MWD Advisors has a post up about the coming move from “systems integrators” to “service integrators”.  Its a smart read, pointing out that customers who want to offload technical details to service providers are also likely to hand-off the technical lifting to integrate and coordinate these SaaS/Cloud services together to the companies that currently do systems integration.

Interestingly, if BPM vendors provide the right tooling, a SaaS BPMS (or even a hosted one) could be ideal tooling for pulling together these other services to support cross-functional processes for the business.

Well, after much celebration before announcing the details, we now have some (just some) facts about Appian’s 2009.

It sounds like it was a good year – as MWD reports, its license revenue was up 59% (but we don’t know from what base, much like Lombardi’s reported numbers before it was purchased), and customers doubled.  Of course, another way to phrase this is that ASP declined by 20% (if my math is right), or that revenue mix has shifted from prepay (enterprise license revenue) to either post-pay or subscription revenue.

MWD’s assessment is that international revenue will grow faster than domestic revenue.  And while this argument makes sense, having worked at more than one company Appian’s size in my career, I can attest that international revenue can be very erratic.  For a few reasons:

1. When starting from a small base, a single deal (or two deals) can dramatically affect the percentage growth internationally or in a region.  However, with so few data points, it may say next-to-nothing about going forward revenue.
2. Even off of a bigger base, international revenue has so much to do with your sales operation, and so little to do with your product.  There are other products out there.  There are big consulting shops out there. Whether you capture the money (revenue) that is being spent to solve the problems your software solves depends almost entirely on your sales and marketing operation.
3. American companies of this size rarely understand the international markets well enough, and make mistakes which cause big revenue swings up and down.  This is true because the executives usually lack field operational experience overseas, and though they may hire that experience, they may not be able to successfully evaluate those international experts and may end up throwing good money after bad.
4. I’ve seen a single sales rep bring in 30% or more of a small company’s revenue for a single year, only to bring in zero revenue the following year.  Individual sales rep performance is crucial to small enterprise software companies.

Appian may well overcome all of these pitfalls.  But revenue in both the US and Internationally is coming off of a small enough base that we should expect to see high beta for any of the smaller vendors.

The conclusions that Appian’s results really drive home:

• BPM is growing, not dying.  And growing faster than enterprise software generally. (Not just from this datapoint, but from Lombardi, IBM, Savvion, Pega reported results)
• The BPM pure plays were doing well in 2009.
• The remaining pure plays may still have legs and room to run while Lombardi and Savvion acquisitions are digested – even if those acquisitions are quite successful.

MWD Advisors has a post up regarding Running IT as a Business. As they put it, the main objections to this idea seem to be “daft” – that they depend on assuming that IT will run this business in the worst-possible “order-taker” fashion.

As MWD points out, there’s no requirement that IT run their business badly!  However, I will say I can identify with the skepticism that IT can be run like a business, because although “running X like a business” doesn’t have to be interpreted in the most simplistic order-taking terms, I’d be dishonest if I said I hadn’t seen just that happen.  All too often that over-simplification is what the company executives seem to think they want.

So, I think what we have here is a difference between what it should mean to run IT more like a business, and the reality of what people have confronted in their work life.  I think everyone would agree that when IT takes too myopic a view of their role in the success of the business, it is detrimental to everyone.  And if IT provides more business value… that’s good for everyone.

Where IT and Business meet is something that we have had a lot of experience with at BP3 because we’re involved in BPM projects.  You can’t do BPM projects without bridging the gap between IT and Business, and in our experience, the closer aligned IT can get with the business, the better.

I wanted to comment on MWD’s blog post to this effect but since I can’t get logged in there, I’ll just put the information here and hopefully it will get picked up by trackbacking.

MWD points out the risks that were observed in the CloudCamp session attended:

IT practitioners – They’re likely to have concerns about the ultimate impact on their jobs and the potential of Cloud to take power away from the IT department. Uncertainties regarding processes around platform change management and dependencies. Concerns about security. Concerns about integration, latency and lockin.

There is a new approach to some of the security, provisioning, etc. issues which is represented well by Conformity.

