App-Dev Megatrends

Take food purveyor Wolferman's. Last year, the company best known for gourmet English muffins lost a ton of holiday orders--as many as 1,000 during the peak season--due to an inefficient call-center system, a slow Web site and a cluster of disconnected apps. That all changed when the company brought in eOne Group to craft a new e-commerce solution. Based on IBM's WebSphere platform and open-source SuSE 7 Enterprise Linux, the app-dev project streamlined transactions by tying Wolferman's front-end and back-end systems together with a new e-commerce engine that more efficiently processed orders and accelerated Web-response times.

That, of course, is the geek stuff. The message suited for TV: Order costs dropped from $5 to $6 per phone call to $1.50 per Web order, while sales jumped 20 percent, thanks to the new system.

"By preventing a repeat of the $300,000 to $500,000 in losses that we experienced [last year], the solution has paid for itself in one holiday season," says John Butorac, general manager at Wolferman's.

Across America, companies like Wolferman's are working with solution providers like eOne to revolutionize business through development work. They, not providers of monolithic, enterprise applications with overly complex and cumbersome offerings, are automating processes and extending new benefits to customers.

And because these companies are opting for open, standards-based tools that run on essentially any hardware or software infrastructure, their opportunities are virtually boundless.

Consider the following: According to an Insight study done for the Technology Solutions Group of CMP Media, publisher of VARBusiness, the amount of revenue generated by solution providers from application-development work and license sales is expected to grow to $18.8 billion next year, a 6.2 percent increase.

Today, nearly two-thirds of all solution providers offer some form of application-development capability to their customers, according to the study. On average, these companies generate one-third of their annual revenue from applications-development work. Given the momentum around them, most--nine out of 10, according to the study--are optimistic about future growth prospects.

Several developments are encouraging these companies. New tools and techniques, such as Web services, integrated development environments (IDEs), open-source platforms, J2EE app servers and .Net, are promising to reduce some of the arcane drudgery in development work.

In addition, more customers are looking to outsource more of their applications-development work to third parties. In fact, market researcher Gartner Group has said that by 2005, traditional application-development groups will no longer exist in more than one-third of all IS organizations. The reason? The rate at which technology changes is increasing and the opportunity to tap a bigger pool of expertise has grown.

Before taking advantage of these realities, however, builders of applications need to understand the macro developments impacting their markets. In the following pages, VARBusiness analyzes the top megatrends in the app-development arena. They encompass both technical and business directions. Before you start your next project, consider the following carefully.

1. Open-Source Rules
When most people think open source, they immediately think Linux, and for good reason. Linux has shown what open, agile, flexible and cheap can do. But, open source is so much more than alternative operating systems. It's applications, tools and Web services that, in the words of Robert Rhodes, CEO of Systems Evolution, Houston, "is here to stay."

"Linux is just the tip of the iceberg," says Rhodes, whose once-small Certified Microsoft solution-provider shop has grown large enough to consider going public, thanks to its success in applications development. "There are so many open-source applications out there now."

One example, Rhodes says, is a PHP Web-based project-management framework that includes modules for companies, projects, tasks, forums, files, calendars, contacts and other items. The success of such applications is convincing big ISVs to rethink their entire approach to the market.

"Open source clearly is one of the major megatrends impacting software development today," says Novell CTO Alan Nugent.

The trend is so big, in fact, that Provo, Utah-based Novell is betting its business on it. As sales of the company's core networking infrastructure products have stalled, Novell management has decided to port core services that were once the exclusive domain of NetWare to other platforms, including open source. Novell has warmly embraced open-computing standards and has made acquisitions of companies that can accelerate its movement into the open-source world.

Last month, for example, it bought Ximian, a Boston provider of desktop and server solutions that enable enterprise Linux adoption. The company has explored Mono, a new software technology that will allow developers of applications written in Microsoft's Visual Studio.Net to run their software on other platforms.

