Software Business
Executive Report

December 10, 2007

Busting Seven SOA Myths
Avrami Tzur
Vice President, SOA, Technology Solutions Group
Hewlett-Packard Company

Service Oriented Architecture (SOA) is not simply about IT, but about the enterprise as a whole.  Encompassing people, processes, and technology, SOA is an approach to managing all of these resources by representing functionality as services that business users can compose into processes defined by business requirements.

In IT terms, SOA is an approach to distributed computing that abstracts complex, heterogeneous IT systems into composite, business-oriented services. With SOA, you move away from platform- and vendor-dependent technology and toward an architectural solution to chronic IT problems. SOA means embracing heterogeneity and leveraging existing investments rather than ripping and replacing.

There are a few myths, however, that are causing confusion. SOA is never a “big bang” effort—it is a journey. SOA requires a phased roadmap approach and must start with a thorough upfront assessment of requirements—not simply in IT but business-wide. Furthermore, SOA is not just about technology: the SOA journey also involves people and processes.

There are many other myths about SOA, and seven of the most common are addressed in the sections that follow.

Myth #1:  SOAs are too expensive.
This myth has its origins in organizations that did not plan a SOA roadmap, but simply tacked the idea of multi-channel integration or creating common services onto an existing initiative. Suddenly the costs for that single initiative spiral out of control. The problem here is not cost but inadequate planning. Of course there are costs involved in the SOA architectural approach and required governance, and these must be planned and budgeted from a holistic, enterprise-wide standpoint. Once implemented, SOAs decrease costs by driving reuse and vendor agnosticism. And by focusing on simplicity and modularity, SOA radically reduces development costs.
               
Myth #2: There’s no business justification for SOA.
The first step in developing an SOA is not technology implementation—it’s planning, and this planning is tied directly to business justification. You start with the business view (why you want to do something), then move to the functional view (what exactly you need to accomplish), and finally get to a technical view of how to do it (which is where SOA comes in with its technology-neutral approach). In terms of the compelling issues that a line of business is facing—such as customer retention or increasing “wallet share”—moving from point applications and legacy systems to a services-oriented IT world has very clear business justification. You are not justifying an architecture, but the ability to serve customers faster, address compliance requirements efficiently, and so on. One starting point is to evaluate which business processes generate the most return on investment for your company, and prioritize your SOA deployment to make these processes more efficient and more customer-aware. 

Myth #3: SOA won’t work with the way my company is organized.
This could be true. It’s important to understand that SOA drives some organizational changes and calls for a fresh look based on a review of business requirements. “Consensus combined with governance” is a good summation of a successful SOA.  SOA calls for enterprise governance that establishes and communicates policies that employees must follow for technology implementations, gives employees the tools they need to be compliant with those policies, provides visibility into the levels of compliance across the organization, and mitigates any deviations from established policy. Some companies, for example, have instituted reuse metrics for their development environments to encourage the leveraging of existing services.

Myth #4: I’m already using Web services, so I don’t need SOA.
There is a clear relationship between Web services and SOA, but the use of Web services does not constitute an SOA or deliver its benefits. SOA is an architectural approach, while Web services are an implementation of SOA, in which interfaces are based on standardized Internet protocols. SOA takes planning based on business requirements and priorities, implementation of governance, and a phased, roadmap approach to achieve a true service-oriented environment. 

Myth #5: SOA will solve all of my integration problems.
It is true that by adopting the strategy you need for a successful SOA, you will ultimately eliminate integration problems. However, it’s the underlying information integration strategy that is the solution, not a magic bullet effect of the SOA architecture. Planning for an SOA, assessing business requirements, and establishing governance and an underlying information integration strategy: this is how to solve integration problems.

Myth #6: SOAs are too difficult to manage.
If you enable the proliferation of services without governance or continue to have siloed development, any system becomes too difficult to manage. A successful SOA involves the coordinated application of technology, expertise, and resources. Governance is a key element of this, and the right management tools are also vital.

Myth #7: Our ongoing pressures and priorities make SOA impossible.
The priorities of compliance and proliferating service offerings can force IT into reactive mode. Adopting SOA can be the solution. SOA and its related governance structure can give IT the flexibility to adjust more rapidly and easily to continual change. Moving to SOA is as fundamental a change as client/server was to mainframe or the Internet was to client/server. The move to SOA has a major reward: relief from the reactive treadmill in IT.

