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Killen Alert May 2006What Is In This Issue1. ERP suppliers promoting service oriented architecture (SOA) applications and infrastructure. Suppliers include SAP, Oracle, Sage Group, plc., SSA Global, Lawson Software, and Intentia AB. 2. Key to becoming a more agile and profitable company: service oriented architecture (SOA). 3. SOA interview with BEA Systems. http://www.killen.com/soa/ 1. ERP Suppliers Promoting Service Oriented Architecture (SOA) Applications and InfrastructureEnterprise resource management (ERP) suppliers include SAP, Oracle, Sage Group, SSA Global, Lawson Software, and Intentia International AB. With various degrees of effectiveness, these companies are now promoting the customers’ need for SOA, as well as their own existing and emerging SOA products. SOA is not a product any supplier can sell. However, every one of the suppliers mentioned above wants to be seen as a leading SOA visionary and a provider of emerging SOA compliant applications and infrastructure. ERP suppliers are software companies that have traditionally provided integrated application software that automate the back-office requirements of medium and large enterprises. These back-office requirements include financial and also human resource management. Siebel was not considered an ERP supplier as it serviced the front-office application space known as CRM. All suppliers included in this issue fit our definition of ERP suppliers. ERP suppliers now offer applications that automate other requirements besides back-office applications. And, they are now offering integrated applications to small companies as well as to medium and large companies. SOA is an evolutionary approach to software development and deployment that will have a profound impact on the business performance of enterprises. It is a comprehensive approach, including concepts, standards, and products. (See http://www.killen.com/soa/) 2.1 SAP AG and SOA (Frankfurt and NYSE:SAP)SAP generated over $10.5B in revenue and a net income of $1,855B for 2005. It has over 27,000 customers. Shai Agassi, president of the Product & Technology Group and executive board member, SAP AG (NYSE: SAP), is now the company’s leading customer-technology visionary. He has been traveling the world sharing his belief on the new trends that now impact customers, and how SAP can address these emerging needs. Underlying many of his statements is the need for SOA. He states, "Today we're shifting from different drivers for why businesses are building their fabric¾the infrastructure. Whereas before it was about (for the) management of resources, then it shifted to management of information and now we're shifting into management of business events.” When we were first exposed to Shai’s statement “…shifting into management of business events,” two thoughts came to mind. (Oracle had just presented us with a slide with a title, “Fusion Architecture: SOA + EDA.” EDA stands for event driven architecture.) The first thought was how the two fierce ERP suppliers¾SAP and Oracle, are countering each other at every opportunity. The second thought was deeper. By encouraging customers to now focus on the Event, instead of Information or Resources, Shai was reminding everyone that the methodology of strategy places the Event closest to the Situation¾where change occurs. It touches it. The Event is an action or series of actions that change the Situation. Companies will make more progress if they now focus on business event management. Regardless, Shai could have added, to have any chance of effectively using IT systems to manage business events, those systems need to conform to SOA. Shai goes on to say he believes in five points. They are 1. “...for I.T. to deliver the flexibility organizations need, it must create a single, unified platform that provides a repository of coherent services.” It is understandable that Shai, an executive of the world’s largest ERP supplier, sees the world this way—needing a single, unified platform that provides a repository of coherent services. This statement clearly eliminates the consideration of multi-ERP platform suppliers, such as Oracle. And, it calls attention to the need for SOA. For IT systems to deliver the flexibility that organizations require, SAP and other application suppliers will have to rewrite their software to conform to SOA. Yes, one does need a repository to keep tract of SOA services. 2. “...the market has shifted from point solutions to industry-flavored suites.” Oracle just announced in April that it was acquiring Portal.com, a billing software supplier for telcos. And last year, SSA Global purchased CRM supplier, Epiphany. Portal.com and Epiphany are two examples of point-application suppliers who competed in the close shadow of ERP suppliers, and whose investors were lucky that the companies were acquired. ERP suppliers have gained strength with the acquisition of each new application. However, there will always be an opportunity for point suppliers who can fill a customer need better than the ERP suppliers. Point-application suppliers need to start rewriting their applications to conform to SOA to effectively compete. 