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SANTA BARBARA, Calif.—Another day, another set of new buzzwords, as the parade of top IT execs continued.
The most interesting vision came from SAP AG, which laid out a very clear strategy, differentiated from other top IT vendors.
According to Shai Agassi, an executive board member at SAP, the company is focused on what it calls “applistructure,” or the merging of applications and infrastructure. The company believes that this platform is the future—and it expects to capture a 25 percent combined share within a few years.
Agassi contrasted his companys approach with that of Oracle, which believes in combining the database and the infrastructure, and IBM, which is trying to merge applications with system software.
The only other company that sees the world like SAP does? “Microsoft is claiming to play that game,” Agassi said. “Theres a network called MBF [Microsoft Business Foundation], and there is a claim that they will build a collection of objects … but it will take a lot of time.”
SAP, on the other hand, has “done the long, tedious, painful effort around the world in a hundred countries,” he said. “Weve localized in each one of those countries. Weve done it in 25 industries with the pain of understanding the difference between a financial services and toothpaste company.”
Although the companys NetWeaver application-server platform was launched just this year, Agassi claims that 5,000 companies will be running it next year—or about 10 percent of its installed base.
And unlike in years past, “We dont steamroll our partners. Wed like them to succeed as much as possible.” So why does SAP still have a rapacious reputation? “Some of them do self-inflicted damage and then come back and blame it on us.”
Agassi went on to describe how the company is encouraging system integrators and ISVs to develop canned business processes that will run on SAPs platform. “We dont know how to do it. There is a space in there for startups that want to do (i.e. sell) another five (copies), or 50, and then not do 500, but do another 50 for the same audience. And build a catalog for the oil industry or the telco industry.”
When it comes to the war over data and business processes, Agassi defined three critical battles: who owns the data, who owns the metadata (i.e. the definition of a “customer” or an “invoice),” and then who owns the meta-metadata (or the repository).
He said the master battleground that everyone wants to win will be fought around three asset areas—financial, manufacturing and product—and three relationship areas—employees, customers and suppliers.
Certain companies are already doing a good job in some of these areas. Ariba has a strong position in manufacturing, and Salesforce.com is taking a leadership position in customer data, but SAP wants to own it all. And SAPs position is that theres value in getting it all from one place.
Agassi was extremely negative about Oracles chances in the marketplace, characterizing the PeopleSoft move as “a great mistake.” Thats because SAP stands to gain as many PeopleSoft customers as Oracle does in the long run—without the multibillion-dollar price tag.
SAP sees the database, and by extension Oracle, as a commodity. “That layer [database] is truly commoditized,” Agassi said. “The stickiness that has remained isnt a feature; its a knowledge stickiness. Its how many Oracle DBAs in the market that have a comfort zone with Oracle. How long does that go before a MySQL with the right capabilities, or DB2 or SQL Server, comes in and completely depresses the prices in the market?”
Next Page: An IBM vice president calls for “integration on all levels.”
IBM and Integration
IBMs vice president of technology and strategy, Irving Wladawsky-Berger, started out with a 20,000-foot view.
“Society is in the beginning of a transition from the industrial age to the information age,” he said. Wladawsky-Berger summarized his companys focus of “on demand computing” into three critical areas:
- “Integration at all levels based on open industry standards.”
- “That integration causes an incredible possibility of innovative industry solutions, industry by industry by industry. But you need to focus, regardless of what business you are in, on how to involve your industry and transform yourself to take advantage of all these possibilities.”
- “Society is now so incredibly dependent on the IT infrastructure that it has to work incredibly well—performance, scalability, durability, availability. So, you need a really, really well-functioning IT infrastructure.”
The old way of selling IT products, by controlling technologies to maximize market share, just isnt possible in todays ubiquitous IT world, according to IBM. Instead, the company is focusing on integration with its middleware offerings—including WebSphere, DB2 and Workplace—and by facilitating integration with other components through open standards.
Wladawsky-Berger also highlighted IBMs consulting business as a way to deliver transformational business solutions industry by industry.
Unlike Hewlett-Packard Co. and Microsoft, which have a broad consumer line, IBM is focused solely on business—reaching consumers only through OEMs. He also pointed to IBMs industry focus as a strength, claiming that HP “doesnt have quite as strong an industry expertise and an industry consulting play.” Sun, in his view, is “primarily a hardware vendor.”
