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Loosely Coupled weblog

Thursday, June 19, 2003

Startups have the edge
If you want to harness an emerging disruptive technology, then you can't rely on big vendors. IBM, HP, Microsoft and the like may end up dominating web services and SOA once it all becomes mainstream, but any business aiming to win the competitive advantage that stems from being an early adopter can't afford to wait for the rest of the world to catch up with the leading edge. Instead, they have to assemble tools and products from startup companies and other specialist vendors who are already ahead of the curve.

Ray Lane, former chief operating officer of Oracle and now a general partner with leading hi-tech venture capital firm Kleiner Perkins, explained succinctly why this is in an interview in the March issue of Optimize. After running through the disadvantages that IBM, Microsoft and BEA each face, he summed up:

"Typically, if the challenge is a discontinuous change in the status quo, startups have the advantage. Microsoft didn't invent browsers; Netscape did. IBM didn't invent the PC; Apple did, and so on. The RTE [real-time enterprise] is a discontinuity with 100 years of status quo, so I think startups have an advantage ... Well established companies ... will provide the massive infrastructure the RTE will require — operating systems, databases, application systems, etc — but the new tools and apps will likely come from the startup world. "

A leading early adopter of web services and SOA is Eastman Chemical Company, and an article just published in Computerworld Australia does a great job of describing its progress so far. By putting this article together with one or two other information sources, it's possible to pull together quite a detailed picture of the contributions made by specialist vendors:

  • The first project, writes Computerworld, was "a simple read-only web service to give customers access to technical data in its product catalog." Web services networking startup Grand Central played a significant role in extending the web services to Eastman's distribution partners, which Grand Central describes on its web site.

  • The next project was a more ambitious management scorecard application, which brought together an executive view of "financial, manufacturing and other data from several disparate internal and external systems," reports Computerworld. A major contribution to this project came from New York-based user interface startup Droplets, and from Californian web services platform vendor NextAxiom Technology. There's a very illuminating account of NextAxiom's role in this project by Eric Parizo over on searchWebServices.

  • The next challenge facing Eastman is automating the management of its growing portfolio of web services. "There's no consensus yet as to exactly what a web service management tool should do or what services should reside there versus the application server," Eastman's Carroll Pleasant tells Computerworld. "It's very tough, because you can't just do an apples-to-apples comparison between these guys. Each one represents some fundamentally different approach as to how you're going to build the service-oriented architecture."

Eastman is shopping around startups for web services management because the established IT management vendors are some way off having shippable product to offer, as Keith Rodgers writes in this week's Loosely Coupled feature story, Slow progress on web services management.

HP's Al Smith, CTO of web services management, was disarmingly honest with Keith about how little HP could offer companies like Eastman when they started asking for help last summer: "What did we know about what it means to manage a web services environment? The answer was, 'Not much'." That's despite HP's being able to draw on a lot of web services expertise from its former middleware division, and having made a top-level executive commitment this year to embrace web services in its management suite. Nevertheless, Smith said he still isn't expecting much in the way of sales for another year or so.

In such circumstances, who'd be an early adopter of web services and SOA? In Ray Lane's view, "The need is driven by competition. You'll have no choice if you want to compete." Any business that wants to gain competitive advantage rather than having to play catch-up later is going to have to grasp the nettle of working with startups — doing the research and due diliigence, building relationships, and plugging the gaps in between each of their solutions with home-grown software. In time, the mainstream vendors will catch up and best practice will be common knowledge, but for now it remains a journey of discovery.

The big picture, at least, is starting to crystallize. Ray Lane provides an excellent overview of the various elements that early adopters like Eastman are having to work on. It's not exactly a roadmap, but it does outline the main contours of the landscape:

"... you can do it a piece at a time, but first you have to have a vision: an enterprise architecture. Think of it this way: All of these apps at the bottom — Oracle, SAP, web apps — form the foundation. Then there's a metadata layer to represent the semantics and rules of the source data. On top of that are composite applications that can reuse existing apps. At the top of the stack is end-user programming."

posted by Phil Wainewright 6:51 AM (GMT) | comments | link

Tuesday, June 17, 2003

e2open comes of age
One of the poster children of the web services age, e2open today unleashed the commoditization of B2B process integration capabilities that have previously been achieved only by private, company-proprietary exchanges. Seven of the world's largest electronics manufacturers are users of e2open's Multi-Company Process Management platform, "an approach that leverages a common platform to gain end-to-end synchronization over their buy- and sell-side forecast, order and inventory supply-chain processes," according to the company's press release today.

