• This is a really good move for IBM as it establishes IBM as the de facto leader in Cloud integration
• This gets IBM some really good mid-sized clients and a mid-sized client-friendly business model
• Cast Iron offers significant value to IBM’s customers by radically simplifying the process of integrating cloud-based apps like SalesForce.com, google docs and a host of others either with eachother or with “non-cloud” apps like SAP.
• The number of different API’s and, indeed, API approaches adopted by different SaaS and Cloud players makes it a real pain to integrate them – Cast Iron makes it possible to link SAP with SalesForce.com in seconds rather than days or weeks
• While this is an excellent addition to IBM’s integration portfolio, it has also added (yet) another way to specify how two applications interact which places the onus on IBM to help customers decide which approach/technology to use

This is a really good move for IBM as it establishes IBM as the de facto leader in Cloud integration

Cast Iron Systems was originally founded as a web-EAI company and has recently repositioned as a cloud integration company. The company offers a combination of middleware, tooling and adapters that allow a range of cloud and non-cloud applications to interconnect.

IBM has been working on addressing the integration challenge presented by the explosive growth in the number (and adoption) of SaaS applications so will have been well aware of the the value that buying all of this technology already built – and pretty widely deployed.

This gets IBM some really good mid-sized clients and a mid-sized client-friendly business model

Looking at Cast Iron’s client list, it’s clear that the company has enjoyed a deal of success in the mid-market – which is the segment that is most actively adopting SaaS in anger, so in acquiring the company IBM is gaining an important foothold in a very important part of the market for SaaS and cloud.

Cast Iron also supports a more mid-sized business-friendly way of doing business (low entry cost, and a range of pricing/charging options that IBM is very likely to replicate elsewhere.

Cast Iron offers significant value to IBM’s customers by radically simplifying the process of integrating cloud-based apps like SalesForce.com, google docs and a host of others either with eachother or with “non-cloud” apps like SAP.

It would be disingenuous to write this announcement of as “IBM Buys some adapters” – but even if it were just that,  the coverage is pretty impressive – with adaptors in place for Salesforce.com,  Oracle CRM On Demand, Google Apps, NetSuite, and others as well as adaptors for  SAP,Oracle EBS,PeopleSoft, JD Edwards and Siebel as well as several others on the non-cloud side of the fence.

The number of different API’s and, indeed, API approaches adopted by different SaaS and Cloud players makes it a real pain to integrate them – Cast Iron makes it possible to link SAP with SalesForce.com in seconds rather than days or weeks

Having waded through the docs for the google API set, Twitter’s, PayPal’s and SugarCRM’s (to name a few), I can tell you with personal experience that it’s a real pain. While all of the API’s are essentially service oriented, they’re all documented differently and all implemented differently. They’re also subject to change. Managing the integration of one of these apps with one that you’ve either developed yourself or that you run on your own systems is “a bit of a pain”, doing it with two is “gnarly” and doing it with more than two starts to become really annoying.

You don’t quite appreciate how much of a pain it is till you see someone demo Cast Iron’s solution to the problem – SAP to SalesForce.com integration was demoed, live, in under five minutes.

Really… it took less than five minutes to have SAP injecting new clients into SalesForce.com. That’s less than 300 seconds!

While this is an excellent addition to IBM’s integration portfolio, it has also added (yet) another way to specify how two applications interact which places the onus on IBM to help customers decide which approach/technology to use

There is a minor caveat – IBM has now got “another” integration technology to offer customers, who are already perhaps a little spoilt for choice when it comes to picking places to drop that integration logic. Unwary clients could find themselves doing really unpleasant and gnarly things by writing custom transformations or business rules within the Cast Iron tooling (which even allows clients to write custom logic in Javascript) . IBM needs to make it clear that the Cast Iron technology is really, really, useful in the context of COTS to Cloud integration but that there may be better places for describing complex business rules and transformations.

This post may be read to the strains of the wonderful Ella Fiztgerald singing “There may be trouble ahead”.

Having slogged through the marathon that was the Oracle-Sun announcement day, we’re left with two immediate impressions:
1.They took a heck of a lot of time to say so little
2.Oracle’s back to the future pitch, while nothing like as badly thought out as some people say, just isn’t going to cut it.

If you’re in a hurry, here are the headlines:

• The back to the 60’s mantra is both more and less nuanced than you might think
• But the integrated stack pitch simply isn’t well enough thought out
• There are two killer reasons why the “single stack” pitch fails: Innovation, and Focus
• Ultimately Oracle’s hardware strategy is simply not convincing enough
• Oracle’s software strategy is much more coherent but Sun brings a mixed bag
• The absence of a services story is the elephant in the room

We’ll be thinking, talking and writing in much more detail about this – so if you’re interested in knowing more, drop me a line – gary@bathwick.com

The back to the 60’s mantra is both more and less nuanced than you might think
Perhaps the most headline grabbing component of the strategy is the notion that Oracle is planning to emulate the IBM of the 1960’s by delivering a highly integrated stack from top to bottom.

Superficially this seems like total nonsense and no doubt the die-hard Oracle knockers will make much of this “backward thinking”. But you have to remember that when Charles Phillips presented the idea he added the caveat “…but built on open standards”. Oracle isn’t advocating a return to the tightly closed proprietary systems of the 60’s; the company is focussing on the “up-side” that came with those integrated systems – improved reliability, better integration, and a single source of support.

The problem with this guiding strategy is that it isn’t anything like as revolutionary as the sound bite might appear. Of course clients want things that are more reliable, offer better performance and deliver better economics (can you imagine anyone saying they want less?). This may be why IBM has been offering tightly integrated hardware and software bundles for a long time, even before it became necessary to describe them as “appliances”.

