Content Becomes King Once More – This Time of Search Marketing

Edited transcript of BriefingsDirect[TM] podcast with Media Survey's Sam Whitmore, recorded April 24, 2007.

Listen to the podcast here. If you'd like to learn more about BriefingsDirect B2B informational podcasts, or to become a sponsor of this or other B2B podcasts, contact Interarbor Solutions at 603-528-2435.

Dana Gardner: Hi. This is Dana Gardner, principal analyst at Interarbor Solutions, and you're listening to BriefingsDirect. Today, a podcast discussion about the future of marketing -- maybe we can call it Marketing 2.0?

We're going to talk about content creation as a strategic activity, and we're going to talk about what the PR and marketing folks in the field, in the enterprises, in businesses, are making of all of this.

Joining us to sift through it all, we have Sam Whitmore, founder and editor of Sam Whitmore’s Media Survey. Welcome to the show again, Sam.

Sam Whitmore: It’s great to be back, Dana.

Gardner: It’s been two years since we started these conversations. I came to you as a professional providing tools for the media pros, asking, were they making blogs, were they making podcasts, what about RSS? And you weren’t sure. But do we have a new state of the art? Are people into this now? Is it a fad or are we really into something substantial?

Whitmore: It’s as close to substantial as it’s ever been. There are many segments, and we should be careful about generalizing, but in our world are the people that are likely to listen to this podcast. People understand about RSS feeds now. Microsoft Vista, entering the market with Web feeds, moved the marble a little bit -- and it's a very exciting time.

Gardner: I just got back, Sam, from the Web 2.0 Expo in San Francisco and was very impressed with the use of RSS, particularly as a machine-to-machine capability. Folks that are creating content, and then creating distribution networks using these within the mashup interface, the rich-Internet application interfaces. RSS is really a very popular tool for developers, and that’s going to hasten its appreciation for those a little higher up the food chain who are thinking about strategies, marketing, outreach, community development and so forth.

Whitmore: We're now getting people to understand the concept of "You don’t have to browse anymore." They still search, of course, probably more than ever before. But think about the two ways that people get their information now. It's either through RSS syndication, or through search. And it’s almost quaint to think back about, "Yeah, I think I am going to go through my bookmarks and see what I haven’t visited in a while." I don’t know anybody who does that anymore.

Gardner: The thing that’s interesting to me, and what’s changed in my business in the last year or so is this emphasis on search. Search, from what some people tell me, is the "new media." When you want something, you know enough about it to start a search. If you're a little bit diligent, you can find just about anything you want. That includes B2B content that describes products, values, and services that companies want you to know about.

What’s been interesting for me is that as I have created content -- some of it of by my own creation and, and other content that is sponsored -- people want help in creating content. As an analyst, I can moderate a panel or discuss something with users, and then make that available to many people. But that content has now become a very powerful force in search, and I did not intend it that way.

I intended this content to be something that had more of an RSS play value. But what’s happened is that the content is a search-ranking benefit for the topics we cover. I will blog about this content on three blogs, and I share it with distribution partners who are often IT media companies like TechTarget and E-Commerce Times. I also share it with direct subscription-based content deliverers to IT decision buyers, including Books24by7, AnalystPerspectives, Gerson Lehrman Group's News, and Insight24.

There are a number of channels that this audio and text content then finds its way into -- where it's tagged, has a different URL, and is associated with a different Web domain. The search engine crawlers and the algorithms that rank content take a look at this content and say, “Wow, it's going across multiple domains, it's been tagged a lot, it’s been put into bookmarks, and linked to -- so it must be highly relevant." And this content tends to move up swiftly in the search ranks.

So, my question to you, Sam, is: Are you seeing search marketing as I am seeing search marketing -- that it is becoming as important as advertising?

Whitmore: In a word, yes. I'll know a lot more in a couple of weeks, because at the end of the month, out in San Francisco, I will be going to ad:tech and hanging around with that crowd. But, it's been building for a while. The investment in search-engine optimization (SEO) and some of the acquisitions that we have seen, such as big, multi-national marketing companies now snapping up the iProspects, and iCrossings, are doing a great job. So, it’s definitely being built into the mix. That’s what Content 2.0 is. And you’ve really staked a high ground in that, haven’t you?

Gardner: I am trying.

Whitmore: So, you tell me. How are you doing with that? Is it driving your business?

Gardner: It is. About 90 percent of my business is now supported through custom podcast content creation. And I even hesitate to use the word podcast anymore, because for me, podcasting is really a means to creating content -- and not an ends. Just as you and I are having a discussion now on the phone, and I can create a transcript from this in about two or three days, that means this content can be widely distributed through multiple modes or modalities across different distribution networks and partnerships. We can even license it to people to use and create more content.

That’s sort of led me to another concept, which I call the "content pyramid." Interestingly enough, I’ve stumbled onto this in the same fashion that I stumbled onto search as an important element. Because I look at software development and deployment strategies as my main domain area for coverage -- and then I am more of a practitioner of Web 2.0 in terms of how I deliver content -- I’ve noticed over the past five years or so, a more strategic approach to software development.

That is to say, there's a new way, instead of small groups off doing their own thing, creating their applications that run autonomously on a monolithic stack of some kind, that have no real relationship to one another, and that at some point I might have to integrate and/or assimilate the data that they contain and create. The idea is to take a strategic overview and to think about applications from an architectural perspective.

The idea is to think of applications from their lifecycle, not just how we create them -- but how we might want to use them in the future, or even sunset them. Then think what we’re going to do with this pile of data that, in many cases, is about the same customer or the same product, but in a different format in a different application? This one-off approach is just not productive, and it’s expensive.

Companies are spending 70 to 80 percent of their IT dollars just on maintenance of these existing applications, and are not doing innovative new things. There has been a whole host of things that have happened around, "Hey, let’s create components, let’s use standards, and let’s develop around a common framework such as Eclipse." So, there’s more of a strategic approach to software.

Ultimately, the goal is a Service Oriented Architecture (SOA) where you have lots of different business services that you can then package, mash up, and aggregate to create different processes. Then, you can tear them apart and build them up again. It’s more of a use-reuse, common-repository mentality, and not just one-off production.

Whitmore: All right, so let’s see how you pull this off with content.

Gardner: The idea is to start thinking strategically about your content, instead of having thousands of people around your company, each creating their own content without much interaction, without much coordination, but perhaps a lot of overlap and a lack of reuse, adding to redundancy. That goes for everything from mimeographs to RSS feeds, and all in between.

But when you think about content more strategically, and can plan for and create core content that can be reused and extended across different uses -- like marketing literature, the documentation you provide for your services and products, your advertising, as well as your communications with your investors, with analysts, with the press -- you create more of a coordinated core set of messages and documents and content. We'll be seeing more audio and video increasingly in this mix.

If a company can create this content core and allow people to use it and make it accessible -- in the same way as with the development of software tools and components -- you can better control your costs. You can better control your message, because more of your messaging will be in sync, because it's all coming off of the same core. You can create a lot of this core without having to go through a sixth-month review process, and without taking up your experts’ and your company’s time by forcing them to write 80-page papers.

Maybe this whole notion of the conversation that is prominent in social networking and in Web 2.0 -- of having a series of conversations, capturing it as audio, turning it into text, reusing it across different aspects of your communications, and increasingly, capturing it as video as well -- will allow for a much easier way of gathering knowledge from your experts and users, keeping it on message, and then making that available as a set of core content.

Now, it’s a vision. There is always going to be a lot of need for exceptions, but conceptually starting to think about content strategically to me makes a lot of sense now.

Whitmore: Well, I know that Netflix has somebody in the CCO position, Chief Content Officer, and that they have looked into that as a fundamental principle of communicating to their constituencies, their prospects, their customers, their investors, and people like that. So, it is a good idea.

Gardner: It’s really all about content discussion and community. As more companies outsource and offshore elements of their production and distribution, and as more business services become available off the wire, what is it that’s going to define the business of the future? It’s going to be their relationships, and the way that they foster those relationships is through ongoing content-based discussion.

We now have the ability to distribute content far more widely, but, at the same time, in a more granular sense -- that long-tail concept -- more widely, yet more targeted, and more cheaply than ever. So, you can create a 30-minute movie, put it on YouTube, and almost anyone on the planet has access to it. Anyone, by the way, who does a search on the key issues about your value, your products, or your company gets to the content.

More companies will be making some pretty high-quality, interesting, 30-minute, maybe 15-minute movies. We are already seeing this. There was a great one on SOA that IBM did not too long ago. Are you, as a marketer, going to want to have someone else define your messaging for you? Or are you going to start thinking about doing this yourselves?

Again, IBM is a bellwether in this, at least in the IT space. They’re just creating scads of content. And when you go to Google, if you type in "SOA" or "Services Oriented Architecture," which is an important direction and business opportunity for IBM, the left hand side of the search page, that free-content stuff, is littered with IBM content. Discussions with developers, whitepapers, mentions in press – these are the things that get vetted by the search engine algorithms as being relevant.

Any company that has a strategic direction in which they are taking their business should say, “What are the keywords that relate to our future? What is the content we can create that will drive recognition from those keywords of our value, specifically as an individual company? And how can we create an ongoing process by which we’re feeding that algorithm machine over and over again to retain that high ranking?"

That to me is Marketing 2.0.

Whitmore: That model works hand-in-glove in uber-search environments like a Yahoo!, YouTube, or Google. But in the world that I follow, you've got the IT and tech media really trying to drive their brand, because they don’t want you to go to Google and type in “SOA.” That would be a terrible defeat for them.

Gardner: But, you don’t want to limit yourself to one media company’s input. What these media companies should be doing is the same thing their customers are doing. That is to create the very best possible content on the key subjects of interest of the day, and have them appear high up in the general search ranking. So, when I do a Google search on “SOA,” I’d just as well see an article up there by InfoWorld as one that is from IBM. But either way, if it's good and valuable information, that’s what I’m going to look at.

