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Companies

Microsoft goes ERP!

Microsoft agreed last December to buy Great Plains Software for about $1.1 billion in stock. Great Plains has around 2000 employees and sells packaged software targeting the small to midsize companies. The acquired company will be inserted in Microsoft's Application Division. Its products will improve the offer of Microsoft for small companies currently represented by the bCentral Web service. The new version of Great Plains products should be developed on the ".NET" platform and available on the Web.

ERP software was the "trend du jour" at the end of the 90's when Y2K deadline forced a lot of companies to change their core information systems infrastructure. Since then ERP-focused companies like SAP, Peoplesoft or Baan have been mainly relegated to the background, replaced at the center of the attention by new firms created with the Internet boom and fast-growing niche-focused companies like Siebel. This acquisition has not been caused by the need to save Great Plains. The company is profitable and its revenues are growing at a +50% rate. But Microsoft is looking for new market segments to sustain its own growth and give new challenges to its employees. The XBox gaming project is another example of this diversification desire.

If past is a good tool to forecast the future, the broadening of Microsoft appetite is not a good thing for its new competitors in the ERP and ASP area. Even more as the Bush administration is said to be kinder with the Redmond giant about anti-trust issues. As a counter-effect, it could also accelerate the move from software development companies to develop and propose solutions that do not use Microsoft products.

Macromediallaire

Macromedia announced January 16 that it will acquire (officially "merge with") Allaire in a $360 million stock-and-cash deal. Jeremy Allaire will become chief technology officer of Macromedia. Macromedia, with more than 1200 employees worldwide, is known for its Dreamweaver HTML editor and it Flash animation tool. With a workforce over 550 employees, Allaire is the editor of the ColdFusion application server.

The combination of two of the best financially fit companies in the Web-development software space makes sense. Their respective product lines are not too much in competition and they will be able to improve distribution and reduce cost of sales. As the executive of a CASE tool company told to me, you need $20 to sell every $1 that you put in product development. After the initial boom, the industry will begin to consolidate. At a time where many companies like SilverStream, WebMethods or Vignette are pilling up sometimes huge losses to build a sales and support organisation, this acquisition allows Allaire to reach a higher critical mass where sales revenues can support... the sales support infrastructure.

Andersen Consulting Begins a New Tale

Andersen Consulting, the former consulting arm of Arthur Andersen, has been renamed Accenture since the beginning of this year.

I think that 2001 will definitely see the victory of the big traditional consulting companies at the expenses of the e-consulting firms that had surfed on the Web trend in 1999 and 2000. These companies have now lost their fast start advantage and the lucrative stock option programs that allowed them to hire herds of cheap developers hopping to get rich very fast. Employees turnover and financial health will make their fight against more established competitors very hard. Survival will already be a victory for them. Ironically, it is now well-established consulting firms, like KPMG, that are talking about IPOs.

Dot Com Losses are not Lost for Everyone...

Webvan, the on-line grocer company, faces the possibility of being delisted from the NASDAQ, because its shares are trading under the $1 limit. The company reported net loss of $280 million for sales of $94 million in the first nine months of 2000.

We speak about this company, because it is headed by the former CEO of Andersen Consulting, George Shaheen. He left the top spot of AC to join the start-up in 1999, when everybody was in the "get rich fast with Internet" mood... even men with the reputation of being clever it seems. Looking at the current stock price, there are small chances to cash on stock options, but if you look compensation data, you will see that Shaheen received around $14 million of bonus in fiscal year 1999. Perhaps, the beginning of an explanation for the $280 million loss...

$9% Numbers

On Growth Rates and Growth Rates

"If you've geared up for 100% growth and the market's only growing at a rate of 30%, you'll have a lot of people sitting around doing nothing".

Source: Richard Donner, Investement Banker in "Europe's Net Consultants Take Steps To Avoid Crunch in Shrinking Market", Dec 29, 2000, public.wsj.com

They are no more sitting around, they have been forced to walk out!

 In Others' Words

Debuzzing XML

"Extensible Markup Language (XML) is no big deal - it's just a delimited text format with pointy brackets. In fact, XML sometimes makes information exchange more complicated.