But the integrated stack pitch simply isn’t well enough thought out
The “integrated from top to bottom” story is superficially appealing, but doesn’t stand up to scrutiny particularly well.

Let’s begin with the “complete systems” chart above. Firstly there is a pretty compelling argument (made by IBM) that there is significant benefit from not having an apps business. IBM argues that customers gain by using a platform that supports the widest possible applications ecosystem – Apps vendors and clients then both gain the best infrastructure expertise and the best industry expertise. When it comes to industry expertise IBM can argue that it offers a breadth of industry expertise that spans a wider range of verticals and runs deeper into the infrastructure than Oracle and Sun’s (with the possible exception of telecoms where Sun really does have deep roots). We were also entertained by Oracle’s characterisation of SAP – they will no doubt be a bit surprised in Walldorf to learn that they don’t have any vertically focussed apps.

Oracle’s primary assertion is that it’s easier to deliver an innovative stack if you own all the components – a point made repeatedly throughout the briefing. In his opening pitch Charles Phillips said this:-

“If you have separate companies at each layer, one company building the DB, another building the storage etc it’s very hard to get those engineers to work together”

He then nodded towards the “big” problem when he said this:

“It’s hard to get those engineers to work together even when they’re in the same company – ask IBM, they know.”

We choked on our collective coffee at this; because IBM does actually know really quite well how challenging it is to get engineers from different groups to work together, because IBM has been doing it for half a century.

In short, Oracle claims that everything will be better in Oracle stack-land because all of the release dates can be synchronised, and integration can be “engineered in ahead of time”. Well, we wish them the best of luck with that; but, saying “we know it’s hard” and even “believing” that it’s hard are a long way from experiencing the challenges associated with coordinating so many different technology life-cycles. All joking aside, as Oracle discovers that this kind of integration really is very hard to do, the company might be well advised to go and ask IBM.

The final point on the ‘total stack’ approach is that some parts of it simply aren’t core to ‘engineering in integration’ – like storage. There’s a reason IBM backed away from manufacturing hard disk drives – If IBM felt that retaining its manufacturing capability would have given it a competitive edge it would have done so. Instead the company sold it, and created a very close partnership with the company that bought it (Hitachi).

There are two killer reasons why the “single stack” pitch fails: Innovation, and Focus
The single stack pitch fails for two key reasons – It doesn’t mean that you can innovate more quickly, and a “focus” on a dozen things nets out as no focus at all.

Innovation first. Oracle is promising to invest $4.3 billion on R&D in 2011 to cover the apps business, middleware, servers, processor design, storage, workstations, and network equipment. By comparison, IBM spent $5.8billion on R&D in 2009, on middleware, servers, processor design, and storage. In other words, IBM is spending $1.5bn more, on fewer things. Oracle won’t be able to invest as much in server design, processor design or middleware development as IBM, either from an overall budget, or a return on investment point of view. IBM’s R&D is already bolstered by partnerships with vendors like Hitachi (hard disks and semiconductors) and Sony (processors) which exist because they deliver far more innovation than IBM (or Hitachi or Sony) could deliver alone.

The further point is that coordinating development to ‘engineer integration in’ means that the whole will generally advance at the speed of the slowest, which will by definition slow innovation down.

Second, the question of focus. Oracle’s acquisition strategy prior to the Sun purchase was absolutely focussed on augmenting Oracle’s already successful applications and middleware businesses. The justification and value creation arguments were clear, and more importantly were focussed on something that Oracle was already very good at. The addition of Sun with its mixture of businesses (and particularly hardware) creates too many areas for Oracle’s senior management to think about – which argues against the ability to focus at all.

Ultimately Oracle’s hardware strategy is simply not convincing enough
While we’re prepared to believe that Oracle will do a better job than Sun did of making their businesses more commercially focussed (although that’s not saying much), we think that at best Oracle will buy a temporary reprieve for the hardware business, rather than preventing a decline that we see as inevitable.

There’s a real danger that Oracle will come to discover, between 12 and 18 months from now, precisely why IBM’s strategy was to walk away from certain elements of the hardware stack and, indeed, why IBM chose not to acquire Sun when it had its chance. In the meantime, IBM (and HP for that matter) will continue to provide a warm welcome to those clients who decide that while the Sun platform isn’t yet “burning”, there’s a distinct whiff of smoke in the air, and they’d rather be on a platform with a clearer more secure future.

One particularly interesting point is that Oracle stated that it’s not all that interested in the X86 market, which implies a level of confidence in Sun’s proprietary processors that the market doesn’t share. Sun cannot ship the volume that is necessary to maintain a viable processor family. A focus on “high value, differentiated products” can easily turn into “unprofitable but expensive niche” unless Oracle can find a way to bankroll the ongoing development of the Sun processor technology similar to the one that IBM found in its deals with the games console suppliers. IBM has shipped tens of millions of processors for games consoles, all of which form part of, and help to fund, the Power family of processors.

Oracle’s software strategy is much more coherent but Sun brings a mixed bag
While Java is the big prize, there are some niche technologies (the identity management technology for example) that add value to Oracle’s software portfolio. Much of Sun’s Java middleware is to be positioned as the reference implementation (which much of it originally was).

Given Oracle’s stewardship of InnoDB we think Oracle will most likely provide a good home for MySQL. But we’re not convinced that technologies like NetBeans are going to enjoy much attention as time goes on.

The absence of a services story is the elephant in the room
For a while now we’ve been characterising this decade as the decade when the power shifts from software to services. In simple terms the 1970’s and 80’s were the decades of hardware, the 90’s and the 00’s the decades of software and we’re now into an era where services holds sway.

