOD). One of the benefits there was that the structure of the problem now became recognizable in the structure of the solution.

We’re faced with a similar situation today. The structure of our IT solutions are difficult to map onto the structure of the business processes. It’s that realignment that we’re trying to address with SOA.

Ideally, the services that we’re building -- that have technical implementations -- are building blocks of business processes. And so we see that tie-in once again.

Gardner: I expect we’re going to have some listeners that aren’t all that technical. So, just for the edification of our audience, could you please give us your "elevator definition" of SOA?

Brown: SOA is an architecture in which the functions that you need in your business processes become recognizable services of your IT information structure. At a lower level, we can also build services that the IT community consumes. Those are technical services. They become the lower-level building blocks for ultimately building the business services.

The real business value comes out of having a portfolio of business functionality in the form of services that you can quickly reorganize and re-orchestrate to build new business processes or to modify your existing processes. That’s where the big business win comes in.

Gardner: I have had people come to me and say they don’t understand the difference between an application and a service. Why is it that applications can’t be used in a similar way?

Brown: You almost can. Most of the functionality that we need is in those applications. The problem is that the functionality wasn’t designed for reuse. Applications tend to be somewhat specialized for use in a particular situation. Their functionality is hard to get at.

It’s a COBOL mainframe transaction, and you have to be on the mainframe to invoke it. Or it’s a piece of Java code, and you need to be in Java to invoke it. One of the things we’re trying to get to here is just to make the stuff more accessible and to standardize it in such a way that it reasonably fits into different business situations.

IT Misalignment

Gardner: Todd Biske, let’s go to you for a moment. As we try to define the issues that IT organizations are grappling with, you and I have discussed in the past the notion that IT can’t keep up with the pace of business, and that business would like IT to be a lot more agile and responsive.

Where do you see the root causes here? What is the main problem that is preventing IT from responding today?

Biske: Every organization is going to have its own distinct challenges, but as with a lot of things you have to look at the whole notion of the enterprise -- not just IT, not just business -- the whole piece of it.

Dr. Brown points out that a lot of times IT may be misaligned and not be able to see the business processes that are spanning the silos. It may also be the case that the business isn’t either. So, you’re really setting up challenges, when you’re trying to view things from more of an enterprise perspective.

I really see things like this as an organic growth of technology over 20, 30, or 40 years. That’s what happens as you slowly add things. You’re adopting things as you go along, and you eventually get to a state where you have to step back and view it from a higher level -- to really understand what you've got, and then to start breaking it apart.

Trying to do that at the same time that you’re trying to keep the business growing and keep up with new competitors who are nimble and don’t have all of the boat anchors tying them down, is always going to be a challenge -- whether it’s SOA, business process management (BPM), OOD, or the Web.

It’s the same pattern repeating itself, but the pressures of globalization make viewing your entire enterprise and your business as a whole even more important. It’s hard to continue to operate in a niche and continue to sustain that organization for many years, whether it’s from the IT aspect or the business aspect.

Gardner: Now, Paul, you finished this book earlier this year. It was published by Addison-Wesley in April. You have another related book in the works: This was the first book that came out, and it’s geared toward a business or a higher-level audience.

The second book, which is going to be coming out later this year, is called "Implementing SOA: Total Architecture in Practice." It's more of a hands-on and how-to book, tailored toward developers, designers, and the architects themselves.

Why do you think that SOA needed to be broken up as a subject in this way?

Brown: To build on a point that Todd just made, we have to look at our business intent, which is to deliver the results of the business processes, and tie that back together with IT.

It’s distressing, when I go into a company, how infrequently I find anybody who can articulate what the end-to-end business process is that produces the key results or can tell me what the entire order-to-cash cycle looks like. There are lots of experts for fragments of it. The IT focus has traditionally been on fragments of the processes.

The pressure these days is to improve the overall business process, the response time to the customers and partners, and the overall quality of what’s going through. So we need this focus on end-to-end business process and the focus on the end-to-end system interaction that helps bring that business process to life.

The pair of books focuses on that issue. This first book is essentially a business argument, and this perspective is required. There is a needed role to carry that perspective forward. That role is the role of the architect, whether the business process architect or the systems architect.

This first book tries to make the case that we need to start taking an end-to-end perspective, and it has business implications. It has implications for how we organize and conduct projects and how we manage the business processes themselves, because very often they’re not being managed.

The second book gets down into the technical aspects of what exactly it is that the architect is doing at the business-processes and systems level. What kind of information do they need? How do they get the stakeholders involved? Essentially, it’s oriented to the execution of the architect’s role.

Evolution, Not Revolution

Gardner: We’ve talked about a progression over decades in IT. We’ve also had, of course, transformation and evolution in how businesses are organized and managed. There have been plenty of buzzwords and schools of thought over the years. I’m wondering if we also need to address that organizational side.

It seems to me that many of the points you make in the book point out the foibles of decentralization. When things are too fragmented, when the systems as well as the processes are not being addressed holistically, and that leads to eventual breakdown.

Are we really talking about a change from decentralization to command-and-control? Do we need to address all of this organizationally pretty much from the outset?

Brown: I think it's an evolution. It’s inevitable that the bulk of the resources are going to remain in the organizational silos that they’re in. They’re organized that way, because they’re grouped around a particular piece of functionality, and that functionality is not going to go away.

What we need to introduce into the picture is more thinking in terms of how these different silos play together to make the business work. That has to happen on both the business side, looking at business processes, and the technology side, looking at systems.

To me, it's a real open question as to where that responsibility actually lies. In a theoretical sense, I would think that it belongs with the chief operating officer (COO) of the company, whose job is essentially to execute the day-to-day business of the enterprise. I don’t see many companies that have evolved that far yet.

More often, you see the responsibility falling under the chief information officer (CIO), which is not necessarily inappropriate. In my book I argue that the CIO has another huge responsibility, which is simply managing the vast array of resources in the IT part of the world -- not only the systems, but the people that are there for their daily care and feeding.

That’s a huge responsibility in itself. I wonder whether a single individual has the bandwidth to manage this overall marriage of business processes and systems at the enterprise architecture (EA) level, and to also manage all those resources.

So I leave it as an open question. There are two roles that need to be played. I think each organization has to find its own solution for where those roles live in the organization.

Biske: One of the things that I liked about the book was that it introduced a traditional organizational hierarchy, but then the bulk of the book talked about this project organization. You’re trying to execute a project ... [but] what’s the structure of the organization that supports getting that project done?

Do you think that we’re going to require more fluidity in our organizations, less formal structure and more focus on this particular effort? What does the organization need to be to ensure the success of that effort?

When we go on to the next effort, you again change the organization for that effort to ensure that if it’s successful. It’s not so much just about putting out the hierarchical organization chart, and then everyone tries to operate according to those rigid silos.

Brown: I think the assembly of an ad-hoc project team, typically referred to as a cross-functional team, is very important. It’s not a new concept, and even today many projects are organized that way.

What I think is necessary to augment that, though, is active participation of the enterprise architecture group with a broader view of the end-to-end business processes and the end-to-end systems that are involved.

The project team is going to be narrowly focused on accomplishing specific tasks and achieving specific goals, but if we want our service portfolio to build out, if we want that kind of flexibility, the style in which that is done has to be integrated smoothly with the bigger picture of both enterprise business process and enterprise systems architecture.

So, we need a proactive enterprise architecture group that’s willing to roll up its sleeves and get its hands dirty, touching the individual projects that are going on. They really need to coordinate their work, so that we don’t end up with the chaos that we’re in today, and so that we have pieces that elegantly fit together and can be rearranged to achieve new business goals.

Gardner: You make a strong point in the book that, in very few cases, someone has the full understanding of an entire business process. You also make the point that when we do get those people in place, they need to have authority over that entire process. And you have set out a methodology about how to approach this from a political and power perspective.

For example, Paul talks about the need for a process charter, which is sort of prime objective for a project. There needs to be a business-executive sponsor, someone who can take some ownership and have authority. There should be an IT executive sponsor, as well as the business executive.

Let’s look at just this personnel level. How do you think organizations can start to get people in a role of actually owning and having authority over an entire business process? There seems to be a vacuum, that there hasn’t been anyone in this role before.

Brown: Well, in a pragmatic sense, we sort of evolve into the business process from below. By "from below" I mean by attacking it from a system’s perspective. The reality is that anytime we touch systems, intentionally or unintentionally, we tend to alter the business processes they live in.

As a starting point, I would encourage the technical architect simply to be inquisitive about the business process and make sure he or she understands what the process is supposed to be, and acquaint the business with the implications of the changes that are being made.

You can do a lot of it through question and answer, just by asking questions: "Nobody told me what’s supposed to happen if this goes wrong at this point in the process." So by answering questions, you can raise the visibility of the business process.

That’s a far cry from actually taking control and managing that business process. We see some of the control and management arising out of workflow-oriented projects, where usually, at the departmental level, a business person is consciously trying to grab a chunk of a business process, and then structure it so that it can be controlled and managed. We see these different fragments coming into play here.

With really large projects, if you look at an enterprise resource-planning initiative, you tend to build this project team that reports in at a very high level in the organization and gains a lot of authority from where it reports in. The enterprise resource planning (ERP) projects that are most successful are the ones that consciously address both the business-process re-engineering part, as well as the systems engineering.

What we want is a model that’s very similar to that. You need the same kind of authority from that business-executive sponsor and the IT-executive sponsor to make everybody play ball. But now the projects are small. They’re not the mammoth business ERP efforts anymore.

