The Pieces Are Moving

What's that grinding sound? It's nothing less than strategic business applications shifting to a higher virtual plane.

Even as the dog days of summer approach and attention turns to vital concerns like sand-dribble castles and fish bait, groaning and grinding continues to emanate from the movement of the IT industry's tectonic plates. Touting utility computing, Hewlett-Packard, IBM, and other major infrastructure providers vie to become your one-stop shop. The ongoing drama of Oracle's attempt to acquire PeopleSoft has removed the veil over carnivorous machinations latent in a whole range of enterprise application vendors. Finally, as Internet computing matures through service-oriented architecture (SOA) — and as radio frequency identification (RFID) technology approaches mainstream — many user organizations are coming to realize that they must break free of older notions and move up to a new vision of business-IT alignment.

Consolidation Conundrums

Thanks to Oracle's PeopleSoft acquisition caper, we've learned that Oracle was also coveting J.D. Edwards, not to mention Lawson Software. Meanwhile, news came out that SAP and Microsoft had been in extensive merger and acquisition talks, even as Microsoft pumped funding into its current Microsoft Business Solutions portfolio, which the company created through earlier acquisitions. SAP's June earnings report showed impressive numbers, including a 45 percent rise in U.S. sales. Siebel Systems, on the other hand, gave investors a heads-up that it would miss its numbers by a fair amount in the second quarter, despite reporting success with its Analytics product over the past year.

Consolidation plus uncertain business prospects in the enterprise applications sector brought consternation to IBM, which views itself as the prime infrastructure partner to many of the vendors in play. News sources reported on internal IBM memos that expressed concern about the company's competitive position given the blending of infrastructure and applications anticipated by the technology directions of Microsoft, Oracle, and SAP.

In early July, determined to strengthen its "middleware" positioning, IBM announced its intention to acquire Alphablox Software. A regular at business intelligence (BI) and data warehousing trade shows, Alphablox always took a little while to understand; however, its distinctive view of BI as an application development problem made Alphablox one of the more innovative software providers out there. If the acquisition goes well, IBM could use Alphablox to move BI out of its "query and reporting" confines by giving a wider spectrum of developers and ISVs the tools with which to build applications focused on leveraging information resources.

Cost Versus Value

While the courts will have their say, further consolidation among application software vendors is bound to come. Incremental dips and turns in demand could trigger mergers and acquisitions, but the true causes are bigger. With packaged applications and services taking care of the meat and potatoes and reducing need for customization, businesses want to focus on development that will deliver competitive advantage. In the CRM arena, all you have to do is look at the success of to see why the Siebels and PeopleSofts of the world must move quickly to raise their portfolios above basic offerings and focus on what brings customers flexibility and innovation. That's why SOA is such a hot topic. SOA approaches promise to both preserve current investment and enable the addition of modular components.

Cost remains a key factor — and vendors often tout the potential of SOA to reduce the cost of both application management and development. The proof there will be in the pudding: with luck, a tasty pudding, not an uncongealed morass of conflicting standards and proprietary extensions.

However, cost is also about software pricing and licensing, which are in major flux. Embedded components inside business objects, deployment over the Web, and other distributed platform issues complicate how to calculate the bottom line. Wall Street and government regulators also have a say in how they would like to see software providers recognize new sales versus recurring maintenance revenues. Negotiations also must take into account services: New technology adoption depends on a strong business case, which makes business analysis services incredibly important in influencing new sales and licensing.

To balance the higher cost of value-added services, vendors and their IT customers are reaching into a familiar bag of tricks: automation, but on a much bigger scale. Automation will involve smarts about not only systems and security management, but also about types of queries, anticipated user and data volumes, and process management. While automation might help create the "black box" some organizations wish their IT resources could become, it could also be where you'll find the strongest link between IT and business objectives. Automation will be essential for implementing business rules, process management, and model-driven knowledge discovery to deliver value from increasingly complex, global operations.

Utility Computing

It's ironic that to better align business and IT some organizations will decide upon the ultimate separation of the two: They'll contract with a major vendor to deliver "utility" computing. IBM's On Demand computing, HP's Adaptive Enterprise, and equivalent solutions from Computer Associates, Sun Microsystems, and other providers are competing for contracts with organizations that have decided that they're not in the IT business. HP aims to "automate the dynamic link between business and IT," according to its literature. The vendors' financial services will arrange pay-as-you-go or other forms of leasing and subscription contracts.

HP and its competitors view automation as critical to enabling business flexibility, essentially so that systems can respond more quickly to change, deliver information more rapidly, and establish consistency, quality, and availability. If a business requires a certain response rate from its e-commerce applications running on Oracle, for example, HP's Adaptive Enterprise solutions (including OpenView) will use automated intelligence to let the system figure out how to make it happen.

Virtualization is also an essential concept of utility computing, as it has been for nearly all modern innovations in software, servers, and storage. Down the road, virtualization will lift organizations above the entire IT function. We're not there yet, but in talking with HP, IBM, and others, the idea is that the IT utility will respond directly to business objectives, which may be expressed through models, rules engines, process management systems, portals, and so forth.

HP and IBM talk about "self-healing" autonomic computing — in HP's case, that gives the system the smarts to immediately replace bad CPUs or other components. But the big idea is to establish some logical plane above the integrated network of systems that allows for swapping in and out underlying components. Grid computing, which has practically become synonymous with utility computing, depends on virtualization. HP envisions blades that can power up with your "personality" so that desktop systems needn't be replaced; this notion could apply to larger components on the grid as well.

RFID: Data in Motion

China has announced that it will give its citizens RFID-enabled identification cards that will combine banking and credit information, driver's license, and possibly even health data into one card. TechWeb News reported recently that Mexico's attorney general and 160 of his employees working at the Mexican anti-crime information center have RFID chips implanted in their arms. These news items signal a trend that could eventually find billions of people wearing RFID chips. In other words, not only will RFID implementation generate tremendous data volumes: Whether on palettes or people, RFID data sources will also be moving around, gathering together and coming apart, and variously playing roles in multiple processes.

RFID presents a form-factor challenge to software vendors; they must put the right applications and data on the tags to enable both real-time and sophisticated trend analysis based on the data. The speed, size, and variety of data flowing through systems using RFID will also force user organizations to climb up to a higher level of abstraction, where they can gain the big picture that allows them to understand business networks of processes and derive knowledge from data generated by those processes.

Will RFID prove to be the "tipping point" that pushes organizations — unable to marshal the talent and funds to act alone — toward utility computing? We shall see; however, it's clear we're at the beginning of some big changes. Vendor consolidation, SOA and the Internet, and RFID are three concurrent factors reshaping enterprise computing, forcing organizations to evolve toward a higher state of intelligence — or risk suffering the fate of the Neanderthals.

David Stodder [[email protected]] is Editorial Director and Editor-In-Chief of Intelligent Enterprise.

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