Jiasundar’s post on Google Wave finally turning out the lights reminded me of our own attempt to collaborate on a blog post via Google Wave. We got reasonable far with it but ran out of steam – I think partly due to some of the very shortcomings Google Wave started with.

Basic issues of connectivity – very few of our colleagues had Google Wave accounts.  We couldn’t trivially add them even if they were Gmail or Google Apps users already.

Basic issues of control – once someone was added to a Wave you couldn’t remove them.  And anyone could add someone.  That kind of permissiveness actually reduces sharing.

Minor issues of control – the Google Maps mashup was promising.  But I found you couldn’t control the location and sizing of the map presented – to show a specific region, at a specific zoom.  Pretty well defeats the purpose.

Overall the service raised the question – if a tree falls in the woods, but no one is there to hear it, does it make any noise?  If collaboration happens in the Wave, but no one is there to see it, does it still make progress?

Ultimately Google Wave failed more because of a lack of discipline and will than because of any specific technical or usability hurdle (I’m not aware of anything that couldn’t have been fixed).  It would have made for an interesting mashup with BPM, as SAP’s demonstration of Gravity showed.  But it needed to mature before it would be appropriate for an enterprise setting.

Jaisundar recaps the BPM community’s reaction to Wave – which I would characterize as initially one of panic in some corners, but I wasn’t too concerned personally, for this reason:

It isn’t really Google’s intent to build a BPMS.  They don’t think of the problem Wave is solving as a “process”.  As a result, they’re unlikely to take it in that direction.  I don’t think you end up with a good BPMS my accident.

Intent matters.

Good post from our friend Jaisundar at BouncingThoughts:

The real key to agility will need to come from your people. Your culture.

Here is how I look at it. Technology may contribute to an agile organization, but mostly the root of agility lies in the collective consciousness of an organization.

To be fair, I think many people look at their organization and see the potential for agility, but look at the tooling available to that organization, and they don’t see the technology to support agility (e.g. working inside a monolithic ERP system to create process change…)

BPM is a contributing but not sufficient ingredient for agility.

The news hit the wire this morning (early for me, as I’m sitting in San Francisco this morning).  I got a phone call at about 5:20am PST to give me the news (thanks, I think?!).

The Lombardi press release touts a shared belief in customer success, a good product and culture fit, as well as good ole market opportunity:

“Any discussion on business improvement inevitably leads to improving the processes that are at the heart of every company,” said Craig Hayman, general manager, IBM Application and Integration Middleware. “Recognizing this, IBM has strengthened its presence and investments in business process and integration software to meet these growing client demands. Lombardi fills out our company’s portfolio in this key area.”

Lombardi already supports Websphere, and  was an early adopter of the app server in the BPM space (I can testify, I was there with Lombardi’s first Websphere clients).  In Austin, we’ve certainly seen a history of IBM successfully acquiring and expanding software companies that were acquired (Tivoli and Webify come to mind).

I’m sure there will be more news as the day(s) go on, I’ll try to just keep this post updated with the latest, unless something comes up that deserves an entire post on the subject.

Congratulations to the Lombardi team, who have been breaking ground in the BPM space for years now, and yet staying focused on making customers successful, not just on the latest bell or whistle on the product road map.  I think there’s a good chance, depending on the structure of the takeover, that some of Lombardi’s DNA will rub off on the BPM-focused parts of IBM.  I can see the effect Webify has had on IBM’s efforts, and I always thought Lombardi’s and Webify’s products would make for an interesting combination. Now we’ll get to find out, I guess!

More to come…

IBM press release here.

UPDATE: 12/16/2009 7:20am PST
Keep up to date with what the analysts (and others) are saying on Twitter:

And then we have a post from Phil Gilbert on “The Second Decade of BPM“. Phil’s take on where BPM is headed, with an interesting look back:

I can’t begin to convey the impact this will have on how and where BPM will be practiced, going forward. In the blurb above on this blog site (which was posted when I started this blog in 2005), I said that by 2010 process will be the primary prism through which large companies view themselves; and that by 2020 the management of process will be “second nature.” The first of those milestones has come to pass: process is not simply the way business operates itself, but manages itself.