It’s your everyday integration project or services project that spans silos. What we need is a project organization for them to report into.

In my book, I argue that organizations should be part and parcel of the same organization in which the enterprise architects live. That ideally ought to report in on the business side of the house, probably to the COO, because that’s where the authority comes from to really make changes in the business.

Architecture: An Enterprise Issue

Gardner: You say in the book that architecture is no longer just an IT issue, but an enterprise issue. By that do you mean that we should dwell on the fact that the IT people need to understand business issues and what the goals of the business are?

It seems to me that you’re also saying that the business side of the house needs to understand the technology issues as well as the process issues. Is that the case?

Brown: Yes. When you design a business process, you’re making assumptions about what systems are going to do and what people are going to do. You can’t validate the assumptions until you actually start doing the technical design.

You need to have a systems architect involved when you are planning business processes. Conversely, you can’t really make modifications in the system without inadvertently changing the business processes.

So it doesn’t make sense to separate these activities. You really have to treat them as if you're architecting the business, which consists of both business processes and systems.

Gardner: Todd Biske is a practitioner in the field. Do you see some movement within enterprises that they recognize this, that they will be looking at architecture from a "total" perspective that will encompass both the IT systems issues, as well as the process issues?

Biske: I think you're starting to see some organizations on the leading edge take this approach. Overall, I think enterprise architecture is still -- surprisingly -- an emerging discipline in many organizations.

I can look at some of the companies I’m familiar with here in the St. Louis area, where I’m located, and not all of them have enterprise architecture organizations. They’ve got to get over that first step of recognizing the need.

Groups that have been practicing enterprise architecture for some time are clearly growing out of the IT roots, and realizing [that the solution] is about the business and it has to incorporate business architecture.

If you go to a Gartner enterprise architecture conference, you’re going to hear the same thing. There's this momentum building around the notion of business architecture. It’s not just about what technologies I have and how do I consolidate the number of vendors that I’m dealing with, and the more IT related issues.

So I definitely agree that it is total architecture. Ultimately it has to involve the business, if the company is going to continue to be successful in the long run.

Gardner: Do you think that for business people on the management and organizational side of the house to read this book would perhaps illuminate for them some of the interdependencies [between business and IT]? Would it set them up to take part in a discussion like this?

Biske: It will. It was really interesting reading the book, thinking of some of my own experiences, and realizing that this book is really written from a business perspective. I've worked in organizations where, as described in the book, there is this hand-off that occurs at some point. Whether people realize it or not, all of a sudden you’ve now got business projects and you’ve got IT projects, and you run the risk of their becoming disconnected from each other.

I kept that in mind, as I was reading the book. ... I considered whether it could be a challenge or not. If you really have the business involvement, as it’s described in this book, this makes a lot of sense.

The extent to which a business manager could read this and see it come together is going to depend on how they currently work with their IT staff, and how open are they to changing the way IT behaves.

If they’re set in their ways, are used to the traditional customer-supplier relationship, have these hand-offs, and then things get disconnected -- it may not occur to them that there is another way of doing this. But if they have recognized that they need to get better interaction with their IT departments and start to operate more in terms of a partnership, then this book can help them out a lot.

Gardner: One of the things that was impactful for me was the notion that SOA can be a catalyst to thinking about things differently and bridging this business-IT chasm. And also that SOA can be a precursor to a whole new conversation about how to think about businesses from this perspective of "Total Architecture."

Those people who are thinking of SOA as a technology discussion will have their eyes opened by this book.

Let’s move on to the notion of "Total Architecture Synthesis." It’s a methodology that you discuss in the book, Paul.

Can you explain what you mean by "Total Architecture Synthesis," now that we’ve set the table in terms of the larger problem. Once we recognize that this is business and technology coming together, how do we then create a form of architecture that is inclusive for IT and business?

Brown: When you start getting into a project, there are a couple of traditional ways of structuring the work in the project. The oldest one is the Waterfall Model. That's where I gather all the requirements and do the business process design. Then, I would do all the systems design. Then, I would do implementation ... and so on.

The problem with that is that in a lot of our more ambitious projects, the feasibility -- and by that I mean our ability to execute the project within the cost and schedule guidelines that we’re given at the outset -- is still to be determined.

You’re well into the project, before you have enough information to recognize that you’re headed toward what Ed Yourdon would call the "Death March Project," one where the cost or schedule is off by more than 50 percent. So, the Waterfall Model is an expensive and risky approach.

Another model that’s being talked about a lot these days is the Agile Development model. Agile Development bites off a small chunk, tries to drive it to implementation, and then iterates rapidly. The issue I have with that approach is that you tend to pick off the low hanging fruit in the early iterations. You pick on the easy parts of the problem.

The situation you end up in is one in which you haven’t really thought about the architecture, because the simple parts of the problem didn’t challenge the architecture. By the time you get to the tough parts of the problem you have sunk cost into what may turn out to be an inappropriate architecture.

So I try to marry the two together. We want to take the agile approach, but just for building the architecture, not necessarily driving it to implementation. We want to take a look at the business processes that are involved in the project and figure out which ones are liable to be most challenging to the architecture. They're not hard to identify. They are the ones that have the high volume of execution, move a lot of data, require a lot of automation, and are business-critical.

If you simply inventory the business processes that you need to achieve your business goal and rank them in these four categories, the ones that are liable to challenge your architecture bubble to the top very quickly.

You then focus on gathering the requirements for just a couple of those business processes, the most challenging ones, and drive them down into a business process design sketch and an architecture sketch.

Immediately you begin evaluating your architecture: Is this something we can actually build within the cost and schedule guidelines? Does it achieve the business goals? If the answer is "no" -- you can stop right there, go back to the business, and have a business discussion: Should we be doing this project at all? Should we grow the scope? Should we cut the scope? Or, whatever needs to be done.

That’s the whole idea of Total Architecture Synthesis. We want to turn this development of the architecture into an iterative process that tackles the tough problems first -- the risk problems, the feasibility problems -- and gets them right up front.

Gardner: Does this make sense to you, Todd?

Biske: Absolutely. I read through that section and saw a lot of things that I had seen in the past of how organizations approach things. I think it’s right-on.

The way it was put in the book that I thought was good was, when you’re in the feasibility stage, there are things that you already know how to do, and those are the things that you shouldn’t be spending your time on at that point.

You already have a good degree of confidence as to how much it’s going to cost and how many resources it’s going to take. The problems that you don’t know how to do are the ones that you’re at risk of these cost overruns.

So focusing on those larger problems and getting them the appropriate priority early on handles these things much earlier in the lifecycle, and yet can still be done in an agile manner.

Gardner: There’s the adage of "follow the money," when it comes to getting things done. I think this makes a lot of sense. There’s a great deal of logic in this book, but when you go into organizations, a lot of people are driven by profit and loss centers, budgets, who's responsible for what, and what's the "cost center" versus the "profit center."

I wonder about the point you make in the book, Paul, around the fact that a service being created and driven into a SOA probably won’t save money upfront. That is to say, there is a need for investment. The return on that investment (ROI) will come later as that service is used across more business processes, and those processes become more agile themselves.

What needs to happen in addition to discussing Total Architecture from the business and the systems perspective? What of incentives and the financial structure? Does that need to be adjusted as well?

Brown: Well, in order to get to a portfolio of services, to get that long-range return on investment, you need to have organizational discipline upfront to structure your IT work as services. To accept the fact that, in the very short-term, you’re probably going to pay a little bit more for services than you would for developing the same functionality in a non-service or non-reusable manner.

The way you cover that in the short-term is you simply accept a lower return on investment -- a positive return on investment -- but a lower one for the early projects. That implies that you’re structuring your projects and choosing your projects because the individual projects have inherent business value. They’re justifiable on their own, and you’re just getting a slightly smaller ROI. With this approach you can sustain the investment in services indefinitely.

We’ve seen organizations that are succeeding. I’ll use two companies as examples, Harrah’s and Con-way. They're in very different markets. Con-way is in transportation; Harrah’s is in the entertainment and casino business. Both sustained their investment in services for a couple of years and achieved significant business benefits after that two-year investment.

Harrah’s, prior to their SOA investment, acquired five new casinos, and it took them two years to fully integrate. What does that mean in their world? In their world, their competitive advantage is that when you earn points in one casino, you can walk across the street to another Harrah’s property and use them to buy yourself a meal at a restaurant.

That fluidity of the customers throughout all the properties was essential to Harrah’s. It took them two years to get there before their SOA investment. Two years later, they acquired Caesars, which effectively doubled the size of the company. But they had also made this two-year investment in services.

They achieved the systems integration [with the Caesars merger] in six months, rather than two years. So they gained 18 months of competitive advantage, as a result of this investment in SOA.

Con-way has seen similar improvements in their projects as well, as they sustain this portfolio investment and now they’re reaping significant business benefits.

Concession to Reality

Gardner: You say in the book, Paul, that Total Architecture is a "concession to reality." What do you mean by that?

Brown: I mean that your business processes and your systems are intertwined, and the design of one affects the other. That’s reality.

You can choose to ignore your business processes and let them evolve by accident, as Todd was talking about earlier. That’s how we got in the bind we’re in right now. To a large extent, we’ve been focused on individual profit centers and driving down cost in individual functions. We’ve lost sight of the end-to-end business processes.

The resurgence of interest in customer loyalty, customer service, and all of that is really a reflection that, as a business, we need to stand back and look at what we’re doing to our customers and our partners.

The investments we’re making and the individual activities in the business processes are fine, but in order to remain competitive we need to stand back and take the holistic view. The holistic view simply means you need to understand what that business process looks like before you can improve it.

