IT Investment Research

Apache Sorry That OpenOffice Put It in the Middle of Old-fashioned Open Source Catfight

No sooner had I said I missed the good old days when the Free and Open Source Software (FOSS) movement went ballistic over silly things (like too many electronic document standards when there were already a couple of hundred standards for paper documents) , it turns out the good old days are still here. Based on today's statement by the Apache Software Foundation (ASF) to the effect that

"openoffice.org is doing just fine in its new home, thank you,"

I guess I've been missing a good old-fashioned "Microsoft (MSFT) sucks," "Microsoft is like the Soviet Union," "Massachusetts Chooses ODF" legitimate open source culture vs. FOSS catfight.

Only Oracle (ORCL) has replaced Microsoft as the bad guy. The thing is that when you have a movement like FOSS (or Occupy Wall Street or "Hope and Change"), you have to have bad guys.  Neither your message nor your substance can stand on their own so in order to get attention, you have to attack someone or something else.

openoffice.org is a decade-plus-old, crippled Microsoft Office wannabee, turned over to ASF by Oracle.  Oracle had inherited it from its Sun acquisition  -- and probably would have preferred to just dump it deservedly into the dustbin of history -- but must have made a promise to the European Union (EU) to keep it alive in return for EU approval of the acquisition.  Sun had inherited it from a long-ago acquisition of a miniscule European company.

The ASF is one of the good guys. Its web server is probably the most popular piece of open source software in existence. "The Apache Way" is really a positive, populist and progressive (in terms of information technology) movement unlike anything else in the industry.   I'm sure this sort of notoriety is the last thing ASF wanted when it agreed to take over the code.  Sorry about that, guys.  

-- Dennis Byron

Apache 2.2.2: Where is the Outrage? Where is the Bombast?

Jim Jagielksi announced August 30 release 2.2.2 of the Apache HTTP server, the latest update to the most successful yet least controversial open source project. This is THE Apache, the web server, not to be confused with the hundreds of other open source projects the Apache Software Foundation has spawned, dozens of which have reached relative stability.

This is the project/product that killed the standalone middleware market when IBM decided, "Why build our own.  Give these guys a few bucks to a have 'birds of a feather' meeting."

Congratulations but I sure miss the fun similar releases would have caused 10 years ago. BEA would tell you all the things that were wrong with it. Some open source zealot (not part of the Apache Software Foundation) would tell you that Microsoft (MSFT) causes world hunger.

From an investment point of view, starting with IBM's decision -- and Oracle's (ORCL) related decision to ship Apache with its app server -- increasingly the middleware market merged into the platform-software market and more recently the software market merged into the overall IT market. Today, all the IT leaders except SAP have declared they're in a business bigger than or different than the software business. (SAP's CEO made the declaration about 18 months ago and shortly thereafter was no longer SAP's CEO.)

Oracle sells servers.  Microsoft sells (or is trying to sell) telephones. EMC sells document management software. Intuit sells second mortgages. And ironically many of the smaller companies in the former software market that have not yet made their declaration have started calling themselves "open source" companies.  Looking for that Apache lightning to strike twice. 

-- Dennis Byron

Beat Wang! Sell More Minicomputers!

All the Internet fun being caused by Congressman Anthony Weiner helps explain why New Yorkers and Bostonians are always at odds about baseball, hockey, clam chowder, and so forth and so forth. I'm a Bostonian.  All these years I honestly thought a weiner was a hot dog.  But Weiner's weiner (actually, as the link describes, he's not sure it's his) is not that kind of wiener. 

Which reminds me of the good old days when men were men and none of them would get caught dead saying the word Twitter. This was when mincomputers ruled the information technology world, and New York was a place where your company had both a Wall St. and midtown office (so it was easy to make both a morning and afternoon meeting, stop off in Chinatown or Little Italy for lunch, catch the Eastern Shuttle in both directions, and still be home in time for twilight golf).

I worked in the marketing department at Data General and one of the copywriters came in with a great idea for an internal sales promotion piece. It pointed out all the ways that the Data General minicomputer of the day was far superior to the Wang Laboratories mincomputer of the day (or DG office automation was better than Wang office automation... or whatever).  So we polished up the comparison, had the art director make it look good and readable, and together the three of us -- all Bostonians -- came up with a headline:

"Beat Wang! Sell More Minicomputers."

Not too creative I admit but straightforward and to the point. That's what sales promotion is supposed to do. So we took it to the vice president, who was a New Yorker, to get his sign off. Here is the cleanest explanation I could find on the Internet for the problem we had with the VP. It comes from a parenting web site on the Albany NY newspaper so don't be afraid to click on it. (I can only guess at what vulgar lists I got myself on looking for this clean explanation.)

