Dell World—The Big Picture

For the past few years, many pundits have derided Dell as a one-trick pony. Sure, it totally disrupted the PC and then server markets with its direct model, and redefined operational efficiency in the hardware industry. But could it ever hope to compete in higher value, higher margin software and services businesses?

With Michael Dell back at the helm, the vendor began publicly charting its path to the virtual era in 2010 (see my March 2010 post Dell 2.0: Top Takeaways from Dell’s Virtual Era Event) and has been executing on this strategy via both organic growth and strategic acquisitions. Most of these acquisitions (Perot Systems as the exception) have been smaller companies with innovative products and high-growth rates.

To make the Virtual Era vision a reality, Dell has been executing on four key and inter-related objectives:

• Moving from product to a solutions orientation. In the past, Dell’s identity has revolved around boxes—from PCs to servers to Streaks to big screen TVs. While Dell vociferously reiterated its ongoing commitment to the PC, it put the spotlight on its growing ability to provide businesses with end-to-end, heterogeneous solutions, not just piece parts—and to satisfy market demand for better, more cost-effective and easier to deploy, use and manage IT solutions.

• Building out its cloud-cloud-cloud plan (my phrase). The shift to cloud computing—public, private and hybrid—features prominently in Dell’s solution equation. Dell’s sales team has been using Salesforce.com for a few years now, and is also a major user of Chatter and Radian6. Dell has become a cloud convert, and figures plenty of other companies will want to make this move too. Dell has invested $1 billion dollars to build and buy a cloud computing portfolio to help customers take advantage of cloud computing. Dell’s portfolio includes public cloud, private cloud and service solutions (such as Boomi, which I’ll get to in a minute!) so customers can move to the cloud and still leverage their existing IT investments. In Michael Dell’s words, Dell wants to “give them the bridge to the past and a path to the future.” One example is the new enhancements Dell has made to its Virtual Integrated System (VIS) Architecture, which helps extend virtualization benefits within a customers’ existing infrastructure.

• Transforming from snubbing the channel to become a channel-friendly vendor. In the past, Dell’s most unique characteristic was its successful direct sales model. But, while that works fine for selling hardware, it won’t allow Dell to move up the solutions stack. Dell has recognized the important role that local partners play in creating value-added solutions that work with customers’ existing investments. It has been actively seeking partners that add solution value, and will have over 100,000 by the end of October.

• Pioneering in social media. Dell has been breaking ground in using social media for input, dialogue and interactive marketing. After getting badly burned in the Dell Hell support crisis in 2005, Dell licked its wounds and has moved on to become a leader in building extensive social media capabilities to help it tune into customers and become a social media poster child. Dell just keeps raising the bar in social media, as evidenced by its Social Media Command Center.

Dell Boomi—A  Microcosm of the Virtual Era

Dell’s latest release of Boomi highlights Dell’s execution on its Virtual Era strategy.  Boomi, which Dell acquired in 2010, is an 11-year old integration company that has been steadily moving to expand its cloud integration services. Boomi’s cloud integration service helps companies more efficiently and affordably integrate cloud and on-premise applications—across different locations, networks, clouds and companies (see Dell and Boomi: Doubling Down on Integration for more details).

Boomi’s approach features a cloud-based integration hub that provides customers with integration as an online service. With Boomi, companies can integrate different cloud and on-premise applications across geographically dispersed locations. Boomi’s visual interface relieves customers from complex code-writing and scripting.

With this release, Boomi has added several new capabilities that correspond directly to Dell’s broader overall Virtual Era vision, as shown in Figure 1.

Figure 1: Boomi Fall 2011 Release and How it Highlights Dell’s Virtual Era Themes

Source: SMB Group 2011 (click image to enlarge)

Quick Take

Dell is moving beyond its direct, hardware-centric comfort zone and making good progress on its Virtual Era strategy, as exemplified by Boomi. Serendipitously for Dell, HP has been pre-occupied with and increasingly defined by PC unit flip-flopping and a game of CEO musical chairs. HP’s diversions not only help boost Dell’s current client and server opportunities, but also give Dell more running room to move ahead with its long-term strategy.

While some out there may still view Dell as one-trick pony, I see ample evidence that Dell is well positioned to succeed in its next race.

In conjunction with IBM’s Smarter Commerce initiative, the SMB Group and CRM Essentials are working on a series of posts discussing how technology is empowering today’s customer, and why companies have to change their approach in order to build strong relationships with them.  This is the first in the series, and was based on a couple recent experiences of Brent Leary of CRM Essentials. The last example is really Brent’s dad’s experience using his iPad – which is the one that really brings it all home…so to speak.

I recently bought a new video camera—a Panasonic AG-HMC150. This was a pretty significant purchase for me because it represents a step up into the semi-pro leagues, as I’m planning to do some documentary style programs. I kicked off my buying process with two things: a question and a search.

I posed a question to my friends first. A few people I know do this professionally, so they were my first stop. And because I posed my question to them on Facebook and Twitter using a couple of hash tags, I received their valuable feedback along with great information from people I’m connected to but didn’t know were knowledgeable about video production. On top of that, I received even more valuable information from people I wasn’t connected to, but who saw my question due to the hash tags I used. So within a matter of minutes, I had a great deal of information to sift through to help me with my big buying decision.

While the feedback was pouring in from my social network, I also took to Google to find product information on video cameras. I found links to review sites, informative blog posts and videos comparing the various aspects of cameras to help me with my decision. I went to manufacturer sites to get specs, and followed that up with trips to CNET for in-depth reviews. All this was topped off by finding a few great online communities created by enthusiasts who are passionate about video production, and in some cases about specific cameras—like the Panasonic AG-HMC150 community on Vimeo.

Within a few days, I went from not knowing what to get, to feeling very confident in selecting the right camera for my needs. I also found a community of knowledgeable, experienced people who I could learn from and collaborate with to help me not only with my buying decision, but also with my video production activities. Once I decided which camera to buy, I used the web to find the right place to buy it. My newfound community recommended a company based on their previous interactions with it.