Phil has a pretty good sense of the big picture.

Second, because Lombardi has focused on the business user, we have also focused on how to engage and support the business user. The work we’ve done on culture, change management, governance and BPM methodology is the best in the industry. Lombardi University and its role-based curriculum, along with tiered certifications and advanced mentoring, means that Lombardi can help IBM scale their business customers more quickly into the world of BPM. Lombardi’s On-Demand Assistance program is also built from the ground up to allow fledgling BPM teams built on business-first principles to still have a technical safety net under them.

This quote illustrates for me what I hope Lombardi can bring to IBM. A better understanding of how to support the business and help them achieve success via BPM, and a better sense of what BPM really could mean for the business world.

UPDATE 12/16/2009 8:45am PST
Austin Startup is carrying the standard press release.

And ebizQ has already launched a forum topic on the subject.

UPDATE 11:35am PST: More great coverage and viewpoints:
Dennis Byron discusses the acquisition, and is focused primarily on eliminating one more option from potential customers, and the inexorable force of consolidation.

Redmonk gives props to the Austin software and enterprise scene, as well as to the deal-making by IBM. The big question is how well IBM can incorporate Lombardi without losing its DNA.

Miko Matsumura posits that this might have been a firesale based on the language of the press release. Could be, Miko has more experience with this than I do. Regardless, I think the timing was good for IBM because I expect 2010 to be a big year for BPM software.

Sandy Kemsley chimes in with the best run-down of the analyst call.

Update EOD 12/16/2009:
David Moser of Australia weighs in. He points out which communities might win or lose, based on this deal going through, in particular which customers. But he also points out:

And with what should be a significant boost to their market, some of the biggest winners could be Lombardi service providers. Watch out for skills shortages.

I happen to agree, that service providers (e.g. BP3) could be well positioned to benefit because, no doubt IBM can sell more of the same product with its much larger sales channel. It takes time for people to ramp up on a BPM product. For a time I expect there will be exacerbated shortages of Lombardi BPM skills, but of course we’ll try to help as best we can!

Bruce Silver also comments on the deal. The tone of Bruce’s post (and some others) is a bit somber – I think some of the folks out there were rooting for a Lombardi IPO or for a deal that made it more clear that Lombardi would still be providing leadership in the BPM space from a “vision” perspective. There is an emerging consensus among outsiders that “departmental” is a losing strategy. I think if it is a pricing/marketing strategy it has legs – potentially target lots of smaller installations to service departments, but if it is reflected in technical direction of the product it could be a real problem. There’s no reason the tech can’t scale much bigger than a department, but its still up to IBM-Lombardi to decide what the market positioning and pricing breakpoints are.

Tony Baer’s take on the acquisition titled “Early thoughts on IBM buying Lombardi“. His emphasis on Lombardi’s chief advantage to IBM is its simplicity – making it possible to address the business directly within the enterprise. He’s looking for the integration of Blueprint and Blueworks to be a good indicator of how this purchase is going to work out.

UPDATE 12/17/2009: Well the blogs keep rolling in with new thoughts or analysis.

Jaisundar’s take is that blueprint is a key piece of the puzzle by widening the user base for BPM and creating a demand funnel. So much comes down to how IBM handles it and whether they keep the Lombardi DNA, while adding to it their massive sales channel synergies.

Meanwhile, Richard Watson has a couple of witty posts on the subject of showers (listing the # of bpm products and related products IBM has purchased as an embarrassment of riches and portfolio overlaps – but also, market clout. In a previous post, he makes the best statement about this subject: “If IBM wants to become the leader in BPM, they need to get out of the data center and start thinking like business people.” – This is exactly why people are excited about the merger, and why they’re worried. Lombardi is not stuck in the data center mindset. Will that business-focus be lost in the merger? That’s the real fear.