I’ve seen horror stories of people who have tried to improve a business process by examining a small portion and making some changes, without realizing that the changes that they’re making are having an adverse impact on the bigger business process. So while they thought they were improving things -- they actually made them worse. You can’t live with that.

Gardner: Any response to that, Todd?

Biske: I’m in complete agreement. One of the things that I wanted to call out was the ROI discussion. It was great that the book pointed out that projects are successful when they achieve the desired business benefit.

I can’t tell you how many IT projects I’ve seen whose mission statement basically said, "We have to get this thing done by this date for this much money." Their success criteria was based upon meeting the date and meeting budget -- and had nothing to do with the perceived business benefit.

Suppose suddenly we change our view on projects to say the project isn’t done until the business benefit has been achieved? Or we say if it's not going to be achieved, we made a mistake somewhere along the way and we need to cancel the effort? It puts a whole different perspective on things in terms of how these IT solutions fit into the business, and it gives that appropriate visibility that we need.

It’s not about the ROI of one service: It’s about the ROI that’s going to be achieved by a whole sequence of services coming together to support a business process, which is going to yield either those cost reductions, the ability to integrate faster, or new market opportunities.

You have to put it all into that appropriate perspective, which brings it right back up to Total Architecture.

You wind up in these debates over whether this one particular service is actually going to achieve significant cost savings or not. You can’t possibly answer that question without viewing things in a broader perspective.

So phrasing our projects in terms of the business benefits and taking that broader view is critical to understanding how these things are going to fit in, and actually achieving the goal of agility and better IT business alignment.

Gardner: Paul, as you’ve been talking about the book with folks who come from a number of different perspectives and situations, has anything surprised you in terms of the reaction you’re getting to it?

Brown: No -- but that’s the good news. I've gotten very positive feedback from the people that I’ve talked to who have read the book.

If there is anything that I get in the feedback, it’s that the organizational solutions that are required to make this happen are very diverse in nature. They depend as much on the current organizational structure and current culture of the enterprise as they do on any of the principles that I lay out in the book.

So I do see some creative discussion there around how to organize and execute this. But in general I’m getting very positive feedback.

Gardner: So the desired effect is happening.

Brown: Yes, although it remains to be seen. I would like to look at [the market] again a year or two from now and see if these ideas are really taking hold and starting to influence the way people think about organizing their business, their IT and their projects.

Gardner: Well, thanks. We’ve been discussing the recent book, "Succeeding with SOA: Realizing Business Value Through Total Architecture."

We’ve been discussing how the concept of Total Architecture can help elevate the issues and spawn some discussion about what will make SOA successful, and ultimately make businesses more productive, more agile, and perhaps even cut some IT costs in the process.

We’ve been discussing this with the author of the book, Dr. Paul Brown, principal software architect at TIBCO Software.

We’ve also been joined by Todd Biske, enterprise architect at MomentumSI.

Any parting thoughts from either of you, please?

Brown: Well, I'd just like to encourage people to take a look at the ideas in this book and keep your mind focused on delivering business value. The rest will take care of itself.

Gardner: Todd?

Biske: I would like to add that there is no shortage of books on SOA that deal with the technical details. But if you listen to a lot of the experts out there, all of them say that it’s not the technical details that are going to make SOA so difficult.

It’s all the cultural details that come into play. Dr. Brown’s book really does a good job in trying to discuss some of those non-technical things in the organizational culture, brings up a number of excellent points, and makes a number of excellent suggestions on how to improve that situation, and then really be successful with SOA.

Gardner: Well, great. This is Dana Gardner, principal analyst at Interarbor Solutions. You’ve been listening to a BriefingsDirect sponsored podcast. Thanks for listening.

I do hope that people take a look at this book. I think it does have a lot to offer.

Listen to the podcast here. Sponsor: TIBCO Software.

Transcript of Dana Gardner’s podcast with Dr. Paul Brown on his book "Succeeding with SOA: Realizing Business Value Through Total Architecture." Copyright Interarbor Solutions, LLC, 2005-2007. All rights reserved.

BriefingsDirect SOA Insights Analysts on RIAs, Microsoft Silverlight and Enterprise 2.0 Trends

Edited transcript of weekly BriefingsDirect[TM] SOA Insights Edition podcast, recorded May 11, 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, Vol. 18, a weekly discussion and dissection of Services Oriented Architecture (SOA) related news and events with a panel of industry analysts and guests.

I’m your host and moderator, Dana Gardner, principal analyst at Interarbor Solutions. Our panel this week, and this is the week of May 7, 2007, consists of Joe McKendrick, an independent research consultant and blogger at ZDNet and ebizQ.

Also joining us is Todd Biske, an enterprise architect at MomentumSI an Austin, Texas-based consultancy.

And joining us also, a return to a BriefingsDirect podcast, Barbara Darrow, an former industry editor at CRN Magazine and newly independent blogger. Welcome, Barb.

Barbara Darrow: Hi, Dana!

Gardner: This week we're going to look, in hindsight, at several trade events that have highlighted the importance, and I suppose the still-maturing technology, around Rich Internet Applications (RIA). The events were last spring's JavaOne show, the mashup-oriented MIX '07, Microsoft-oriented show in Las Vegas the previous week, and also the Web 2.0 Expo, a Web 2.0-oriented show in San Francisco the week previous to that.

One of the things that jumped out at me is how we seem to be moving beyond just the notion of an RIA into specific platforms, and/or approaches for doing this. We now have a slate of new products and approaches from Microsoft around the Silverlight brand. We also have news from Adobe about open-sourcing the Flex toolset that helps create content that’s supported on the ubiquitous Flash seamless download client through browsers. And, we've also seen Sun Microsystems pony up with the JavaFX scripting language, also designed for RIAs.

[Update: Silverlight will be joined by a Linux version, called Moonlight.]

So, I want to go to Joe McKendrick first. Joe, do you agree that these announcements are showing that RIAs are more than a sideline, and are becoming a mainstream way of bringing content, data, and applications to users?

Joe McKendrick: Absolutely. It’s a nice step up from the browser interface that we've all been accustomed to for the past decade now and very competitive with the fat-client concept of Microsoft Windows, which is still Microsoft’s bread and butter. To a large degree, they should feel threatened by this. There are many other threats to their business, but this is their home turf, the client side. When you introduce these capabilities, this ability to enable rich clients coming right off the Web or Web-type interface, it’s definitely that last mile.

Gardner: Microsoft got a lot of credit and high marks, from what I could see in the blogosphere, about their approach. There seems to be less lock-in than in the past, and they even seem to be embracing some community principles that we often associate with open source.

McKendrick: They have to, Dana, they have no choice. Clearly, the market is moving in the direction of networks. I'm going to call it "network-based computing." It’s a term that’s been used for a number of years now, but we're clearly seeing the realization of that vision.

Gardner: Let’s go to Todd Biske. Todd you're an enterprise architect. Does going to RIAs make life easier for you, and do you see any need to continue to maintain a wide variety of client approaches?

Todd Biske: Actually, it's really interesting to see this, because certainly in enterprise circles, it’s much more about AJAX than it necessarily is about Flash. Then, you have Silverlight, and now JavaFX Script, which I think are more in the same category as Adobe Flash, than targeting the AJAX world. I've yet to see an enterprise application focused on Flash development. It seems to have much more of a place either in content distribution or the general Internet space.

Still, it’s gaining at least mind share, and so we’ll have to see whether this begins to make a push more to the corporate enterprise world. AJAX has a little bit easier path into that space, given that it works natively with the Web-based technologies that corporate application developers have already been using, such as CSS, HTML, JavaScript and XML.

Overall, I think this is good. I have a strong background in usability and I knew that the pendulum was going to swing back at some point. We went from green screens all the way to these rich desktop environments. Then, we went back to just the HTML forms, and you knew that pendulum was going to start to shift back towards the center again, that users were going to need higher levels of interaction and capabilities on that Web-based platform.

I think this is just indicative of that trend. The bandwidth needs and everything else have caught up to the point where we can start to leverage these technologies. Users are demanding more. They don’t have to deal with the primitive forms, because they have powerful machines and high-speed networks that can now support this much better, even on their mobile phones.

So, it's certainly a trend that I expected. Silverlight is interesting, and you mentioned Microsoft in the general community-based practices. Two or three years ago, I was invited to a Microsoft technology summit, and they collected about 40 of us in Redmond. It was just a general discussion around some of the things that they were doing, but it was a series of diehard Java advocates, diehard Flash advocates and diehard Linux advocates. It was an interesting exercise just to listen to what they had to say. Microsoft was really trying to hear what would make Microsoft more attractive.

I don’t know whether coming out with a direct competitor to Flash is going to make it any more attractive in the eyes of the Flash developers, but I think certainly playing to their strengths in the existing Microsoft development community, and bringing in some of the best practices of the other development communities, is a smart move on their part. That’s why I think Silverlight will continue to play a role.

Gardner: Let’s go to Barb Darrow. Barb, you were tracking what was going on at the MIX '07 event. Did this, in your mind, shift to a new Microsoft?

Darrow: I tracked it, but from afar. We had another reporter there. The thing I found a little bit interesting about it, first of all, was that Ray Ozzie actually said something. He hasn't been very forthcoming since joining Microsoft, and I guess I can’t blame him for that. So, they laid out this strategy, but being reporters, we always like to handicap things. This whole move to rich clients is interesting. I cover IBM software, and I've got to give them credit. IBM has been talking about this for a while. I want to ask the other panelists here about the trend right now handicap Microsoft versus Google. I would love to get these guys to talk about who among those two players is the leader in this world of a converged client that combines the best of the fat client and best of the web client.

