Transcript of BriefingsDirect SOA Insights Edition Vol. 8 Podcast On SOA Through the Eyes of Investors

Edited transcript of weekly BriefingsDirect[TM] SOA Insights Edition, recorded Jan. 12, 2007.

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Dana Gardner: Hello, and welcome to the latest BriefingsDirect SOA Insights Edition, Volume 8, a weekly discussion and dissection of Services Oriented Architecture (SOA) related news and events, with a panel of industry and financial analysts and guests. I’m your host and moderator, Dana Gardner, principal analyst at Interarbor Solutions, ZDNet blogger, Redmond Developer magazine columnist.

Our panel this week consists of Steve Garone, a former IDC group vice president, founder of the AlignIT Group, and independent IT industry analyst. Welcome, Steve.

Steve Garone: Thanks, Dana, great to be back.

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

Joe McKendrick: Thanks, Dana, I’m glad to be back as well.

Gardner: Its also a return visit for Jim Kobielus, principal analyst at Current Analysis. Hi, Jim.

Jim Kobielus: How’s it going, Dana? Hi, everybody.

Gardner: Neil Ward-Dutton, also making a repeat appearance, is a research director at Macehiter Ward-Dutton in the U.K. Hello, Neil.

Neil Ward-Dutton: Hi there. Hi, everyone.

Gardner: Our guest this week is Trip Chowdhry, a managing director of equity research at Global Equities Research. Welcome, Trip.

Trip Chowdhry: Hi, everybody.

Gardner: Our topics this week are going to revolve around three meaty issues. The first is the business opportunity for vendors around SOA. How will Wall Street, the City of London, other markets, and investor organizations view SOA as a growth opportunity, and what sort of companies will benefit?

Our second topic is going to be around the rcent announcement at Macworld -- and we’re talking about the week of January 8, 2007 -- by Steve Jobs and Apple Inc. of the iPhone, and what this might mean for a mobile front-end: Is it just for consumers? Is there an enterprise aspect to iPhone? And what might be some implications for SOA and composite applications?

First, let’s dig into this notion of SOA as a business opportunity for vendors. Some of the things you need to ask as an enterprise buyer are: "Am I buying into a company that’s going to be around in five years? Am I getting locked into a technology or relationship? If so, will that vendor be able to devote the resources for R&D, for support?"

I’d like to know that my vendors and primary suppliers are healthy financially. Some news just today: SAP came out with some results from the fourth quarter that came in below their Wall Street guidance. So, a little bit of a shocker there.

Let’s go first to Trip, because you’re an equity analyst, how do you view this SAP announcement? Is it a blip or is there some other opportunity to look at the impact of SOA and how the business is changing for business applications vendors?

Chowdhry: Actually, if you think about companies like SAP who have very long implementation cycles, they have a lot of moving parts. It's a complex product, and the problem that SAP has -- and to some extent, most of the SOA vendors have -- is that they’re trying to solve complexity with complexity, and with that you can easily get a few early adopters.

When it comes to mass adoption -- or the second phase of product adoption that needs to occur to show growth -- then you really have to ease the product, ease the message. You have to tell what you do in one bullet point. So far, our research shows that NetWeaver and SAP, and some other vendors, have very complicated messages, which CIOs are now struggling to understand.

That is going to create some sort of a downward pressure near-term in SOA-based initiatives from a business and financial point of view. From a technology adoption point of view and a trials point of view, SOA is definitely a trend, but it seems like the messaging, the product, and everything else need to be simplified, so that people can know how one initiative can correlate and coexist with other initiatives they have going.

Gardner: That’s interesting, because a recurring theme of our discussions over the past several months has been the complexity and the lack of clarity and understanding in SOA messaging and the business value. It seems to be also impacting how investors and those who value vendors look at this as an opportunity. It's like they don’t quite get it.

Steve Garone, do you agree with that, and do you think that there are certain types of companies, vendors, maybe systems integrators, that might be able to benefit from this complexity and lack of clarity?

Garone: Yes, I do. Dana, let me go back to your statement regarding messaging. Yes, we have had a variety of conversations about that, and in particular this sort of chasm that exists between technology messaging and business messaging. This is an architecture and a technology that can provide benefits from the technical point of view, but also from the business point of view.

It’s not clear that either the end-users or the providers of technology are able to clearly articulate either of them or have them interoperate -- so to speak -- have them mesh into a coherent vision of what SOA actually is and what it can deliver. So, I think 2007 is going to be a very important year for sorting out all that within organizations, and therefore in the responses that vendors provide in terms of messages.

Trip, I really loved your statement, "solving complexity with complexity." I think that’s right on the money. Another way to put that is that despite the Nirvana that SOA allegedly can provide, it’s still fundamentally about integration, and integration is always a difficult and complex problem. So, vendors who can address that in a robust and user-friendly way, are going to have significant amount of success.

In terms of companies like SAP, they sort of come at this from the enterprise application side. They in fact are going to have to move toward a model where they can present their products as a series of loosely coupled services that adhere to standards, and can therefore be integrated with other applications and easily accessed and used. I think they’re moving in that direction. I’m not really prepared to say that being unable to do this, or the speed at which a company like SAP is doing this, is affecting their financial results, but I do think that that’s going to become pretty much the ante that these companies have to put up in order to actually continue to play the game.

Gardner: It’s interesting, I speak to some systems integrators, and I characterize SOA as the gift that keeps giving, and they chuckle and they nod their heads and kind of wink. If you’re are a services organization, professional services, then complexity, integration, and such long-term trends always tend to be positive.

Garone: Yes, I agree with that.

Gardner: They also say they think SAP and perhaps other business or package business applications providers, monolithic application providers, are going to be yielding to some pressure in the market. Of course, it's too soon to tell from one quarterly result. We are having a robust global growth. Gross domestic products (GDP) are in growth mode. Even if the United States is in two to three percent growth, many of the emerging markets are growing much more rapidly.

You would think that a global vendor like SAP would be also enjoying some growth. So, it’s too soon to tell if there is a longer-term trend here. Let’s go over to Jim Kobielus. Jim, do you think that complexity is bad for vendors, good for SIs, and can you think of any types of vendor that might be able to go to Wall Street and say, "We’re going to be worth twice as much in two years because of SOA?"

Kobielus: I’ve joked for many years with people that the more change you have, the more complexity you have, and the more need you have for consultants to come in and explain it all. So, there’s always going to be an opportunity for consultants and analysts to explain what things like SOA are and are not, and what their relevance is to the average business user.

In terms of whether complexity is bad for vendors or good for vendors, and so forth, let’s take a step back here. In terms of the business opportunities in SOA or that SOA creates, first of all remember that SOA is just an architectural abstraction. How do you shrink wrap and make sexy something that’s just a three letter acronym?

In terms of differentiating your value prop as a vendor in this market, one of the problem with SOA is that SOA essentially has an architectural approach, smashing and dissolving the ability for vendor lock-in, because everybody is implementing common standards with any-to-any interoperability. So, these SOA universes are getting so multi-vendor and heterogeneous, the complexity can be overwhelming.

In many ways, the number-one opportunity that SOA presents for vendors are for those vendors that can reduce the complexity by providing SOA suites of software and other components, and secondarily those vendors, those service providers, who can provide SOA and integration best practices to enterprise customers.

So, how do you shrink-wrap SOA? Well, these suites -- from the likes of SAP/NetWeaver, Oracle, IBM, Microsoft, etc. -- implement all the piece-parts of SOA, the portals, the app servers, the databases, and the UDDI registries. Next, the Accentures of the world provide the warm bodies and warm brains of professional services to crunch this complexity down into greater simplicity, and deliver end-to-end integrated solutions that leverage the largesse that an SOA universe provides.

Gardner: What about middleware? We’ve seen IBM in the last several quarters come out with its newest growth engine, its software division, and within the software division the growth is in middleware: WebSphere. So, suddenly we’ve got the largest vendor and perhaps the largest SI as well, but their growth is in middleware. Oracle has also come out with some results in the last couple of quarters that have shown some strength in their middleware offerings.

Is SOA perhaps a leader to a larger infrastructure opportunity on Wall Street? What do you think, Joe McKendrick?

McKendrick: Well, Dana, I think basically at this point the terms middleware and SOA are fairly synonymous. If you talk about middleware and offering middleware out to the marketplace, you’re talking about some type of standardized, componentized service-based offering. So, absolutely. Middleware and SOA is the direction in which companies are going.

In terms of the opportunities, there are essentially three levels or three types of offerings vendors can offer, and put out to the marketplace. On one level, you have the applications. Then, there are the services, the systems integration (SI) services. And, then there are the development tools used to build these applications or systems. Microsoft, of course, still reigns as king of development tools. It has plenty of competition.

What I find interesting is on the application level, and this is where SAP has a lot of work cut out for it. As we see more standardized, componentized middleware evolving into the marketplace, we’re seeing more of a commoditization of software taking place, just as we saw commoditization of hardware back in the '80s and '90s. This stuff is probably happening under the radar at the this point, but I wouldn’t be surprised if we saw a Dell-type of business model begin to evolve in the software space, where you’re not an original equipment manufacturer or you’re not actually producing the software, but you’re pulling together components that someone else makes and offering it to the marketplace.

Gardner: Joe has raised an interesting issue, which is the business model. Let me take it back to Trip Chowdhry. Wall Street tends to frown on companies that are in cycles that have peaks and troughs, sometimes two or three years cycles. They’re difficult to predict. Wall Street prefers a recurring-revenue model that can show consistent returns and growth.

It seems to me that a move from an enterprise license approach, which we’ve seen in these large vendors, to a services-support-maintenance type of model, which we might expect with SOA offerings, might in fact please Wall Street. Do you have a sense of whether a shift in business model is in the offing and what it means?

Chowdhry: This is very good stuff that you mentioned, because there are some companies that are trying to innovate SOA as more of a service. There is a startup company called Mule, that’s trying to have -- I won’t say integration as a service, but has some SOA flavors to it. It’s not exactly SOA, but when I speak to these CIOs, they don’t say "I want SOA." They say "I want to make two systems work together with the least effort." That is a change over the last year. If that’s the problem, then the solutions could be many.

That’s one thing that we’re seeing. Then, of course, the Apache Foundation has its own product called ServiceMix, which is given out free, and JBoss coming out with its own SOA. Then, we have these commercial companies including BEA Systems, webMethods, and TIBCO, which have commercial offerings that are still on a license model. If you look at the various kind of plays in the market, one is software-as-a-service SaaS).

You have open-source alternatives like ServiceMix and JBoss, and then you have commercial pairs. Investors hate it when there is uncertainty, and there is no clear winner. Right now, there is no clear winner who can say, "Here is SOA." As someone on this panel mentioned, there is no product called SOA. You have a product called "database," but SOA is still a concept. And Wall Street is having a tough time putting a valuation or momentum behind SOA. Wall Street is thinking that any company that is in a disastrous situation evolves to be in "SOA."