It’s a simplistic characterisation of an industry that’s too complex to be defined in such a pat way, but it was interesting to hear the word “solutions” used over and over again by Oracle – as so many others have for the past 20 years – just as vendors like IBM are beginning to talk about “business outcomes”.

Yes, Oracle will be able to find customers that want to buy hardware, and even “solutions”, but the real money, particularly in the high end of the market, increasingly lies in the ability to help customers deliver business outcomes.

This is why, even before Oracle started talking about a return to the 60’s, we felt that the acquisition of a hardware company was basically a retrograde step, and that Oracle’s long term success would have been better served if the company had bought a services organisation. Of course, there’s still plenty of time for Oracle to do that. Watch this space.

• A good move by IBM
• the acquisition builds on IBM’s portfolio in a number of respects
• Lombardi gains access to IBM’s partner community
• Lombardi’s partners gain access to IBM’s sales channel
• Lombardi’s customers gain too
• But of course there’s overlap…
• To get the most IBM needs to do some hard integration
• The billion dollar question (which came from James Governor) is Lotus Live..

A good move by IBM
This is a good acquisition, it gives IBM a more complete story to tell (adding “People” to the Process (WebSphere) and Information (Filenet) triangle that IBM uses when talking about BPM.

The acquisition builds on IBM’s portfolio in a number of respects
But it’s not just the “addition” of more people-centric BPM tooling, Lombardi brings a portfolio of industry vertical expertise, and a methodology/coaching approach that goes down very well with clients.

As I (along with many many others) have been saying for a long old time – “Cool tools” are a fraction of what it takes to effectively “do” BPM, strong middleware gets you just a step closer and the rest is down to your behaviour; The methodology you choose (and how you choose to apply it) represents a big component of BPM success, followed by your organisation’s cultural ability (or willingness) to commit to it.

Lombardi gains access to IBM’s partner community
This move is good for Lombardi too, while the company has managed to gather an impressive customer list, from a broad range of verticals on its own. By becoming part of the IBM family Lombardi gets access to a customer base,  sales force, geographic reach and a partner network that very very few can boast of (I can only think of two tech co’s that come close – Microsoft and HP).

Lombardi’s partners gain access to IBM’s sales channel
I think it’s also good for Lombardi’s partners, who will also get access to geos, channels and potential customers that it would have taken Lombardi decades to develop.

Lombardi’s customers gain too
This acquisition makes Lombardi’s technology more secure not less. This isn’t an acquisition on a whim, Steve Mills has signed off on a few acquisitions over the years and he’s not one for spending IBM money just for laughs.

IBM clearly sees the acquisition as adding that essential “third element” – people-centric BPM where they admit they’ve not been overly strong in the past: IBM is not going to throw this technology away.

But of course there’s overlap…
The natural first question (asked by Judith Hurwitz) related to the potential overlap between the Websphere BPM technology, Filenet and Lombardi. Craig did a sterling job of pointing out the fairly natural positioning of Websphere Dynamic Process Edition as “Process”, Filenet as “Information” and now Lombardi as “People”. But IBM is well aware that without some clear indications about how the overlaps will be dealt with, the “third leg on the stool” gambit will only get them so far.

I agree with IBM’s contention that these different “modes” or “styles” of BPM tend to be done by different people in different parts of the organisation – But if you really want to claim to be “end to end” your integration needs to be a whole lot stronger than BPMN or XPDL file exchange.

In fairness I ought to make a couple of points:

• there has been progress in doing integration between Filenet and Websphere , even if I’d like to see even more
• Lombardi is one of the longest standing WebSphere partners – the Lombardi platform has been running on WebSphere since the early 2000’s so a fair amount of integration already comes for free
• Craig did acknowledge that there’ll be integration work to do

To get the most IBM needs to do some hard integration
In the medium term the “three legs” pitch will work, but long term I’d like to see the links between the modelling tools and the underlying middleware become much more seamless – getting the middleware together should be straightforward, getting the modelling tools to integrate is likely to be gnarly.

The billion dollar question (which came from James Governor) is Lotus Live..
James asked about the integration with Lotus Live, which is closely related to other questions about the two companys’ online offerings (BlueWorks from IBM and Blueprint from Lombardi. As it happens BlueWorks runs on the Lotus Live infrastructure (the url is apps.lotuslive.com/bpmblueworks/), but isn’t all that integrated into the other Lotus Live offerings. Like James, I think there’s a big, big , opportunity here, perhaps more for Blueprint (which is simpler and easier to use than BlueWorks).

In a nutshell:

• Of course this move means HP’s competitive position against Cisco is improved significantly
• And yes, Cisco’s postion vs HP is improved by their alliance with EMC
• I think this will be good for Cisco, HP, and end-user organisations
• Will Cisco buy a services company in the next 12 months? Hmm
• There is evidence that we all have a LOT to learn about selling networking stuff
• Some strong commentary from a proper Cisco watcher..

Of course this move means HP’s competitive position against Cisco is improved significantly
Duh. HP has already signalled a clear goal to compete with Cisco in networking with the Procurve product line, the 3Com deal makes HP’s offering wholly credible at pretty much every scale. Interesting to note the emphasis placed in the announcement on the fact that 3Com’s kit is “modern” – the implicit implication being that Cisco’s is old – but I don’t think the “my asic is faster than yours” drag-race has a long term future.

And yes, Cisco’s postion vs HP is improved by their alliance with EMC
The EMC alliance is pretty good news for Cisco – bolstering Cisco’s datacentre play significantly – bringing storage, management, and virtualisation technology to the Cisco offering.

