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Anne Stuart’s BPM in Action

Dennis Byron

Is Deflation in Enterprise Software Market Bad for BPM?

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I don't usually comment on IT investment research issues on the BPM in Action blog but unusual economic times demand a different approach. The financial status of your business process management (BPM)-enabling technology supplier could have a direct effect on your enterprise's ability to compete. (That assumes your enterprise's financial status is stable.)

Maureen O'Gara reports that Microsoft's recent quarterly result (period ending March 31) represented the first time in the company's 30-something-year existence in which revenue in the same quarter the previous year was higher. I am not going to take the time to research that factoid because I believe annual and trailing-four-quarter results are more important. But her comment made me sit up and take notice.

So how did the other software market leaders do in the last three or four months? Oracle reported quarter-over-quarter revenue growth (for the period ending February 28), but that result did not take into account BEA's revenue during the same period the year earlier. In a fair comparison, Oracle revenue was down too. IBM was down overall and even its software unit deflated although it was up slightly adjusting for exchange rate differences.

SAP will announce its results Wednesday April 29. No one in the investment research community is expecting an SAP outcome that counters its three larger enterprise software competitors. These four companies account for about 40% of all software spending.

Each is also a major factor in providing BPM-enabling technology. The question then is

"Is the BPM sector of their businesses outperforming the whole?"

One way to tell is to look at smaller software suppliers totally or more significantly tied to BPM. The problem is that very few of the smaller companies are public companies. (PegaSystems is an exception about which we'll know more in May.) And the percentage of the larger companies' business that relates to BPM is so relatively small that they do not have to break it out the way Oracle separates applications from database/middleware or IBM separates WebSphere from Lotus.

Another indicator is to follow the marketing activity. In tough times, companies do not invest marketing and development dollars in products that are not succeeding the marketplace. That's where the admittedly hard to find good news is for BPM:

  • I expect important NetWeaver BPM news out of SAP's upcoming Sapphire user event
  • Microsoft is nearing formal release of BizTalk Server 2009, after months of beta; key documentation hit the web site in April
  • IBM has activity firing on all BPM cylinders from WebSphere to FileNet to Cognos to Lotus; there is a BPM track as part of the May 3-8 IBM SOA Impact event
  • Oracle, although it has a lot on its plate in general and some new BPM rationalization issues in particular with the Sun acquisition, has pulled together a viable BPM story as part of absorbing BEA

So that's good news in particular for the BPM stack players. And none of these companies are going anywhere (although I have seen a resumption of Microsoft-SAP and IBM-SAP merger rumors). In fact, traditionally, the large suppliers emerge from down economic times even stronger.

-- Dennis Byron

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TIBCO (TIBX:US) is a publicly-traded company and appears to be doing rather well as of recent.

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Business process management and optimization -- philosophies, policies, practices, and punditry.

Anne Stuart

I am the editor of ebizQ.

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