3“...people like their current user experience but want business process content to be part of it.” By current user experience, Shai is referring to the Microsoft PC Software that most people working in the enterprises use ever day. By stating that “(people) want business process content to be part of it,” he means those users want access to automated business processes that SAP provides. Shai says, “We teamed up with Microsoft to jointly deliver ‘Project Mendocino,' which brings the best of desktop productivity, and the best enterprise applications without cost of integration." Since we have been focusing on ERP suppliers and SOA, when we hear “Microsoft,” we think about Microsoft.Net technology, which is an SOA standard. 4. “...ecosystems that reuse common services deliver more, faster and cheaper innovation than any single vendor.” Reuse of common services is a clear promotion of the need for SOA. 5. “...I.T. will become strategic to the business as the pace of process innovation accelerates.” This makes sense. As events continue to occur faster, technology becomes more important in managing these events. Yes, Shai’s use of the term “strategic” is designed to bring the ERP and SOA discussions into the boardroom. Back, as far as May 24, 2004, Henning Kagermann, SAP, CEO stood in front of 1000-plus customers. He told the audience, “now is the time for everyone to develop a roadmap for building an SOA.” He went on to say, “Key to getting to SOA, was using SAP Enterprise Services Architecture and NetWeaver.” SAP calls “Enterprise Services Architecture (ESA) a blueprint for service-based business solutions. It’s a design or pattern for enterprises and the supplier community to develop SOA systems. Its elements include, infrastructure, applications, and standards. NetWeaver is a key part of the ESA infrastructure. It is middleware¾a product that unifies integration technologies into a single platform. NetWeaver is based on industry standards and can be used with Java 2 Platform, Enterprise Edition (J2EE), Microsoft .NET, and IBM WebSphere. mySAP is SAP’s ERP for the foreseeable future. It comes with NetWeaver. If it includes NetWeaver, by definition, it provides a platform for SOA applications. SAP is encouraging its customers on R/3 ERP, a client-server based approach, to migrate to mySAP. It plans no other path from R/3 to the SOA environment. In 2007, SAP plans to release fully SOA-enabled mySAP Business Suite, and other applications software. 2.2 Oracle Corporation (NASDAQ: ORCL)Oracle generated revenues of $12.89B and profits of $2.886 for FY 2005 ending May 31. The second largest ERP supplier promotes SOA extensively as a part of its effort to sell the customers on its Project Fusion and various middleware products. Charles Phillips, President of Oracle says, “Oracle Fusion Architecture is a unifying model of emerging trends in grid computing architecture, service oriented architecture, and enterprise information architecture. While each trend is a study unto itself, the fact that these techniques can now be united into a single architecture is an exciting idea. It gives customers and partners a good view of the direction that Oracle is taking to make the most of our core strengths in database, middleware, and business applications.” Oracle’s Fusion Architecture is part of Oracle Project Fusion. Oracle and its investor’s fortunes turn on the success of Project Fusion. The success of Project Fusion is critical to Oracle customers, especially those who rely on PeopleSoft, J.D. Edwards, and Siebel applications and infrastructure. Oracle says that Project Fusion applications and ERP will be available FY 2008. Project Fusion will select and rewrite the best of breed applications from Oracle, Peoplesoft, J.D. Edwards, Siebel, ReTek, Portal.com, and others. The company will expose all of the features and functions of the Fusion Applications Suite as services. These services will conform to SOA, relevant Worldwide Web Consortium (W3C) standards, and J2EE. Project Fusion also proposes to coalesce the best features of the multiple ERPs that Oracle supports. The company will build the Project Fusion ERP using its own middleware products and as few competitor products as possible. Under middleware, Oracle includes portal, develop tools, enterprise application server, web services, data base management, and hub data base, security, grid computer, systems and process management software. And, it says all of the Oracle middleware products that make up the Fusion Middleware Stack that are available today, all conform completely to SOA standards. Oracle tells customers that if they want to migrate their IT environment to SOA, they should purchase the following products in the following sequence. 