IBM offers to buy Sterling Commerce

We should have seen this one coming. IBM’s offer to buy Sterling Commerce for $1.4 billion from AT&T closes a major gap in the WebSphere portfolio, extending IBM’s array of internal integrations externally to B2B. It’s a logical extension, and IBM is hardly the first to travel this path: Software AG’s webMethods began life as a B2B integration firm before it morphed into EAI, later SOA and BPM middleware, before getting acquired by Software AG. In turn, Tibco recently added Foresight Software as an opportunistic extension for taking advantage of a booming market in healthcare B2B transactions.

But neither Software AG’s or Tibco’s moves approach the scope of Sterling Commerce’s footprint in B2B trading partner management, a business that grew out of its heritage as one of the major EDI (electronic data interchange) hubs. The good news is the degree of penetration that Sterling has; the other (we won’t call it “bad”) news is all the EDI legacy, which provides great fodder for IBM’s Global Business Services arm to address a broader application modernization opportunity.

Sterling’s base has been heavily in downstream EDI and related trading partner management support for retailers, manufacturers, and transportation/freight carriers. Its software products cover B2B/EDI integration, partner onboarding into partner communities (an outgrowth of the old hub and spoke patterns between EDI trading partners), invoicing, payments, order fulfillment, and multi-channel sales. In effect, this gets IBM deeper into the supply chain management applications market as it already has Dynamic Inventory Optimization (DIOS) from the Maximo suite (which falls under the Tivoli umbrella), not to mention the supply chain optimization algorithms that it inherited as part of the Ilog acquisition which are OEM’ed to partners (rivals?) like SAP and JDA.

Asked if acquisition of Sterling would place IBM in competition with its erstwhile ERP partners, IBM reiterated its official line that it picks up where ERP leaves off – but that line is getting blurrier.

But IBM’s challenge is prioritizing the synergies and integrations. As there is still a while before this deal closes – approvals from AT&T shareholders are necessary first – IBM wasn’t about to give a roadmap. But they did point to one no-brainer: infusing IBM WebSphere vertical industry templates for retail with Sterling content. But there are many potential synergies looming.

At top of mind are BPM and business rules management that could make trading partner relationships more dynamic. There are obvious opportunities for WebSphere Business Modeler’s Dynamic Process Edition, WebSphere Lombardi Edition’s modeling, and/or Ilog’s business rules. For instance, a game changing event such as Apple’s iPad entering or creating a new market for tablet could provide the impetus for changes to products catalogs, pricing, promotions, and so on; a BPM or business rules model could facilitate such changes as an orchestration layer that acts in conjunction with some of the Sterling multi-channel and order fulfillment suites. Other examples include master data management, which can be critical when managing sale of families of like products through the channel; and of course Cognos/BI, which can be used for evaluating the profitability or growth potential of B2B relationships.

Altimeter Group’s Ray Wang voiced a question that was on many of our minds: why AT&T would give up Sterling. IBM responded about the potential partnership opportunities but to our mind, AT&T has its hands full attaining network parity with Verizon Wireless and is just not a business solutions company.

SpringSource’s surround ’em on every cloud strategy

We’re trying to stifle the puns with SpringSource’s announcement that now it’s also become the preferred Java development platform for the Google Apps Engine. Like SpringSource on a roll… OK that’s out of our system.

But coming atop the recent announcements of VMforce, along with key acquisitions of Gemstone, and to a lesser extent, RabbitMQ, we’d have to agree with VMware’s CTO Steve Herrod that VMware’s acquisition of SpringSource has not slowed the company down. Congrats to SpringSource’s Rod Johnson for keeping the momentum going under VMware’s watch, and hats off to VMware for making it all happen.

