Razorfish Wants to Get its Name Out on Broadband

Razorfish, Inc. (NASDAQ: RAZF) was founded by Jeffrey Dachis and Craig Kanarick in 1994, and has evolved into a Digital Business Service Provider (DBSP). It was Dachis's second creation following "In Your Face Inc.", a self-described 'guerilla marketing events firm'.

Razorfish describes itself as is an international digital communications solutions provider, and goes under the maxim "Everything that can be digital, will be digital'. The company cut its teeth on animated web design in server-push / client-pull in 1995, working for the likes of IBM Personal Computers, AT&T, and CMP Publications. From its beginnings, Dachis saw digital technology as a means to change the way business works, though at the time most online services were largely no more than web catalogs.

Razorfish's intentions were - and are - to lead the digital revolution rather than be led. Its early success gave it the cash and share value to acquire the strategic building blocks it needed to follow its vision. Recently it acquired I-Cube to give it respectability as a systems integrator, and TSDesign (Boston) whose main function is to provide quality assurance to the user web experience.

In Europe, it extended its reach into wireless by acquiring Spray Ventures and recently opened up a wireless laboratory in Helsinki. Its acquisitions in the U.K. of CHBi for broadband and Sunbather for web design in Europe, and Fuel and Tonga for web design capabilities in the media industry have enhanced its capabilities and strengthened its strategic positioning as a complete service provider.

Razorfish has also grown partly organically, but this is the lesser process, and must pull together the many strands it has built through internal organizational processes and infrastructures, something it is presently busily doing. Razorfish management has recognized that in this game, you must aim for the Holy Service Grail - providing end-to-end solutions (EES) to its clients. To do this it has developed procedures and internal infrastructures to share knowledge and integrate its diverse acquisitions.

In April 1999, Razorfish went public with a share offering, raising about $45M to provide fuel for its expansion.
Coming from the creative side of web design, Razorfish holds no particular allegiance to a specific technology vendor - in other words, it is a technology agnostic, which is not an uncommon characteristic of vendors of this genre. The advantages of this approach are that it can in theory better serve its clients by providing the best and most appropriate technologies to specific problems. The downside is that the company must have adequate resources to cover all the technologies it will need. To achieve this, however, means that internal resources - management, corporate knowledge and project management, personnel training, and cross-office fertilization of skill sets - must be efficiently utilized. Razorfish has adopted a number of strategies and developing infrastructures to meet this challenge.

Internal Structure and Culture

In general, as a technology agnostic, Razorfish personnel are divided into functional groups rather than technology areas. This means that the personnel focus on architecture, or design, or technology implementations. People move up in these functions, though often the line between function groups is blurred, enabling at least some to cross between the function groups. In this way, at least some personnel can climb to be Client Partner managers from a variety of backgrounds. A Client Partner is the senior client management interface.

Geographically, Razorfish is divided into two zones: North America and Europe, each with its own managing VP. The two zones are linked through a basic knowledge management and project information system called MOM. MOM allows users on either side of the Atlantic to review current projects and project skill requirements, to plan their agendas and interact with others on the network. MOM is the beginnings of a comprehensive inter-office knowledge management system.

A dedicated high-level executive position currently manned by Bob Lapides (EVP of Global Process, Methodology and Market Transformation.) provides the means to sew management systems together and create a unified international presence. Such issues as technology transfer across offices and efficient utilization of skills for project planning and execution are addressed with office group leaders who create skills communities among the offices. MOM and the skills communities reduce travel and traveling costs.

Razorfish's philosophy is that good technical people are able to deal with many different technologies, learn them quickly, and apply them. Within the organization, mentor programs have been established, often across function lines. The mentor can accept or refuse a request, but generally can take on four or five 'interns'. Apprenticeship style learning means skills are learned through osmosis and on-the-job practice more than by any formal training program. However, Razorfish insists the quality of its people is high, and formal training programs are not necessary.

Culturally, Razorfish is a work-hard / play-hard organization. It is expected that their people deliver quality work, since this is what keeps the customers coming back.

From a personnel point of view, with a growing population currently at about 1360 employees, Razorfish has a billable force of over 900. Of these, roughly 20% (about 180) are strategists ( usually Client Partners), 40% technologists (about 360), and the remaining 40% (another 360 or so) are designers, spread amongst its offices. Some 45% of its skill base - mostly in Europe - are devoted to broadband and wireless solutions such as interactive and enhanced TV, and the skill set includes the physical design (including board level design) and branding of hand held devices. Roughly 25% of the payroll is in support and executive management roles.

Strategy for Strategic Consulting

Digital strategy can impact the entire business operations of the client, and hence a broader strategic (global) analysis of an established client becomes necessary. To provide for this front end, Razorfish is slowly developing the expertise and building its credibility through hiring, sitting on industry panels, and developing processes to fit the new environment. Bringing in industry specialists is always the good move, but it takes referenced clients to help you (who often recommend you to others) really move ahead, as well as an impressive procedure that delivers quick results. Razorfish still has a ways to go before it becomes the natural trusted advisor to CEOs and corporate boards. However, Razorfish claims to having already beaten out the likes of Andersen on a number of occasions.

The other aspect Razorfish brings to the table is its multidisciplinary approach and 'fresh thinking'. In this day of fast changing business environments that rapidly are becoming interlaced with cross-industry technologies, there is a requirement for cross-fertilization of ideas, and hence a user may look at Razorfish to get new perspectives in the digital realm. One example given by Razorfish health industry specialist Mike Parker is the use of wireless digital technology in healthcare: a dentist for example may view a digital reproduction of an X-ray while simultaneously caring for the patient, using a mobile device conveniently located for viewing - the lack of wires being a great aid against clutter. The broader implications of this technology can of course be seen in other areas of Healthcare, health care service providers (doctors, hospitals etc.), heath care delivery instrumentation industries, manufacturers, VARs, etc. to which vertical industry specialists can provide insight.

However, proper processes and management tools need to be developed, proven, and used in a number of engagements if Razorfish is to be a serious contender. Their slow approach is reasonable given that they need to create these tools as well as internal knowledge dissemination structures. Further, as a transcontinental company, Razorfish has equivalent leaders on both sides of the Atlantic who must coordinate their efforts.

There is also a fairly broad line between proper digital business strategic analysis and getting to know a client's business in order to create a website, something the user should be aware of. Razorfish is aware of this issue, and as such it is establishing internal business development programs for its technical and managerial staff.

Thus Razorfish's early successes have and will continue to hamper its ambitions at least in the U.S. market: those successes were founded on their ability to do neat websites, and website building - once done - that could be taken over by less expensive and less sexy outsource organizations or internal MIS departments. Another issue is the persona of the acquired companies. Clients of these companies now have a partner with more to offer than previously, as in the case if I-Cube customers. Hence the need to provide an all round set of services - or at least give the appearance of doing so - is paramount if Razorfish wants to move ahead. In Europe it may have more success through its acquisitions, but in essence, Razorfish has a branding problem of its own. Thus the first and fourth components of the EES - discussed below - are currently out of Razorfish's reach. However, we predict that Razorfish should be able to lay claim to the strategy piece within the next year to eighteen months.

In another direction, Razorfish has a major desire not to be so dependent on a few clients, but the reality is that it will continue to derive a significant portion of its revenues from a limited number of larger clients (probability 90%). However, as the company's revenues grow, the anticipated dependence on single clients accounting for more than 10% of revenue should decline. In 1998 one client accounted for about 25% of the company's revenue. With a revenue growth of over 400% from 1998 to 1999 (due largely from acquisitions), and the size of major contracts almost doubling, at least more new clients are being added. USWEB, another DBSP, reports its contract sizes have about doubled on average, confirming the market is tending toward larger sized contracts requiring more services. However, part of the revenue growth, - approximately 15-20%, was due to a 30% increase in billing rates to some major clients in January 1999. This adds some weight to the likelihood that Razorfish is having some difficulty in leveraging itself into larger contract sizes, though the acquisitions blurs this analysis as does its recent international acquisitions .

Acquisition as a revenue generator is working well for Razorfish. The dramatic revenue jumps (Figure 1) in 1998 and 1999 were largely the result of acquiring I-Cube and Spray respectively, as well as through market growth (an estimate shows about half the year-to-year increase). The larger acquisitions were accounted for mostly through stock option exchanges and some cash. Razorfish's earlier smaller acquisitions in 1998 were cash deals. Another troubling trend is the rising cost of personnel shown in Figure 2. In January 1998, Razorfish raised its rates by 30% to at least one major client, though the apparent modest rise in relative manpower costs is masked by acquisitions and expansions. Figure 1 indicates the impact on the bottom line of Razorfish's acquisitions.