And this whole different meaning of words thing really bothers me now because two of my grandchildren are New Yorkers. 

-- Dennis Byron

Infor and Lawson: What a Pile of... Systems Integration Challenges

On March 10, in commenting on why it would be a good idea for some industry-centric enterprise software supplier such as Cerner (CERN) or JDA (JDAS) to take a look at Lawson (LAWS), I said:

I can't dismiss the hint... that privately held Infor might acquire Lawson but that would mean it's a fire sale...

Well get on your asbestos gloves.

But this does allow me to run my annual post that tries to remember and list all the enterprise-software companies that used to be independent but that are now a part of Infor.  Here goes:

Agilisys (out of SC&T), Aperum, Arzoon, Baan, Boniva, Brain, Daly Commerce, Comshare, Dun & Bradstreet, Elevon, e.piphany, EXE Technologies, Extensity, Formation Systems, Foundation, Future Three, Infinium (nee Software 2000), Ironside, JBA Software, Lilly Software, Marcam, MAPICS, Mercia, McCormick and Dodge (M&D), Ohio Community Library Consortium (OCLC), NxTrend, Octane, Pegasus (not Pegasystems), Provia, Softbrands, StarBuilder, SunSystems (not to be confused with the server manufacturer acquired by Oracle), Symix, System Software Associates (SSA), Varial, and Vision.

And if the Infor buy-out offer is accepted by Lawson management and Carl Ichan, add BCM, CareScience, Confer, Enwisen, Healthcare.com, Healthvision, HCI, HIE, Hublink, Integrated Media, Intentia, Mobis, Movex, MPower, Noblenet, Outlaw, Pixel, PM Sims, Riley Dike Dosher, Rouge Wave, Scase, Xcare.net and Lawson itself -- which grew pretty much organically -- to the list.

-- Dennis Byron

Nothing New in Enterprise Software in 2011

Blogs are pretty much reactive communications vehicles.  I see something in the news or from the major research houses or from my own assignments that I think might inform investors or potential investors in EMC, Google (GOOG), IBM, Microsoft (MSFT), Oracle (ORCL), SAP, and so forth and I comment in three or four paragraphs. 

But I found very little to comment on in January.  Now I know why.  Gartner says nothing new is happening in 2011 in enterprise software.  Specifically, according to SiliconIndia, Gartner says:

"Business intelligence (BI), collaboration, content management, social software and supply chain management will be the top application software growth segments in 2011. The five long-term, overarching, and interdependent trends affecting the enterprise software markets are globalization, implementation, modernization, socialization and verticalization."

Change "business intelligence" to analytical applications and the variations on "social" to sales/marketing/ecommerce and that's how we kicked off the 2000 enterprise software retrospective at IDC 10 years ago.  As testament to the maturity of the now almost 40-year-old enterprise-software market, what Gartner says for 2011 is true for this year and was true in 2001.  The aircraft carrier turns slowly.

The lack of news and new research is about to change shortly as all the research houses put out their 2010 retrospectives. So I'll comment on it. But knowing what happened last year is not that useful to investing except to the extent that it informs the future. There's no more "a rising tide raises all boats."

So I'll explore some non news that will inform IT investing such as how developments in HTML will change the market, the evolution at Red Hat (RHAT) will matter to IBM and others that depend on open source as their R&D departments, the failure of Software as a Service (SaaS) to take off as the pundits predicted will morph the software deployment rules once again (fourth time in last 40 years), the further consolidation of the suppliers will affect companies such as Lawson (LAWS), Progress (PRGS) and TIBCO (TIB) that are looking pretty lonely in their independence, the strength of cloud computing will be in private clouds where you can't invest in it, and the fact that the enterprise software market is actually disappearing means all the leading companies will have to change their strategies (see the last paragraph of this December 2010 blog post)

-- Dennis Byron

(No financial interest in companies mentioned except for a few hundred shares of EMC)

Are Enterprise Software "Master Brands" Simply Riding Cloud Computing?

Saugatuck Research is out the week of January 10 with a very thorough Research Alert (you have to sign up for the analyst firm's Research Alerts but they are free) that has a lot of good kick-off-2011 information about the trend to cloud computing technology. Saugatuck has been one of the major software as a service (SaaS) fanboys  over the years so it is not surprising that it has morphed its 2008-2009 thinking on SaaS into becoming a cloud computing fanboy in 2010-2011.