In Summary
When it comes to operational efficiency, SOA enables businesses to introduce new practices, processes, and services more rapidly and at a lower cost. Myths aside, the fundamental business reason for moving toward the architectural approach of SOA is business flexibility, and this is an enormous advantage with wide-reaching implications across any enterprise.

Avrami Tzur serves as vice president of SOA in the Technology Solutions Group at HP, responsible for the company’s SOA products and strategy. Previously, Tzur was vice president of SOA at Mercury. Prior to that, he was the general manager for the Americas at Orsus Solutions, where he led the company’s efforts in delivering a middleware platform for developing wireless software solutions for the enterprise.

"Post-Disruption" Marketplace Taking Hold in 2008

Over the past several years, the IT market has been reshaped by a handful of key disruptions – online delivery, community-based development, solution-oriented packaging, and emerging markets. These disruptions, which started at the margins, gained momentum in 2007 with the rise of everything-as-a-service, Web 2.0 applications, open development communities, "free IT" funding models, and the emergence of non-traditional competitors like Google, YouTube, and Facebook. These developments set the stage for what IDC believes will become the Post-Disruption Marketplace.

In 2008, IDC predicts that the most important market leaders in the IT marketplace – many of whom have been cautiously dabbling in these disruptive new markets, models, and offerings – will jump in with both feet. The year will be marked by greatly increased investment in emerging markets, introduction of a raft of new online product and service offerings, the opening-up of closed business models to communities, and innovative new approaches to simple, solutions-oriented packaging. IDC expects there to be so much investment in these disruptive markets, business models, and offerings, that they will cease to be considered disruptions – they will become the new status quo for competing in the IT marketplace for the next decade.

"Disruptive technologies have been a persistent theme in IDC's predictions over the past several years," said Frank Gens, senior vice president of Research at IDC. "These technologies have been creeping into everything from enterprise software and hardware to consumer gadgets and telecom services, forcing vendors to rethink their offerings. In 2008, the era of experimentation will end as industry leaders get serious about transforming their products and services to take advantage of – and meet the challenges posed by – these new technologies and business models. The status quo is about to change."
As the IT industry accelerates into the Post-Disruption Marketplace, IDC offers the following predictions for 2008:

• Worldwide IT spending will grow at a slower pace in 2008. Economic uncertainties and downside risk will dampen IT spending growth in the U.S. and elsewhere. As a result, worldwide IT market growth will be a moderate 5.5-6.0%, down from 6.9% in 2007.

• IT Suppliers Will "Double Down" on Fast-Growth, Emerging Markets and SMBs. Vendors will increase their focus on the "BRIC+9" countries (Brazil, Russia, India, and China plus the next nine important emerging markets), where IT spending growth will remain strong. The SMB sector will get similar attention as suppliers seek out additional pockets of spending.

• Market Leaders Embrace Online Delivery Models. The IT industry's market leaders will dramatically increase the migration of core offerings – applications, business intelligence, servers, storage, imaging, printing, etc. – to online delivery models as a key method for profitably serving high-growth markets, particularly SMBs.

• Application Appliances Will Go Mainstream. Furthering the industry trend toward "solutionization" of commodity products, server vendors will partner with application vendors to deliver pre-packaged application appliances that simplify customer adoption.

• "Web Gadgets" Will Further Extend the Internet. Following in the footsteps of Apple's iTouch and Amazon's Kindle, a new class of devices will fill the gap between notebook PCs and smartphones. These will radically change the online marketplace, including fueling the acceleration of location-based services.

• Mobile Networks Will Open Up. Faced with mounting pressure from Web gadgets and open development efforts such as Google's Android and the Open Handset Alliance, mobile network operators will begrudgingly begin to open up their networks to any device and any application.

• Software Will Emerge to Tame Social Networking's "Cacophony of the Crowds." The sudden expansion of social networking will lead to a tsunami of unstructured data. This will lead to the emergence of "Eureka 2.0" software that combines text analytics, sentiment extraction, and related technologies to distill the "wisdom of crowds."

Alongside these developments, we'll see more active marketing of Consumer VoIP by U.S. telcos, and a continuing surge in Green IT that moves market shares as corporations focus on the "greenness" of IT purchases and operations. Finally, the long-running trend of Industry Mergers and Acquisitions will continue unabated as companies seek market share and/or competitive advantage.

"One of the more profound consequences that will come out of this era of hyper-disruption is the opportunity – and for some, the critical need – for IT suppliers to move beyond their old, narrow identities and offerings," noted Gens. "As the industry's leaders set about to substantially rebuild their core businesses on disruptive models and principles, they will find that these efforts will redefine their identity as well as their customer base."

