Dennis Byron has picked up the torch for the stack vendors again in his latest missive on eBizQ. First we start with the fear (some call this FUD for Fear, Uncertainty, Doubt):

But for business process management (BPM) decisions in your company, the issue is pretty clear. Another leading BPM point product will bite the dust, raising the question whether there is a future for BPM point products. IT managers and staffers have to ask–again and constantly–do I want to bet my job and my enterprise’s success on BPM point products anymore? Or is it time to move to a BPM suite? (Forgetting the technical, functional or philosophical arguments for point products, I’m not sure that all the point product suppliers don’t want to be acquired anyway.)

Ah, so now we’re betting our jobs on these flighty little startups?  Well, and it turns out that the “Pure Plays” are, in fact, BPM Suites, not single point solutions – so perhaps he isn’t making a stack vendor vs. pure play argument?  I’ll leave it to Dennis to clarify.  In fact, during one sales cycle of a BPM pureplay against BEA, BEA attempted to convince the customer that the pureplay vendor was about to be acquired – attempting to scuttle the deal.  No more than 8 weeks later, Oracle announced their bid to take over BEA.  I’m not sure that the big boys are actually safer than the pure plays in this regard…

Next, Dennis moves to close the deal in favor of the biggest integrated software vendors in the world:

Of course if you finally bite the bullet on the BPM suite philosophy issue (vs. BPM point product), why not go all the way and buy into the entire Oracle, SAP, TIBCO–and now Software Ag–stack (vs. a BPM suite from a BPM supplier that does not develop and market an entire stack)?

Well, of course the answer to this is simple:  None of these vendors has a compelling BPMS suite when compared with the so-called “Pure Plays”.  This isn’t just my opinion, it is backed up by the last 6 years of Gartner and Forrester research in the BPM space – where essentially they find that 6 years down the road, the big boys are still “just 2 years away” from having a real BPM suite.  And the touch points between BPM suites and “the rest of the stack” are really well-defined, and based on open standards (web services that can be auto-discovered, J2EE containers that are nearly commoditized).

Finally, Dennis ends with something I really don’t understand:

But don’t compare the IBM deal Phil writes about with all IBM deals. As I said in my earlier blog post, don’t compare IBM with Oracle, SAP, TIBCO, etc. And don’t compare sales/marketing tactics with value.

I just have to ask the obvious question:  why not?  It isn’t the first (nor the last) time IBM will use this tactic on a deal.  In fact, it is probably IBM’s most common tactic against BPM suite vendors like Lombardi.  And why not compare this to the sales tactics of Oracle, SAP, TIBCO, etc. when we already know that they engage in similar tactics?  BEA did this with Fuego.  Oracle bought BEA.  Do we really believe they won’t engage in some of the same tactics?  SAP has a long history of doing this kind of thing as well. Apparently we’re just not supposed to compare them because… well, just because.  Or because Dennis says so.  That isn’t a good enough reason for me.

Look, I’m not saying that it is immoral or evil to do these things – it is just a business tactic designed to outflank smaller competitors (and smaller competitors have their own sales tactics).  But the reason this outflanking maneuver is needed is because the product they are pushing is provably inferior.  If it wasn’t, the IBM’s and Oracle’s of the world would love to go head-to-head with the little guys and pound them to dust.

Having been on both sides of this equation, I can tell you it was quite fun when you had the superior product AND financial resources to really take it to the little guy in a head-to-head competition.  When you don’t, the flanking maneuver can be effective so long as the customer values the other pieces you are selling, or so long as you can convince them that another product is actually the most important thing to focus on (preferably another product that the smaller vendor either doesn’t have or has very weak representation in). I think part of the challenge for the stack vendors lately is that most customers already own their raft-load of other software (J2EE containers and integration technologies and ERP systems), and so the customer doesn’t have a compelling reason to look away from the head-to-head value proposition of the BPM software evaluation…

A quick recap of the stack vendor vs. pure play debate:

Round I occurred primarily on the ebizQ BPM In Action blog moderated by Dennis Byron, in the following posts:

• Appian/Why Not BPM?
• Pure Play vs. Stack Vendor
• Do Stack Vendors Stifle Innovation?
• How Do Stack Vendors Price BPM Software?