1. Business Process Execution Language for web services (BPEL) 2. Hub Data Base Management 3. Oracle Grid Computing 4. Fusion Applications Selling Project FusionIt is difficult for Oracle to sell Project Fusion. Project Fusion started life with a set of objectives designed to overcome a problem that Oracle created for itself. Oracle’s decision to acquire PeopleSoft, J.D. Edwards, and Siebel created a significant problem. Now Oracle needed to support multiple applications and infrastructure that provided the same functionality. Customers are concerned about ongoing support for their present applications, the potential costs involved in migrating their software to future Oracle products, and their inability to plan. It’s difficult for Oracle to recast Project Fusion in terms of customer benefits. Oracle is hosting 1,000 customer events around the world to promote SOA and Project Fusion. 2.3. Sage Group, Plc (LSE: SGGEF)http://sagefaq.sagesoftwareinc.com/ Sage Group, plc plans to promote SOA products in the future. The London-based software company, Sage Group, plc., generates $1.2 Billion in revenue. It has a global client base that numbers 4.7 million small medium business (SMB) customers worldwide. It has 8,000 employees. The North America operation—Sage Software, Inc. accounts for 41% of the revenue. Sage Software, Inc. sells recognizable brand names such as ACT by Sage!, Peachtree by Sage, Sage Accpac ERP, Sage CRM SalesLogix, Sage MAS 90 ERP, Sage MAS 200 ERP, Sage MAS 500 ERP, and Sage Timberline Office. Sage Software, Inc. especially wants to increase sales to mid-size companies. http://sagefaq.sagesoftwareinc.com/ 2.4. Lawson Software (NASDAQ: LWSN)Soon Lawson will close the deal to acquire ERP suppliers Intentia International AB. Combined, the two companies will claim a customer bass of 4000. Lawson Software generated net income of $5.26M and revenue of $87.7M for nine months ending 2/28/06. It promotes a) Lawson System Foundation 9 (LSF 9) as a platform for SOA applications. b) SOA applications are on the way. C) Strong relationship with IBM. Lawson’s message clearly links together the platform, applications, IBM, and, SOA. Lawson System Foundation 9 (LSF 9), SOA, and IBMOn March 15, 2006, Lawson announced the availability of (LSF 9), and that they would soon offer SOA versions of their Business Management Solutions, Human Capital Management, Supply Chain Management and Enterprise Financial Management suites on LSF 9. The announcement also promoted that LSF 9 uses IBM WebSphere, DB2, and Tivoli network management software to provide a J2EE compliant SOA platform. The St. Paul, MN, USA company targets smaller accounts than SAP and Oracle. Lawson targets services organizations such as healthcare, retail, banking, insurance, K-12 schools, and local/state governments. They also pursue distributors and manufacturers. Lawson offer software to automate financials, human resources, procurement, service, distribution management, and retail operations management. It has approximately 2,200 customers. 2.5 Intentia International AB (XSSE: INT B)On March 10th, 2006, Intentia, the Swedish ERP supplier with revenue of SEK 292.6 Million expecting to be acquired by Lawson Software, made an announcement. CEO Bertrand Sciard released plans for the next generation of Movex3 —enterprise software designed for mid-sized companies. He also said that Movex3 ERP will enable customers to obtain the benefits of SOA and protect its initial investment in Movex. Intentia is releasing an “SOA Enabler,” called Project ADA for Movex3. The supplier says Project ADA provides a business process layer for Movex3 applications. It will enable Movex3 applications to interoperate seamlessly with other SOA-based web services and applications. The Swedish firm claims that because the interoperability takes place at the business logic level, rather than at the code level¾as with traditional enterprise application integration, it will dramatically improve companies’ ability to change processes and connections as their business needs require. Henrik Billgren, President, Intentia Research and Development, described their approach as ideally suited for mid-market companies. Billgren said. “Breaking down bulky enterprise applications into individual services delivers the flexibility benefits of SOA. But in its purest form, implementation complexity and cost is too high for mid-sized companies and would more than offset any gains.” He went on to say, “Conversely, larger applications are simpler to deploy but are too rigid for today’s dynamic business environment. We believe that Project ADA will enable us to take a sensible approach to SOA that’s right for the mid-market by providing both business agility and implementation simplicity.” “The ADA platform will encourage agile supply chains and adaptable business processes because the time and cost required to make changes will be significantly reduced. Companies can choose and change business partners based on the ability of those partners to deliver the best product or service, rather than resisting such changes because of the IT hurdles they create. “The smartest thing about Project ADA,” Billgren concluded, “is that it again leverages our customers’ investment in Movex Java. They can therefore benefit from SOA faster, with less risk and at a lower cost than otherwise possible.” 