Also, does IBM have any kind of credibility here? There’s this kind of contention between new kids coming up, who are used to downloading everything they want and doing mashups -- they grew up this way -- and then there's this traditional IT environment that constrains from above what you can do. In that spot, IBM has a little bit of credibility. IBM is trying hard to adopt this mashup/social networking thing going forward, but I'm just wondering. Are they a player here? I would love to know what the other panelists think.

Gardner: Let me moderate that a little bit, and I’d like to also agree with Todd about separating the enterprise and the AJAX type of interface, real time updates, data presentation, dashboards, and having more user interactivity playing from the browser. These are all great things, and we have a separate track around the rich content, more movie-type content, and then Flash and animated dynamic activity. I think we should talk at some point about whether these two will come together?

If you go to a lot of consumer-facing portals and insights, you get this rich activity. There are movies galore, and you can cut and paste or mash up these sorts of things. Won’t that start to bleed over into the enterprise, and won’t enterprises want to have flashy, if I could be a punster, presentations and video as well, in order to make for the best interactivity and capture the attention of their users?

But before we go there, let’s address Barb’s point about IBM. We’ve seen Google take great advantage of AJAX. Its calendar, its Gmail, and more and more of its sites are really poster children for this type of presentation. Microsoft is now stepping up to the plate with both RIA activity and more animation in video, but what about IBM? Let’s go to Joe.

McKendrick: Well, IBM does things in a big way, and I've seen them doing a lot of work in this area, in terms of Wikis and blogging. They're even getting involved in the whole second-life scenario. They have a way of moving into these markets in a very big way, and I don’t see them ignoring the whole Web 2.0. Like everyone else, they're piloting things, seeing how it fits in with the enterprise. Again, it’s hard to express. The enterprise is a different scenario from the market at large, but things that go on in the market at large tend to eventually seep into the enterprise, often from the bottom up, as new ways to squeeze productivity from these approaches comes to the fore.

Gardner: In a sense, IBM was ahead of the curve on this, as Barb mentioned, with their workplace approach. They were creating the equivalent of client middleware -- or "upperware," as I like to refer to it -- sending event-driven and message-driven activities to the client, and that client could be universal, could accept different types of across-the-wire protocols and formats. But that really didn’t work out so well. It didn’t become ubiquitous, and, I suppose, part of the reason that was the rich-client platform that Eclipse Foundation runs, which usurped that, and is being used for these sorts of activities by developers. Instead, IBM took this technology and has now dumped it mostly into the Lotus brand of products. I believe they're calling it Lotus Connections, and they highlighted a lot of that at Lotusphere, which wasn’t that long ago, back in the winter.

So, let’s go to you Todd Biske. As an enterprise architect, do you sense that IBM is in a leadership position or have they recognized that they only have a lot of client interactivity through their Lotus products. And, does it matter to you whether they are considered in the vanguard of these tooling environments for RIAs and animation of video?

Biske: IBM probably needs to have some activity in this place soon, because, on one hand, we can look at Microsoft and Google, and they are both application providers outside of the Lotus space. IBM is not an application provider in the same sense. So, some of the things that you see Microsoft doing with Microsoft Live and the Google applications, I wouldn’t expect to see any big push from IBM. But, then if I talk about the pure development technology side of it, all the platforms that were announced with the exception of JavaX are really proprietary to the vendors that are supporting that.

So you have to look into the AJAX space, and here’s where you could say that IBM is maybe a little bit behind the curve. TIBCO had their general interface acquisition, so they've got AJAX development tools. I don’t know that I've heard anything from IBM, specifically in the AJAX or RIA space, saying, "Here’s our set of development tools to support you building solutions, whether it’s for the enterprise or for the general Web 2.0 community at large." So, there’s a potential gap there that they could push into, and we'll just have to wait and see it.

Gardner: Well, TIBCO had an announcement at JavaOne, highlighting their TIBCO AJAX Message Service Version 1.0, which is really about live data and events from the server right to the Web page in AJAX Applications. This is really creating an end-to-end messaging environment for complex activities and mission-critical activities. We've seen that messaging, queuing and lining up activities, and then having them fire off in the right order is an important technology. It’s worked very well on the server side, and we're going to have to wonder if all of these calls going out to these AJAX pages are going to work in high scale at high complexity.

So, given that this is an end-to-end in messaging, and seeing how prominent IBM has been in messaging with its MQSeries -- a very popular product for long time now -- they might be missing the boat in that they are so involved with SOA. Perhaps there is an acquisition or an internal activity within IBM that we have yet to get some wind of. What do you think, Barb?

Darrow: How many companies has IBM software acquired in the last three years? It's definitely north of 20.

Gardner: Not a lot having to do with either the client or tools though.

Darrow: That’s definitely on the table, and who knows who might be on the list. The thing about IBM is that it's strong and a very big environment, and they are trying to push much more into mid-market companies with their whole Express branding strategy. Frankly, I'm not so sure how well they're doing there, and that’s where other platform providers can really make hay. In terms of an acquisition, I wouldn’t rule out anything for those guys.

Gardner: Of course, another big push for IBM these days is moving into the small- and medium-size businesses base.

Darrow: Right, and those are where the Express lineup is. I do know that a lot of their Express offerings are not resonating that well with the companies they are targeting.

Gardner: Now, let’s go back to Sun Microsystems. They had their day in the sun, at the JavaOne show. A lot of the journalists and analysts that I spoke to there were a little bit disappointed that the Sun didn’t have a lot more to say other than, “Yeah, we finished open-sourcing Java.” They were perhaps a little bit late to the table on that, and then had this JavaFX scripting language. People were saying “What? Another scripting language?” Sure, it runs on SE, and it’s apparently quite fast, but hasn’t the train left the station on scripting languages? Aren’t people looking for more of the frameworks and integration across what's already available? I'll throw that out to you, Todd.

Biske: I would agree. My reaction was little bit of a "ho hum." They’ve got a huge curve to overcome here. You've had these scripting languages out there for a long time, establishing significant presence. Sun is not Microsoft, and can’t really push something down to this huge developer community that’s completely dedicated to just using their technology. So, I'm not expecting great things as a result of the JavaFX announcement. I'm not surprised by it, but it’ll just be another player in the mix of things.

Gardner: It seems that Sun is still trying to figure out a way to create a business benefit from having all those Java runtime clients floating around. Does this strike you as something that’s going to be able to bring them more revenue on their server and infrastructure side?

Biske: No. I don’t think it’s going to make a big difference in that regard. Again, there are some struggles on the Java side. And, just given that it’s going open source -- which, again, I view as a good thing -- the market is established. I don't think the server decisions that companies are making are based upon the Java support behind it. They know they can get Java support on any of the platforms, and they want to choose. It’s not necessarily going to perform any better running on the Sun hardware than HP, Dell, or whoever else they want to pick as their strategic provider on these things.

Darrow: Dana, can I just ask a quick question here?

Gardner: Certainly.

Darrow: How much difference do you think it would have made if the open-source Java thing had happened two or three years ago?

Gardner: Oh, it would have made a big difference. Another thing that struck me at JavaOne this year was the dearth of announcements from other major Java-oriented vendors, and I'm thinking of IBM, BEA, and Oracle. It was really a silence, and what I think has happened is that Sun waited for so long to declare its intention for Java, and then to open-source it under GPL Version 2, that they lost the community. Now, the community is off doing things under Eclipse, Apache, Source Board, OSSI, or whatever. So, the momentum of the community and the ecology for Java was lost, as Sun basically sat on the fence, trying to figure out how to make more money from Java. I don’t think it’s something they're going to recover from.

Biske: Was that really a problem with not being open source, or was that really an issue with the whole Java community process?

Gardner: I'd say they are related. If they had not had such oversight power over the JCP, and they brought it out to something like Eclipse or Apache, or even some of the other standards bodies that they had talked about, significantly earlier, then Sun would be just another participant rather than the taskmaster. So, I think they're related.

McKendrick: And has this role changed for Sun with the open-sourcing of Java? How far back has Sun stepped from the process, from being the taskmaster?

Gardner: Well, the JCP is still there, and so for what they call the JSRs, new projects within Java, I still think they have that same oversight, and the actual code and licensing of the Java technology -- the runtime, the implementation, the reference platforms -- are now under a GPL 2. So, it’s gone a great deal of the way on the runtime, but the new community development is still within the JCP which politically is largely influenced by Sun.

Biske: This comes back to the whole notion of the client side of this. Will Java, as a development platform, have a role in the development of the client side? It’s well established on the server side, and that’s not going to change any time soon, but what is the future of the client platform, and will it be a case of these RIAs coming down into the enterprise?

Or, will we continue to see a separation of "Here are things down in the content-heavy world of the Internet" and "Here is the corporate world?" Even in the corporate world, either you’re building Microsoft applications, because that’s what’s on everybody’s desktop, or you're building Web-based applications. More and more of the presentation technologies are going towards AJAX, rather than anything you're doing in Java JSP.

Gardner: That raises that earlier question I had. As I look at the younger generation, my kids are really into games, and they have a certain expectation on interface and interactivity. We look at the client, and we have some of these technologies where we can stream and download large files with ease. If it works in the consumer space, it certainly should work in the enterprise space.