I think Round I essentially ended with Dennis and I agreeing to disagree – but I think the majority of comments that got past moderation supported my view.  He asked me for specific examples of stack vendors engaging in this behavior of giving away BPM while charging for, say, Websphere – before he would believe my assertion that stack vendors will give away a component against a pureplay vendor to win a deal (not just in BPM, but in any space).  Well, unfortunately any information I have along those lines is not something I’m able to disclose except in the most general way, which wouldn’t fit his definition for specific data point.

Round II is captured best in two blog posts on the BP3 blog – (and I welcome comments on our site, as they are only moderated after the fact – your comments will show up right away, and you’re only subject to moderation if they are viewed to be spam by askimet).

First, there was Stack Vendors vs. Pure Plays, and then there was a followup about Oracle’s acquisition of SUN.  In the latter post I focused on why stack vendors don’t have enough focus to really innovate… In the former post, I focused more on the overall debate:

[...] if a vendor is giving a piece of software away, you should be suspicious- anything a vendor is giving away for free (or nearly so) isn’t likely to get a lot of investment of R&D dollars going forward.  Software companies tend to invest where they see a competitive edge, and they tend to discount and under-invest where they don’t.  It isn’t irrational behavior, and it isn’t a question of good/bad or good/evil – its just the trade-off of stack versus pure play.

For some reason, others doubt these basic laws of Software physics, but I don’t.  As you can imagine, I was quite pleased to be vindicated at least partly by a recent post from Phil Gilbert, President of Lombardi, entitled with the usual flair:  “Flash: Free IBM BPMS Worth Exactly What it Costs” (for the humor impaired, he’s saying it is worth exactly the zero dollars it costs to buy it… ).  Phil rips IBM pretty good in his post, and I couldn’t resist quoting him…

So, here it is, quoted for you Dennis:

Today one of our customers said they were told by IBM: “why spend your money with Lombardi, we’ll give you our BPMS for free.” I finally agree 100% with IBM on something: their BPMS is worth nothing. Getting a cheap BPMS is like buying a dancing elephant for a dollar: cool, but who can afford to feed it?

I particularly like the dancing elephant line… but for Dennis Byron, I think you have your specific example.  Let’s take that elephant line again though.  Right, someone has to feed the elephant.  This isn’t just you, the customer.  Yes, Phil argues that the customer will have greater development and maintenance costs, and fewer process benefits, using IBM’s BPMS than by using, say, Lombardi’s.  But it is also about IBM.  How will they afford to pay their development staff on their BPMS if they are giving it away?  Someone has to be paying for software in order for IBM to maintain their development team – they have to feed the elephant.  If they can’t explain how many developers they have, how much that costs, and how their zero price solution will pay for those developers, you have to wonder how long Big Blue will keep making that investment, no? This same logic applies to smaller stack vendors, only moreso – they don’t have the financial resources of an IBM.

How else to Stack vendors use undue leverage to get a sale in a software category they aren’t really any good at:

But this notion of getting “free” or highly-discounted software from strategic vendors has currency. How many times has your company picked up some crap from some vendor because it’s on a discount schedule and you have to buy x amount of software each year to “maintain your discount.” So let’s discuss the cost of software, and the value of software.

Yep, that’s right.  They get you to buy into the notion of “maintaining your discount.”  Wow.  I sure hope my local car mechanic never learns that trick.

I have another example.  The McDonald’s near my office started giving away McCafe drinks earlier this year – to get people to try them.  I tried my free McCafe – and it was so bad I went screaming back to Starbucks.  The difference between a McDonald’s and Stack Vendors is that at McDonald’s their food/drinks have to be good enough to get my return business – I tasted the drink, and rejected the free value proposition.  At a big Stack vendor, they’re hoping you don’t actually “drink” that free drink – they just want to book the revenue, prevent a “competitor” from getting a toehold in their turf, and help you “maintain your discount.” If you don’t taste the software, you may never know you’ve been had.