While this is just my personal experience, individual examples like mine are being replicated all over the web as social, cloud and mobile technologies help connect us to the people and information we need in order to find solutions when we need them. It’s what is driving hundreds of millions of people to spend a growing amount of time on Facebook, Twitter and other social networks. With these social networks becoming collaborative platforms, and with smart mobile devices providing access from anywhere, we can build and extend relationships to people and information in ways that truly improve how we experience life.

One thing I love to experience every year is watching college basketball’s national tournament, also known as March Madness. I’m not alone, as this is annually one of the highest rated television events of the year. But this year I was even more into the tournament than ever before.

For the first time, every game was shown on one of four television networks. But the big reason I had a much better tournament experience had to do with the free apps for both the iPad and iPhone that streamed all games live—giving me a choice of seeing any game from wherever I happened to be.

Not only did the mobile apps make it possible to stream any game, they also made it possible to keep track of brackets, share information with my Facebook and Twitter friends, and participate in ongoing tournament conversations. The Social Arena, available through mobile apps and multiple websites, provided me with a non-stop flow of tournament information, including insights from on-air personalities like Charles Barkley. The Social Bracket allowed me to vote on who I thought would win each game, but it also tallied up all the votes to see how the overall viewing community picked the games. Finally, the NCAA and Turner Broadcasting hired people to use social media monitoring tools to analyze the chatter taking place around the tournament, in order to provide insights into what was driving conversations.

Now even if I didn’t have the social and mobile apps, I would have been watching the tournament. But because I love all my mobile devices as much as I love watching the games, I experienced March Madness in a way I couldn’t possibly have done in years past. And, as you might have guessed, I’m not the only one who likes both basketball and mobile devices, as you can see from the numbers below:

• March Madness On Demand (MMOD) was the #1 free app for both the iPhone and iPad in the App Store during the first two days of availability.
• 36% of all streams were from the iPad and iPhone apps the first weekend of the tournament.
• The mobile apps averaged 683,000 daily unique users.
• An average of 67.5 minutes per daily unique visitor was spent streaming MMOD on broadband.
• The NCAA.com/MMOD broadband site averaged 3.8 million daily unique visitors.

Turner was able to leverage our love of social/mobile tools to provide viewers with a whole new level of engagement with the tournament. And, as Fast Company magazine stated in an article about the project, Turner is fit to deliver “a true revolution in sports. And in return they’ll get audience data, captivity and flexibility like no sports broadcasting has ever seen before.” As a side note, television ratings were the best they’ve been in 15 years.

It is clear today that people depend heavily on social networks and mobile technology. Now, more people have accounts on social networks than they have email accounts, and mobile device sales are poised to surpass combined desktop/laptop sales within the next year in the United States. Google+, a network only a couple of months old, already has more than 25 million users sharing over 1 billion pieces of content daily. The ease of content creation and distribution has led us into the age of the zettabyte (with 21 zeroes after the “1”)—which is the amount of information estimated to be available to us online today.

It’s not just the younger generations that are heavily dependent on these technologies. Baby Boomers, and people from earlier generations, are also adopting these tools. I know this from firsthand experience, watching my soon-to-be 80-year-old father using his iPad to do things he had never done before on his desktop computer. He reads books, listens to NPR, watches videos and shares information with his siblings on Facebook—and even Twitter. He uses Bank of America’s app to do his banking. He shops on Amazon.com and Apple’s App Store. He even mentioned reading a few of my blog posts, something I can’t remember him doing before.

Quite honestly, my father loves his iPad because it allows him to easily do so much more. And these tools enable today’s customer to do and experience more than imagined just a few short years ago. But, the fact that customers are smarter today has more to do with having better technology at their disposal than being brainier. Customers have always wanted more information and access to the right people. They have always wanted to be listened to, and have their ideas incorporated into developing better products and services. They’ve also wanted to be valued beyond the financial transaction that they bring to a company’s bottom line.

And now, because technology has empowered them to get together, share experiences and amplify their collective voice, customers expect companies to engage them with these new tools and communication channels. As customers leverage social and mobile technologies to improve their knowledge and life experiences, they will look to build relationships with businesses that will do the same. Well, at least my father and I will.

This is the first of a six-part blog series by SMB Group and CRM Essentials that examines the evolution of the smarter customer and smarter commerce, and IBM’s Smarter Commerce solutions. In our next post, we’ll look at key points businesses need to consider to best serve the smarter customer. In the meantime, we’d love to hear how you’re using the web, mobile and social technologies to become a smarter customer.

After HP’s announcement that it would ditch it’s new Touchpad and put WebOS in mothballs, rumors leaked about it’s intentions to spin-off or sell it’s Personal Systems Group (PSG) PC business and acquire information management software vendor Autonomy for $10.2B. Combined, these moves confirm HP’s CEO, Leo Apotheker’s strategy to get out of the low-margin device business and create a bigger footprint in the higher margin software and services arena.

On the surface, perhaps, not a bad plan. After all, margins in the PC business will only continue to shrink, HP has a (very expensive) white elephant on its hands with WebOS, and Apotheker is of course a software wonk. Furthermore, IBM made what turned out to be a great decision when it sold its PC business to Lenovo back in 2004— and it seems like HP has been an IBM-wannabe for at least the last 20 years, so why not follow suit?

But, there are some very significant reasons that the outcomes resulting from HP’s decision are likely to be very different from IBM’s— many of which revolve around the SMB market.

Being in the Right Place at the Right Time, with the Right Strategy

Unlike IBM, HP has had a significant presence in the SMB and consumer segments. Although PSG accounts for less than 15% of profits, it comprises about one-third of HP’s revenues. In contrast, IBM has always been an enterprise-focused company, with no intentions to make a big play in the consumer market. IBM had been selling off PC-related assets, and had already tipped revenue and profit scales in favor of services and software before it sold its PC division as part of a long-term strategy to exit commodity markets. The Lenovo deal also provided IBM with a partnership opportunity to make huge inroads into selling higher-value products—software, servers and services—into the burgeoning Chinese market.

