For the last couple of years, many of us in the BPM world have wondered what exactly Ishmael and his crew at Intalio were up to.  They made a series of acquisitions and investments, the purpose of which wasn’t quite clear to much of the BPM community, because it included a CRM solution and a focus on cloud computing.  But when we finished talking, it was clear to me that Ishmael has simply made a different bet than most of the rest of the BPM community.  While the mainstream of BPM innovation has been focused on BPMN2, modeling and collaborating in the cloud, and tweaks to the method and thought process like ACM… Intalio has gone a contrarian route-  retooling and refocusing on BPM in the cloud – but not by dabbling, by jumping with both feet, so to speak.  This is the long game rather than the dink-and-dunk short game.

It is a bold move, and Ishmael makes the argument that if you really want to play with the big boys, you need to make the investments that Intalio has made in a vertically integrated stack for cloud computing.  Rather than writing all the code from scratch, of course, Intalio is relying on a bevy of open source software.  A quick look at this page reveals just how many open source projects are involved in Intalio’s offering (and that’s just on the application engines side).

A heavy focus on open source software might cause you to wonder how Intalio makes money.  Intalio contributes to some of these projects, and just leverages some others.  the distinction that Ishmael made is that while the open source project for, say, the process engine (Apache ODE and Drools Flow), is free and open source… The entire integrated solution that Intalio is offering is commercial.  You are, essentially, buying a professionally prepared 10 course meal, instead of just getting all of the ingredients for free, so to speak. As Ishmael points out, customers do not mind paying for commercial software today that includes open source parts (nearly all of the commercial BPMS offerings today include at least some significant open source project code).

Ishmael went into great detail about the investment required to make Intalio’s PAAS offering virtualization- ready – the upfront investment to natively leverage SpringSource and the like is significant. But once there, it is much easier to scale application deployments.

We walked through a pretty compelling demonstration of the authoring tooling – which was browser-based, and he scored bonus points with me by running the whole stack on a Mac (attention commercial BPM vendors: your users and developers want Mac, iPad, and iPhone support).  The ability to model data, leverage it in user interface and process diagrams, and deploy it quickly, is compelling.  It doesn’t *feel* like a BPM tool, it feels like an IDE for building apps in the cloud.  Perhaps that is the intent.  To make BPM a feature of the environment, so to speak, rather than the centerpiece of the environment.

I asked Ishmael, given that this seems like both a horizontal and global strategy and a great number of component projects that make up their product offering, how does Intalio decide what NOT to do?  We had discussed why he had made the investments he’d made, but how do they decide what not to do?  Ishmael’s take is that they are throwing the long ball – seeing themselves as a much smaller version of a Microsoft of the 90′s, where:

• The operating system is the cloud instead of Windows
• The “development studio” is Intalio Studio instead of Visual Studio
• The productivity suite is Intalio Docs instead of or in addition to Microsoft Office

Another analogy he gave is RedHat – providing the glue to pull together open source projects into coherent commercial offerings.  There are many execution challenges, but if you pull it off and execute, you’re in very good shape because most competition is either too small to deliver, or too big to abandon their existing commercial software business (or not nimble enough). His example of too large:  he argues it would be very hard for IBM to come to market with an integrated product that is also virtualized for the cloud, because there are different P&Ls within IBM’s software group, who aren’t going to work together on one seamless offering. Others might argue these points differently, but given Ishmael’s thinking, the strategy he’s pursuing makes sense in that context.

The pricing model is free up to 5 users, and then scales up in price as you expand the solution.  This makes it easy to prototype solutions, and scale cost relative to the benefit achieved.

In some respects, what Ishmael and Intalio are trying to do is offer a compelling software stack for process applications in the cloud, but also removing many of the barriers to entry companies would normally face.  One could argue that they are trying to make BPM in the cloud simple enough that mere mortals can attempt it.  And Ishmael claims it isn’t just a superficial attempt to band-aide these projects together – that they’ve thought and worked hard on every level of the stack – from hardware, to virtualization, to Infiniband networking, to the more obvious software layers that developers interact with.  The conversation with Ishmael about these topics reminded me of my conversations with Phil Gilbert of Lombardi about making versioning relevant to BPM authoring (that it isn’t enough just to check things into subversion, that real versioning requires a much deeper understanding of process authoring).  Versioning was Lombardi’s long pass in the last couple of years leading up to the acquisition by IBM. And the point of this kind of deep investment in both cases is to create simplicity out of complexity – to provide truly useful abstractions to the customers of your software.