Whitmore: But as you get closer to, “I've got to make a decision on a reseller or a solution provider or vendor," then I think that I am not going to trust IBM. They are not going to be my goal because they are going to be omitting the stuff about BEA and its competitors.

Gardner: Well, we hope that BEA and its competitors are creating content about their value and that it’s also available. Obviously, buyers will be moving from research, into creating a shortlist, into an RFP process, getting into weighty, detailed discussions, and then ultimately buying negotiations. This Marketing 2.0 approach is completely complementary to a traditional sales, research, and then execution process.

Whitmore: It absolutely is. They can work in parallel, and these IT trade titles and these people that are being rapidly disintermediated need to figure out how to get some of their content to rank well in generic search environments. That brings us back to SEO and the fact that you can subscribe to RSS search results. These people really are getting hammered.

Gardner: We're now leveling the playing field. The best content that is vetted through the algorithmic search process is what’s going to be most prominent. We know that when people do searches, they don’t go more than one or two pages in. Therefore, the IT media, those companies covering IT, need to come up with great content, great columnists, podcasts, RSS, video, whatever it might be, that would show what is voted on as best and vetted.

Whitmore: I have an editorial bias, when I hear the word "content." I think about generic, by-the-pound content. Whitepapers have their place, and product documentation too, but as the 20-somethings and 30-somethings take over the world – and that’s happening – they are not going to accept the same blandness and pseudo-authority that a lot of content has for us.

Gardner: I agree. People need to loosen up, and I've written a number of whitepapers. The way you go about a whitepaper is you do research, you get information, and you do interviews – primary research. And what is an interview? It’s a discussion. Why not just create a great discussion with the experts and put that up, instead of putting it into some sort of a turgid-prose, 80-page tome of which people only read the executive summary?

Why not give the long tail its due, put up a series of five key discussions with the experts you would have interviewed anyway for the whitepaper, let people either read the transcript or glance at the executive summary of each individual interview or discussion, and then pick and choose? To me, that’s just a better way to learn. And it's also a lot easier for the experts as well as the authors. So, it really is a discussion.

There are more young people thinking about community and social networking, and so why not combine all of this into a happy discussion that is also substantive and educates at the same time?

Whitmore: It reflects real people with real attitudes, and not created by the lawyers and the PR people and the conservative forces within companies because that’s simply not going to work. One of my last points questions is, when are we going to see an example of a company relying on "content pyramid" philosophy, and could we prove that they were successful doing so? When are we going to see that?

Gardner: We're seeing dribs and drabs of it. The idea is to look at what’s effective in terms of engagement with your communities. If you can engage your community with a whitepaper from the people doing lead generation, and they get 300 or 400 leads, it’s a success. But when you put something up on YouTube, you get 30,000 to perhaps hundreds of thousands of potential downloads and click-throughs and looks.

The scale is much greater and the cost can be comparable or even lower. You are going to start to see what works in the field. When people recognize that if they are number one or assumed to be in the top several media outlets, they are going to have to be there. Vendors will cultivate the search option too through PR and AR and Investor relations and operate among different channels or distributions of content to reach their end-users and communities.

I can see "search relations (SR)" as another possible definition of people’s approach to this.

Whitmore: That’s a very interesting concept, but from a VP of sales perspective, Dana, I don’t want 30,000 leads. I want the 25 that are in an advanced state of consideration for the product that I sell.

Gardner: Then, you just vet them. You take that 30,000 potential community and bring them down into another level of content that will slough off those who are not interested very much. That’s to say, if they’ll click through and look at a five-minute video, that means there’s mild interest. If they click further down and read a transcript of hear a podcast on a similar topic, but more refined, that shows even more self-selecting and interest.

Then, if they listen to the podcast, you get down to the where it’s a lead generation benefit. That’s where you separate the wheat from the chaff and you get real leads. It's also where the content pyramid works. You need the content to walk them down that path of self-selection.

But, I would rather start with a large universe and work it down, creating brand affinity and relationships with those people, and then find the content and the mechanisms that then bring them to the point where they are ready to sign up for the product or service.

The pyramid is, in that case, inverse – you start wide and you go narrow. But the content creation process should start specific and narrow and then go wide. It has to be two-way discussion. Once you engage the people on a discussion, that’s where you have a myriad of opportunities for bringing them into your business.

Whitmore: Are there examples of people that are prospering with this philosophy?

Gardner: The notion of getting people to a sales-and-marketing activity requires community, affinity, and interest, and you have to lure them in there and then get them to click – whether the click is a download or it’s a lead generation form.

I’d look at some companies that are good at that. I'd again bring up IBM, but I have also noticed that BMC has a very good page, where you can go for information. And this page has got a listing of all sorts of content that has to do with specific values about what they bring their customers.

And they're saying, "Here’s the content that we have created. Here’s content that we found out there that others have created. Here are links to blogs and podcasts that we think are relevant to this. Here’s a download of whitepapers in the traditional marketing literature." It's really just a site or a destination around a topic that’s a subset of their business that people can go to, and then they could get an RSS feed from.

In a sense, BMC is doing their community a service through a knowledge triage around a specific topic that then hopefully will engage the community. So, BMC is a good example. They still have to populate this. People who come back, people who have a subscription to RSS, are going to need something new and fresh coming down their pipe every week or two.

But, they're creating this funnel, qualifying people, and then hopefully getting them into an engagement. It therefore requires these companies to become publishers themselves.

Whitmore: But, most companies don’t have the headcount for that.

Gardner: Why not?

Whitmore: Because usually the executives are going to say, “If I had any spare headcount, I'm going to put it in sales and field marketing and they're not going to get into the publishing business.” They might subcontract it out, but I don’t think they're going to bring it in-house. I’d be very surprised.

Gardner: I was thinking the same thing when I started my business, Sam. I thought that I would be one of those subcontractors – and I am. I basically help people figure out how to make content distributed and keep it credible and valuable. But, I'm seeing more and more companies are actually saying, “We're going to create a studio – a video studio -- inside of our company.”

Whitmore: What kinds of companies?

Gardner: Well, Red Hat, for example, recently had a job posting that they are looking for someone who has experience as a video producer. And they are going to start doing this in house, I suspect. I expect to see the same thing from other companies.

Whitmore: That’s interesting, because they live in a viral world. And Apple’s the same way.

Gardner: Their goal is to get people to download the code that then leads to support and maintenance. That interests business.

It will be a mixture. Some companies aren't going to be interested in being in the content business. They’ll outsource the whole thing. Other companies will say, “Listen, it just makes more sense for us to make this a core competency. We'll still use traditional media, but we're going to create our own media too.”

Let’s think about the numbers here. Let’s say you're a $5 billion-a-year company, revenue-wise, in the IT space. You and I have worked for large IT publications. What was the total editorial budget?

Whitmore: Back in my day? It was at least $1 million.

Gardner: Let’s say you could create an entire weekly news publication that’s the best in its field for a couple of million a year, and you're a $5 billion company. Wouldn’t you throw $750,000 or $1 million at a core competency of content creation, and perhaps soon dominate your space for content, and dominate all of the keyword searches because you're putting up the best, most interesting content?

Whitmore: If I had strong enough leadership, I would.

Gardner: If I were spending five times that much on just advertising -- and half of that advertising was wasted, but I didn’t know which half it was -- wouldn’t I take some of that money and devote it to my own content creation competencies? This is no-brainer. Any company, after a certain critical mass of size and revenue, should look at -- among their marketing spend and advertising spend -- their content creation spend.

Whitmore: Being a student of media, I have observed a collective lack of will across most segments most of the time. When you see the exceptions to this, that’s when you see a feature story. That’s when you see a Q&A. The journalists are out there beating the bushes to find people with spines who do something other than what's expected of them.

Gardner: You know as a former journalist -- and I should say you're still a journalist in what you're doing -- when you beat the bushes, there are always stories out there. There is another thing that's interesting, there's something called News@Cisco, and Cisco Systems created it like a newsroom.

Whitmore: I love that site. That is the absolute archetype for vendor publishing, as far as I'm concerned.

Gardner: There it is. You can go in and say, “We want to talk to you. We're just fine in the field -- whether it’s a sales person, an engineer, another blogger, an evangelist -- what's news and interesting and happening in the communities that affect Cisco? Let’s talk about it. Let’s publish it.” There's plenty of great stuff in there.

Whitmore: Well, that’s a good place to send people. It’s newsroom.cisco.com I believe or is it news.cisco.com?

Gardner: Or you could just go to Google and type News at Cisco, right? I mean, why even think about the site? You go to the search engine. It’s the same way that your clients and prospects are going to find your stuff.

Whitmore: Well, I guess I’m old school and I never realized it. I tried to think of the destination but you're right, I don’t need to, and that sort of makes your point.

Gardner: You can call it lazy but, darn it, it works, it’s productive. If you use search, not just for search, but for navigation, that’s just another reason to look at that as a place you have to be.

Well, we've been having an interesting discussion. I want to thank you Sam, but we're out of time. We have covered some Marketing 2.0, maybe even some press release 2.0. I've been tracking what folks like Shift and Edelman and some of these other firms are doing, where they create a whole slew of rich content that becomes available when a press release or a news event happens, I think it’s very similar thinking to what we've been describing.

Whitmore: That’s right, a content stack. We probably don’t have the time to get into that, but here are the two things, the two litmus tests, that I would point to regarding this social media press-release thing. Number one, who are the vendors using this approach and do they continue to use it once they have started? Do they stick with it?

The other thing is, are journalists publicly saying, "This helps me do my job better and I'm inclined to write longer or richer pieces when I'm communicated to in this new way?" When I start to see critical mass in both of those areas, then we’ll know that the trend is taking hold. Until we see that, I'm still skeptical

Gardner: Well, I would offer one more opportunity for how it could be gauged as a return on investment, and that would be when you do a search on a company. If any of those pieces of press release 2.0 content actually start rising up, then it’s served its purpose too.

Whitmore: You've done it to me again. I didn’t think of "search" first.