One area where Razorfish can have a major strategic development impact and follow-up long term partnering is with new dot-com companies well funded by Venture Capitalists (VC's). These companies often start with a good business idea, often by someone well versed in the industry. Someone, for example, familiar with the automotive parts industry realizes that this is a perfect industry for an online auto parts mart. This happened in the case of partsdriver.com for which Razorfish built the website and the backend integration. However, translating the idea into a working website means that the strategic concepts must be worked out as the business model is translated into the digital medium. Razorfish's expertise shined in this example, though it is a more confined problem than a complex pre-existing brick and mortar company changing or adding spots to its current organization.

Is "Sage" Wiser And Better Than "Best"

While, at the upper-end of the enterprise applications market, many will have been riveted by watching the inevitable intensifying global supremacy war between SAP and Oracle, it might be interesting to analyze the equivalent moves of the two superpowers at the (perhaps even more promising) lower-end of the market, also known as the small-to-medium enterprise (SME) market segment. One player would inevitably be Microsoft Business Solutions (MBS), following two major, well-publicized acquisitions in the early 2000s (see the article Microsoft Keeps on Rounding up Its Business Solutions). On the other hand, the UK-based the Sage Group plc (LSE: SGE.L), one of the leading providers of business management software for SMEs worldwide, with total annual sales of over $1.2 billion (USD) and 4.4 million customers in fiscal 2004 and the only technology stock on the FTSE 100 index for the London Stock Exchange (LSE), has been rounding out, also by annexation, its currently largest SME geographic coverage (see Will Sage Group Cement Its SME Leadership with ACCPAC and Softline Acquisitions?).

While one can never be too certain, it appears that at this moment additional major acquisitions are not imminent when it comes to both MBS and Sage, and that these SME leaders are rather embroiled in sorting out other, more burning internal issues. To that end, in mid-March, the Sage Group announced that, after a three-year hiatus, it intends to resume use of the "Sage" name and brand in North America, enabling the company to better leverage its worldwide strengths.
Sage lost the ability to use its own name in North America in 2001, when it lost a court fight to Quick Technologies Inc., the small Dallas, Texas (US)-based company that claimed ownership of the Sage name in the region. As a result, Sage had to subsequently and for the time being, adopt the name Best Software for its then primarily US-based operations (prior to the ACCPAC acquisition in 2004, which has since allowed it to penetrate other regions, such as Canada). Some think Sage adopted the Best name, the original name of the Reston, VA.-based specialized software company that had long marketed the FAS fixed asset management, Carpe Diem time management, and Abra human resource (HR)/payroll lines, as a stopgap measure after Quick demanded too much money for the name rights. Whatever the case, the parties have now apparently settled (i.e., in connection with its resumption of use of the Sage name and brand, Best Software has acquired the rights of Quick in the Sage brand, which rights date back to the early 1990s), and Sage plans to fully adopt the Sage brand for its North American business by March 2006.

Sage executives believe that the Sage brand is synonymous with excellence in accounting and business management software for millions of SMEs around the globe. By the same token, the strength of Sage as a global software leader will now stand clearly behind its more than 2.4 million SME customers in North America. On the other hand, Best's top executives claim that, during the last few years, Best had boosted its name recognition into the 20 percent range, and was possibly climbing toward the 30s figures. Best's president and CEO Ron Verni has recently begun an aggressive program to quickly transition to the new company name.

While many value added resellers (VARs) might see the long term value of the Sage global brand, there will always be some with reactions of dismay, given they have lived through several name changes from, for example, former Peachtree Software, "original" Best Software or State-of-the-Art, the company that originated the MAS 90 accounting product, temporarily via Sage Software and the Mid-Market Division of Best Software, to now make a full circle going back to Sage. However, because so many of the products have very strong brand identity themselvesPeachtree, ACT!, Timberline, ACCPAC, MAS and others that have been retained and will continue to be retained under the Sage umbrellathe Sage brand overlay certainly should provide a stronger long term compromise. Still, there is really only one company that has indisputably better name recognition in the mid-market accounting business (if not everywhere else), Microsoft, and one product that is virtually a household name within that target market in North America, MBS Great Plains.However, in North America, some exceptions that can clearly claim the household name recognition in Canada might come from ACCPAC and Intuit's QuickBooks in the US, in the lower-end of the market.

Also, Best Software has long acknowledged that its products are better known than the company name. Companies such as former specialty products provider Best Software (acquired in 2000), customer relationship management (CRM) provider Interact Commerce (acquired in 2001), entry-level accounting provider DacEasy (acquired in 1991), not-for-profit (NFP) accounting provider Micro Information Products (MIP) (acquired in 2001) and another entry-level accounting provider Peachtree Software (acquired in 1999), all had strong brand recognition in their respective target niches and a market presence in the SME market. Thus, both Sage and Best have done quite well respectively, despite Microsoft's big advantage in corporate name and brand recognition.
Best Software sells such a portfolio of renowned US and Canadian brands as Abra, ACCPAC, ACT!, BusinessVision, CPASoftware, FAS, MAS 90, MAS 200, MAS 500, MIP, Peachtree, SalesLogix, Timberline Office and Simply Accounting, among many others. In the fiscal year ended September 30, 2004, Best Software reported revenue of $516.6 million (USD), representing 42 percent of Sage's global business. To be exact, in addition to its North American leadership, Sage is the leading provider of accounting software for SMEs in the UK, Spain, France, Germany, and South Africa. Globally, the vendor reported over $1.2 billion (USD) for the last fiscal year with profits in the mid-20s percentage range, a comparatively very strong business compared to the chief rival Microsoft, whose business solutions group managed slightly more than half of Sage's revenues ($667 million) and significant losses in excess of $200 million (USD) in its last fiscal year.

Best Software outlined the brand transition at its Insights reseller conference in May, whereby setting the name switch deadline at next year should give resellers time to make due changes in their marketing materials. Earlier, in March, Best announced its first ever combined user conference, the Sage Summit, scheduled to take place on November 2-5, 2005 in San Diego, California (US). This will be the first time that customer conferences for all of the company's North American product lines will be combined into a 3-day event for attendees to network, gain insight to better utilize their software, and hear about industry and business trends affecting their organizations. Open to the more than 2.3 million SMEs in the US and Canada who use Best Software or Sage products, the 3-day Sage Summit conference will combine the company's three previous customer conferences focused on Timberline Office, CPASoftware, and MIP software, and will add conference agendas incorporating other products in the Best Software family such as MAS 90, ACCPAC, SalesLogix, and more than a dozen others. There will also be a special one-day session for users of ACT!, Peachtree, or BusinessWorks.

Using a "conference within a conference" format for the expected 3,000 attendees, Sage Summit is designed to preserve the experience of a community for customers while also providing the opportunity to engage with a wide range of Best Software and Sage product users from a variety of industries. Session tracks will be broken out by business needs and industries rather than specific products, so that customers should have the opportunity to learn about relevant issues impacting their industry segment and explore other software tools to improve their businesses in addition to learning how to get better return on investment (ROI) from their current software.

What Do Users Want and Need

Microsoft Business Solutions (MBS) especially emphasized at Convergence 2005, the company's annual user conference, that the upcoming wave of MBS business management applications will make individual users much more productive. As part of the undertaking, the vendor claims to have conducted extensive face-to-face conversations with over 2,000 business people from around the world and from all walks of life; chief executive officers (CEO), marketing vice presidents (VP), sales people, accountants, purchasing managers and clerks, warehouse workers, and so on, were all talked to, observed doing their work, and more importantly, listened to.

The booming feedback according to MBS was that almost all of these users wanted their enterprise applications to be more intuitive and organized around their specific role and tasks, that is, with pertinent personalized desktops/user interfaces (UI) that would only show them what they need to naturally do their jobs. Another often heard issue was that people want to connect and collaborate in the context of their work. Also, given a number of customers that are switching from using "pedestrian" fax and snail mail to using e-mail as the main technology for connecting and transacting with their customers and suppliers, MBS intends to build much easier transactional e-mail support into the first wave of product releases, and to make it easier to build and use collaboration portals.

Almost every current or prospective user MBS talked to also purportedly prioritized gaining insight from applications. At the basic level, users want a more intuitive way to "look inside the business", and they want applications to bring them closer to their operations, such as alerts that can help them handle exceptions or better yet, to act on business events (or even non-events) well before they become exceptions (for more related information, see the article Business Activity Monitoring—Watching The Store For You). Customers also always want very flexible and easy-to-use reporting capabilities, whereby it is always astounding to see them referring time and again to Microsoft Excel when trying to create and visualize reports, thereby virtually crowning the spreadsheet product as the leading business intelligence (BI) tool (see Vendors Harness Excel (and Office) to Win the Lower-end of Business Intelligence Market).

