IT Investment Research

What's Rocket Software Going to Do with $90 Million

The October 13 squib by Kara Reeder on IT Business Edge about Rocket Software sent me on scavenger hunt the morning of October 14. The Boston Globe article to which Kara referred and subsequent links and Googles implied there was a mystery with questions such as

• “How large an enterprise-software company is Rocket?
• “Where did the new investment come from?”
• “Who are the 24 companies it has acquired?”
• “What was the patent lawsuit with CA settled in February 2009 all about?”

Questions I was asking myself after following the threads from Kara’s piece included

• “Why does a Dutch company have to file with the U.S. Securities and Exchange Commission (SEC)?”
• “How did that acquisition of Seagull turn out, any way?”
• “IBM UniVerse… the UniVerse name rings a bell but I don’t associate it with IBM?”

There’s a lot of speculation about the timing of the announcement that Rocket acquired IBM UniVerse on October 1 and the SEC filing on October 9 but I don’t think it’s likely that Rocket Software, doing $50 million or so in software sales a year, paid over $90 million for IBM’s UniVerse business. Maybe Rocket sought financing so as to pay off CA—and have a little left over to afford a tony (or is it spelled toney?) Massachusetts address like Newton. But why bother if it has five years to pay back CA.

So here (I apologize for the open-barn-door nature of it) is some belated information technology (IT ) investment advice that might still be actionable. Work your way down the Software 500 list looking for slow-growing publicly held infrastructure enterprise-software suppliers, likely with an IBM mainframe connection. 

Rocket Software, a company that has apparently been quietly funding acquisitions from its profits for a decade, now has some real money in its pockets.

-- Dennis Byron

(P.S. The answers to all my questions follow if you care:

(The answer to the SEC-related question was easy, just a matter of bad memory on my part.  It wasn’t Rocket Software that was Dutch. It was good old Seagull, the mainframe screen scraper guys acquired by Rocket in 2007. To be less flip, Seagull described itself at the time of the acquisition by Rocket as specializing

“... in technology that transforms "legacy" applications into SOA-compliant Web services, helping enterprises achieve exponentially faster IT support for business change, governance and compliance.” 

(Seagull continues to market its software separate from Rocket. Rocket is based in Newton, MA and was formed in 1990, making it probably the “youngest” IT/enterprise-software company with a “Route 128” address. Route 128, which circles Boston, was of course the Highway 101 of its day.

(The SEC filing is a Rule 505 Form D event. Rule 505 allows some companies offering their securities to have those securities exempted from the registration requirements of the U.S. federal securities laws. As the SEC site explains:

(“Form D is a brief notice that includes the names and addresses of the company’s owners and stock promoters, but contains little other information about the company.”

(That’s for sure when it comes to the Rocket filing.  I remember chasing down Rocket when they acquired Seagull but hadn’t paid much attention before or since.  They apparently liked their privacy and that was OK with me since no one would be investing in them. Well that was only half true.  You were certainly investing in the many companies Rocket acquired for dimes on the dollar and with little outwardly publicized funding—until this recent SEC filing—except for a line of credit from Wells Fargo.

(Catching up with Rocket now, it looks like its acquisition bandwagon has been at the head of a little known parade for a decade. Rocket is to infrastructure enterprise software what Infor is to applications enterprise software (that is, what the old Computer Associates used to be to all enterprise software). Acquired companies and brands in addition to Seagull (Bluezone/Legasuite) include Areotext (from Lockheed), ARKIVIO, CorVu, Gentia Assets (from Open Ratings) some IMS utilties from Telcordia, Mainstar, NetCure, Peritus, Servergraph, SmartDB, StorageNetworks STORos Storage Manager, SystemsSoft, and TSCI.  Rocket tried to scoop up NetManage, a Seagull competitor, in 2008 but NetManage ended up going to Micro Focus.

(As for the implied mystery, the privacy fetish is apparently still a Rocket Software company characteristic. How large is Rocket Software? I found that although Seagull and CorVu were listed on the Software 500 before they were acquired, they don’t seem to be separately listed in the latest John Desmond bible.  And Rocket is not there either that I can see. My guess: maybe this smorgasbord is doing $50 million a year in software sales.