Neil/MWD, check out the Conformity Executive Webinar Series: The Enterprise SaaS Working Group, or check out their blog on the subject here.  This is a group of leading lights in the SaaS community talking about adoption challenges and approaches.  Hopefully there will be a playback afterward for those who miss it the first time around.

Previously, we wrote about the individual vendor assessments that MWD put out.  Macehiter Ward-Dutton recently (Dec 18, 2008) updated their individual vendor reports with a comparison/summary report, which does a pretty good job of bringing it all together.

It weighs in at 13 pages, and in combination with the individual assessments makes for a nice resource.  For the categories and vendors that I’m familiar with, the comparison seems to hit the mark – rating products of similar capability in an area with the same rating (from Very Strong to Weak).  However, A quick glance at the chart would give you a few impressions that I’m not sure fully bear out my experience.

For example, Appian and Lombardi look like the winners, with Appian having the most squares darkened as Very Strong, out of any of the vendors.  Lombardi is in second, as the only vendor with no Fair or Weak scores, as well as a lot of Very Strong rankings. However, I wouldn’t describe Lombardi as “Very Strong” in rules, nor Appian as “Very Strong” in optimization.

Second, IBM shows as very strong through the various capabilities in the “Scenarios” evaluation.  However, each of these “scenarios” requires one more different IBM products – it isn’t at all an integrated experience – so if you buy an IBM “BPM” product you won’t find yourself able to do all of these things.  It isn’t a criticism of any one product – its the total experience that customers find frustrating.  You’ll have to buy all the other software to be able to address these scenarios.  And as anyone who has installed a suite of IBM software applications and their requisite fixpacks can tell you, it may be more of an adventure than you expect.

I haven’t seen Software AG’s latest offering, but it is described as a well-integrated BPM suite… and yet the definition of the “ownership” evaluation is something about the pedigree of the software suite and whether it was cobbled together or built-in-house for example.  Software AG’s offering, to my knowledge was very much a product of many acquisitions by WebMethods, which was, in turn, acquired by Software AG.  In the intervening years Software AG may have made the investments to turn this into a polished and unified experience.

Another general note-  I would say all of the rankings are a little high – I would bump most of the evaluations from Very Strong down to Strong, from Strong to Fair, etc.  But how to *characterize* the ranking is really a subjective exercise, and a relative one (Very Strong as compared to what? as compared to an objective standard or as compared to the other vendors?)- so this is a bit of a nitpick – but I think it would come closer to representing how customers would perceive the vendors’ performance in each area if the rankings were all lowered a notch with just a couple exceptions for the truly exceptional vendor-coverage areas (customers being generally less impressed than vendors by the software in question in all categories, I think).

This is a great start to anyone’s software vendor analysis, and I imagine anyone who is serious would invest in getting access to the premium service that let’s you adjust the scoring to fit your scenarios.

I want to thank MWD for putting this research out in the public domain – hopefully my comments will be taken as constructive rather than snarky!

Just saw this come across my inbox: a new set of vendor assessments from MWD in the BPM space.  It looks like they sell a subscription service, but they’re offering these particular BPM assessments for free in exchange for registration information. Looks like they have assessments for Lombardi, Appian, IBM, Oracle, Software AG, TIBCO, and the newest addition, Pegasystems.

Not sure why they don’t have Intalio or at least some representative from the opensource world, but still its a good set of research to be able to lay hands on at only the cost of some contact information.  There’s also a teaser for a comparison report that will come out soon.

After reading two of the reports, there is a strong product-focus in the reports, but no discussion of financial viability or market presence.  In a way, that’s refreshing as you see too many of these kinds of evaluations colored by areas outside of product capability, as if a healthy balance sheet alone will make the software work better for you as a customer.

On the other hand, like most evaluations of software, some of the subtleties of the software capabilities are missed.  These products don’t all deal with versioning, simulation, integration, and reporting to the same degree of competency, but from reading the descriptions you might feel that they are equivalent in these respects.  I think this is because some of the difficulties of each platform (and strengths!) are not apparent from a demonstration or even the first 5 minutes, but require working on an end-to-end deployment to uncover.  There probably isn’t an economical way for an analyst-firm to get to that level of expertise on all the products in the BPM space.

My complements to MWD for getting these reports out in a publicly consumable way!