I think this will be good for Cisco, HP, and end-user organisations
Oddly enough the the two “combined” offerings have a lot in common:

• HP has management tools, Cisco gets them from EMC
• HP doesn’t have virtualization technology to match EMC’s
• HP strengthens it’s networking offering (esp in Security, and large scale switching) making it comparable to Cisco
• HP has storage, Cisco gets this from EMC
• HP has it’s own server tech, Cisco would be mad to enter this market anyway
• HP has a strong x86 server story, Cisco has an emerging (but exciting) x86 server story

For me, this looks good for end-user organisations, in that it means that they’ll have more choice – Choice = competition, and competition leads to innovation – good for all concerned.

The gorilla in the boardroom is HP’s services capability – the combination of HP and EDS is extremely powerful, making HP Services the second biggest in the world. Cisco doesn’t have that kind of services capability…

Will Cisco buy a services company in the next 12 months? Hmm
I can see the appeal – but who would they buy? I think Cisco would be well advised to focus on being a partner to the likes of IBM (assuming the EMC deal doesn’t upset big blue too much) and the other services co’s in the market place, rather than going out shopping for a services arm.

There is evidence that we all have a LOT to learn about selling networking stuff
I was interested to see the extent to which early comments on the HP/3Com deal seemed to focus on individual products and their relative bits and bytes – It would seem that networking is where server h/w was a decade ago – with lots of obsession component feeds and speeds rather than the overall outcome.

Check out detailed information here

Now, I freely admit that I’m an iPhone fan – it’s a rocking phone, wrapped in a business model that is rocking too (for now at least).

But, Canalys seems a little “down” on Droid -

Rather than eating into RIM and Apple’s integrated platform sales, Android appears largely to have cannibalized the use of other free Linux minority platforms and taken the lunch away from Microsoft’s Windows Mobile.

(Pete Cunningham – Canalys)

I think that Pete may well have a point right now – but I expect droid-based phones to put up an increasingly strong showing as time passes. It wont be as quick as supporters of Android like but the ecosystem is still in its very early days.

My wild stab in the dark (and I mean wild stab in the dark) for the next 12 months…

• The number of droid-based phones will grow in number to create the real potential for a world-beathing ecosystem – Provided that droid phone makers don’t rush off in too many directions
• If Apple can negotiate data roaming deals with the leading global mo-telcos then RIM is going to be in big big danger
• Apple needs to be ready to adapt the closed-garden a) for the enterprise and b) for non-commercial apps
• WinMo and Symbian are going to see their share of the market halve.

If you’re in a rush:

• “Excel madness” is a syndome that occurs when people blindly believe “X” simply because “X” shows up in a certain cell in a certain spreadsheet – Of course… it’s not just Excel – “calc-madness” and “123-madness” are also known conditions
• Many key decisions (many of which have a profound effect on our lives) are made on the basis of data that is simply garbage.
• The mis-use of spreadsheets represents the second most terrifying threat to civilisation after global warming
• Be super cautious about forecasts that contain numbers that appear accurate to three decimal places
• Spreadsheets make really poor databases
• Feral data creates chaos
• We need to establish very clear guidelines about the gathering, use and application of “data”
• Maybe it should simply be illegal to create a spreadsheet with more than 100 * 100 cells?

This is all very, very, obvious (or at least it should be)

I’ve nearly finished writing this, and have had to pop back to the top to add this disclaimer  – because this is pretty much a “stating the obvious” post – (and if this doesn’t ring bells with you, I doubt any kind of explanation will ever help you) – But I reckon it’s still worth posting, because the problem is certainly no smaller even if a lot of us know of its existence.

The background

This post was inspired by a conversation I had recently with a junior financial analyst at a major investment bank. It was an informal conversation – so the identities of both the analyst and the bank will remain secret. Besides – the story I was told is, I strongly suspect, one that is true of most banks.

This analyst had just completed an incredible work-cycle (10 days of working 18 hours/day) to complete an “analysis” for one of the senior bods at the bank. The project started with this analyst being given a zip file containing half a gigabyte of spreadsheets – Over 100 of them. These spreadsheets contain a vast quantity of data, they are all linked – some of them to many others. A single re-calc takes hours. The spreadsheets contain macros, formulas, and all sorts of hocus-pocus that render the output completely and utterly opaque – even to the Oxbridge double-first toting young analyst charged with creating a report.

It scared the living be-jayzus out of me…

Excel-madness

We’ve all seen this – that faintly crazed look in a colleague’s eyes when they’re challenged on a point of data – You can see that they just want to shout “The number is 54.56% because the @$%$ spreadsheet says so!”. Who the hell are you to challenge the contents of cell 4987MP, What sort of messed up anarchist would challenge 4987MP?

If you look closer – into that person’s eyes – you will see their hidden desire to stab you in yours with their biro.

Question this number at your peril

And let’s face it – who the hell are you to challenge  this – Did you spend 110 hours over the last 7 days rushing to produce this analysis for the meeting? Did you grapple with the two dozen spreadsheets that have been linked and interlinked in order to get to this number?

This number is the truth, because the spreadsheet (which as the dweebs amongst you will have noted is OpenOffice Calc) says it is.

As John Mihalec tweeted to me in response to my tweet about writing this blog:

@thinkovation Because 2 + 2 is so obviously 4 that it lulls us into complacency re whether either 2 is even 2 at all.

Many key decisions (many of which have a profound effect on our lives) are made on the basis of data that is simply garbage

Computer Science 101 taught us “Garbage in, Garbage out” – and we’ve been collecting, polishing and re-packaging garbage ever since. But this stuff is different – Our retirement funds, savings, economic stability, even our understanding of climate change all depend on knowing the right things.

The financial crisis was caused by many many things – and I’m not discounting either “greed” or “stupidity” as major causal factors – but the absolutely tippy-top of the list cause of the crisis was the failure of pretty much everyone (except Warren Buffet and a small number of others) to appreciate the level of risk that was associated with all of the various financial instruments that were flying about.