Gardner: "Search" -- it’s the new media.

Whitmore: Even though I started with it in this podcast interestingly enough.

Gardner: Search and RSS, yeah.

Whitmore: That’s right. Well, Dana, I enjoyed it as always. It’s great to talk with you.

Gardner: Right, we've been talking here today with Sam Whitmore. He is the founder and editor of Sam Whitmore’s Media Survey at mediasurvey.com. or, heck, just go to Google and type in "Media Survey" or "Sam Whitmore," and you’ll get there.

This is Dana Gardner, principal analyst at Interarbor Solutions, and you have been listening to BriefingsDirect. Thanks.

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

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

Transcript of Dana Gardner’s Podcast on Marketing 2.0 with Sam Whitmore. Copyright Interarbor Solutions, LLC, 2005-2007. All rights reserved.

Transcript of BriefingsDirect Podcast on the Emergence of 'Integration-as-a-Service' for SOA

Edited transcript of BriefingsDirect[tm/sm] podcast with Dana Gardner, recorded June 20, 2007.

Listen to the podcast here. Podcast sponsor: Cape Clear Software.

Dana Gardner: Hi, this is Dana Gardner, principal analyst at Interarbor Solutions, and you're listening to a sponsored BriefingsDirect podcast. Today’s discussion is about an intriguing concept, that of hosted Services Oriented Architecture (SOA), looking at integration as functionality and process that can be accessed on demand, moved off of your enterprise infrastructure, and onto someone else’s. This, I suppose, looks at services and compositing-as-a-service as well.

Here to explain these concepts and how they’re being used practically today -- and the implications for the future -- is Annrai O'Toole, CEO of Cape Clear Software. Welcome back to the show, Annrai.

Annrai O'Toole: Thanks, Dana.

Gardner: The notions of integration and hosting have been bounced around for a while. I recall a company named Grand Central that got quite a bit of funding and had a 1,001 different ways of mixing together services, components, and objects. Maybe it was a little ahead of its time. Why you think that the time is right for something like hosted integration?

O'Toole: You’re right. It is a somewhat back-to-the-future position, and clearly a lot of the ideas we’re talking about are things that Grand Central spoke about -- it must be six years ago. A couple of factors are driving this. First, it’s the whole technology maturity thing. Six or seven years ago, the standards around Web services were in their infancy, and people didn’t have a lot of experience with them. Because they were young, unproven, untested, and lacking in key bits of functionality, people didn’t really want to go there. Technology is one element of it, but there are a few more important elements driving it as well.

One is a secular trend toward simplicity and flexibility. At some levels, this has been driven by teams through virtualization. Storage and processing power are being very quickly virtualized. Applications are being virtualized, with software-as-a-service on demand. There is a long-term shift by customers, who are saying, “We don’t want to own complex infrastructure anymore. We’ve been there, and done that. We want something else.”

Gardner: So, you’re saying that enterprises have gotten a whiff of the notion that they can have complexity removed? They can have consolidation and cost reduction at the same time, and they kind of like that?

O'Toole: They do like that, and they’re willing to pay for it. They’re paying on a subscription basis, but we see many people not wanting to own, or get involved in, large initiatives, rolling out complexity. Before I got on this call, I did a quick refresh of some of the Websites. If you look at the SOA offerings from Oracle, IBM and BEA, they range from a minimum of 13 products to the top of the range, with IBM at 31 products. These are 31 simple products with easy to remember names like “IBM Tivoli Composite Application Manager for WebSphere.” People don’t want to own this stuff anymore.

I’ll give you another data point on the complexity that’s involved here. Recently, we looked at some RFPs. We had an RFP come in – and this isn’t all that unusual – from someone looking to do a big SOA initiative. It was – and I’m not joking -- a 111-page RFP.

Gardner: RFP is a request for proposal. That’s how companies go out and say, “We would like to start a bidding process around that acquisition of a large IT capability of some kind.”

O'Toole: Customers look at the choices available to them, and say, “Do we want to do all this big SOA integration on our own by buying these complex things, or are we prepared to look at alternatives? And, do those alternatives have any reality?” They do, and many companies are shying away from these big, complex initiatives.

Gardner: We’re certainly seeing that. Companies readily grok the notion that SOA is designed to make heterogeneity an asset rather than a liability. If that’s the case, then they certainly seem less interested in going to a single large stack, single portfolio, or even platform approach to that. So, that’s clearly in the market. On the other hand, they want this stuff to work, and they don’t want to be caught with their pants down in six months or a year, due to reliability or performance issues. Perhaps you could help take us to the notion of hosted integration from the perspective of “Does it work?”

O'Toole: This is a critical point. You can sit in a room with a bunch of executives, both from the business and IT segments and, say, “Hosted integration is a good idea,” and they’ll know that. We’ve got some proof points around it. Most notably, one of our marquee customers in the software-as-a-service base is Workday. The PeopleSoft founders got together to rebuild an ERP application, but this time on a hosted basis.

Gardner: Dave Duffield was the founder. Right?

O'Toole: Yes. Today they’re doing hosted integration, and, if you go to the Workday site, you can navigate into what they call the Web services networks. You can see the type of services that they are hosting on behalf of their customers. The whole idea is that they’re taking the integration burden off the customers, so that the customers can integrate their applications with Workday, without having to do any work on the customer end of the connection.

This is a huge portion of the unfolding software-as-a-service story. All application trends, be they 10 years ago when it was big ERP or now with software-as-a-service, have to address the integration problem, because none of these large applications live in isolation.

Workday has taken a novel approach to that around a hosted integration solution, and that works. They have large customers today. They’re handling integrations for their customers and hosting integration into things like ADP. Workday handles the integration between the customer’s data and ADP, which is actually doing the payroll and running checks, making sure that check runs get done at the end of the month and that people get paid. So, that’s a pretty important integration service to be hosting, because if it doesn’t work, and if it’s not reliable, then people don’t get paid.

Gardner: That tends to be top-of-mind for many people.

O'Toole: These aren’t trivial integrations. So, hosting is a big thing.

Gardner: If I could just pause you for a moment. As I understand it, Workday wanted to create some on-demand business applications, but in order for them to create a subscription business model around business applications, they had to conquer this integration issue in order for their application to be accepted. Is that correct?

O'Toole: That’s correct. If you think about it, the work they’re doing is all around handling human resources, the human resources (HR) application. That’s somewhat different from the type of application that SalesForce offers. SalesForce is a stand-alone box. You can use Salesforce.com to do customer relationship management, and it’s not essential that it integrate with other aspects of your business.

HR is very different. It must be integrated with your existing payroll systems, and must be integrated with third parties, such as people who manage benefits or people like ADP, which actually does payroll processing. So, it’s not possible to roll out an HR solution with Workday, unless you’ve got the integration problem solved.

Gardner: Sure, companies use an ecology of providers to help them support their employees in a variety of ways, whether it’s benefits, insurance, or future earnings and stock trading, and a whole bevy of different services.

O'Toole: Exactly. It’s a very complex ecosystem, and integration is one of the things that’s a sine qua non. They don’t have a business, unless they have the integration problem licked. So, it’s very different from CRM. And, as Salesforce.com expands its footprint, it too is running into this integration problem. They have now realized that they’ve got to offer better integration solutions for their customers as well, and they are working their way through those issues too.

As we wind the clock forward, we’re going to see more customers wanting to use on-demand style applications, and wanting integration to be solved in an on-demand way. They don’t want to build all these integrations again. You can also take this one step further. We’ve seen a lot of our enterprise customers, as they think about rolling out big SOA initiatives, are saying, “Maybe, we should really model ourselves as a mini software-as-a-service to our own internal organizations.”

Large enterprise IT departments are essentially rolling out hosted solutions and integrations. We’ve got many examples. We cite JP Morgan pretty frequently as a large enterprise customer that is hosting integrations centrally inside JP Morgan, so that it’s easy for different divisions and some external customers to access application functionality. The point we would make about our vision of how this hosted integration goes forward is that it’s not just for software-as-a-service companies like Workday or SalesForce. This is actually a model that’s good for internal IT as well.

Gardner: So, if we are an internal IT department moving towards SOA, and we access various services, assets and resources -- some internal, some external, some to partnerships -- we’re going to find ourselves in the role of doing integrations as a service anyway. That’s their point. If that’s going to be the case, then why not look for various other organizations that can follow that same beat of logic, and therefore you’ll have a federation approach toward integration as a service.

O'Toole: Another way to think about it is that if we are going to virtualize storage and processing power, we want to virtualize integration. It’s not something that is being rebuilt again and again and again by different companies or different departments within different companies. Let’s really start to move to a hosted model for us, and, as you say, these can be federated in a very coherent way. What’s new now is that the underlying technologies and standards can actually support that model. So, while this model might have been a pipe dream five or six years ago, today it’s reality, and the technologies and capabilities are there to do it.

Gardner: It seems to me that you are offering these enterprises the opportunity to get out of being in the middleware business, or to at least reduce the role that middleware plays for them as a provider and a host themselves. They can offload more of the function that middleware plays.

O'Toole: One of the things that we discovered in our interaction with Workday was that there is a neat concept that we can borrow from the software-as-a-service companies, and that’s a notion of multi-tenanting. You’ll hear us talk about more multi-tenanted integration, where I can take standard integrations -- such as to Workday, ADP, SAP, or SalesForce – and host those core integrations in a central spot. Once I’ve got that core integration built, I can make small changes to make it unique for all the different people who want it.

Everybody will have exactly the same data formats, but I take that core thing and then allow many slight variations that co-exist, and you get this notion of multi-tenanted integration. As I said, you’ll hear us talk about it more, and this is another piece of the puzzle that starts to make this a better, different way for companies to get out of the middleware business, or at least radically reduce and centralize all that’s happening in one virtual spot, and not scattered everywhere.