(As for the law suit with CA, Inc.--not to be confused with the old Computer Associates, two years ago CA said that certain Rocket developers misused intellectual property from one of the CA-related entities and improperly incorporated software code from it into certain software products being developed at Rocket as far back as 1999 and 2000. Rocket said at the time that it believed that “the claims are meritless,” but in Febnruary of this year Rocket agreed to license technology from CA, including source code authored several years ago and related trade secrets, for $50 million to be paid in increments through 2014--see the latest CA, Inc. 10-K.

(As for my final question, over the years, Rocket had purchased the Visionary brand from IBM back in 2000 and has many other mainframe-oriented products as noted above. That, I guess, is what led up to the October 2009 acquisition of IBM UniVerse.

(My memory cells clicked in since I began writing this post 15 paragraphs above. My thought association exercise went like this:

• UniVerse…
• Jim Capeless…
• Paris in the early 1970s...
• Dick Pick

(Some of the story belongs on my travel blog, not here. Most of it belongs in my unwritten “People’s History of Information Technology,” where people like Pick and Capeless get treated with the same depth as Gates and Jobs. If I ever write it, it will be a history where the winners (Highway 101 again) don’t get to write the history books.

(But the nut of it is that UniVerse is a remnant of IBM's acquisition of the database part of Informix in 2001, part of which had previously been called Ardent, which was formed by a merger of Unidata and VMark in 1998. VMark, where Capeless was President in the 1980s and 1990s, after working for Honeywell Bull in the 1960s and 1970s, had written its own version of the legendary Dick Pick’s widely licensed data management concepts back in the 1970s.

(Making this even more confusing, what was left of Informix was re-named Ascential, which was also acquired by IBM in 2005.)

Put Up an Umbrella, Red Hat

Just as I saw some rays of hope in Oracle’s fiscal-fourth-quarter bad news reported on June 23, I see some seeds of rain in the forecast in Red Hat’s fiscal-first-quarter good news reported on June 24.  Tout sheets like The Register and the technical press look at Red Hat (RHT) revenue numbers in the same way they look at enterprise software suppliers such as Oracle (ORCL).  But the key number for Red Hat, because of its subscription revenue model, is deferred revenue as with other information technology (IT) service suppliers (such as EDS before it was acquired by HP or Shared Medical before it was acquired by Siemens).

Forget the double-digit growth numbers headlining many article in the press. In the last three months, Red Hat deferred revenue grew only $24 million (4%) or $3 million (flat) depending on how you look at it.  This exchange between a financial analyst and Red Hat includes the detail:

“Sarah Friar: And then just on the numbers, the difference… in deferred revenue on the cash flow statement versus what we can see on the balance sheet, is that all just a currency difference.

“Charlie Peters: … on the deferred revenue, let me just add a little bit (to what was said earlier in the conference call). The question is, the change in the deferred revenue, if you [take it] up the balance sheet, it’s about $24 million. The change in deferred revenue if you look at the cash flow statement, it’s about $3 (million), and part of it is currency, part of it is US dollar.

“I would break it down this way, in the short-term section there’s a positive change of $6 million and additional $14 million change from currency for roughly a $20 million change in short-term. And long-term consistent with what I said about the changing of the average life of the contract from 24 months historically last two quarters to 19 months this quarter, we have a US dollar reduction in long-term deferred of about $3 million.

“Which is more than offset with a currency improvement of $7 million for a net change in long-term of $4 million. Hope that provides everyone better clarification.”

I’m sure it does if you’re a CFO like Charlie Peters.  But the net of it is that Red Hat dodged another analyst’s question on new vs. renewal subscription business and its services/training business was down again sequentially.  The latter should be an important indicator of current (vs. renewal) business activity and as for the former, either way you look at deferred revenue (cash flow or balance sheet; long term or short term; $3, $4, $6, 7, $14, $20 or $24 million), almost as much of it is getting posted as revenue as is getting booked.  That’s not a good sign. Still one quarter does not make for good comparisons.

