The Demise Of The Packaged Application
by Judith Hurwitz, CEO
As this new year begins, I am going to take a bold step and predict the beginning of the demise of the packaged application as we know it. Do I mean that companies will stop selling vertically-oriented packaged applications? Of course not. Nor will we return to the days when customers wrote everything from scratch. Instead, we will begin to see the packaged aspects of software becoming the ?container? that companies will begin to pour modular business services into. They will use packages to define a process model. This process model will represent the best practices within a particular vertical industry or within a partnership model.
Plus ca change?
Is this really a change? If one thinks about a traditional packaged application, it consists of business logic and a set of defined or implied procedures anyway. The difference that I am suggesting is that within the context of a service oriented architecture (SOA) there will be a clear separation between process and business logic.
Why is this change necessary? Simply put, the business world has changed. Imagine the world of software back 30 years ago. The typical corporation wrote its own software for everything from general ledger functionality to foundational manufacturing capability. Then some innovators discovered that there was a market for generalising this capability and selling a packaged version of code to a broad set of customers. Suddenly, companies could buy what they used to build. At that time there was a huge debate about ?build versus buy?. Today, no company would ever consider building their own general ledger application.
The packaged application became the norm. This worked fine as long as “static” business models prevailed. Where business models changed companies were obliged to customize the packaged software they purchased, often very significantly. This created a vast industry of consulting firms dedicated to package customization activity. Indeed when ERP became popular, the customization of just SAP’s software constituted a subindustry in itself.
To get some idea of what the new world of SOA-based packaged applications will look like, we can take a look at how it is likely to evolve. There are five aspects to this:
- The SOA container
- Business Services
- Industry Process Maps
- Process Services
- Information Services
The SOA Container. Service Oriented Architectures, by their very nature, are designed as a means of connecting sets of loosely coupled independent services. “Virtual” applications built as a collection of such services need to have a container that enables them to work together. Consequently, I expect that key infrastructure vendors will deliver and package containers or frameworks to help customers move to this new model.
Business Services. Business services are the business logic that defines the rules and logic for conducting business. Such services will include general capabilities such as credit checking code modules as well as industry specific algorithms. Each business service will implement a specific function that is designed without dependencies, so that it can be easily linked with other services. Packaged applications contains thousands of such “business services.” Typically, in a packaged application, they are welded together rather than being independent and isolated from each other.
Industry Process Maps. Traditionally consulting firms create best practice or process maps that incorporate industry best practices. Increasingly, consulting organizations have begun to codify their consulting practices so that they can reuse their intellectual property more effectively within the same vertical industry – and they will continue to do so. In the past, consulting organizations would have created these process maps across packaged software offerings in order to be able to customize them for specialized situations.
Process Services. Once organizations have created business services they must be linked together. This linking is based on the innovative ways that companies decide to conduct business across employees, partners, suppliers, and customers. Within a typical packaged software environment these process services were either absent or indistinguishable from the application. Business process management software traditionally sat on top of packaged applications in order to link one application process to another. However, implementing something innovative would require the creation of customized process maps.
Information Services. The last piece of the puzzle is the information services. In the SOA model, information services are implemented as a separate set of services that can be linked to the right level within the new virtual packaged application model. Again, this is different than the traditional packaged application where information is difficult to access ? especially at the meta data definitional level. Even separate databases are tightly integrated with the packaged application. In the new model, information services are treated as a separate layer of functionality in order to offer better flexibility.
The Bottom Line
The movement away from the packaged application is on track to happen. One only has to look at how companies like SAP, Oracle, and others have started to redesign their once bulky packages into a set of well defined modules. While there is some risk that this movement will open up the tight control that these vendors have had on their customers, it also opens up new revenue opportunities to sell incremental software components without waiting for major software releases. On the other side of the ledger, companies with strong integration units such as IBM can begin to offer their codified services as though they were software products (service as software). Companies with strong understanding of business process issues such as IDS Scheer are well positioned for leadership as well.