Wednesday, February 6, 2008

Middleware field consolidates in services direction as Workday acquires Cape Clear

On-demand business applications provider Workday has acquired SOA and enterprise integration middleware vendor Cape Clear Software, the companies announced Wednesday.

The acquisition is novel in several respects. A middleware software vendor is being absorbed by a software as a service (SaaS) provider to expand its enterprise solutions role -- not to sell the software itself -- demonstrating that the future of software is increasingly in the services. It also shows that integration as a function is no longer an after-thought to business applications use -- it is fundamental to any applications activities, be they on-premises, online, or both.

Workday, Inc., of Walnut Creek, Calif., is an on-demand financial management and human capital management solutions vendor. It was founded by David Duffield, best known as the co-founder and former chairman of PeopleSoft, which grew to be the world’s second-largest application software company before being acquired by Oracle in 2005.

Cape Clear Software, of Dublin, Ireland, and Waltham, Mass., develops and supports enterprise service bus (ESB) platform software, designed to help large organizations to integrate their heterogeneous application, content, and processes environments. Disclosure: Cape Clear Software is a sponsor of BriefingsDirect podcasts.

Details of the deal between the two privately owned companies were not disclosed, but the deal is expected to become final in less than 30 days. Cape Clear becomes a part of Workday, forming its new integration unit. Cape Clear CEO Annrai O'Toole will become Workday's vice president of integration and head up the new unit.

The Cape Clear SOA solution set will no longer be offered standalone, and will be available only as part of Workday Integration On Demand online offerings. Both companies stressed, however, that all of Cape Clear's current 250 customers will be supported on-premises at those client sites as Workday customers.

"All customers will get support for as long as they want, but we will not take on any more [on-premises] customers," said O'Toole.

Instead of taking the Cape Clear portfolio to market as SOA infrastructure and middleware offerings Workday plans to broaden its ability to help its customers exploit SaaS, both on an application-by-applications basis as well as in playing an "integration as a service" role. That role also expands into, in effect, a brokering position between complex hybrid arrangements where digital assets and resources can come from many hosts.

"We need to be part of an application sale, not a standalone middleware sale. [Standalone middleware sales] don't exits anymore," said O'Toole.

Only IONA Technologies, of which O'Toole was a co-founder, and TIBCO Software remain as major standalone middleware vendors, now that BEA Systems has been acquired by Oracle, said O'Toole. Consolidation has incorporated middleware into larger stack or business applications offerings. And SOA infrastructure has also seem a bout of consolidation, even as open source SOA components and commercial-open source providers have entering the field aggressively.

The combined Workday-Cape Clear plans to take "Integration on Demand" to market on several levels:

Workday said it intents to assume greater responsibility for customer integrations, expanding its investment and focus on integrations in three areas:
  • Packaged: Workday offers a growing number of common integrations to solutions such as payroll. These connections are managed by Workday as a service, and the company will continue to add to this portfolio.
  • Custom: Workday and its partners deliver tailored connections between Workday and third-party or custom applications. These links can be provided as a Workday service or implemented on premise, based on customer requirements.
  • Personal: Workday offers business users easy ways to link productivity applications, such as Microsoft Excel, to live Workday data, making it simple to create and share reports and tools with users across the enterprise.
Future focus will also include:
  • Hosted integration services for large enterprise customers, beginning with human resources activities.
  • Partner integration, to bring, for example, payroll providers like ADP and other business service ecology players into a larger offerings mix, managed by Workday.
  • RESTful integration with the Web 2.0 community, including mashups, social networks, web services, and mobile commerce services and endpoints. Such mashups will also allow the integration of personalized and custom content via Microsoft Office and Google docs/applications.
“Integrating business applications has always been much too difficult. At Workday, we made integration a core capability from the very start, and adding Cape Clear to our portfolio serves to deepen our focus and capability in this vital area,” said Aneel Bhusri, Workday president, in a release. “Increasingly, customers are looking to Workday to build and manage integration as a service. With Cape Clear’s ESB, we expect to rapidly increase our portfolio of both packaged and custom integration capabilities.”

In effect, Workday is expanding its role to not only provide business applications, but to assume the functions of integrating those applications with a client's existing and future environments.

I recently moderated a podcast discussion with fellow ZDNet blogger Phil Wainewright and O'Toole on the new and evolving subject of "integration as a service."

As Cape Clear's functional set becomes the basis for services integration and management, Workday aims to solve the integration is a business requirement problem in new ways. "Enterprises are sick of buying software and then being left with the integration," said O'Toole.

I also see an opportunity for Workday to grow its role substantially, to take what has pioneered to a greater scale and to the back-end business services that companies will increasingly seek to acquire as online services. Once the integration function is inculcated as services, many other elements of business and process, content and media, can be assembled, associated, and managed too.

The provisioning details and policies that manage the relationships among people, processes, resources, providers and application logic components also become critical. It will be interesting to see if the Workday value will extend to this level, in addition to integration.

Indeed, service providers and cloud computing-based providers will need to crack the integration AND federated policies nut to fully realize their potential for reaching enterprise and consumer users. The ability to solve the integration and policies problems could place Workday at a very advantageous hub role among and between many of the major constituents in the next generation of enterprise computing and online services.

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