Then there is all the blogoblather about Red Hat being acquired. It is no coincidence that the two examples of IT services suppliers mentioned above have been acquired by HP and Siemens. The large multi-discipline IT guys want the kind of predictability found in Red Hat’s subscription model. But despite the tout sheets salivating over an acquisition of Red Hat, Red Hat doesn’t become a meaningful takeover candidate to a prudent large company until the subscription-revenue run rate gets over a billion.  And until it is clear from the deferred revenue calculation that the run-rate is growing.  That is the number to watch over the rest of 2009.

-- Dennis Byron

Graft for Enterprise Software in Massachusetts: Two Sad Histories Intersect

It is a 50/50 proposition that a Speaker of the Massachusetts legislature gets indicted. In the last 50 years the state has had 10 speakers and at least half have been indicted (Thompson, Flaherty, Finneran and Dimasi) or heavily investigated (a few of the other 6). 

On another plane, in the information technology (IT) world, Massachusetts is well known as a key spawning ground of the IT era although that's just history now. Western Electric from way back when. The IT work at the universities during World War II (where supposedly Grace Hopper found the first computer bug).  Raytheon and Honeywell starting up a venture in the 50s (where Paul Allen worked in the early 70s before he left to start up his own little PC-related company with his high school friend Bill). The minicomputer revolution during the 60s and 70s. The creation of Lotus 1-2-3 and Visicalc, which are credited with moving those left-coast PCs out of hobby status (at least the inventors worked here before they wrote them so I assume the software started here too). The minisupercomputers during the 90s, which led to a lot of today's virtualization and shared-memory/shared mulitprocessing-based cloud computing. 

So given Massachusetts' IT history and political graft history, it was inevitable that the two would intersect.  Whereas previous Massachusetts house speakers have been indicted for hiring "nieces" or lying to grand juries and other usual stuff, the latest indictment invovles wiring contracts for Cognos (before it was part of IBM).  The Boston Herald reports:

"The indictment alleges the former House Speaker - then one of the most powerful politicians in the state - used his “power and influence” to win Cognos the contracts. In return, DiMasi pocketed thousands of dollars funnelled through a law associate - including a $25,000 check from Cognos, the indictment states.

"DiMasi faces five years in prison and three years of supervised release and a $250,000 fine if found guilty of the conspiracy charge. He also faces 20 years in prison and a $25,000 fine for each of the eight counts of mail and wire fraud, if convicted.

But hell, we were going to have the best enterprise-level analytical software any school department ever had!

-- Dennis Byron

Vignette License Revenue Down 60%, Pays Price for Buzzword du Jour Marketing

Vignette (VIGN) may be just the first of a long line of enterprise software suppliers to pre-announce (and then formally report) very bad year-over-year and quarter-over-quarter compares.  Or it might be the poster child for losing out in the enterprise-software market by changing positioning almost annually.

On January 5, Vignette said--on a preliminary basis--that its quarter 4 (Q4) 2008 revenue would be down 32% vs. the same quarter on 2007.  Worse, its Q4 license revenue would be down as much as 60% in the same compare.

Although I don't expect any enterprise software suppliers to ring a bell over calendar Q4, these numbers also are the result of a decade of Vignette changing positioning, most often without even changing the products on which the position is based. Follow the bouncing ball as represented by the opening sentences of each year's Vignette 10-K (date of publication; refers to previous fiscal):

• 2000--Provides ebusiness applications

• 2001--Provides customer-driven Internet applications

• 2002--Provides content management software

• 2003--Provides content management and portal software (via acquisition)
• 2004--Adds process to the other two for the first time

• 2006--Process becomes workflow (going backwards in terms of industry use of buzzwords)
• 2008--"The web experience" (i.e., Web 2.0)

Of course this confuse the hell out of investors.  But imagine what it does to potential customers.

-- Dennis Byron

NY Times Satire on Timesharing Good for a Laugh In Tough Economic Times

IT Business Edge editors and bloggers, of which I am one, pointed me to a fun article in the October 12 New York Times titled “Smart Monitors Linked to a Server.” A wikipedia entry says the author of the article…

“… tends to write in a sarcastic, cynical tone, much as one would read in MAD Magazine.”