He also pointed to open source as a key element of IBMs strategy. “Without it, it is impossible to achieve the kind of integration that we think people need to achieve in the marketplace.”
In his view, operating systems have already become a commodity, which makes Linux so strong. “Its the only operating system that runs on every single architecture,” Wladawsky-Berger said. “The fact that Linux runs on everything puts it in the same category as Internet technologies like TCP-IP and all the XML stuff, and it makes it much easier to move workflows around because you have the same underlying operating system.”
He was less sanguine about Sun president Jonathan Schwartz comments Tuesday about Solaris versus Red Hat. “Poor Jonathan is searching for something to grab onto to say that Solaris is better than Linux in high-volume systems,” Wladawsky-Berger said. “I think he needs to do better than that.”
Both Microsoft and EMC were very “on message,” barely deviating from their canned scripts.
EMC had taken some hits during a previous panel, voted the least likely to succeed of all of the top vendors. Howard Elias, the companys executive vice president in charge of marketing, addressed the problem head-on by talking about how the acquisitions of Legato, Documentum and VMWare were transforming the company from a hardware vendor to one that provides services and data management as well.
“We have a unique lens,” Elias said. “Our lens is coming from storage and information management, and our construction when you move up the stack has that lens.”
Elias then introduced a theme hed return to frequently during the discussion—that while the industry has focused on technology, EMC was looking to put the I (for information) back into IT.
Next Page: Working to own the vertical stack.
Vertical Stack
Elias described EMCs challenge as working to own the vertical stack, what it calls ILM (information lifecycle management)—turning data management into a service. “Everybody has to protect data, have operational recovery, disaster recovery, but frankly its all still very point technologies,” he said. “What we want to do is let that become a service, in fact dial in the recovery point objective and recovery time objective, and let the infrastructure be automated in such a way that we can provide that recovery.”
On the horizontal dimension, Elias pointed to VMWare and its ability to drive a virtual infrastructure that abstracts severs, networks and storage into a pool of resources.
He went on to characterize VMWare as “very disruptive, but one that were keeping at arms length.” VMWare works closely with IBM and HP, both potential competitors to EMCs core business.
By the time Microsofts vice president of business development, Danl Lewin, took the stage, the contrast between his company and the others had already been somewhat defined.
Microsoft has a unique business model, unlike the other IT companies presenting at Vortex. “Ninety-six percent of Microsofts revenue comes through others, through partners,” Lewin said.
He compared his companys business model with Dell Inc.s approach. Dell used to build motherboards when they provided a competitive advantage, but now theyre a commodity that the company gets from the lowest bidder. Software functions such as payroll and 401(k) are like motherboards and can be shopped out as well, he said.
Microsoft took considerable heat about being a closed platform during the conference, and Lewin agreed—up to a point.
Lewin rebutted the argument that Microsoft offers a closed environment, to a point. “You get a choice of multiple languages to program in when you come into the dot-net world,” he said. But when you compile, “you are picking Microsofts stack.”
As expected, Lewin was down on open source, calling it a “challenge to the capitalist system where people make money and pay taxes.” Microsoft is gaining market share on the server side, he insisted, while gaining in the enterprise but really making strides in the midmarket. Linux, on the other hand, “is gaining share, but primarily at the expense of Unix.”
Although he called Salesforce.coms success “extraordinary,” Lewin was less bullish on the promise of grid and distributed computing. In a backhand slap to Oracles Charles Phillips, who claimed Tuesday that his company has half of the 300 people in the world who understand database kernels, Lewin called Microsoft Researchs Jim Grey “one of the first five guys.” Greys paper analyzing the true cost of distributed computing, which concludes that processing needs to be co-located with the data, is fascinating reading.
Lewin ended by attributing the Longhorn delay to too much complexity. The three key components—the Avalon display, the database file system and the Indigo Web services piece—were just too big of a challenge for Microsoft.
“The lesson here is about modularity. We wanted to show exciting things about Indigo sooner rather than later,” he said. “Unifying the store [the file system] needs to follow on a little later, in coordination with the server releases, so you can have a distributed store. Itll take time, but itll happen.”
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