AMR just released the results of a survey they did about SOA spending. This is going to be an interesting compliment to ebizQ's survey, "SOA Market Pulse," which is coming out in a couple of weeks.

Companies adopting service-oriented architecture (SOA) spent $1.4 million on software and services in 2007, according to a report released today by AMR Research.

"The SOA Spending Report 2007-2008," which surveyed IT executives from the United States, Germany, and China, found that the primary drivers for SOA investment were to meet the need to change investments faster, cheaper, and with less risk (22%), to meet requirements of individual projects (18%), and to reduce IT costs through reuse (17%).

Survey respondents represented a cross-section of companies with 500- 10,000+ employees in the process and discrete manufacturing, retail, wholesale/distribution, telecom, and financial services industries. According to the survey, SOA adoption and spending largely varied across vertical industry, location, and size of company.

"SOA adoption and interest varied by industry in some surprising ways," said Ian Finley, research director at AMR Research. "Financial services, the top revenue vertical reported in vendor interviews, came in at the bottom in our SOA adoption tally. Upon further analysis, we discovered that while a smaller percentage of financial services companies have adopted SOA, those adopters are spending a great deal more on SOA than their peers in other industries. In other sectors, more of the industry has adopted SOA, but the average company spends a more modest amount."

Additional highlights of this report include:

SOA adoption is broad based and growing rapidly -- China, Germany, and the United States all showed adoption growth rates of over 100%.

SOA spending is significant -- 45% of SOA adopters reported spending over $500K on SOA software and services in 2007.

(source: PR Newswire)

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Following on its repurchase of $18 billion worth of its own stock last year, IBM decided to re-coup some of its investments and spend some of its own money on itself by buying back $15 billion worth of stock today. The markets are happy with this kind of confidence and even the bleak news about housing foreclosures in the U.S. hasn't brought it down.

However, buried in its release of the new version of IBM's System Z out today is the new on demand analytics software, Cognos 8 BI.

IBM today is announcing new Information on Demand software for System z, including Cognos 8 Business Intelligence (BI) for System z. IBM Cognos 8 BI for System z combines the proven reporting and analysis capabilities of IBM Cognos 8 BI with the power and reliability of System z, enabling customers to use their data for competitive advantage, improve decision-making and optimize their business performance. IBM is also announcing a Cognos 8 BI for Linux on System z customer beta program. IBM Cognos 8 BI for Linux on System z will be available in the second half of 2008.

IBM’s Information on Demand strategy is helping customers gain access to the right information they need, when they need it, along with key business insights needed to address and respond to changing market demands. By deploying Cognos 8 BI for Linux on System z, customers will be able to easily report and analyze hundred of millions of transactions directly on the mainframe - ensuring everyone across the organization can quickly identify and respond to critical business trends.

IBM is also announcing the immediate availability of DB2 for z/OS Value Unit Edition, which provides a new one-time-charge offering that enables the deployment of new application workloads. This offering strengthens the role of System z as a cornerstone for key business initiatives such as SOA, Data Warehousing, Business Intelligence and packaged applications such as SAP. DB2 for z/OS Value Unit Edition and IBM Information Server enable System z clients to further deliver trusted information for their dynamic warehousing requirements.

In addition, IBM will bring new Master Data Management capabilities to System z in the second half of this year. This will include the InfoSphere Master Data Management Server for Linux on System z, which allows businesses to centrally manage customer, product, and account data for use across an enterprise.

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ebizQ's editorial producer and SaaS Week blogger Krissi Danielsson blogs today about the completely nutty antics of everyone having anything to do with Yahoo! these days. There is so much going on in the world of Web 2.0 that we can't even compile an email newsletter without fear that the news is going to become obsolete within the next five minutes!

However, starting today and continuing over the next eight weeks, ebizQ's Web 2.0 and the Enterprise newletter series is going to hit your inbox on Wednesdays, if you sign up for it (here, and the tick the last box on the page after adding your email address). Today the newsletter features blog entries, news items as well as key analysis on Web 2.0 concepts from RFG/Experture and the Microsoft/Yahoo deal by AMR Research. Email me if you sign up for the newsletter but were too late for today's, I'd be happy to forward it (editor at ebizq.net)

This is all leading up to ebizQ's Virtual Conference on Web 2 that is happening March 19. Check out the agenda and register for it, it's guaranteed to be quite exciting.