Are we going to see, in essence, more mashups that lead to more animation, more convergence, and, hypothetically, are we going to start seeing SAP R3 applications that look more like Nickelodeon Saturday morning cartoons? What do you think Joe? I think Jimmy Neutron would make an excellent CIO, by the way.

McKendrick: Well, I have an eight-year-old daughter. She plays computer games, and do you know how those computer games are delivered? They are delivered through a fast software-as-a-service model. I don’t think she even knows was a CD is. She doesn’t use a CD to load her games, and that’s what the younger generation that’s percolating up toward our workforce is now looking at. They expect their software, their solutions to be delivered fast over the network. This is part and parcel of the animation, the graphics, the exciting video. It’s part of their world, and they are going to expect it.

Darrow: I agree. It’s going to be like a battle of the bands. These young kids coming up through college are used to being able to download whatever they want. They’ve got broadband everywhere. These enterprise software companies are going to have to face that, because these are the people who are going to be running these systems going forward. It’s going to be a really interesting scenario.

McKendrick: Yeah, if we have a bunch of 20-somethings come to work for us, and they see 3270 green screens they have to work on, tabbing to between the fields, they are not going to stay with your company long.

Gardner: Can I throw just one countervailing perspective? If you look at Google, which is all software as a service, they have extremely sparse, almost Draconian, interfaces. How do these two coincide, this demand for rich animation and yet Google’s success with very Spartan interfaces?

Biske: I'm going to side with you on this one, too Dana, and take a contrarian view. Having done a lot of work in human-computer interaction space and user-centered design, there is a difference between what I want versus what I need. Ultimately, in the enterprise world, it's about efficiency and it's going to be about how quickly I can get the business processes done that I need to. If we look at how companies are starting to leverage some of the work flow on BPM systems, I see it going towards more minimalist interfaces, not necessarily in the technologies involved, but I want something very lightweight that’s specific to the task I need to get done.

This is where the gadget and widget technology, and either the Mac OS Dashboard or the Vista Sidebar, actually may start to play a role in the enterprise. You’ve got these very targeted interfaces for a specific task, and it’s not just saying, "I’ve just got a bunch of data fields on there and it’s the Web-based version of a green screen." They're leveraging dynamic HTML and JavaScript in AJAX, but they go directly to the task that you need done. They’re there. They pop up with a key press. You do what you need to do, and the task is completed. That goes into your workflow system, gets routed to the next person down the chain, and again you’ve made it as efficient as possible. You’re not waiting for this big, bloated thing to come up or to go out to the Web, and you've still got to navigate through all of the Web-based forms to get to that particular task that you need to do.

While all of the media content and everything is nice, you have to look at them and ask, "What’s the applicability of all of those capabilities to corporate enterprise problems? How do I leverage a video in executing the business processes that I have to execute?"

It’s not to say that there aren’t any scenarios for that, but I don’t see it as something very applicable today. And, there is a real risk that you could have this 20-something crowd come in and, like any technologist, it’s the shiny new thing, and they are not thinking about how this is really benefiting the company. Is it making things any better for the business problems that I have to solve? And, if it's not why are we investing so much energy in trying to find a way? It’s a solution looking for a problem, and not vice-versa.

Gardner: Maybe there's a third way on this, and that would be that you go for the minimalist, when you are dealing with data, transactions, and workflow issues, but there is a whole other side of enterprise productivity around collaboration, learning, discovery, and knowledge transfer. These videos and rich media, be it text, audio, or video, whichever you choose, or all three, could be very powerful. We could see instances where we are going to get both. We are going to get a lot of minimalist widgets, but we’ll also get lots of rich, movie-grade video, when it comes to the other side of the equation, which is not dealing with machines and data, but dealing with people.

Darrow: I don’t even know what the term is. I think we’re beyond Gen-Y'ers -- right? I think of kids coming out of college, and when I say that they’re going to demand changes, it’s not necessarily that I think that they are going to want video, although I think they will. The issue is that they want to be able to download what they need to do whenever they want it, and they are going to bump up against this IT constraint.

There was a really good panel discussion on this a couple of years ago at Lotusphere. This is when Ray Ozzie made his triumphant reappearance at Lotusphere, before Microsoft brought Groove. He talked about this duality, and he cited some research about how many young IT workers bring their own laptops into the office, so they can use the tools they were used to, rather than the company-mandated tools.

Even when it just comes to looking stuff up on the Web, kids are used to finding information where they want to and they are not used to going through corporate routes for this. I think what you are saying about a dual mode is right. In terms of the spare interface versus video, there are places for both, and there are productivity places for both.

Gardner: A lot of kids that I see these days, are really into SMS texting on their mobiles. That’s about as sparse an interface as you could possibly get, and they love that. It’s very popular. They also like full, rich media, and so they want the best of all. They want it their way, and they want the best of everything. It’s not either-or; it’s "all of the above."

Darrow: Like the appliance mode that we were talking about before, where you are only exposed to the processes you need to do your job, versus all those layers of information. You don’t need that. That’s totally applicable. The key here is that kids are used to getting what they want when they want it, and they are going to bump up against IT constraints.

Gardner: So, a company like Google will be able to give them what they want the way they want it. And, Yahoo, Microsoft, and Salesforce.com could offer a lot more richness or the ability to mash up more rich media and communications, as they wish, into their business applications. But that brings us back to IBM, HP, and Oracle, the big older-line enterprise-focused vendors. What’s going to be their story? Are they just going to let Yahoo, Microsoft, and Google fill this role that could erode their total value over time? What do you think Todd?

Biske: I think you're absolutely right on the whole dual-mode thing. The wheels are turning in my head here thinking of what the model of the infrastructure provider to the enterprise needs to be. This is really an interesting discussion with me working as a consultant now, because I have the situation where I've got my own laptop that I am running everything on, and I need to go into clients. Probably 10 years ago, you’d have to wait to get access to their LAN, and you'd have to use their machines. Today, that’s not the case. I can do all my work without necessarily having to go on my client’s network at all.

Gardner: Are you using an EVDO card or some wireless technology?

Biske: I’ve got a Sprint USB modem that I leveraged to be able to be connected wherever I am. Just as another example, I have been doing some SOA strategy development. Obviously, the artifact on a lot of that is a bunch of PowerPoint.

Now, we’re going around doing a road show to various people presenting this. I talked with the guy I am working for and said, “Are you okay with me just going and recording this as a podcast and making it available for people to download and listen to it on demand, because we’re just going around saying the same thing again and again and again and again? It would save a lot of wear and tear on our voices, if we could just record it and make it available on demand."

Do companies need an internal podcast infrastructure or even blogging in the enterprise? I continually reference my blog in my consulting work and say “You know what? I've thought about this before. Go, look at this blog entry and you can see my thoughts on it." It’s very transparent. It saves me having to reproduce all of that work every time. The same thing certainly holds true in a corporate infrastructure. The knowledge exists but nobody knows where to find it.

So, do we need to see the IBMs and the other big infrastructure player now not just providing an application server, but a full internal communications infrastructure, including support for the distribution of podcasts and blogging networks? How does all of that integrate in with your identity management system? In the enterprise world, you’re probably still going to need to have some degree of world-based access control on some of these things, and different levels of privacy on the information. They may have to bleed more into that application-provider role, rather than the pure infrastructure side of it.

Gardner: Yeah, I agree with that. I think we’re going to start to see the emergence of what we could call the Chief Content Officer in a company. Their job is going to be to allow for additional modalities of distribution, whether we’re taking advantage of blogs, Wikis, and RSS, or whether you’re just creating videos from PowerPoint slides or rich-media animations and graphics.

I think that’s absolutely a role, but these large enterprise vendors have already done the heavy lifting, when it comes to knowledge management, document management, and the integration of formats. It’s really just a matter of bolting on a front end, and that probably could be a Flash via the Flex approach. Wouldn’t that be part of the thinking that Adobe had by making Flex go open source? Why have all these vendors go and reinvent this? Why not just use ours, and we’ll let you open source it so you can adjust it to your needs and environment?

McKendrick: Tom Davenport recently came out with a blog and an article in Harvard Business Review, in which he looked at this phenomenon occurring within enterprises -- the Enterprise 2.0 phenomenon, or we call Web 2.0. He feels that this stuff is important, but it’s not the next big thing. It's the next little thing.

It’s not really making a huge dent in the overall course of the market, the billions and billions of dollars that are being spent on IT infrastructure, for example. These are all nice things that are out there, but they are not -- at least in Tom Davenport’s view -- the revolution that’s overtaking the IT world. Most companies, most enterprises are still worried about maintenance issues. They are worried about the server, server farms, network, and bandwidth -- the fundamental nuts and bolts.

Gardner: Well, yeah, but to Todd’s point. If young 20-somethings come into the company, and they liked the idea of creating a podcast and distributing e-learning that way, rather than having to talk the same PowerPoint presentation over and over again, they’re going to probably do it. They’ll do it off the grid from the enterprise and then put up on YouTube and say, "Here’s the URL. Here’s the presentation. Go take a look at it."

McKendrick: I like Todd’s point, and, in fact, I have heard the term "personal outsourcing" applied. The resource I first heard this from was John Schmidt over at the Integration Consortium. With personal outsourcing, an employee or a worker no longer goes down the hall to another worker to get an answer to a question or picks up the phone. Now, they go to the entire global community through blogs or Wikis.

Gardner: Through a search, right?

McKendrick: They start with a search. It’s the same way in my own work, and I am sure yours as well. You go out to the entire world now seeking collaboration, seeking answers to your questions, seeking additional knowledge.

Gardner: What do you think, Barb? You’re pretty close to what enterprises and also the channels are doing practically. Do you see this as the next little thing or is there more to it?