Consider its hilarious opening:

“Instead of having a big, loud… computer on your desk, what if you could have a quiet, thin machine that rarely needed an upgrade or a fix??

Of course, you probably have a “quiet thin machine” on your desk.  It’s your laptop. It only cost $400 three years ago so if it ever needs an upgrade you can get another one, probably for $200 now. All your data, which used to be back in the "computer room" on a system that was always crashing, is now right there on your laptop. Or on a flash disk in your pocket.

The second sentence is a give away too:

“That has been the goal of many technology companies over the last 15 or so years. They have tried to disrupt Microsoft’s (MSFT) dominance of the PC (sic) desktop...”

Of course back 15 years or so when X-Windows was the hot idea, Microsoft did not dominate the desktop or anything else. IBM and DEC did.

The article goes on to say:

“Rather than relying on their innards for handling work, these so-called thin clients send it out over the network to much larger servers that hold all of the necessary software and handle data-processing jobs… The benefits of the technology seem obvious… The thin-client model places the burden of managing computers on professionals monitoring servers in a large warehouse.”

The above is what convinced me the article is a Mad-like satire. Although I must admit that I didn’t know MAD still existed.

On the other hand, I think this sentece is about a real product but the description is right out of Mad:

“Next month, Samsung will ship the 19-inch SyncMaster 930ND monitor... Business customers can plug an Ethernet cable into the monitor and turn it into a full-fledged computer by connecting back to their data centers.

As opposed to a half-fledged computer? Pretty soon, the article says, we can even plug such a device into our TVs. Pong, anyone?

On a serious note, I did not get the satire in the mixed up description of technologies from Citrix (CTXS), VMware (VMW) and others, which could mislead investors that do not understand the Mad connection. But if you are thinking of investing in IT this week, you have bigger problems than simply not understanding the differences between desktop, application, storage and server virtualization.

What Metastorm S-1 tells us about the BPM software market

As I wrote recently concerning the leaders in the business process management (BPM) software market:

"I see IBM (IBM) and Fujitsu numbers one and two worldwide in BPM.... Other suppliers that are likely to have similar market share (to Software AG). ..include Oracle/BEA (ORCL), Microsoft (MSFT), TIBCO (TIBX), AT&T/Sterling Commerce (ATT), Autonomy (LSE:AU), SAP (SAP), ACI Worldwide (ACIW) and Sun (JAVA)... others including Metastorm (on the shelf as MSTM) are trying to work their way on to the leaderboard.

"Many--including the smaller suppliers--offer multiple BPM-related products because of acquisitions made over the last 36 months so a more useful ranking to determine market acceptance would be by product rather than vendor. Consider IBM with everything from Filenet to Notes or Oracle with everything from Fuego to the Plumtree portal to the Collaxa BPEL engine."

No current investment activity demonstrates the leader/chaser market share situation in BPM, and the multiple brand through acquisition issue, more than Metastorm, which filed its S-1 in May 2008.  Naturally, MTSM is in no great rush to complete the offering so I waited for a slow summer day to read its filings.

First the market share issue. BPM, for a variety of reasons is different than most "emerging" software markets over the last two decades. In most other high flying software-market investment opportunities of the 1989-2008 timeframe, one company came out of a pack from a standing start, went public and then was acquired. There were two chances to cash in in almost all cases.

But BPM is different in that no startup has come out of the pack to go public.  Metastorm is the first to try. Pegasystems (PEGA) had been public since its bank-automation application phase, Fuego and host of others had already been acquired, and the other smaller companies including Metastorm (with the possible exception of Lombardi and Savvion) cannot really be considered startups. They all have other functionality or technology hertiages... in workflow (Handysoft), imaging (Global 360), KM (Appian), and so forth.

MTSM is throwing down the gauntlet to the other small players thinking about an IPO by publicizing its revenue streams.  Its major problem is that unlike Ariba (ARBA) in 1999, Siebel and i2 (ITWO) in 1996, Arbor in 1995, and PeopleSoft earlier, Metastorm is not bringing its shares public competing in an undefined software market against a few equally small software suppliers.  Instead it is aiming right at the major software suppliers in the information technology (IT) market.