These first three "software of the future" design themes—empowered, connected, and insightful users—are all about making people more productive, and Microsoft believes this convergence of structured transactional data coming from MBS applications and unstructured work coming from Microsoft Office is something it can uniquely do, although the trend has also been noted and tackled by the likes of SAP, IBM, and Oracle (see Mainstream Enterprise Vendors Begin to Grasp Content Management).

Going beyond end-user productivity, there is also the realization that most business people have a mental picture of the organizational hierarchy (with associated roles) and process flows model of their company in their head, and they want their business management software to be able to easily map to this model and change with it. MBS refers to this as the "adaptive process", which it plans to enable through a model-driven development approach. Although the idea of model-driven development has been a vision in the software industry for a long time, what makes Microsoft think it can deliver it to business applications now is the existence of a set of integration standards that make it easier for the building blocks of an application to be assembled into business process flows. To that end, the Web services stack precisely addresses this need, and the use of Web services in process-based applications is referred by some pundits as one practical embodiment of SOA. For more information, see Understanding SOA, Web Services, BPM, BPEL, and More.

To put this into competitive prospective, at the recent mid-May Sage Insights Conference, Sage Software's CEO Ron Verni also spoke about what drives users to investigate technology options—a vision that is rather focused on providing the broadest range of choices and customer-specific application options that readily integrate. For Sage, underlying technologies are a means to an end, and the end is to provide businesses with highly functional, easy-to-use business process management (BPM) tools. Sage is in the business of providing business applications, not development tools, and therefore is less inclined to develop in a way that requires an ever expanding technology stack such as what Microsoft focuses on (after all, the MBS-related business is not profitable, but the software tools business is). This is where the Best/Sage broad line of application comes into play, given its attempted sweeping coverage of market needs.

As it will be detailed later on, the vendor has also announced a multi-year plan to deliver an integration framework which ties many of these products as well as third-party products together behind the scenes, and a common desktop that ties the Sage products together at the UI level, providing businesses with logical suites of business applications that they can bring together in a building block fashion as their needs dictate. Sage offers many points of entry to its product lines, including specialty applications for construction, real estate, manufacture, non-profit, and accounting, among others. In addition, the idea of supporting Linux and non-Microsoft databases is not a foreign concept to Best/Sage, making the concept of "choice in computing" even more accessible, even if Linux and non-Microsoft databases are not supported across all products.
Coming back to Microsoft, for the first wave of Green, as mentioned earlier on, MBS is building a Web service-based interoperability layer, that is enabling applications to integrate, and is also developing composite applications to support cross-company and cross-module processes. To explain a bit deeper, Indigo, part of Microsoft's Windows upcoming operating system (OS) code-named Longhorn, unifies a variety of Microsoft technologies (e.g., Common Object Model [COM+], MSMQ, ASP.NET Web services [ASMX], and Remoting, most of which will be explained shortly) and transports (i.e., hypertext transfer protocol [HTTP], transmission control protocol [TCP], user datagram protocol [UDP]/dynamic data exchange [DDE], and inter-process communication [IPC]) to create a single framework and runtime environment for building distributed computing systems. Hence, Indigo is well suited for building software oriented architecture (SOA) systems, whereby service orientation should help software architects and developers design and build connected systems. As a well-known fact, SOA complements object orientation and helps articulate services (i.e., software components) in a platform- and implementation-independent manner.

Accordingly, Microsoft's server-side Web technology, ASP.NET, takes an object-oriented programming (OOP) approach to web page execution, whereby every element in an ASP.NET page is treated as an object and runs on the server. To refresh our memory, OOP is a type of programming in which programmers define not only the data type of a data structure, but also the types of operations (functions) that can be applied to the data structure, in which way, the data structure becomes an object that includes both data and functions. In addition, programmers can create relationships between one object and another, and, objects can, for example, inherit characteristics from other objects. One of the principal advantages of OOP techniques over traditional procedural programming techniques is that they enable programmers to create modules that do not need to be changed when a new type of object is added, since a programmer can simply create a new object that inherits many of its features from existing objects, making object-oriented programs easier to modify.

On the other hand, Web services are software programs that are communicated with via message exchange, and are also autonomous, which means they exist and run on their own. Furthermore, functionality exposed by these services are described using standards-based schema and contracts, so that many applications can invoke a service, and the service should not crash if one of the consuming applications breaks. A system would then be a collection of deployed services cooperating in a given task, and would thus be built to adapt to change.

Indigo is implemented in the Microsoft .NET Framework, which means that Web services can be created with any common language runtime (CLR)-compliant language, which can be dozens, at this stage. Indigo Web services are exposed on the wire via standards based technologies (such as extensible markup language [XML], XML schema definition [XSD], simple object access protocol [SOAP], Web services description language [WSDL], and other Web services specifications).

Earlier Microsoft .NET framework-based distributed computing technologies such as ASMX, Enterprise Services, Remoting, COM+/MSMQ can also be used from within Indigo applications, since Indigo can interoperate on the wire with virtually any applications built on infrastructure that conforms to the above Web services standards. For example, Remoting is a .NET-based technology (a replacement for Distributed Common Object Model [DCOM]) that allows objects residing in different application domains (and are said to be separated by a "remoting boundary") to communicate. Objects using remoting may be on the same computer, or on different computers connected by a network.

At the end of the day, Microsoft pledges to provide mechanisms for migrating applications that use most existing frameworks to services. To brush up on our knowledge, the .NET Framework is a programming infrastructure created by Microsoft for building, deploying, and running applications and services that use .NET technologies, such as desktop applications and Web services, which contain the following three major parts:

1. The CLR, also known as the virtual execution system (VES), which is a runtime environment that manages the execution of a .NET program code and provides services such as memory and exception management, debugging and profiling, and security;

2. The framework class library (FCL), which is the collective name for the thousands of classes that compose the .NET Framework. The services provided by the FCL include runtime core functionality (basic types and collections, file and network input/output [I/O], accessing system services, etc.), interaction with databases, consuming and producing XML, and support for building Web-based and desktop-based client applications, and SOAP-based XML Web services; and

Addressing Channels and the Low-End Market

Microsoft Business Solutions (MBS) especially emphasized at Convergence 2005, the company's annual user conference, that the upcoming wave of MBS business management applications will make individual users much more productive. As part of the undertaking, the vendor claims to have conducted extensive face-to-face conversations with over 2,000 business people from around the world and from all walks of life. MBS talked to, observed, and listened to chief executive officers (CEO), marketing vice presidents (VP), sales people, accountants, purchasing managers and clerks, warehouse workers, and so on.

Given that the technology blueprint, however impressive and powerful, is only a part of the total equation, which also includes solutions and the partner channel, MBS has lately also made moves to address these too. The channel has hardly been a picture of immaculate organization so far, with channel partners often competing against each other, while attractive horizontal and vertical add-on products would remain unavailable and unknown to the wider MBS customer base or would remain unsupported by small, resource-strapped value-added resellers (VAR)/independent software vendors (ISV). To remedy these problems, at Convergence 2005, Microsoft announced plans to increase resources and provide new tools and offerings for MBS ISVs and VARs, whereby all efforts are designed to accelerate the MBS Group's partner-driven vertical strategy, providing stronger opportunities for partners to align their services and solutions with their customers' specific needs.

To that end, by the end of fiscal year 2006, the MBS Group pledges to align 50 percent of its existing partners to a vertical solution or service. In addition, field resources and through-partner marketing will be aligned with verticals. While initial efforts will emphasize fourteen verticals within manufacturing, distribution, public sector and services, the MBS Group will continue to provide sales and co-marketing support to a broad ecosystem of partners across many verticals.

To support partners in generating customer leads in their target markets, MBS will provide resources for the field in the areas of demand generation, advertising, sales support, lead management and more, whereby more than 800 MBS team members in the field will reportedly be trained and empowered to help partners succeed in targeted verticals. In addition, the vendor will provide improved tools for the field, including data on vertical opportunities, an improved map of partner solutions, and a vertical business planning guide book, all designed to help partners plan and execute their vertical strategy. The idea is twofold: 1) to help find the appropriate solutions and bring them more into the mainstream of the sales process, and 2) to make sure that channel partners are not competing with each other for the same customers.
Microsoft's goal for 2005 is to have aligned half of its existing partners vertically, to have obtained vertical field commitments and training plans from them, and to be well on the way to vertical lead distribution. Specific tools and offerings include the following:

* Vertical Opportunity Map—MBS pledges to provide partners with the data necessary to assess opportunities that exist in specific geographic regions worldwide. This data includes a total count of business entities as well as industry and vertical purchase rates, allowing partners to get a good estimate of the market opportunity in their region or country. Partners are encouraged to use this data in combination with their own data to determine the relative attractiveness of serving a targeted market segment.