Gardner: Just to step back a moment. We’re not just talking about loosely coupled interoperability here, right? We’re talking about integration across a variety of different needs that organizations would have, depending on their unique legacy, applications, and platform environments. So, when we talk about integration and hosting, we are going to give them a quite a long check list. Is this is going to be the binary, object, and component level, or we are just talking loosely coupled XML and mashup types of activities, or all of the above? How do we make this into a list that could be managed from the provider perspective as well as from the customer’s perspective?

O'Toole: We’ve seen two fundamental preferences here, and there are two options for what you want to host. The first option we would broadly categorize as very loosely coupled data transformation. A lot of the things that people need to solve in terms of integration problems are really data transformation. How do I take payroll information from one provider, transform it, and send it down to another provider? Most people can deal with that. Most people can wrap their head around how that can be done in a hosted manner. What’s involved there is that it’s loosely coupled and it’s data. It’s ultimately some kind of XML or it gets converted into XML somewhere along the line.

The next thing is a step up from that. Now that I can get information between these things, do I want to have some orchestrations or some kind of inter-company business processes? It’s not just getting data from A to B, but it’s, “I want to get data from A to B, and then I want to call C, and when C has completed its job, then I want to call D, and when that’s complete, the whole thing is done.”

That’s next level of complexity, and it involves a more sophisticated approach. But, both of them are possible and both are in operation today. As far as what customers are going to go for, I think they’ll be happy to do data transformation initially, and when that’s really working for them, they might be prepared to take the next step and host business processes in the cloud.

Gardner: I suppose another trend in the field these days, Annrai, is that the very notion of an application is up for grabs. We used to have applications as packaged applications of functionality, and they had logic, data, and presentation, but we are moving away from that.

It’s coming down more to who understands vertical business issues and can assemble components and assets and services to create advantage, efficiency, and productivity benefit by combining human knowledge, understanding, and relationships. That’s different than just plopping down an application and then rallying everyone around it to work within its requirements and definitions of productivity. It seems to me that what you are doing, even if it’s on the loosely coupled basis alone, is allowing for that redefinition of business applications and processes to accelerate as a catalyst to that. Do you agree?

O'Toole: Absolutely. We’re already well past the definition of applications as monolithic, stand-alone entities, and we are already into a more federated, loosely coupled environment. Look at the things that SalesForce is trying to do, for example, with AppExchange, and their desire to host more and different applications, but all in the same SalesForce portal.

You’re going to see that model applied in a very generic way across a whole range of different applications, and it’s really going to break down the barriers between applications. In some sense, it’s taking mashups to the next logical conclusion. That process has already started. We’ve already seen the first inklings that it’s coming to every large enterprise on the planet over the next several years. The alternatives to it just don’t make economic sense anymore.

Gardner: It could happen to these enterprises, whether they want it to or not. The line-of-business people and those who are aggressive about seeking out productivity on their own are going to do that.

O'Toole: A good analogy is what really drove client-server or the Internet as big computing waves. The line-of-business people could sit at a desktop and see something in action. You had color, and it wasn’t a green-screen mainframe application, and you could get them tailored really quickly. Business people got that very readily.

Gardner: They really increased the universe of participants in computing.

O'Toole: Correct. With the Internet, you could show people a browser and they got it really quickly. For the longest time, a lot of concepts around SOA have been inexplicable. You can’t explain them to a business person. You think you might get there, but then you start talking about governance and you are just down the weeds. You can’t sit them at a laptop and show them SOA, but you can sit down and show them mashups. You can show them hosted applications. I believe that you can even show them hosted integrations.

We can show our customers ADP runs, on which they’d have to do nothing in terms of getting them to work. You can show those to business people, and they get it. That’s what’s changing the definition of what an application is, because business people can actually see these mashups and all the stuff running for themselves, and they say, “This is really interesting. Now, I know what this stuff is all about.”

Gardner: You’ve mentioned SalesForce several times, and you’ve mentioned Workday. Is there going to be an opportunity for other types of organizations? I’m thinking about Amazon, Google, and Microsoft recognizing that there’s an opportunity for them to come in and provide more subscription-based services, these loosely coupled integration points and mashup points.

Is that how you see this evolving, that there will be a handful of large generic players? Or, will this be something that needs to be done on a more specific basis closer to the individual organizations, closer to individual departments, or perhaps both. Will we have a grassroots ecology of small providers as well as some large mega providers?

O'Toole: Yeah, that’s a very interesting question. I don’t have the answer, but there are a few trends that you can see. Undeniably, a lot of the bigger players are actively trying to muscle into this space already, Amazon, in particular, with their accessories stuff. They’re great. So, you’re going to see more of that. However, the other people who are going to make a huge contribution are the whole open-source community.

Over the next several years we’re going see a different set of development tools emerge around wikis. I was looking at some of this QEDWiki stuff from IBM and some from Oracle, and I think you are going to start to see a different way for people to build enterprise applications along enterprise mashup sever concepts. That hasn’t really begun yet.

There are leaves blowing in the wind, but there’s nothing concrete there just yet. If we conquer that one, then that’s going to put really flexible composite application construction into the hand of every size organization. That means we wouldn’t end up with this thing owned by just the big players, such as, “You are just going to get what Amazon wants to give you and nothing else.” It will create a new world for organizations of different shapes and sizes to have easy-to-use tools to build their own stuff.

Gardner: So, perhaps it will be a very fertile period, in which the number of people that can participate in development – who have a role in how to exploit information technology for their business purposes – expands. They don’t have to go through a keyhole, pushing requirements in and waiting for something come back through the door six months later. We will increase the number of people that can directly participate in shaping how IT helps them.

At the same time, we’re also compressing the time it takes for them to recognize some value from this. That is to say, if they can start doing mashups, if they can relate their knowledge of business issues and problems directly into a hosted environment or mashup interface of some kind, then we increase the number of people, but we compress the time before those people can enjoy the benefits of their labor.

That sounds like a very powerful combination that will -- perhaps even more than what we saw in client-server and Web browsing -- accelerate adoption and drive people to want to have a role in this. This goes especially for the younger people today who are used to driving their own destiny online.

O'Toole: As the Web 2.0 generation gets into the enterprise, they’re going to have a very different view of how things should be done. They want it done the way that they have experienced this medium as teenagers. They’ll say, “What do you mean you can’t do it the way I want to do it?” I certainly hope that that’s the way it turns out, because we are just about due for another major innovation in the app development life-cycle.

Gardner: For some of these interesting possibilities to occur, we also have to get back to the pragmatic notion that it needs to make business sense. For an organization like Workday, SalesForce, or Amazon, given the resources that they are going to need to pull this off, there’s going to be a lot of translation and semantic traffic, as you get close to the orchestration that you described. A series of events has to happen in a certain of pattern and be published and subscribed.

A complexity comes up about different requirements being fired off before the other set can be attempted. They’re going to have to have quite a bit of infrastructure and resources. Is there a business model that makes sense for them be able to fund their needs, provide the reliability and speed that people are accustomed to, and still make a profit? How does this work in dollars and cents terms?

O'Toole: There are two aspects to this. As we practice this multi-tenanted integration, what that’s going to enable us to do is dramatically driving down the cost of integration. If I am a customer in a large enterprise, on Amazon, or whatever, and I go and build an integration, I’ve got to build it uniquely for every single app and version of the app that it touches. So, I’ve got to kit out this huge infrastructure and code this unique piece of integration. That’s really expensive.

If we can move away from that to a different infrastructure, even though it’s still a pretty complex infrastructure, what it supports is the notion of building the integration once, and then making minor modifications to customize it for lots of different users. That can amortize that infrastructure cost over many different customers. If I can move to that model, that changes the economics for the provider. It enables them to offer more flexible pricing models to their customers.

The obvious ones are in the subscription-based models for the integrations that they host for you. That’s how I see the economics of it working. I really believe that because of the innovations that have been taking place in both the standards and in the underlying infrastructure for SOA around the ESBs, this multi-tenanted integration is here and is going to be a big driver in the current equation.

Gardner: So, at a basic level, we’re talking the 80-20 rule again, where 80 percent of the functionality is recurring and common. Its reuse can be paid for over a period of time, and then the 20 percent is dealt with case by case, and that can be managed as a cost, because of the efficiencies of the other 80 percent.

O'Toole: Correct.

Gardner: What is it about the technologies today that’s going to make that possible? Obviously, infrastructure, virtualization, and the storage prices have come down significantly. I suppose there’s another issue we haven’t talked about, and that’s the ability to get the highly specialized people to do these things. Each company, if they try to hire them individually to build this, might find, despite their great intentions and ability to invest, that they just can’t find the people.

Therefore, they might be forced to recognize that, given the scarcity of resources, there has to be a more cooperative approach. Let’s let those skilled people who are fundamentally ready to attempt these things do it, but more in a more centralized way. Then, we can all enjoy that common 80 percent benefit. Two questions. One, does it make sense, given the human resources issues, that we centralize? And is that another factor in the cost equation?

O'Toole: One business that’s there waiting to be created is a universal hosting business for integration, pretty much along the lines of what Grand Central had in mind.

Gardner: And what Google has done when it comes to search. No one can touch them, because of their expertise in that.

O'Toole: It’s absolutely possible for someone to own the data centers, and the expertise to offer this virtualized integration. Someone – in fact several people -- are going to try to own that over time. For a lot of small- to medium-sized businesses, that’s going to be hugely attractive. I can well imagine this small- to medium-sized business coming along and seeing a palette of available hosted integration – from SalesForce to all the different desktop CRM applications and SAP integration -- sitting out there, ready for them. If it doesn’t exactly support what they need, there’s a simple model, where they can send in the data format, state the business processes they need to support, and they’ll get a quote back saying, “This is what it’s going to cost you on a monthly basis.” I see that as a very viable option.