Short but sweet (we’re behind with report deadlines for our day job), SpringSource’s cloud strategy is to become as ubiquitous as possible. Grab every potential Java PaaS platform in sight, do end-arounds with IBM and Oracle who have barely placed their feet inside the door for Java development platforms as a service. Their move reminds us of Duane Reade, the well-known Manhattan pharmacy chain whose long-time strategy was to saturate every street corner location to crowd out rivals like CVS and Walgreens out of the market; as a desperation maneuver, Walgreen finally bit the bullet and snapped up Duane Reade, but in deference to its New York brand recognition, kept the name.

But given that Google app Engine is not exactly a mainstream enterprise platform (Google still struggles to understand the enterprise), for SpringSource the announcement carries more light than heat. The move nonetheless brings a halo effect to Google’s Apps Engine, which becomes more extensible with the Spring framework and with cool extras like Spring Roo, which eliminates a lot of coding legwork and is a good match for Google’s Web Toolkit, which provides a warmer, fuzzier, but more importantly simpler way to piece together web apps. More importantly, it means you can now write and run something meaningful on Google App Engine without having to rely on Python. It provides clever potential upside for Google’s newly announced Apps Engine for Business.

SpringSource’s strategy is an end-around, not only to IBM and Oracle, but also to VMware itself. The latest announcement vindicates in part VMware’s strategy for SpringSource, which we believe has been about building the de facto standard Java cloud platform. While we give hats off toe VMware for accelerating SpringSource’s expansion of its middleware stack and cloud strategy, VMware has been slower to leverage SpringSource internally, whether it be with:
1. Promotion of vCloud. That’s remains more a future bet for leapfrogging VMware past the increasingly commoditized hypervisor business, leveraging its market-leading virtualization management technologies to establish them as de facto standards for managing virtualization in the cloud.
2. Cross-fertilizing SpringSource’s dependency injection capabilities into virtualization, with the idea of simplifying virtualization in the same way that the original Spring framework simplified Java deployment.

Tibco’s Hits and Misses

Messaging is Tibco’s business, but it has had a mixed track record when it comes to making the messaging around its message-oriented view of the world. It starts off on the right foot. Its perennial tagline, The Power of Now, has become timelier in a world where the ability to respond is reinforced by the headlines. Just take last couple weeks for example: last Thursday’s weird Wall Street meltdown, and before that, arrest of the foiled bomber of Times Square.

Tibco is hardly alone in voicing such messaging. IBM’s Smarter Planet and Progress Software’s Operational Responsiveness are also about the need for systems that think on their feet. Yet Tibco’s DNA gives it a unique claim to this space as the company was born around fast reliable, messaging. Two years ago, Tibco CEO Vivek Ranadive made the case for event-driven predictive intelligence. Now Tibco is talking about the need, in global marketing head Ram Menon’s words, “to humanize the story better.” That’s always been a stretch for this technology-driven company whose vision has long been driven by a shy, technology centric CEO. Towards that goal, Tibco is taking a step or two forward, but unfortunately also a step back.

The good news is that Tibco is fleshing out it’s “Power of Now” tagline. We saw the first of a new series of simple, straightforward visual ads with short statements of business outcomes, like how Tibco’s event processing helps defense agencies clear the fog of war, underscored by the tagline.

Then Tibco unveiled a new tag line, the Two-Second Advantage, which makes the case if that you have just enough information quickly enough, you don’t need the complete picture to make the right decision. Tibco’s on a roll there, a message backed up by the surprisingly irreverent Ronald K. Noble, the brash New Yorker who heads Interpol, who made the case that such an advantage can have life or death implications in crime fighting, especially when it comes to border control.

The problem is that just when you’ve thought that Tibco finally has gotten on message, it reverts back to its geeky self and steps on top of it. The latest case is its CEO’s Enterprise 3.0 concept that, when debuted in front of a room of analysts, floated like a lead balloon.

His numbering is over simplistic and cuts against popular perception: Ranadive terms Enterprise 2.0 as client/server, rather than the social computing weave that is now seeping into enterprise systems – including Tibco’s. But bloggers of record Sandy Kemsley and Brenda Michelson summed it up best. Kemsley: “Enterprise 3.0 is becoming a joke amongst the analysts attending here today (we’re tweeting about staging an intervention)…” Michelson:” We like the 2 second advantage message, but “Enterprise 3.0” doesn’t resonate, it won’t be meaningful to Business Execs and CIOs.”