* Solution Finder—To increase the visibility of Microsoft's extensive portfolio of partner vertical solutions, this Web-based tool will be launched in the second half of calendar year 2005 to help customers select industry-specific partner solutions and related MBS financial management, supply chain management (SCM) and customer relationship management (CRM) solutions. In addition, partner account managers can use this tool to help identify opportunities for partners to develop their own intellectual property (IP) or identify opportunities for them to work with other partners to deliver a complete industry-specific solution. Solution Finder will work with data from the Microsoft Partner Program systems to streamline the partner profiling experience.

* Microsoft's Partner Channel Builder—This combination of an on-line tool and structured worldwide networking events will allow all Microsoft Gold Certified and Certified partners, including partners selling MBS products, to collaborate in an effort to deliver more complete industry-specific solutions. Partners may access the on-line tool at http://www.microsoft.com/partner/channelbuilder.

* Vertical Lead Distribution—Whereby a vertical lead grid will be incorporated into Microsoft's demand-generation processes to help the field effectively distribute sales leads to partners who have relevant solutions or industry expertise.

* Industry Builder—This is an ISV initiative designed to deliver industry-enabled enterprise applications that can be further extended into new markets by both VARs and ISVs. As part of the Industry Builder initiative, select ISVs will develop industry modules according to Microsoft's quality standards and package them with a customer support contract that includes both the MBS core modules and the Industry Builder application(s). The initiative is immediately available for ISVs focused on developing industry-specific solutions for MBS Axapta, and will reportedly extend to other MBS applications later this year.

Companies that need a business management suite often find themselves working with multiple solutions from a number of solution providers to meet their specific business needs, which can often result in slower implementation times and, potentially, higher costs. MBS' industry feedback indicates that these customers want a single source for product support and a reliable point of contact from the solution providers they work with. The Industry Builder initiative might fill this customer need by offering a Microsoft support contract that applies to both the MBS Axapta core modules and the vertical application modules that were developed by the participating ISVs. MBS is addressing that demand by combining vertical applications developed by ISVs with the core functionality and deep customization options offered in Axapta.

Ultimately, the Industry Builder initiative should provide customers with a more complete solution while also giving the partner community a more powerful means to compete with other software vendors, as partners can add highly valued consulting in delivering that 'last mile' of vertical-specific functionality, which today is so important for customers.

A year ago or so, Microsoft was encouraging partners to use MBS' nuggets of functionality such as bill of materials (BOM), project accounting, payment processing, or electronic data interchange (EDI) as the foundation for their own solutions. Microsoft advocated that partners either embed these MBS modules right into their own vertical products or customize their solutions in a way that they would only work on top of these MBS modules, but this strategy will now be superseded by the Industry Builder initiative. Microsoft will supposedly not build any vertical applications itself, but this new vertical focus will likely have a long-term impact on how MBS will design and develop its products.

The Market Impact of Two Powerhouses

Therefore, Sage/Best Software has almost all the ingredients of the recipe for success in the SME market—the functional footprint, several strong individual product brands, deep and ever-improving channel relationships, large installed base (many of which are small-offices/home-offices (SOHO), referred to as a "feeder channel"), and financial stability. Still, even if the ingredients and a good recipe are only a good start, it takes time and immaculate execution to produce a succulent dish'.

For one, the Sage/Best Software brand has yet to have a universal ring, like those of Microsoft, IBM, SAP, or even Intuit, for that matter. Given Sage's revenue level is quite higher than those of mid-market who is whos—Geac Computers, MBS, SSA Global, Infor Global Solutions, and Lawson Software—, making it an ultimate juggernaut within the SME market per se, the time has long come for its mind share to become commensurate with its size (for more information on the importance of branding and positioning, and on subtle differences between the two, see Branding and Positioning: What's the Difference? And Can You Afford It?).

Thus, despite a seemingly well crafted marketing campaign, the Best Software brand remains much less-known than those of its individual products, for example, ACT!, SalesLogix, or Peachtree, and especially ACCPAC. The company has long suffered from either the "Best who?" syndrome or the confusion with the former Abra, Carpe Diem, or FAS provider only. Additionally, the wealth of corporate names and a likely unwieldy slew of products within each of Sage's divisions and groups, presents sales and marketing confusion for the company, both internally and externally across the globe.

Sage is far from being a uniformly global company, as its product offerings differ for different markets, particularly on both sides of the Atlantic. For instance, while the unified Best brand will be increasingly applicable for the North American market, Sage offers for the other international markets a disparate line of products for small businesses comparable to the above-mentioned Best's lines (e.g., Instant Accounting for a single user, Line 50 for up to 5 users, Line 200 for 5 to 25 users, and Line 500 for up to 1,000 users).

While Best Software's MAS 500 manufacturing modules come from the company's purchase of ERP vendor Haitek Solutions in 2002, Line 500 comes from the Sage Group's acquisition of Tetra, a UK-based mid-market ERP vendor, in 1999. These deals have consequently resulted in different ERP products offered by different units of the Sage Group. After the Tetra acquisition, The Sage Group formed Sage Enterprise Solutions, based in the UK, which offered an ERP suite initially called Sage Enterprise (renamed recently Line 500). Therefore, the �one face to customers' motto might only be applicable within certain markets per se, such as North America, the UK, or France, and very unlikely across the globe.

Yet, international business is a major reason the company has to be able to use the name Sage in all markets. North America is obviously a very large contributor to the global business and several Sage and Best brands, especially in the CRM realm (i.e., SalesLogix) and its entry-level element in contact management (i.e., ACT!), have truly a global application. One of the great strengths that the vendor brings to the market is the breadth of the product selection it offers. The ability to promote true breadth under the Sage brand is important for both existing and prospective customers. Another real issue is the increasingly international scope of business, especially since Best has had some recognition in the US but virtually none internationally. This is an analysis of the equivalent moves of the two superpowers at the (perhaps even more promising) lower-end of the market, also known as the small-to-medium enterprise (SME) market segment. One player is Microsoft Business Solutions (MBS), who underwent two major, well-publicized acquisitions in the early 2000s (see Microsoft Keeps on Rounding up Its Business Solutions). The other player is the UK-based the Sage Group plc (LSE: SGE.L), who has been rounding out, also by annexation, its currently largest (SME) geographic coverage (see Will Sage Group Cement Its SME Leadership with ACCPAC and Softline Acquisitions?).

The lengthy discussion of recent events points out the fact that even the biggest and best in the market have serious issues to solve, and that no one can rest on their laurels. Also, the two SME leaders seem to have somewhat different strategies going forward, and time will tell who will ultimately win. Certainly, no one should hereby dismiss the importance and clout of the likes of Epicor Software or Exact Software in the market segment, each with own innovative twists on the value proposition (see Epicor's Mid-Market Pitch Becomes Higher For (One) Scala and Exact Software—Working Diligently Towards the "One Exact" Synergy), but both market observers and Sage and Microsoft themselves will respectfully agree that they tend to be each other's most "love to hate" opponent.

While many eyes are on MBS due to its indisputable mind share, the parent company's technological prowess, and pervasiveness/familiarity—at least on the desktop level—Sage/Best will remain the SME applications market leader for some time in terms of inexorable numbers that determine the market share-based leader. Namely, its slew of relatively recent acquisitions have created a company with well over $1.2 billion (USD) in revenues, nearly 4.5 million users and more than 20,000 reselling and software development partners. If one is to juxtapose these against the MBS' $800 million (USD) or so in revenues, over "only" 300,000 customers, and over 8,000 partners, any debate about who the current SME leader is, should cease for now.

Global versus Local Channel Approach, Who Will Win

On one hand, "super" or "mega" value-added resellers (VAR), or resellers that are morphing into mighty systems integrators (SI), are developing for MBS products to the point that it looks like a new level of distribution is being created that should help with the impending internationalization and verticalization of some MBS products.

For example, the 3,000-person large Seattle, WA-based Avanade, which is owned almost equitably by Accenture and Microsoft, recently purchased En'tegrate Software, a Chicago, IL-based reseller that was one of the largest MBS Axapta resellers in the US. The VAR had also developed the MBS Axapta add-on solution for lean manufacturing, and a wizard-based configuration and system setup tool suite dubbed ERP Complete, which was acquired by Microsoft prior to Avanade's acquisition. The tool guides Axapta users through each implementation step, and has reportedly allowed some companies to cut the implementation budget by even one quarter of the initial estimate. ERP Complete comprises four major modules that provide automated support for program management, software configuration, and communication management, and that deliver a library of additional resources for Axapta partners. The tool, which will initially be provided free to all registered Axapta partners in the Microsoft Partner Program, has also reportedly reduced total cost of ownership (TCO) for Axapta in many manufacturing implementations.