As long as IBM is giving BPM away for free, maybe its time to ask why Websphere isn’t free… after all, JBoss is… Maybe they can explain why Websphere is worth some coin and JBoss isn’t?  And then maybe you can ask IBM why that same logic might not apply to the BPM space?

Phil, thanks for re-opening the subject and thanks for a very entertaining read!

Quick update: from a more recent Dennis Byron post on Open Source vs. Licensed Software:

The IBM-sponsored speaker is Matthew Brown of Forrester and the subject is portals rather than BPM but the findings and the underlying thought process can be applied to any project. The message is simple: open source Ts&Cs are like any other license Ts&Cs. And license Ts&Cs are only a small fraction of your IT project costs whether it be for BPM or anything else. And sometimes open source Ts&Cs can dramatically increase the rest of the IT project costs. To the caution of “pay me now or pay me later,” add the caution “what I give you with one hand, I take away with the other.”

Let me put this in context… IBM came to this conclusion:  License costs are a small fraction of your IT project costs.  Apply this to the debate above – that free BPM software can incur costs that far outweight the licensing costs of the paid BPM software  – whether it is opensource or just free.  And you’re actually more at risk if it is free, but not open source because you can’t modify or improve the source code yourself…

Recently read the post (and watched the screencast) on Intalio’s blog about their new “Process Table” feature.  The basic idea is that you use a spreadsheet to define your process, and then have the software “auto-magically” produce a running, executable process for you (screens and all). Interestingly, I saw something similar in Lombardi’s labs when I was an employee there, one of the “science fair” projects that one of my colleagues was showing off.  Not sure what happened to it as far as a shipping product idea, but it sure made for a neat demonstration.

I think in this family of product ideas, however, ActionBase (Click on the “take the tour” link) has a better answer.  At least, if you’re going to the depth of comparing one web video demonstration to another (admittedly not up to Dennis Byron’s standards of research!).  ActionBase proposes using Word and Email to create processes “on the fly” and relies on the software to manage the hand-offs for you.  However, ActionBase also appears to let the process adapt as it is running, if someone is assigned a task and needs to add additional items to the process flow.

Both of these ideas address processes that have lightweight technology requirements but very real process requirements.  Both pure-play and stack vendors would do well to provide better support for such scenarios, but its even more important for the pure-plays because they’re more concerned with directly assessing and meeting the needs of the business, rather than just IT.  IT-led projects won’t be as interested in “process-lite” style approaches like this, but in reality it is a great way to start extracting process out of the email stream or the spreadsheet-hand-off scenario…

Dennis Byron has a post up on the BPM in Action blog about technology for BPM in the Cloud, in which Dennis even drops the bomb that he is now convinced by his research (converted, as he put it) into the opinion that the cloud is not just SaaS redux.  There are a couple of good links off of this article for background reading as well…

There’s an even more amusing read from Forrester’s BPM Blog by Robert Richardson.  He notes just how many cloud announcements (or SaaS announcements – unlike Dennis, he doesn’t clearly delineate which is which in his post).  The announcements are proof that not only is BPM a robust market, but that there will be no shortage of either new entrants, rebranded entrants, or simply companies that hadn’t hit my radar before.  He points out that Singularity, Cordys, IBM, Vitria, Appian, and Software AG have all put out SaaS or Cloud announcements for their BPM software.  If you add in Lomardi’s recent announcement of the Spring 2009 Blueprint Release, you’ve got yet another announcement, all in roughly 2 months.

I have to admit that for me, some of these companies have a lot to prove before I believe the press releases (I need to see it to believe it) because of past history of either management or the company.  Some companies have a history of promising without delivering in this space.  Appian and Lombardi have both BPM credibility and good SaaS credibility due to their respective offerings (Vitria, for example, is clearly more known for integration, and so is Software AG, and for that matter IBM).  Alignspace is still in beta (I’ve applied but you can’t just “get in”), but is the most “BPM-like” thing I’ve seen from Software AG yet.

I think its a good play for most of these firms, at least from a marketing point of view (not knowing how much their investing I can’t evaluate whether it is a good R&D investment): firstly, they potentially get to change the conversation to one centered on the SaaS-ness of the offering, rather than the BPM-ness of the offering; and secondly, they get a round of press about the SaaS or Cloud aspects of what they’re doing rather than just the BPM buzzword which is, no doubt, a little harder to excite journalists and bloggers with!