Much analysis I see incorrectly uses the words cloud and SaaS interchangeably. But I like the fact that Saugatuck is measuring "NEW" IT spend as well as total IT spend in its research methodology.  Such a view has long been lacking in a lot of research on IT and enterprise software market dynamics.  It is the most useful metric for IT investment once you've done due diligence on the individual IT suppliers' balance sheets. Saugatuck claims 65% of new IT spend will be "cloud or hybrid" by 2015.  The adjective hybrid leaves a lot of wiggle room but at least the hard number provides a starting point from which investors can decide how the market is going to play out during the decade that just started (or did it start 12 months ago?).

The January research alert also has a lot of detail about what Saugatuck calls Master Brands.  All are major cloud computing technlogy players no doubt, at least in terms of how they might be using the technology, but the implication that they are equal or competitive players could be misleading to IT investors and the idea that the group is simply riding the cloud computing wave is even more misleading. 

• EMC belongs on the list if Saugatuck includes EMC's 98%-99% ownership of VMware (VMW). 
• Amazon (AMZ) belongs on the list only if you believe that the retailer is going to move out of retailing to become an IT hosting company.  (At least, unlike EMC, Amazon might provide its shareholder some value some day if it spins off its IT hosting division in a way unlike the way EMC spun off VMware without really spinning it off.)
• salesforce.com (CRM) makes the list only if you conflate SaaS and cloud
• SAP belongs there as a wannabee and Intel as a basic-technology provider to everyone else
• I don't know what HPQ is doing -- in general, not just in the cloud -- and I don't see Apple (APPL), Google (GOOG) or DELL doing much directly

As often explained here, the remaining IT and enterprise software suppliers listed as Master Brands are not riding the cloud. IBM, Microsoft (MSFT), and Oracle (ORCL) are driving the cloud computing technology trend. 

-- Dennis Byron

(No  interest in companies mentioned)

"Under $600!" The New Software/Technology Marketing Mantra

Soon in the U.S., enterprises will have to report every business transaction over $600 to the government.  I'll have to tell the government when IT Investment Research buys a new computer from Best Buy (BBY) and Best Buy has to tell the U.S. Internal Revenue Service (IRS) that I bought one.  And maybe even Mastercard (MA) has to tell the IRS it "financed" the deal. (If I buy that new TV I'm thinking of, I can't call that a business expense but do the other two parties still have to comply?)

And that's not to mention the effect on eBay. 

And is that before or after the Massachusetts sales tax?

That will make "Under $600" the new mantra for enterprise software and information technology distributors and retailers. That demand will filter out to the manufacturers and they will need to lower their prices at the beginning of the supply chain for all kinds of business equipment. That new U.S. government mandate will drive down overall information technology (IT) and enterprise software market revenue in the short term but it may expand the IT market in the long term as lower prices help meet the pent up demand.

Will larger enterprises have to report each monthly subscription maintenance fee paid to IBM, Oracle (ORCL) and SAP or can they just report the yearly total? And vice versa for the leading enterprise software providers.  Do HP and Xerox (XRX) have to break out each business printer companies buy or simply total them up when they send in their tax returns.  As much as this mandate is going to test marketeers, it's got to be a goldmine for tax lawyers.

Luckily my small business  doesn't have to spend that much for its accounting and tax software.  Or for this blogging engine. But maybe that's  going to change now that SixApart has been acquired.

-- Dennis Byron

(no financial interest in companies mentioned)

The Day the InterNet Died

With apologies to Don McLean, a work in progress:

I can't remember if I cried
When I read how the FCC lied.
But it will cost you deep down inside.
The day the Internet died.

So "bye, bye to our high-tech high."
They drove the browser to the sky
Before Obama national-ized it.
And them good old boys that knew Morgridge before they named a street for him in San Jose
Are singing "this will be the day that I die."

It's not a bad as that plane crash in Iowa but it's on the top-five list of worst U.S. government suggestions/decisions of all time.

-- Dennis Byron

Tongue-Twister EU Standards Body Supports Microsoft by Accident

It used to be easy to follow a simple organization with a simple name such as the International Standards Organization (ISO) to know all you needed to know about the implications of standards on enterprise software market dynamics.  And thereby all you needed to know about standards relative to investing in enterprise software suppliers.

Then seemingly out of no where (although it has been around under various inexplicably funded consortia acronyms for years) comes the Transatlantic Conumer Dialog (TACD) Intellectual Property (IP) Policy Committee. Really, I don't make up these names. These are same type of European Union (EU) wonks as the WEP/INSEAD/Global Competitiveness Network/Industry Partnership Program that gave us the fun blog post that said it was best to start a business in Iceland and Finland recently. 

