ENTERPRISE APPLICATIONS SPECIAL REPORT T5S O U T H C H I N A M O R N I N G P O S T T U E S D A Y , M A Y 3 0 , 2 0 0 6

Service-oriented architecture(SOA) appears to be all the rageamong the informationtechnology networkadministrators of many largecorporations, but how does onebegin or get support for such anambitious initiative?

Vivek Ranadive, the founder,chairman and chief executive atintegration specialist TibcoSoftware, said a compellingreason for adopting SOA was “toend the architecture forextortion” that had held theheads of companies and theirnetwork administrators hostagefor more than 20 years.

“The database-orientedarchitecture in many companiesis very rigid; it centralises controland is very expensive to change,”Mr Ranadive said, noting thetypically high cost of keepingthose software licences andupdating them.

He said the situation gotworse as companies piled onmore business applications, suchas enterprise resource planningsoftware, on top thatarchitecture, which meant“extortion on top of extortion”.

“There is a sea changehappening in the industry. Overthe next 20 years, data will nolonger be controlled in one spot– it will be democratised.Companies will move from astatic database-orientedarchitecture to a dynamicservice-oriented architecture,” hesaid.

“The killer application willcome from the companies andtheir business process ...Differentiation will come fromhow uniquely companies usetheir business processes.”

The primary value of SOA asan IT strategy is its design tobreak down monolithicapplications into discretebusiness services that can beshared and reused across theenterprise using standards thatimprove their interoperability.

The ability to composeservices that can then be invokedas stand alone services isintended to reduce the cost andcomplexity of integratingincompatible applications, which

is typically the case in many largefirms absorbing a new businessunit, operating in a new market,or implementing new IT systemsto comply with regulations,according to Jeff Kristick, directorof product marketing for Tibco’sbusiness process managementsolutions unit.

“Tibco customers have foundthat the true benefits ofenterprise-wide SOA can berealised most effectively whendeployed as part of an“independent enterprise service

bus,” Mr Kristick said. Thatindependent integration layerhelps to mitigate complexity bynot exposing business processesto the complexity of runningmultiple, disparate applicationplatforms.

“Enterprise applications work,but they do not need to be thecentre of the universe in abusiness,” said Ram Menon,senior vice-president forworldwide marketing at Tibco.“It should be the businessprocess. We provide the tools tomanage those business processesand help implement the SOA.”

Research firm Forrester saidthe business processmanagement software marketwas growing fast, with worldwidedemand anticipated to growmore than 20 per cent annually

between last year to 2009, whenthe market will be worth US$2.7billion.

Forrester predicted theenterprise service bus approachchampioned by Tibco would bethe most popular way to do SOA-based integration over the nextseveral years.

Mr Kristick said high demandhad so far come from thefinancial services, retail bankingand telecoms sectors.

Tibco clients in Asia includedChina Telecom, Acer, DBS Bankand the Hong Kong HousingSociety.

Burton Group researchdirector Anne Thomas Manessaid: “Despite agreement thatSOA will enable better flexibilityand agility, there’s still debate asto what exactly SOA is and howto implement it.”

Meanwhile, database softwareproviders such as Oracle andIBM, and major applicationsuppliers such as SAP, have alsoembraced the promise of SOA.

Last September, Oracleannounced its FusionArchitecture, which incorporatesbusiness process managementand SOA. IBM said its products –including WebSphere, Rationaland Tivoli middleware – were allcapable of helping companiesachieve the business benefit forSOA.

For companies just startingon the SOA adoption path or inthe middle of deploying itthemselves, IBM offers a freeonline assessment so businessescan quickly evaluate their level ofSOA exploitation and identifyhigh priority focus areas.

Research firm InternationalData Corp reported last monththat SOA, besides the software,would also cost companies interms of external services neededto adopt the strategy.

It forecasts worldwidespending on SOA-based externalservices will reach US$8.6 billionthis year, a 138 per cent increasefrom US$3.6 billion last year. By2010, global SOA-based servicesspending will reach US$33.8billion.

“There is no question thatSOA will offer a tremendousopportunity for service vendorsin the coming years,” said

Marianne Hedin, SOA programmanager at IDC.

“Service providers need togain broader and deeper skills inthe area of SOA, and positionthemselves to be activelyinvolved with clients throughouttheir long SOA journey, whichcan take many years.”