And Derek Miers, well-respected for his thoughtfulness on business process and business improvement, took a look at this merger and concludes:

While the choice of dance partner was a little surprising, the desire for a liquidity event in the Lombardi management team was there to see long ago. They touted an IPO around this time, but in the current market that was always going to be difficult.

IBM brings the broad base and ability to grow. Lombardi brings market cachet / credibility that is hard to quantify – but everyone in BPM knows Lombardi and they’re well-respected. Derek’s take on Lombardi’s success:

As I have said to many other vendors, when people buy BPM products, they buy the promise of success. And I am sure Lombardi’s success in the market is as much down to that aspect as it is their leading technology stack. They help their customers understand how they will succeed in meeting their business objectives (rather than touting the beauty of their technology stack).

That’s exactly the point – the culture that Lance and I (and execs at Lombardi) tried to create in the services organization was around business objectives and customer success. Something we’ve endeavored to continue at bp3.

Update EOD 12/17/2009:
Clay Richardson of Forrester Research writes up his analysis, which includes:

Ultimately, this deal centers on the need for IBM to develop a more compelling story for the business. In many ways it is further validation of the IT-to-BT transition that we are seeing within the enterprise.

IBM already had their story down for the CIO and needed to develop a more compelling story for the VP of Operations, and the VP of Customer Service, and the VP of Procurement – in other words IBM needed to establish a stronger voice into the business. And this is what Lombardi does best as a leader in the human-centric BPM space.

If he’s right, this is good news for Lombardi and its customer-base (and prospective customers). He follows up his points with Phil Gilbert’s plan to push the envelope with Blueprint even further “to collaborate on scoping and discovery for enterprise process initiatives.” As he says, IBM is weak in that area, and there’s little overlap. His basic take is that this is a capability buy as much as a technical buy. If he’s right, it bodes well for the future of BPM, or at least the future of IBM BPM!

Update EOD 12/18/2009: You thought we were done with the updates? you were wrong!

Dr. Diaz, on the IBM BPM Blueworks Blog, gives another IBM angle on the acquisition – conveying a sense of confidence and positivity in the IBM strategy.

John Reynolds, of Lombardi and soon IBM, writes a pretty good defense of the “Department” positioning – after all, what is “bottom-up” BPM if it isn’t a department level solution that scales up to meet your enterprise strategy, vs. the top-down BPM approaches that IBM has been using so far:

It’s not really a technology issue – Lombardi’s solution scales quite nicely. It’s a methodology issue… Some tools really enhance the “Top Down” (Enterprise) approach, while others really enhance the “Bottom Up” (Departmental) approach. Offering both seems like a pretty good idea when you think about it.

Update 12/21/2009:
Jennifer Dubow (@jennifer_dubow) posts a link to an IBM F.A.Q. on the Lombardi acquisition. Hits all the high points with no muss, no fuss.

Update 12/22/2009
Neil Ward-Dutton of MWD Advisors recaps the responses of vendors, which generally provide for fun reads. Of course, if you read their blogs without, somehow, realizing their corporate affiliation you might fall for their bias without correcting for it. Its only natural for competitors to see this as an opportunity to try to steal a march while IBM / Lombardi are distracted by integrating two companies – but having been on the other side of this – it didn’t often work as well as we would hope – often the buyer was able to keep the momentum going in the 12-18 month timeframe.

Update 12/29/2009 Jim Sinur weighs in with Power Vendors vs. Pure Plays, positing that the Power Vendors are catching up. I don’t see the catch-up that Jim is mentioning, but I do see catch-up-by-aggregration and the question is whether any of the remaining pure-plays have enough heft to out-innovate the big guys. Obviously small vendors with a tight focus can continue to outpace bigger players in their niche, but the wide Pure Play field has been thinned with this acquisition…

Update 12/30/2009In the ProcessMaker Blog, Brian makes one of the most compelling statements about why IBM bought Lombardi (and although he didn’t address why IBM bought other Business* companies – e.g. iLog, FileNet, Cognos, Webify, etc. – the same logic applies quite well). The short version: it is about addressing markets, not technology. And if Lombardi addresses a particular market, and is scaling, then IBM can plug that into their vast sales and partner channel and really wring value out of it. The thesis rests on the assumption that the BPM market is hot – but that’s a safe one.