2.6 . SSA Global (SSAG) NASDAQMike Greenough, President, Chairman, and CEO of SSA Global, needs to speak out on the importance of SOA and how his company plans to provide the customers with SOA compliant products. Promoting SOA, might not generate new sales at this time. But it would reassure customers that SSA Global understands their emerging needs and is already developing SOA compliant products. SSA Global should generate revenue of $750M fiscal year ending July 31, 2006. And, it should again provide investors with a profit. It has 13,000 customers. Forty to fifty percent of the customers use IBM software products. IBM has certified that SSA Global’s ERPs works with IBM’s SOA compliant middleware. IBM validated SSA ERPLX, SSA ERPLN, SSA BAAN IV and SSA BAAN 5 to work with the IBM WebSphere product line. We are unaware of IBM certifying any other supplier’s ERPs. SSA Global and IBM have agreed to work together to sell SSA Global’s solutions that are built upon IBM middleware. The middleware includes IBM WebSphere Portal, IBM WebSphere Business Integration, IBM WebSphere Application Server, and IBM DB2 Universal Database. SSA Global provides what it calls “solutions”—applications, and infrastructure. In terms of applications, SSA Global offers the customers Supply Chain Management (SCM), Project Lifecycle Management (PLM), Customer resource Management (CRM), Supplier Relationship Management (SRM), Financial Management (FM), and Human Capital Management (HCM). It plans to rewrite applications to comply with SOA. SSA Global calls its “SSA Open Architecture” an SOA Architecture. We present a diagram of their architecture here:
SSA Global, in 2005, started to provide its SSA ERPLN and SSA ERPLX customers with a path to SOA. It added SSA Integration to these ERPs. SSA Integration provided the standards-based interoperability that is required to support an SOA environment. The ERPs support the following standards: SOAP, Java, .net, JDBC, ODBC, OLE-DB and others. SSA Global plans to add new features to its ERPs in 2006, and over the next two-year period. The firm will release new tools, based on SOA design principles that will reduce the task of migrating applications to SOA. The firm will continue to expand the ERP footprint solutions by leveraging the SOA functionality and developing composite solutions. Over the next two years, SSA Global plans to expand the standards-based interoperability toolkit, SSA Integration, to Supply Chain Management, Project Lifecycle Management, Customer Resource Management, Supplier Relationship Management, Financial Management, and Human Capital Management. 2. “Key to Becoming a More Agile and Profitable Company: Service Oriented Architecture (SOA)”Killen & Associates, and its partners C3BC Consulting/MIDDELWARESPECTRA and Global Information, Inc., are releasing a series of interviews with experts from the user and supplier communities to help business and IT decision makers make informed and wise SOA decisions. The first interview in the series is with Eric Stahl, Senior Director, Investor Relations BEA Systems It is available at http://www.killen.com/soa. Michael Killen, President of Killen & Associates said, as part of the “Key to Becoming a More Agile and Profitable Company: Service Oriented Architecture (SOA)” we will release an SOA white paper that will include a transcript of the interviews. Charles Brett, President of C3BC Consulting/MIDDLEWARESPECTRA said, “My firm will issue a special issue of MIDDLEWARESPECTRA that will also feature the interviews. Saturo Ono, President of Global Information, Inc. said, “I welcome the opportunity to make all of these interviews, the white paper and technical journal available to my 50,000 customers of business and IT reports, worldwide. Companies interested in learning about sponsorship opportunities should immediately contact Jo Brown, 650-327-2312 or JoBrown@killen.com to request additional information. C3BC Consulting/MIDDELWARESPECTRA (http://www.MiddlewareSpectra.com) and GII http://www.giiexpress.com/ _____________________________________________ Bea Systems, an important supplier of middleware, Senior Director of Investor Relations shares his view on SOA. _____________________________________________ The next Killen Alert issue will include a review of SOA and related developments in South Africa. Back Issues: 11/2004 - 10/2004 - 9/2004 Killen & Associates publishes the Killen Alert. http://www.killen.com |
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