Three is risk that Ishmael and Intalio may have made this investment “too early”.  I recall in the 90′s a firm that made a bet on server-side Java runtime environments a bit too early – betting on JRun, which was a pretty immature platform.  A year later, when the product suite was ready, the whole thing could have been accomplished in 3 months on top of newer commercial application servers (e.g. Weblogic).

Time will tell if Ishmael’s long pass pays off – he’s either stolen a march on the competition, by getting “fully cloud-enabled” early, or he’s made the march too early and paid too heavy a price to get there.  If he’s too early, we’ll know because other “mainstream” BPM vendors will quickly follow with fully cloud-ready BPM stacks.  If he’s stolen a march, then Intalio will use its technical advantages (perceived and real) to drive more business at the expense of others.

Related posts:

1. Another Take on Intalio’s Cloud
2. The Long Game
3. Mashup Tools for BPM

I’m wondering what other BPM tools are showing off functionality like this – or what other mashup utilities can be easily plugged into existing BPM products.  If you have experience with this put a comment below or drop me a line, I’m definitely interested, and I think it would be good for more people to know about it.

Related posts:

1. The Rise of “Social” BPM Tools
2. The Process around Social Tools
3. Why use BPM over other workflow tools?

However, outside of Pega, who of course is publicly traded, the results lack enough meat on the bone.  If Savvion won every competitive deal they were in, and Pega‘s license revenue was up 60%, then that statistic tells me that Savvion is missing a lot of deals (maybe north of $50M worth).  Appian quotes statistics about customer acquisition and “new orders” but leaves us wondering how that turns into revenue – ie, if orders are up 67%, does that mean that Revenue is up a similar amount?  bookings?  or did the ASP (Average Selling Price) decline?  Can’t tell.  Further muddying things is the fact that Pega doesn’t break out any of its non-BPM revenue from its BPM revenue.

I haven’t seen Q2 or 1H announcements from Lombardi or Intalio yet – but if I missed them please chime in here and help me out!

UPDATE: Pega’s Q2 results came out, and it reported 25% increase in revenue from Q2 2008 to Q2 2009.  Pega’s CEO reports that they are growing faster than “the market” though I’m not sure if he means the software market or the BPM market in particular. 25% growth is a pretty good result in the 2009 economy.

UPDATE (8/25/2009): Lombardi issued a press release on its 1H2009 results.  In the press release, Lombardi reports double-digit growth (though 10-99% is quite a range), and it also reports being profitable and adding to its cash reserves.  Lombardi goes on to tout its historic growth rate, market share gains, analyst reviews, product releases, etc.

Related posts:

1. Appian 2009 Results
2. A Few Shots Across the Bow of IBM
3. Lombardi announces 2008 Results

First, there is the natural (at this point almost knee-jerk among us techies) skepticism toward anyone flouting that “cloud” buzzword.  After all, most of the “cloudiness” (is that appropriate?!) comes from virtualization technologies, and not from the software vendors.  In a sense, the software vendors have to “get out of the way” of the virtualization.  This is similar to what I used to say about a good J2EE application – if it does its job right, it “gets out of the way” of the J2EE container and let’s it do the clustering, transaction management, messaging, etc. (or, at least, the configuration of all of the above).

Second, Mr. Tuli praises Intalio’s acquisition strategy.

Third, he expresses concern about the nature of the sales pitch – that it might be too focused on the big enterprise clients, rather than on the open source community which is using various Intalio products.  If I can take the liberty to quote his best passage:

And I found myself concerned about Intalio’s early open source community users (there are some 50,000 companies in that crowd), but there was no mention of what was unique in the new Intalio for them. With these upcoming acquisitions Intalio would soon have some 10-15 million customers, and with this so called Boxing I just felt that perhaps the Bazaar was being boxed neatly into a Cathedral.