The reason for that failure to understand the true level of risk lies in the way in which both the instruments themselves, and the tools people used to assess their risk, wrapped and wrapped the risk under layers and layers of complexity – It was a giant game of pass the parcel – with the outer wrappings  so numerous and shiny and neat,that the smell from the final parcel of dog do0-do0 was completely overlooked.

If you allow something to become en-mired in many layers of obfuscation, you have to accept that the “system” you create is going to become increasingly chaotic. If you can’t track the journey taken by a simple number through the myriad sections, tabs and linked files – You have to be prepared to factor in “chaos”.

The image below is hypothetical – but it’s not an exaggeration – there really are figures sloshing around that are derived from inter-linked hierarchies of spreadsheets that are a lot more complex than this one.

A simplified map of the spreadsheets involved in an analysis

Take this image as an example. Item A is the output spreadsheet – which combines the results from B, C and D – which each in turn depend on one or more “child” spreadsheets. Here are some boring questions one might ask -

• How long ago was the data in J refreshed?
• Has anyone audited the assumptions made in H?
• Is there anyone in the organisation who could explain to an Actuary how come the number is 54.56%?

If you can’t provide sensible answers to these questions – then, it’s time to take your life in your hands and tell your excel-crazed, sleep deprived colleague that they may as well have arrived at that number using a lab-rat and a roulette wheel.

Incidentally – someone has trained rats to trade, and reckons his rodents can do at least as well as the majority of the top fund managers – check it out here

The mis-use of spreadsheets represents the second most terrifying threat to civilisation after global warming

I really believe this. But to put it a little less alarmingly – what percentage of global GDP is wasted because of bad decisions arising from rubbish information. Well, I’ve done the analysis – and the answer is 15.596%.

I did this analysis by spitting olive stones across my patio – and they seemed to form the shape of 15.596 – more or less. And I will defend my analysis against anybody, any time.

Be super cautious about forecasts that contain numbers that appear accurate to three decimal places

This one really ticks me off in a big big way. Most of us have had to sit and listen to some starry eyed “analyst” stand up and pronounces that the market for Open Source Thingamies will be worth $175.89 million in 2011. Perhaps you think “typical lazy-assed analyst, can’t be bothered to take it down to individual cents, or perhaps you’re like me and you’re wondering whether the analyst is a) Too stupid to understand that his market forecast cannot possibly be that accurate or b) So arrogant that they think I’m stupid enough to be impressed by this semblance of precision. In either case – the analyst has 30 seconds in which to say “Of course – this isn’t this precise” or I’m cancelling my subscription.

Incidentally, some time ago I started rounding my OSS market forecasts to the nearest 100 or 50 million, when I present the numbers I tell the audience the truth – Which is that this is my best guess, based on my experience of the market, and a scenario that I’ve created. I’m always happy to talk to clients about the scenario – and I’ve even given them the excel once or twice so they can see the impact of changes to my assuptions.

An imaginary market forecast

Above there’s an imaginary market forecast – obviously this one is immediately suspect – the line is far too staight – it’s based on a CAGR of 5%. Seasoned forecasters will pounce on this and either a) Cynically modify the figures so that the growth appears more natural or picturesque or b) Carefully apply a scenario that will show how the progression won’t be a straight line.

Actually – In many cases both action a) and b) are identical  – with “A” being  the more honest IMHO.

So now I’ve whined about the issues… let’s start moving towards resolution..

Spreadsheets make really poor databases

Databases are the best place to store data. In the olden days, when the data had to be snake-charmed out of the mainframe, we had an excuse for storing data in spreadsheets. We don’t have that excuse any more.

Of course – one reason for taking a copy of the data and stuffing it into a spreadsheet is that the pesky “real data” keeps changing – and there’s nothing as tedious as having your risk assessment messed up by changes to the underlying data – huh?

Feral data creates chaos

Feral data is data that was once domesticated, but which is now “in the wild” – Accurate data that came out of our ERP system, that has now been mooching around sitting in various executives’ laptops. It breeds, it evolves – and it becomes less and less like the original data, and even less like the “current” data that is gazing mournfully through the bars of the ERP cage it’s kept in.

When talking to groups of business people, I often ask for a show of hands – of people who admit to making major decisions on the basis of feral data.

You know it’s the majority – pretty much every time I ask.

We need to establish very clear guidelines about the gathering, use and application of “data”

We all know this to be true – so can we get off our asses and do something about it already?

This is particularly true for regulators – especially in the FS sector… if banks can’t prove the following things, they should have their licenses revoked – it is as simple as that…

• We know the source, age, accuracy and volatility of all of the data that drives our investment decisions
• We maintain version control and configuration managment of all of the models we use to calculate risk
• We run a complete audit of our executives laptops / fileservers and email accounts for feral data every three months

Maybe it should simply be illegal to create a spreadsheet with more than 100 * 100 cells?

No… really!

If you’re pressed for time :

• It’s sad, and all that, but Sun had it coming : Sun’s performance meant that acquisition was inevitable
• There’s a hard road ahead for Sun employees as Oracle moves to meet the commitments it’s made to shareholders : Once the deal goes through, expect 12-18 months of turmoil within Sun
• There are major opportunities for IBM and HP, while Sparc isn’t yet a “burning platform” there’s a definite smell of smoke in the air
• While there’s no doubting Oracle’s success in software, the company is unproven in hardware and Oracle has plenty of  challenges to focus on over the next five years without adding the saving of a hardware business to the list
• Sun brings a mixed bag of software assets, with a danger that they’ll provide more disruption than revenues
• It’s unlikely that Oracle will “mess up” Java
• It’s unlikely that Oracle will spike MySQL and if it tried to MySQL would survive
• The EU will delay, but not prevent the transaction : That is unless Ellison gets bored with waiting

It’s sad, and all that, but Sun had it coming
I’ve been an admirer of Sun technology since the 90’s. So there is a part of me that’s a little blue at the thought of such an industry icon simply being absorbed into the Oracle machine. That said; Sun had it coming – the company is reaping the rewards of appalling strategy and excessive sentimentality.

