For many many years in analyst circles, it was almost obligatory when talking about IT vendors to say "well of course, HP makes all its profit from ink". I remember looking, year after year, at marching rows of red figures as HP focused in on the performance of its software division in particular. It was kind of uncomfortable for everyone involved - lots of shuffling in seats was done.

I know I'm a bit late (the results were announced in mid-August), but I've recently had an update briefing on HP's software business, and HP's acquisitions are doing some good. Like IBM, HP has made a strategic move to acquire higher-margin businesses in an attempt to avoid the commodity trap. Mercury, Opsware, SPI Dynamics - they're not all that huge, but they are all in high-growth areas (compared to network and systems management tools, where HP used to be centred, at least ;-).

The result is that in Q3 this year, HP's software business brought the highest operating profit (as a percentage) across all of HP's business units. It's not just about ink any more. In this light, it's pretty difficult to see HP as "not serious about software" (something that it's competitors have regularly said to customers). Alongside one of the companies HP competes regularly against, BMC, the 14.6% operating profit within HP's software business looks pretty decent (if my maths is right, BMC's operating profit is currently running somewhere around 13% of revenues).

That said, of course, when you compare HP's results against Microsoft's 36%-odd operating profit, things take on a different colour...

Posted by neilwarddutton in IT Service Management | Permalink | Comments (0) | TrackBacks (0)

I have just returned from a couple of days in Orlando, where I attended a Microsoft Server and Tools Business analyst summit which coincided with the company's TechEd conference. The RedMonkers James and Coté did a great job of live blogging the event (here, here, here, here, here and here) - and there was even some Twittering - but I needed the joys of a 9 hour transatlantic flight to collect my thoughts.

The big news at TechEd and the focus of the analyst summit was Microsoft's Dynamic IT for the People-Ready Business (Dynamic IT) strategy, which the company describes as building

on the company’s Dynamic Systems Initiative and ongoing Application Platform efforts to provide customers with the key areas of technical innovation necessary to make their IT and development organizations more strategic to the business

In other words it's a framework which builds on a number of Microsoft's most significant, but historically largely disconnected, initiatives which is designed to help customers understand how they can be combined to increase the business value of IT. This is long overdue, for a couple of reasons.

First, whilst Microsoft has used language in the past which implies linkage between the different initiatives and associated products, such as 'design for operations' for DSI and .NET, it's not always been clear how the implication becomes reality. For example, how do the System Center management tools exploit operational policy requirements defined in Visual Studio and how do those requirements map to policies defined in Windows Communication Foundation? Dynamic IT sets out to make the linkage explicit.

Second, Microsoft has lacked a cross-company vision for enterprise IT (for want of a better term) within which to frame discussions with customers and around which it can rally the troops. I'm thinking here of things like IBM's On Demand, HP's Business Technology, Oracle's Fusion etc. There's People-Ready of course but I think that's about more than Enterprise IT. Dynamic IT provides Microsoft with a competitive alternative and one that is more reflective of current reality than future aspiration.

There are four aspects to Dynamic IT where Microsoft plans to focus innovation:

* unified and virtualized
* process-led, model-driven
* service-enabled
* user-focused

built on a federated, interoperable and secure foundation. Obviously, it's still very early days but I do think Microsoft has a lot of work to do if it's going to achieve what I believe it hopes to with Dynamic IT.

For example, in his keynote when Bob Muglia talked about process-led, model-driven he discussed process-led in terms of the application lifecycle, BizTalk, Windows Workflow Foundation and Office Business Applications and model-driven in terms of System Center and IT management models (based on Service Modelling Language and the Common Model Library). What he didn't do was explain the relationship between the two. When describing service-enabled, he focussed on .NET, SOA, web services and software plus services, primarily from the bottom-up, developer perspective (consistent with Microsoft's initial foray into SOA) but failed to tie that into the end-to-end service lifecycle - Big SOA - and thus process-led, model-driven. (As an aside, I think Microsoft is also missing a trick when it comes to information and data as a service but that's for another day).

As well as explaining the relationships between the different aspects of Dynamic IT, Microsoft also has to be very careful that it doesn't fall back into the trap of using it simply as a framework for categorising its products. Increasingly, the key concerns of the people it is trying to reach with Dynamic IT don't fall into neat product categories and Microsoft has struggled in the past to articulate the joined-up propositions required to address these concerns because of its focus on product stovepipes (as I discussed here).