There’s also the matter of being in the right place at the right time. This is 2011, not 2004. The consumerization of IT is well underway. Employees (whether in small, medium or large businesses) are increasingly choosing to spend their own money to BYOD (bring your own device) instead of using a company-issued brick. And more companies are giving employees an allowance to purchase their device of choice.  This trend will only accelerate as younger employees—who expect cool gadgets—graduate and enter the workforce.

What’s HP’s SMB Entry Point Now?

To be truly successful in the SMB technology market—especially at the low-end—vendors need both a compelling entrée and solutions that can help these businesses grow. You can do it with a must-have business solution—ala Intuit—or with a solid line-up of IT infrastructure products and services. But, on the infrastructure side, PCs and notebooks have historically been one of the first IT products that small businesses buy. This is changing with the rise of smartphones and tablets, but these too are client devices. And SMBs will continue to buy PC and notebooks for the foreseeable future.

Which begs the question, what entry point HP will have into small business without PSG? HP lacks compelling small business solutions and has scrapped its plans for mobile devices. Printers—which HP will presumably hold onto—are even more of a commodity solution at the low-end of SMB than PCs.

HP’s Weak SMB Prognosis

Our prognosis is that without PSG, HP’s value proposition will be much weaker in SMB with this exit. PSG not only provided an entrée to upsell servers and services, but has been, for all intents and purposes, HP’s major marketing arm and “voice” to these businesses.

Meanwhile, since SMBs lack IT resources, they typically don’t want or can’t deal with multiple vendors supplying different pieces of the puzzle. This means that when HP hands off its PC business, both SMBs and the HP VARs that serve them—many of whom are small businesses themselves—will have the opportunity to rethink whether they want to stick with HP on the server side.

Who Gains

PC makers such as Lenovo, Acer, SONY and Toshiba should get a good bump, but Apple and Dell are the big SMB winners.

• Apple basically owns the tablet space until someone comes up with a way to beat them at their own game (which obviously is tough to do!). But its not just iPads. IDC reports that Apple sold 1.66 million Macs and reached an 8.5 percent share of the market, up from 7 percent in Q1 2010. While a lot of these sales are a result of the BYOD to work movement, more SMBs are also buying them because of their reputation for reliability and security. With HP’s imminent departure,  Apple which has the cool factor and typically affords  higher profit margins than PCs–may be very appealing to some VARs.

• Dell is now clearly poised to be the #1 SMB infrastructure brand. Since Michael Dell came back in 2008, Dell has surged in the SMB market. Not only will Dell take advantage of market uncertainty, but it is well-positioned in its ability to serve the end-to-end IT needs of SMBs, from PCs to servers to managed services. In the last two years, Dell has made a significant investment in listening to and understanding the needs of SMB customers, and it’s paying off. At the Dell Take Your Own Path event we attended in December 2010, SMB business owners told us that they selected Dell precisely because it could provide the broad range of infrastructure solutions and services that have enabled them to out-perform their peers. Dell continues to extend its SMB strategy and portfolio, with acquisitions and solutions such as it’s KACE infrastructure management appliance; Boomi, for application integration; and storage solutions, such as EquaLogic.  This gives it a solid foundation for extending its SMB footprint beyond PCs and servers.

While it hasn’t fared as well in the mobile device area to date, Dell is building a range mobile devices–laptops, tablets and smartphones–layered with a consistent user-interface called Stage. Over time, and allowing for mid-course corrections, this strategy has more potential to pay off for Dell with HP out of the picture. And, just as Apple will appeal to some disgruntled HP VARs, Dell will appeal to others, particularly those that want to pitch a complete solution from a single vendor rather than piecing together a patchwork of components from several vendors—not only because it’s easier, but because they’ll get better margins by concentrating their business with one supplier.

HP’s departure also opens the door wider for some less likely suspects. For instance, a vendor that already has an ongoing relationship with a large swath of SMB customers, a focus on mobility and the cloud, and willing  to place a strategic bet on the huge SMB technology opportunity. Perhaps a telco, such as Verizon? Finally, the ambitions of Amazon and Google, and their potential to disrupt the SMB market with whatever they have up their sleeves can’t be discounted.

Summing Up

HP’s move to increase its focus on high-margin software and services solutions will definitely impact its ability to maintain a strong position in the SMB market. Unfortunately for HP, it is also likely to find itself outflanked by IBM and hunted down by Oracle in the large enterprise space. Ironically, after growing to be the largest technology vendor in the world by acquiring vendors from Compaq to 3Par to Palm, and now Autonomy, HP appears to be headed back where it started from when it made the Compaq acquisition in 2001: in an uncomfortable middle ground with formidable competitors ready to pounce on all sides.

However, times changed, and Dell started to look like a one-trick pony. As Michael Dell himself acknowledged at last week’s Dell’s 2011 Virtual Era Analyst Event, which I’m paraphrasing here, “Dell had a winning formula that worked for a long time…but then it didn’t work so well anymore. Technology changed, as did customers’ expectation of technology, and Dell had to reinvent itself.” After re-taking the helm in 2007, Michael Dell began charting a new  course for Dell–one designed to help it capitalize on market demand for better, more cost-effective and easier to use IT solutions.

At last week’s event, Dell provided us with an update on its strategy to help companies in the anytime, anywhere virtual era by providing customers with “open, capable, affordable solutions.” For Dell, this means building solutions on open, industry standards; providing customers with choice; virtually (instead of vertically) integrated solutions; and ensuring that solutions can scale as required.

By leveraging cloud computing and remote services, and delivering the right blend of hardware, service and software offerings as more complete solutions–instead of as commodity piece parts–Dell’s aim is to solve customers’ IT problems instead of creating new ones.

