Tuesday, January 12, 2010

Is Google the best candidate to create a good, customer-focused cloud banking service portfolio?

Slowly -- and sometimes not so slowly -- the bricks have been giving way to the clicks for the past 15 years. Plenty of formerly unassailable business models have suffered as a result. The tears flowing for these companies, however, have been few outside their own high, stony walls.

Users, customers, innovators, seekers -- the majority bottom sections of the social and economic pyramids -- these are the big winners in the many wonderful effects of the Web and Internet. And I for one have the freedom, productivity, choice and empowerment to prove it.

Except in one glaring area: banking. We are by no means done on the disruption front.

I have had it with the old financial processes, lack of capability, murky institutions, rips-offs, peonage fees/rates -- and especially attitudes. As far as I'm concerned -- as a consumer, family, and business -- I'm ready to fire them all and move to the inevitable cloud- and open source-based alternatives.

I have had it with credit cards, banks, mutual fund companies, PayPal, debit cards, MasterCard and Visa. As far as I'm concerned they are all fired. They do a lousy job, have suspect security, charge too much, stiff you with hidden fees and raise their rates whenever they want. Why pay 15 percent interest on a credit card when money can be borrowed for less than 2 percent? For their service? For their security? Because they can do a basic two-phase commit?

Merchants hate it, users hate it. Why are we waiting on this? Let the banking disruption rumpus begin!

You want financial industry reform? Screw the Congress, SEC and Fed. Barney Frank and Chris Dodd don't seem to have the stomach and/or power to make much difference. Same with Obama. What we need is real competition -- Internet style. The financial industry needs to follow the mainstream media (and others like car makers and hopefully cell phone networks) on a strict diet of lower costs, less egregious profits, less pitiful service -- and to be swiftly outmatched on their piss-poor online capabilities.

Like a lot of big, old industries, the banking function is essentially a function nowadays of software, standard protocols, high-performance (yet standard) IT systems ... and soon impeccable cloud computing credentials. But they key is the good software, of making things work for the users and community, not just the providers.

A few good transactions

If I can order movies, rent a car, and run a small business online, I should be able to do a few basic financial transactions online. I'd like to do more micro-payments and automated financial and business processes. Credit cards are not the best way to do this. Yet I seem to be stuck with a loan shark when I simply need to be able to order and fulfill a modest online transaction.

So let's have those that are good at what really counts -- software and cloud computing experts -- offering the banking services that we as consumers and businesses really want.

I'm tempted to write a similar screed about health care and mobile telephony, but that will have to wait. But we need to nail banking, finance and insurance first. It impacts all the rest.

The last two years are and should be the last straw. Wake up. In these failed finance industries -- the corporate leaders of which we as U.S. taxpayers apparently own in no small degree -- "Too big to fail" needs to be replaced with too good to resist. The companies that should be subsidized are the ones that create productivity, lower costs, improve service and propel -- rather than hamstring -- the economy.

Why as part of the stimulus are the governments not creating the legislation to allow a new breed of bank to emerge? Why are the laws not being amended to allow for more -- not less! -- competition in the financial realm? What choice do we really have? MasterCard and Visa are not a choice.

In other words, we need a viable new cloud banking option era. Marc Andreessen told Charlie Rose when he set up his latest venture fund last year that new online banking was ripe for investment. He's right. Let's get on with it. I'll be your first customer.

Let the big guy do it

Meanwhile, how about Google? Like a dog on a meat truck, they have their teeth into everything else around them. Why not online banking too? You can't blame for being too big to succeed, can you?

If any of us can explore, learn, compare, shop, order, track, and share your experiences via Google -- the actual monetary transactions scattered inside these processes should be a natural included component too. Right?

Is Google the best candidate to create a good, customer-focused cloud banking service portfolio? I think they would provide just the catalyst for change we so desperately need. We can then expect Microsoft to enter the field three years later, perhaps for an added element of choice and change.

MicroCard and Googlesta! Hey, it's a start, and almost certainly an improvement.

Monday, January 11, 2010

The march of Progress Software: Savvion provides latest entry in BPM consolidation parade

This guest post comes courtesy of Tony Baer’s OnStrategies blog. Tony is a senior analyst at Ovum.

By Tony Baer

Is it more than coincidence that IT acquisitions tend to come in waves? Just weeks after IBM's announcement to snap up Lombardi, Progress Software today responds with an agreement to put Savvion out of its misery? In such a small space that is undergoing active consolidation, it is hard not to know who’s in play.

Nonetheless, Progress’s acquisition confirms that Business Process Management (BPM)’s pure play days are numbered, if you expect executable BPM.

The traditional appeal of BPM was that it was a business stakeholder-friendly approach to developing solutions that didn’t rely on IT programmatic logic. The mythology around BPM pure-plays was that these were business user-, not IT-, driven software buys. [Disclosure: Progress Software is a sponsor of BriefingsDirect podcasts.]