What I think Microsoft needs, as I explained during various meetings at the summit, are scenarios and associated case studies to bridge between the framework and the products and emphasise the linkage. This will also serve to highlight the importance of the three foundational aspects - federated, interoperable and secure - which might otherwise be lost and to tie into Core, Application Platform and Business Productivity Infrastructure Optimization roadmaps which Microsoft is using to help customers understand how they move forward from where they are today.

For Microsoft's customers and potential customers Dynamic IT is a positive sign that company is beginning to recognise that you are more concerned with the outcomes from deploying the company's technologies than you are about the technologies themselves or the way that Microsoft chooses to structure itself to develop and sell them. Over the coming months you should be looking to Microsoft to fill out the framework and seek explanations for how the pieces fit together today and how the company plans to enhance that integration going forward.

Posted by nmacehiter in Architecture • BPM • IT Service Management • Software Lifecycle | Permalink | Comments (0) | TrackBacks (0)

The other day Martin Atherton over at our partner Freeform Dynamics got me thinking again about the IT service management (ITSM) / application management / business service management (BSM) hoopla we've long been saddled with in the IT industry.

I can absolutely see why vendors would want to try and avoid being seen as "just" providers of ITSM tools and make themselves look more "businessy". It's another example of the stack race phenomenon you see in so many areas - development tools, middleware, etc - and the simple idea is that if you can make your offering look and sound as if it can help customers talk more effectively to businesspeople, it's better than an offering that is a bit oily under the fingernails.

And I absolutely believe there's a place for tools that can help customers explain the value of IT investments in a way that makes sense to the people who pay the bills.

The problem is that the vast majority of the technology and practice out there does nothing of the sort - at least not without the expenditure of a lot of blood, sweat and tears. To characterise the ITSM/app management/BSM "stack" probably crassly unfairly, all that happens as you move higher up the stack is that events and alerts are correlated at ever more abstract levels. Events from routers, servers and switches are aggregated to give higher-level views of health and performance of infrastructure; infrastructure events are correlated with stats from DBMS instances, application servers, web servers and more to give higher-level views of health and performance of "applications"; and information at the application level can sometimes be aggregated further.

But fundamentally all we're doing is reporting on more chunky technology outcomes. The outcomes we're reporting on are still technology outcomes. The insight is about performance, uptime, security, and so on. There is no business context.

I could argue that we do have technology that can help provide business context to ITSM, app management and BSM - business activity monitoring (BAM). But to focus first on technology is missing the point.

The real underlying point is that do really manage services that make sense in a business context, the whole mindset of the IT organisation has to be turned inside out. IT organisations have to stop focusing so much on internal perspectives of process improvement and efficiency (are we doing things right?), and start focusing a bit more on a more external perspective (are we doing the right things?)

To pursue this idea of "inside out IT" into the software development realm, let's not forget - as I said to an audience of CIOs last night: you can be at CMMi level x and still not guarantee that the things you do will drive business value; instead you *can* turn out irrelevant systems, but in a very predictable way.

Posted by neilwarddutton in IT Service Management | Permalink | Comments (2) | TrackBacks (0)

The ever-vigilant Redmond watcher Mary Jo Foley over at ZDNet reports that Microsoft's Server and Tools unit (but not the P&L - Microsoft will still report server and tools financials), which is responsible for Microsoft Windows Server, SQL Server, Visual Studio, System Center management products and Forefront security products, is now part of the Business Division, the home of Office and Dynamics.

Mary Jo finds this move 'curious' but I can see the logic. It's hinted at (if you get past the marketing speak) in the company's official statement that it made the move to:

sharpen leadership focus on the company’s top priorities and align its organization for innovation, ultimately enabling it to deliver even more value to its customers.

I think this is all about making it easier for Microsoft to articulate propositions which resonate with the key concerns of senior business and IT people. The reality is that key strategic business and IT initiatives - SOA, BPM, compliance ... - increasingly depend on multiple technologies and associated competencies, which cross traditional stovepipes. Big SOA, for example, is about managing IT work across the entire service lifecycle and so touches project and portfolio management, software development and integration, IT service management. BPM, as the other Neil pointed out, is about Office as much as it is BizTalk and Workflow Foundation.

In the past, the way that Microsoft has been organised has worked against the articulation of such joined-up propositions (that's in part why it took the company so long to talk about SOA). Customers would get different answers to the same cross-cutting requirement depending on which Microsoft stovepipe they were talking to: you need BizTalk and SQL Server; you need OBA and SharePoint. [As an aside, I said much of this in an interview with Microsoft PR earlier in the week].