How Dell’s Strategy Plays in the SMB Market

At this year’s event, Dell put SMBs in the spotlight. Steve Felice, president of Dell’s Consumer, Small and Medium Business unit, took center stage in the line-up of keynote presentations, mapping out Dell’s SMB vision. Dell’s other executive presenters and panelists–up to and including Michael Dell–underscored Dell’s commitment to delivering products, services and solutions tailored to the needs of SMB customers as well. (This contrasted with last year’s event, at which Dell mentioned that it would use mid-market businesses as its design point, but then quickly veered into large enterprise territory for the bulk of the event).

More importantly, Dell is putting meat on the messaging bones at both ends of the SMB spectrum. For example:

• Dell’s focal point for the Virtual Era is the mid-market. Dell defines the mid-market as companies with 500 to a few thousand employees. It believes that by starting with mid-market requirements, Dell believes it can more readily scale up or down and make the economics of IT work better for businesses of all sizes, because mid-market companies have complex IT needs, but scarce IT resources–and can’t afford a lot of expensive labor or IT tools. They need more complete, automated, fixed price IT solutions and services. Recent Dell acquisitions such as Dell KACE, which Dell acquired KACE, which helps simplify systems management and deployment with appliance and cloud-based solutions, and Boomi, which supplies cloud integration services to help companies affordably integrate cloud and on-premise applications,  focus on mid-market problems. Dell’s results to date illustrate how this approach is shaping up: KACE sales are up 400%, and Boomi (see Dell and Boomi: Doubling Down on Integration) sales are on track to double by year-end.  At Dell’s Take Your Own Path SMB event in December 2010, I met several Dell SMB customers, (see SMB Group video interviews with Chitale Dairy and Pixomondo) that are using these and other Dell solutions to help move their businesses ahead of the competition. 

• Capitalizing on the consumerization trend. IT innovation used to move mostly downstream, from large enterprises to the consumer. These days, the direction has reversed. Consumers are buying brighter, shinier and often more capable devices than they get at work–and bringing them into the office. Entrepreneurs are starting their own businesses, and don’t want to sacrifice the looks, power, capability and ease of use of consumer devices for stodgy and unwieldy business products. In a nutshell, consumer IT is raising the bar for business IT. Dell is taking advantage of its position as one of only two major vendors with an end-to-end portfolio that spans client devices from consumers through large business. Dell’s consumer products provide it with a great access point to small businesses. Since the introduction of its small business Vostro line in 2007, Dell has continued to make refine and expand its offerings to help small businesses bridge the gap from consumer to prosumer and up with a portfolio of PCs, notebooks, tablets and smartphones geared to different needs across this spectrum, along with services to help with device manageability, security and control. In particular, Dell has been aggressively expanding its mobile offerings with a comprehensive line-up of Android and Windows 7 devices to capitalize on the transformational shift to mobile computing.

• Taking a more channel-friendly but not a channel-only approach. Dell has moved from being a poster child for the direct model to a company that recognizes the value of the channel and the role it plays in the SMB market. Several of its recent acquisitions, including Compellent, EquaLogic and KACE brought strong reseller channels that Dell is building on. However, Dell also recognizes that while many SMBs continue to rely on the channel, SMBs are increasingly purchasing at least some of their IT solutions directly, as indicated in SMB Group’s 2010 SMB Routes to Market Study.  Unlike its major competitors, Dell’s first priority is to bring greater IT efficiency to the market–not on maintaining an IT channel that doesn’t add value. This should increase the odds that the channel partners that work with Dell are actually adding value instead of just serving as middlemen.

• Becoming a bona fide software and services provider.  Dell and others have talked about “productizing” services and automating technology solutions to make them more affordable and provide better business value. Dell’s recent string of software acquisitions and its purchase of Perot Systems indicate Dell’s intent to become a serious force in this realm. Dell’s investments to date to build cloud infrastructure and services foreshadow its future intent to offer an expanded range of public, private and hybrid cloud solutions for SMBs. In addition, Dell’s Managed Services footprint is growing, with 9000 team members in 39 countries who provide an array of services, from application services to break/fix. Dell’s focus on using cloud and other technologies to help provide remote, automated services should make these services more affordable for SMBs.

Quick Take

Dell’s strategy for the Virtual Era and mid-market design point bode well for SMBs. Unlike the many technology vendors that speak in jargon-riddled tongues that can make your head spin, Dell execs are also able to tell the story in a way that mere mortals can understand. As important, Dell has found the silver lining in the Dell Hell support crisis of a few years back, building extensive social media capabilities so that it can listen to what customers want, and map to these requirements. Finally, Dell is walking the walk–investing in and building the software and services capabilities it will need to deliver its vision to SMB customers.

Dell contrasts its perspective with that of its traditional major competitors–HP and IBM, which it contends skew towards a large enterprise design point. While I think Dell may be overstating this, Dell’s SMB strategy and solutions seem to be more deeply entwined with the fabric of the corporate vision as a whole.

Of course, I’d like to see Dell go even further with its SMB agenda. Some top of mind ideas:

• Provide a less expensive but just as inviting alternative to the Mac. Many entrepreneurs and small business owners are defecting from Windows PCs to Macs not because of hardware issues but because they’ve had too many experiences where the Windows slows down and gets funky. I’d love to see Dell put more focus into raising the profile of its non-Windows PC and desktop alternatives.

• Offer a turnkey social media service for SMBs. Dell really gets social media, and in my opinion, is ahead of the field in understanding how to use it effectively. It would be great if Dell created a streamlined, turnkey offering to help SMBs use, monitor and manage social media. As we learned in the SMB Group’s 2011 SMB Social Business Study, and as highlighted in this post, Is There a Method to Social Media Madness, only about a quarter of SMBs are using social media in a strategic way, and few are using tools to manage and ensure that they’re getting return on their social media investments.

• Solve the SMB dilemma of having to buy and pay for multiple mobile service contracts for different devices. How about using a little muscle with AT&T (Dell also needs to offer its mobile devices through Verizon) to enable–instead of prohibiting–SMBs to tether their notebooks with their smartphones (instead of banning this) via a bundled service package. The SMB Group’s 2010 SMB Mobile Solutions Study showed that expensive data plans for mobile services are the biggest inhibitor to SMBs adopting mobile solutions, as discussed here.