Tibco service-oriented architecture strategy

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Vivek Ranadive says there is a sea change happening in the industry. Over the next 20 years, data will no longer be controlled in one spot.

Initiative puts an end to‘architecture of extortion’ IT departments see SOA as a way to break down monolithic business applications

Report by Bien Perez

“The database-orientedarchitecture in many

companies is very rigid, itcentralises control and is

very expensive to change”Vivek Ranadive

Tibco Software chairman and chief executive

Jeff Kristick of Tibco Software

The nascent software-as-a-service(SaaS) market in Asia is about toheat up, with NetSuite attemptingto trump SAP in selling on-demand business applications tomid-sized companies.

SaaS pioneer NetSuite, aCalifornia-based firm controlledby Oracle chief executive LarryEllison, has announced keyimprovements to its recentlylaunched NetSuite 11.0 release,which brings mid-sizedcompanies the benefits of a singlebusiness management suitewithout the cost, complexity andrigidity of traditional enterprisesoftware applications.

“This is what we call ‘SAP forthe rest of us’,” said Zach Nelson,chief executive of NetSuite.

The new and improvedNetSuite Version 11.0, which hasbeen made available in phasessince April this year, competesdirectly against mySAP All-in-One, the German software giant’sSaaS solution.

SaaS is a fast-growing softwaredelivery model in whichapplications – including customerrelationship management (CRM),enterprise resource planning(ERP), supply chain managementand e-commerce – are offeredremotely over the internetthrough a subscription-based fee.Users do not buy the licence ofthe software.

With seven years of researchand development invested in itsSaaS model, NetSuite delivers anintegrated on-demand businesssuite.

Other suppliers in thisemerging market typically offerstand-alone CRM or ERPapplications.

Mr Nelson said the newfeatures in NetSuite Version 11.0put even more distance betweenNetSuite and SAP’s approach –with an emphasis on makingback-office applications such asERP as easy to use as front-officeapplications like CRM.

NetSuite Version 11.0 adds

deep ERP functionality, includingdemand-based inventoryreplenishment, landed cost andbin management formanufacturing companies;project accounting and milestonebilling for those deliveringservices; and expenseamortisation for companies withmore complex financial systems.

CRM has long beenconsidered the domain forcustomer-facing activities, but MrNelson said back-office systemsowned the most importantinformation in the relationshipwith the customer – orders,credits, invoices, payments andproduct/service delivery.

NetSuite says its Version 11.0 isthe first application to make theback-office part the strategic coreof total customer relationshipmanagement.

Every interaction by back-office users – phone calls, e-mails,meetings, documents and usernotes – is tracked in transactionrecords such as in orders,invoices and shipments, enablingthe personalisation of workflow.

The new NetSuite release alsoadded customer dashboard, used

to gather and review all thatinformation, and KPI scorecards,a business intelligence tool.

Mr Nelson said NetSuite wasrolling out this version to“thousands of firms”, includingnew customers in Japan, whichhe said was “the world’s second-largest IT market”.

More than 100 firms in Asiause NetSuite, which will beef upits presence in Hong Kong thisyear.

Springboard Research lastmonth noted that the top fiveSaaS vendors operating in Asiawere all North American –Salesforce.com, WebEx,RightNow Technologies, Oracleand NetSuite – and accounted formore than half of the market.

It estimated the regionalmarket, excluding Japan, sawrevenues increase more than 80per cent to US$80 million lastyear.

The market is expected togrow to US$501 million by 2008.

Amid the challenge fromsmaller and aggressive rivals, SAPthis month forged a new reseller,referral and solution relationshipwith IBM to serve the US$500billion small and medium-sizedenterprise market worldwide.

That alliance will focus initiallyon the United States but willexpand to about 12 countries inthe coming months. More than8,000 small and medium-sizedfirms run their businesses withmySAP All-in-One.

“The SaaS market is receivingconsiderable focus from softwarevendors operating in variousindustries,” said Dane Anderson,research vice-president atSpringboard Research.

“Global software giants, localindependent software vendorsand emerging on-demandsoftware vendors all have ahealthy dose of respect for thepower of SaaS to disrupt thecompetitive frameworks of thesoftware industry in the future.”Bien Perez

NetSuite upgrade aimsfor mid-market sectorCalifornian firm tries to grab share of business managementsoftware revenues before SAP and others get in on the act

Zach Nelson: targeting Japan