[...] HTML shouldn't be a big deal either, just another delimited text format with pointy brackets, and one even harder to parse than XML. But over the past 10 years, HTML has become a very big deal, and so many people use HTML for hypertext, it's pointless to use anything else. In other words, Metcalfe's Law of networking kicked in: Every time the number of installed Web browsers doubled, HTML's usefulness quadrupled. XML enthusiasts (such as myself) can make a good case that in the next decade, Metcalfe's Law is going to make XML even bigger than HTML.

[...] The only problem- we're wrong. XML is a low-level format, roughly equivalent to IP (or perhaps TCP/IP) in networking. IP is the Internet's foundation, and most office intranets and almost everything interesting (Web browsing, e-mail, streaming media) happens on top of it. But IP alone isn't enough - IP is an application foundation, not an application itself. The Internet is useful only because users agreed on higher-level layers such as FTP, SMTP and HTTP to move information around, and designed useful applications (such as file browsing) that depend on those layers. XML doesn't have those layers yet: it's like an Internet where every piece of software has its own IP-based protocol.

XML isn't in this situation for lack of trying. Several organizations have been pushing higher-level specifications to allow easy data exchange on top of XML and to simplify processing for business-to-business data exchange.

[...] However, because none of these specifications have achieved widespread acceptance, the current practice is to design every XML-based interchange language from the bottom up. The fact that all the languages are XML-based brings incremental benefits (we can share a schema language, a few low-level librairies, and some development tools), but the markup languages are otherwise mutually incompatible. Users are still forced to create a spaghetti architecture of transformation filters to translate information from one XML markup language to another, just as they do with non-XML data exchange formats, except XML specialists can be harder to find and more expensive than Perl programmers. Because XML alone isn't an application, it doesn't enable communication and Metcalfe's Law doesn't apply. XML alone with one million users isn't all that much more useful than XML alone with a few hundreds users.

[...] XML moves information up and down with industries, but can it move information across different industries as well? With so many different XML-based markup languages, XML's cross-industry improvements are minor, and the horizontal vocabularies that do exist are often as isolated and idiosyncratic as the vertical ones. At the same time, however, the XML hype among media and investors got attention in the boardroom. Because companies were afraid of being left out, many decided to start sharing information in open formats. In other words, XML scared them into doing the right thing. Even if XML itself were to fail, this dramatic change in corporate attitudes is an important legacy.

[...] At some point over the next 10 years, we'll agree on some high-level standards for data exchange, with real applications, analogous to HTML for human-readable text. When that happens, the big deal will be the new standards, and XML will be an essential but mostly invisible part of the plumbing, like IP."

Source: Davig Megginson, XML - The Big Deal, The Future of Software, Winter 2000/2001

XML is surely a hot topic in today's interconnected world. However, I also do not see in a near future the availability of standards that will have an impact in more than one industry. It will already be a big victory if widespread data exchange inside one industry succeeds, as defining a common vocabulary could already a big challenge in classical software development projects. What can be assumed is that XML will become the de facto standard basic approach for data translation between applications, in the same magnitude that SQL has achieved in the database area.

Interesting links to know more about XML:
http://www.xml.org
http://www.omg.org/xml
http://www.w3.org/xml

Conferences

Attend the Software Test Automation Conference for viable and practical solutions to the most critical software test automation problems. March 5-8, 2001. San Jose, California
 http://www.sqe.com/testautomation

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Karl Wiegers' In Search of Excellent Requirements

Virginia / Washington DC March 26-27, 2001

Bonus: Methods & Tools readers will receive $125.00 OFF the regular seminar price. Also, receive FREE, Karl Wiegers' highly acclaimed book, Software Requirements (Microsoft Press, 1999) if you register before Feb. 28, 2001.

Requirements form the foundation for all the software work that follows. Arriving at a shared vision of the product is one of the greatest challenges facing software teams, with customer involvement being one of the most critical factors in software quality. This two-day workshop, based on Karl Wiegers' highly acclaimed seminar, will provide attendees with a tool-kit of practices, reinforced with practice sessions and group discussions, which immediately can be used to improve the quality of the requirements development and management in any organization.

For more information visit: http://www.spc.ca/epr8

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