Obviously, shifting branches of the org chart is comparatively easy (even it is very big). The hard part is going to be changing behaviour, joining up the marketing etc. The creation of the Connected Systems Division back in 2005 shows that the company can pull this sort of thing off (albeit on a smaller scale in the Server and Tools Business as was) and Jeff Raikes, who now owns the combined entity, has the influence and power to drive things through at this larger scale.

I am off to a Server and Tools Business analyst event in just over a week so I will hopefully learn more then.

Posted by nmacehiter in Architecture • BPM • IT Service Management | Permalink | Comments (0) | TrackBacks (0)

I spent the beginning of last week in San Diego at the Microsoft Management Summit (MMS), the company's annual conference focused on all things systems management. With time to kill on the 15-hour return journey, I began to draft my thoughts only for this post from Coté over at RedMonk to pop into my feed reader. As well as providing excellent summaries of IT management, Microsoft's Dynamic Systems Initiative (DSI) and the company's System Center product family, Coté provides his impressions of MMS and Microsoft's approach to systems management. Since my impressions were much the same:

- Significant focus on delivery with System Center Operations Manager, Configuration Manager and Essentials, Virtual Machine Manager and Service Manager (although the latter is still a year away)
- Emphasis on modeling - Service Modeling Language, Common Modeling Language (adding the management semantics to SML), CMDB, Management Packs
- Raising the ITIL flag - Microsoft Operations Framework (which Microsoft has until recently failed to exploit despite a long-standing ITIL foundation); System Center Service Manager and CMDB
- Plugging some notable gaps - OEM relationship with EMC for network-aware management but support for a heterogeneous environment requires more work.

I won't repeat them in detail here.

Instead, I thought I would call out something which I felt was largely absent from the two days of briefings and meetings with the Windows Enterprise Management Division team: how they help organisations align what they do from a systems management perspective with business objectives and priorities. Ultimately, as Microsoft claims, that's what DSI is really all about:

A dynamic system is Microsoft's vision for what an agile business looks like—where IT works closely with business in order to meet the demands of a rapidly changing and adaptable environment. The Dynamic Systems Initiative (DSI) is Microsoft's technology strategy for products and solutions that help businesses enhance the dynamic capability of its people, process, and IT infrastructure using technology

Microsoft has done a pretty good job with its Infrastructure Optimization (IO) Model of outlining a roadmap to dynamic systems nirvana, as well as assessment tools to help organisations understand where they are on that path. The company has also gathered a significant amount of data from its customers which should help IT organisations to justify IO investment to the business.

However, the company hasn't really explained how it can help them to maintain the dialogue with the business once the investment has been secured - understanding and capturing business expectations; providing business-meaningful monitoring and metrics; correlating IT security management (as an aside, Microsoft needs to tighten the linkage between its System Center and security - Forefront, Identity Lifecyle Manager - offerings) with business risk management etc. Microsoft needs to address this, not least because all of its enterprise systems management competitors are claiming such capabilities, be it Business Service Management from BMC, Business Service Optimization from CA, Business Technology Optimization from HP, Service Management from IBM.

There were signs, admittedly subtle ones that were obscured by the focus on new System Center products, in Bob Muglia's Tuesday morning keynote that Microsoft recognises this need:

- Plans to extend Design For Operations to a 'business analyst' audience
- The use of SML (presumably in BizTalk) for business process and key performance indicator modeling
- 2007 Office System (Project Server for portfolio management?) as a component of Microsoft's management offerings
- DSI is "ERP for IT"

Fortunately the timings of my meetings meant that I had a chance to quiz Kirill Tatarinov, Corporate Vice President, Windows Enterprise Management Division, about these small but important aspects of the keynote. He confirmed my interpretations of Muglia's comments in light of aligning IT operations with the business. He wasn't able to go into too much detail but I fully expect to see Microsoft begin to talk about these aspects of its management strategy in the not too distant future.

With Microsoft now four years into its ten-year management initiative it's good to see it delivering the first generation of DSI-era management tools. It's equally encouraging to see that the company recognises that it's not just an IT proposition. The company certainly has many of the assets required to help IT engage with a business audience but Microsoft is already coming from behind when it comes to IT management. There may be another six years of DSI but that's a LONG time in the IT industry, so it has to act quickly if its not to be forever trying to catch up with its competitors.

Posted by nmacehiter in IT Service Management | Permalink | Comments (1) | TrackBacks (0)

The big IT news of the week is obviously the Microsoft-Novell alliance. Take a look here and here for Jon's (before the event!) and my thoughts.

Posted by nmacehiter in IT Service Management | Permalink | Comments (0) | TrackBacks (0)