Tibco doesn’t need new messaging, it just has to bring out the best of what it already has. It can humanize “The Power of Now” by appending the question, “What does it really mean?” And from that, “The two-second advantage,” and all the business cases that manifest it, become the logical response.

‘Nuff said.

With acquisitions and organic product development, Tibco’s portfolio is broader than ever, and not surprisingly, this year’s event carried announcements of a large number of product upgrades and introductions. For us the highlight was ActiveMatrix BPM, which finally puts Tibco’s business process management engine on the same Eclipse development platform and runtime as the rest of Tibco’s service orchestration products. As a completely new product (this is not iProcess, which becomes Tibco’s legacy BPM offering rooted from the original Staffware acquisition). This is a major development for a vendor that has accumulated a large portfolio of individual products over the years, with the harshest critique being the need for multiple runtime engines: ActiveMatrix, iProcess, BusinessWorks, Rendezvous, EMS, etc. The new BPM offering fills a critical gap in the SOA-oriented ActiveMatrix product family.

Our critique here – as with IBM – is that the use of Eclipse as the design time platform appeals more to developers than business stakeholders. But the fact that ActiveMatrix BPM is intended to be an execution platform means that so-called nirvana of having business people design their own business processes is the type of stuff that you do when in a room with a whiteboard. Fortuitously, Tibco does have something in the works, as it previewed Design Collaborator, a new process definition tool that suspiciously resembled IBM BPM Blueprint; we hope that Tibco designs it so that it could feed BPMN models into ActiveMatrix BPM so it doesn’t become a dead-end product.

There were other introductions, such as the none-too original, retro-named PeopleForms (which sounds like the name for one of Oracle’s legacy PeopleSoft offerings) that for now only churns out SharePoint-like forms-driven apps as a beta. PeopleForms addresses a low end of the market not served by Tibco, developed by what’s left of the old General Interface team; eventually this will be beefed up into something more useful with workflow. We also hope that there might be some rationalization with Design Collaborator, so that this product doesn’t wind up becoming a standalone curiosity.

But the most profound impression came from an acquisition that Tibco completed only in March. Our award for best-of-the-day award from the analyst sessions was demonstration of Netrics, a tiny 15-person outfit out of Princeton, NJ that has developed a patented, algorithmic pattern matching program that really fleshes out the “two-second advantage message’ in providing proximate matches that should be “good enough: to make decisions. Netrics’ technology assigns algorithms as metadata that scores the identity of names or people or things; using that metadata, it quickly reduces large data sets to find probable matches. Those probable matches can be filtered to include or exclude misspellings and typos. Netrics’ technology has ready applicability to identifying event patterns and golden copies of data – and as such, Tibco’s initial plans are to incorporate the technology into Tibco Business Events (their CEP offering) and Master Data Management. On the horizon, it provides a pattern matching approach that complements text mining that is often used in national security applications.

Netrics is not a replacement for data quality – that remains a major gap ion Tibco’s product suite. While the two-second advantage implies having data that is “good enough,” when you perform event processing and must make snap decisions. But over the long haul, you’ll need the kind of feedback loop and reality check on those decisions that business intelligence provides – and for that, you’ll need data that is better scrubbed.

SpringSource buying Gemstone: VMware’s written all over it

There they go again. Barely a month after announcing the acquisition of message broker Rabbit Technologies, SpringSource is adding yet one more piece to its middleware stack: it has announced the acquisition of Gemstone for its distributed data caching technology.

SpringSource’s Rod Johnson told us that he was planning to acquire such a technology even before VMware came into the picture, but make no mistake about it, VMware’s presence upped the ante.