Darrow: A lot of the VARs and systems integrators I talked to are sorting this out as well. This is the next big battlefield. You've got to incorporate all the stuff, but you've got to have controls. I don’t know; it’s the million-dollar question. The Flex move on Adobe’s part is brilliant, because if you look at the broad scheme of things out there in terms of toe-holds on people’s computers, the only company that has as big a toe-hold on most computers as Microsoft is Adobe, because of the PDF reader and the Flash reader. It’s brilliant.

I think that's a really good story going forward -- how is the latest Adobe-versus-Microsoft battle going to shake out here. Again, I’m being a reporter. We love battle stories. We are so knee-jerk that way. But, Adobe was incredibly smart here, and their partners and their systems integrators have to sort this out. I would love to hear what the other guys think about this.

Gardner: From my personal experience of moving from podcast production -- one of which we are listening to now -- to video, I have had to look at various approaches. There are some great tools out there for going to QuickTime. You can really compress the files, and there are some great tools. Final Cut Pro is an excellent tool. On the other hand, I have to worry about the other readers, the other media players, and by going to Flash, I don’t have to worry about that at all. So, I am very quickly moving all of my rich media production over to Flash and buying the Adobe tools as needed, hoping that open-sourcing of Flex means that this will be something that will enter more ISVs, enterprises, software-as-a-service providers. As an independent producer, it is pretty much a no-brainer for me. I don’t even need to consider Silverlight, because Flash does everything I need.

Darrow: Right. You've got a bigger universe out there to attack.

Gardner: All I have to do is create the content. If I can make it rich on one hand, but also make it compressed, so that it can be used in these RSS feeds and networks, then my job’s done technically. Then, I just have to focus on the content.

Darrow: Were any of the panelists at MIX '07? I was just curious about what percentage of the audience there was from the Adobe world. I'm sure it was fairly large, but I don’t know.

Gardner: You've nailed something here. It is a new battleground, and it affects not just media and content, it affects RIAs, SOA, and mashups. It affects how companies like Amazon, Google, Yahoo, etc., will be monetizing. And, it certainly affects how Microsoft is going to be facing pressures as a transition from its older business models to new ones.

Darrow: Dana, you had a blog about a month ago about the development environments that Amazon and eBay were using. I'm curious whether there is going to be broader applicability for those guys going forward. Any thoughts on that?

Gardner: That was one of my major takeaways from the Web 2.0 Expo, which I did attend. We are in the era of very fertile development and entrepreneurial opportunities. On one hand, we've got more and more people that are able to play the role of developer, have a say in how applications behave, are more able to take their views as entrepreneurs or line of business people, and get what they want for productivity instantiated in some kind of a computing environment.

So, on one hand, we have an expansion of the people who can take part in development. At the same time, we're seeing a compression in the cost, in the risk, and in the time, for going from concept to full production. We're seeing things like the Amazon EC2 and S3 and the Bungee Labs Connect announcement. Then, there are others like One Page, a Chicago company that barely just gives a business user a list of dropdown menus, tailors them each time there is a response as part of their application development process, and then being able to just push a button and it’s "Wow!" It’s in full production. Bungee is also offering debug and test as a service.

So, it's really compression. You can go and literarily, in a matter of hours, take a simple application from concept to full production. That can scale to millions of potential users within days, if need be, as these Amazon Elastic Cloud approaches provision servers based on demand. Then, the developer, the entrepreneur can then pay for that hosting based on the demand, which means they should be getting revenue and profits that are commensurate with the cost of production.

It's a very interesting period with software as a service and mashups. As more entrepreneurs go in this direction, enterprises are going to need to follow. They're going to just say, "Wow, we can get this done faster, better, cheaper by going around our IT department -- not that we don’t love them and we don’t continue to support them -- but when it comes to widgets, gadgets, mashups, and quick ways of going out to market, and testing something to see if it works are not, let’s just go through this new opportunity." Any other thoughts on that?

Darrow: I'm just curious what the long-term strategy is for a company like that, for Bungee Lab. Is that basically existing just to get bought up by someone else, or do you think they are in it for the long haul?

Gardner: There are a number of different options for their future, but if they can demonstrate an ongoing recurring subscription revenue based on this ecology approach, the quid pro quo is "We give you the free development, the free debug, and then the hosting on a pay-per-drink basis, and you have to keep your application within our hosting environment." If they are like a canary in a coalmine, if they prove that model, then other companies will race to it as well, and we could see a whole wave towards consolidation.

So, they could go in a number of directions. They could continue to make a good living on their own, they could become part of a larger Elastic Cloud approach -- that is to say a service or development as a service that you drop into a larger hosting and services deployment environment -- or some other mashup with another company that provides some other levels of service. But if they can prove the concept of developing deployment as a service on a pay-per-drink basis, that’s going to be very meaningful.

McKendrick: Let me throw a curve into this as well, it will be interesting to see the impact that has on development outsourcing, which has been the preferred way among enterprises in terms of cost cutting.

Gardner: You’re right. The way they have cut cost is to go offshore, break up development projects into small components, have them developed separately, and then reassemble them. If you can do a large portion of that off the wire, and then pay only after it goes into production, you're right, that could be really impactful on the offshoring business.

McKendrick: The new company is also based offshore that provides the offside hosting.

Biske: If you look at it, there are certainly increasing trends that companies more can purchase what they need, rather than having to do custom development. So, is the model the long tail, where we just outsource all of the development, throw it out there for the community to develop some of the niche products, outsource more of the vertical applications, and use the Internet to say, "Hey, I've got a big, broad distribution channel." Whether it's somebody writing applications to run a dental office, or niche markets like that, you can just go out and get it and have a model that you can developer and have a bunch of these little niche things sitting in your office at home.

Gardner: That’s a good note to wrap things up. I appreciate your listening for these 45 minutes.

McKendrick: Dana, I just want to add one note. I don’t think anybody mentioned the term SOA once this entire podcast.

Gardner: No, but it has been lurking in the background.

McKendrick: Perhaps there is this convergence taking place between Web 2.0 and SOA.

Gardner: Certainly the whole client issue hasn't gone away, and it is still working itself out, but it is going to have a great bearing on how you then go back and design, aggregate, and composite your services, right?

McKendrick: Exactly.

Gardner: Okay, well thanks very much to our panel. We’ve had Joe McKendrick, Todd Biske and Barb Darrow joining us here, and I just want to say thanks for listening. I am your producer and moderator Dana Gardner, Principal Analyst at InterArbor Solutions. Come again and listen to our next BriefingsDirect SOA Insights Edition. Thanks, everyone.

Listen to the podcast here.

Produced as a courtesy of Interarbor Solutions: analysis, consulting and rich new-media content production.

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. 18, on RIAs and Enterprise 2.0 trends. Copyright Interarbor Solutions, LLC, 2005-2007. All rights reserved.

SaaS Providers Increasingly Require 'Ecology' Solutions from Infrastructure Vendors

Edited transcript of BriefingsDirect[TM] podcast with Progress Software's Colleen Smith on SaaS, recorded July 26, 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: Hi, this is Dana Gardner, principal analyst at Interarbor Solutions, and you're listening to BriefingsDirect. Today, a podcast discussion about Software as a Service (SaaS), the burgeoning marketplace for off-the-wire business and consumer applications, and the infrastructure that's required for those delivering these applications and services to thrive and prosper.

To help us sort out this market and the needs for infrastructure, we're joined by Colleen Smith, managing director of Software as a Service for Progress Software. Welcome to the show, Colleen.

Colleen Smith: Thanks, Dana.

Gardner: Tell us a little bit about how Progress Software, you, and how your research came to determine that the time is right for ramping up your offerings and their applicability to the SaaS provider market?

Smith: I was lucky. Progress had started to look at the application service provider (ASP) model back in the early 2000-2001 time frame to figure out whether there was an opportunity for some of the small ISVs who were using the Progress technology to become more of an application service provider. When I joined the company two years ago, I was basically asked to figure out how to build more of a SaaS partner program and look at ways in which we could work with our partners.

We basically stepped back and said, "All right, let’s look at a number of different areas," one being the technology enablement and how to build applications to go to market with SaaS. We also added a couple of other things, because we felt that one of the biggest challenges traditional software vendors had was around the business model, the go-to-market strategy, sales enablement, and figuring out ways in which we could actually help them to be more successful in this new business model. We were thinking of it more as a business model and not just as a technology.

Gardner: So, it's also providing the back-office applications and requisite integration for them to have a business go at this, not just the underlying guts of getting the scale and reliability for the applications themselves?

Smith: Right. We’re an infrastructure provider, but we also look very carefully at this channel, which happens to be ISVs that bring our infrastructure products to market. We wanted to make sure they could be successful with SaaS. Sure, there are the technical components of multi-tenancy, being able to have a Web-based access, and being able to drive policy configuration and personalization.

More importantly, we work with a lot with our partners or these ISVs to make sure they realize that this requires different marketing. It requires a different sales and business model, because clearly there are financial implications in terms of cash flows. There are also a lot of things they need to think about in terms of who is the target market.

We've helped them focus on looking at new markets and going down-market. Our partners have always focused very much on the mid-market, but SaaS has enabled them to target some very niche verticals and go down into the "S" of SMB (small and medium business).

Gardner: You mentioned application service providers (ASPs), and there was a lot of talk along the lines of potential for this market at least 10 years ago, maybe more depending on how the delivery was designed.

What's different between what was then conceived of as the ASP market and what we now call the SaaS market?