Gardner: Okay. If I’m an enterprise, and I’m intrigued by some of these notions and believe that this is the future, although I can’t readily predict at what pace and where things will happen, how do I get started? How should I rationalize this to my CFO? Is there a formula in terms of, “We can reduce our capital expenditures by blank percent, but we’re going to have to increase our subscription payments or recurring predictable expenditures by another?” How do we help companies understand how to get started, and then how to explain why this would make sense financially? Are they going to be paying by transaction, by user, by application, by service? It’s pretty hard to put a meter on this. Where do you attach the meter on how to build for these things?

O'Toole: They’re all good questions, so let me break them off one by one. For a lot of our enterprise customers, what we say to get them started is that as they think about their SOA initiatives and building internal SOA applications, they should be planning, building, and hosting the integration to those services at the same time. What we say to them is, “Okay, this great hosted integration vision doesn’t quite exist today, but you can create a mini version of it for yourself inside your own organization. So, when you build a service that you’re going to offer to either internal customers or to external ones, don’t only build up service, but find out who’s going to need to use that service, and build the integrations for them.

That gets them going down a path, where they’re at least containing all their own internal integrations in one spot. Maybe some time in the future, they’ll be able to hand that off to someone else, but that’s another day’s work. So we say to them, “That’s a good starting point.”

Alternatively, if they’re a smaller businesses, and they’re not interested in doing SOA things, we then encourage them to look at companies like SalesForce and Workday and see how they are approaching these integration problems.

Gardner: Go at it through the software-as-a-service applications approach.

O'Toole: Exactly. Go down that road. So, there are two starting paths, depending on whether you’re going to build stuff yourself or you don’t want to be in the development business at all.

In terms of cost justification and how you price for this, right now I don’t think you can charge on a per transaction basis. Our thinking is that you’re still going to charge for this just in terms of the overall volume that you need for CPU-based pricing, because we don’t think that pricing them on an individual transaction basis or an individual integration point basis make sense. People don’t really want to go there yet. We just say, “Okay, the services you’re going to need to create are going to need two or four CPUs, so that bounds your price and you can either pay on a subscription base or you can do it a one-off payment.”

Gardner: Does the per-employee model work in this respect?

O'Toole: No. Certainly, we haven’t seen them working well, because for most organizations, they start off doing something pretty simple that isn’t critical to the business. So, you can’t turn around and say, “You are JP Morgan. You’ve got 150,000 employees, so this simple thing is going to cost you ... blah.” This is still an evolving area, but I think the point that we’d make is: this is being done now, so whether you’re doing it on an internal basis or you’re someone like Workday and you are doing this on a pure hosted basis, this is the model.

People are already going with this model now, and they’re increasingly not going with the model of buying complex SOA suites and three years worth consulting. They’re adopting approaches that are much more on-demand and hosted from the get go. So, the future is now. This stuff is happening at the moment as we speak.

Gardner: It’s very exciting. As people process the notion of SOA and recognize the benefits, particularly the small- and medium-sized businesses, these light bulbs start to go off, and things fall into place.

I’m glad we’ve had a chance to explore this a little more deeply. It’s a very interesting adjunct to the SOA discussion, as well as that discussion around how applications, by definition, are changing. We might soon have some examples of how the cost benefits are real and compelling.

So, thank you, Annrai, for joining us in this discussion about hosted SOA, hosted integration and interoperability, and eventually getting to the notion of services compositing as a service.

This is Dana Gardner, principal analyst at Interarbor Solutions. We’ve been joined by Annrai O'Toole, CEO of Cape Clear Software. Any parting thoughts, Annrai?

O'Toole: No, I think I’ve said all that I needed to say on this one. So, as usual, it’s a pleasure, thanks for having me on the show.

Gardner: Sure. I think it’s a subject we should probably revisit every six months or so, because it’s bound to have some twists and turns in the journey, no doubt. Thanks for listening.

Listen to the podcast here. Podcast sponsor: Cape Clear Software.

Transcript of Dana Gardner’s BriefingsDirect podcast on the emergence of integration as a service for SOA. Copyright Interarbor Solutions, LLC, 2005-2007. All rights reserved.

BriefingsDirect SOA Insights Analysts on Software AG's Acquisition of webMethods, Web 2.0 and SOA, and SOA Hype Curves

Edited transcript of weekly BriefingsDirect[TM] SOA Insights Edition podcast, recorded April 6, 2007.

Listen to the podcast here. If you'd like to learn more about BriefingsDirect B2B informational podcasts, or to become a sponsor of this or other B2B podcasts, contact Interarbor Solutions at 603-528-2435.

Dana Gardner: Hello, and welcome to the latest BriefingsDirect SOA Insights Edition, Volume 16, 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 Development News Magazine columnist.

Our panel this week, and it is the week of April 2, 2007, consists of Steve Garone, a former IDC group vice president, founder of the AlignIT Group, and an independent IT industry analyst. Welcome, Steve.

Steve Garone: Hi Dana. Great to be here.

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

Joe McKendrick: Good morning, Dana.

Gardner: Also joining us is Jim Kobielus. Jim is a principal analyst at Current Analysis. Welcome back Jim.

Jim Kobielus: Hey, Dana. Hey, everybody.

Gardner: And, Tony Baer, Tony is a principal at OnStrategies. Hey, Tony!

Tony Baer: Hey, Dana, how are you doing?

Gardner: Great, and joining us as a first-time guest is Todd Biske. Todd is enterprise architect with MomentumSI, an Austin, Texas-based consultancy. Welcome to the show, Todd.

Todd Biske: Thanks, Dana, thanks for letting me join.

Gardner: My pleasure. Because of the big news this week with mergers and acquisitions in the SOA space, we’re going to take that as our top topic. We’re going to look at the announced acquisition of webMethods by Germany’s Software AG. We’re also going to talk about the role of Web 2.0 and SOA and perhaps delve into the notion of using wikis for governance, control, and management of assets and process.

If we have time, we’re going to jump into a discussion about SOA hype. Is SOA over-hyped or under-hyped, and that might take an hour in itself just to get started.

The news this week came as a surprise to me, and I think to many. Germany’s Software AG, a company with database and tools assets, best known for legacy implementations, legacy support -- and perhaps moving more toward modernization and, therefore, SOA -- for about $550 million in cash has announced an agreement to purchase webMethods based in the U.S., in Virginia.

WebMethods itself has recently gone through a series of acquisitions, including, most recently, Infravio. Our regular listeners may recall that we had a vice president from webMethods, Miko Matsumura, on the show just recently. So, let’s go around the table a little bit and get the take. I suppose the big questions are: Is this a big deal or a little deal, and is it a good deal or a bad deal? Let’s start with you, Steve Garone?

Garone: Well, that’s interesting question you just asked. I think it’s a good deal. I'm sure it’s a good deal for webMethods from a financial standpoint and for the folks who are going to profit individually from the acquisition. It’s also a good deal from Software AG's standpoint, given its direction to move more strongly into SOA, which I don’t think -- based on what I’ve seen -- it’s been extremely successful at doing over the last three or four years.

Software AG, if we go back maybe three, four, or five years, went through a series of fairly significant announcements with integration products and database enhancements focused on XML, leading it more toward modernizing into the web services, and eventually SOA, world. My perception is that from a business standpoint it has not been extremely successful at that, particularly in the United States.

So, this move really amounts to an effort to get a lot of customers onboard, customers who are using the webMethods products and suites. As you mentioned, we’ve talked about it on this show before. The governance aspects that resulted from the Infravio acquisition are particularly important for Software AG in terms of acquiring a customer base in the United States.

Gardner: You mentioned the price paid. We should point out the 25 percent premium that is apparently going to be paid by Software AG for webMethods that would be over its publicly traded price before the announcement.

Tony Baer, you had an interesting point in your blog. You’ve mentioned that this price, of roughly $550 million is a third, or significantly less, than the $1.3 billion that webMethods had paid back in 1999 for Active. What’s your take on this? Was this something that was of economic expediency? It seems like it happened fairly quickly after the Infravio acquisition?

Baer: Well, I think that webMethods has been looking for an exit strategy for some time, because basically they're trying to build up their SOA platform story. The fact is that large corporate customers are going to be nervous with a $200 million company. They’re probably a lot more comfortable with a company that’s closer to one billion, if they're looking for a platform play.

In terms of the pricing discrepancies, that just reflects the absurd valuations we had during the dot-com period. That was a very interesting irony. I actually liked the point you raised in your blog, Dana, which is the challenge of integrating German companies with companies of some other regions, especially the U.S. German companies tend to be very deliberate. Take a look at Shai Agassi’s recent departure from SAP. He just didn’t want to wait another couple of years to become CEO or whatever the title is over there.

Gardner: "If" he was going to become CEO.

Baer: Very good point. German companies are very deliberate. I don’t think he had the patience for that. One thing I want to point out is more of a key performance indicator. Software AG had, up until now, a very heavily promoted alliance with Fujitsu. In the area of BPM, Fujitsu would resell Software AG’s service bus and Software AG would resell Fujitsu’s BPM. BPM also happens to be one of the highlights of the webMethods acquisition.

One of the challenges that will be before Software AG, and I think an indicator as to whether they are successfully getting the message out to their customers, is how they handle this transition with BPM. Obviously, having an internal product is going to be a lot more attractive than having to partner for it. In fact, Software AG’s CEO told me that in a quote. So, it will be interesting to see how they handle that.

Gardner: How about you, Jim Kobielus? Do you think that this is a sales and channel opportunity to reach the Asia-Pacific region through the Fujitsu alliance and take what was a complementary fit in terms of North America and European Union presence for these two companies? Is this a technology play for all of the above?

Kobielus: I am not really up on the Fujitsu alliance with Software AG. So, I won’t comment on that. It’s very much a geographic jigsaw puzzle coming together here. Clearly, Software AG is very big in Europe, and not so much in the U.S., in terms of integration in BPM.

It’s pretty clear that from a geographic standpoint it’s very complementary. Actually, it’s more complementary from a product standpoint than many have been there willing to give it credit for. Software AG, as you’ve indicated, Dana, is very strong on legacy modernization of the whole mainframe-based setup products for development, databases, and so forth.