This is Part Five of the Is "Sage" Wiser and Better than "Best"? series.

As outlined earlier on, part of MBS' overall strategy is to simplify and speed up software implementations and reduce the TCO for all of its enterprise applications. Much of the implementation-related research and development (R&D) work has been carried out at the platform and architecture level, whereby one of the objectives of Project Green, the initial initiative to create a new generation of component-based business applications, was to ease implementation. However, with the project being dependent on the much-delayed Longhorn operating system (OS) release, the application development schedule also had to be pushed back, together with the implementation-related development. Meanwhile, MBS had to keep content its substantial install base and attract new customers, likely contributing to the yet another pragmatic move to acquire the toolkit rather than wait for architecture-level changes down the track.

Further, Tectura, an MBS VAR based in California with $150 million (USD) in revenues, but which aims to have a total revenue of $300 million (USD) by 2006 and $500 million (USD) by 2007, has been expanding across the Atlantic with several 2004 acquisitions, such as of former Aston Business Solutions and Cosmo Consult (both with strong European roots). At the end of June, the company added another company in a whole new geography to its portfolio—Enterprise Solutions Group (ESG), with around 300 Axapta and Navision professionals in 14 offices across Asia. Also, ePartners Solutions, based in Irving, TX, and with $60 million (USD) or so in revenues (that in 2004 also acquired Chantilly, VA-based EYT), and Interdyyn, a $40 million (USD) consortium of MBS Great Plains resellers, both established European connections in 2004, while Altara, a $16 million (USD) in revenues, Cedar Ridge, NJ-based MBS VAR recently opened its London office, with plans to have up to 60 people working in Europe by the end of 2005.
As indicated earlier on, this need for MBS VARs to achieve bigger scale and international expansion is being fueled largely by two MBS lines that come from former Navision acquisition, Axapta and Navision, which are strong in many overseas markets owing to their traditional multi-national capabilities and presence, but which are also growing in North America.

By contrast, Great Plains, the best-known SME enterprise resource planning (ERP)/accounting product in North America (and still a major revenue contributor to the MBS top line), and Solomon, one of the best known project accounting packages, are not well known overseas. This is by no means to imply an uncertain future for these products. Quite the contrary, the above-outlined upcoming releases seem to be well thought-out roadmaps in tune with the users' needs and to preserve each product's niche strengths. For example, last year's acquisition has rendered Great plains as a NFP solution response to Best's superiority in the segment (see Microsoft to Add "Encore" Functionality to MBS Great Plains 8.0), while ever more intrinsic integration with Microsoft Project and the Outlook user interface (UI) metaphor will vouch for Solomon's acceptance by project-based companies (see Solomon Stands the Test of Time Despite Changing Masters).

MBS does not believe there is value in rewriting existing code, but rather it is focusing on the aforementioned revised Project Green, which, in a revised form has become an effort to build a next-generation extended-ERP system that is supposed to place all MBS enterprise applications on a pure service oriented architecture (SOA) (rather than on a single, rewritten code), but on separate tracks as to preserve the differentiating traits of each ERP product. The way the SME segment is (i.e., it requires small nimble applications for the lower-end of the spectrum as well as medium-size, complex applications for the upper-end of the spectrum), seems to need the people and process focus that is depicted above. Going forward, with all applications being converged within Project Green, MBS does not still want to create the monolithic entity of, for example, SAP R/3, against which it might today still be competing, in addition to other challenges associated with a revolutionary (rather than evolutionary) approach.

However, MBS does not yet have a set-in-stone product roadmap, nor has it announced a final delivery time line for Project Green, albeit there are recently unveiled revised plans for a gradual delivery (in two so-called waves, with different extent of SOA enablement and code convergence). At this point, the vendor is using .NET technology indirectly by exposing current applications through XML and Web services to allow customers and partnering independent software vendors (ISV) to integrate current applications to .NET. Such a strategy would leverage middleware and integration tools, such as the Microsoft SharePoint Portal Server and Microsoft BizTalk Integration Server, which are built on the .NET technology.
Sage/Best, on the other hand, seems unlikely to see such global-scale expansion of its resellers, at least in part because there seems to be more investment money available for those doing business with Microsoft. Yet, Sage is investing heavily in supporting the channel as it always has. It is also reportedly seeing consolidation of partners regionally and a movement towards a unique focus on Sage products. For example, Net@Work recently merged with American European Consulting in New York, whereas ERG merged with Burch Consulting in Texas, both creating a broader combined skill set and services to customers as a result.

Recently, we have also witnessed Microsoft attracting some resellers (e.g., ePartners and Tectura) to go solely for MBS products from previously peddling both MBS, Exact, or Best. Two at least can certainly play in this game, as significant Sage partners such as BDO Seidman and ITG, among others, have dropped Microsoft Great Plains to focus exclusively on Best products. The truth of the market place is that the universe of business partners for business management applications is not rapidly growing with unknown partners suddenly deciding to get involved with enterprise applications for the first time. Instead, the universe of existing applications partners is relatively well known, and some movements from product to product within that universe occurs naturally.

Sage has more than 6,000 VARs in North America already and is seeing movement towards partners dropping competing products to focus solely on Sage products. Also, MBS recently appointed former Best's executive Craig McCollum as VP of MBS sales strategy, in great part due to his experience in handling multi-code products, which might indicate MBS' two-prong approach to maintain local strengths of some products on one hand, while nurturing global opportunities on the other, particularly for Axapta.

Furthermore, Sage/Best does not market many of its major products on a worldwide basis, which means less need for international resellers. The vendor has long contended that insistence on a single accounting platform across multiple worldwide operations is not a big issue in the middle market, and that localization is the solution. For that reason, the vendor has strictly pursued a best-of-breed approach, favoring a local product with a local touch. Sage markets different lines in different countries, buying leading players in Spain, Poland, France, and so on, that are little known elsewhere.

On the lower-end, Sage has Peachtree in the US, while Simply Accounting is the number one market share leader in Canada, and former Softline's Pastel, the number one in South Africa, does not sell much elsewhere. For larger SMEs in the US, that choice has meant ACCPAC, MAS 90, MAS 200, and MAS 500, along with Peachtree, BusinessWorks, FAS, and the Platinum for Windows (PfW) BatchMaster line. In the UK and the Southern Hemisphere it has been offering the Line 50, Line 100, Line 200, and Line 500 products, while in France it would be Ciel, and elsewhere in Europe, other popular local brands like SP in Spain. As a result, not many customers can integrate the UK Sage product lines (e.g., Line 500) with the US Best Software counterparts (e.g., MAS 500), albeit the same would currently hold for MBS' Great Plains, Solomon, Axapta, and Navision product lines.

Processing Complex Events (During These, oh well, Complex Times) – Part II

For one, Apama revenues have increased multiple times (e.g., 70 percent growth in fiscal 2008). This growth probably makes Progress the market share leader in the CEP market, together with the fact that Progress Apama currently has approximately 110 customer deployments.

A sampling of Apama customers, those that Progress has publicly announced, can be found at the company’s website here. The product’s “sweet spot” and leading presence to date has been in the Capital Markets and Financial Services segments for high frequency trading applications. Apama’s customer profiles range from the largest sell-side firms in the world to smaller, boutique buy-side firms.

Furthermore, Progress Apama now has a worldwide footprint, with deployments in North and South America, throughout Europe, the Middle East, Australia, Japan, and Korea. The product now logically supports some internationalization capabilities. Last but not least (and to be detailed later) Apama has expanded in capability with more CEP functionality, sophisticated development tools, flexible event capture and replay, visual dashboards, and open integration framework, while emphasizing less on just promoting the product’s high performance and scalability (e.g., sub-millisecond latency for thousands of scenarios) traits.

Progress Apama customers are generally distinguished by a desire to leverage the product’s rapid application development (RAD) tools to build unique trading or trading-related applications that allow them to incorporate their own business logic, rather than packaged, off-the-shelf applications. While the company’s early market adoption has been in capital markets, Progress Apama has also established penetration outside financial sectors in other event-driven environments.

Other sectors are telecommunications, supply chain/logistics, energy grid monitoring, manufacturing process monitoring, retail banking fraud detection, entertainment (i.e., gaming surveillance), and other areas. For example, when it comes to telecommunication providers’ revenue assurance, a CEP platform could monitor the billing of several million subscribers across multimedia channels (i.e., voice/video, data, content, and unlimited multimedia messaging service [UMMS]), to prevent revenue loss in real-time.