Finally, he finished with a critique of the maturity of their support of the open source community that uses Intalio’s software, including a lack of documentation.   In the comment stream, an Intalio developer responded to the lack of documentation, pointing out: “As I say from time to time on the forum, we need to eat at some point, and training, helping people is where the most painful part of our job is.”  And this is where you find the sticking points with software companies – when the simple analysis might be that improved documentation would undermine training revenue.  It isn’t true, actually, but it is easy for software companies’ personnel to come to this conclusion.  Specifically in the case of an opensource company, it might be reasonable to accept small payments for improving documentation on behalf of customers, much as they might accept payments for fixing bugs or adding features to product specifically for a particular customer (I’m not sure if Intalio does this, but certainly it has been done on other platforms, like oscommerce, by developers who contribute to that project).

Overall it will be interesting to see how Intalio’s strategy plays out and where it leads for the company.  It is, at the least, a different strategy than what we’re seeing from other BPM vendors, which makes it interesting to read about and interesting fodder for blog posts!

Related posts:

1. Intalio Crows about New Offerings
2. Whose Cloud is it?
3. Updates on the Cloud and BPM Community

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…

Related posts:

1. ActionBase 6.5
2. Data Warehouse… Process Warehouse?
3. A Process is only as Simple as it is

We’ll have to see how the acquisitions shake out for Intalio, but none of this sounds like bad news for the BPM space.   Its a very ambitious play for Intalio.  On this page, Intalio announces its utility pricing for on-premise solutions.  Again, they’re painting a pretty ambitious picture for what they’ll set up, including VMWare vSphere as the hypervisor.  The pricing at first glance looks a little high to me- but that is based on my thumbnail cost+ consideration, rather than comparing to what other solutions cost when priced the same way (at $10/GB of memory, paying $0.10/hour/GB means that you’re paying $10 for 100 hours of 1 GB, and you keep paying going forward).

UPDATE: In another page, Intalio rolls out their new slogan and messaging, answering my question above as to “why enter the CRM market?” to some degree- they’ve given their view of the value-play in that space, but haven’t fully explained the rationale behind their move into the space from a strategic point of view.  The three limits Intalio targets:

1. Deployment options – Intalio offers their CRM package on-demand, on-premises, and managed on-premises.
2. Programming language (for customization and custom extensions) – Intalio claims Salesforce only supports APEX and Visualforce, while Intalio supports a number of standard languages.
3. Capacity and Performance – Intalio appears to be offering bigger file sizes, etc. than Salesforce.

Again, interesting stuff from Intalio, and aggressive positioning.  I’m curious to see how it plays in the marketplace, and definitely interested in reading any comments, emails, or posts from folks who are using the Intalio cloud offering!

Related posts:

1. Another Take on Intalio’s Cloud
2. (Reading about) Eating Intalio’s Dogfood
3. Intalio’s Long Game

Coghead may or may not be an example of a SaaS BPM tool.  It has typically been described as “a web-based enterprise software editor that featured an unusually intuitive interface”, and typical competitors were seen to be tools like Intuit’s Quickbase, though I imagine some others might consider Coghead a competitor.  I believe Intalio‘s BPEL engine was used under the hood at Coghead.

Part of what got my attention on this matter though, was TechCrunch reporting that Coghead received $11M in funding.  It reminded me of a previous discussion on Sandy’s Column2 blog regarding Appian’s funding round of $10M to fund the SaaS model Appian is increasingly moving to.  At the time, I felt that $10M might not be enough for a company to develop a successful SaaS solution.  Although SaaS seems like a low-cost way to get a business started, and it *is* in many respects, customers also don’t sign big up-front checks in most cases- a few of which can solve lots of funding problems: specifically cashflow problems.  Spreading that cashflow over 3 years, for example, may be sensible, but it is really a transfer of risk from customer to vendor (the increased risks: customer can cancel before paying the full amount, customer may be purchased/merged/forced into a failure to complete the transactions, vendor has to provision all equipment, vendor has to maintain a happy customer for 3 years to continue to collect the money).  On the other hand, once this model gets going, it can be very successful and sticky (see: Salesforce).