WebMethods is very strong on integration, BPM, and the whole SOA stack registries. There is some redundancy with Software AG’s products, such as the whole Crossvision Suite, but I think that from a technological standpoint webMethods is stronger on BPM, the repository, and all of those SOA components than the company that’s acquiring it.

There definitely are a lot of synergies there. Also, webMethods is a bit more visionary than Software AG on the SOA front and has been for quite a while. In fact, webMethods almost coined the term "Web services" back in the late 1990s, and they had a pre-SOAP implementation or a protocol that presaged or foreshadowed SOAP and the whole WS suite that came along. I think webMethods is still a more dynamic company than Software AG in a variety of ways.

Gardner: Let me just pause you there for a second. So, you’re saying that webMethods is ahead of its time, and Software AG might be behind the times, and so together they are going to be on time?

Kobielus: That's right. Software AG is a little bit stodgy and maybe that has to do with its national background. The whole German-versus-American alliance thing is kind of interesting. So, it’s ironic that a big German and a smaller American company are hooking up right now and trying to make a real go of it on SOA.

Another big German and another American company are divorcing -- DaimlerChrysler, of course. They want to get rid of the German stockholders of DaimlerChrysler, who want to jettison the Chrysler side of it and send it packing its bags back to Detroit. They cited the cultural difference, the Germans did. It didn’t work out.

Gardner: Just as a quick aside, it seems that you can pick up Chrysler for $4.5 billion. That seems like a small change for such a big company. If I had a few more bucks, I might consider it.

Garone: Based on the last Chrysler car I owned, I don’t think it’s a cultural issue.

Gardner: You could sell the bricks in the factory and Chrysler would make that money back.

Kobielus: I was reading in one of the articles in the press that Software AG and webMethods cited a cultural match, and that's why it’s a good synergistic deal for those guys. We’ll wait and see.

Gardner: Just the fact that you bring it up means it’s probably somewhat different, right? Let’s go to Todd Biske. Todd, I really enjoy your blog. I think you have a view of SOA that’s much more pragmatic and practical than some of us tea-leaf readers. You tend to eschew the products and look more to the process and the issue of changing the way people behave. Does this merger and acquisition mean anything to you?

Biske: I always like to follow what's going on. The interesting thing that only time will tell is what you’ve got filling the technology gap. We’ve seen a lot of the recent mergers, even just webMethod acquiring and Infravio for the registry/repository and governance solutions, fill the gap.

Clearly, this isn’t a case of filling a technology gap. It's more about geographic issues. But the question from an end user point of view is, when you combine two medium-sized companies, will you get a new big player or will you just get another medium-sized company, maybe like DaimlerChrysler, and the message just gets kind of watered down for both?

I don’t know whether this acquisition will really make a lot of large enterprises see them in a different light or not, when they’re comparing them against the likes of IBM or Oracle. It certainly creates a potential to do so, and that increased customer base can go a long, long way. We’ll see where we windup with it.

Gardner: Your point is well taken. I see this as kind of a risky activity and I agree that this is one-plus-one-equals-two, or one-plus-one-equals-three. And hopefully now, one plus one plus equals 1.3 or 1.5.

In a sense, the whole SOA notion might be affected by this, because if these companies don’t succeed, and they can’t make a multiplier effect, they can’t show that the whole is greater than sum of the parts. You'd have to ask yourself why two companies that are focusing more and more of their products and processes and approaches on SOA couldn’t pull their companies together.

A failure could happen for a number of reasons. It could be culture, but gee ... SOA has to do with culture. Or it could be geography, and gee ... SOA is supposed to be appealing to multinational companies. And, it could be technology, but gosh ... I hope not, because the SOA technology is suppose to allow for mixing, matching, and elevating to a services level of assets, and data resources, and then to bring the people and process together around that.

Does anyone else share my view that this has a somewhat high level of risk, in that, if doesn’t succeed, it could besmirch SOA in general?

McKendrick: I don’t think it’s going to have a huge impact, at least initially, on either besmirching SOA or advancing SOA. It’s a great metaphor. Have you folks seen the movie, "The Pursuit of Happyness," with Will Smith? I’ve spoken with Software AG on a number of occasions over the past three years. When I look at them, I think of the young Chris Gardner out there trying to sell these bone density scanners to hospitals and doctors. He said in the movie that these scanners are slightly better than X-Rays, but cost three times as much.

That kind of reminds me of Software AG. Software AG has been working very hard over the years to try to sell their products. They had Adabas, EntireX, Tamino, and Bolero. They've been really working hard trying to push these products, which maybe are slightly better than other products in the market out there. I’m not sure if they’re priced three times as high, but they have to work hard, and they just haven't quite risen to that level.

Maybe buying webMethods will give them that final break -- the internship at Dean Witter that Chris Gardner had in the movie. This is their breakthrough into the market.

Also Software AG's focus has always been the legacy market. That's what they have been good at. They bought Sabratec a couple of years ago, which provided very good legacy integration tools for iSeries, AS400 mainframes and that’s always been their focus.

webMethods has played in this integration and legacy market as well. This is a huge, untapped frontier -- the legacy integration side of SOA. There are hundreds of thousands of legacy systems that have yet to be leveraged and exposed. In the long run, there is a lot of potential for Software AG to be well positioned.

Gardner: Well, there are a number of companies that are focusing on legacy. IBM is trying to cover its flank in terms of, "If anybody is going to put the mainframe out of business, it’s going to be us." So, there is certainly a lot of business, and perhaps even more so in Europe and in the type of customers that Software AG has.

I want to throw the question out again. Does anyone want to share my perception that this is a risky merger, given the geography, the culture, and the fact that the SOA is in a sense on trial?

Baer: One thing struck me about both companies, which I think also sort of ups the level of risk. Both companies have been going to their own form of legacy migration. Software AG is obvious, but webMethods is another clear case in point. WebMethods initially was a B2B company, and then it bought Active Software for $1.3 billion, and that was suppose to be webMethods’ future. Unfortunately, they bought an EAI company, just as the EAI market peaked. So, in that post-2000 era, or post-Y2K, where SOA started to emerge, they start to seem a bit of a legacy player.

Over the last five years, they’ve been essentially reinventing themselves from EAI to SOA. If there's any risk here, it’s that maybe webMethods is a company that's a lot more open to change, because it had no choice. It doesn't have the cash cushion of Software AG, but you’re talking about two companies that are trying to undergo transition. That ups the risk factor. On the other hand, it might also up the motivation, as long as Software AG’s cash cushion doesn’t make them both too complacent and, as you say, Dana, the cultural differences don’t get in the way. Those are some very big "ifs."

Garone: I tend to agree with Tony, although I think it has to be put into context of what webMethods has gone through and continues to go through. I don’t think it’s unusual amongst vendors in the EAI space. If you look at the collection of those vendors, webMethods has done a really good job, relatively speaking, and they have a ways to go as they all do.

The platform vendors have had that issue, too. IBM had to move each product toward a more SOA-centric model and has also done a very good job. The point is, I don’t think that’s particularly unusual. There is risk here, culturally and technologically, but I really don’t see this risk as being major enough to influence the adoption of SOA or the SOA space in general.

Gardner: Okay, fair enough.

Kobielus: I find it risky from Software AG’s standpoint. They’re acquiring another vendor whose own customers are not avidly acquiring their new product. What I mean by that is, back in 2002, webMethods had license revenues of about $120 million, and it’s dropped. Last year, it was $84 or $85 million in software license revenues. This doesn’t sound like a healthy software vendor, and, to some degree, it sounds like webMethods' own customers regard them as being a legacy vendor, away from which they’re trying to migrate. That’s just the surface impression I get.

Biske: I don’t think it’s going to impact adoption of SOA or cast that all in a negative light. Interestingly, looking at the other risk to webMethods and to Software AG, how would we’d be perceiving this, if it was in the reverse direction with webMethods acquiring Software AG or even if it was presented as a merger of equals, rather than an acquisition? The fact that you’ve got the German company acquiring the U.S. company, what does that mean for the existing U.S. customers of webMethods, and how are they going to perceive this, because there are some cultural issues that have made it difficult for Software AG to gain ground in the U.S. market.

Garone: That’s an interesting point. I really can’t address the issue of whether this is financially feasible or not, but my first reaction was, "Why isn't this in the other direction?" I perceive webMethods as being better positioned and in a better business position generally than Software AG is.

Gardner: Well, they have certainly shown their interest in expansion, but I don’t think their cash position would have allowed this.

Garone: Right, that’s probably true.

Gardner: So, the desire might have been there, but not the means, right? Now, what about the point about Infravio and the registry/repository? We heard quite a bit from Miko about governance and policy, running an IT organization, and perhaps even a larger take on the whole management of business in general. It was a very visionary discussion we had, and yet Software AG has its own repository.

I frankly don’t know enough about them to put them side by side and pick a winner, but it seems that if Infravio and governance was going to be the tail that wagged the webMethods’ dog, and that this acquisition may show you a little different future for the role of registry and repository. Any thoughts on that issue?

Baer: It depends on who is going to be driving the agenda there. An early indicator is that Software AG has said that they want to keep webMethods’ management in place. That’s kind of interesting, because usually a CEO of an acquired company exits fairly tactfully, if it’s a friendly takeover. We’ll approach the interesting inflection point about 8 to 12 months down the pike, when we see who's really driving the SOA strategy at the combined company. That’s basically going to be the telling point.

Gardner: Okay, thanks, Tony.

Garone: I think that’s correct. The real pessimists out there -- I’m not sure I’m one of them -- would look at this and say there’s no doubt that webMethods is going to drive the SOA strategy. Software AG, in terms of revenue, is highly reliant on Adabas maintenance at this point and it's going to continue that way until it figures out how to leverage what it got via the acquisition of webMethods in the SOA space. I’m not quite sure I’m there, but there are some elements to that that may ring true.