The News

So Oracle just bought Sun.  I didn’t think this had any real bearing on the BPM market because I couldn’t think of any BPM software that Sun has been pushing.  Dennis Byron of ebizQ confirms in his article “Does Oracle/Sun Mean It’s a Horse Race for BPM?” (registration required but it’s painless, I assure you), that Sun has already pretty well “de-emphasized the BPM-related elements in the remnants of SeeBeyond, which it acquired in 2005.” The only impact I expect the acquisition to have on BPM is that it assures that Oracle’s thought leaders will be spread even more thinly as they work hard to incorporate Sun’s many software offerings, not to mention as they try to figure out the hardware business for the first time.  BPM is such a small part of what Oracle does now, that it is hard to imagine it won’t get starved for attention inside the walls of Oracle.

The Background

This is an argument I’ve been having on-and-off with Dennis Byron of ebizQ this year, and in a  previous post on the subject,  I summarized my arguments that had been scattered across a few posts on Dennis Byron’s blog.  Dennis largely took the side of the big stack vendors, arguing that they innovate as much as the little guys (in general, and in BPM).  I took the general point of view that while stack vendors bring advantages to the table, innovation is not chief among those advantages, and that the innovation in the BPM space (and in most spaces) comes from the upstarts and smaller companies.

From the Analysts’ Mouths to…

Well, not that Gartner is the final word on everything, but their statements over the last 4 years are pretty illuminating, from my perspective (thanks to the folks at the Lombardi partner conference for bringing these front of mind):

Gartner, 2005: “Current offerings from IBM, Microsoft, Oracle and SAP provide weaker support for human workflow patterns integrated into a broader process, business-user-oriented rule definition and maintenance (for decisions, re-sourcing and flows), human collaboration, and integrated document and content flow, compared with popular pure-play vendor products [...]” – “Business Process Management: Act Strategically and Buy Tactically”, Gartner Group, June 21, 2005.

In other words, in summer of 2005, the assessment was that the stack vendors just “weren’t there yet”.  But the prevailing view was that if we just gave them another 18-24 months they’d get there.  Even the pure play vendors themselves worried greatly about growing as fast as possible during this “window of opportunity” while the stack vendors were playing catch up.

But, in 2007, what did Gartner have to say? Paraphrasing, their 2007 report noted that none of the stack vendors had a good, integrated experience for people playing a role in process improvement life cycles.  They specifically called out IBM, SAP, and Oracle on this.

Again, everyone thought, if we just wait 18-24 months, these guys will catch up.  The analysts would say it, the stack vendors said it, the pure play vendors again attacked their “window of opportunity”, worried about what would happen in 2 years when the stack vendors “caught up”.

And then in 2009,

“Products from IBM, Oracle and SAP do not yet address the ideal BPMS use case – even in vision – and this can’t be overcome by sheer marketing and sales. “ – Gartner BPMS Magic Quadrant, 2009.

Side Note: Examples of the marketing are everywhere, such as the SAP/Aris positioning here… I’m not sure if the use of punctuation and capitalization are supposed to lend credibility to the offering or just make it harder for spellchecker to check your work… but Chemical.PerformanceREADY as a product name doesn’t give me a feel-good that SAP and Aris have really gone deep in the chemical business and committed to it – the name doesn’t identify what processes are covered, and is so vague that the definition of the product could be that it runs my whole business or that it runs a background check (HR) process tuned to the chemical business.  And there’s a neat set of concentric circles that try to make standard SAP implementation sound easy.  But, having said that, at least the Aris division of SAP is beating the BPM drum whole-heartedly, which is more than we can say for most BPM-related software packages acquired by stack vendors.

So, essentially we have 4 years of reports on BPMS, and the “stack vendors” still haven’t provided a unified BPMS that really addresses the use cases that pure play vendors address. Meanwhile, pureplay vendors have shown a lot of innovation in terms of deployment scenarios (hosted, on premise, SaaS), and new software features.  If, in 2005, you put off your BPM implementations for 2 years to get the latest and greatest from the Stack Vendors, you’d still be waiting today, 4 years later, and the expected wait is…. still 2 years…

Why?