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Today at the Gartner BPM Summit in beautiful and talented Las Vegas (where more than one person canceled a meeting this morning due to a late night at the Flamingo Hotel's Blackjack tables), I had a great meeting with HandySoft's Bruce Knudson.

Bruce and I talked about the work HandySoft is doing in the government sector, which made me recall my days covering Pentagon's activities for National Defense Magazine, and my subsequent association with the Association for Enterprise Integration, an industry group that provides a framework for collaboration between government and industry.

(The DoD CIO, as well as many other defense agencies, have turned to AFEI to be its conduit for policy and strategy input from industry through jointly chartered working groups. More recently the Deputy Under Secretary of Defense for Business Transformation has requested a partnership with AFEI for the purpose of garnering industry input on transforming DoD business operations. AFEI working groups formed under these partnerships provide the opportunity for industry to influence policy, shape the future and secure the nation.

The Association for Enterprise Integration (AFEI) is a non-profit association for corporate and individual members whose common goal is to advance enterprise integration, network centric operations and world-class electronic business practices for industries and governments around the globe.)

But I digress. HandySoft is drinking some of the kool-aid that Gartner analysts are dishing out to BPM Vendors, and that's that BPM tools have to be 'more 2.0', i.e., more collaborative to be successful in the BPM market of the future. Garth seems to be taking that into consideration as he crafts his message about the tasking engine that HandySoft has built, which allows for iterative tasks to be collaborated upon between people. Garth reported that Gartner is saying that tasks additionally need to be flexible enough to be built upon across person-to-person networks, so he reports HandySoft will be working on that too in the near term.

***If you like this article, you can get all this coverage and more in our weekly ebizQ BPM Update. Sign up to receive it at this link.

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Last night I went to sleep with a mental picture of how Fujitsu organizes its new autodiscovery process engine, which was poetically described to me by Hiro Makita and Keith Swenson for Fujitsu, here at the Gartner BPM Summit in Las Vegas.

The images I saw in my briefing drew a unique picture of how processes in most companies are presented to a BPM provider. Most of the time, finding out what a companies processes are can take several months, and the image of what request goes where, and who talks to who, and who orders what, etc., can be depicted by a confusing spaghetti-like diagram.

Instead, Fujitsu offers companies the chance to give them a data dump, and about a week later, an automated process discovery mechanism prepares a report so the company knows exactly what their processes are, both for average situations, and exceptions. It's pretty cool.

The briefing also included a confidential (and extremely impressive list) of customers that Fujitsu is working with to improve their mission-critical processes. They are some of the most important companies in the world.

***If you like this article, you can get all this coverage and more in our weekly ebizQ BPM Update. Sign up to receive it at this link.

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At the Gartner BPM Summit, I just had a great meeting with Dale Skeen, a technology visionary and founder and CTO of Vitria, which today announced the industry’s first Web 2.0 BPM suite that empowers business users to directly model, manage, monitor and optimize their business processes.

This release, Dale said, represents the convergence of Web 2.0 and traditional BPM, by empowering business analysts with the ability to use 2.0 tools such as mashups, wikis and other collaboration platforms to integrate data and to give processes a higher level of context and meaning.

"Before, it's been business vs. IT, but it has to be business + IT," Dale said, to give collaboration tools the opportunity to fulfill their promise.

With Vitria's new product, business analysts can now model and execute business processes in a rich web-based environment in direct collaboration with their IT counterparts, significantly reducing the development cycle, saving companies millions of dollars and enabling a truly agile enterprise.