Dell’s commitment to the SMB market is coming through loud and clear. If it can stay focused and be bold, it has the opportunity to do some big things for SMBs that should really pay off for both Dell and for its SMB customers.

When big companies gobble up smaller ones, you always wonder whether the acquired company will get swallowed up into the belly of the beast, derailed or morphed into something unrecognizable.

In November, Dell acquired Boomi, which provides AtomSphere®, a cloud integration service that promises to help companies more efficiently and affordably integrate cloud and on-premise applications.  Boomi’s integration cloud helps Dell solve the problem of integrating applications across different locations, networks, clouds and companies (Figure 1). The Boomi acquisition also underscored Dell’s broader strategy (and a string of acquisitions) to create a cloud computing portfolio to help customers maximize the benefits of cloud computing in what Dell calls the “Virtual Era.”

Fortunately, it looks as if Dell is helping Boomi stay the integration course, as we learned in a recent update on the progress of the Dell-Boomi acquisition. In this brief, we provide a brief overview of what Boomi is and what it does, highlights of its new Spring 2011 release, and our perspective on how the Dell-Boomi acquisition is shaping up.

Figure 1: Boomi’s Integration Cloud

What is Boomi and How Does it Work?

Boomi gives companies of all sizes a one-stop shop where they can integrate any combination of SaaS and on-premise applications, and third-party trading partners via Boomi’s AtomSphere integration cloud.

The secret sauce that enables Boomi AtomSphere to deploy these integrations as a service is the lightweight, distributed runtime engines that Boomi calls “atoms” (Figure 2). Boomi’s patent-pending atoms contain the components needed to execute an integration process—including connectors, transformation rules, decision handling and processing logic. With Boomi, customers and partners can:

• Sign up for an account and begin building integrations immediately for free. Boomi provides a free Trial via the Web, and users can develop the integration without paying a fee.  Once they deploy the integration, users pay for it with monthly subscription pricing.

• Create integrations without programmers. Based on user feedback, Boomi has redesigned the user interface a couple of times over the years to make it user-friendly for the likes of systems analysts, advanced CRM administrators, or those with report-writing and business intelligence skills.

• Choose where they want to run their Boomi integrations. Users can have Boomi run their self-contained, autonomous “Boomi atom” integrations in a public cloud, or in a private cloud or on-premise behind their own firewalls. But, while users choose where they run their Boomi atoms, these atoms always connect back to Boomi’s data center for centralized management, updates, etc. via the AtomSphere cloud.

• Build and/or use pre-built integration widgets. Boomi and its partners also provide pre-packaged integrations in ready-to-run wizards that business users can deploy.  ISV partners typically build these widgets and bundle them with their applications. The widgets contain the application connectors plus the data mappings and transformation logic, and feature wizards to walk end-users through the integration in a step-by-step fashion. For example, Taleo has built Boomi a widget for Workday to ADP integrations.

• Use the Boomi dashboard to monitor the status and health of all of their integrations, and provide an audit trail.

Figure 2: How Boomi Works

As important, Boomi doesn’t impose any additional security concerns for users. When customers deploy the atom behind their firewall no data passes through AtomSphere. AtomSphere only monitors the health and status of the atom—the data only flows directly between the applications being integrated.

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Community is another significant part of Boomi’s value-add. The Boomi dashboard features a green feedback button, and Boomi implements at least 25% of the top-vote getters each quarter. In addition, Boomi Suggest aggregates integration maps (over 15,000 live maps to date) from users. When another user has a similar integration requirement, Boomi Suggest generates automated mapping guidance that typically provides about 80% of the data mapping required—cutting time and cost from the most time-consuming part of creating an integration.

The Boomi ecosystem also houses public and private connector communities, so that once someone builds a connector, they can share it. Boomi provides a revenue share arrangement for companies that build public connectors and widgets.

Boomi’s Spring 2011 Release

Boomi’s Spring release centers on four key areas:

1.     Providing additional connectivity to legacy middleware, such as IBM MQSeries, Tibco, webMethods, Progress, etc. to make it easier for companies to connect Boomi integrations with their on-premise integration services, enabling them to more easily connect existing integrations and applications to SaaS and cloud applications.

2.     Supporting simpler, faster processing for large data sets. This enhancement simplifies data migration, and includes automatic support for Salesforce.com’s bulk API, designed for organizations that need to load large amounts of data into Salesforce.com. Instead of dealing with Salesforce.com’s complex API directly, Boomi users simply check a box, and the tool calculates the optimal batch size for loading.

3.     Anywhere integration monitoring. With the advent of cloud computing, applications and data are increasingly distributed across many different locations, networks and corporate boundaries. Boomi atoms enable users to distribute integration capabilities to these disparate data sources, without sacrificing centralized monitoring and management across integrations. Boomi has also added a new API so that users can connect Boomi to third-party monitoring, such as Dell OpenManage.

4.     New partner support programs. Boomi has introduced a 4-day hands-on boot camp for integration practitioners, as well as a new 3-level partner certification program to promote consistent service quality across the partner ecosystem.

While some of these enhancements focus on large companies, they also make it easier for ISVs and SIs to develop, monitor and manage widgets and integration services for their SMB customers.

Why Should SMBs Care?

As noted in the SMB Group’s 2011 SMB Top Ten Technology Trends, cloud computing and software-as-a-service (SaaS) have taken IT cost and complexity out of deploying business solutions, making it easier for SMBs to deploy applications to help run their businesses more effectively.

While some vendors provide integrated business suites, most companies run a mix of on-premise and cloud applications from different vendors. For instance, they may use Intuit QuickBooks, a Sage or Microsoft solution for back-office accounting and ERP needs, Salesforce.com for CRM, and other cloud applications for marketing or HR.  But they often lack the time, money or appetite to integrate these applications. When applications don’t “talk to each other” businesses waste a lot of time re-entering redundant data and reconciling inconsistent and inaccurate information across key workflows, such as order to cash. At the same time, the volume of data that SMBs must manage is growing exponentially–adding to the integration challenge.