Real-life and Prospective CEP Deployments Outside Capital Markets

At Progress Software’s Analyst Summit 2009, there was a case study presentation about Apama empowering advanced international logistics in terms of shipping and ports management. The customer is Royal Dirkzwager, which since its founding in 1872 has developed into the maritime information and service provider for Northwest Europe, with a strong focus on the Port of Rotterdam.

Dirkzwager deals with vast information on vessels’ characteristics, ship’s position reports, and ever-varying estimated times of arrival (ETAs) and actual times of arrival (ATAs). From about 200 position reports per second 10 years ago or so, today the company has to deal with over 1,000 position reports per second. Dirkzwager’s public sector customers are the related port authorities, port state control, customs, seaport police, and coast guard. Private sector customers are ship owners and agents, terminals, and service providers (pilots, tugs, maintenance crews, etc.).

One of the business issues for the company has been to integrate berth planning for terminals and employee planning for authorities and service providers into its customers’ business processes. Another issue for Dirkzwager has been the globalization of customers and its geographical coverage expansion.

Namely, from customarily focusing on Rotterdam, the company intends to focus on northwest Europe and, albeit to a much lesser extent, on a worldwide coverage. Last but not least, harnessing electronic position information tools such as AIS (Automatic Identification System) and LRIT (Long Range Identification & Tracking) has become much more important.

Dirkzwager reportedly implemented Apama due to its capability to handle different position report types and to handle large amounts of position reports (i.e., scalability). Also, the company’s employees can now create and modify business rules for the port’s operation. As for future directions, the port operator company expects to enable customers to create own business rules, and to also be able to process port related messages such as route advice and monitoring. The latter capability should result in a reduced overall fuel consumption and improved port arrival planning.

Monitoring Manufacturing Processes, Catching Crooks and Other Bad Guys

Given Progress’ traditional approach to leverage partners to embed and sell its products, we should note that to this point Apama sales have been based mostly on a direct sales model. To date, sales have been primarily to banks and other larger companies in financial services, where CEP is deemed as a “bet the farm” solution. Sales into governments, telecommunications, utilities, transportation enterprises and so on will also likely target major enterprises. These operations will require a continued expansion of a direct sales channel as well as partner-based channels for smaller organizations.

One good example of a partner embedding Apama would be Manuvis within its FactoryMRI manufacturing execution system (MES). Manuvis’ system continuously monitors production equipment and other key production statistics in a discrete manufacturing environment (e.g., production of auto parts). Should the software detect a continuing anomaly in a machine, it will notify workers to tend to the machine. The software will also dynamically re-direct production and re-optimize the production schedule.

Generally speaking, CEP tools can link directly into data collection and automation systems sending signals from the production floor, as well as into packaging, warehousing management systems (WMS), and other related business systems to guide problem resolution and improvement. Another example of Apama’s use in the production environment is to detect bottle-filling trending low or high in a large high-speed bottling plant.

By defining threshold and time window limits, the system provides alarms and dashboard visibility on the fly, as well as comparisons over any period in history. Data input can be sensor outputs, control instructions, transactions and so forth, while connection taps can be made into programmable logic controller (PLC) and control system data streams, as necessary.

Progress has been working with several international regulators, including the UK’s Financial Services Authority (FSA, which is the counterpart of the US Securities & Exchange Commission [SEC]), to incorporate real-time fraud detection technologies into its market monitoring endeavors to help detect fraud. One of the drivers for FSA’s SABRE II (Surveillance and Automated Business Reporting Engine) fraud-detecting initiative was for the regulatory authority to become more dynamic and proactive in detecting market abuse. This proactive approach would be achieved by investigating potential offenders more quickly with relevant evidence, and by identifying trading rings and links between individuals generating illicit market impressions.

The idea was to also instantly detect and prosecute “extremely lucky” individuals (e.g., traders who constantly take a best offer in a market to drive up a share price) and monitor for price/volume movements where companies may need to make a disclosure of price sensitive information. The other drive was to implement all requirements for the Markets in Financial Instruments Directive (MiFID) in terms of transactions reports, policy calculations, and inter-regulatory reporting.

There are hundreds of known and possible illegal trading patterns (tricks), but traditional algorithmic techniques have not been able to detect their use in real time. Thus, Progress Apama is used to promptly detect insider trading, breaches of short-selling rules, wash trading, the spreading of illegal rumors followed by suspicious buying patterns, “painting the tape” to drive a stock’s price up, front-running of orders, and trader collusion (with insider knowledge and “agendas” to buy across different trading venues), as well as many other common market abuses.

The point here is to detect fraud while it is occurring (not after the fact), so that regulators can detect market manipulation that is in breach of regulations in a timely manner. Hence, before a trade is placed, real-time rules should detect both illicit doings and honest mistakes (like so-called “fat-finger” errors or decimal points in the wrong places), apply real-time compliance rules, or make sure the firm is not over a certain percentile of an actively traded market.

Given the need for in-depth know-how and domain expertise, Progress has teamed up with specialist consultancy Detica Group PLC (now part of BAE Systems) to encode market knowledge into algorithms that detect illegal trading patterns. Other possible examples of Apama deployments could be: the detection and prevention of credit card fraud (e.g., detecting several same-number credit card transactions at physically distant retail stores in an atypical time bracket); analyzing patterns in passenger movements (e.g., to detect potential terrorists); aviation control; and predicting the best route for vehicles such as tanks and long-haul transport.

More on Apama’s Life Under Progress Software

Beyond the original acquisition of Apama by Progress Software, there have been no further CEP products acquisitions. As part of Progress Software, however, Apama has expanded its product capabilities with enhanced visual dashboard technology, which involves the RTView technology that is provided via an original equipment manufacturer (OEM) relationship with SL.

Apama has also meanwhile gained backtesting analysis capabilities, by leveraging integration of other technology from Progress–ObjectStore. This object-oriented database is used in the Apama product as Apama EventStore, a time series database that can capture event streams (such as market data and trade execution calculations/decisions), making that data available for replay. This “TIVo”-like effect of a sort uses an application within Apama called Research Studio.

For example, as the radio frequency identification (RFID) system continuously reads each tag, Boekhandels Groep Nederland’s (BGN) Selexyz retail bookstores use Progress Apama to filter out duplicate reads from incoming streams and ensure that every book is counted just once. Duplication is also prevented by reconciling the advanced shipping notice (ASN) data streams coming from the distributor.

Processing Complex Events (During these, oh well, Complex Times) – Part I

The worn-out saying about how we learn new things every day applies to this blog topic too. Namely, my interest in Progress Software Corporation has long been due to its renowned OpenEdge development platform. Indeed, many enterprise resource planning (ERP) and other applications providers leverage (embed) OpenEdge as Progress Software partners. Sure, I also follow and have recently written about the company’s forays in the service-oriented architecture (SOA) space with its two respective offerings: Actional for web services management and Sonic for enterprise service bus (ESB) and messaging.

But in late 2007, out of mere courtesy, I accepted a briefing about Progress Apama, the company’s platform for complex event processing (CEP), algorithmic trading, and whatnot. Given the overwhelming nature (“rocket science” of a sort) of the offering’s concept, I now admit that I could not wait for the briefing to end.

Actually, I felt bamboozled like those ordinary mortal FBI agents in CBS’ primetime hit show “Numb3rs.” In that show, time and again the whiz kid math genius (the brother of the FBI team leader) tries to explain to these action-rather-than-theory agents how some complex and arcane math theory can be applied to make sense out of seemingly chaotic and unrelated events. Eventually, complex math solves some important crimes, often by detecting patterns that are not obvious to the naked eye.

Well, fast forward to early 2009, where at Progress’ Analyst Summit (a traditional Boston winter fixture event) we could all find out that Progress Apama is possibly the best performing and growing part of the company. OpenEdge, while still contributing to over 60 percent to Progress’ total revenues, is a mature business that is now sold mostly to independent software vendors (ISVs). In addition, the recent financial markets (and consequently the overall economic) crisis and related cases of high-profile frauds (”white-collar crimes”) have made me conduct my own study of Apama and become familiar with its underlying concept.

Frankly, I no longer grapple as much with the concept of CEP per se (Progress Software refers to CEP as “The Brains of the High Velocity Business”). Where I still get lost though is when it comes to CEP’s relationships with other like technologies and concepts “du jour.”

