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Axway CTO Dave Bennett: What Customers and Companies Can Expect in a Consolidating Software Market

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Listen to the entire 15:07 podcast Download file


     Agenda and Resources

1. Integration Market
    Consolidation:    
    a. Software AG's Buyout of         webMethods
    b. Benefits of Consolidation

2. Specialization vs. General
    Solutions:
     a. Why Specialize?
     b. How Axway Specializes
     c.
Advantages of
        Specialization

3. Business Agility
      a. How Specialization
          Helps Agility
      b. Does Consolidation    
          Stifle Innovation?
      c. Case Studies

Read a complete transcript of the podcast here

Learn more at Axway's Web Site

Replay the Axway  Webinar:
"Collaborative Business Solutions: A New Breed of Event-Based Applications"

Download the White Paper:
The Details of a Business-to-Business Intergration (B2Bi) Solution

Dave Bennett will regularly respond to any comments posted below.

Decisions, decisions... They sure aren't easy, but it looks like deciding on an integration solution is about to get easier as the market starts to rapidly consolidate around the industry's strongest solutions. Or are they?

In a consolidating market, you have two options, says Dave Bennett, CTO of Axway Incorporated. "You decide to fill in every component and every checkbox from a consolidation perspective," he said. "Or you decide to specialize."

The recent buy-out of webMethods by Software AG was an example of specialization, said Bennett, and it demonstrated that Software AG was looking for a way to compete with the Big Four (IBM, Oracle, SAP and Microsoft) by combining its solution with that of webMethods to form an overall SOA infrastructure. And specializing components toward specific business problems is a way for companies like Axway to differentiate their offerings as well.

 
Specialization Examples

Bennett points toward the automotive industry to illustrate the point. Although the auto industry has its Big Three or Big Four just like the software infrastructure industry, individual automotive vendors target specific spaces, like the high-end or the low-end of the market. Some vendors try to cover every segment of the market and others target specific niches.

In the software industry, you see much of the same. Just like a vendor like BMW might specialize in creating a car to perform and handle better than other cars on the market rather than trying to create an option for every type of consumer, an integration technology vendor might focus in on a core business problem for a specific target audience and customize an offering to fit that market need, such as collaborative business problems like supply chain management, supply chain finance, or SOA compliance.

Specialization tends to evolve as companies trying to maintain a market share look for a way to sustain themselves in the face of competition. As companies look for a way to adapt in order to meet new business pressures, they need systems that can adapt to regulatory changes and new business models and changes in existing business models.

Axway's Approach to BPM and Business Agility

A lot of people pay attention to orchestration of BPM, said Bennett, but not everyone pays much attention to choreography. Axway's approach attempts to carve out a niche in the BPM field by being specialized to deal with both choreography and orchestration.

The solution attempts to help customers with business agility and enhanced collaboration as well. Axway aims to help its customers deal with SOAs and regulatory compliance in order to solve competitive challenges in the current market and allow companies to be more dynamic in response to market events, such as regulatory or sensor-related events.

"Having great domain in solving some of these SOA problems or collaborative business problems is key," said Bennett. "And knowing it from a contextual level, from a vertical perspective, understanding a healthcare/life science problem vs. a financial services problem."

Do Companies Need to Consolidate Their Strengths?

But with the trend toward specialization, is the market getting too fragmented? Are companies being forced to focus on their core strengths at the expense of innovation? 

Bennett doesn't think so. The need for agility and the need to compete will still drive companies to look for ways to distinguish themselves, but focus isn't necessarily a bad thing.

"I think you have to be focused. If you try to cover every market, you're going to fail. In fact, even the big guys, they have challenges covering every market," he said.

Case Studies

Bennett points out that Axway now has more than 8,200 customers, including most of the Fortune 500 companies. He cites DHL as one example, where DHL has developed a quick-shift product where about 20,000 trading partners and customers have automated key processes to create a collaborative backbone in order to extend new services to customers on demand.

McKesson is another example, said Bennett, of a customer that has built an e-commerce infrastructure on Axway's platform in search of agility. McKesson provides its customers with a way to distribute goods, as well as advanced services around ePedigree and controlled substance ordering systems. These services are provided over a backbone, taking the infrastructure and leveraging pre-built solutions in order to offer more benefits and values to customers.

The core technologies of ePedigree are an interesting example, according to Bennett, because the next step is track and trace which can work down to an RFID level or a sensor-based level in industries like automotive, aerospace, or supply chain event-oriented environments.

"As the next generation of supply chain moves towards supply chain finance, where you're tying together these sensor events with financial events, you're going to see new types of solutions for visibility, track and trace and supply chain finance that will drive revenue up for a lot of these companies and improve their bottom line," he said.

Finding a Win-Win Proposition

A lot of companies today in the infrastructure space focus on enterprises, but Bennett thinks a good strategy is to focus on collaborative business problems, because if you need agility in any area, that would be the one.

"If you have these collaborative business solutions in place and the right infrastructure in place, you're absolutely going to need agility," he said. "If you break anyone of those things, you break a lot. You can lose a lot of money quickly."

To find out much more about the topics summarized above, listen to the entire 15:07 podcast.

 

2 Comments

In comparing the "horizontal" solutions offered by the Big 4 to the "vertical" solutions of other vendors, what is the "average" difference in time to implement, TCO and ROI?

Dear Sid,

Thanks for the great question –- it’s also a tough one. When considering ROI or TCO, you have to consider both the pure development time and the sustaining time. The time required to compose any solution will vary depending on the complexity of the problem, but here is a good example.

Say you wanted to create a real-time/right-time demand performance monitor with real-time scorecards. You could build that from scratch from one of the big 4 or you could buy a pre-built solution like our Synchrony Trade Activity Manager (TAM) solution. TAM was composed on our Synchrony stack and took us about 10 man years for the first version. If you built a comparable solution on one of the big 4’s stacks, I believe it would take double that, primarily because of the re-factor rate required to get it right. (When a solution is designed to target a specific business issue, based on deep expertise, you end up with a well thought-out solution that requires less re-factoring.)

Now let’s look at the TCO. If you purchased our TAM solution, it would cost you less than building it from scratch. In addition, it will cost you less to sustain – creating future releases, fixing bugs etc. The actual dollars will vary depending on the complexity of the solution, but in the long run, my guess is that it will typically be 50% less than anything built on the big 4’s stacks. If you look at the distribution models of the big 4, a big portion of their typical deals are services. In a number of cases, they give away the software to get the services revenues. I believe that should be a red flag, because sustainability can become an issue and the TCO will often go up. To me, I think software/infrastructure vendors need to take more responsibility for what they deliver, primarily because of the complexity. I know that means that maintenance costs might go up over time, but I honestly believe they will be far less than the ad hoc sustaining services.

On the time to implement, it will always be faster to implement a pre-built solution, even if the solution only covers 80% of the requirement. With new infrastructures like our Synchrony stack, you will have all the tools to compose and adapt a pre-built solution. This is one of the reasons why I would recommend buying an infrastructure-oriented solution instead of a monolithic application. Monolithic applications are not agile by nature – with business models, regulations and new competitors popping up all the time, you will need that agility.

Thanks and have a great day.

Dave

David Bennett

CTO

Axway, Inc.

www.axway.com

Join ebizQ producer Krissi Danielson for interviews with the innovators, movers and shakers behind emerging enterprise software solutions.Have a solution that qualifies? E-mail Krissi at krissi (at)ebizq.net

Krissi Danielson

Krissi Danielsson is a podcast producer with ebizQ and contributor to ebizQ's SaaSWeek site. View more

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