IONA is one of them. WebMethods is another. TIBCO is struggling with growth. IBM, at the end of the day, is a services company, and since they are services company, they can push their own software the way it is, even though it’s not the best. BEA is also in transition. They don’t know what will happen to middleware. Oracle is trying to create a vertical stack. SAP is going with the horizontal stack. Microsoft is thinking the world is Microsoft.

Now, from an investor point of view, they see confusion and uncertainty, and when that occurs, they stay on the sidelines.

Gardner: All right, let’s take it over to Neil Ward-Dutton. Neil, it sounds like we ought to invest in bonds until this whole SOA thing gets settled down. What’s your perspective?

Ward-Dutton: I’ve just been listening to everyone and frantically writing stuff down. It’s interesting what Trip just said about how SOA is still not a product, and I absolutely agree with what some of the other guys said. It will never be a product. I think it's interesting about the observations that were made around IBM and Oracle in their middleware results, the contribution of middleware to their business. I think putting SOA in front of that is like putting the cart before the horse.

I agree with Trip in that what’s not happening is people saying, "I want SOA." What’s happening is a desire for delivering multi-channel services, dealing in a more consistent way with compliance mandates, making supply chains more flexible to allow better syndication of products and services, BPO and the need to integrate services across and between organizations. Those are the things that are being done, and SOA is more and more just the flavor with which those things are being delivered.

So, the big theme that is not going away -- and someone else said this five or 10 minutes ago -- is integration. It’s easy to think integration was a fashion in the late 1990s with Enterprise Application Integration (EAI), which incidentally was something that only really got off the ground once the big SIs got involved. The integration specialist players didn’t really make a huge market by themselves. What made a huge market that became a multi-billion-dollar market was actually the systems integrators. And, it’s the same with SOA.

Pure-play technology vendors providing really innovative little bits and pieces aren’t going to make a mainstream market. It’s only the SIs who really make that happen, because they can take a complex proposition and can actually communicate that effectively to the right communities that need to play into this.

Gardner: It would appear that SIs might be in the role of kingmaker when it comes to SOA -- if they are leading in terms of business opportunity, taking advantage of the change. They’re also going to be saying, "Well, here’s the best-of-breed that we suggest you use." IBM might favor its own software, but I think they’ve taken some pains to be a little bit agnostic or ecumenical.

If the customer says, "We’re an Oracle shop, and we want to use Oracle," then IBM will help them use Oracle. As Trip pointed out, IBM finds itself in a pretty good position because it has both the software business and the systems integration business. HP could also be considered in a good position. They have hardware, they have software partners, and they have this strong systems integration and professional services capability.

So, the question is: Are the SIs in a very strong and advantageous position over the next several years?

Ward-Dutton: SOA is a change in mindset. The challenge is primarily a change in the way you think about delivering capabilities through IT. So, what does that mean? Well, who’s going to make the money? The people who can help you change the way you think, not the people who give you bits of technology.

If you look at how the technology is being delivered, a lot of the technology that gives you the on-ramp to SOA -- the Web services enablement pieces -- those are being delivered free or nearly free as part of upgrades. The vendors are baking those technologies into products in the hope of making sure customers renew. That technology is finding its way to the market and to customers without lots of new money being spent. It's part of the regular upgrade cycle of technology, and the way that’s being procured.

The really interesting stuff is around change management, organization, and culture. That's where the real SOA market value is coming from. It absolutely plays into what everyone else was saying a minute ago about more of a subscription model on the technology side, because it's that kind of model that actually aligns the value of the investment with the value you’ll receive with the customer.

Gardner: Are you saying that SOA as a vision or a concept -- as it works its way into how people design, develop and integrate and manage and run their IT departments -- will in fact lower the amount of money that the market projects onto these vendors? Is that to say that SOA is a disruptive influence in terms of the amount of money required to do IT?

Ward-Dutton: No, at all. SOA does not create a whole pot of money to dive into. What it’s doing, because it’s a flavor of technology that’s being baked into existing upgrade cycles, is to create a replacement market. SOA-related technologies are replacing others.

Gardner: Let’s go around the table. I want to ask a very simple basic question and that is: Does SOA create more demand and more net spending over a two- or three-year period, or does SOA, in fact, spur on and create less IT spending? This is very general and aggregate, but we’re trying to determine whether SOA subtracts from the amount of money -- the pie that’s spent on IT -- or not? First, let’s go to Steve. What do you think?

Garone: Wow, that’s quite a question, Dana. I’m not sure that I can give a precise answer today.

Gardner: Gut instinct?

Garone: We’ve all recognized during these conversations that SOA is really just starting out, people are just really starting out with SOA. If you look at all the case studies that are around, and I’ve talked to end users about this, they’re really just beginning to ramp up with pilot projects or even small production projects, but it really hasn’t permeated a lot of organizations. There’s going to be a fair amount of money invested in new products and technologies, in training people to understand these and use them, and, in cases where you can’t do that or don’t see it cost-effective to do that, to go outside to system integrators to get that done.

Gardner: Steve, I was hoping for a short answer here.

Garone: I’m sorry.

Gardner: Is SOA a growth impetus or is it an contraction impetus?

Garone: I think it’s a growth impetus, especially in the short-term.

Gardner: Okay, Joe McKendrick?

McKendrick: It depends on how the economy does over the next two to three years, if the economy goes downward, we go into a recession or some type of economic downturn, when IT budgets decline, SOA will be seen as a strategy to cut cost. Formerly, a systems integrator would come in and spend about a year working on tying two systems together in an enterprise. If the two systems are SOA standardized to some degree, that could be shaved to a matter of weeks.

Gardner: So you’re seeing SOA as a cost-saving and somewhat of a contractor in terms of total spent?

McKendrick: If the economy goes into a downward cycle.

Gardner: Let’s just say the economy is adjusted, we’re going to have an adjusted perspective in terms of what the macro economics are.

McKendrick: IT spending probably will remain constant, but it’s going to shatter the types of projects that are out there. The systems integrators are in a tough spot because these one-year engagements that they could charge tens of thousands, hundreds of thousands, of dollars for are probably going to be going by the wayside. You’re going to see a lot of smaller engagements, smaller projects.

Gardner: Jim Kobielus, what do you think?

Kobielus: SOA is primarily going to be a belt-tightening approach that will come in very handy when the economy turns down. I mean if you do SOA right, it’s the whole notion of "don’t reinvent the wheel." In fact, you share, reuse, and consolidate all your existing silos down into fewer silos that can be then repurposed into new applications fairly quickly though some open standards.

If you do SOA right, then the SOA-specific projects will result in a leaner, meaner IT organization. Conceivably, the budgets might remain the same, but the share of the money will go not so much into the SOA plumbing, as UDDI registries and so forth, but will go for value-added projects in terms of business process reengineering (BPR). This will be based on the project accelerator templates that more and more of these SOA software vendors are providing -- more of the high-level systems integration.

Gardner: So over time there might be a bump in spending in order to actualize and realize SOA advantages, but once they are realized, the total amount of money required for IT should go down. This means a smaller pie for the vendors, which means vendors will be fighting over a smaller total marketplace, and we can expect some of the bigger players to perhaps have an advantage there.

McKendrick: In any given IT project, the role of the IT analyst will shrink and the role of the business analyst will grow, because then the value-added will be in process optimization as driven by the business people.

Gardner: I dare say that productivity will increase, but again we’re looking at this through the lens of how to size the total market for SOA and how vendors will adjust to that. Neil Ward-Dutton, what do you think about this, is SOA a contracting influence over time or is it a growth influence?

Ward-Dutton: It’s neither. Things won’t change, and the reason has to do with the size of the pie. There’s a maturing view of IT as a business enabler out there, and so IT budgets are really going to pretty much track the overall business performance. The thing that is going to happen is, while the budget stays the same, SOA enables better choices to be made around where the money gets spent in IT. That’s what’s really important.

It’s about being able to draw a line between stuff you want to reduce cost on and stuff you want to go crazy on, because it’s where you really differentiate the business. SOA enables you to move that line, as and when you want. That’s really interesting. It puts the customer in the driver's seat. SOA is like table stakes for the vendors, SOA is not a net new market opportunity, it's table stakes.

Gardner: So, spending remains fairly neutral in real terms, but productivity as a result of that spending increases?

Ward-Dutton: Yes.

Gardner: Trip Chowdhry, you’ve done some studies, how do you see the total pie for enterprise software and infrastructure being affected by SOA?

Chowdhry: If you look at the big picture, the industry is going through consolidation. Companies are merging, and that definitely puts integration as a top priority. Even before the two companies merge, the second thing they look at is: Can the two ITs work together, can the two IT departments, can the two products and platforms, work together between the two companies that are merging?

Definitely, an SOA kind of an architecture makes the M&A activity more fluid, but the question is, Who will benefit? Would it be software product vendors or would it be system integrators and consultants? I think there will be in two phases. The first phase would be the system integrators and consultants will win, because I think when we speak to the CIOs, anybody who can help them understand the mess gets the money. In the long term, software vendors may make money relatively or literally more than the SIs, because they may automate and simplify many of these processes. But net-net I think SOA is good for IT sector as a whole.

Gardner: Why, exactly, is it good as a whole?

Chowdhry: Because the past infrastructure has been wasted on legacy technology. Now, business is being done across every geography. Even a small company has to interact with a producer in China, a call-center in the Philippines, a software developer in India. When you think about the companies that are evolving today, it requires strong agility.

If you don’t like your vendor in India, you should be able to fire it and immediately get another one -- say, in Ghana or South Africa -- up and running. What SOA provides for a business user is flexibility, agility and the ability to optimize your processes to get the resource where it is cheapest and sell it where it’s more profitable. From a business point of view, SOA is a dream come true. The only problem is that it's not mature enough for everybody to put their hands around. The biggest problem SOA has is people and vendors saying, "It’s a concept! It’s a concept!"

The day people say, "SOA is a product, and I have a SOA product," like a database, then overnight SOA can become a reality and it could show the same sense of maturity and adoption that databases or Microsoft Office have.

Gardner: Okay. So, for investors, they want to see a product that they can sink their teeth into and say, "This is SOA and this is how it’s going to be sold into the enterprise." That way I can estimate and value the monetary flow.

Chowdhry: Exactly. They want to have an SKU and hear the price. That’s their mentality. Concepts are very difficult, because there’s no end to concept. The pushback I'm getting is that the problem with SOA is that it’s a constant evolution of various standards. First, it was SOAP; then, REST, and then the whole community debate about which protocol is good and which is not. Whenever there is so much discussion going on, people step back and say, "Let them figure it out. Maybe I'll put money into it next year."

Gardner: My take on this is that ultimately SOA is a growth influence, because it’s been the history of IT that when you’re about to crest from investment into recovering productivity benefits phase, and the cost begins to go down, there’s yet another thing that you have to begin to invest in. So, it’s ongoing. We’re still in the early stages of IT. This is not going to be something that you’re just going to mature to and then pull the plug and say, "We’re all done." It’s a journey and the spending will ultimately continue to grow.