CEP: Complex…What?!&Principles of CEP-based Systems

In fact, IT-Director’s article from two years ago confirms that there are various issues that confront the event processing community. There now seems to be common agreement that event-processing as a term should best be used to encompass both CEP and event stream processing (ESP), the latter term arguably applying to events that are not necessarily complex in themselves.

In addition to just what exactly event processing is, and whether and how it differs from operational business intelligence (BI), another vexing issue is how big the event processing market is. For those of you that might want to delve into philosophical discussions about which concept is broader (and which came first) within the alphabet soup of CEP, ESP, SOA, event driven architecture (EDA) and business activity monitoring (BAM), here is one of ZDNet’s blog posts. There is also an excellent blog post on a practical combination of SOA, EDA, and CEP, plus, you can always peruse the Event Processing blog from the horse’s mouth (it is maintained by Progress Apama staffers) .

Principles of CEP-based Systems

In plain English, CEP lands itself well to any environment that treats any business update as an “event.” Such organizations want to enable users to rapidly define event-based business rules to identify patterns indicating opportunities and threats to the business. These encapsulated rules (either as “if-then” statements or structural query language [SQL] statements) are loaded into a real-time computing (RTC) CEP engine.

The correlating engine is permanently connected to multiple event sources and destinations (with volumes of events and related data points) and offers analysis and response within an extremely low latency period. Events can be captured and preserved in time-order for a historical pattern analysis and root-cause analysis (RCA).

Given that algorithmic trading in capital markets was one of the first real-life applications of CEP, let’s translate the above general CEP principles into trading terms. The continuing digitization of financial market data and the advancement of electronic market access has created a market environment in which competitive differentiation amongst financial service firms rests with split-second algorithmic execution that can exploit minuscule and momentary advantages in price, time, and available liquidity.

To that end, a trading company will treat any market update as an “event” and will enable users to rapidly build quantitative algorithms (based on their vast experience and know-how) to identify trading opportunities and risk breaches. Germane trading rules are then loaded into a trading system that offers real-time analysis and response with a latency measured in milliseconds.

The trading system is permanently connected to a number of relevant market data sources, news-feeds, and trading venues (exchanges). Finally, events can be captured and preserved in time-order for backtesting and digital forensics analysis.

In summary, the drivers for CEP adoption are the following:

* Applications with high throughput and latency requirements. Such requirements from market trends such as higher velocity business event flows, more voluminous (and yet shorter-lived) transactions, and rapidly changing market conditions. These trends in turn pose the challenges onto customers in terms of how to detect opportunities and threats in real-time, and how to show the health of their business; and
* The need for rapid software development and customization, and increasing application complexity (temporal and/or spatial logic, real-time analytics, etc.). The customers’ challenge in this regard is how to accelerate the deployment of new capabilities.

Progress Apama became part of Progress Software via the acquisition of the former Apama LTD in April of 2005. Apama is the core technology foundation for Progress’ initiatives in CEP and the company’s go-to-market initiatives that leverage that CEP platform in capital markets for the following “daily bread” actions: algorithmic trading, market aggregation, real-time pricing, smart order routing, and market surveillance.

Prior to its acquisition by Progress Software, Apama had a few dozen customers in London, New York, and Boston. Today, however, after leveraging the global parent’s infrastructure, Apama is marketed and sold in all the major financial centers in the world.

Apama was founded in 1999 in Cambridge (UK), by John Bates and Giles Nelson. Fellow Cantabrigians and CEP visionaries Bates and Nelson are co-holders of the patents on Apama’s core technology, which is a commercially-productized expression of their efforts to create a platform for the unique characteristics of “event-based” applications.

Originally, Apama had set out to try and resolve a number of telecommunications-based real-time mobility issues, but had then realized that there were additional commercial opportunities in a wide range of environments. As a result, the company has historically focused on financial markets and specifically financial trading systems where real-time event-based trading systems are in high demand.

The capital markets segment has indeed proven to be an early proof point for the Apama CEP platform. Apama’s design philosophy and architecture were intended to provide a platform that allows traders to quickly develop and deploy distinctive proprietary strategies that exploit these opportunities and mitigate risks.

In addition to the above-mentioned CEP applications in capital markets, other current (or future) uses in the segment are the following: commodities trading, bonds trading and pricing, foreign exchange (Forex) aggregation and algorithms, futures exchange and options algorithms, equities trading, cross-asset trading, real-time risk management, broker algorithms, news-driven algorithms, and so on.

New Release For Ariba's Software

Ariba and Commerce One are beginning to develop look-alike buy-side applications. With this announcement Ariba catches up with Commerce One's BuySite 6.0, especially in internationalization and interoperability. And that level of convergence is where we think this high-end e-procurement market is going to settle. Although we see Commerce One stronger in building a network of marketplaces and Ariba stronger on the buyer side, both companies are in it for the long haul, and their basic software offerings will become more and more similar over the next few years.

The realities of the market are that MRO buying is being overshadowed by vertical marketplaces and supply chains as the driver that determines which buy-side software choices a company might have. Ariba recognizes this by making it possible for Ariba Buyer users to connect to other marketplaces. This is another trend that must accelerate, since many companies are being forced to participate in different marketplaces by different suppliers or customers.

Caldera eDesktop Edges Out Microsoft Windows 2000 in Functionality - Part III

Linux is based on a "clone" of the Unix operating system, originally made by Linus Torvalds in 1991 as a graduate student at the University of Helsinki. The core of Linux is "open source"; all version source code is available under open license, and any extensions or modifications must be submitted to the Linux community at large for inclusion in the main, shared body of Linux code. Within the space, Red Hat is the leading provider of Linux "distributions" and service. Red Hat Linux 6.2 was released in April 2000.

Caldera OpenLinux eDesktop 2.4
Caldera Systems began life as Novell CEO Ray Noorda's marketing arm for a non-Microsoft version of DOS originally developed at Digital Research, DRDOS. Caldera has made significant inroads in the Linux market. OpenLinux eDesktop 2.4 is high-performance desktop software optimized for the Internet. It also includes powerful Internet-ready applications designed specifically for helping you enjoy and maximize the power of the Internet.

Windows 2000 Professional
Microsoft Windows 2000 Professional is Microsoft's premium desktop operating system. Released in February 2000, Windows 2000 is the successor to Windows NT. Windows 2000 promises cross-compatibility with existing Windows 95/98, while extending the stability and security of Windows NT.

SAP NetWeaver and Globalization: Meeting Local and Global Requirements

White Paper Description
Rapid changes in international markets—and mounting pressures to reduce costs and improve quality—make globalization a key issue for most organizations today. Worldwide company reorganizations, acquisitions, mergers, and spin-offs affect the structure of an enterprise, demanding immediate action. Globalization requires that companies enable core business processes on a global basis, while providing ease of use for local user communities.

Related Topics: Translation and Localization, Localization, Currency Conversion, Standards, Translation

Related Keywords: SAP, Web services, translation tools, address management, e-business solutions, SAP NetWeaver, language support, Unicode-based system, country versions, localization strategy

Why Is In-transit Visibility (ITV) in the Supply Chain Important

Picture this: a customer service representative (CSR) gets a frantic call from a customer asking about parts. In this scenario, the customer is waiting for the supplier to deliver critical parts for a product which is scheduled on the line in a few hours. The customer service department's initial step is to check the order status where the item will be identified as being delivered, en route for delivery, awaiting customs etc.

Usually, tracing the shipment to a particular order is more complicated than just opening up the order status screen. If a product is en route, the CSR should be able to connect the item with the delivery truck and provide an estimated time of arrival (ETA) at the customer's location. At times, it's very crucial for customers to have this information in order to figure out if they should reschedule a production line or just wait for the product. But the hurdle in answering this question is figuring out how far a truck driver is from the delivery location and if the inventory can be located in-transit with a third-party logistics provider (3PL).

More and more companies are trying to realign their supply chain due to competitive pressures, by identifying new areas for revenue and improving overall customer service by providing on-time delivery of products with fewer errors in shipments and fewer damaged goods. Usually an organization's supply chain creates the rhythm for the whole organization. Wouldn't it be great to see inside a truck at any given time during the transportation process to figure out which finished goods are being delivered and which items the organization will be receiving?

Having the ability to identify, change, and monitor shipments from origin to destination gives an organization reliability, flexibility, and transparency within the entire supply chain. With the use of in-transit visibility (ITV) capabilities an organization will be able to meet the challenges of rapidly increasing fuel prices and changes in regulatory requirements, and provide customers with premium services without increasing the total cost of operations.

To further explore ITV, it's beneficial to understand the origin of the concepts. The ITV concept originated from the U.S. Department of Defense (DoD) in the early 1990s. It was mainly used by the DoD to achieve better visibility to track goods within the supply chain in war zones. Now, the ITV concept is being adopted by many transportation companies to provide extended visibility for their customers and used for an organization's internal operations.