Simple, clean and affordable integration options help SMBs decrease the time it takes to integrate applications, and derive maximum value from the business solution investments, by:

• Streamlining connectivity between internal applications and with third-party applications and processes.
• Reducing the time, errors and business costs associated with inaccurate data entry.
• Providing a consistent, real-time view of information across integrated applications.

When ISVs or integrators offer SMBs a short cut to integrate applications with those of relevant partners, they help remove adoption barriers and enable SMBs to get more value out of their business applications with less hassle.

How the Dell-Boomi Acquisition Is Shaping Up

Hosted by Dell’s SMB Group (and also working closely with Dell’s Services team), Boomi has retained its offices and independence in Philadelphia and San Francisco. Dell has put a corporate integration executive in place to help smooth the transition, and is investing to double Boomi’s staff by the end of 2011.

However, Boomi continues to gear its offerings for enterprises of all sizes, with revenues evenly split between large enterprise and SMBs. For instance, Mindjet, which has about 250 employees, wanted to standardize its business application integrations to minimize ongoing technical support requirements, and support Sarbanes-Oxley compliance. The company was able to create its first integration in 5 weeks, without using any internal IT resources, is using Boomi’s centralized management and data auditing capabilities to comply with Sarbanes-Oxley, and is adding additional integrations.

About 75% of Boomi’s are channel influenced. Boomi has grown its ISV and SI partner roster to 70+ companies. As discussed earlier, partners can build widgets and deliver them to customers as a packaged integration. Boomi estimates that about ½ of its ISV partners build widgets, and each typically creates about 3 to 5 of them. In addition, there are about 15, 000 live data maps in Boomi Suggest and about 200 connectors in Boomi communities.

SMB Group Summary and Perspective

The integration challenge has always been complex, and continues to become more multifaceted. More applications need to be integrated both in the cloud and on-premise. In addition, adoption of new mobile and social media solutions is on the rise.

Six months into the acquisition, Dell’s approach appears to be on target. Boomi has stayed focused on its mission of helping companies overcome one of the major hurdles to adopting new cloud-based solutions—without having the burdens of raising capital or fielding questions about financial viability.

As a result, Boomi’s growth curve is accelerating. Although some of the Spring 2011 enhancements seem most appropriate for larger customers, they should also help ISVs ease integration issues for SMBs in a more scalable manner. In many cases, SMBs often lack the skills or resources for do-it-yourself integrations, and pre-built connectors and widgets from ISVs are a much better fit.

Looking ahead, while Dell and Boomi indicate they will continue to nurture this channel-friendly, community-centric strategy, Dell is starting to train its own sales, services and specialist teams on Boomi. Although the Dell-Boomi offering faces strong competition in the integration arena from the likes of IBM-Cast Iron, Informatica and Pervasive, Dell teams should provide Boomi with a strong sales boost among both end-users and partners, especially if Dell can leverage Boomi out to its worldwide teams to take advantage of global opportunities.

Overall, Boomi’s cloud integration solution is a good fit with Dell’s expanding cloud computing strategy. As important, Dell’s corporate integration approach appears to be off to a good start to providing the combination of nurturing and autonomy that will help Boomi thrive and optimize the value it can deliver to Dell, its partners and customers.

As I wrote after the Metamorphosis event, IBM’s acquisition of Cast Iron put the spotlight on the tremendous demand that cloud computing is creating for integration software to bridge the gap between on-premise and software-as-a-service (SaaS) applications—as well as between SaaS solutions. This drumbeat has continued to strengthen, leading Dell to the conclusion that Boomi’s integration capabilities are an essential ingredient to making its Virtual Era solutions and services strategy a success. Integration is very strategic and critical for both IBM and Dell, and each has vast marketing and technology resources to invest in these acquisitions. As a result, Cast Iron and Boomi are likely to become more formidable opponents for Pervasive.

So how will Pervasive, which has arguably been the market leader in the integration space to date, fare as competitive pressure continues to mount? Based on what Pervasive announced at IntegratioNext, and as importantly, the conversations I had with many customers and partners at the event, I think Pervasive will manage just fine, for several reasons.

1.     Pervasive has an innovative, stress-tested integration portfolio that’s growing stronger. Pervasive has been a leader in helping end-user customers, ISVs and channel partners solve the tricky problems of data and application integration since 2003. Today, Pervasive’s integration line-up includes a wide range of integration options for on premise, cloud to cloud, between cloud and on premise, including:

• Data Integrator, an integration platform that connects a plethora of databases, flat files and legacy formats and applications, including virtually any software-as-a-service (SaaS) and on-premises applications. With the latest release, Data Integrator V10 in now available the cloud as well as on-premise.

• DataCloud2, initially launched in 2009, is a fully multi-tenant, on-demand integration platform that combines the Data Integrator platform and DataSynch with Pervasive Integration Agent, a lightweight agent that sits behind a company’s firewall to connect on-premise apps with the cloud. Developers can tap into Pervasive data services, including its catalog of data adapters, to accelerate development.

• DataCloud Marketplace, where both customers and partners can shop for integration tools. End users only buy the solution the need, they don’t have to purchase other technology from Pervasive. Pervasive has already created several small business integrations, such as Salesforce.com to Intuit QuickBooks and Salesforce.com to Freshbooks–pricing starts ad $19.95 per month.  Developers that create integrations with Pervasive technology can put them the marketplace, set their own price, and create an ongoing annuity revenue stream.

2.     Pervasive enjoys a great track record with ISV partners. About 60% of Pervasive’s business today goes through the channel, mostly via ISVs that embed Pervasive integration within their solutions. Embedded ISV integrations are becoming a key differentiator for business software and cloud vendors because they ensure that the integration won’t cost more than the solution.