Let's go on to our next subject. This week we saw Steve Jobs get on stage and introduce a fairly innovative confluence of what we’ve seen in multiple devices and multiple services. He’s taken a mobile device footprint, put a flat screen on it, given it a GUI, with a touch screen, brought together communications, both in text and voice, together with a full-blown operating system -- in this case OS X -- that can connect through Wi-Fi and through its Cingular partnerships, the EDGE network.

I’ve been very encouraged by this. It does a lot of what I would like to do from a personal productivity perspective. The iPhone product isn’t due until June, and it seems as if the feature and function list is still not completely nailed down.

My thoughts go back to when the Apple Newton was first discussed -- we’re talking 10 or 12 years ago. There was some vision about doing away with the PC for many workers. Now, notebook computers weren’t nearly as ubiquitous back then, and they were heavy. They were kludgey. The batteries didn’t work so well. But this notion of having a small-footprint device that can pretty much do what you’d want a PC to do strikes me as something that’s still of interest to the enterprise.

We see a lot of vertical niche applications with this. For example, when a FedEx person shows up at your home with a package, they’re essentially carrying a mobile PC device, but it’s highly verticalized and very expensive. It strikes me as being a very significant development, if we could get a common-footprint approach, an industry standard approach to this. If we could bring that into the enterprise and realize some of these benefits around business process and around edge workers and knowledge workers and business analysts getting out of their cubicles, going to where the activity is happening. They could tap applications through a mobile full-function browser anywhere, anytime, at low expense.

Am I alone in this? Steve Garone, do you think that things like the iPhone, and the Sony Mylo -- although that’s been directed more at college students -- are going to be the end-points for SOA?

Garone: It’s an interesting question, and to me there are actually two questions there. One is whether this is a useful device for the enterprise. Based on what I’ve seen of the iPhone, personally I’d love to have one. It’s very cool. The indications that I get from people who are actually implementing solutions in the enterprise is that there are some questions around what email systems it can work with, how robust the email is, which of course is very important in an enterprise environment. I was a little bit turned off by the fact that this is a single carrier only, which I think is contrary to the whole notion of an open interconnected network, and SOA, in particular.

Gardner: Not to mention competition.

Garone: Right. We can all talk about the tendency of Apple to do things like that throughout its history. But conceptually these kinds of devices from the very beginning have been part of the SOA vision. The question is: Is this the right device, does it meet enterprise needs in terms of email, and in terms of application access?

Gardner: Couldn’t you do Webmail through the browser?

Garone: You could conceivably do Webmail through the browser, but we haven’t even seen this device yet so we don’t know.

Gardner: If it runs OS X, it probably will run the Mac Mail program which is a strong POP client.

Garone: I agree. One issue that could come up, though, is one of the visions that has been talked about in the context of mobile devices and handheld devices is being able to access and download parts of all applications and databases for local use. The question is whether this the kind of device that can do that in an open and robust way in terms of other platforms and other technologies?

Gardner: Now, you mentioned you’d like one of these personally. This is how the PC entered in the enterprise. People liked PCs and they brought them in. They weren’t sanctioned by IT. They called them toys and trinkets. Perhaps the same effect could happen with something like the iPhone. What do you think, Joe McKendrick. Is this an end point that will find its way into the enterprise?

McKendrick: It’s interesting. I suspect it remains to be seen how deeply consumers embrace iPhone or whatever they’ll be calling it a few months from now. It’ll be interesting to see if this is something that enterprises embrace, which I don’t think will happen, I think it’s going to be kind of a bottom-up percolation.

Employees will be bringing these things into work with them, just as the cell phones and smart phones and PalmPilots had their roots, and the PCs began back in the early 1980s -- not as a deliberate strategy of the enterprise to reach these devices. But if there’s enough of a critical-mass of employees who are using the devices -- the iPhones, in this case -- then enterprises will begin to take a second look and reach out. I don’t think enterprises are looking at it right now or will be looking at it when it’s introduced in a few months.

Gardner: Jim Kobielus, do you see this as taking a step toward that notion of a mobile device that’s closer to a PC but does voice and other things that the enterprise could make good use of?

Kobielus: Oh yeah, for sure. But I don’t see anything terribly revolutionary in the iPhone, other than the fact that it comes from the Steve Jobs godhead. There’s no doubt that Apple does great design, does a great marketing, and does a great zeitgeist. They made a splash with the Newton and look what happened there. What in the iPhone is not already being used in corporate environments in a major way? People are carrying their iPods into the office and using them to listen to podcasts, or using their cell phones. They’ve already got mobile messaging and mobile browsers in a variety of devices that they’re using.

Gardner: They use iPods as a mobile storage device, too.

Kobielus: It's a nice design. I don’t want to sound to flip and cynical about it, but it's one of those things where Apple does a very good job, just like Microsoft does, of getting the average person on the street aware of the fact that we are reaching some sort of a tipping point in terms of putting these things in the hands of the average individual and the average office worker. Quite frankly, I’d like to wait another six to 12 months to see if this gets any traction in the enterprise arena. It probably will, but I don’t think there is anything strongly differentiating this particular client device.

Gardner: What do you think, Neil? Is having a low-form factor, but highly functional browser, something that will blow this open, something that brings together the necessary ingredients for a whole greater than the sum of the parts?

Ward-Dutton: No. Something I always try to remember is that I am not typical, and it's something I need to burn into my forehead. I am not typical, and I’m afraid neither are you guys. You are atypical. Most people aren't anything like us and don’t have our interests, nor all the time that we have to think about this stuff.

That mistake was at the heart of an awful lot of the far-out rhetoric that you heard in the late '90s- and early 2000-time around the previous generation of PDAs and mobile computing and how it was going to revolutionize the way that all business processes were enacted. They’re not, because actually it’s a minority of people that need this functionality. Most people aren’t mobile workers.

Gardner: Is it just another hype-curve here?

Ward-Dutton: I’m afraid so. As a consumer and an individual who loves gadgets, I think it's incredibly lust-worthy. I read some of the reviews and they'd crawl over broken glass to get one. It’s not going to be cheap, but as an individual, I think it’s awesome. Someone just said, "I’ll wait six to nine months." I’ll wait six to nine years.

Gardner: Trip Chowdhry, what do you think? You’re in Silicon Valley. Is this something that’s going to have an impact on the enterprise?

Chowdhry: Actually, I did see the iPhone at Macworld and I was very impressed. It seems like the name may have to change to Apple Phone, because Cisco has sued them. I think there are definitely enterprise kinds of applications that could work very easily on it. That is based on the demo that I saw at Macworld. First of all, browsing is very good -- very, very good. I would say very, very impressive.

It's very easy to use. If somebody sends you an email attachment or PDF or Word file, you can see it like you'd see it on a computer. It's totally amazing. You can expand it and contract it. The visual things are very good. Instant messaging is another application, which -- at least in the financial sector -- people like to communicate with.

Someone on this panel mentioned that the feature-effects are not complete. I think down the road there will be two or three versions. One could be for teenagers, one could be for a business user edition or small business edition, and the third could be for entertainment. The IM feature, as well as email and attachments, which are very business-centric, could do very well.

IM was one of the things I feel could be a killer app. I wouldn’t believe that many of the enterprise applications, like Salesforce.com-kind of stuff or running some mobile enterprise ERP system, on this PDA would do justice to it. But you can effectively communicate with your colleagues without a lot of baggage, and have four hours of battery life and being able to carry a very small battery as a spare.

I think it’s a good form-factor that can fit in every pocket. The feature sets still needs to be sorted out, but it’s a development platform. So, third-party guys will also come out with their own platform. First step, it will be a good replacement for products like BlackBerry and others.

Gardner: I tend to look at this optimistically in regard to the enterprise. I think that for salespeople, the mobile warriors, for those who are in the field, or internally on a factory floor, for example, this pulls together a lot of what was necessary and doesn’t require the integration on the back end.

The IT people will say, "Listen, all the stuff we’ve got can be plugged into this, whether it’s through the browser, through POP, through other standards of instant messaging. We can have a VPN go to it, and have secure access through the browser to our applications."

I think what makes this an intriguing to the enterprise is that Jobs and company have done the integration for them, and they don’t have to go and take each and every application or function and force-feed it to a device. That's done through standards and it could be very interesting as an accelerator to replacing the laptop and even desktop computer for a lot of workers.

Chowdhry: We think more in terms of data, but the people who were standing next to me [at Macworld] were representing a biotechnology company. They said, “I'll use iPhone at work, just to make sure I can scan through my voicemails.” That’s a feature where you can preview your voicemails just like you preview your emails. They felt that was the killer application for the enterprise. They said, “We have 20 to 30 voice messages in the morning. We have to go from one to thirty without knowing which one is important.”

Gardner: As I have alluded to in some of my blogs, if we bring Voice over IP (VOIP) into this, and we can do telephony and get the convergence benefits of having CTI and other benefits from an all-IP environment -- a lot of what we used to think of as "unified messaging" becomes a reality. And, as you say, that’s a very important productivity benefit.

McKendrick: Dana, this is Joe. The real test for the iPhone will be if a year from now we can do this entire podcast all using iPhones.

Kobielus: The problem with iPhone is that the hoopla surrounding it has still got us fixated on this notion that we all need or want one gadget for everything. I think the way it's all shaking out is that each of us possesses a federation of gadgets of our own. I don’t think so much that iPhone is a replacement for your laptop or even for your desktop, but rather yet another device that will hook up with them in various ways, through Wi-Fi and Bluetooth, and so on.

Then, you can zip all kinds of contents back in forth. What interests me more than iPhone from this past week is Apple TV or iTV, whatever they’re calling it -- the IPTV appliance. That seems to me to be a more exciting development on the whole. In a year’s time, we simply can be doing this video podcast using Apple TV.

Gardner: I would just add to that. I think this is going to reduce the number of gadgets I’ve got to have. In a sense, my notebook computer becomes my server, and it serves my television as a node using something like Apple TV or TiVo or Slingbox or whatever it might be. My notebook computer becomes my server for my content, so that I can manage it up to the cloud or to the other devices. It could be the cell phone, an iPod, or an iPhone. It really increases the value and strength of what the notebook computer does. It gives me a mobility node and also a home entertainment node. And that’s, I think, the vision here.

Kobielus: Didn’t Apple release, or didn’t they discuss, a home server this week as well?

Gardner: No, that was Microsoft, at CES.

Kobielus: Microsoft, I get these guys mixed up.

Gardner: The notion of a server is necessary, but whether we actually want to go out and buy another $1,000 Microsoft device that’s going to require a systems administrator behind every potted plant in every living room is still an open question.

Kobielus: I think it’s inevitable. I think the whole notion of a SOHO server is coming to the fore, I think every household in the world is going to have its own SOHO server before long, to coordinate this federation of gadgets and channels.