SpringSource has been looking to fill out its stack vs. Oracle and IBM ever since its cornerstone acquisition of Covalent (which brought the expertise behind Apache Tomcat and bequeathed the world tc Server) two years ago. Adding Gemstone’s Gemfire becomes SpringSource’s response to Oracle Coherence and IBM WebSphere XD. The technologies in question allow you to replicate data from varied sources into a single logical cache, which is critical if those sources are highly dispersed.

So what about VMware? Wasn’t SpringSource planning to grow its stack anyway? There are deeper stakes at play: VMware’s aspiration to make cloud and virtualization virtually synonymous – or at least to make virtualization essential to the cloud – falls apart if you don’t have a scalable, high performance way to manage and access data. Enterprises using the cloud are not likely to move all their data there, and need a solution that allows hybrid strategies that will invariably involve a mix of cloud- and on premised-based data resources to be managed and accessed efficiently. Distributed data caching is essential.

So the next question is why SpringSource, as a historically open source company that has always made open source acquisitions, buy open source Terracotta instead? Chances are, were SpringSource still independent, it probably would have, but VMware brings deeper pockets and deeper aspirations. Gemstone is the company that sold object-oriented databases back in the 90s, and once it grew obvious that they (and other OODBMS rivals like Object Store) weren’t going to become the next Oracles, they adapted their expertise to caching. Gemfire emerged in 2002 and provided Wall Street and defense agencies an off the shelf alternative to homegrown development or a best of breed strategy. By comparison, although Terracotta boasts several Wall Street clients, its core base is in web caching for high traffic B2C oriented websites.

Bottom line: VMware needs the scale.

There are other interesting pieces that Gemstone brings to the party. It is currently developing SQLFabric, a project that embeds the Apache Derby open source relational database into Gemfire to make its distributed data grid fully SQL-compliant, which would be very strategic to VMware and SpringSource. It also has a shot-in-the-dark project, MagLev, which is more a curiosity for the mother ship. Conceivably it could provide the impetus for SpringSource to extend to the Ruby environment, but would require a lot more development work to productize.

Obviously as the deal won’t close immediately, both entities must be coy about their plans other than the obvious commitment to integrate products.

But there’s another angle that will be worth exploring once the ink dries: SpringSource has been known for simplicity. The Spring framework provided a way to abstract all the complexity out of Java EE, while tc Server, based on Tomcat, carries but a subset of the bells and whistles of full Java EE stacks. But Gemfire is hardly simple, and the market for distributed data grids has been limited to organizations with extreme processing needs who have extreme expertise and extreme budgets. Yet the move to cloud will mean, as noted above, that the need for logical data grids will trickle down to more of the enterprise mainstream, although the scope of the problem won’t be as extreme. It would make sense for the Spring framework to extend its dependency injection to a “lite” version of Gemfire (Gemcloud?) to simplify the hassle of managing data inside and outside of the cloud.

SOA what

There is a core disconnect between what gets analysts and journalists excited, and what gains traction with the customers who consume the technologies that keep our whole ecosystem in business. OK, guilty as charged, we analysts get off on hearing about what’s new and what’s breaking the envelope, but that’s the last thing that enterprise customers want to hear. Excluding reference customers (who have a separate set of motivations that often revolve around a vendor productizing something that would otherwise be custom developed), most want the tried and true, or at least innovative technology that at least has matured the rough spots and is no longer version 1.

It’s a thought that crystallized as we bounced impressions of this year’s IBM SOA Impact event with colleagues like Dorothy Alexander and Marcia Kaufman, who shared perceptions that, while this year’s headlines or trends seemed a bit anticlimactic, that there was real evidence that customers were actually “doing” whatever it is that we associate with SOA.

Forget about the architectural journeys that you’ve heard about SOA; SOA is an enterprise architectural pattern that is a means to an end. It’s not a new argument; it was central to the SOA is dead debate that flared up with Anne Thomas Manes’ famous or infamous post of almost a year and a half ago, and of the subsequent debates and hand wringing that ensued.