3.     More focus on the SI and consultant channel. While embedded ISV integrations are a great, friction-free way to provide integration, they won’t solve for an endless combination of integration scenarios—particularly in the SMB market. Pervasive is providing more tools and marketing programs that SI and consultant firms are also finding very attractive. Strategic Growth, for instance, uses Pervasive technology to provide reasonably priced, repeatable and easy to integration between Salesforce.com and NetSuite. Since these software vendors won’t integrate with their competitors, partners can seize on the opportunity to build new revenue streams by creating integrations to serve their own customers, which they can also sell in the Pervasive Marketplace.

4.     The integration challenge has always been complex, and is becoming more multifaceted. More applications need to be integrated both in the cloud and on premise. In addition, adoption of new mobile and social media solutions is on the rise. By providing more turnkey (and less costly) integrations Pervasive and its partners can alleviate the problems of one-off custom integrations and costly updates.

5.     Pervasive is taking significant strides to boost its marketing capabilities. Pervasive hasn’t always articulated what it does and how it helps as clearly as some of its competitors. But, the vendor has hired new marketing people to help it articulate its strategy, messaging, and the business value of Pervasive integration solutions in a clearer, more compelling way. At the event, I did notice that Pervasive sessions seemed much more tuned to business value than in the past–now they need to keep it going.

Finally, Pervasive enjoys its freedom. Although I don’t believe that IBM and Dell will squander their respective acquisitions of Cast Iron and Boomi, each of these acquired companies is now a little fish in a very big pond. As such, they are likely to sacrifice some agility as part of these larger, more bureaucratic companies. In contrast, Pervasive, as an independent company, can keep a laser-like focus on integration, without worrying about having its focus diluted and/or dispersed within a large IT company that has many other irons in the fire.

Highlights:

In May of this year, IBM acquired Cast Iron Systems (for an undisclosed sum) to help customers more effectively tackle the challenges of integrating cloud and on-premise solutions. Cast Iron, which was founded in 2001 and has 75 employees, provides hundreds of pre-built templates and a “configuration, not coding” approach to help streamline and shorten the time application integration. Cast Iron’s OmniConnect portfolio includes three deployment options, which all share the same interface, and deliver user interface mashups, process integration and data migration capabilities:

• Cast Iron Cloud2, a multi-tenant Integration-as-a-Service cloud offering
• Cast Iron Physical Appliance
• Cast Iron Virtual Appliance

Cast Iron has positioned itself as the “The #1 SaaS and Cloud Integration Company,” with more than 450 mid-market customers and an unspecified number of large enterprise accounts. Traditionally, Cast Iron has competed against rivals such as Boomi, Informatica and Pervasive in the integration market.

IBM will make Cast Iron’s solutions available worldwide as part of the WebSphere integration portfolio.

Quick Take:
IBM’s acquisition of Cast Iron was driven by a few fundamental market trends. First, cloud computing growth is exploding. IBM is forecasting global market CAGR for cloud computing is expanding by 28%, from $47BB in 2008 to $126B in 2012. In addition, data volumes are rising exponentially. IDC forecasts that data stores are growing an average of 60% annually, fueled by factors including the social media explosion, and the increasing trend to aggregate, mine and monetize data. More and more of this data will be stored in the cloud.

These forces ratchet up the need for simpler, cheaper integration alternatives. In the cloud, data and data control are widely distributed. And most companies will continue to operate in a blended or hybrid computing approach for the foreseeable future. Connectivity scenarios between cloud applications and data sources, cloud to on-premise, and between public and provide clouds are spiraling the number of possible integration scenarios. Developers, integrators and customers must deal with a staggering number APIs and technologies to accomplish these integrations.

While IBM’s WebSphere already includes a wealth of integration capabilities, Cast Iron enables IBM to provide more turnkey integration, which reduces cost and complexity, and removes significant barriers to cloud computing adoption. By leveraging this streamlined approach, IBM can strengthen its role as a integration hub for its existing enterprise customers, and more readily extend its integration footprint into the mid-market.

Of course, IBM had other acquisition options, most notably Pervasive, which is a significantly bigger company than Cast Iron, boasting more than 1,000 SaaS integration customers and dozens of integrations; and Boomi, which focuses exclusively on a cloud-based integration platform, and offers dozens of integrations. (Interestingly, Boomi, Cast Iron and Pervasive–all provide integrations for several of the leading SaaS vendors.)

So why Cast Iron? My take is that IBM took this route for a couple of reasons. First, I think IBM likes the fact that Cast Iron’s line-up features software, cloud and appliance options. IBM has been putting a lot of focus on appliances, in particular, as bridge between on-premise and cloud solutions. Cast Iron provides an appliance option, and also provides integration in a uniform way across all three delivery models. In addition, IBM likely viewed Pervasive’s PSQL database business, which still accounts for a majority of Pervasive’s revenues, as an asset it didn’t want or need.

For these and other reasons, the Cast Iron acquisition makes sense for IBM. But will IBM be able to successfully surface and leverage Cast Iron’s automated, simplified approach within the context of an increasingly complex and crowded WebSphere and Software Group portfolio–which, I’m told, is now comprised of more than 30,000 different offerings? IBM already has two disparate integration stacks, WebSphere for application integration, and InfoSphere for data integration. Smaller acquisitions have tended to get lost in the IBM shuffle in the past, and IBM Software has made additional, bigger acquisitions (such as Sterling Commerce and Coremetrics) since it acquired Cast Iron.

Meanwhile, what moves will Pervasive, Boomi and Informatica make to meet the challenges of a new integration gorilla in the mist? As important, what plays will IBM’s traditional competitors, such as Oracle and SAP, as well as cloud leaders such as Google, Amazon, Salesforce, etc. come up with as they pursue similar goals? Are other integration acquisitions in the works?

I don’t have a crystal ball–or inside information–to know how the details of new developments will unfold. But as the drivers for more streamlined cloud integration continue to intensify, this promises to be a very interesting space and one I’ll be watching closely.

• Cast Iron Cloud2, a multi-tenant Integration-as-a-Service cloud offering
• Cast Iron Physical Appliance
• Cast Iron Virtual Appliance

Cast Iron has positioned itself as the “The #1 SaaS and Cloud Integration Company,” with more than 450 mid-market customers and an unspecified number of large enterprise accounts. Traditionally, Cast Iron has competed against rivals such as Boomi, Informatica and Pervasive in the integration market.