IDC's predictions for 2008 are discussed in greater detail in the report, IDC Predictions 2008: The Hyper-Disrupted IT Industry Takes Root (Doc # 209776).

Contact www.idc.com

NetSuite IPO Auction Commences

NetSuite Inc. today announced that the auction for its proposed initial public offering of its common stock has commenced. NetSuite announced that it expects the offering to price after the stock market closes on or about Wednesday, December 19, 2007.

Credit Suisse Securities (USA) LLC will act as sole book-running manager for the offering, with W.R. Hambrecht + Co., LLC acting as co-manager. NetSuite will offer 6,200,000 shares of its common stock in the offering. NetSuite and the selling stockholders have also granted the underwriters a 30-day option to purchase up to an aggregate of 930,000 additional shares.

NetSuite is conducting the offering as a modified Dutch auction. The preliminary prospectus, which is available at NetSuite’s auction website www.netsuiteipo.com contains further information about NetSuite, the offering, and the structure of the auction. In addition, the site also provides a link to a recording of the management presentation to prospective investors.

NetSuite’s auction website also contains information about how to contact the underwriters to open a brokerage account with one of the underwriters.

A registration statement relating to these securities has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold, nor may offers to buy be accepted, prior to the time the registration statement becomes effective. This release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. No offer to buy the securities can be accepted and no part of the purchase price can be received until the registration statement has become effective, and any such offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time until the notice of its acceptance is given after the effective date.

The offering will be made only by means of a prospectus. Copies of the preliminary prospectus for the offering can also be obtained from Credit Suisse Securities (USA) LLC, Prospectus Department, One Madison Avenue, New York, NY 10010, telephone 800-221-1037.

Contact www.netsuite.com

Varonis, the foremost innovator and solution provider of comprehensive, actionable data governance solutions, has selected and implemented Marketbright's on-demand platform to accelerate their emarketing, and partner marketing initiatives. By leveraging the Marketbright solution, Varonis has, in a short time, seen a five-fold increase in leads tracked through marketing campaigns.

Varonis' solutions give organizations total visibility and control over their data, ensuring that only the right users have access to the right data at all times. Data governance is becoming an IT imperative and demand for solutions has been growing exponentially. Varonis selected Marketbright for full, self-service management of all of their demand generation campaigns. Because of the on-demand architecture of Marketbright's solution, Varonis was able to leverage the platform immediately, and see rapid results for their sales and marketing teams.

Varonis is also leveraging Marketbright's deep integration with salesforce.com to enable the passing of only qualified leads (with automated lead scoring), and to automate the prioritization of leads. In addition, the integrated Marketbright and salesforce.com solution provides sales teams with the full prospect interaction history, to enable a deeper understanding of customer needs.

"The ability to have an integrated view and management of all our marketing activities, and the deep integration with salesforce.com, have given us greater insight into the customer needs at a much earlier stage in the sales cycle," said Johnnie Konstantas, vice president of marketing for Varonis. "With Marketbright's solution, both our sales and marketing teams can be more efficient in responding to the needs of our prospects."

Contact www.varonis.com
Contact www.marketbright.com

Vivat Partners with rPath to Provide Clients with Virtual and Software Appliance Solutions

Vivat, a leading enterprise IT consulting firm for Fortune 1000 companies, has selected rPath’s rBuilder and the rPath Appliance Platform for its clients’ virtual and software appliance needs.

Vivat is a boutique professional services organization focused on Service Oriented Architecture (SOA) and Enterprise Application Integration. The company entered into a partnership with rPath to complement its existing product and services portfolio. Using the rPath solution, Vivat is able to help enterprise customers extract value from intellectual property that was thought to be impractical to commercialize. rPath benefits by gaining a partner able to assist customers in the development and maintenance of virtual and software appliances.

“rPath’s technology enables Vivat clients to realize significant efficiencies in their go-to-market strategies. Software and virtual appliances can be distributed seamlessly to new markets and customers,” said Vivat’s Chief Commercialization Officer, Joel Davne.

The rPath-Vivat partnership has already had initial success. Vivat approached an existing Fortune 500 customer in the Information and Delivery Services sector about unlocking a key information tool used primarily for internal purposes. Vivat proposed utilizing rPath technology to facilitate the commercialization of this solution to permit the tool’s distribution to new markets and customers. The result was a new appliance offering, allowing Vivat’s customer to extract value from their existing legacy applications.
“By providing clients with an automated and repeatable method for building and maintaining virtual appliances, Vivat is adding to its already robust product and services portfolio,” stated Sara Spivey, VP of Marketing and Business Development at rPath. “Using the rPath solution, Vivat can help enterprise clients package and commercialize intellectual property, something that was previously considered impossible.”