Smith: When I look back at the ASP market and what was going on, it was much more about the hosting. Everybody said that if you just take a business application and host it, you can be an application service provider. What they didn’t realize was that the folks who were trying to do the hosting really had no domain knowledge in terms of the business application. They didn’t understand how to focus on managing the business processes. They focused on getting the application up and running and hosting it.

There were a couple of problems with that. Number one, the applications were built for on premises. They weren’t built to be used by multiple customers. The other thing is that the people who had built those applications weren’t necessarily the ones who were doing the hosting. It was the hosting vendors who figured they could just load it up and run it.

SaaS and ASP in concept are still the same. The application is going to be housed and managed centrally, hosted somewhere, and run by different customers. The biggest difference is that the people who are now managing, building, and deploying those applications are more of the ISVs, who understand what it takes to run and manage that business process.

On the software side of it, there is much more of a focus on business-process automation, and the people who are building, deploying, and running those applications have a good, solid knowledge of the business itself. The second thing is that the applications are now architected specifically to be able to run for multiple customers, and it’s not a separate implementation for each customer.

The economy of scale is what killed a lot of hosting providers back in the ASP days and ran them out of business. They were just doing an implementation for every customer, as opposed to a single implementation that can now be used by multiple customers -- personalized and managed. The people who use the application run and use it differently, but the implementation is pretty much the same for all customers.

Gardner: Right. I want to get into a little bit of why the costs have come down and what the architectures are that make it more of a pure of-for-and-by the Web play. Before we do that, you mentioned that you've been at Progress for a couple of years. Why don’t you tell us a little bit about your background, and how you've come to be involved with the SaaS market?

Smith: Prior to coming to Progress about two years ago, I spent five years as an industry analyst. I was looking at the ASPs back in those days and understood what was going on around the market, but I also looked at the overall infrastructure market. Prior to that, I spent 15 years in the enterprise-application space.

What's interesting is my background. I started in the mainframe days, saw the transition to client-server, then saw the transition to the Internet. So, I watched the different transitions in how the software industry has grown over the last 20 years or so. I even started off my career at EDS doing service bureau and outsourcing. I've seen it come full circle.

When I joined Progress, I said, "Let’s look at this new business model, SaaS, and figure out how an infrastructure company can make a play in terms of being part of this new business model through using our technology, but at the same time working with a lot of ISVs who are out there trying to figure out how to make that transition.

Gardner: For those listeners who might not be that familiar with Progress. You have been involved with ISVs, first with tools, then with runtimes, and then increasingly with stack and infrastructure platform approaches. So, your core audience, your clientèle, are really ISVs. Isn't that the case?

Smith: Yes. We’ve been in business 25 years, and I would say for a 23 of those years our go-to-market has been to work with ISVs who take our technology, build applications on top of it, and bring it to market. We also have a direct arm, but a long-standing portion of what we’ve done over the years is to provide the software infrastructure for application partners or ISVs to be able to bring their applications to market, build them, and deploy them.

Gardner: One of my earlier questions was about the timing. Why is the timing right now. For a lot of reasons, these ISVs recognize that they can continue to support their licensed, on-premise businesses and, at the same time, pursue other market segments at a price point that makes it worthwhile. Would you agree with me that the timing is right for the ISVs, as they increase their business model directions, in terms of the price points? Why is this a good time for these ISVs to start looking at SaaS?

Smith: I do agree with you. I think the timing is right. There are a bunch of reasons why. Number one, the Web is finally viewed as a business platform. Seven or 10 years ago, the Web wasn't viewed as the way in which business applications were going to be run and managed. Because of that, as I mentioned before, a lot of traditional ISVs have been selling to the upper end of the mid-market, or to large enterprises. Those have been the folks buying business applications.

The "S" in SMB really couldn’t do a number of things. They couldn’t afford the dedicated IT staff to manage and maintain the applications. They didn’t necessarily have the infrastructure and the technology to run these business applications. A lot of business applications are much too complex and require too much manpower to manage and maintain the app.

A couple of things have happened. One, the price of computing has come down. People now have access via web browser to business applications.

The other thing, one we’ve all seen, is that ISVs realize there’s a whole new market. There’s that long tail, if you will, of the software market that allows them to be able to go after new people. In the past, software just wasn’t accessible to them, and now there’s a whole new market opportunity.

We stress to our ISVs, "You can continue to be in the traditional software business for your core market and the market that you’ve been going after, but there’s a whole new opportunity for you to look at new markets, whether they be the low-end of your current market, adjacent markets, or even new geographic territories."

Throughout South America, Africa, and Asia-Pacific, what we’re finding is tremendous growth opportunity for ISVs to look at these as new markets and to go into those new markets with a new business model. That new business model is SaaS.

Gardner: So, on the delivery side of things, that is to say on the direction in which they sell, there’s this long tail and globalization benefit that provides them new market opportunities. These areas are ripe for the need for productivity, yet they probably don’t want to set up their own data centers.

On the other side of the equation, on the supply side of how these ISVs can deliver, there’s a new support ecology available to them. They don’t have to create their own data centers themselves. They can find partners. We’ve heard a lot about Amazon, for example, and there are others, of course. These ISVs can focus on what they do well, which is their software, their logic, and then also take advantage of some hosting.

Tell us a little bit from your vantage point as a software infrastructure and tools provider how that ecology works when it comes to these hosting options?

Smith: You’re exactly right. Back in the ASP days, it was all about hosting. I’m not saying that in the SaaS world hosting isn’t important, because it absolutely is. What has changed over the last 7 to 10 years is that now you look at it in terms more of an ecosystem.

You’ve got your infrastructure providers, your application providers, and your hosting and managed-service providers. The biggest change that I have seen now is that each realizes they have a role to play, they have a core expertise, and that through building of this ecosystem and through partnerships you can be much more successful in being able to lower your deployment cost, but still being able to target and go after these new markets.

I look at our ISVs and our ecosystem within SaaS. We use partners like OpSource, for example, to be able to do some of the hosting and managed services. Our ISVs are the ones with the business and domain expertise, and know what their business application is. They know their particular vertical niche and they know how to best deploy, manage, and build out business processes to be able to support it. What we provide in the equation is the underlying infrastructure that helps them to develop, deploy, integrate, and manage and monitor their business applications.

Together, what we have is more of an ecosystem that’s able to go out and lower the overall total cost, because each one of us is playing our role in the system. Because it’s a partnership, the pricing and licensing is all done based upon what we call the shared risk/shared reward model.

Gardner: I think they also call that "pay as you drink," right?

Smith: Something like that.

Gardner: Now, we’re not just talking about big honking business apps anymore either. As more companies adopt Web services and look at methodologies such as SOA, we can perhaps get a little bit more granular as to what is hosted, and look to business process management from a hosted or SaaS view. I guess we could call them "components as a service." That requires quite a bit more heavy lifting on the infrastructure side. There’s more integration, managing data, and making data available in near real time across multiple services.

Can you address the opportunity for applications to be decomposed into services as a service, and also what new requirements there are for the infrastructure to support that?

Smith: Sure. What happens early on in a market is that we see lot of these niche, vertical, best-of-breed or single applications or components in the first wave of coming out to market with SaaS. So, whether it's in the legal sector, healthcare sector, or financial services, they say, "Here’s one specific business application -- mortgage applications, loan applications, or patient billing." What slowly happening is being able to start integrating business processes and offer them out to the community.

If you look at financial services, instead of just being able to offer loan applications, there’s now a whole suite of different types of business services or business components. As long as somebody who’s part of the financial services arena has the ability to integrate those different business processes and offer them out to their community, they basically have become more of a business service provider.

What we’re seeing is that you no longer are an application vendor like you were in the traditional business model. If you do this right and you use the underlying technology of governance, policy enforcement, integration, and development, then you can build out a whole service delivery environment or platform, where you can now offer multiple business services to a community that might be very vertical-based.

We see a lot of this happening in financial services, healthcare, the legal sector, and even in agriculture, which needs to now manage and maintain a lot of different business processes because of federal regulations, mad-cow disease, and all the other reasons people have to manage and monitor business processes a lot more thoroughly.

Gardner: Okay. So, where the traditional ISV might have had a monolithic application standalone, we’re seeing more decomposition into services. Their role becomes more of a services integrator off the wire, but at the same time they have more flexibility in how they deliver.

They also have more flexibility in how they create, in that they can exploit reuse more generally. They can also shop around for business services that might be on the market and available to them through the ecology. So, there seems again to be a two-prong benefit: one in how they can deliver, but also in how they can aggregate and create. Does that sound right?

Smith: Yes, and what that comes down to is the winner in all this is the end customer, who is looking for a single business-service provider who knows their business, whether they know healthcare, legal, or any business sector, and they’re able to provide a number of different business services for them. The big challenge that most large organizations had was integration, because they’d go to one vendor and buy a business app, then go to another vendor and buy a different business app.

In the SaaS world you could run into the same thing, if you’re going out to all these different SaaS providers. But, if you start to think in terms of those SaaS providers participating in this ecosystem that’s much more based upon who the end customer is, the end customer can end up benefiting. They’ll be able to go to a single business-service provider.

Maybe that business provider has built those services, or maybe they haven’t, but they’re able to pull in these multiple business services, Web services, or whatever technology they’ve been built in, and offer them out to the community. So, the end customer, who might be that smaller business user, can now have a single point where they go to access a number of different business services.

Gardner: Again, that points to the long tail. You can have a higher level of customization, but also manage your costs in dong so.