The TACDIP is complaining

"If Internet users are to be truly free to choose whatever software and applications they desire to use,  we need an established norm for open standards as a prerequisite for both consumer friendliness and easy market innovation in an fair, anti-monopoly environment."

It's kind of like the firestorm on the blogosphere in early April 2010 about net neutrality now that the second highest court in the U.S. has ruled that the U.S. Federal Communications Commission (FCC) really has no authority vis a vis the Internet. That's not surprising to anyone except apparently the FCC.

But indecipharable-acronym groups like the TACDIP don't really do anything but issue white papers so their effect on the market for the shares of companies such as IBM, Microsoft (MSFT), and Oracle (ORCL) is more subtle than the DC Circuit Court's April 6 ruling in favor of Comcast.

Let's jump over the obvious flaw in the TACDIP whine. Internet users are already free "to choose whatever software and applications they desire to use."  No open standards are required from the European Union (EU) or anyone else.  Similarly, standards have never been especially supportive of user friendliness or market innovation.  In the case of market innovation, failed standards efforts such as the Object Management Group's Common Object Request Broker Architecture, slowed down the development of services oriented architecture (SOA) for a decade.

So what TACDIP really cares about, when you cut through the bullcrap, is its idea of a monopoly environment. It wants the EU to screw over Microsoft some more and screw its own taxpayers and citizens at the same time.  Ironically in the same week when so-called "Open Massachusetts" is incenting its citizens to learn Microsoft technology for free, these Eurocrat camp followers are urging the EU apparatus itself (the powerless quasi ubergovernment that regulates the shape of fruit in Europe and has other important functions not left to the EU's constituent nations) to cowboy up in favor of standards. 

But as is typically the case with such consortia, TACDIP has conflated open standards with open source.  So despite its stated intention to screw over Microsoft, TACDIP's move to support open source in the Euracracy, if it should suceed, helps Microsoft--which now has Codeplex--and harms Oracle and IBM, both of whom are in trouble in open source terms (Oracle for allegedly re-closing Solaris after the Sun acquisition and IBM for protecting its intellectual property). Microsoft's Codeplex is rapildy becoming the largest Open Source Initiative (OSI)-approved, open-source-terms-and-conditions-based development community and library.

Another proofpoint for the law of unintended consequences!

-- Dennis Byron

(No financial interest in companies mentioned except for the $12 a year I pay Microsoft for Office)

Are We Building Enterprise Software "the Toyota Way?"

A lot of enterprise software was changed or spawned during the 1990s and the first decade of this century based on the success of the Toyota Manufacturing (or Production) System. What is less well documented but clearly linked is that enterprise software development itself also changed during the same period for the same reason.

The terms agile or waterfall tend to be used rather than any mention of Toyota (although I am aware of one source that talks about kanban software development) but the concepts of managing by walking around, standardized work, the worker stopping the assembly line, the extended supplier community supplying parts just in time and so forth sounds a lot like community forums, rapid application development, "The Cathedral and the Bazaar," re-usable objects from a repository and similar ideas that permeate the world of programming these days.

That leads to two questions.

• Did the philosophy behind the Toyota Manufacturing/Production System lead to what now looks to be Toyota's quality-control implosion?
• If so, and if 21st century enterprise software development follows the same "production" philosophy, is a quality-control implosion likely in enterprise software development in the near future?

(These questions are unrelated to the fact that embedded software developed in some Toyota Way may actually be the culprit behind the quality problem, as opposed to oversized floor mats or some 99-cent gas pedal that is going to cost $500 per vehicle to replace.)

Consider the ripple effects to enterprise software investing if the answer to the two questions above is "Yes." In my opinion, it will mean that a handful of related enterprise-software-market trends will be accelerated:

• The end of the home-spinning-wheel era of software development and finally the completion of the 20-year-old concept of the software factory
• More mergers among software, systems and IT services suppliers (e.g. Perot into Dell (DELL), Sun into Oracle (ORCL)) such that there will be no distinction among types of IT companies; and of course there will be fewer, bigger of the remaining category: IT companies able to afford sofware factories (just as fewer and fewer companies could afford to build and run fab plants during the 90s)
• The movement to most information processing to the "cloud," completing the 50-year return to utility computing.

There are a lot of other similar back to the future implications, all just a matter of time (which all mean there is a time to buy and a time to sell in an increasing number of publicly traded enterprise software suppliers).

-- Dennis Byron