Regardless, Coghead shows that $10M may not be enough.  I think there are people in the business who could make that work, but if you are figuring SaaS out as you go, $10M can disappear all too quickly.

(PS-  I love the crunchbase widgets.  now all I need to do is find a wordpress widget/plugin that will add them auto-magically for me!)

Related posts:

1. Managing the Complexity of #SaaS, #Cloud Applications
2. The BPM Experiment is Over
3. Emergency Cost-Cutting

One of the complaints oft-voiced is the inclusion/exclusion of various vendors.  Dennis Byron contends that the language for inclusion isn’t really clear:

The companies covered are said to be “the top 22 vendors offering multiregional, cross-industry business process management suites (BPMSs) that interest Gartner clients and nonclients the most. These vendors account for most spending in the BPMS market. See (Gartner’s) Market Share: Application Infrastructure and Middleware Software, Worldwide, 2007.”

I am not sure how to parse the qualifier. Is AuraPortal one of the top 22 vendors as measured by spending-based market share? Spending may be the operative words; turn it around to revenue and I find it hard to believe that Aura is larger than Sun (nee SeeBeyond) in BPM. I also don’t see how Sun would not make the cut based on the capabilities criteria. No content maybe? That’s a little too granular for my taste.

Gartner does explain why it does not include Autonomy, Handysoft, Magic iBolt, NewGen, Vitria and a few others as well as why it dropped a few suppliers previously included in its previous BPM MQ such as Captaris and SunGard.

But I guess I give the analysts a pass on this one, as I’ve been in the BPM space for long enough to know that Gartner is already including *too many* vendors in the space, which legitimizes vendors who really aren’t in contention, rather than too few vendors.  From my time on the vendor side of the fence, most of the vendors on the quadrant were rarely involved in competitive sales cycles with the top couple of pure plays.

There are also some hidden nuggets of irony in the report, such as the note that IBM has a Smarter SOA compaign about how SOA and BPM work better together… this is a message that BPM evangelists have been expounding for years, while IBM and fellow SOA (stack) vendors argued vehemently that SOA didn’t need BPM or that BPM did not, in fact, better inform SOA efforts… (no fault of Gartner here, it is just a single bullet on a list of quick-hits on the various vendors).

I was also pleased to read the assessment that Lombardi customer references “are among the most advanced in BPM maturity. They demonstrate broad adoption of BPM across an organization that yield transformative business results.”  Process maturity is like a tree, whose seeds are planted and nurtured over a long period of time in order to yield a tree that will bear fruit (savings).  Several of us at BP3 were senior members and management of Lombardi’s professional services staff or within deployments of Lombardi’s software, and can rightly feel pride in fostering a culture of BPM adoption at a great number of Lombardi’s customers, as well as within Lombardi itself.  It is always gratifying to read that someone else recognizes the fruits of your labor (even if they don’t know of your efforts!).   Gartner also points out a few Lombardi weaknesses, around smaller deal-sizes and support for case management, and templates and frameworks.  These are weaknesses that can be addressed by working with certain independent professional services firms!

There are notes, of course, on all of the vendors, that are well worth reading.  In particular I thought the assessments of Appian and Intalio (the written part) were fairly spot-on to the feedback I’ve heard from our prospects and customers (both pros and cons).

One other thing I liked:  on the Ability to Execute axis, Gartner (appropriately) reduced the weighting of the “viability” part of the ability to execute evaluation.  I’ve always felt that that part of the quadrant received too much weight, to the benefit of very large software vendors, and to the detriment of perfectly viable, but smaller, independent vendors.  (Viable was generally synonymous with large revenues, and a bit self-reinforcing)

Related posts:

1. Merry Christmas!
2. Merry Christmas!
3. Oracle Buys Sun: Returning to the Old Stack Vendor vs. Pure Play Debate

However, the point raised by this is a valid one.  Often software startups write software that is purported to help with some general-purpose endeavor, but then fail to employ their own software for their own business.  At a previous employer, we wrote software to improve salesforce productivity, but we didn’t use our own software in our salesforce.  I think that not using our software actually hurt our business, and hurt our ability to understand customer complaints and issues.