With about $48 million in 2007 software revenue, Metastorm trails the leading suppliers. In addition, the S-1 numbers are probably not backcast for 2006/2007 acquisitions (because that is not required under Generally Accepted Accounting Principles) so the growth rate is not quite as high as advertised. But Metastorm's growth still appears to outstrip the BPM market’s. Metastorm has a reasonable presence (30% of revenue) outside the United States, which is important given the current macroeconomic situation. Its products appear to be particularly popular in the government sector, which accounted for 26% of Metastorm’s business in 2007.

Another differentiator but possible sticking point is Metastorm's relationship to Microsoft.  Most of its products are exclusive to or optimized for the Microsoft platform.  That's good news except if Microsoft decides to more agressively pursue this market opportunity.

As for the product acquisition trend, Metastorm is trying to redefine the already redefined BPM category as a market opportunity.  Its S-1 says there is a unifed market for enterprise architecture management (EAM), business process analysis (BPA) and BPM (as already redefined from workflow and integration middleware) in combination. I don't see it but even if I am wrong such a redefinition is a tough challenge for a small player in a market and the challenge is compounded by the fact that all the major software-market players also offer products in all these categories. So even if Metastorm were successful in broadening the definition, its competitors are the same.

There is the further problem as discussed at my blog on IT Business Edge: the categories  EAM, BPA and BPM actually do not cleanly fit together. Metastorm says:

"However, BPM software alone generally focuses on the automation, management and control of business processes and does not address all of the activities needed to improve processes. By itself, BPM software may not allow an organization to fully understand a given process and how it relates to the strategy, people, systems and data that the process impacts across an organization."

Although that might be true of some BPM products, it is certainly not the roadmap that all the leaders have laid out.  Metastorm is no further down the road toward integrating these functions because it is also the amalgamation of acquisitions: heritage Metastorm was formed by the merger of Metastorm and the U.K.-based Sysgenics in 1998), Commercequest (which is the result of the mergers of KMG, ANS, and others) and Metastorm in 2005, and the acquistion of Provision with its EAM and BPA offerings and Spotlight Data by Metastorm in 2007.  It was Sysgenics that brought the eWork capability to the mix originally and well as the foothold in the EU.  Understanding the revenue streams of these disparate products--and their relationships to their disparate competitors--is really the key to understanding the Metastorm IPO as an investment opportunity.

The wildcard issue with this IPO is Metastorm's ownership by Internet Capital Group (ICGE). Metastorm is not the typical IPO in that Metastorm itself is over 30% owned by ICGE, another public company. This raises the VMware/EMC condundrum I have discussed at Research 2.0 in an investment-opporunity environment--both marco and individually--that is probably not worth the time to figure out. But that is not to say that ICGE has the same kind of complete control over Metastorm that EMC has over VMware.

In summary the Metastorm offering serves the purpose of legitimizing the market for those of you thinking about whether BPM is legitimately a separate software function worth investing in or just a part of the ERP suite (as I discussed here) or middleware investment opportunities. Other players not mentioned above that are nibbling around the edges of the opportunity include Adobe (ADBE),  Axway/Cyclone/Tumbleweed (part of the Sopra Group listed on Bourse), BMC/Remedy (BMC), Cordys, DST Systems (DST), EMC/Documentum, GXS, IDS/Scheer, Intalio, Mega, Red Hat/JBoss (RHAT), Ultimus, Vignette (VIGN), Vitria and W4/Akazi. Of course, most of these companies either do not report BPM as a separate business segment because it is still a minor part of their revenue under SEC (or equivalent) regulations or they do not report their revenue at all because they are private companies.

NOTE: I do not recognize “pureplay” as a separate market research segment and don’t think you should consider pureplay as a feature when looking at BPM (or any other software market) investment opportunity. There is no reason why a company that only offers BPM should have a better BPM product than one that offers multiple types of software.

And who is the leader in ESB-based BPMS Suites?