Other platform giants are making open source a cornerstone of their business models. IBM, for example, has spearheaded efforts such as the Eclipse project, which is an open-source tools effort that is attracting hundreds of tools providers ranging from tiny embedded vendors to Intel. Eclipse provides a place to share and access infrastructure code for free. Companies can take the code, combine it into their products, and package and resell it as they so choose. In today's world, it's an efficient way to go to market fast.

"Technology is expanding too quickly, and the capabilities of it are too many for any one company to meet the needs of the market or its customers alone," says Skip McGaughey, IBM's Eclipse chairperson. "So they have to share and collaborate in an open way."

Sun's recent forays into open source are even more ambitious. At the recent Linux World conference in July, it showcased its MadHatter and Project Orion initiatives, two attempts to wrest control of the desktop from Microsoft.

"We are planning a Microsoft-compatible desktop platform that includes a windowing environment, a browser, an office-productivity suite and [legal] indemnity for about 50 bucks a user or roughly 30 cents a day," says Jonathan Schwartz, executive vice president of Sun's software group. "That's pretty compelling and... has a lot of folks realizing it's going to be the true impact of not only the open-source development, but the work Sun has been doing to provide an alternative to Microsoft."

2. Web Services Are Exploding
It's no secret that Web services, a fuzzy nomenclature if there ever was one, has fallen victim to inflated marketing. But if you cut through the hype, the programming model's value is becoming more apparent. Web services is changing the way apps are written and breaking down barriers between systems.

"To listen to the marketing, you'd think that Web services cured cancer and discovered life on Mars," says Joe Lindsay, CTO and founder of eBuilt, an Orange County, Calif.-based solution provider. "But, in reality, [Web services] is CORBA that might actually take off. And that, while boring, has a lot of value to IT."

What has catapulted Web services beyond the connectivity failings of CORBA, COM and other earlier protocols is the incorporation of industry standards, such as SOAP, XML, WSDL and UDDI. These standards allow developers to write applications with common front-ends that can talk to other applications running on disparate platforms. It renders Web services the ideal tool for systems integrators to tie legacy and other systems.

What's really interesting is the impact Web-services interfaces will have on new development. The days of building an application from scratch are dissolving as developers can instead create new apps that pull components and functionality from existing systems... reuse at its finest... with Web services as the common glue.

"We often are creating a composite application with J2EE as our primary platform, leveraging and delegating to existing systems where it makes sense," says Mark Panthofer, vice president of professional services at Nvisia. "If not broken, do not rewrite. And Web services play a big role in that integration."

One caution: Web services need not be ubiquitous. Some types of application interactions, particularly those that require high performance, just won't benefit.

"That's where people get carried away with Web services. You don't always need to render an XML stream when you can do things in binary," says Kevin Carlson, founder of Verteris, an Atlanta-based ISV. "Otherwise it's slow as a dog."

3. The Platform Wars Are Heating Up
IBM and Microsoft are battling for your heart and mind like never before. And so is Sun, BEA and Oracle. But don't be a victim of their promises. Choosing a platform requires some self-assessment of your business and that of your target customers. What are your priorities? Flexibility and portability? Speed of development and easy deployment?

If you are primarily building large, distributed applications that need to scale across a range of hardware and software platforms, J2EE development is probably the way to go--and that could mean targeting IBM or one of several other J2EE app-server vendors, such as BEA, Oracle or Sun. Java apps are technically portable--much more so than a Windows app--although they still require some tweaking from one J2EE platform to another. BEA's WebLogic app server has certain native hooks, as does IBM's WebSphere and so on. The ability to appeal to varying customer environments is still very real.

"Java has that multivendor support," says Mark Driver, industry analyst with Gartner. "With Microsoft, it's 100 percent lock-in, but with J2EE it's much smaller. If you don't like IBM's [infrastructure] after two years, you can move the application to BEA's. It's flexible."