Update 01/06/2010 The debate spills over into 2010. Neil Ward-Dutton reprises his previous review with a more considered analysis and the summary is that perhaps IBM really is buying Lombardi to get a better “business-facing” solution – but that they just don’t want to admit that blatantly in their external positioning. Its an interesting read.

Update 01/08/2010Gartner’s Janelle Hill and Jim Sinur report on the acquisition for Gartner. Basically they advise getting ready for a move to Websphere if you aren’t on it already, in a timeframe of two years, and tout the BPM DNA acquired in the Lombardi acquisition.

I was struck by a series of articles I’ve read recently regarding Outsourcing and how it is really hurting American businesses.  Robert Hayes raises the specter of the US possibly killing its Innovation Machine, and compares outsourcing of High Tech to the Subprime-Mortgage fiasco. He makes a few powerful points, for which it isn’t hard to look for data points to support.

The same forces can lead a number of manufacturing companies — each independently making apparently rational decisions to outsource certain segments of their operations — to ravage their industrial commons: the valuable infrastructure of suppliers and skills that underpins them. The supposed savings they expect to generate from such activities are based on costs that often do not properly reflect the damage they are causing.

As I read this, I think of Dell, once the pinnacle of the PC industry’s drive toward efficiency… But under the hood of Dell’s efficiency engine we discovered that a lot of their benefits had to do with financial engineering – taking ownership of inventory as late in the process as possible, owning the warehouses (and charging rent) that their vendors used to store their equipment prior to final assembly, and paying creditors as late as possible.  Reading on in Mr. Hayes report:

A company’s competitive advantage is rooted in things it can do (e.g. design, make, distribute, or market) that its competitors cannot do as well, if at all. As the number of these core capabilities decreases, the company’s competitive vulnerability to those that are able to master the same capabilities goes up.

This sounds like what Dell did – outsourcing the manufacture of increasing parts of the value chain, until you reach the logical conclusion, where Dell no longer does even final assembly of much of its inventory, it is simply the design, marketing, and distribution vehicle for other companies’ computers.  They reduced the number of areas in which they could differentiate from the competition.  And the competition (HP, Lenovo, Acer) have adopted very similar business models, and now enjoy similar (and in some cases, better) margins.  As Mr. Hayes writes: “[...] teaching an armada of hungry potential competitors first how to master, then how to surpass their capabilities.” Meanwhile, it is difficult to unwind this change in the food chain because the necessary infrastructure and skills to support manufacturing and assembly in the US has now been outsourced overseas (largely to Taiwan and China). Restarting that infrastructure in the US is a daunting task in dollars, time, and leadership.

Mr. Hayes makes a persuasive argument that these companies have not, in fact, been improving profitability – that they have instead been cashing out their intellectual property and assets in exchange for a temporary improvement in margins… Which is now evaporating.

Now that the field has been reduced to competing largely on: Design, Marketing, Distribution… Branding becomes more important.  And this probably explains in large part why Apple has been so successful of late -they can outsource the production efficiencies that Dell (and others) have produced in overseas outsourcing shops, and they can exceed these other manufacturers with differentiated software and hardware design and branding (The aluminum unibody Macbooks with Mac OS X are the envy of the industry), better marketing (Apple ads), and distribution innovation (Apple Stores).