Smith: Exactly. The biggest challenge people have about going after that long tail is the fact that you’re really talking about millions of markets of a dozen. It’s very difficult to get your cost model to a point where you’re able to go after all of those millions.

But, if you really think about it and you build the business application that’s very specific to what they need to do, and you’ve built them based upon the small services, then the customer chooses which business services they need to run their business. You’re offering a spectrum of different services, because you understand what their marketplace looks like and what vertical they’re in.

Gardner: Now, when I speak to some enterprises and increasingly smaller businesses -- the S in the SMB -- I keep hearing the same concerns come up around data. They’re concerned about data ownership, managing iterations of data, and coordinating data between their on-premises locations, applications, data centers, what might be happening out in the cloud, and within the ecology, and then how that translates properly to the end user.

Now, Progress Software has made some acquisitions and has focused quite a bit of energy and investment on this data issue -- the real time, management, semantic issues around not just data availability, but about how things are termed, labeled, and classified, application by application, instance by instance, and even site by site. Help us understand how Progress is helping the ISVs in the SaaS environment deal with somebody’s complex data and semantic issues.

Smith: When people initially thought of integration, they thought about point to point, and it was more about at the business process level. We realized was that if you’re not addressing data-level integration semantic issues, then you’re not going to solve all of the problems that customers have.

We made an acquisition last year of a company called Pantero, and we have built a product that we’ve termed Data Xtend Semantic Integrator. It's all about looking at the semantics of the data and being able to match and manage that data from one system to another. So, it’s just another product that we’ve added to our infrastructure, and it allows customers or our ISVs to look at all different levels. We’ve got integration at a business-process level, at the enterprise service bus (ESB) level. We now have integration at the data level. We also have capabilities to govern and monitor and manage Web services.

Progress continues to add different technologies into our environment to support what’s going on in terms of all of the different integration and Web services challenges happening in the industry. Our basic focus is to continue to add software infrastructure components to support the needs of large enterprises, as well as to support the needs of business-service providers who are trying to offer these integrated business applications to their customers.

If you think about it, large enterprises can do a lot of this themselves and can buy the infrastructure to build, integrate, and manage. In a lot of ways, the SMB requires these services providers or these business services providers to be able to do all of that integration, and they expect that that integration will just be handled for them, and that’s what they’re really looking for.

So, that’s the big challenge of whether ISVs are going to become business-service providers or whether they’re going to partner with business-service providers. They almost become the manufacturer, if you will, of these small-business components that larger business-service providers will pull into their environment. So, you might see a different breed. We might move away from the traditional systems integrators and you might see more business-service providers focusing on supporting the customers. The ISVs are actually building some of the components that are used, but they aren’t necessarily going to be the service providers.

Gardner: So, it's still murky and up in the air as to how this supply chain works, who interfaces with the customer, and which type of organization does customization versus underlying OEM types of activities.

Colleen, I wonder if you could put on your analyst hat again for a minute and try to forecast how that market might shake out.

Smith: I think the SaaS market, in general, is really still in its nascency, and there are a lot of things that have yet to happen. But, the good news is this isn’t just a fad. We see a fundamental change in terms of the business model.

What I say a lot is that if we think in terms of the software industry over the last 20 years, we’ve come a long way in terms of building partnerships, and in terms of how systems integrators and service providers work with ISVs. What I see being the success of SaaS is that if we continue to enhance that model, it's going to be about hosting providers, working more closely with system integrators and ISVs. The only way that the end customer is going to win in this is if we get into a business model where there is that shared risk and shared reward, but the customer pays for only what they need to use.

It's going to come down to pricing models. It still has to come down to some building of ecosystems out there, where everybody knows their role and plays that role, but doesn’t necessarily try to do the other person’s role. There are still a lot of things happening.

I believe it’s going to be vertically focused. I don’t think this is going to be a horizontal play. We’ve seen a lot of success in vertical business expertise. There's going to be content, business applications, data, and services. If all of those can be offered in a single environment through a single service provider, the customer will end up winning.

Gardner: I suppose from the business point of view, software companies historically have been motivated to try to move towards the one-size-fits-all volume model. That’s been in their best interest. So, what we’re seeing here is the flipping of that model to, "You can do as well, or perhaps better, over time by focusing on the one-size-fits-small niche. Through reuse and efficiency in your infrastructure and tooling you can accommodate those small niches and still prosper." Is that the value proposition that you would like to stake out for Progress?

Smith: Absolutely. We’ve always worked with a lot of our partners and told them, "Figure out where your niche is, and, if you can be the best at your niche, you can be successful." We aren’t necessarily talking about creating the next SAP, but if you can be really successful within your specific niche area, then your customers are going to value your service.

In the SaaS model, there are two S's. One is the software part and the other part is the service. If you have business domain expertise, they’re going to look at you as a partner and they’re going to ask you to help to run, manage, and grow with their business. That’s the other part. If you’re focusing on SMB, you also have to help those small organizations figure out how they can scale to become large organizations. So, it’s your opportunity as well as your responsibility to make sure that you can scale with them.

Gardner: So, it’s domain expertise that becomes a differentiator that’s more valuable over time, rather than just the ability to write good software.

Smith: Yes. I often talk about it. You’re moving from develop-package-ship into develop-build-service-deploy. It’s much more about the ways in which you can deploy and service the customer, as opposed to just packaging, shipping, and saying, "Well, now it’s somebody else’s responsibility."

Gardner: I suppose it's being more of a partner with your customer, rather than just throwing software onto a disk, shipping it out, and saying good luck. Right?

Smith: Yes, because the switching costs are lower. It’s not necessarily happening in the industry today that everybody is dumping their SaaS application to go to another one, but you have to be able to service your customer. If they’re not getting the service that they require from you, they will look elsewhere.

Gardner: We’re getting towards the end of the show. I wonder if you have some examples that you could share with us, either by name or by definition, of ISVs that have focused in this vertical direction, have embraced SaaS, and are getting along okay.

Smith: I’ve got a couple of interesting examples in terms of ways in which you can think specifically about accessing the long tail, but being able to target a whole new set of users.

One of our partners is in the K-12 education area. They had a traditional business application that sold to faculty and to the student administration systems. They figured out that they could offer a business application that can now be accessed by parents over the Web. So, they re-architected their application for multiple school districts. They now allow parents to go in and track absenteeism, as well how students are doing in terms of grades, and things like that.

They've completely re-architected and re-thought the way in which they’re building and deploying business applications for K-12. That’s an interesting example of thinking about SaaS and thinking in terms of a new market, as opposed to just looking at large universities or schools that can afford a system.

They’re selling at the state level and saying, "Here is a state-wide student administration system that can now be used at all schools. Even if they don’t have a large IT staff, all they need is access via the Internet." That’s interesting in terms of the education. This is one of my small partners called Skyward, and they’re located in Wisconsin.

Another interesting area is in library management systems. They've been around for a while, and we’ve got a partner, Keystone, who has focused on a very small niche in terms of braille and applications for the visually impaired. What they’ve done is to rethink the way in which you can have access to books and to look up books available at libraries. And, it can all be done via the Web.

They’re actually coining themselves as the Netflix, if you will, of libraries, because what you can now do is use the Internet to look for availability and access to different books that might be available, not only in your town, but statewide, and have those books actually shipped to your house.

So, they've re-thought the way in which library systems are built and used, and are able to bring in access from the Internet, and, in this particular instance, can allow handicapped individuals access information right from their homes.

These are just two examples where you start to think about who the user of a system is. It’s a very traditional backend accounting and business management system, but it’s now being used and serviced to expand their market, as well as just to be able to have a service for some small end users, who, in the past, wouldn’t have had access to these types of technologies.

Gardner: So, it really provides for some creative business development by looking for these, as you say, entirely new types of customer bases.

Smith: It's looking at new markets, being able to target now at a statewide level, as opposed to a smaller individual school or individual library. So, it’s a new market opportunity, but they’ve been able to take something they’ve been doing for years with domain expertise and really expand their opportunity. What we see is that there are tremendous opportunities for ISVs out there, if they step back and think in terms of what they know, what's business domain expertise they have, and where they could provide a better level of service to consumers or customers.

Gardner: So, depending on the type of organization you are, you have the opportunity to scale up -- if that makes sense -- to scale down, perhaps to do both, and then, as we mentioned earlier vis-à-vis globalization, in a sense, scale sideways.

Smith: Exactly, we’ve had other partners who have looked at this as an opportunity. I've got a law firm software company in the UK that looked at this SaaS as an opportunity to go to both Australia and South Africa. They have expanded their territory, without having to build a lot of support in data centers and development centers in Africa or Australia.

They’re still running their main headquarters out of the UK, but they’ve been able to go into these two countries, because it just so happens that the legal systems in South Africa and Australia are similar to the one in the UK. So, the business processes were similar but they were able to expand into new geographies.

Gardner: Very interesting. Well, thanks. We’ve had a nice discussion about Software as a Service, and particularly on the business development opportunities for ISVs. We’ve been discussing this with Colleen Smith. She is a managing director of Software as a Service for Progress Software. Thank you, Colleen.

Smith: Thank you, Dana.

Gardner: This is Dana Gardner, principal analyst at Interarbor Solutions, you've been listening to BriefingsDirect. Come back and listen next time. Thank you.

Listen to the podcast here. Produced as a courtesy of Interarbor Solutions: analysis, consulting and rich new-media content production.

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 Dana Gardner’s Podcast on SaaS with Colleen Smith of Progress Software. Copyright Interarbor Solutions, LLC, 2005-2007. All rights reserved.