This isn’t an issue of capability. Each of the stack vendors has produced world-class software in other areas, and each of them employ a bunch of world-class engineers.  But BPMS has not received the attention, focus, and thought leadership that it requires for these vendors to be successful.  The folks making product decisions around their BPMS products may still think of BPM as a check-mark on their SOA software stack, and in any case they don’t seem to understand the incredibly broad potential of BPM (and of a BPMS). It looks to me like even the analysts (e.g. Gartner) have grown weary of the posturing of the stack vendors absent any real delivery compared with the pure play vendors.  And it isn’t lost on me that in general, all of the stack vendors have acquired pure play vendors only to see their pace of innovation stall or stop as they figure out how to integrate the new software (often in this argument, it is pointed out that since stack vendors buy pureplays, they “inherit” that innovation, but it just doesn’t work out that way in most cases).  And then because they’re often giving away the BPMS on the back of a stack SOA offering, they aren’t seeing the dollars attached to BPM that would drive them to increase their investment (self-fulfilling prophecy)…

Of course, in 18 to 24 months one of the stack vendors could surprise me and “catch up” to the pure plays (through actual engineering effort, not just by purchasing one of the existing pure plays), but I’m not holding my breath just yet.  If you want to get ROI in the next 18-24 months, go pure play, and get those projects in production.  And then see where the market is after that… and which tools make the most sense for the next leg of your process improvement journey.

So Who is Going to Win?

I don’t pretend to know who is going to win the BPM/BPMS market.  However, as a customer, I would be wary of pure play vendors that sell to stack vendors, when that stack vendor is not putting all their weight behind BPM and BPMS. If the stack vendor isn’t re-aligning their business behind BPM and expecting a significant percentage of their revenues to come from BPM, then the pure play vendor will likely suffer the fates of staffware, fuego, collaxa, and others who have been absorbed and (nearly) forgotten by the market. If you’re a pure play vendor, and you want your venture to succeed within one of these stack vendors, you need to make sure they’re really aligned with BPM – that they believe it is the future of the enterprise software business.  If they don’t, I wouldn’t have much faith that they’re really going to invest in the engineering needed to succeed.

Dennis Byron published this article back in March, but I missed it.  Part 2 of 2, the focus was on the CFO’s requirements.

From our perspective, the key passage is right here:

As mentioned above, through your CFO’s (or CEO’s) intervention, your company’s partners may affect your BPM-enabling technology choice. In addition, CFOs may be interested in the partners of your BPM suppliers. Often the association of a BPM software supplier with a big-name consulting firm such as Bearing Point, Patni or Accenture will provide CFOs peace of mind even if you actually use the services of smaller BPM consultancies.

For example, a professional services supplier such as bp3 has a close but non-exclusive relationship with Lombardi Software, and you might want to look for such product-complementary partners once you have finalized a choice of technology supplier.

(Our emphasis on BP3, above)

I happen to agree with this point, and clearly our customers do as well.  Often as our customers are choosing a software vendor, partnerships with big consulting or outsourcing firms are part of the evaluation criteria.  Equally often, they are interested in BP3 (or companies like ours) doing a piece of the work or being responsible for the core BPM delivery.  Customers want to know that they aren’t “locked in” to a single consulting provider, and they also generally want access to boutique firms that are really experts in the area, in addition to the big, generalist, firms.

I went back and read part 1 as well, and its a good read, with broad mention of vendors in the space and their pedigree- and proof that there is still no shortage of software vendors to the BPM space!  Which, I think, just proves that business process touches everything.  I suspect we’ll see a whole wave of BPM software in OEM deals and arrangements going forward, to put BPM closer to the many problems that other software already (mostly) addresses. I thought it was interesting how many of the software vendors mentioned were previously service providers.  For service companies entertaining becoming software companies, I’d recommend reading a previous post on this subject (you can skim by reading the first two paragraphs and the last three paragraphs if your time is limited).