Until now, the modeling and collaboration capabilities of BPM solutions were constrained by a technological gap that kept business analysts and IT professionals separated. Converging BPM, Web 2.0 and Event Processing has enabled M3O to bridge that gap. The product empowers the business analysts to play a key role in building and managing their own process models without having to spend days or weeks with IT to construct and finally complete a process. With this enabling technology, both business and IT can be more agile and responsive to changes in the business, reducing implementation times for mission- critical processes from weeks to days.

ebizQ's own Beth Gold-Bernstein has high marks for the new product:

"Vitria has brought together the ability to model, manage and monitor business processes in an extremely slick and easy to use Web 2.0 interface – think iPhone meets dashboards," said Beth Gold-Bernstein, Chair of the ebizQ 'In Action' Conference Series. "The visualization capabilities provide a true synergy, enabling knowledge workers to (model and) link information and create new views or dashboards more easily than trying to explain to IT what it is they want. In fact after using M3O the knowledge workers will be the ones to unleash the true synergy of BPM, Web 2.0 and event processing in the enterprise."

I'm off right now to go look at the demo... as I can't wait to see what Dale described as bringing 'the iPhone coolness' to a BPM dashboard.

***If you like this article, you can get all this coverage and more in our weekly ebizQ BPM Update. Sign up to receive it at this link.

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Today at the Gartner BPM Summit, I heard Alan Trefler of Pegasystems, speak about his vision for the future of BPM.

Alan said there are three failed ways that the marketplace has so far attempted to close the execution gap - that is - the gap between what management wants and what IT provides. First, you have the failure of engineering, and people stop asking for help and changes in current technologies because they have so much frustration with systems as they are. The second common failure is offshore development, where you farm out the work but the solutions are continually out of reach. Third, you have the failure of mega-application providers, who are massive and expensive and make huge promises, yet still manage to keep agile solutions out of reach.

The true vision of BPM, Trefler said, is to change the way the business and IT works together, to change processes to match applications, to change expectations, directly capture objectives, automate programming, and therefore automate the business process work.

***If you like this article, you can get all this coverage and more in our weekly ebizQ BPM Update. Sign up to receive it at this link.

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This week I will be blogging (and maybe a little podcasting) from the Gartner BPM Summit in Las Vegas. At the moment, I'm scheduled to find out the latest in BPM trends and technologies with execs from Corticon, Pegasystems, Fujitsu, Vitria, Lombardi, Global360, Qualiware, and a few others. If you are going to be there, give us a shout and let's meet up. Email elizabeth@ebizq.net.

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Below is the text of the letter that Microsoft sent to Yahoo!’s Board of Directors:

January 31, 2008

Board of Directors
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089
Attention: Roy Bostock, Chairman
Attention: Jerry Yang, Chief Executive Officer

Dear Members of the Board:

I am writing on behalf of the Board of Directors of Microsoft to make a proposal for a business combination of Microsoft and Yahoo!. Under our proposal, Microsoft would acquire all of the outstanding shares of Yahoo! common stock for per share consideration of $31 based on Microsoft’s closing share price on January 31, 2008, payable in the form of $31 in cash or 0.9509 of a share of Microsoft common stock. Microsoft would provide each Yahoo! shareholder with the ability to choose whether to receive the consideration in cash or Microsoft common stock, subject to pro-ration so that in the aggregate one-half of the Yahoo! common shares will be exchanged for shares of Microsoft common stock and one-half of the Yahoo! common shares will be converted into the right to receive cash. Our proposal is not subject to any financing condition.

Our proposal represents a 62% premium above the closing price of Yahoo! common stock of $19.18 on January 31, 2008. The implied premium for the operating assets of the company clearly is considerably greater when adjusted for the minority, non-controlled assets and cash. By whatever financial measure you use - EBITDA, free cash flow, operating cash flow, net income, or analyst target prices - this proposal represents a compelling value realization event for your shareholders.

We believe that Microsoft common stock represents a very attractive investment opportunity for Yahoo!’s shareholders. Microsoft has generated revenue growth of 15%, earnings growth of 26%, and a return on equity of 35% on average for the last three years. Microsoft’s share price has generated shareholder returns of 8% during the last one year period and 28% during the last three year period, significantly outperforming the S&P 500. It is our view that Microsoft has significant potential upside given the continued solid growth in our core businesses, the recent launch of Windows Vista, and other strategic initiatives.