Gardner: Will it be a discrete box or will it be a virtualized server, where part of it’s on the cloud and part of it is just availing the extra power, capacity and storage I’ve already got on my notebook computer?

Kobielus: It’s a so-called set-top box repurposed.

Garone: Now, Dana, this is Steve. I just want to ask a sort of a devil’s advocate question here. Given what you just said, how does that pertain to the enterprise?

Gardner: Well, it’s interesting because if more and more people do this and they're getting this great functionality, productivity, and I guess you could call it client-server approach for their home and their personal life, and then they walk into their enterprise and they’re left with this kludgey, uncoordinated, un-integrated stuff, they’re going to be thinking, "Wow, I’d be better off having my SOHO and be a contractor to this enterprise than I would be by being actually a member of the enterprise."

Garone: That’s probably true, but I think what I’m getting at here is you see this as a very powerful browser, and certainly you can’t argue with that. But in terms of doing real enterprise work on this device, is this the right device for that at this point in time? I’m not getting the sense that it is -- maybe some day.

Gardner: I think it’s a combination of a notebook computer and something like the iPhone, because all the enterprise has to do is put things into an IP stream and put it onto a VPN, and that way I can access it through my notebook if I want full feature, or my iPhone type of a device if I want mobility. Plus that same device can then be something I use in my home for entertainment and managing my personal life as well.

So, for me this frees up the enterprise. I, as a user, have to worry about the node, the end-device. And they, the enterprise IT department, simply need to worry about putting their applications or their services or their SOA services into a stream through IP through a VPN.

Garone: That paints the picture of this device being an extremely thin client that communicates with and leverages assets that are on a server.

Gardner: It’s a rich convergence client, which is really what people have been looking for.

Chowdhry: I had a comment regarding the iTV, I saw it. Actually, I came back little less optimistic about it, because it uses Wi-Fi, and there are serious problems with Wi-Fi if you want to deliver high definition TV. Wi-Fi has a lot of problems with collision and jitteriness. They were showing some high definition videos on iTV and you could see jitteriness. For the way it’s being positioned, delivering high definition TVs within your home, at maximum you could only do it as one channel.

I am little less optimistic about that, because the right technology for something like that is probably a power-line technology. There’s a company, I think its called DS2, which has these 200 megabits-per-second chips that you could just broadcast right over your existing home networks. Some company -- I think its LG Electronics or Samsung -- are trying to use broadband 200 megabits power per second right into the electrical outlet. With that, you can deliver four to five high-definition streams.

Probably the first generation of iTV could just have mere success. It will take at least two or three years before iTV also incorporates some of these power-line technologies to get at least consistent broadband within the home.

Gardner: That’s a good point. The iPhone, iTV and even the AirPort (the Apple Wi-Fi device) are limited right now. But the fact that they are putting so much emphasis into it tells me that there are might be further generations of these wireless network capabilities out there that they’re banking on. It’s the paradigm that they like. Whether the current level of standards and capabilities meets the task of the future remains to be seen.

Okay, folks, we’re about out of time. I want to thank our guests: Steve Garone, Joe McKendrick, Jim Kobielus, Neil Ward-Dutton and Trip Chowdhry. Thanks all for joining.

I’m Dana Gardner, principal analyst at Interarbor Solutions. You’ve been listening to BriefingsDirect, SOA Insights Edition. Come back and listen again next week.

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

Listen to the podcast here.

Transcript of Dana Gardner’s BriefingsDirect SOA Insights Edition, Vol. 8. Copyright Interarbor Solutions, LLC, 2005-2007. All rights reserved.

Transcript of BriefingsDirect Podcast on Borland Gauntlet and Enabling Development Process Management

Edited transcript of BriefingsDirect[TM] podcast with Dana Gardner, recorded Dec. 19, 2006.

Podcast sponsor: Borland Software.

Listen to the podcast here.

Dana Gardner: Hi, this is Dana Gardner, and you’re listening to BriefingsDirect. Today, a sponsored podcast on developer productivity, on looking at an holistic approach to development that takes into consideration policy-based approaches -- managing process and people -- and not just the technology. We'll also talk about seeking a feedback approach, where testing is continuous -- and visibility into performance becomes an imperative.

To help us sift through some of these issues today we’re joined by Rob Cheng. He’s a Director of Developer Solutions at Borland Software. Thanks for joining us, Rob.

Rob Cheng: Thanks for having me, Dana.

Gardner: Rob, we want to get into a little bit of a historical context here on developer productivity. Why don’t we start out with understanding some of the basic principles around Agile development? I think that’s a good place to start, as we get into some of the approaches that Borland’s taking, and some of the newer benefits that are available in the field now. Give us a little primer and a little history, if you will, on Agile?

Cheng: Certainly. Agile essentially arose as a reaction against what was perceived as more heavyweight methods like Rational Unified Process (RUP). They were considered to be somewhat inflexible and inefficient, and imposed too high of an overhead on the development organization. The term "Agile" actually covers quite a few different specific methodologies, including extreme programming and Scrum, but they all share some basic principles, things like customer focus and rapid iterations on working software.

Gardner: I suppose if you do have rapidity, and you’re remaining lightweight, you also might lose visibility. So, managing this becomes a bit more important.

Cheng: Absolutely. I don’t know if it’s true that you lose visibility, but you have to be more cognizant of what you need to do to maintain visibility. A rapidly iterating process gives you more opportunities to measure things. You could conceivably end up with better higher fidelity measurements of visibility. That’s really where we’re going from the Borland Gauntlet perspective.

Gardner: And obviously it gives us an opportunity to gather more data at more points in the process.

Cheng: That’s right. In terms of data or metrics, rapid iterations really give you more opportunity to sanity check what you’re building, either from a code perspective or, ideally, with the customer/end user of the product.

Gardner: When one gains more data and input, then one can also make comparisons, and have, in a sense, a feedback opportunity.

Cheng: That’s exactly right. One thing that isn’t talked about enough in this area is the context. You get around to looking at projects in relationship to each other in context and also in relationship to time, looking at how things have changed from previous versions or over the last few months of the development process.

Gardner: I suppose the emphasis, until fairly recently, has been on managing the code, managing the development itself, in bits and bytes, checking in and checking out, and so forth, but with less attention paid to the overall process of how to take a project from beginning to end with a lifecycle approach.

Cheng: I think that’s actually an important point around Agile methodologies. If you look at the Agile Manifesto, or any other documentation around it, it really does try to emphasize that there’s a customer focus in all of this. And that customer focus helps drive some of this end-to-end thinking that we’re talking about.

You can’t have customer focus when you’re ignoring requirements, or when you’re ignoring use cases. Your iteration is not going to be completely successful, unless, at the end of it, there is a validation.

Gardner: And that leads of course to the real Nirvana here, which is to align business goals and interest with the development process, and development in general.

Cheng: That’s right. When you talked about aligning to customer needs, ultimately what you’re doing when you’re aligning the customer needs is aligning with the business needs.

Gardner: Now, what's at stake in getting this right or wrong? How big a deal is this, when we look at different vertical industries? And when we look at competencies within organizations, as they compete with one another, and the impact of globalization, and the need for getting to market quickly. What are the stakes here?

Cheng: The stakes are ultimately the success or failure of your software initiative. When you look at reports like the [Standish Group’s] CHAOS Report, which specified some ridiculously high number -- over 60 percent of software projects failing -- that entails a huge cost to the business. There’s a huge cost to software failure, software project failure, and there’s also a significant cost within projects of having to deal a lot of late stage rework.

Getting this right during the process means that it will eliminate a lot of those costs upfront. We can find out early whether there are issues, and the scope and size of those issues. The second part isn’t addressed quite as often. It’s the high business risk involved in simply not knowing. This goes back to the visibility issue. If you’re heading up a business unit, and you ask your accountants for some financial analysis, and they tell you, “Come back in a few months and then maybe we’ll give educated guesses,” what would you do?

Gardner: I’d be concerned.

Cheng: You bet, and you’d be right to be concerned. That’s not how businesses are run, but this is how software development has been running for decades. The businesses that have been trying to manage these, development organizations, have taken it for granted that this is how development works. This is black art. And, it goes to the heart of problem that we at Borland are trying to help the customers solve.

We’re trying to help them make software delivery more of a managed business process that’s based on metrics and objective measurements, not just guess work and anecdotal evidence. When we’re talking about more agile or rapidly iterative process, this is where it really gets to the heart of it. You can contribute to more frequent and improved measurement, not just from code, but, as we were talking about earlier, from an end-to-end user acceptance perspective.

Gardner: So, I shouldn’t need to wait until the project’s done to know, how well it’s doing.

Cheng: That’s a recipe for failure -- waiting until the product’s done to know whether it’s successful. You could take any other example in the business industry and you would be laughed out of any conference room, if you suggested, “We’ll wait until we’ve delivered our product or come off the manufacturing line to decide whether it’s okay.”

Gardner: This makes good sense. It’s logical and it’s rational. We can compare this to other initiatives in the industry in business over the past 150 years, whether it was manufacturing or the Industrial Revolution. So, there seems to be a natural evolution. But, how do we actually put it into practice? How do we go from theory to execution? You’ve gone out and decided that this is an important and a good business to be in. And, you have done some acquisitions to bolster your approach to this. Tell us a little bit about how you got from theory to execution?

Cheng: The technology that we’re talking about today around Gauntlet arose from an acquisition of some technology from a start-up that was run by several of BEA’s WebLogic Workshop veterans. They saw the problems and the challenges within their previous roles in very high definition and contrast.

They felt this was a serious problem that really impacts every development organization on earth. Borland, at that time, was also looking at how we could help extend some of the best practices and process improvements across the lifecycle -- and earlier into development. You might have noticed that we’d also made recent acquisitions around the testing in Quality Assurance (QA) space.

Gardner: Right.

Cheng: One was with Segue Software. One of the challenges that vendors like Segue or Mercury have had is that, although they’ve been quite effective at doing some automation and improvement around the QA process, they had no visibility into what’s happening in development. So, we still had this problem that you’re testing more effectively, but you’re still doing it very late in the game. After it comes off the assembly line, you have very little impact, and you can make very few changes effectively and cost effectively at that time.

Gardner: When I was doing some research into Gauntlet, I learned that the word Gauntlet comes from the idea that you’re going to put their code, the process, the people, through this gauntlet, making sure that it passes all the tests along the way, which is a good visual idea. It reinforces what’s going on here. Can you give us a bit more detail? What do you mean by test-before-the-test-phase and continuous test?

Cheng: That definitely is the metaphor of Gauntlet. What we mean by testing continuously is essentially that we are marrying quality control with existing version-control processes. Specifically, what’s happening is, as developers are committing their changes into their SCM or version control system, Gauntlet works behind the scenes to test, analyze, and measure those changes.