IBM’s so-called SOA conference, Impact, doesn’t include SOA in its name, but until now SOA was the implicit rationale for this WebSphere middleware stack conference to exist. But more and more it’s about the stack that SOA enables, and more and more, about the composite business applications that IBM’s SOA stack enables. IBM won’t call it the applications business. But when you put vertical industry frameworks, business rules, business process management, and analytics together, it’s not simply a plumbing stack. It becomes a collection of software tools and vertical industry templates that become the new de facto applications that bolt atop and aside the core application portfolio that enterprises already have and are not likely to replace. In past years, this conference was used to introduce game changers, such as the acquisition of Webify that placed IBM Software firmly on the road to verticalizing its middleware.

This year the buzz was about something old becoming something new again. IBM’s acquisition of Cast Iron, as dissected well by colleagues Dana Gardner and James Governor, reflects the fact that after all these years of talking flattened architectures, especially using the ESB style, that enterprise integration (or application-to-application, or A2A) hubs never went out of style. There are still plenty of instances of packaged apps out there that need to be interfaced. The problem is no different from a decade ago when the first wave of EAI hubs emerged to productize systems integration of enterprise packages.

While the EAI business model never scaled well in its time because of the need for too much customization, experience, commoditization of templates, and emergence of cheap appliances provided economic solutions to this model. More importantly, the emergence of multi-tenanted SaaS applications, like Salesforce.com, Workday and many others, have imposed a relatively stable target data schema plus a need of integration of cloud and on-premises applications. Informatica has made a strong run with its partnership with Salesforce, but Informatica is part of a broader data integration platform that for some customers is overkill. By contrast, niche players like Cast Iron which only do data translation have begun to thrive with a Blue Chip customer list.

Of course Cast Iron is not IBM’s first appliance play. That distinction goes to DataPower, which originally made its name with specialized appliances that accelerated compute-intensive XML processing and SSL encryption. While we were thinking about potential synergy, such as applying some of DataPower’s XML acceleration technology to A2A workloads, IBM’s middleware head Craig Hayman responded to us that IBM saw Cast Iron’s technology as a separate use case. But they did demonstrated that the software of Cast Iron could, and would, literally run on DataPower’s own iron.

Of course, you could say that Cast Iron overlaps the application connectors from IBM’s Crossworlds acquisition, but those connectors, which were really overlay applications (Crossworlds used to call them “collaborations”), have been repurposed by IBM as BPM technology for WebSphere Process Server. Arguably, there is much technology from IBM’s Ascential acquisition focused purely on data transformation that also overlaps here. But Cast Iron’s value add to IBM is the way those integrations are packaged, and the fact that they have been developed especially for integrations to and from SaaS applications – no more and no less. IBM has gained the right sized tool for the job. IBM has decided to walk a safe tightrope here; it doesn’t want to weigh Cast Iron’s simplicity (a key strength down) with added bells and whistles from the rest of its integration stack. But the integration doesn’t have to go in one direction –weighing down Cast Iron with richer but more complex functionality. IBM could go the opposite direction and infuse some of this A2A transformation as services that could be transformed and accelerated by the traditional DataPower line.

This is a similar issue that IBM has faced with Lombardi, a deal that it closed back in January. They’ve taken the obvious first step in “blue washing” the flagship Lombardi Teamworks BPM product, which is now rebranded IBM WebSphere Lombardi Edition and bundled with WebSphere Application Serve 7 and DB2 Express under the covers. The more pressing question is what to do with Lombardi’s elegantly straightforward Blueprint process definition tool and IBM WebSphere BlueWorks BPM, which is more of a collaboration and best practices definition rather than modeling tool (and still in beta). The good news is that IBM is trying the right thing in not cluttering Blueprint (now rebranded IBM BPM Blueprint), but the bad news is that there is still confusion with IBM’s mixed messages of a consistent branding umbrella but uncertainty regarding product synergy or convergence.

Back to the main point however: while SOA was the original impetus for the Impact event, it is now receding to a more appropriate supporting role.