Yet many customers live and breathe in Microsoft's environment, particularly in the SMB space. For developers who focus on this market, .Net is a solid choice. For one, the tightly integrated development and deployment environments are optimum for getting apps into the marketplace fast.

Microsoft's platform is also preferable for developers who write primarily client-side apps.

4. The Global Economy Has Come To Software
Unless you've been living under a rock for the past year, you know that lots of companies are outsourcing their software development work offshore, most notably to India and Russia. That includes the likes of vendors as large as IBM and big corporations that hire solution providers to develop custom apps for them.

The lure of offshore is real and taking root for developers of all size. For one, highly skilled programmers in Bangalore, India, come a lot cheaper than their U.S. counterparts, oftentimes by an order of magnitude. Offshore outsourcing also speeds time to market for ISVs by, in effect, enabling a near 24/7 operation between the United States and overseas developers in opposite time zones.

But with the benefits come challenges, say some solution providers. Job No. 1 is managing offshore coders carefully and closely.

Kat Shenoy, president and CEO of software development solution provider E-Softsys, has been running an offshore operation in India for the past five years (two of them with a previous company). He's struck by the development efficiency and high quality of the applications produced. Shenoy says he expects the offshore arm to grow by 20 to 25 percent this year and next. But over the years, he has learned some things.

"Make sure you locate in a city with good infrastructure available," says Shenoy, who found out the hard way when the small Indian town where he first set up shop lacked networking access.

The company eventually moved to better-wired Bangalore, where ample lines and a dedicated VPN connect its transcontinental teams. To improve communications, the company relies on instant messaging and NetMeeting software for collaboration. These tools are no substitute for human contact, however, and Shenoy advises stationing a project manager at the offshore site during a job's design and analysis stage.

Another fact to note is that, unlike U.S. shops, offshore operations almost always have to secure ISO9001 certification to land business. It's the equivalent of the Good Housekeeping Seal of Approval for U.S. customers buying sight-unseen. The arduous certification process is worth it, however, Shenoy says, because the quality of projects is improved as a result of regular audits and strict documentation.

"In the long run, you are saving time because you end up with fewer development mistakes," he says.

5. Distributors Emerge As Power Centers
Believe it or not, computer-products wholesalers have built surprisingly helpful capabilities. That's after years of struggling to find ways to help ISVs.

Remember when GE Access dropped Oracle because it couldn't figure out how to make a profit or a business out of distributing the database company's software? Well, Avnet has figured out how to distribute high-end software. Others, too. They have built world-class capabilities in porting, platform expansion, solutions customization, etc. And that has attracted those who never thought distributors would be able to help them.

For example, Sally Stanton, vice president of category management at Ingram Micro, Santa Ana, Calif., is working to bring BEA onboard there to help the San Jose, Calif.-based platform software company increase its penetration in the small-to-midsize enterprise market.

Ingram Micro is also looking to expand the amount of vertical-market software it carries. It has already made headway providing software specifically designed for health-care institutions and is looking to broaden its portfolio of software geared for customers in financial services, manufacturing and other vertical markets. This month, Ingram Micro plans on formally launching a financial-services practice.

"What we are trying to do is create a model that is ISV-friendly. In the case of Cisco, for example, we have helped aggregate solutions around its Avvid platform," Stanton says. "The vendor still has responsibility for testing and certifying that third-party applications will run on its platforms as promised, but then Ingram Micro can later manage those relationships."

6. J2EE RAD Goes Prime Time
Organizations in droves, particularly larger enterprises, are turning to Java as the foundation for their applications because of its scalability and platform independence. What they don't bargain for, however, is Java's complexity, which translates into long development cycles, more testing errors and fewer developers schooled in all its nuances.

"The biggest challenge for Java is dumbing it down [so more people can work with it]," says Gartner's Driver. "The reality is that the sheer number of departmental developers is so much larger than the number of software architects."

