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OT-'Middleware' One of IBM's Bright Spots

By Alan Goldstein
May 01, 2002
http://www.newsfactor.com/perl/story/17531.html


Integration will be a perpetual problem for businesses as wave after wave of new technologies arrive on the scene.
Obscure at best to most people, IBM's business in so-called "middleware" has been one of the few bright spots in a generally gloomy picture for Big Blue.
"It's a very hot part of our business," said Steven A. Mills, senior vice president for IBM and group executive for the company's software unit.

Technology giant IBM, based in Armonk, N.Y., is known more for its services and hardware. But IBM is huge enough that Mr. Mills' software division, the company's third-biggest operation, was still a $12.9 billion business last year, accounting for 15 percent of IBM's $85.9 billion in revenue. In the first quarter, 80 percent of IBM's $2.9 billion in software revenue came from middleware products.



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What's Middleware?
Mr. Mills describes middleware as the Krazy Glue that holds together all of the different computer systems in a modern business.

These days, the holy grail for many companies in their "e-business" initiatives is to link many processes together, "to let everything occur in a seamless flow," Mr. Mills said. That means connecting a series of events: A customer places an order, the system checks inventory, delivery gets scheduled and inventory is replenished, for example.

Most corporations have a hodge-podge of computers that they acquired at different times for the variety of functions they perform inside factories and warehouses and at headquarters.

Additive Industry

But as businesses have shifted their infrastructures from mainframes to minicomputers to desktop machines, they haven't simply discarded their old systems.

"The information technology industry is additive -- not subtractive," Mr. Mills said in a telephone interview. "Companies have done centralized computing, they've done decentralized computing, and they've realized it's about federated systems. Use computers where they make sense, in different sizes and flavors. But tie the different pieces together."

IBM's primary middleware product, called WebSphere, is aimed at connecting a variety of programs on different kinds of computers, automating business processes and providing access to information for users on all of their devices.

"It's complex by its very nature," Mr. Mills said.

Integration Top Priority

Sales of WebSphere rose 53 percent in the first quarter, compared with the same period last year, marking the 12th consecutive quarter of double-digit growth.

That contrasts with overall first-quarter revenue at IBM that decreased 12 percent from the first quarter of 2001, largely as corporate customers deferred spending in a weak global economy.

Even if companies are spending less on technology in general, integration projects that require middleware remain a top priority, Mr. Mills said.

"There's no lack of interest in this," he said. "We don't see an abatement in the business."

Boom's Silver lining

In the aftermath of the business-to-business Internet boom of a few years ago, corporate customers have grown wary of runaway software projects in which vendors over-promise and under-deliver.

"I tend to view it like fire," Mr. Mills said. "You can either heat your house with it or burn it down. Like any other tool, there are effective ways to use it to gain maximum advantage and ways that lead to disappointment. You've got to plan projects carefully, focus on rapid deployment and on near-term returns."

Newfound wariness aside, there was a silver lining to the dot-com boom, Mr. Mills said. It sparked thinking in all companies about how they could use the Internet to connect every aspect of their operations.

"The lasting legacy of the dot-com era is a widespread standard," Mr. Mills said. "You can sit in your home or office and navigate 10 million Web servers, yet you have no idea what the underlying architecture is in any of those systems. It's an amazing breakthrough."

To be sure, IBM has tough competition in middleware from companies including Microsoft Corp. and BEA Systems Inc.

Perpetual Problem

Mr. Mills said he hopes his edge comes through harnessing vast corporate resources, within the software group or in IBM Global Services, now the company's largest business unit, based on revenue.

Middleware isn't going away anytime soon, Mr. Mills said. Integration will be a perpetual problem for businesses as wave after wave of new technologies arrive on the scene. Many people believe wireless services may be the next wave.

Businesses want to spread computing power to their mobile employees, but it will be challenging to create useful systems in which information can be entered without a keyboard and viewed on a small display, Mr. Mills said.

"It creates a classic 'How do I connect?' problem," he said. "There's lots of middleware opportunity." http://www.techextreme.com/perl/story/17531.html
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