Contact www.rpath.com

Software as a Service (SaaS) Will Impact Partnering Landscape

A recent IDC survey offers clear indications that partners believe Software as a Service (SaaS) is a key area of opportunity with the potential to dramatically change the partnering landscape. Survey respondents identified perceived revenue annuity as the factor making SaaS a particularly attractive long-term strategy.

"In 2008 we expect several major vendors and their respective partner ecosystems to become more engaged in the SaaS market," said Stephen Graham, group vice president of Software Business Strategies at IDC. "The survey results clearly show that partners are very optimistic about the potential opportunity that lies ahead and that they expect to link with other firms to realize this potential."

The IDC-ITPartner.net survey was conducted in September 2007 with members of the International Association of Microsoft Certified Partners (IAMCP) and a community of large IT distributors. The survey was designed to assess SaaS partner business activities, partner perceptions of SaaS, and the business impact of SaaS and partnering.
Among the key results from the survey are the following:

• 76% of partner respondents believe SaaS will dramatically impact the partnering landscape
• More than 70% of partner respondents view SaaS as an opportunity
• Many of the surveyed firms are already engaged in SaaS-related activities
• Implementation services and business services related to SaaS deployments are considered the most profitable opportunities associated with SaaS
• In order to be successful, organizations must effectively target their partner messaging

The forthcoming IDC study, The Channel View: SaaS Capabilities and Opportunities, assesses current perceptions of the IAMCP partner community regarding SaaS impact and opportunities for their firms. Also included is information regarding core messages to partners, how to build the SaaS value chain, and overall essential guidance.
For more information or to purchase the report, please contact your IDC Account Manager or email sales@idc.com.

Contact www.idc.com

DreamFactory Leads the Way in Delivering Business Essentials Across the Web

DreamFactory, a pioneer in providing advanced web applications and development tools for cloud-based platforms, will co-host a Web seminar “The Reinvention of Business Intelligence for SaaS” with Saugatuck Technology on Dec. 11, 2007. Saugatuck Technology, an influential research firm for the SaaS industry, recently recognized DreamFactory as an early mover in the SaaS space, as profiled in the analyst Quick Take report published in November 2007.

DreamFactory’s and Saugatuck’s one-hour educational web seminar will reveal recent findings from Saugatucks’s SaaS-based Business Intelligence (BI) research. Participants will learn how SaaS-based BI solutions like DreamFactory’s Carousel application are changing the way companies can execute and manage their businesses.

"Saugatuck’s industry-leading perspective provides real insight into the significant trends and changes in today’s marketplace due to disruptive business models like SaaS," said Eric Rubin, CEO DreamFactory. "Their research report uncovers the fast-growing acceptance and adoption of DreamFactory’s native applications on leading SaaS platforms."
Saugatuck’s report highlights DreamFactory’s strengths and the power of its competitive strategy in the market. According to Saugatuck Vice President Mike West, DreamFactory has added to the functionality of established leaders. The report discusses DreamFactory’s strategy to extend the value of its business applications from the desktop and internal network across the Internet and to leverage the other tools on leading SaaS platforms, like salesforce.com and Cisco/WebEx, natively and tap into the customer base of the platform and ecosystem.

Click here http://www.dreamfactory.com/resource-center/web-seminars/saugatuck_business_intelligence_saas for more information on the webinar.

January 2008

January 30/31 - Softletter's Marketing and Selling SaaS Seminar, 2008 - Atlanta, GA - SaaS Comes South 

6th Annual Growth & Exit Strategies
for Software & IT Companies
February 12, 2008
Boston, MA

World Financial Symposiums (WFS) is an international organization dedicated to educating technology leaders. It organizes and promotes forums for CEOs, CFOs, corporate investors and other deal participants for the software and IT industries, with the intent to educate and encourage deal flow among industry participants.

A true symposium, WFS brings together elements of the financial and partnering community, allowing for the exchange of innovative and effective approaches and methods being used in successful corporate growth plans today.

The 6th Annual Growth & Exit Strategies for Software & IT Companies will be held in Boston, MA, February 12, 2008. Featuring a topical agenda and world-class presenters, the conference provides an outstanding opportunity to learn about creating wealth and accelerating growth.

To register, please visit www.worldfinancialsymposiums.com

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