Today, it's the architect--that small pool of the highest skilled Java programmer--who are called on to wring all the benefits out of J2EE-based applications, Driver contends. It's not practical to have such staffers at every level of solution-provider practice or ISV shop.

Increasingly, J2EE tools vendors realize this. In a bid to win over those legions of departmental Windows developers who serve the midmarket, the likes of BEA Systems, Compuware, Borland and IBM are introducing products that apply rapid application development (RAD) principles to Java. Through these IDEs, Java code, beans and components are generated automatically, allowing developers and even business analysts to focus on modeling processes, not writing code.

Some analysts refer to the trend as application assembly, where new applications are essentially composites of already existing applications and components, as well as new code.

In July, for example, Compuware shipped Optimal J 3.0, a development tool that allows Java developers to build distributed apps via standards such as Universal Modeling Language (UML). Optimal J takes the semantic-rich models and transforms them into syntactically precise Java code automatically. The net result: shorter development cycles and no hand-coding errors.

"For an ISV or systems integrator, this kind of product preserves or improves margins while squeezing a little water out of their bid," says Dan Schoenbaum, vice president of strategy at Compuware, Farmington Hills, Mich.

7. New Technologies Are Going To Alter Development Approaches
As Rational Software's head development guru, and now, post-IBM acquisition, IBM Fellow Grady Booch has a bird's-eye view of the future direction of application development.

"Software engineering has been and remains hard, fundamentally," Booch says. "All the tools and technologies out there are still pushing us up against that wall, and it's not getting any easier."

Booch says ISVs and solution providers should focus on developing to higher levels of abstraction, rising above code to design applications with the core business processes in mind. He says new and future techniques will soon find their way into commercial development tools and IDEs.

That includes patterns, which are essentially common ways of solving common problems in development, such as logging. With distributed systems, logging is often conducted in multiple, ad-hoc ways across an organization. Patterns allow you to devise one way to complete the task--a method that everyone in an organization uses--and build the pattern into your software architecture.

Model-driven development, meanwhile, is one of the hottest trends in the industry today, as evidenced by a flurry of mergers and acquisitions. Borland purchased TogetherSoft for its modeling capability, while IBM bought Rational and Holosofx, and so on. Moreover, the maturation of a standard, UML 2.0, has helped spur tools vendors to head in this direction.

At its root, modeling is a way to map out an application visually and semantically (hiding the code), giving a developer a map from Point A to Point B in a business process. In reverse, modeling expedites the process of amending applications to reflect process changes; instead of sifting through and then rewriting code, one simply manipulates the models.

Another technology-design trend that Booch predicts will take hold over the course of the next three years is something called "aspects." Whereas patterns deal with common structures and behaviors, aspects tackle the differences each stakeholder (human or machine) has with respect to a particular application. Aspects enable a single application to respond in multiple ways, based on the user or other factors. For example, a developer can design a single security application to automatically navigate many local considerations in the United States, but not globally.

8. Hot Markets Abound
Looking for a direction to take your practice? These and other areas stand out today. First off are portals--and not just your company's HR portal, but interactive gateways that allow authenticated access to external partners and customers. The platform vendors all see the opportunity here: BEA, IBM, Microsoft, Oracle and Sun have wrapped their infrastructure stacks together, with the portal component promoted as one of the major linchpins, along with the app server. For ISVs and other solution providers, IBM's WebSphere Portal Server or Microsoft Sharepoint, for example, provide a foundation on which to build third-party customized portlets, or applications that live in the portal.

In addition to portals, other key markets are e-commerce systems that unite front-end and back-end systems. Such systems enable online self-service applications that slash customer-service costs by reducing the need for call centers. Another area ripe for the picking: mobile applications for cell phones and handhelds.