Meta Group analysts quoted in the release say that such "process integration networks [are] the next evolutionary step in e-business," and it's not hard to see why. This is the kind of technology that previously companies had to build themselves. It's what has given e-business celebrities like Dell and Cisco their edge over less technologically advanced rivals. But now that proprietary advantage is being commoditized away by e2open, and by others that will follow.

Electronics industry magazine EBN reports in its online edition that e2open customer Hitachi Global Storage Technologies estimates it will reduce its annual operation maintenance costs by a third as a result of deploying the system. Much of the gains come from replacing paper-based processes with electronic equivalents that give much greater real-time visibility up and down the supply chain.

"Yesterday," e2open's release continues, "seven companies showcased their progress toward realizing the benefits of Multi-Company Process Management by describing their production deployments using E2open supporting more than 1,500 trading partners executing an array of business processes, from buy-side procurement and supply chain planning to sell-side channel order management."

These seven companies are a significant segment of Dell's supply chain, and now all their customers (Dell's rivals) will share in the benefits of their freshly gained e-business slickness. That will force Dell to look for other ways of differentiating itself, which is why the suggestion I made in my previous posting is perhaps not as outlandish as it may have appeared at first.
posted by Phil Wainewright 12:51 PM (GMT) | comments | link
Repositioning Sun
Virtually every business section in the globe seems to have run yesterday's AP wire story on Sun's current malaise. Yet it strikes me that Sun could probably turn itself around pretty quickly, just by repositioning itself better to align with today's market dynamics.

As a systems manufacturer, Sun has one huge advantage over its main competitors IBM and HP, who are saddled with huge professional services organizations (IBM in particular). With spending on IT services plunging through the floor, those overheads are going to look more and more of a liability in the coming months. That in turn will make customers wary of being sold propositions that are designed to maximise services revenues, thus driving business into the arms of rivals who don't have such a huge consulting burden to bear.

Sun could do well out of promoting itself as the champion of lean, low-maintenance, consulting-lite computing platforms. The fact that its underlying hardware is actually proprietary is neither here nor there. As IDC analyst Dan Kusnetzky recently explained, it won't even matter what operating system people are running: "Widespread virtual-environment adoption will speed the current trend toward OS commoditization and decrease OS importance in IT infrastructures, he said," reports "IDC is certain that businesses will move to on-demand and virtual computing," and neither operating systems nor the flavor of the underlying hardware will matter any more, provided they do their job well enough.

All Sun has to do is keep its price-performance proposition competitive with alternative platforms, and start making a virtue of having no particular professional services axe to grind. But there's one big impediment to making a success of this strategy that it's going to have to deal with: Java.

As long as Sun is seen as the champion of Java, customers will stay away for fear of having J2EE rammed down their throats by Sun's salespeople, when all they need is Apache, XML and Perl. Although Java has its place, especially for transaction-intensive applications, it's over-engineered for many others, and no amount of simplification will fix that. Open source and XML-based alternatives are a better fit, particularly for collaboration-intensive applications.

One way for Sun to ease off from its obsession with Java might be to cut the software division loose and let it make its own way in the world. But that would be giving up on the undoubted benefits of being closely associated with Java. Sun needs to dilute its commitment without dissolving it completely.

The alternative is clear. The company needs to acquire another business that won't add to its consulting capabilities or increase its inventory of complex software platforms, that will dilute its excessive identification with Java, will strengthen its commodity systems manufacturing, and will be big enough to create a major top-to-bottom impact throughout the organization — big enough even to encourage Scott McNealy to spend more time with his family. All of this, I feel, adds up to a Sun-Dell merger being a smart move. If it happened now, it would have a lot going for it.

UPDATE: Hmm, a lot of disagreement with this posting. See comments.
posted by Phil Wainewright 11:48 AM (GMT) | comments | link

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