Sun has suffered from a desire to “focus” on so many things, that the result has been a lack of proper focus on anything. The adage “Sun invented Java, and then managed to make no money at all out of it” has become a cliché.  Yes, there’s a case that Java drove the Sun brand which in turn drove hardware sales – but no matter how hackneyed a cliché is, there’s nearly always a strong underlying truth to it.

Sun wasn’t in imminent danger, the company had plenty of cash, and if the latest restructuring plan had been well-executed, there was a reasonable likelihood that Sun could have found an even, albeit “smaller”, keel. But, Sun has had plenty of restructuring plans (this latest one is referred to as “Restructuring Plan IX” – or “Plan i” in aphabetic terms) – so it has seemed pretty clear to me for some time that, notwithstanding Jonathan Schwartz’s manifest talents, he was either unable to, unwilling to, or prevented from driving the kind of wholesale change that Sun needed in order to thrive in the post dot-com era.

At the strategic level Sun was too slow to respond to changes in the market – As hardware vendors divided into the “commodity players” (like Dell) or the blended hardware + software + services players like IBM (and to some extent HP) Sun managed to fudge its strategy – by partially committing to the commodidity/volume play on one hand, and by making a big play in the software market on the other.

There’s a hard road ahead for Sun employees as Oracle moves to meet the commitments it’s made to shareholders
Larry Ellison has made some powerful promises to shareholders, the most exciting of these being that he expects the Sun acquisition to add $1.5 billion to Oracle’s non-gaap operating profit in year one, and $2.0 billion in year two. Those aren’t just big numbers – they’re massive. If you just take Sun’s R&D and SG&A expenses (excluding the restructuring charges, and “impairment of goodwill and intangible assets” hocus pocus) Sun has a gross operating loss of $378 million for the 2009 financial year. So in order to deliver $1.5, we’re looking for a combination of increased revenues, and reduced costs that drive an improvement in performance close to $2 billion dollars.

You don’t make those savings by cutting the office supplies budget.

Once the deal goes through, expect 12-18 months of turmoil within Sun
Sun reported that it had 34,000 employees in it’s 2008 annual report. There have already been a number of lay-offs since then – but the total is still close to 30,000. Only recently Sun announced another round of lay-offs, which it chose, absurdly, to blame on the delay in completing the acquisition caused by EU’s investigation. Anyone who believes that those lay-offs would not have happened had Oracle been able to complete the transaction is in for a big big surprise when it does complete.

Despite being relatively close to one another geographically, Oracle and Sun have cultures that are as different as night an day. Oracle’s culture is one that is absolutely focussed on commercial success with no room for sentimentality. While Sun may have been a more “fun” place to work – Oracle is a far better run business.

There is going to be blood on the walls at Sun, because that is the only way Oracle can deliver the financial turn-around it has promised.

I expect Sun’s total employee count to be a lot closer to 20,000 than 30,000 by the end of next year.

There are major opportunities for IBM and HP: While Sparc isn’t yet a “burning platform” there’s a definite smell of smoke in the air
There’s no doubt that Sun’s recent performance has created an opportunity for the likes of IBM and HP to offer Sun customers a more secure long-term vision. The Oracle acquisition adds to the questions surrounding the long-term viability of Sun’s hardware business, and Oracle’s currently stated intent to retain the hardware business raises even more concerns.

Both IBM and HP will win business from Sun over the next two years. Even with a tie-up with the likes of Fujitsu, the future of Sparc is extremely doubtful. Sparc is certainly a great technology but it’s simply not viable over the long term. The level of investment required in order to sustain a processor business demands that you ship in volumes that Sparc simply cannot reach. Intel and AMD get those volumes from the PC / Server markets and IBM’s power processor family benefits enormously from its use in all three of the top games-consoles.

Oracle may be able to push Sparc as the “ideal” or “preferred” processor on which to run the database, and I’m convinced that Oracle’s famously “keen” salespeople will drive some volume, but I don’t believe they’ll drive enough to make Sparc sustainable in the long-term.

While there’s no doubting Oracle’s success in software, the company is unproven in hardware
This is an obvious point – but Oracle is absolutely unproven in the domain of hardware – Indeed in the past, Oracle has done a great job of battering hardware suppliers on price in order to retain margin for their software.

It’s also telling that IBM previously walked away from negotiations with Sun. IBM has far more experience as a hardware/software/services company, and part of me thinks that if IBM didn’t think the deal was worthwhile, it may not actually be worthwhile?

Oracle has plenty of  challenges to focus on over the next five years without adding the saving of a hardware business to the list
The rejuvenation of Sun’s hardware business is going to require an immense amount of management time and effort. In the meantime, the software industry is undergoing massive change, the emergence of SaaS, and cloud computing represent serious threats to the established business models upon which most large software companies base their businesses. If I were an Oracle shareholder – I’d want Larry to be focussed on the likely impact of SaaS and cloud, rather than have him figure out how to sell more tape drives.

Sun brings a mixed bag of software assets, with a danger that they’ll provide more disruption than revenues
Looking at Sun’s software portfolio, it seems that there are only a few really “interesting” bits – DTrace (beloved of kernel developers and Sysops everywhere) and Sun’s identity management technology (especially notable on account of it being profitable) to begin with. Then the two “star attractions” – Java, and MySQL.