In actuality, they simply used a different language or notation: process models with organizational and workflow-oriented semantics as opposed to programmatic execution language. That stood up only as long as you used BPM to model your processes, not automate them.

Consequently, it is not simply the usual issues of vendor size and viability that are driving IT infrastructure and stack vendors to buy up BPM pure plays. It is that, but more importantly, if you want your BPM tool to become more than documentware or shelfware, you need a solution with a real runtime.

And that means you need IT front and center, and the stack people right behind it. Even with emergence of BPMN 2.0, which adds support for executables, the cold hard facts are that anytime, anything executes in software, IT must be front and center. So much for bypassing IT.

Progress’s $49 million deal, which closes right away, is a great exit strategy for Savvion. The company, although profitable, has grown very slowly over its 15 years. Even assuming the offer was at a 1.5x multiple, Savvion’s extremely low seven-figure business is not exactly something that a large global enterprise could gain confidence in.

Savvion was in a challenging segment: A tiny player contending for enterprise, not departmental, BPM engagements. If you are a large enterprise, would you stake your enterprise BPM strategy on a slow-growing players whose revenues are barely north of $10 million? It wasn’t a question of whether, but when Savvion would be acquired.

[Editor's note: Savvion is bringing a new geographical footprint to Progress. Savvion is well positioned in India, where Progress is eager to tread. And Progress is prominent in Europe, where the Savvion-broadened portfolio will sell better than Savvion could alone. ... Dana Gardner.]

Questions remain

Of course that leads us to the question as to why Progress couldn’t get its hands on Savvion in time to profit from Savvion’s year-end deals. It certainly would have been more accretive to Progress’ bottom line had they completed this deal three months ago (long enough not to disrupt the end of year sales pipeline).

Nonetheless, Savvion adds a key missing piece for Progress’s Apama events processing strategy (you can read Progress/Apama CTO John Bates’s rationale here). There is a symbiotic relationship between event processing and business process execution; you can have events trigger business processes or vice versa.

There is some alignment with the vertical industry templates that both have been developing, especially for financial services and telcos, which are the core bastions (along with logistics) for EP. And with the Sonic service bus, Progress has a pipeline for ferrying events.

[Editor's note: The combination of Savvion BPM and Progress CEP help bring the vision of operational responsiveness, Progress's value theme of late, out from the developer and IT engineer purview (where it will be even stronger) and gets it far closer to the actual business outcomes movers and shakers.

The Savvion buy also nudges Progress closer to an integrated business intelligence (BI) capability. It will be curious to see if Progress builds, buys or partners it's way of adding more BI capabilities into it's fast-expanding value mix. ... Dana Gardner.]

In the long run, there could also be a legacy renewal play by using the Savvion technology to expose functionality for Progress OpenEdge or DataDirect customers, but wisely, that is now a back burner item for Progress which is not the size of IBM or Oracle, and therefore needs to focus its resources.

Acquiring Savvion ups the stakes with Tibco, which also has a similar pairing of technologies in its portfolio.

Although Progress does not call itself a stack player, it is evolving de facto stacks in capital markets, telcos, and logistics.

Event processing, a.k.a., Complex Event Processing (CEP, a forbidding label) or Business Events Processing (a friendlier label that actually doesn't mean much) is still an early adopter market. In essence, this market fulfills a niche where events are not human detectable and require some form of logic to identify and then act upon.

The market itself is not new; capital markets have developed homegrown event processing algorithms for years. What’s new (as in, what’s new in the last decade) is that this market has started to become productized. More recently, SQL-based approaches have emerged to spread high-end event processing to a larger audience.

Acquiring Savvion ups the stakes with TIBCO Software, which also has a similar pairing of technologies in its portfolio. [Disclosure: TIBCO is a sponsor of BriefingsDirect podcasts.]

Given ongoing consolidation, that leaves Active Endpoints, Pegasystems, Appian, plus several open source niche pure plays still standing. [Disclsoure: Active Endpoints is a sponsor of BriefingsDirect podcasts.]

Like Savvion, Pega is also an enterprise company, but it is a public company with roughly 10x revenues which as still managed to grow in the 25 percent range in spite of the recession. While in one way, it might make a good fit with SAP (both have their own, entrenched, proprietary languages), Pega is stubbornly independent and SAP acquisition-averse.

Pega might be a fit with one of the emerging platform stack players like EMC or Cisco. On second thought, the latter would be a much more logical target for web-based Appian or fast-growing Active Endpoints, still venture-funded, but also a promising growth player that at some point will get swept up.

[Editor's note: Tony's right. Once these IT acquisition waves begin, they tend to wash over the whole industry as most buyers and sellers match up. As with EAI middleware, BI, and data cleansing technologies before, BPM is the current belle of the ball. ... Dana Gardner.]

This guest post comes courtesy of Tony Baer’s OnStrategies blog. Tony is a senior analyst at Ovum.