IBM will make Cast Iron’s solutions available worldwide as part of the WebSphere integration portfolio. .

Quick Take:
IBM’s acquisition of Cast Iron was driven by a few fundamental market trends. First, cloud computing growth is exploding. IBM is forecasting global market CAGR for cloud computing is expanding by 28%, from $47BB in 2008 to $126B in 2012. In addition, data volumes are rising exponentially. IDC forecasts that data stores are growing an average of 60% annually, fueled by factors including the social media explosion, and the increasing trend to aggregate, mine and monetize data. More and more of this data will be stored in the cloud.

These forces ratchet up the need for simpler, cheaper integration alternatives. In the cloud, data and data control are widely distributed. And most companies will continue to operate in a blended or hybrid computing approach for the foreseeable future. Connectivity scenarios between cloud applications and data sources, cloud to on-premise, and between public and provide clouds are spiraling the number of possible integration scenarios. And developers, integrators and customers must deal with a staggering number APIs and technologies to accomplish these integrations.

While IBM’s WebSphere already includes a wealth of integration capabilities, Cast Iron enables it to provide more turnkey integration, helping to reduce cost and complexity, and in doing so, removing significant barriers to cloud computing adoption. By leveraging this streamlined approach, IBM can strengthen its role as a integration hub for its existing enterprise customers, and more readily extend its integration footprint into the mid-market.

Of course, IBM had other acquisition options, most notably Pervasive, which is a significantly bigger company than Cast Iron, boasting more than 1,000 SaaS integration customers and dozens of integrations; and Boomi, which focuses exclusively on a cloud-based integration platform, and offers dozens of integrations. (Interestingly, Boomi, Cast Iron and Pervasive–all provide integrations for several of the leading SaaS vendors.)

So why Cast Iron? My take is that IBM took this route for a couple of reasons. First, I think IBM likes the fact that Cast Iron’s line-up features software, cloud and appliance options. IBM has been putting a lot of focus on appliances, in particular, as bridge between on-premise and cloud solutions. Cast Iron provides an appliance option, and also provides integration in a uniform way across all three delivery models. In addition, IBM likely viewed Pervasive’s PSQL database business, which still accounts for a majority of Pervasive’s revenues, as an asset it didn’t want or need.

For these and other reasons, the Cast Iron acquisition makes sense for IBM. But will IBM be able to successfully surface and leverage Cast Iron’s automated, simplified approach within the context of an increasingly complex and crowded WebSphere and Software Group portfolio –which, I’m told, is now comprised of more than 30,000 different offerings? IBM already has two disparate integration stacks, WebSphere for application integration, and InfoSphere for data integration. And, smaller acquisitions have tended to get lost in the IBM shuffle in the past, and IBM Software has made additional, bigger acquisitions (such as Sterling Commerce and Coremetrics) since it acquired Cast Iron.

Meanwhile, what moves will Pervasive, Boomi and Informatica make to meet the challenges of a new integration gorilla in the mist? As important, what plays will IBM’s traditional competitors, such as Oracle and SAP, as well as cloud leaders such as Google, Amazon, Salesforce, etc. come up with as they pursue similar goals? Are other integration acquisitions in the works?

I don’t have a crystal ball–or inside information–to know how the details of how new developments will unfold. But as the drivers for more streamlined cloud integration continue to intensify, this promises to be a very interesting space and one I’ll be watching closely.

About two years ago, Boomi made some significant headway on solving this problem when it announced its cloud-based integration as a service offering, Atomsphere (formerly named Boomi On Demand).  The service enables users to model, build and deploy integrations through a browser based visual interface. Behind the scenes, lightweight, but highly functional runtime engines called atoms make all this happen. The atoms contain all of the necessary connectors, transformation rules, decision handling, processing logic, etc. to facilitate the integration.

While Boomi gained good traction with this offering, it realized that there were still lots of people that didn’t have the time, knowledge or inclination for modeling the integration with the drag-and-drop mapping tool. So this week, Boomi took another step towards simplifying the integration situation, introducing Boomi Widgets (http://www.boomi.com/news_and_events/press_releases/072909). Widgets are wizard driven. They walk users through a set of questions to configure the integration to their needs in about 15 minutes, start to finish. Users don’t need to know anything about modeling, coding, data mapping or other technicalities. You can use Widgets  for SaaS-to-SaaS and SaaS-to-on-premise integrations between business applications. The Widgets run continually in the background to automatically update and synchronize applications every few minutes.

As important, Boomi has also opened up its platform and APIs for developers and systems integrators with a self-service model. Third-parties have easy access to the tools they need to build Widgets, and then embed them into the solutions they sell to customers. Boomi negotiates a wholesale price for the Widgets with the partner, who can then mark it up depending on their own marketing strategy. 

For instance, I spoke with Walter DeWildt, from WDCi, an Australian SI. WDCi sees the SMB SaaS market booming, but potentially getting stalled because SMBs are concerned that integrating these applications will cost more than the application. WDCi sees Boomi Widgets as a way to create affordable, repeatable integrations for SMB customers. In about 3 weeks, it developed an integration for Salesforce.com and Saasu, a popular on demand accounting solution in Australia.  WDCi can manage all the integrations it builds, and the customers running them, from the Atomsphere platform.

Making the Widgets super-simple for SMBs to use, and removing barriers for developers should be a great one-two punch for Boomi. The Widgets relieved integration hassles for SMBs, and remove integration development and maintenance barriers for developers. They can write the integration once, embed it in their application, and all of their customers can use it—essentially eliminating the integration barrier to adopting a new solution.

Because of these advantages, I expect that the Boomi Widget library will grow quickly from the handful of Widgets in it today (including Intuit QuickBooks to Salesforce, and Salesforce to NetSuite) as more developers and SIs recognize the potential competitive advantages of embedding integration within their solutions.