Gardner: Yeah, this smacks of a good sales and channel match-up, and they might run webMethods as a subsidiary for some time. Then there's also this balance-sheet issue, where Software AG has recurring revenue. It’s got an old cash cow to continue to milk, and that gives webMethods an opportunity to be funded and financed -- without the vagaries of a quarterly report to Wall Street -- to pursue the larger brass ring here, which is SOA.

Kobielus: Dana, I’ll make a one last point there. I agree with that with what you just said. Software AG is a cash cow in the same way, for example, SAP is living off the substantial legacy of a very well-entrenched set of products. My first reaction to the webMethods acquisition was how they finally put webMethods out of its misery. When I say misery, how long has it been? WebMethods is about 11 or 12 years old now, and it seems that for most of their history they have been in some financial trouble or shakiness. It’s just been one thing after another, and it’s like they don’t get a break.

Now, they seem to have a corporate parent that has a comfort pillow for them, some money to fund ongoing development, diversification, and so forth. Software AG pulled webMethods out of their misery and has given them a new lease on life.

Gardner: Thanks, Jim. Yeah, maybe then make them the R&D department in a sense, right? Okay, a final word on this issue to Joe McKendrick. Joe, this relates somewhat to our discussions from the past about best-of-breed versus integrated-stack-and-suite. Clearly, these companies think that bigger is better and more is better. Does this change your thinking on the best-of-breed versus integrated-suite issue at all?

McKendrick: Well, as we discussed in a previous podcast, the whole notion of an SOA suite runs counter to the SOA philosophy. SOA is especially about loosely coupling, and it doesn’t matter where the applications or the system resides. SOA should be independent of all that, and the idea of an SOA suite runs counter to that thinking. Nevertheless, we see lot of companies glomming onto each other, a lot of gelling taking place. This Software AG-webMethods merger is an example. Progress Software has been very astute in assembling a collection of companies that deal with different aspects of SOA. They want to compete with Oracles, and we saw that just recently with JBoss.

Gardner: SOA Software?

McKendrick: Yeah, right. SOA Software and JBoss. Their goal, their intention is to compete against these bigger guys, while servicing the smaller business market, of course.

Gardner: More of an ecology approach to how to bulk up.

McKendrick: Yeah, we’re going to see more of these alliances, more of these acquisitions and mergers.

On Web 2.0 and SOA ...

Gardner: Let’s move on to our second topic, which is this notion of Web 2.0 and SOA. Now, Web 2.0, of course, can be defined many ways in the market. Some people look at it as simply a rich Internet application interface approach. Others focus on the collaborative social networking aspects of it. Yet others look at Web 2.0 as simply going from an HTML and text page-driven Web to more of a process and semantic Web.

So, let’s just leave the Web 2.0 definition off the table and look at the issue of any of these new activities, whether it’s social networking or rich Internet application interfaces or whether it’s taking advantage of more semantics and BPEL as a process relating to Web activities instead of just as a publishing medium.

Let’s just say, "All of the above" for defining Web 2.0 and how this relates to SOA. I want to go first to Jim Kobielus, because in some emails this week you had some interesting thoughts. We’ve seen a few companies say, "Let’s leverage Web 2.0." We’ve seen Intel come out and say, "We’re going to corral a number of 'open-source' Web 2.0 functions." We’ve seen Cisco get involved with Web 2.0. We’ve seen BEA just announce an embrace of Web 2.0. Even IBM is tinkering with this, I’m sure.

So, there is something there, but let’s focus on this collaborative aspect and particularly in terms of governance. Annrai O’Toole at Cape Clear mentioned this to me probably about nine months ago that he looked at governance and at Web 2.0 and thought, "Gee, maybe wikis would be a good concept for how people manage their services." They could say, "I think the policy should be this, and I’m going to use it in this way, and you can pick and choose."

It's sort of an open source, open collaboration approach to policy and use of services and their agreements. I suppose provisioning rules would come about. You said, Jim, this is kind of a scary concept, that wikis seem to be anti-governance and that it could be a collaboration with no structure. Tell us a little bit about why you’re concerned?

Kobielus: Well, when I think of governance, like everybody I think of the capital "G," like Government, but governance has a broader concern. You often think about crack-the-whip, controls, and setting controls on how people interact and how policies are created? When I think about wikis, I think of the exact opposite. There are no controls. It’s basically a shared space to which everybody can post, everybody can overwrite, and everybody can erase everybody else’s comments.

Gardner: The wisdom of the crowd, right?

Kobielus: Well, okay, that’s a religious faith. Wiki seems like the wild, wild West. It’s a free-for-all as collaboration. That’s great. It’s definitely got a very valid role in many environments, like open-source initiatives where they are very peer oriented. Everybody is an equal, even-steven, participant. There is a high emphasis on collaboration, design, reciprocity, and all of that. So, when I think about the whole SOA governance space, both design-time governance and run-time governance, I think of wiki as in the design-time governance side, where you have teams of designers or business analysts and IT people sitting around the virtual table, trying to hash out policies.

Gardner: Requirements?

Kobielus: Requirements, policies, data designs, data hierarchies like with their master data management environment. Quite often these are creative processes involving teams of smart people who sit around a virtual table and hash out the overall design approach. Wikis and the whole Web 2.0 repertoire of collaborative tools can be very valuable in this upfront design, modeling, simulation, and shoot-the-breeze aspects that are critically necessary for design time. But runtime SOA governance really depends on clear-cut policies, designs, data definitions, and so forth that have been handed down by the policy gurus, and now are governing ongoing operations without ambiguity.

In that case, you don’t necessarily want any Joe Blow to be able to overwrite the policies and the business rules that are guiding the ongoing monitoring, management control, or security of your SOA.

Gardner: Yes. You said that they needed adult supervision, but I didn’t think that this would be open to anybody. I thought this would be open to the people who have impact, the architects and the line-of-business people perhaps. You're not going to open this up to anybody. There would be a directory and an provisioning, so that only those most close would have access.

Let’s go to the real world. Todd Biske, does it make sense to you? Should we be collaborating among the right people with the right access and privileges in how SOA governance is improved over time?

Biske: I don’t know that you really want a wiki-style collaboration for governance. I tend to agree with Jim that you can’t just open it up to the masses, and even if you look at collaborative environments, whether it’s the large open-source projects, or something like Wikipedia, there's some hierarchy that eventually was put in place, where certain people were allowed to do commits or were designated as senior editors.

So, you always wind up with some form of governance structure around that. The area where I think wikis are going to be important in the SOA space is in the service management lifecycle or service development lifecycle. You got companies that have to move to a service-provider model, whether it’s internally to internal consumers or externally. I have talked a lot about this in my blog.

If we compare that to traditional product management, for a long time it was really just one-way communication. The product marketers went out and said, "Here’s our product. Here are its features. Go and use it." They pushed it out to the market place, and the only response they got back was did people buy the product or not.

Over time, they recognized the need for much more collaboration with their end consumers on how to evolve that product, whether it was the formation of customer advisory boards or even leveraging the Internet and some of the technologies to establish a community around those products. The same thing can apply when adopting SOA.

If I am providing a service out to the rest of the enterprise, I am going to be interested in what the consumers of that have to say. If I am not listening to them, not establishing that bi-directional communication, eventually they are going to go somewhere else or they are going to build it on their own and put that redundancy back into the organization, which is the opposite of what we are trying to achieve.

Gardner: Okay. So social networking has a value here, but you wouldn’t want it necessarily hardwired into the way in which the technology actually operates?

Biske: Exactly.

Gardner: Okay, I can buy that. Does anyone else have any thoughts on this notion of wikis and collaboration as applied to SOA governance?

Garone: I don’t really have a lot to add. The two guys who just talked gave a great view of this particular question, and I agree with virtually all of it. After a while, it becomes something that a few key contributors, people who actually have the power, control, and knowledge, would be part of. I waxed philosophical in my head and asked, "Well, is it then still a wiki or is it in fact a collaborative tool among a set of decision-makers who, through policies themselves, are able to make changes or not?"

Gardner: I think you're right. The key word here is collaboration. I believe that IBM is going to be coming out soon with something called Jazz, which is a collaborative application lifecycle management approach. We are seeing more collaboration across different aspects of the whole development-to-deployment environment and we are looking for the tools to do that. Web 2.0 is perhaps stepping up and saying, "We have some tools that can be used in that way." Perhaps, it's not just a matter of dropping a wiki into the process, but something a bit more tailored to an aspect, but somehow availing all the participants of each others' wisdom in the process.

Kobielus: It’s like an open source project. You have a broad range of contributors, but only a handful of committers who can actually commit changes to the underlying code base. So, you might have a wiki that has potentially 3,000 different contributors, but ultimately there might be a moderator or two whose job it is to periodically weed out the nonsense, and crack the wiki whip to make sure that what’s actually been posted reflects the wisdom of the crowd of 3,000 people and not necessarily the vandalism of the few who decide to just disrupt the process.

Garone: And that’s a governance model in itself.

Gardner: Yeah, that’s right. It’s governance, and it relates back to what we’ve discussed in trying to find analogies in geo-politics for technology governance. You want the best of both. You want a federated approach, where they get grassroots input, but you also need command and control. So, it’s Jefferson and it’s Hamilton, right?

Kobielus: It’s Aaron Burr occasionally too. You’re going to follow the pistols.

Gardner: I heard an interesting analogy the other day. We talked about the chicken and the egg, and somebody said, "What about the rooster?"

Alright, let’s move on. Before we leave with Web 2.0, does anyone else have any inputs about the role of Web 2.0? As I said, it’s a very large subject, and then it evolves into Enterprise 2.0 issues, which have lot to do with software as a service and delivery of service. There is the mash-up notion of creating services and then compositing them, even if not with an application purpose or a process, which is letting people change their interfaces and drag and drop things.

We have seen some information from Google Maps this week that have lent more credence to this. I’ll just throw it out to the crowd, any other beauty tips or predictions for the future about where Web 2.0 and SOA come together or not?

