deal architect

A Hat Tip to IBM

IBM has been on a M&A tear recently - as Dan Farber points out $ 3.6  bn in the last few weeks across ISS, FileNet, Webify and MRO.

Most of their close to 30 acquisitions since 2001 were around infrastructure software and had revenues of under $ 500 m a year - so bite sized and relatively low risk. It can usually lower SG&A across its global sales network and breath new life in to aging products.

IBM calls most of these acquisitions "capability" extensions (see slide 7 of this presentation) - avoids the Larry term "consolidation" and the negative CA or Infor acquisition image.

And it is starting to market many of these products under the SOA banner. Allows it to say SOA is growing rapidly and start a self-fulfilling momentum.

It shows up in Open Source world with selected products like Linux and GlueCode which help commoditize certain competitors - and gets kudos for being "socially responsible".

Sells lots of systems integration, application maintenance, BPO and hardware and systems management around third party application software like SAP and Oracle, and gets kudos for being a "neutral", Switzerland like player.

And laughs all the way to the bank. Software is likely to be 25% of revenues this year, but 45% of pre-tax income. No talk of open source or neutrality around its core software products.

You have to admire their deftness.

Out of left field

One of my 2006 predictions was:

"An infrastructure vendor - likely Dell or Sun (as it tries to redefine itself) - will introduce infrastructure outsourcing at aggressive, "utility" price points to cover a wide range of network, database, desktop and other services."

I had not counted on amazon to offer compute and storage "in the cloud" - but it is delightful none the less.

• Pay only for what you use.
• $0.10 per instance-hour consumed (or part of an hour consumed).
• $0.20 per GB of data transferred outside of Amazon (i.e., Internet traffic).
• $0.15 per GB-Month of Amazon S3 storage used for your images (charged by Amazon S3).

Not sure I should have been surprised. As I wrote in The Incumbents Dilemma

".. the challengers are not the 6th or 8th market share player in the category but often brand new players out from left field."

While amazon is aiming at more of the free agent developer market (along with its Mechanical Turk for outsourcing tasks), it sets a benchmark for emerging utility computing vendors to aim for.

eBay with Skype in communications, SaaS vendors cannibalizing application hosting and maintenance, Google in everything...left field, indeed.

Turn Right at the Fountain

Overheard an American tourist visiting Windsor Castle  "I wonder why they put this so close to Heathrow airport"  -)

Much as Europe changes, thankfully old landmarks do not disappear.

As we plan next summer's trip, I recalled my two years in Europe were greatly enriched by a book of walks in major European cities. Written by George Oakes, a NY Times travel writer,  in 1965 it described every little square, fountain, church. It has since been updated periodically by Alexandra Chapman.

Saint George, as my wife calls him (she is not as big a walking fan as I am), made me explore European gems like the canals of Bruges and the aqueduct of Segovia - and discover little secrets in Paris and Rome the tour bus guides do not even know about. I finally gave up my dog eared copy a few years ago and got a new one.

Get your self a copy - or if you want walks for a selected city, my daughter will be happy to make you a copy. For a small fee - in euros, please for her fund when she Eurails the continent in 4 years. By then she probably be able to avail of a GPS enabled Segway - and Saint George's classic in e-book format on her iPod with dog ears painted on....

Learning from Katrina

as we stare at another major storm headed towards Florida - Ernesto, eWeek has a nice article on what we learned from Katrina in terms of disaster recovery.

SaaS vendors are learning what offshore vendors learned a few years and what EDS and IBM learned a long time ago. Hurricanes, earthquakes, wars - CIOs are paid to worry about stuff like this. And expect their vendors to worry just as much.

Imagine

Imagine a computer that never crashes, or gets infected by a virus. Imagine a computer onto which you never have to install any application. Imagine a computer that follows you wherever you go, be it at school, at work, abroad, or back home. This computer does not exist today, but it will in the future, and this future might be much closer than you think.

- from the marketing site for the Office 2.0 conference being organized by Ismael, a fellow "Irregular"

What is Gartner probability of a coin flip?

ARmadgeddon points out Gartner's suggestion of a coin flip as a vendor selection tool.

So, if there are 6 vendors, that would be a total of 5 coin flips? 3 flips to reduce to 3 vendors, give one a wild card and 2 more to decide the winner. That is a probability of .5 to the power of 5 a vendor would be selected? And does the wild card introduce bias? Would a dice not be easier?

Help me out here, readers. I tried this site but realized the wisdom of my reader crowd was probably a better bet.

Buzzword Compliant

I listen to this explanation of Web 2.0 from Andy Gutsman of Zend and read about defining Enterprise 2.0 for deletionists and networkists at Wikipedia.

Suddenly, I feel illiterate - both my technical jargon and my English are clearly of the 1.0 genre.

This will not help SaaS or Web 2.0

Computerworld writes about fallout from AOL disclosure of search data.

Will make IT folks more nervous about data shared beyond the firewall.  As irrational as first wave of giving out credit card info over web, The solution, as I wrote in what to look for in a SaaS vendor,is to scrutinze vendor security and standards more, not to go hide even deeper behind the firewall. On the other hand, not sure SaaS and Web 2.0 vendors are ready for more detailed due diligence audits.

More on great software

Continuing the "great software" thread from last week, here is InformationWeek's take on great products over the decades.

As I wrote in the previous post, though

"Greatness to me is not just an exciting product - it is also one developed by the vendor and available to be implemented by customers at a reasonable budget."

The industry still has much to do, though a new generation of start-ups is showing a very different set of economics and values.

Capital flows downhill

The venture capital mating game today is chaotic. Business plans usually flow from entrepreneur to VC. But what if VCs, with their broad view of deal flow, could publish what investments they think are most attractive and have qualified entrepreneurs apply for those categories?

That is the concept behind an article in Business 2.0 where 20 top VCs from Draper to Khosla identify their ideal market niches and even name the amount of money they would be willing to fund.

I was thinking - wouldn't it be neat if we could get CIOs/CTOs to similarly start their own wish list of startup technologies they would endorse. As I wrote in the MAGIC framework, there is a significant chasm between what CIOs need for innovation in their businesses and what start-ups and VCs often dream up.

Rather than entrepreneurs pushing uphill, it would be nice to see likely customer demand and VC deal flow visibility provide much more intelligent and relevant cues to startups. Not to discourage wild new ideas from percolating, but the reality is if customers and VCs are not that excited about funding the idea over the next 2-3 years, the wild idea probably needs to be tamed a bit...