We can also intercept problems. For example, a very common problem is that you make some change, and because you weren’t careful, you break the build. It causes everybody else not be able to work, because you did something, perhaps some trivial change to a configuration file, that stopped it from working for every one else. Well, Gauntlet can actually interpose itself into this process, do the automated build analysis, and find that either it doesn’t build or fails some important test. Gauntlet won’t allow it to progress. It actually won’t promote the code and integrate it into main lines.

Other developers won’t see that and won’t be impacted by that change. When we talk about continuous test, we’re really talking about an approach to software delivery that emphasizes that quality really should be approached, and should be considered in every role and every stage in the life cycle. It’s not just the responsibility of QA. Unless you’ve made that mental acceptance that this is QA’s job, and you’re already in that place where it’s after the fact. You’re doing all this work but it’s already too late to make effective changes.

Gardner: Of course, the earlier you intercept the problem, the less costly and time-consuming it is to fix it, and the sooner you can bring the rest of the team in and on it.

Cheng: Actually, that’s true for number of reasons. Testing frequently does give you this notion of early detection. If you’re testing constantly and continuously, that means the time between when you create a problem or defect and the time when you find out about it is relatively short. That has a couple of consequences. One is that, it doesn’t have time to grow. It’s a bit much to talk about these defects as viral, but they can impact other projects and other development efforts.

Software is classically complex and interdependent. The longer you take between introducing a problem and discovering it, the longer you have that problem, and the longer you have other components and technologies -- or other software modules -- that depend on that particular flawed implementation. Unrolling that becomes much more expensive when you find out about it much later.

Gardner: I’ve heard some folks say, “Gee! You want us to have quality, and you want us to test continually, but you also want it done fast. Now which is it going to be?” I think there’s been some mentality that testing slows things down, and you’re bringing this in however as an overlay. This isn’t something that people need to do terribly differently. It’s not a rip-and-replace approach. You’re letting people use their same software configuration management (SCM), the same tests, and you’re just providing an organizational matrix on that. Is that correct?

Cheng: Yes that’s right. In fact, we do lower the overhead to some extent. When we talk about testing often, those are manual tests. Those are tests that the developer or QA engineer has to remember to do. They have to do them manually, have to take time out of their implementation to go and run these. Build it locally, test it locally. Presumably you’re doing something with that output as well, and all of that is overhead.

Gauntlet is trying to help streamline this process by automating all this stuff. The building and the testing actually all happens on the server. So, once the developer checks it in, it’s fire and forget. They can go on to the next task and check with the dashboard to see what the result of that was later.

Gardner: So, a rundown Rob, if you will, about what Gauntlet is? How it’s priced? What’s its architecture? Give us just a quick elevator description of what it is we’re actually talking about here.

Cheng: Sure. Gauntlet, as we talked about earlier, is a continuous build-and-test automation solution. Essentially, it’s a server-based product, server software.

It’s charged by the seat. It does interact with the version control systems that work with StarTeam, and we are constantly looking at also increasing the range of version control systems or SCM systems that we support.

Gardner: What have the results been so far? Are you going to come out with a new version or major release in early Q1 of 2007?

Cheng: That’s right.

Gardner: What have been some of the results so far? How has the field reacted to this?

Cheng: Right. The release in early Q1 of 2007 is actually the first official production release. We acquired Gauntlet in February, and since then we have doing a number of internal customer field trials as well as make a public early access release available. The feedback has been quite good.

I’ve been surprised by how quickly people have been able to get up to speed in using it and seeing benefit. The thing that’s really interesting about is that there are organizations, customers, and evaluators that are at all different phases and all different parts of the spectrum, when it comes to their occurrence, build, and development processes.

We have some that barely have unit tests. It was a feat to get them to actually have a build script that they can kick off in an automated fashion. Gauntlet gives them a framework, the central dashboard if you will, to monitor their progress, because it is one of their initiatives to improve. Part of what you need to do to build improve is to measure. You only get what you measure.

Gauntlet not only does the measurement, but it also does the visualization of it. So you can see from day to day, week to week, and project to project how things are progressing. You can see how often you’re able to build successfully, how much testing coverage you have from different projects, and how that is changing overtime. Are you increasing the coverage of testing that you have for your the different classes or different projects?

Then, we have other customers who are way on the other end of the spectrum, where they’re already very rapidly iterative. They are very agile and they see Gauntlet as a way to push that even further. They take their best practices and multiply the impact of them by offloading a lot of manual effort, doing it more on an automated way, and to giving the entire organization much more real-time feedback and better visibility about what’s going on?

Gardner: So, from their perspective of using this as a tool, they can find utility in it across the spectrum of maturation, in terms of where they are in their development and where they hope to go? That’s always a good descriptor of a long-term value. You mentioned something about visualizing a dashboard. Are these things that are designed for the architects or the project manager level, or is it some thing you can talk to the business people and say, “Here’s where we are. No guess work. We’re on track?” Is it designed for business people to engage with this as well?

Cheng: The Gauntlet dashboard currently is designed for development managers, project managers, and individual practitioners: the developers, the QA engineers, QA management, of course. The consequence of Gauntlet is that those managers, those project leads, the project managers, have the objective information to tell the business people what the actual information is.

They can tell what the status of the project is, what the risk is involved, how close they are to being able to actually ship, and if they know what the real stability is. They know what the confidence level is. A really good way of characterizing is that you’re giving developmental IT management much more confidence in how and what they say to business management?

Gardner: They can report to these business side folks with authority, because they do actually know where things are?

Cheng: Exactly. It’s fact based. It’s not just based on educated guesses.

Gardner: That notion of hope as a business strategy doesn’t have to kick in here.

Cheng: Actually, it’s not business strategy; it’s a recipe for failure and disaster. There often is too much -- what was one of the term that [former Federal Reserve Chairman Alan] Greenspan used -- an over abundance of optimism?

Gardner: Exuberance, perhaps?

Cheng: Perhaps that was it, but the overabundance of exuberance is really something that characterizes a lot of development in organizations sometimes. Gauntlet is a nice way to run a sanity check on that.

Gardner: One of the things you mentioned a moment ago about this spectrum of different organizations being able to apply this well gets to the heart of an area that’s always fascinating to me. That’s how to manage behavior, cultural shifts, individuals and in larger groups, getting them to change the way they think and move beyond a certain pattern of accomplishment, even though they feel it has probably been the only way up to a certain point.

Can you tell us little bit about how Gauntlet might be brought to bear on this issue of managed business processes, and how to get people to change the behavior? Can we really think about this as a way of orchestrating teams and behaviors? Or is that biting off a bit too much to chew?

Cheng: Yes and no. There is definitely something required as a forcing function, and it allows the adoption of more and more agile development. There’s usually a big failure or big problem.

One of our beta customers, for example, who is very aggressively adopting this technology, had what they called a brand-damaging, embarrassing failure event on their external customer-facing Website. They felt as if this was a symptom of the process failure that they had, and that was what really initiated their need to drive a change in process and in culture.

So, often there’ll be issues that people know they need to change, but they’re kind of set in their ways. They need something to spur them to action. Gauntlet does help in a sense that once somebody -- it doesn’t even have to be the entire company, the entire organization -- gets it in their head that they need to try this or they want to experiment with the more iterative, more agile approach, Gauntlet really helps them climb that learning curve. They climb that ladder of progressing incrementally towards getting more effective in their processes.

It can be just simple things like tracking builds, making sure that you can automate your builds, and that you’re building successfully. Then, tracking your unit tests. Do you have enough unit tests? Are they succeeding? How much of the code base are your tests actually covering? A lot of those things you could figure out, but it would be a lot of extra overhead to manage that process manually.

Gardner: So, for those organizations that have decided that they need to move from a tactical ad-hoc approach to a more strategic processes-driven approach, this gives them a ramp and a tool to start moving swiftly in that direction.

Cheng: That’s right. When you talk about strategic, we talked earlier about the notion of software delivery as a managed business process. One of the things that characterize other business processes in organizations is that you can do real sophisticated analytics. You can do business intelligence. That’s one of things that Gauntlet is trying to bring to the table, because of being able to continuously test, measure, and collect all the data.

Gauntlet actually gives you this great wealth of information that you can then data mine. When you talk about strategy and process, you also have to think about how to optimize the process. How do organizations continuously improve processes, not just code or technology? How are they are doing the work itself? A lot of that comes down to being able to mine to do ad-hoc analytical queries against the data that’s been collected about how the organization is actually operating. That’s one of the things that Gauntlet really provides -- that data warehouse of activity and metrics around actual development actions.

Gardner: So, I’ll get more data, I‘ll be able to start analyzing it. And then I can start setting policies, and then be able to revisit those policies and, on an iterative basis, improve upon them. What can we tell people about this policy-based approach or policy enforcement up and down the process and up and down the development lifecycle?

Cheng: That’s a very good question. The issue of process is important. A lot of times, process decisions are made for very good reasons at a higher level, in the process office, in the CTO, or the CIO’s office. They’re made in conjunction and collaboration with the management of software development. It often doesn’t get down to the individual practitioners, or it’s hard to enforce, because it’s just something that you’re telling people you’re managing that they have to do. How do you discipline it, and how do you enforce it?

One thing that Gauntlet allows you to do is make policy decisions at the point of insertion, at the point of code entering the system. Earlier, I talked about how we can essentially gate the promotion of code, the integration of code changes into different controls, based on whether they’ll be all that successful or whether test passed? Well, this is also something like you use much more generically as a framework, so that you can embed policy into that point as well. We can make decisions about requirements around maintainability, the complexity of the code, and the readability of the code.

If we have tools, they’ll help us analyze security, vulnerabilities or even such things as license compliance. Are you introducing unapproved third party’s libraries as open source libraries and packages? All these types of issues have the same characteristic cost curve, which is the later you find out about problems, the much more expensive it is to remediate.

Gardner: It also sounds like you can capture knowledge and competencies and then extend them, reuse them in a sense. This leads us into my next set of questions. What’s coming down in the future around these sorts of benefits, as we think about things like managed services and services-oriented architecture, and continuous ecology development of services, where there really isn’t just a cut-off date? As people consume these services, you’re going to adjust them, and they’re going to be working under service-level agreements. Is the Gauntlet approach something that’s going to become necessary as we move into that new arena of constantly dynamic development?

Cheng: Absolutely. In fact, a couple of words that you said were really resonating with me. One of them is “competencies.” From the competency perspective, one of the things that really breaks the back of development organizations sometimes -- and I’ve heard this a number of times from development directors – is that there may be dependencies in your system that you’re not really aware of. You don’t really think about them until they’re broken.

One of those is the human element, where there may be one person in the entire organization who knows how to put the software together. You only have one person who knows how to build the software, and that person leaves the company. You’re kind of hosed. You may have weeks or months worth of catch-up to get that knowledge back, but it ought to be institutional knowledge.

Gardner: Right.