There are other assets of course – the glassfish app server (which is unlikely to survive as a commercial offering), NetBeans (a great development tool that totally doesn’t deserve the market failure it’s enjoyed to date), then there are the assets that form Sun’s “stack” – the EAI technology (from the $387 million dollar SeeBeyond acquisition) – these will add little to Oracle’s Fusion middleware stack – which is already considerably enriched as a result of the BEA purchase.

It’s unlikely that Oracle will “mess up” Java
Oracle has been a supporter of Java, and has its own Java IDE (successor to the technology licensed from Borland some time ago). Given the JCP, and the fact that Oracle already has a clear stake in the Java middleware market, it’s hard to see how much more Oracle gets by acquiring the core technology itself. Oracle may see opportunties to drive cash out of the Java platform that Sun never did – but I suspect that if Oracle tries to hike the licensing fees for things like mobile Java the licensees may simply say “No thanks”.

It’s unlikely that Oracle will spike MySQL and if it tried to MySQL would survive
I don’t think MySQL represents a major threat to Oracle’s database business today, and it may be that by owning MySQL Oracle hopes to prevent it from becoming so – But in the mean-time, MySQL has found its way into places that the Oracle database has not. Essentially Oracle now has the number 1 market-share slot in both the commercial and open source database sectors.

I’m curious though, about how Oracle’s salesforce will view a “free database”, having been brought up on the raw steak that is big proprietary software, I doubt they’ll have much appetite for the humous that is open-source.

Ultimately, the “get out of jail” card for MySQL is the fact that it is open sourced. If all else fails, we can create a fork, call it “OurSQL” and get on with it.

The EU will delay, but not prevent the transaction

I’m really not a fan of the EU when it comes to competition regulation in the IT sector. They’ve bungled the Microsoft case time after time, and seem to me to be approximately a decade behind the times in terms of their thinking. I think the most likely outcome is simply a delay (and the opportunity for Oracle/Sun to blame more lay-offs on the EU), but there remains a small chance that  Oracle will have to hive of MySQL, and an even smaller chance that Larry will get irritated with the whole process and walk away entirely. When it comes to EU bureaucrats (and indeed Mr Ellison) you never can tell.

[Edited October 28th - to correct a glaring error - Had listed Crossworlds instead of SeeBeyond as the EAI co bought by Sun - Thanks Mr W-D]

It’s a load of nonsense of course, which is why I’m writing this at 10:30pm on a Friday rather than drinking Mojitos with my buddies. Having read some of the want-witted comments made by some bloggers and journos I feel compelled to write this.

If you’re busy, here’s the abstract:

• It wasn’t twitter that was hacked – it was Google Apps
• Please don’t confuse “network” with “cloud” – it’s embarrassing to read and makes you look stupid
• This is not a story about cloud computing, it’s a story about security
• The moment you make a computer accessible via the internet you have a security challenge
• Security is an important issue for cloud computing – So instead of hyping it, or denying it, we need to deal with it
• The good the bad and the ugly – Some of the articles/blog posts I’ve seen on this topic

It wasn’t twitter that was hacked – it was Google Apps

Here’s what happened : Someone hacked into the Google Apps service used by Twitter. The guys at Twitter use Google Apps (you can confirm this by typing “docs.twitter.com” into your browser). Someone managed to hack into one or more Twitter employee acounts. It seems as if a hacker was able to guess (either by cunning or brute force) the relevant password or passwords, and “hey” presto.

So the lesson here is about password security, and the steps that providers like Google ought to implement in order to detect and prevent brute force attacks (where someone attempts to log in over and over again using different passwords).

Please, please stop confusing “network” with “cloud” – it’s embarrassing to read and makes you look stupid

No, really! They’re not the same thing! Cloud computing is a computing paradigm in which one or more third parties provide a load of underlying infrastructure that enables you to do stuff. A network is a collection of computers that can talk to each-other. Sure you need network connectivity for cloud to work – but the two things are as different as “tarmac” and “road”.

A useful test, which you can use either on your own comments or others is to see whether you can safely substitute “network” for “cloud” without affecting the actual meaning of the piece. If you can, then stop and have a think.

We analysts love coining our own very special definitions of things like cloud – I quite like this one from Wikipedia

This is not a story about cloud computing, it’s a story about security

This story is only coincidentally connected with the fact that the Google Apps service runs on a cloud. If Twitter were using Exchange (and I’m guessing hell might have to freeze over for the cool kids at Twitter before that happened) they could very well have suffered the same issue – by carelessly allowing web-access to the exchange server, or sharepoint for example.

The moment you make a computer accessible via the internet you have a security challenge

Everyone has heard someone say “if you want your data to be really safe, then don’t put it onto a device that can be connected to a network”. While this (obvious) statement does have some truth to it – it’s slightly beside the point. We really do have to make our computers accessible via the network, and lots of smart people have developed all sorts of cunning techniques to make that data secure.

I had a short twitter exchange with another analyst (the wonderful James Governor) on the topic of “cloud security” a little while ago. James was irritated by a comment from a vendor that cloud computing raises serious security issues. His assertion was that cloud computing is not inherently “less secure” than a private network. As it happens I disagree fairly strongly with this assertion as a general statement – but James also made the point that most internal networks are a security nightmare.

My take is that it should be obvious to anyone with even a basic level of competence that when you make sensitive data accessible over a public network you need to take steps to ensure that it is secure. If you’re not asking questions like “Do I trust my provider to keep my data safe from harm (ie Loss, Tampering etc) , and secure against unauthorised access (ie Hacking)” or “Will I be compliant with my company’s regulations (and the relevant legal requirements) for data security?” then, you’re not a fit person to be making important decisions about data (or indeed about how many sugars to put in your coffee).

