Made To Order

Software guru Bricklin invented VisiCalc, the first computerized spreadsheet application, when he got tired of doing business computations by hand as a student at Harvard Business School in the late 1970s. Now, Bricklin spends most of his time providing custom application development services as president of his own firm, Software Garden, based in Newton Highlands, Mass.

At a public appearance two weeks ago at the Computer History Museum in Mountain View, Calif., Bricklin stressed the need for custom software development in the current economic climate, where customers are demanding applications that solve very specific business problems.

Said Bricklin in a later interview: "Solution providers have to understand the actual needs of the business for the particular problem they are trying to help solve,. They are in business because they can get close to customers, and customers depend on them to be able to customize and tailor, and choose the right thing for the situation."

Bricklin is not alone is his viewpoint. Companies that have traditionally identified themselves as either ISVs or VARs have in recent years been changing their business models to provide custom application development services in addition to reselling or integrating packaged applications.

"Companies are broadening their offerings and not classifying themselves by these traditional categories of VAR and ISV," said Marc Maselli, president of Back Bay Technologies, a Needham, Mass.-based solution provider. "What matters is what business problem you can solve."

Factors driving this shift don't just include the increased need for applications tuned to make businesses run more efficiently. The development of service- oriented architectures based on open standards and Web services—and SOAs themselves promise to enable IT systems to be more flexible to business changes—also is spurring the move toward custom application development.

Application development vendors are responding to this trend in a big way. IBM, Microsoft and BEA Systems have either released or plan to release extensible tools that allow solution providers to customize how they build solutions so the process takes into consideration customers' business needs from the get-go.

At the same time, vendors are tweaking their channel programs to encourage partners to develop custom solutions, particularly for customers in vertical markets that have specific business needs to fill.

The channel's move to custom application development didn't happen overnight. For years, systems integrators and ISVs have seen the value in customizing solutions based on packaged software. However, more and more traditional solution providers are beginning to develop their own repeatable application frameworks and solutions to solve specific business problems, while ISVs are customizing traditionally packaged applications so they are finely honed for vertical market needs.

This new, hybrid type of solution provider has some vendors scratching their heads trying to figure out a way to most efficiently target them, said Diane Krakora, principal with Amazon Consulting, Mountain View. Amazon works with vendors to develop channel strategies and programs. "When people say they are creating a program for developers, what are they really talking about?" Krakora said. "The resellers have really morphed from the old box reseller to what we now call a 'solution provider,' which is really becoming an application developer. The business need is now becoming the driving factor for these guys."

IBM has been especially visionary in meeting the needs of the emerging category of solution providers trying to solve business problems through custom application development. Three years ago, IBM released the open-source Eclipse framework, which provided an IDE that allowed third parties to plug in various tools so developers could have a customized palette for application development.

"When we launched Eclipse, we made the analogy that it's a portal for developers," said Scott Hebner, vice president of marketing and strategy for developer relations at IBM, Armonk, N.Y. "In a portal, you can mass-customize how you view a set of applications. Eclipse is the same for a developer—you can take multiple tools and integrate them into one experience." This kind of customization through open APIs for tools is integral to developing applications that suit a customer's business need right from the beginning of the development process, said Kim Jones, president and CTO of Spinning Electrons, a custom application development shop.

"The whole notion of an agile set of [tools] gives you the ability to [drive] the development process through the creation of solutions as opposed to having a big bang at the end of a long project," Jones said. "This notion of loose coupling enables you to cobble together [an application] and later detach and reattach something better if you find it fits into the solution."

After providing a customized framework for development through Eclipse, IBM streamlined its partner network to better serve the business needs of customers. Earlier this year, IBM unveiled Industry Partner Networks, a way to categorize its myriad ISV community members according to the vertical market they serve. Currently, IBM supports nine vertical markets through the program.

"Customers are demanding partners that really understand their needs in a very detailed way and can customize the application to their needs," Hebner said. "In reality, these partners are a combination of ISVs and solution providers that have a very deep understanding of the customer's needs."

IBM's chief application development rival, Microsoft, also is showing signs of getting behind the custom application development trend. Though Microsoft has not yet formalized a vertical market focus for its channel program, the vendor's salespeople tend to pay more attention to partners that have expertise in providing applications for certain vertical markets than those with horizontal application development skills, solution providers said.

"If I'm a business partner of Microsoft, I get the impression that they will value me more if I have a specific industry focus," said Joe Lindsay, president and CTO of Quality Systems Laboratories, an Irvine, Calif.-based startup provider of compliance applications for the life sciences market.

Microsoft also plans to allow partners to add custom modeling tools to Visual Studio 2005, the next release of its .Net development toolset, due out in the first half of next year. Through a strategy called Software Factories, developed at Carnegie Mellon University, partners can build custom processes and methodologies for vertical market applications within Visual Studio, said Microsoft's Prashant Sridharan, the toolset's lead product manager.

"The down payment from Microsoft [on Software Factories] is to enable partners to build customized tools and to bundle that with customized processes from the knowledge you build over time and the code you've written over time for an industry vertical," he said. Sridharan added that Microsoft, Redmond, Wash., is promoting this idea of Software Factories because it is seeing solution providers "bleed more into the ISV space."

"A lot of them are building internally a number of tools and packaged products that help their services be more efficient," Sridharan said. "What the industry wants us to provide is not just a tools platform, but a way to customize that platform to develop reusable applications."

Another vendor that has tweaked both its technology and partner programs to meet the needs of hybrid solution providers is BEA, San Jose, Calif. In May, BEA donated the framework of its WebLogic Workshop Java development tool to the open-source community through the Apache Software Foundation. Called Project Beehive, the open-source framework supports the development of composite applications through Workshop controls, which allow developers to blend together pieces of different tools and applications in a custom way.

To support partners building vertical applications, BEA's team rolled out an Enterprise Solutions Program that provides technology and marketing blueprints for partners to build specific business applications, said Bobby Napiltonia, vice president and general manager of worldwide channels and alliances at BEA. "We put together five specific solution areas where we see most BEA work is happening," Napiltonia said. Those five areas are employee self-service, customer self-service, service delivery, securities processing and RFID.

Solution providers are welcoming all this recent activity on the part of the vendors, which they say is necessary for the paradigm shift happening in both the industry and the channel.

"There's no question in my mind that it's no longer, nor has it been for a while, about cool technology," said Mike Grandinetti, senior vice president and chief marketing officer at Yantra, a Tewksbury, Mass., application developer for the retail and wholesale distribution markets. "It's about sizing very specific business problems, and they are always in the context of a specific industry or subindustry. The only currency that really matters is to truly understand those processes, those issues, those concerns that are unique to a company's own industry."

But just because solution providers have more vendor support as they migrate to custom application development doesn't mean it should be taken lightly.

"It's not for the faint of heart. Product development is expensive and difficult," said Jeff Wohlfahrt, president of Milwaukee-based Advanced Concepts, which was founded in the 1980s as a reseller of Open Systems accounting applications but now packages and provides services around its own software. However, Wohlfahrt said that developing software and adding custom services to that offering gave Advanced Concepts "freedom in terms of what we can provide customers, and the opportunity to make a lot more money."

Others in this emerging space agree that the rewards for providing application development outweigh the challenges of transition, and those that make the leap successfully will ultimately reap the benefits from the industry's new dynamics.