Over in the ebizQ breaking news section, we are reporting that Gartner has ranked Software AG high in both the enterprise service bus (ESB) and business process management suite (BPMS) categories. 

This is not to criticize Software AG (Frankfurt TecDAX: SOW); when someone serves you up a pitch right down the middle, hit it out of the park.  But Mr. Gartner, are those two categories supposed be mutually exclusive?

I can't tell from the related Gartner press release which says middleware consists of 11 categories but only lists five or six.  Apparently BPMS suites are part of the ubercategory "BPM-enabling technologies," and ESB's are part of "application integration and platform middleware." But what about BPM-enabling technologies based on ESBs?

This is the silly season for market share reports from the leading quant houses such as Gartners' Dataquest and IDC so expect to see more such slicing and dicing of the market in ways no user would recognize. The intention is to wow you investors.

In the real world, BPM is a value proposition and dozens of different types of software technologies can be used to make it happen.  I do rank Software AG high in the category based on its 2007 acquisition of WebMethods and its own previous successes selling the concept.  I see IBM (IBM) and Fujitsu numbers one and two worldwide in BPM although Fujitsu depends on its position in Asia/Pacific to get so highly ranked.  Ironically, Software AG distributed Fujitsu's BPM products outside of A/P prior to its acquiring  WebMethods.

Other suppliers that are likely to have similar market share to (or larger than) Software AG in BPM include Oracle/BEA (ORCL), Microsoft (MSFT), TIBCO (TIBX), AT&T/Sterling Commerce, Autonomy, SAP (SAP), ACI Worldwide (ACIW) and Sun (JAVA).  Appian, Lombardi, Pegasystems (PEGA) and Metastorm (on the shelf as MSTM) are trying to work their way on to the leaderboard. Many--including the smaller suppliers--offer multiple BPM-related products because of acquisitions made over the last 36 months (so a more useful ranking to determine market acceptance would be by product rather than vendor) and these products use everything from ESBs to collaboration technology to deliver business process management.  Consider IBM with everything from Filenet to Notes or Oracle with everything from Fuego to the Plumtree portal to the Collaxa BPEL engine.

SMEs: The Right and Wrong About a Short List of One

A few weeks ago, Paul Fremantle of WSO2 told me, in a discussion on SOA and enterprise services buses, that IT changes are leveling the playing field for SMEs and larger companies. I was reminded of Paul’s comments when reading Andrew K. Burger’s recent interesting two-part series about enterprise software at E-Commerce Times. Burger’s point is that SMEs should not leave the

“…the likes of IBM, SAP, and Oracle as well as less well-known providers (but typically thought of as aimed at large enterprises)…” off their short lists.

By the way, larger enterprises are typically an SME’s customers and suppliers rather than his or her competitors.

What struck me in reading the Burger article was that most SMEs have a very short list when it comes to enterprise software. It probably has only one vendor on it — and no, I am not going to say it’s Microsoft. I mean “one vendor” generically — that is, SMEs have one vendor whoever it is (and as often as it is Microsoft, it’s also just as often an IBM partner such as Lawson).

SMEs don’t go through the short-list process with the procurement rigor of a company that can afford to have its own purchasing and legal organizations. Often this is a restriction of their own IT staffing (or executive time). So they turn to a local consultant/SI who in turn is basically locked in to one enterprise software supplier. If that’s the case, follow Burger’s advice in terms of questions to ask and the idea of getting a second opinion, and even talking to the big boys.

But just as often, it is an industry issue. A lot of SMEs lock into industry associations to choose their enterprise software and IT because the associations can provide purchasing power and legal protection. As often as not, there is no competitive advantage in your having better or different enterprise software as the insurance agency or widget maker down the street. If that’s the case, I suggest you still read Burger’s article to understand some of the underlying issues, but don’t be worried about a short list of one.

(Note: Franchisees are often in the same positive situation as those SMEs that look for their enterprise software through industry associations but probably have no flexibility of choice under their franchise agreement.)