Microsoft’s consistent belief has been that the combination of Microsoft and Yahoo! clearly represents the best way to deliver maximum value to our respective shareholders, as well as create a more efficient and competitive company that would provide greater value and service to our customers. In late 2006 and early 2007, we jointly explored a broad range of ways in which our two companies might work together. These discussions were based on a vision that the online businesses of Microsoft and Yahoo! should be aligned in some way to create a more effective competitor in the online marketplace. We discussed a number of alternatives ranging from commercial partnerships to a merger proposal, which you rejected. While a commercial partnership may have made sense at one time, Microsoft believes that the only alternative now is the combination of Microsoft and Yahoo! that we are proposing.

In February 2007, I received a letter from your Chairman indicating the view of the Yahoo! Board that “now is not the right time from the perspective of our shareholders to enter into discussions regarding an acquisition transaction.” According to that letter, the principal reason for this view was the Yahoo! Board’s confidence in the “potential upside” if management successfully executed on a reformulated strategy based on certain operational initiatives, such as Project Panama, and a significant organizational realignment. A year has gone by, and the competitive situation has not improved.

While online advertising growth continues, there are significant benefits of scale in advertising platform economics, in capital costs for search index build-out, and in research and development, making this a time of industry consolidation and convergence. Today, the market is increasingly dominated by one player who is consolidating its dominance through acquisition. Together, Microsoft and Yahoo! can offer a credible alternative for consumers, advertisers, and publishers. Synergies of this combination fall into four areas:

Scale economics: This combination enables synergies related to scale economics of the advertising platform where today there is only one competitor at scale. This includes synergies across both search and non-search related advertising that will strengthen the value proposition to both advertisers and publishers. Additionally, the combination allows us to consolidate capital spending.

Expanded R&D capacity: The combined talent of our engineering resources can be focused on R&D priorities such as a single search index and single advertising platform. Together we can unleash new levels of innovation, delivering enhanced user experiences, breakthroughs in search, and new advertising platform capabilities. Many of these breakthroughs are a function of an engineering scale that today neither of our companies has on its own.

Operational efficiencies: Eliminating redundant infrastructure and duplicative operating costs will improve the financial performance of the combined entity.

Emerging user experiences: Our combined ability to focus engineering resources that drive innovation in emerging scenarios such as video, mobile services, online commerce, social media, and social platforms is greatly enhanced.

We would value the opportunity to further discuss with you how to optimize the integration of our respective businesses to create a leading global technology company with exceptional display and search advertising capabilities. You should also be aware that we intend to offer significant retention packages to your engineers, key leaders and employees across all disciplines.

We have dedicated considerable time and resources to an analysis of a potential transaction and are confident that the combination will receive all necessary regulatory approvals. We look forward to discussing this with you, and both our internal legal team and outside counsel are available to meet with your counsel at their earliest convenience.

Our proposal is subject to the negotiation of a definitive merger agreement and our having the opportunity to conduct certain limited and confirmatory due diligence. In addition, because a portion of the aggregate merger consideration would consist of Microsoft common stock, we would provide Yahoo! the opportunity to conduct appropriate limited due diligence with respect to Microsoft. We are prepared to deliver a draft merger agreement to you and begin discussions immediately.

In light of the significance of this proposal to your shareholders and ours, as well as the potential for selective disclosures, our intention is to publicly release the text of this letter tomorrow morning.

Due to the importance of these discussions and the value represented by our proposal, we expect the Yahoo! Board to engage in a full review of our proposal. My leadership team and I would be happy to make ourselves available to meet with you and your Board at your earliest convenience. Depending on the nature of your response, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo!’s shareholders are provided with the opportunity to realize the value inherent in our proposal.

We believe this proposal represents a unique opportunity to create significant value for Yahoo!’s shareholders and employees, and the combined company will be better positioned to provide an enhanced value proposition to users and advertisers. We hope that you and your Board share our enthusiasm, and we look forward to a prompt and favorable reply.

Sincerely yours,

/s/ Steven A. Ballmer

Steven A. Ballmer

Chief Executive Officer

Microsoft Corporation

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