While I was at Lombardi, we used our own softare (Teamworks) for building the support site.  It had great advantages for the company over using a pre-packaged solution:

1. Our support staff had to become very intimate with our product in order to build the support site.
2. We gained an important production beta-test site for new releases.
3. We gained an important migration site from one version of software to another.
4. We could actually see our own warts.

Lombardi also used Teamworks for certain internal processes – running the build and test processes for example.  But we didn’t use Teamworks to run our sales process – we used Salesforce for that – for the simple reason that Salesforce is a specialized application around that process, and the benefits of using a mature technical solution outweighed the benefits of eating our own dogfood.  And, as it turns out, it helped us understand how to help customers with processes that Salesforce didn’t quite handle.

One thing I learned about using your own software:  the commitment to develop the applications has to be critical to getting your job done, or include support from the top.  Support from the top doesn’t just mean “I like that idea, go do it!”, and it doesn’t just mean tacit support of getting it done, or even pressure to get it done.  It means providing the air cover, equipment, time, and funding to get it done.  “What funding?” some would ask – after all, you own your own software.  But if you are applying a developer’s time to an internal task, that is time she is not spending on product development – an opportunity cost.  If it is a consultant, then your opportunity cost is that consultant’s hourly rate, plus the cost of a potentially under-served customer base.  So there is a real cost to the time devoted to internal projects.

Why air cover?  Because there will be demands to pull you or your staff away from these internal improvement projects – just like there are these demands with your customers’ teams.  In order to resist the temptation to distract your team with too many competing priorities, you need to provide the air cover for them (with your management), or your management needs to offer that air cover to you.

Equipment?  You’ll need to deploy your application somewhere when it goes into production.  It may not require dedicated hardware, but you need some kind of environment to deploy to, and the support of your IT staff to keep it up and running.  You may well need development hardware and test hardware (or allocations in a shared environment, which again will require support from the IT staff).

If you get everything lined up, there can be a lot of benefits from deploying your own software internally – and those benefits tend to last and build on themselves over a long period of time.  But if you are missing the key ingredients you run a pretty high risk of delay and/or failure.

Related posts:

1. Recommended Reading: Thoughtful Programmer
2. Required Reading for ACM & BPM Advocates
3. BPM Blogs Worth Reading

I want to discuss this theme in three parts:  The Case for Change, The Proposed Solution, The Proposed Benefits.

The Case For Change. The economy is hurting, and logically software vendors selling perpetual licenses will be commensurately hurt by reduced purchasing plans.  It isn’t a bad premise, though I will point out a couple of things.  During a slowdown in the early 90′s, software that had good ROI sold at accelerated rates, while software without large ROI stagnated or didn’t sell at all.  Products that extracted cost from expensive operations enjoyed great success.  On the other hand, during the 2001-2003 slowdown, I saw something else happen.  Instead of buying software to make complex processes and operations more efficient, I saw companies dramatically simplify their processes or products to eliminate the need for software (for example, PC and Server configurations became dramatically simpler, and fewer configurations were offered.  The same thing happened in telecommunications.  Complicated sales processes got streamlined).  I can’t say whether the current economic environment will spur more software sales in BPM or less… I have visibility to the deployment side, and companies that already own BPM are looking to get more ROI out of that software $.  But for those without BPM software, I’m not sure that they can effect the same kinds of rapid ROI that BPM platforms provide, and therefore I’m not sure how many of them will back off of plans to acquire BPMS packages.  Ismael asserts that many of their purchase plans will change.  I’m not so sure. If I look to 2003 and 2004 as examples, IT departments dramatically cut spending in the 4th quarter to preserve earnings for the current year (and yet, it didn’t stop BPMS vendors from selling in those quarters).  In the new year, however, priorities were reassessed and projects that were deemed to have a large probability of a large ROI were started. I can’t say for sure how this year will play out yet for BPMS vendors.