Cheng: That shouldn’t be somebody’s personal expertise. The company or the development organization is running on that knowledge. Gauntlet helps to capture that in a centralized way and in an automated way, and share it with everyone.

This is also true of the situations when you have maybe niche platforms that you are trying to support or niche environments. There’s only one guy doing it, but you feel like it’s okay. Then, later there’s a customer escalation, because they’re that one big customer that happens to use that platform. And, by the way, the institutional knowledge is now gone. Again, the idea that we could capture that in a system, which actually is doubling as a means of collaboration, is an important one.

The second part about being able to have more services-oriented approaches, more dynamic development processes, also speaks to the issue of globally distributed and outsourced teams. One of the things that Gauntlet can bring to the table there is measurement. A big problem with outsourcing is how do we know what the cost benefit is? I know what the cost is, but we don’t know what the benefit is.

Gardner: Right.

Cheng: We don’t know how effective it is? We have no way to measure productivity or quality of the deliverables. Gauntlet, with frequent objective fact-based measurement, can start giving you answers to those kinds of questions. On the other hand, we also have the ability to do that process enforcement we’re talking about or the policy enforcement. Once I made a determination about the relative effectiveness of different teams, I can put different policies on the different teams.

Gardner: That strikes me as essential, if you want to go from the perception of IT as a cost center to a value center, moving the yardstick up in terms of getting more discretionary spending and more innovative types of projects that are going to be brought to the table and funded.

Cheng: That’s absolutely true. When you talk about that perspective and also the SOA arguments, all of it is predicated on the ability of someone in the IT organization convincing those with the purse strings that they can deliver predictably and they can deliver to target in a managed way.

Gardner: Give us a little bit of a road map if you could, as to what the, purview of Gauntlet is. I think that it’s mostly focused on Enterprise Java development at this time. Where do you see its boundaries or how do you expect it to evolve?

Cheng: The great thing about Gauntlet is that from a framework perspective, it’s as agnostic -- particularly of your language and your development --as version control itself. You can store anything. It doesn’t even have to be source code. And, you can do documentation and other types of content management essentially through version control.

Gauntlet does provide that same framework to be able to invoke and then analyze the results of tests and other measurements that you do. But, you’re quite right that in the first release we are very focused on Enterprise Java. That’s where the ecosystem of the test and analytic capabilities is really focused, but we will be aggressively moving over the next year to support additional languages, environments and systems with .NET development, with C, C++ development.

These are all areas in which customers really want to be able to leverage Gauntlet as well. So, we’ll definitely be moving to that direction and we’ll also be expanding, as I mentioned earlier, the version control on SCM support that we’ll have.

Gardner: And this is already something that’s usually used in conjunction with open source and the Eclipse-based development.

Cheng: Absolutely. This acquisition was from a start up that was almost a 100 percent open-source stack, and it does have extremely effective networking with the sub version that was the original SCM version control system. It leverages NAnt and JUnit as tools for building and unit testing. We can configure it to work with a number of other open-source tools and analytical packages.

At a higher level, it’s also a way bringing some of the best practices of open-source development to commercial customers. One of the things about open source development is that it’s very transparent. I can go to the Website or the public repository and see what’s happening. I can see who did what, when, who broke what, who fixed what?

Earlier we talked about how we start nudging cultural change. One great way to do it is having the kind of transparency that promotes peer-to-peer accountability, as opposed to top-down management. You don’t want to be the one who’s embarrassed by breaking everything. And, on the flip side, you want to be the one who’s recognized as making the most contributions. That’s true in open source, and we think that it could be just as true in improving commercial proprietary software development.

Gardner: Great. Well, thanks. I think that wraps it up for our time allotment today. We’ve been discussing productivity in development and bringing more visibility and accountability in data, fact-based development, if you will.

To work through this discussion, we’ve been joined by Rob Cheng. He’s the Director of Developer Solutions at Borland Software. We’ve been discussing a product called Gauntlet that will be coming to market in full maturity in Q1 of 2007. Thank you for joining, Rob.

Cheng: Thank you very much, Dana.

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

Listen to the podcast here.

Podcast sponsor: Borland Software, Inc.

Transcript of Dana Gardner’s BriefingsDirect podcast on development process management. Copyright Interarbor Solutions, LLC, 2005-2007. All rights reserved.

Transcript of BriefingsDirect SOA Insights Edition Vol. 7 Podcast On Measuring SOA ROI and How SaaS and SOA Intersect

Edited transcript of weekly BriefingsDirect[TM] SOA Insights Edition, recorded Jan. 5, 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 Dana Gardner at 603-528-2435.

Dana Gardner: Hello, and welcome to the latest BriefingsDirect SOA Insights Edition, Volume 7, 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, ZDNet blogger and Redmond Developer magazine columnist.

Our panel this week -- and that’s the week of Jan. 1, 2007 -- consists of Steve Garone, a former IDC group VP, founder of the AlignIT Group, and an independent industry analyst. Welcome, Steve.

Steve Garone: Hi, Dana, and happy New Year.

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

Joe McKendrick: Thanks, Dana, I’m glad to be back, and happy New Year as well.

Gardner: Also, Tony Baer, making a second appearance on this show, principal at onStrategies. Thanks for joining, Tony.

Tony Baer: Happy New Year, Dana.

Dana Gardner: Thank you, and making his SOA Insights debut, Jim Kobielus, he’s a principal analyst at Current Analysis. Hi, Jim.

Jim Kobielus: Hi, Dana.

Gardner: Also, welcome to our listeners. Our topics for today span the SOA spectrum of business and technology. We’re going to be discussing metrics of success, ROI, TCO, how do I know I’m doing? I guess we could call this the Ed Koch approach to SOA: "How am I doing?" Yet we can’t really judge how well SOA is doing, if we don’t have metrics.

We’re also going to work on the impact of SOA on outsourcing: outsourcing of IT, outsourcing of business process. Is this an accelerant? Is this a detractor? What’s the impact? We’re going to explore that. Also, the impact of SOA on services -- software as a service (SaaS) in particular; business applications coming across the wire.

So first off, let’s go back to the metrics topic. Someone out there, and I believe it was you, Tony, mentioned that at one point recently Verizon had come out and said that with a stable of 500 services that they were expecting to yield $20 million in savings over two years. Can you tell us where that information came from and how credible you think it is?

Baer: Good question. I actually spoke with the person who went by the title Executive Director of Strategic Systems at Verizon. Essentially, he reported to the CIO and he was in charge of their SOA program.

He gave a presentation on "SOA In Action." "In action" being two words there. I want to be very careful about that. He gave some metrics. I spoke with him about six or eight months ago, so if there is current data, I’m sure it’s different. But this has been going at Verizon for roughly a couple of years. He spoke of creating in excess of over 500, what he called "unique," services.

Now, I’m always a little skeptical when I hear the term "services," because what does that really mean? The definition can be very loose. It could be we have some functionality here and we’re somehow exposing it, or exposing it using standards, using official Web services standards.

Anyway, his point was that these 500 services, which were developed or reused by a community of over 7,000 developers, now account for -- when I say "now," this is as of six or eight months ago -- over 8.5 million transactions per day. He claims that within a couple of years it has saved the company $20 million. I would presume this is in development time, as opposed to having to create each of these things and reinvent the wheel, which is the traditional way of going about it.

My eyes tend to glaze over at such large numbers without having any greater detail, but the fact is, it’s always been a central tenet of reuse that if you can utilize something and not have to create it from scratch, you theoretically should save money and time. So, my sense is that I think the numbers are probably a bit high and a little loose, but I think they point to the potential that SOA can provide in delivering real savings.

Gardner: I wonder if the figures are high, especially on the number of services. I’ve talked to several companies that seem to think that even a smaller number of services could handle just about all of their back-office and front-office needs, perhaps not in vertical usage or industry usage. Then, for a company like Verizon, with the kind of IT budget they have, $20 million might actually not be that much.

Let’s go to Steve Garone. You’ve talked to a number of companies, and you were looking at ROI and business metrics, do these numbers make sense to you?

Garone: The numbers really aren’t out of the ordinary, but I think one of the challenges that organizations face in doing SOA and then trying to determine their ROI -- for want of a better way to put it -- isn't unique to SOA. It’s really a function of various other types of IT-related activities as well. How do you actually quantify what your ROI is, given the advantages of using an SOA approach? I’ve listed the main reasons why people would want to do SOA, in terms of the advantages, and they basically break down to four major areas.

First is what we just mentioned, which is the reuse of IT assets. That's fairly easy to quantify. As I’ve talked to customers and people who have implemented SOA, I find that this is one that they’re comfortable with and are fairly aggressive about putting numbers to, in terms of what they’ve actually saved. It’s not an easy task, because what actually gets saved when you reuse an asset? You certainly save them some development time and development cost. Do you also save maintenance cost, and how do you quantify that? Is it easier to upgrade assets, and to what extent is that dependent on the infrastructure you have in place?

A lot of factors go into it, so I see various levels of rigor. You see people claiming that they were able to reduce the expense associated with doing the application integration test they normally would have to do. That one is a real tough one, because just understanding what you would have had to do and breaking that down into, not only some specific cost, but also the relationship of the result to being able to do business better, faster with more customers and so on, is a real tough task to accomplish.

The other ones have to do with meeting compliance requirements, which we all know are growing by leaps and bounds every day.

Gardner: Regulatory compliances?

Garone: Yeah, and there’s an area where, again, I think the quantification of benefit might be a little bit easier because the requirements are fairly well identified. In fact, they are very well identified.

The fourth one, which I think is the hardest one, is the issue of how agile do you make your business. It’s a buzzword we hear all the time around SOA. That’s a real tough one because you have to ask such questions as: "If I didn’t do this, how many customers that I'm doing business with now, will I not be doing business with, and what affects that? How do I know what my reach was before versus now? How do I quantify how easy it was for a customer to get to me, and if they do, how comfortable they were given what I presented to them, doing business versus leaving because things were taking too long?"

Gardner: So, most of these are soft measurements, and they would take place over a long period of time, because it’s a journey, and you can’t just say, "Well, we went one quarter. What's our payback?"

Garone: That’s right.

Gardner: Now, let’s go over to Joe McKendrick. These are soft paybacks, and it also seems as if we’re comparing apples to oranges. If we look at mainframe, client-server, Web, and then SOA, which is such a different beast, you can’t really compare. It’s almost a leap of faith. Where do you see the right business metrics coming and getting people onboard in terms of dollars and cents here, Joe?

McKendrick: Well one thing I’ve said a lot on my blog is that the companies that are most likely implementing, or are implementing, SOA are probably the companies that don't really need SOA as much. The companies that really could use SOA in their operations are likely not to be the ones implementing, it’s kind of a paradox.

The reason that is the companies that have the management vision, the support to roll out and move an SOA project forward -- providing top management support, for example -- are likely to have lot of other initiatives on the table. They’re likely to be very forward-looking with their management. Their compensation structure, for example, is likely to be a bit more advanced. They’re likely to have other implementations -- a data warehouse, for example -- a very advanced data warehouse. Essentially what you have in these companies is an orchestra making a lot of beautiful music and SOA may be the horn section, but how do you measure the impact of SOA versus another type of implementation or another type of project?