What Mr. Hayes is arguing isn’t entirely new, but our titans of industry have been unwilling to listen.  In an issue of CIO magazine in 2005, the then-CIO of Aflac, Jim Lester, said that he wouldn’t consider outsourcing his IT because he couldn’t replace the organizational learning, the knowledge of the business, and the alignment with the business that he had in his current IT organization (some people call this caring about your company).  But he was a minority voice at the time.  The fact that his organization out-performed the insurance industry as a whole for the next few years might be unrelated, but I wouldn’t bet on it.  Of course if particular IT services trail the industry averages then it may make sense to switch to commodotized service offerings as a way to play “catch-up” with the industry – a firm will sacrifice its ability to excel in that area, but will eliminate the possibility of self-inflicted wounds in that area, while it can then focus on the areas it knows best.  One could argue that this is what Apple did with its back-end fulfillment – which trailed the industry in efficiencies – so that it could focus on its strengths in design without the drag of inefficient manufacturing operations.

I worry that over the last 10 years, the US been on a similar course with regard to software development. Increasingly attempting to jam down the costs of software developers, and going anywhere in the world in order to achieve it, without regard to the specific qualities of the firms they are outsourcing to.  If this goes too far, we’ll lose the critical ecosystem here in the US that supports software developers (and many software-related professions and the businesses that are based on them).  I see signs of this in startups who don’t do any software development in the United States and assume that this financial engineering will give an edge to their “ideas”.  But what software has often proven is that ideas are cheap.  Execution is differentiating.   These startups are betting the farm on unproven execution resources, which then puts them in competition with hordes of competitors with fewer ways to differentiate.  Counter to this trend, I also see a number of firms now with hybrid software development models that include doing development on- and off-shore to gain some cost advantage but without losing the ability to try to differentiate on execution.

In a very cogent piece on the subject of Indian outsourcing in particular,  Jaisundar argues that IT can sharpen competitive advantages, rather than diminish them.  That India based service providers need to migrate from being order takers to a deeper relationship that can address business process problems proactively and cooperatively.  This is likely true, but it runs counter to much of the order-taking culture at these firms – it will take time to push the mindset in the right direction and to find and train the right people to lead them in that direction.

Meanwhile, there’s quite a bit of abuse of foreign workers going on in the US.  An expose in Business Week on this practice goes into excruciating detail of some of the worst cases.  However, BusinessWeek makes the claim that most employers are unaware that these abuses are being perpetrated by the staffing firms that they employ.  I don’t buy that argument.  I think companies bear a responsibility to know that the people they staff are legitimately employed, and brought to the US under appropriate Visas (for all the attention on H1-B visas, no one is talking about the vast abuses of L1 visas going on right now). Companies bear a responsibility to work with reputable firms – if they don’t, then it is with the intent of getting workers at below-market conditions, which normally can only happen when you have a captive or disadvantaged workforce.  This is a bit like buying a Cartier watch for $10 and pretending that you don’t know it either (a) isn’t a Cartier, or (b) wasn’t acquired in a legitimate fashion. The buyer has a responsibility to buy legitimate goods and services.

In another article, Charles Green blames the money-first-above-all-else culture of Wall Street (and, increasingly, the executive suites of large firms) on Harvard Business School.  Charles Green, himself an alumna of Harvard Business School, argues that HBS has failed to imbue our “Best and Brightest” with a well rounded perspective of business:

Harvard Business School led the charge away from an approach to business centered in relationships and commerce, and toward one rooted in markets and competition. They promised us competitive advantage and efficiency. They delivered.

Unfortunately, the cost of this change is that American business is not prepared for a world that is increasingly interconnected, and increasingly relationship-driven.  Its a great, thought-provoking read.  As a long-time professional services guy, hearing someone say that business is relationship-driven is a bit like hearing that the sky is blue.  Of course it is relationship-driven, trust driven, commitment-driven.  And when organizations ignore this or trample on these aspects of their business, the chickens will come home to roost.  But apparently this was hasn’t been part of the culture of Wall Street for some time.

These articles only scratch the surface of what I’ve seen lately in the press and in blogs, but I think each one captures a specific issue perfectly.  If you can’t differentiate part of your business, it may make sense to outsource it, but be careful.  There are serious landmines in outsourcing, and it isn’t clear that American businesses have correctly assessed those trade-offs for the long run.