On the horizon, companies are exploring the notion of "digital dashboards," as executives seek to monitor in real-time the performance of their businesses. These dashboards provide a golden opportunity for developers to integrate systems and design analytical applications to take advantage of all the data. Companies such as GE, perhaps, best exemplify where others are going. GE CEO Jeffrey Immelt and his predecessor, Jack Welch, rely on "digital cockpits" to monitor their businesses, for example.

9. .Net Grows Up
At VS Live! in New York in late July, Eric Rudder, senior vice president of server and tools at Microsoft, conceded that the Redmond powerhouse was late to the game with Visual Studio.Net. But that was then, he insists.

"When we started out a year ago, it was hard. We were still behind Java by a considerable margin," he said. "But we made some amazing traction, and started to catch up. Luckily, Java flattened out and we've actually passed Java usage with .Net usage, and this trend shows no sign of abating."

Hyperbole aside, Rudder has some right to be optimistic. Buoyed by the recent unveiling of Visual Studio.Net 2003, many developers believe that .Net has finally arrived. They say the tools are a joy to work with, and are intuitive, clean and tightly integrated to the rest of the Microsoft infrastructure. They are able to build and deploy fast, big plusses in this era of targeted projects and measurable ROI.

"The biggest thing for us in moving to .Net is the efficiency of development and the ability to learn something new," says Eric Raarup, director of business solutions at Inetium, an application development solution provider in Minnesota. "It has made it easier to focus on things in development that are exciting, such as creating value and customization to the apps."

Raarup, who counts among his .Net customers such conglomerates as Cargill and General Mills, says the .Net learning curve is not as steep as some have reported, particularly if you have a Microsoft background. Many of the features in Visual Studio.Net actually eliminate steps common to working in older development environments, such as handling elements.

One of the most raved-about perks is the .Net Compact Framework, which now comes as part of Visual Studio.Net so that developers can use the same environment for writing traditional apps and those for handheld and mobile devices, one of the hottest areas of app dev growth. Previously, developers had to move between two different development environments for traditional apps and handheld apps.

In the battle for developer mindshare, Microsoft is providing developers advanced looks into future versions of Visual Studio.Net, so that they can begin planning their application strategies. For example, Visual Studio.Net 2004, code-named Whidbey, is expected to simplify the development process even more with enhanced debugging, no-touch deployment and edit-and-continue features.

10. ISVs Get Partnering Itch
You are part of a crack team of developers, brainstorming ideas late into the night. After some energized months spent writing and testing code, you have birthed an impressive software application, a product replete with all the programming tricks of the trade.

Hmmm. Now all you have to do is market and sell it. And for many ISVs, that's where things get tough. Caught up in the zeal of doing what they do best,designing cutting-edge software,no one's thinking about the business end of things, that essential go-to-market plan. But that's changing. ISVs are getting more savvy, even the start-ups, and are leading a number of trends, including partnering with VARs and platform vendors, hiring the right sales personnel and cozying up to the appropriate industry influencers, such as analyst firms and trade press.

Savvy ISVs increasingly join forces with everyone from VARs to hardware and platform vendors that go to market jointly, or possibly even OEM your product (pretty much nirvana for any third-party ISV). Even more veteran ISVs see the benefits of alliances.

JD Edwards has such an arrangement with IBM. The ISV bundles in IBM's middleware (app server, portal or database) with its own ERP applications, and then manages the subsequent upgrades for all the products, ensuring that they work well together without customization. This approach also untangles a complicated sales and support process for customers and cuts costs, says Lenley Hensarling, group vice president of product management for JD Edwards.

"The infrastructure can outweigh the cost of enterprise software, so we looked at ways to mitigate that by having us convey the portal, app server and database and manage that technology flow," Hensarling says. "Now the customer doesn't have to manage three separate technology streams plus our applications. We take onus to make sure what we ship them is a set of things that work together. This really drops TCO of a 21st century solution dramatically."

With additional reporting by T.C. Doyle, Jeffrey Schwartz and Rob Wright.