So, I’m not sure I buy the economic argument. But I do buy that replacing proprietary solutions with open source solutions or de facto standard solutions makes sense. Why? well, you focus your engineering efforts on the parts that differentiate you, and you rely on the Open Source community to provide for the plumbing elements.  If you find a bug, you fix it, build it, submit it back to the community, and benefit from gradually increasing quality of the overall solution.  Ismael uses the Database example, but I’d say this analogy isn’t perfect for his purposes, because the “winners” in the database space have been primarily licensed software vendors. A better example for BPMS solutions would be the J2EE stack.  Once upon a time it would have been hard to avoid using Weblogic or Websphere, but JBOSS has become a viable solution, and it doesn’t have additional licensing costs (though, the support contracts are actually quite expensive at present).  And you certainly wouldn’t want to write your own J2EE or LAMP stack for your BPM product – you want to focus on BPM and let someone else solve those interesting platform problems for you.

The Proposed Solution. Ismael proposes embedding (OEMing) Intalio‘s BPEL engine in competitor products. In terms of his Blog post, it looks like “BPEL Engine” and process engine are being equated.  However, I think that several of the vendors use something closer tied to the parallel processing notation BPMN, rather than to the XML notation BPEL (there is a brief reference in his post that BPEL’s pi-calculus is better than Petri-nets, but without any supporting data directly in the blog post, since I think that was a bit of a tangent… and certainly doesn’t fit in this post!).  So while they may use a conversion of BPMN to BPEL and then in turn use a BPEL engine, it isn’t necessarily the case (they may, in fact, have a BPMN engine using some other technology).  This introduces some friction for vendors to adopt Intalio’s BPEL engine as a literal replacement for their own processing engines.  Nevertheless, I’m sure some vendors would benefit from getting a BPEL engine embedded even if it isn’t their main processing engine… (and therefore, worth it for Intalio to pursue such agreements where possible)

Looking at his database analogy… This isn’t the same as deciding not to build your own DB and “outsourcing” this technology to Oracle, Sybase, or MySQL… Its actually the equivalent of Oracle deciding to replace their Database Engine with MySQL or PostgreSQL on the grounds that they are cheaper and scalable and times are tough so Oracle could save some money by doing so… but read on for why that may not be their decision…

The Proposed Benefits. No more investment in “stack” technology, pick up a scalable BPEL engine.  The key here is, does the BPEL engine Intalio produces eliminate any competitive advantage or perceived advantage, that the other BPMS vendors have vis-a-vis the competition due to their own respective process engines?  I can’t answer that question for the BPMS vendors, but if we go back to the Oracle analogy, I think Oracle has done quite well (so far) by sticking to their guns and their own DB engine.  There are switching costs that can’t be underestimated too badly – its costly to switch someone from one Database to another… not to mention the monumental task Oracle would have of switching their own software stack to run on an open source database.  Similar friction would exist for the BPMS vendors to switch their process engines out for a BPEL engine.

Conclusion. So, it isn’t that I think this is a bad idea, I just think the bar may be really high, and I’m not (yet) in a position to judge if Intalio passes the bar (or if the other vendor solutions don’t set the bar high enough).  Ismael and Intalio should keep pushing this angle though, with the BPM vendors.  I don’t think any of them will be picking up the phone to call Intalio, as Ismael suggests, but I would suggest he approach them about co-development and OEM agreements.  Having the industry solidify around a common process engine would be a good thing, assuming that process engine is truly superior to all the engines out there today, and might help accelerate adoption of certain standards and innovations.  It would make it easier to expose useful APIs to the developer world (Ismael has some posts about building for developers that are pretty good too), it would make it easier to write solutions that will work across more than one BPMS vendor.  And it would make it easier to push BPMS education down into the college levels at some point.  Still, it looks like a tough hill to climb from here.  Keep fighting the good fight, Ismael.

Related posts:

1. BPMN vs BPEL (again?!)
2. Another Swipe at BPEL
3. Takedown: Bruce Silver has had enough of the BPMN vs. BPEL Debate