By way of a short aside:

A long time ago, I once “saved the day” after a disk crash, by fishing some discarded back-up tapes from the trash so we could restore the lost data after the current tape-set proved to be corrupt (the current tapes having been carefully stored on top of a large and super magnetic line printer), it was only afterwards that it occurred to us that anyone could have snaffled those tapes and recovered the data, so we agreed that from then on we’d leave the tapes we wanted to discard on top of the printer for a day before putting them in the bin.

Oh yes – that really is a true story.

Security is an important issue for cloud computing – So instead of hyping it, or denying it, we need to deal with it

Cloud-based computing does raise security challenges. And you have to consider them. You absolutely should not put data into the hands of a third-party without asking some very straight forward questions (which might include “how do you dispose of back-up media…”).

Sensationalist stories that hype up the security challenges of cloud computing are just stupid, but we also have to avoid falling into denial as well.

Will be talking and writing at length about security in cloud environments – but the key message here is that you can make cloud computing environments secure – you just have to engage your brain.

The good the bad and the ugly – Some of the articles/blog posts I’ve seen on this topic

Good -Recent Twitter Hack Reveals Humans Are Still Security’s Weakest Link by Terrence O’Brien. A really good common-sense post.

Good – Twitter Gets Hacked. Can It Happen to You? Riva Richmond provides some sensible advice.

Good - Twitter’s hack is a timely reminder that the cloud is only as safe as you make it I’m not so much a fan of the Tory-graph, but this is good stuff from Basheera Khan.

Good – Possible link to Twitter hack – GMail vulnerable to password cracking Some important technical information about potential vulnerabilities

Mostly Good – Twitter’s Problem With the Google Cloud – Although “cloud” and “network” are more or less interchangeable in this piece it has some good advice – “Before enterprises can safely move sensitive applications (and thus data) to the cloud they must ensure their security is effective, since a key layer of protection is being removed.” – Although, I’d submit that if you’re planning to move apps and data to the cloud, and this hasn’t already occurred to you then the chances are you’re too stupid to sign up for a cloud-based service anyway.

BAD – Twitter Hack: Are Companies Moving Too Quickly To The Cloud? In fairness Andy Cordial from Origin Storage makes some good points:

But Origin Storage’s Cordial and other security experts raise a different sort of question. They say that the means to properly secure IT operations in the cloud may be in place at the service provider’s end, but the hard work of integrating those security mechanisms with companies’ own internal protocols isn’t getting done in the mad dash to the cloud.

“Applying effective security is all about planning and then applying that planning, backed up by a set of solid security policies with encryption at its heart,” Cordial said. “If Twitter had had this strategy operating at all levels of its hierarchy, rather than apparently going for user growth at any cost, it wouldn’t be in the embarrassing situation it is now.”

But then spoils it by saying “Our observations suggest that a number of companies and their staff are being forced down the cloud computing route and are having to adapt their IT security systems on the fly” – which is silly.

Bad - Twitter hack raises questions about ‘cloud computing’ By John D. Sutter I’m putting this one into the bad category, because the headline is misleading, and the article closes by confusing “cloud” and “network” which is either scaremongering or a sign that Mr Sutter doesn’t understand the difference

Ugly – The Twitter hack and the cloud This is a real shame;  the bbc should have higher standards. The last sentence highlights the confusion between “cloud” and “network” –

“But if you allow your employees – including very senior members of staff – to send confidential information on cloud-based e-mail then you’d better make sure their passwords are super secure.”

Dude, it’s not the “cloud” that’s at issue here – it’s the fact that you can connect to the email account over the interweb.

Really just popping this up so that I remember the location of this SUPERB bit of JavaScript.

Here’s the code

This is an important announcement for two quick reasons – firstly the outblaze technology can bring added functionality to IBM’s Bluehouse platform, and secondly it signifies that IBM is pretty committed to investing in its  “big play” in the online collaboration space.

I reckon 2009 and 2010 are going to be busy years in terms of acquisitions – Steve Mills (the chap who runs IBM’s software business) has a track record of smart purchases, and while I don’t expect him to go crazy with the corporate credit card, I reckon there’ll be a few bargains that he just won’t be able to pass up in the coming two years.

I’m expecting to hear lots and lots on Bluehouse from IBM at the upcoming Lotusphere 2009. It’s very much something to watch…

What is Bluehouse?

Bluehouse (which is from the Lotus guys in IBM’s Software Group) is an online collaboration platform – that allows people to connect to eachother, share documents and form groups. It has a lot in common with Google’s “Apps”, and with other companies like Huddle.

Bluehouse was announced more or less a year ago at the 2008 LotuSphere event, and at the time I reckoned it was the most exciting announcement at the event. I signed up there and then for the beta program and have been a fairly regular visitor ever since.

Is it any good?

It will be.

At the time it was first announced I thought that Bluehouse had the potential to offer organisations an “enterprise quality” alternative to Google Apps and Facebook. That potential remains, but so far Bluehouse has been something of a “slow burn”. In order to get people excited about signing up to “yet another collaboration platform” you have to offer them something special, and BlueHouse isn’t quite there… yet.

At the moment, it feels a little like an empty Cathedral – Beautiful, Well built… but somehow “waiting”.

Bluehouse integrated with a slew of Lotus products (although I’d like the integration to be slicker)… and there’s a really good opportunity for IBM to deliver something that will provide a reliable, trusted, SaaS alternative to Microsoft’s small business server.

I’m off to Lotusphere 2009 in a couple of weeks… and I hope I’ll have a LOT more to say on the topic of Bluehouse then.