Microsoft must have thought we'd all be on Vista by now

Find out how many HP (HP) AMD (AMD)-based XP PCs there are in the world, multiply by $100 and deduct the result from Microsoft (MSFT) profits over the next four quarters. It's probably peanuts but the rollout of Windows XP Service Pack 3 (SP3) is another black eye for Microsoft quality control and all-around poor planning for customer service and support.

It's probably not as bad as the "Vista-enabled PC" upgrade program in 2007. That Microsoft effort lead to everyone wanting to go back to XP because Vista's performance was so bad, even on so-called Vista-enabled PCs, after waiting months for their promised Vista upgrades. During the Vista-enabled scenario, luckily, my 6-year-old grandson Owen immediately complained that there was no Pinball on Vista. So I quickly returned to XP. No harm/no foul for me but I think there are even lawsuits ongoing on that issue.

So this year it's a poor release of XP SP3. The Microsoft master plan probably said that we all had Vista by now. Actually when I read Greg Keizer's article in PCWorld on May 9 I was happy two ways.

-- First I thought I had screwed up the SP3 download/upgrade somehow only to find that it affected at least all HP AMD-based PCs like mine. And maybe any AMD-based PC.
-- Second, I was happy that I had turned off Windows Automatic Update when I bought the PC (I don't like being that connected with anyone, not just Redmond).

Again, I was able to restore to SP2 pretty easily. But I don't know if the average home PC user would have figured it out. Especially if they had no idea the download had happended overnight because of Windows Automatic Update. Many users of my type PC found their home PC endlessly trying to reboot with probably no idea that Microsoft had automatically updated them to SP3 over nite, putting them in the repetitive loop.

I just left a message on the Microsoft support line, which is promising free SP3 support until April of 2009 (although it takes a little work to find this page so Microsoft may save a few dollars in support costs). I expected that they would inform me when a new version of the upgrade was available to download (although there was no apparent way to let Windows Update know that I had removed SP3 from my system). Instead Microsoft sent me the same steps that Jesper Johansson had posted to his blog on Thursday May 8. I don't see a lot of home PC users easily working their way through this set of instructions (especially since Microsoft's version was missing a few steps).

So see you this weekend Owen. Pinball is up and running again.

Agassi’s legacies, NetWeaver and BPX, are rays of good news to SAP

Shai Agassi resigned from SAP (SAP) 13 months ago. But because of the way large corporations such as SAP work, the Sapphire user conference in Orlando May 5-8 is really his last SAP event. Not much has happened during the first two days of the conference except for new SAP NetWeaver business process management (BPM) capabilities which strengthen SAP’s 21st century technology platform, Shai’s major legacy. These capabilities deliver on the NetWeaver innovation road map of April 2007 which he would have been working on prior to his departure.

Together with the recent release of the SAP 20-F and management comments to financial analysts after the SAP financial-results release of April 30, 2008, the Sapphire NetWeaver BPM announcement also highlights the revenue success the product is having. By my methodology NetWeaver revenue is nearing $2 billion on a trailing 12 month basis (SAP says it’s only a billion euro but I believe it uses a different methodology than I do).

Either way, the key statistic is that SAP says 37% of that revenue is for standalone NetWeaver instances. That does not mean that the user was never previously an SAP user (although that is true in some cases). It means that the middleware is being used for traditional middleware purposes such as integration, web/application serving, software development, etc. irrespective of which applications—SAP’s or other suppliers’ or in-house developed—that the middleware is integrating, serving, developing, etc. It’s not just tying two SAP application instances together (some of the other 63% is heritage SAP BI but the total does not include Business Objects). That makes SAP a major middleware player, right up there with IBM (IBM), Oracle/BEA (ORCL), TIBCO (TIBX), Software AG and implicitly Microsoft, from a standing start just a few years ago.

Also SAP has also quietly put together a community of 350,000 Business Process Experts (BPX) from among its users, integrators and other partners. Agassi was one of the early posters on the BPX when it was launched a few years ago.

In other words, by any measure, SAP is no longer a one-trick pony in the software market. In my opinion, Agassi is the person that foresaw the need for SAP to enter that space aggressively and laid out the plan to get there. Wherever he is today, driving around in one of the “green cars” he’s building in his new endeavor, he can toot his own horn.