Gardner: Okay. So the song, the piece of art that you’re creating with this orchestra rises up the charts, and if they're a hit, is it because of the woodwind. Is it because of percussion? Is it because of the conductor? We really don't know. We just know that it’s a hit. Right?

McKendrick: Exactly. There are a lot of case studies out there now. A couple of prominent ones are IBM and HP, who had cases of eating their own dog food. They’ve been able show some terrific significant impact from SOA or service deployment. IBM claims it’s reduced its application portfolio by 75%.

They have one quarter of the applications running their business versus back in 1998 when they really first started looking at this. HP claims it's seeing a payback of about $70 million as result of its SOA efforts. These are companies that tend to be forward thinking. They know that they’re being closely watched, and that their own operations are being closely watched.

In both cases, the benefit is coming from consolidation. They’re using SOA as a lever to help consolidate data centers, various far-flung parts of their enterprises. SOA is just part of that consolidation picture. There’s also virtualization going on, server consolidation. IBM, of course, is big with the mainframe, and they’re consolidating a lot of their operations on Linux running on the mainframe. It’s very much a mixed picture, and as I said, Dana, it’s a matter of being able to separate what’s making this beautiful music.

Gardner: I’ve spoken to HP and IBM as well, and they’re really undergoing IT transformation, probably business transformation, and there are many constituent parts to that, of which SOA is one. But SOA is one that has, I suppose, a lot of interdependencies and effects across many of these other activities, whether it’s server consolidation, application modernization, IT shared services, virtualization and what have you.

Let’s go over to Jim. Jim, if SOA is important, almost like a root system that cuts across a number of different trees that are growing, is it even worthwhile measuring it, or should people just be smart enough to recognize that this is the right thing to do?

Kobielus: That’s an interesting metaphor there -- SOA as a root system. My visual image of SOA is a very complex hyper-mesh. In other words, like a root system, where you have tendrils going hither and yon, the tendrils being simply interactions among services and client.

It’s very worthwhile to measure the ROI of SOA as a paradigm or an approach for enabling and for maximizing the sharing and reuse and interoperability of distributed resources across your network. You make an investment as an organization, as an enterprise, and in this approach you want to know whether you’re investing your funds and your resources wisely. When I think of SOA’s ROI, I think of two numbers, and those numbers are 100 and zero.

As we know, SOA focuses on how you maximize the sharing and reuse of services, of application functionality and resources. In other words, how do you enable a 100 percent reuse as a nirvana? We’ll never get there, but in any given organization, 100 percent reuse, service reuse, first and foremost is a consolidation topic. What that means is, if you do SOA right, you’re doing much more with much less.

You’re able to consolidate redundant silos of application functionality and data throughout the organization. You’re able to consolidate fewer software licenses and servers, with the associated translation and cost savings and capital on operating budgets, fewer redundant software components and so forth. The need for fewer programming groups, as we can consolidate that as well.

So 100 percent reuse is the nirvana. The zero comes in the sense that, if you’re doing SOA right, the marginal cost of billing the next application drops pretty close to zero. You’re able to reuse everything that’s already been built. You do not have to reinvent the wheel. So, basically, a 100 percent reuse means zero marginal cost of building the next application. Of course, as I said, you enable that vision through consolidation, both in software and hardware, and in programming teams, and so forth.

So, once again, getting back to your root-system-and-tree metaphor, SOA becomes this ubiquitous root system from which new sprigs can pop up, without needing to lay down their own root system. Rather they are simply branches on a huge underground system. In Northern Michigan, where I’m from, scientists have discovered the world’s largest organism as a mushroom or a fungus of some sort that spans 30, 40, or 50 square miles. They determined though DNA analysis that it's the exact same individual and has got the largest biomass in the world. In essence -- and it’s all underground pretty much. That’s what SOA is all about, essentially all the services in an SOA sort of share a common DNA.

Gardner: Well, there’s the message we need to take to the CEOs and the CFOs. Let’s make our IT like a fungus.

Kobielus: I think they probably already believe that!

Gardner: Let’s take this now to the outsourcing side. You mentioned between zero and a 100 percent in terms of reuse. That would be reuse for your internal resources, but what about reuse of external services? Things that are made available in a marketplace, because of the effects of economics and supply and demand in competition, could push the prices down while even enhancing the quality of services.

For those commoditized services that everyone uses, that really don’t differentiate anyway, why not go in that direction? What’s the relationship here, Steve Garone, between capturing ROI and lowering total cost of ownership, and starting to look toward outsourcing an SOA as being somehow a tag team?

Garone: Well, actually I think there is a fairly close relationship. Again, it’s not unusual that the drivers are really the same as they are in the case of other types of IT investments. Outsourcing can potentially drive costs down, increase quality, allow you to lighten up your IT staff, and so on. So, the same rules apply here. If you look at what’s going on, there are actually several companies now that are doing this. And, it’s not just commodity services. Look at companies like Salesforce.com, for example, which is essentially creating a services-based hosting environment, not only for their applications, but for applications and services that you actually produce in house.

Gardner: Incidentally, we should expect from Amazon.com similar activity around a retail and e-commerce sector.

Garone: I wouldn’t be surprised. So, the drivers are the same, and I think it’s going to happen. I think that if you’re talking about outsourcing services from the hosting standpoint, that’s certainly real and it’s certainly happening now. If you’re talking about outsourcing services from the development and IT support standpoint, meaning how do I go about building my SOA environment, there’s going to be a stage initially where there’s going to be a lot of that, for the same reasons people outsourced that kind of work before.

People look toward SOA and Web services to simplify their application integration environment. That may, in fact, be the case, but in the short term, people still really need to know how to do it and need, in some cases, to outsource for the expertise to get that done.

Gardner: It seems to me that in the not-too-distant future being able to access commodity-level services that you can incorporate into your SOA activities, off the wire, in a competitive environment, would be a really big economic benefit, to reduce your total costs. Maybe not grow your top line right away, but certainly cut your overall cost, which has been an important element of IT for certainly the last five years.

Let’s take this another step sideways. What about IT outsourcing? We had this phenomena a few years ago. Some of the largest entities on Wall Street -- and I’m thinking of JPMorgan Chase -- went to large companies like IBM and said, "Here, you take it. We don’t want to do IT anymore."

Then maybe a few years, even some months, later decided, "Well, maybe that’s not the right approach." If we can get into a marketplace of services, if we created an SOA, doesn't that really obviate the need for IT outsourcing? Don't you want to retain the competency of business process and composite application authoring, regardless of where those sources come from? Isn’t SOA and the outsourcing of services a better model than wholesale IT outsourcing? I’ll throw that to you, Tony.

Baer: I was just thinking back to what Steve was saying, and it kind of applies to this answer as well. If there is one benefit that SOA delivers, it’s that the value becomes the service rather than the plumbing. If you think about the way we've traditionally developed functionality or integrated systems, we’ve had to spend inordinate amounts of time in the plumbing and maintaining it. SOA theoretically, if it’s done right, standardizes the plumbing, makes everything declarative, so you take out the guess work. The result is that if you look at outsourcing, SOA separates the plumbing from the service. Therefore, what is probably ideal for outsourcing would be the plumbing, because that’s where the value is and that’s not where IT organizations should be spinning their wheels.

Gardner: So where is the value?

Baer: The value is in the -- and this will sound a little cliché-ish -- intellectual property, which is represented by the actual service. That’s the service that delivers the actual business logic. It’s the way a company does business. The way a company does business is not the way it puts together its SOA plumbing. That should be standard. That’s obviously an ideal scenario, but look at how this could impact the outsourcing market. If you follow SOA principles and comply with SOA standards, it allows for that kind of separation, and therefore it makes for an ideal opportunity for outsourcing services to say, "Hey, we’ll take care of your plumbing, and you take care of your services."

Gardner: So, you’re saying perhaps that I should look to commoditize services and find the cheapest best way to acquire them, either on premises, co-located, outsourced entirely, software as a service (SaaS). Then, for those differentiating services that I’m applying intellectual property and perhaps even patents to, then I could even host those somewhere off premises, and it’s bringing that together within my organization that makes me a winner in my market?

Baer: That’s one way of putting it, but another way is, "I create the service, and by the way I rely on you to create and maintain the plumbing." There are many different ways of slicing and dicing this.

Garone: To some extent it depends on what kind of vendor you’re dealing with. I’ll go back to the example I gave earlier of Salesforce.com, which will do some of both. They create a services-based infrastructure that you can use to not only host your IP-unique applications in services, but also to host the ones that they’re providing to you, and if you do it right, you can easily integrate with.

Gardner: Right.

Kobielus: On the issue of outsourcing, the only thing that the company should never consider outsourcing in terms of core competencies is the core competency of making money and delivering value. Everything else is fair game, and I think what everybody is saying here is that they agree with that. SOA -- or much of what we think of as SOA -- revolves round the plumbing, the protocols, the application servers, the middleware fabric, etc., that all is fair game for outsourcing.

Gardner: I like the terms that were used a moment ago. It can be "sliced and diced in a number of different ways." That’s the good news, but it’s also the bad news, because no one really has a model they can fall back on and say, "Ah, here’s the proper way to do this, when we apply outsourcing and software as a service to the SOA mix." Or have I got this wrong? Jim, can you think of any past instances in the history of IT we can look at to get some idea of the best way to slice and dice these many variables?

Kobielus: Going back to my sense of knowledge of IT history, I’m going to have to sleep on that one, Dana.

Gardner: Can anyone else out there think of any precedents that we can look to in terms of what’s the right balance of on-premises, commoditized, software as a service, SOA? It gets kind of messy.

McKendrick: I don’t know if there really is a precedent. This is all open for innovation, Dana. There are a couple of interesting examples, actually, if you look at the telecom industry. I like to use the term "loosely coupled business." SOA is based on loosely coupled components or services. A lot of telecoms actually don’t use their own internal resources to provide services to their external customers. They act as a broker.

Gardner: It shows sometimes.

McKendrick: Unfortunately, yes. I’ve heard a statistic that at Cisco, the networking giant, and 80 percent of its products and services come through outside services that it essentially brokers. I think that’s kind of the model SOA is helping us move toward -- this idea of a loosely coupled business that can pull together services from perhaps throughout the globe, package them, and offer them to an end user or customer that they identify as important to their market.

Gardner: So, maybe the metaphor has moved from a 30-square-mile fungus to a 30-square-mile amoeba.

Koblieus: Amoeba is a good metaphor here, because business models must continue or will always continue to evolve; therefore IT must continue to evolve to the next business model, the next IT sourcing model, whatever helps them to survive and make money.