A technical report written by Asvin Goel on In-Transit Visibility provides a complete overview, defines the concept, and answers the following questions: How is ITV achieved? What value does ITV create for the organization's supply chain? How is value created by ITV's implementation to the overall performance of the organizations supply chain measured? In the next two sections, our main focus will be on the overall concept of ITV. We will examine how an organization's transportation operation benefits from ITV and how it can be integrated with software solutions.

The ITV Concept

Visibility is the ability to obtain information or data easily and accurately. Within a supply chain, visibility plays a vital role. There are three levels of visibility within an organization (collectively, usually called total asset visibility): in-stock, in-process, and in-transit. In-stock and in-process visibility are within the organization's walls. ITV refers to the ability to track items or goods moving within the supply chain logistics or at a 3PL provider location. ITV applications have the ability to manage products receiving value-added services such as custom packaging and re-packaging either through internal operations or by 3PL providers. ITV tools are commonly used in the transportation industry to bring efficiency and profitability into the transportation of goods. ITV applications have the ability to understand and track the status and location of inventory and shipments from their original destinations to delivery destination, which provides accurate visibility into the supply chain, thus eliminating fuel consumption, waste of time, and resources.

ITV can create value based on the capabilities of each contributor within the transportation network. ITV can provide real-time updates on assets which are in transit. This capability can be used by manufacturing and planning teams to run short-term forecasts, identify transportation bottle necks, and provide proof of delivery and compliance to customers in real time. It will also make the organization capable of invoicing or allocating shipments in transit to customer-specific orders. ITV will help an organization's customer service department provide an ETA to customer inquires as well as raise any alerts for late deliveries or road blocks caused by customs, traffic, etc.

With ITV, organizations can eliminate any risks and optimize tasks for truck drivers. By rerouting or expediting shipments, a delayed shipment can be resolved in real time because a dispatcher will be able to communicate with the truck driver.

An Analyst's View of Process Industry SMB Challenges

The process industry provides many of the products we use in our daily lives for food, shelter, and health. Such products are created as materials and transformed through the use of energy resources and chemical products. In addition, the process industry manufactures products that are essential to advanced industries such as computing, biotechnology, telecommunications, automotive, scientific, and space exploration.

These industries are facing major pressures not only to meet the present needs of our global economy, but also to do so without compromising future generations by ensuring that processes

* meet environmental guidelines
* optimize energy resources efficiently
* result in products that are safer, more reliable, and more functional
* provide features that meet both industry and consumers needs

This article focuses on how enterprise resource planning (ERP) vendors are helping the process industry meet both the needs of today and deliver on anticipated functional requirements that will help meet the needs of tomorrow.

Process Industry Manufacturing Challenges

Manufacturers in the process industry are at a difficult crossroads. Although the industry is not facing any imminent substantial decrease in its overall profit margins, there is concern in the industry according to a recent study by the Canadian Manufacturers and Exporters Association, which cites the following issues:

* increased global competition
* foreign currency fluctuation
* changing patterns of customer demand
* escalating business costs
* problems in implementing new technologies
* competitive business pressures
* shortage of skilled workers

To address these issues, process industry manufacturers and distributors must manage the following key activities, and ensure they use an enterprise system that supports these activities:

* Planning production for both materials and capacity—to develop a production plan, manufacturers must ensure that there are sufficient available resources and materials, production capacity, and labor.
* Inventory tracking and controlling work-in-process (WIP)—monitoring material consumption and tracking work order progress is the basis of manufacturers' being able to meet sales order, demand, and delivery dates.
* Replenishment and demand planning—the ability to review variances between forecasted and actual sales is the basis of managing vendor lead times and raw material replenishment.
* Managing the supply chain for order fulfillment—reviewing the global supply chain provides manufacturers with the ability to coordinate logistics and operational activity to meet customer order fulfillment expectations.

Specific Requirements of an ERP System for the Process Industry

Here's an overview of how some of the functionalities of an ERP system for process industries help manufacturers better perform the activities listed above.

1. Conversion process capability
In the process industry, the bill of materials (BOM) used in discrete manufacturing is replaced by the master product formula, or simply the formula. The formula requires a conversion table for measures, such as weights from grams to pounds, and must have the ability to record liquid units of measure, in both metric and US-standard. The formula must also record specific information related to product characteristics that can affect manufacturing processes. For example, in the blending process, the system can record product information such as percentage calculations of raw materials, and the effective specific gravity, potency, density, and number of reactives of those raw materials.

2. Interface to other modules
The master formula can also be linked to submodules like quality assurance (QA), procurement, inventory, and accounts payable (A/P) for government compliance and safety issues. Also, the manufacturer must be able to trace products in order to manage dating of inventory lot control and the amount of inventory available at the distribution level. Furthermore, there are government and regulatory concerns that deal with the nature of the materials, as there may be a controlled substance with specific shipping, handling, and storage regulations. Or, the manufacturing process may emit hazardous by-products. Or, there may be logistical concerns within the manufacturing process itself.
3. QA module and flexible formula adjustments
A process industry ERP system must also have a formulation-balancing operation based on the premise that the QA group tests random samplings of production batches. The system needs the ability to adjust, through a program logic control (PLC) interface, any variations in materials used and external factors such as humidity, temperature, cool-down speeds, etc. Also, the material flow and consumption is recorded back into the ERP system. The system's routing functionalities reflect those capabilities as a requirement or not, depending on the user's specifications.

4. Reworking all co-products and scrap materials
As a result of manufacturing processes, residual materials (by-products) may be created. These by-products can be collected as waste and reused. This is the case within the plastics industry, for which the collection and re-entry of materials into process creates very specific criteria. In the process industry, due to a continuous production flow operation, the production process generates a theoretical production yield, which may be calculated by the downstream packaging operation as units for case-pack quantities. The residual amount generated from the production process may vary within a percentage point, but in the downstream conversion process, the residual quantities may be aligned to complete full, case-size box quantities. By using flexible formulas, process ERP systems can demonstrate how the residual materials can be reworked from waste back into materials used in production.

ERP System Constraints in the Process Industry

For lack of an available solution designed for their needs, some process manufacturers have attempted to implement an ERP system for discrete manufacturing. As there are several fundamental differences between the operations and practices of process and discrete manufacturing, opting for such a stop-gap measure is not always effective. Process manufacturers have no doubt noted the constraints that are placed on their operations as a result of using a system that was not designed for their needs.

The nature of the process manufacturing business is such that it is difficult to manage inventories and profits. Process manufacturers experience large quantities of finished product in transit and of raw inventory. The products often have low yields with substantial scrap (fine chemicals, pharmaceuticals, or plastics).

Business dynamics is putting demands on ERP systems to help with

* maintaining a lead over competition
* simplifying the product lines
* responding to shorter product life cycles
* providing mass customizations (car options, computer system accessories, etc.)
* complying with regulations compliances

In an attempt to meet these demands, many manufacturers have looked at ways to improve supply chain optimization by re-examining manufacturing processes, relocating closer to markets, and looking at cheaper energy, transportation, and labor. The businesses' needs are such that an ERP system must be powerful enough and diverse enough in functionality to do more than simple process manufacturing.
With ingenuity, many of the raw material manufacturers have turned to vertical market integration, moving from pure process manufacturing to mixed mode. Their factories now produce raw product for industry and sell finished goods by the item (counting). An example is toothpaste, where the finished good is sold by the pallet, case, or individual package. The ERP system must allow manufacturing processes to batch products in order to achieve product consistency (two examples are textiles, with "dye lots and finishing," and bakeries, with oven scheduling, and aerospace, with electroplating, etc.).

That some factors are out of the control of process manufacturing vendors is exemplified by the retail industry. In this industry, the vendor has a many-stop supply chain, and plays a role almost like that of the caboose at the end of a long train.

For example, chain stores track sales at the cash register, and use that information to replenish inventory from branch warehouses. The warehouses get their product from distributors. In the case of multilevel distribution networks, this explosion process percolates upward through the various levels from the retail store to regional warehouses (master warehouse, factory warehouse, etc.). The demand is input to the master production schedule at the level of the manufacturer. The process is not always real-time, meaning that a lot of product is out in the supply chain. This process of upward percolation is most common in the pharmaceutical and retail grocery industries. Since everyone in the supply chain strives to minimize and frequently turn inventory, any ERP system has to manage with these constraints.

As a side note, some manufacturers are trying to use real-time reporting to determine product consumption and demand. The information is more accurate and allows total reduction in the field, increased inventory turns, tailoring production to market preferences and better cash management.