Kobielus: Web 2.0 is really HOA, Human Oriented Architecture. It is pretty much giving human beings the tools to share what’s in their minds, to share their creativity with the big wide world. SOA, Service Oriented Architecture, is about sharing and reusing all matter of resources in a standardized way. HOA, the Web 2.0, is the most critical resource, and the most inexhaustible energy supply is human ingenuity and creativity.

Gardner: That’s like Cosmic 2.0. Woah!

Kobielus: Yeah, I have been known to get cosmic. People who have read my blog realize that I am a total space cadet.

Baer: Jim, I'll give you the award this morning for coining the best buzz words, like "Cracking the wiki whip" and "Human Oriented Architecture."

Gardner: Now, any other thoughts before we leave the Web 2.0 subject area?

McKendrick: This may be just a rumor, but I once heard that there was a company, an enterprise with several architectural teams, and these teams actually met face to face once a year to discuss things. That's just a rumor. I am not sure if it’s true.

Gardner: They had to leave their guns and knives at the door.

McKendrick: Exactly. So, Web 2.0 can only help the situation, help break down some of these walls.

On SOA and the Hype Curve ...

Gardner: Okay, let’s move on to our last subject of the day -- we only have a few more minutes -- but it’s the notion of hype. I just noticed, looking around some of the SOA information that was floating around the Web, we seem to be now in the, past-the-peak of the hype curve on SOA and are apparently, from what they say, approaching the "trough of disillusionment."

I took exception with that. I am not sure we’ve even hyped SOA sufficiently and that we are still ramping up on this one. Does anybody else agree with me that SOA is so large, so long-term, and crosses not into just technology but business in organizing behaviors and even redefining the corporation itself? My point is that we are not hyping SOA enough. Anybody agree or disagree?

Biske: I tend to agree with you that the communication isn’t hitting home and it’s not sinking in. I had a blog I know Joe picked up on at one point that talked about companies that are claiming success with SOA. I pointed out that a lot of these companies are the same ones that claim success with virtually every new technology adoption or business adoption, because their culture is well suited to that. There is still a lot of of companies that just don’t know how to do cultural change. It’s not an easy thing to do.

We hyped SOA a lot from the IT perspective, and a lot of the IT managers certainly may be growing tried of hearing about it, but haven't done anything to actually start that process of cultural change. Is it really adopted by the business side and do they understand what it means and how it can impact our business? If they aren't having those communications, we haven’t really changed anything, and that means they’re still open for that message to continue, and to increase.

Gardner: You are saying that managing change well is a core competency, will be an important aspect of any SOA activity, and perhaps SOA adoption could help companies improve the way that they manage change?

Biske: Absolutely. Back when I was working at an enterprise, I had somebody ask me, "How do I build this service so that it meets the enterprise needs?" And I said, "You don’t. You build it to what you know now, and you understand what your processes are going to need to be to change it in the future? Because it is going to change. Think from a change-first perspective, and how you want to manage that process, rather than stick it out there, not want to have it touch it for 10 years, and have it last forever."

Gardner: Well, not to change this subject, but who else agrees with Todd and me?

Garone: You used an expression earlier, "trough of disillusionment." Those words come easily, because they have been used before. That’s because we go through this cycle every time some disruptive technology comes along. The hype gets really high, and the adoption and the use of the technology lags behind, depending on a variety of factors.

I think the SOA hype is pretty high, but I think that it's difficult to sell to decision-makers due to two factors: 1) the degree to which cultural change needs to take place, and 2) as time has progressed through this decade so far we’ve seen greater caution in IT departments because of shrinking budgets. So, the hype is high, but it needs to be sustained longer with messaging that’s going to be more aligned with business goals, rather than technology.

Gardner: We seem to be in a cheap era when it comes to IT, and ironically it’s coming at a time when the Dow is flirting with a record high, even though it has been a bumpy road in the market for the past couple of months. We are still within a Curt Shilling breaking ball of the record, and companies are enjoying record levels of profit, record growth.

Many of them are sitting on record piles of cash. Capital around the world is still at very cheap level, taxes are at a record low in real terms and are dropping in many countries. If there’s any time to invest in IT for the future, this should be it? And yet we’re not seeing it.

Kobielus: Oh, it’s not inconsistent, Dana, with SOA not succeeding. In fact SOA, the model of SOA practically could be: Do more with less.

Gardner: Yeah, but you've got to spend something to allow for your older systems to be freed up and excise the services. That doesn’t come free.

Biske: One thing you have to be cautious with ... Just as we talked about that things change quickly, a number of businesses got burned in the dot-com boom when stock markets were also very high and revenues were increasing. They increased their IT spending, and then the bottom dropped out of it.

Gardner: But, here it’s 2007. It’s been seven years since this crash.

Baer: But, Dana, probably the major reasons -- and the big difference this time -- is that on the IT side there isn't the same sense of urgency. We don't have this Y2K thing staring us at the face, telling us that we must renovate all those legacy systems that are out there -- either renovate or replace. You don’t have the same drama in the headlines all the time. That’s dropped the sense of urgency.

Combine that with the fact that a lot of organizations felt that they got burned the last time they opened up the purse strings.

That’s probably a large part of the reason why you’re seeing much more deliberate spending. To that extent, it can be a positive force in terms of enforcing some discipline. On the other hand, if you want to do SOA right, do you need to invest upfront to do that planning and architecture? I'm not sure that IT organizations have gotten that message.

Gardner: Perhaps there’s more. We keep going back to the crash, but after the crash, we had a series of corporate scandals and meltdowns that really couldn’t be blamed on hyping IT. They had to do a lot more with malfeasance and neglect. We also had a period where we saw new laws and a different compliance atmosphere.

So it could be that companies are being run more by the accountants -- of, for, and by the accountants -- and therefore the vision around IT is not getting through to them, and the purse strings are not opening up. Is that possible?

Koblielus: You’re pretty much on the mark there. I was talking with one CIO about a year or so ago, after about the first year of Sarbanes-Oxley, and she said that the impact of SOX translates to shutting down IT for about 90 days out of the year, just so that they could just account for their tracks over the previous three quarters.

Gardner: Does anyone else concur that the accountants have run amok, and that the IT guys have very good rationales for spending, but they just can’t get the money?

McKendrick: One effect of the whole compliance scenario was that it gave vendors another hype factor. I'm going to try another buzz word. How about Hype-Oriented Architecture? HOA. Using Jim’s HOA for another purpose.

Kobielus: It’s better to have hype-oriented accounting.

McKendrick: Hype-oriented accounting? I think the whole compliance thing gave a boost to the IT industry in the early 2000s. What do we call this decade anyway, the 2000s?

Gardner: The oughts.

McKendrick: It gave the whole industry a boost at a time when things were kind of down with the IT recession. The whole compliance scenario helped business intelligence and the data-environment vendors who directly addressed the flow of financial information.

Gardner: I’d like to conduct an experiment. I think we should take an accountant out to lunch. Anyone who knows an accountant, take them out to lunch and tell them how great IT is and what SOA can do in terms of long-term efficiency and lower total costs. Bring in some of the other mega trends, such as software as a service, virtualization, and data master management. It behooves us all to educate the accounts on why IT is important, because I think they are suffering from a lack of understanding.

Better yet, take a chief financial officer out to lunch and then take the accountants out to lunch. This is the crowd we need to work on. We keep talking about trying to convince the CEO and the CIO, and I think we need to get right down into the bean counters' frontal lobes on SOA.

Biske: Not to move away from the accountants, but one group I hope will keep the hype going is this newly formed SOA Consortium that OMG is sponsoring. It's an advocacy group, not another standards body coming, into the mix. It would be great to start to see a message come from a collection of end-users that are seeing some success with this, rather than being pushed so strongly by the vendor community.

I think it’s a different type of hype. It is one that will be a bit more pragmatic. Hopefully it will continue the pace, and they’ll achieve the goals that they have set out for themselves. I don’t know if they have any accountants in the consortium, but maybe this will help them bring some in.

Gardner: Well, we'll invite them and try to give them a free membership. They should cotton to that, right?

McKendrick: Often, it’s the stuff going on in the consumer space that begins to leach into the enterprise. Any excitement going on in the consumer space, eventually translates into excitement within the walls of the corporation about a certain technology. We saw that with the PCs and we saw that with the Internet. If anything is going on out there in the consumer space right now, it is Web 2.0, going back to the Web 2.0 discussion.

Gardner: Oh, we know how profitable that is.

McKendrick: It's where the excitement is in the corporation that begins to drive the investment. To paraphrase Wall Street's Gordon Gecko, hype is good.

Gardner: Greed was good in the 1980s -- hype is good in "the oughts."

McKendrick: Because it raises that level of excitement, and that’s why you need to get the attention of the bean counters, the CIOs, and the CEOs, most importantly.

Gardner: Well, here’s the message. Take your hype to your accountants and your CFOs and then make them join the SOA Consortium. I am always tempted at the signoff period of our discussion to take a cue from the Car Talk guys and say, "You’ve wasted another completely good hour," but I am not going to do it

Koblielus: And don't drive like my brother

Gardner: And don’t implement your IT like my brother. We have been joined here once again on our SOA Insights Edition by Steve Garone. Thanks, Steve.

Garone: Thank you Dana. It has been a pleasure.

Gardner: Joe McKendrick.

McKendrick: Thanks, Dana. It is good to be here.

Gardner: Jim Kobielus.

Kobielus: Another pleasurable morning.

Gardner: Tony Baer.

Baer: Another hour not wasted.

Gardner: Our guest -- please come back again Todd; we enjoyed having you -- Todd Biske.

Biske: Thanks, this is a lot of fun. I hope to be back.

Gardner: This is Dana Gardner, principal analyst at Interarbor Solutions. You have been listening to Volume 16 of BriefingsDirect, SOA Insights Edition. Thanks, and come back again next time.

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Transcript of Dana Gardner’s BriefingsDirect SOA Insights Edition, Vol. 16. Copyright Interarbor Solutions, LLC, 2005-2007. All rights reserved.