Gardner: We came up against this when we talked to Jeff Pendleton. We thought about architecture and we looked at some of the architects, and we came to Frank Gehry, and we said, "Wow, the outside looks different and almost illogical, but inside, the stuff holding it together is very logically designed."

Then we moved from that to this notion of a sound stage. You would build a sound stage, or even a movie set, depending on whatever scene you were shooting. And, we wanted to have IT act like a flexible sound stage or a movie set. We would just build the set based on whatever the activity was, do what we needed to do, and then perhaps tear it down or reuse parts of it. So, we seem to be coming back to that, although we’re talking about not just our own services as an enterprise on premises, but increasingly a mixture of software as a service and outsourcing.

Anybody want to pick at that or expand on it?

Gardner: Well, we're in complete agreement, that’s great.

Garone: I’m not quite sure I understood it, to be honest with you.

Gardner: Do you remember that call we had about the sound stage show; I think you were on that call?

McKendrick: It’s an interesting analogy.

Gardner: MGM right?

Baer: Right. That actually is about the old movie studio metaphor, one studio and many different productions going on at the same time. Basically, the piece parts were all interchangeable, and piece parts we can call plumbing.

Gardner: So, we’re making five different movies on the lot, and we’re going to bring cameras and lighting equipment and backdrops and makeup artists, and just apply them in the same way, but with a different end outcome. Right?

Baer: I guess you can say the metaphor coming out of this discussion has evolved from fungus to amoeba to let’s bring back the studio system into IT.

Kobielus: Right, if you look at what SOA governance involves, if you examine a given service throughout its life cycle, it begins in the planning stage, it’s a gleam in some business person’s eye, and then it goes to the system engineers, the designers the business people. There’s a governance life cycle on those projects as well. That governance role structure in the movie industry has changed since the very start and it continues to evolve.

The notion of the classic studio system for Hollywood was there between the '20s and the '50s, and then it gradually gave way to more independent producers. Now, you’ve got all these indies everywhere. What I’m getting at is that, the governance of any given movie production project, how it’s done, the best practice for that particular industry, continues to evolve from generation to generation.

Likewise in the IT world. If you look at the life cycle of governance of the creation of any application or functionality, of the whole software is on the life cycle, that paradigm continues to evolve from generation to generation, with new platforms, new tools, and so forth. So, its one of those things where now you’ve got to look at the structure of the SOA governance environment.

You've got roles that are specific to the plan, specific to the development stage, roles that are specific to the deployment and optimization stages and so on. What I’m getting at, then, is that I think the movie studio analogy is very interesting, because it focuses on the core of governance as a workflow over a life cycle involving various roles, and those roles continue to munge into each other and get broken off from each other.

Garone: Dana, just jumping in here, now that I had a chance to think a little bit about your analogy, and just to follow up on that last thought. In essence, the movie studios as we know them now, don’t have the role that we used to know them as having. They used to actually make movies. My understanding is that the customer who is the independent producer, or maybe a larger producer who may bring on another independent producer under them, basically is outsourcing the physical plant requirements to make a movie to the studio.

Gardner: So it becomes an ecology rather than all-in-one.

Garone: Exactly. It’s an ecosystem.

Gardner: Is it the right direction, Steve? David Lean made "Dr. Zhivago" for probably $20 or $30 million. Now, it costs $200 million to make a pirate movie. Can we follow movies as the logical business example? It seems like they’re making less of a movie for more money?

Garone: I know I’m going off on a tangent here in terms of analogies, but the movie industry has almost gone the same way as Major League Baseball. You’ve got stars that get $10, $20, $30 millions a picture. Does it really matter all that much that there’s an independent producer outsourcing the physical plant requirements to a major studio? I don’t know the industry that well, but my gut feeling is that both parties feel that that’s the most efficient way to do it.

Baer: Actually, can I jump in there, because I’ve heard -- beyond the specifics -- of an entertainment industry where values have gotten hopelessly inflated. But look at the mechanism behind this. Before, you had monolithic studios, which had their own life cycles, their own software development life cycles.

Gardner: Exclusive stars that they’d sign up for years at a time.

Garone: Right, it was the Major League Baseball model.

Baer: Exactly, and it’s sort of analogous to the monolithic software marketing, except for the fact that all the piece parts underneath were more interchangeable.

I guess you can argue that if you are an SAP, your piece parts inside the infrastructure were designed to be a self-contained interchangeable ecosystem. But look at the way it has evolved now. Part of it is that the technology for producing films and videos has become much more accessible, and therefore you have now an independent film industry. So, that's analogous to the infrastructure that has become much cheaper, much more open, which is what SOA can do.

In turn, you look at the business model. It's become more interchangeable, so that a studio might collaborate. Let’s say that Universal might work with Sony -- collaborate on a picture -- because it’s so costly that neither one of them could do it themselves. Well, they have the infrastructure and the business process in place that enables that to happen. Meanwhile, an independent film like "Crash" comes out of nowhere last year and wins the Academy Award for best picture of the year, and it’s all possible because you now have this more accessible infrastructure. The moral of the story for SOA here, trying to bring this back on topic -- is that if you get the plumbing down right -- you don’t have to be an SAP to introduce a killer app anymore.

Kobielus: I’m going to take this movie industry metaphor out of the realm of metaphor into the actuality of, teams becoming very SOA-focused in terms of the actual production ... A mashup is reusing existing components of service -- content, -- whatever into new vehicles or new compositions. If you look at the content that’s being developed out there in the IT world, more of it's getting built through various types of mashups, which is very much an instantiation of the SOA paradigm into a different world -- not the software world so much as the normal cultural world that we all inhabit.

Gardner: It's interesting, because when we talk about movie production, it’s really content creation. It’s artistic. It’s creative, complex, and changeable. It has to fit a certain audience at a certain point in time. A movie that was made 30 years ago might not work today and vice versa. What’s also interesting here, looking through this lens of the movie industry, is that depending on the culture of the organization, it can adjust.

So, if you’re a big monolithic enterprise, you're like a command and control structure, you want to do it all your way. You’ve always done this. You’re sort of a traditional brick-and-mortar company. Then, you can perhaps approach IT like an MGM studio, and you can have your own infrastructure, all of your own developers. You can do things without much off-the-shelf or highly customized -- but you come out with a really great product if you’re willing to put that emphasis in. And, if you have such a great product that you dominate your industry, then the numbers will make sense. The investment you made in IT will pay off.

On the other hand, if you want to be a small company, a green-field software-as-a-service organization, you want to only be in an ecology play where you’re acquiring things, and you’re going to plug them in and then rip them out, reuse as much as you can. Then, you can be like a Miramax instead of an MGM. You’re going to do just independent films. You’re going to go in and spend a little bit of money, and maybe you’ll still come up with some great product that will be right fit for your market. The nice thing is, as we said earlier, you can slice and dice it either way.

Does this make sense -- that the culture of the company needs to be considered when we look at the way in which it approaches IT?

Kobielus: For sure. Some companies are not very partner friendly. Therefore, they’re not really the kinds of corporate cultures that lend themselves to outsourcing. First and foremost is managing the relationships. There are other companies that are very partner friendly, it's really quite often a culture issue.

Gardner: Right. I think we’re going to need to cut off our discussion there, but obviously we can take this further and I’m sure we will, but perhaps one of the takeaways that we’ve led to is that companies need to be introspective. They need to look at what kind of organization they are, what kind of organization they want to be, and get a sense of which IT approaches, particularly vis-à-vis SOA and software-as-a-service and outsourcing, make sense for them.

McKendrick: The question is: does management -- does the C level -- understand what SOA is about.

Gardner: I’m not sure we’ve even seen a lot of instances where companies would say, "Let’s take a look at our culture and define it, and then decide our IT approach as a result of that."

Garone: That’s true. They’re going to have to do that. Many of them have not, because they started out looking at SOA from an individual or a pilot project perspective. When it expands beyond there, that will change. It will have to.

Baer: Well, they look at SOA as a technology as opposed to a way of delivering their business services.

Garone: When the technology has been mastered, and has demonstrated its value, it will have to become more than that, and then you’ll see the cultural issues playing a bigger role. A lot of the IT managers and people that I've talked to who are involved in the implementations of SOA solutions, even on a pilot level, seem to understand the cultural issues. They’ve encountered them, and they’ve tried to deal with them. But you’re right. On the C level that hasn’t yet happened.

McKendrick: That goes back to the whole ROI argument we were having a bit earlier as well. The ROI is being seen in developer productivity, for example. If you want to generate hard numbers from an SOA project, developer productivity is the first place you look -- the ability to reuse applications or services without having to have the developers spend X-amount of hours reinventing the wheel.

Gardner: We need to have the equivalent of a Myers-Briggs test, where you actually can ask a series of questions, or do some research, and can define the temperament and the personality traits of a company. From there, you can back up and say, "Well, here’s what your IT should be."

You need to get into the DNA of how a company thinks and behaves organically in order to make the right fit with IT, because the companies that fail are companies where there IT culture and their business culture are at odds or don’t mesh. And they collapse. They can’t function.

Baer: No question about that, and the fact is that, Dana, what you were just saying could apply to almost any type of transformation, but I think this sounds very specific to SOA here. We’ve been providing a whole bunch of metaphors, dealing with other industries like entertainment business or the ability to partner, but if you think about the implications of SOA, it not only should erode barriers between you and your partners. It makes it technologically possible to erode the silos within your organization by going inside and looking at how many instances of the customer object we have? Do we really need 45 instances, when maybe five would do for a business of our breadth and diversity?

Gardner: Okay. Let’s leave it there and we’ll revisit this, but I think metaphors are essential in this period of SOA evolution, because there are so many variables, and because you can slice it and dice it in so many ways. If we can help companies look at ways in which they can reduce the number of variable, and help them get started and find some traction and therefore benefits. That’s an important thing to do.

Joining us in this discussion about the impact of outsourcing, software-as-a-service and how to measure success has been, Steve Garone, the former IDC group VP, founder of the AlignIT group and an independent analyst. Thanks for joining, Steve.

Garone: It’s been a pleasure, Dana.

Gardner: Joe McKendrick, research consultant, columnist at Database Trends, and blogger at ZDNet and ebizQ. Thanks, Joe.

McKendrick: Thanks, Dana, for the opportunity to join you guys.

Gardner: Tony Baer, principal at OnStrategies. Thanks, Tony.

Baer: Thanks, Dana, good way to kick off the New Year.

Gardner: Jim Kobielus, principal analyst at Current Analysis. Thanks for coming, and join us again sometimes, Jim.

Kobielus: Thanks, I’ll look forward to it.

Gardner: This is Dana Gardner, your producer, host and moderator here at BriefingsDirect SOA Insights Edition. Come and join us again next week. Thanks.

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 me, Dana Gardner at 603-528-2435.

Listen to the podcast here.

Transcript of Dana Gardner’s BriefingsDirect SOA Insights Edition, Vol. 7. Copyright Interarbor Solutions, LLC, 2005-2007. All rights reserved.