Back online

It’s been a long time since I have posted on this blog – mostly because I took a  job in November 2009 as an analyst that involved a lot of writing and I felt I would be diluting my focus by posting on my own blog. I have also been more active on various social media sites.

A lot has happened over the past year in technology (and music) and I endeavor to be more active in 2011.

Attivio – unifying structured and unstructured search

This week I attended a breakfast presentation by Attivio, one of the vendors at the forefront of marrying data navigation and analysis approaches for both structured and unstructured data.  The team has a strong technical pedigree with a background from Fast, Sybase, Hummingbird and other vendors.  The problem Attivio is addressing is how to bridge the divide between structured and unstructured data with the goal of providing a unified means for information navigation.

The market for unstructured data/search technologies has undergone significant changes over the past decade – during the late 90s and early 2000s, enterprise search was tied to the Knowledge Management arena.  The challenge many of the pure-play vendors faced was quantifying the value proposition – while defining the problem was not difficult, most approaches to “soft ROI” proved difficult for buyers to commit.    Several waves of consolidation resulted in one “gorilla” in the market – Autonomy – with several smaller players getting absorbed by other vendors including Business Objects, IBM and most recently Fast being acquired by Microsoft.

This has left a vacuum for independent vendors at a time when search and information navigation technologies continue to gain relevance.   Endeca is one of the leading vendors in unstructured data management, evolving beyond its e-commerce origins to focus on enterprise applications.

Attivio offers next generation technology that provides a unified approach to accessing both structured data from databases and applications as well as unstructured data (text files, RSS feeds, etc.)  I first encountered Attivio in mid-2008, and was impressed with SVP Andy Mac’s vision that drew both from his SQL knowledge as well as advanced linguistic/Bayesian and other techniques relevant to text analysis.   CEO Ali Riaz brings a loyal team of former colleagues from Fast and a focused approach to execution, while CTO Sid Probstein has driven the realization of the technology vision.

The company is less than 2 years old, and the company’s approach is to promote its Active Intelligence Engine as a platform – this allows partners to build practices around domain and industry specific applications.  The product offers connectors to multiple databases, ECM systems and dynamic data sources that provide the input for the engine to create a dynamic structure that is tuned to the user and business context.  The presentation featured several new features of Version 1.5 including new modules for classification, sentiment analysis, OCR and connection with Microsoft Exchange.   Demos of sentiment analysis for consumer products vendors, a dashboard for private wealth advisors and testimonial from partner Intralinks provided helpful insights into the success of the company’s horizontal approach.

Gauging by the company’s successes and what I have seen so far, Attivio has been able to carve out a strong reputation in a brief period.  In my view, the ability to marry SQL and text queries in unified fashion has been something of a “Holy Grail” for search and information navigation technologies.  Attivio’s approach combines multiple approaches in a way that bypasses many of the challenges earlier generations of technology faced in trying to adapt to broader types of data.   As a growing company with 45 employees, Attivio is still emerging as a startup, but strong IP and differentiated technology position the company as a meaningful and viable competitor against far less nimble technology giants.

New blog post recent thoughts on public security vendor divergence http://ping.fm/04iMZ

Security Still Offers Fertile Growth Opportunities Despite Challenges

Reflecting on an eventful month in the security sector, the market continues to allow meaningful opportunity for startups and mature companies to flourish – however, the sector is not immune to pressures both secular and cyclical.  I have had several conversations recently with interesting companies in the market including Xceedium, which provides a secure access appliance that audits all user activity inside the network, and Qualys, which continues to grow revenues and expand the product portfolio despite a challenging market.

This week’s divergent earnings results from McAfee and Symantec are evidence in point.   McAfee once again delivered robust growth across segments and geographies, and acquired MX Logic in the process.   Symantec ‘s results were disappointing for the company and investors with the exception of bright spots in the consumer.    Both vendors address the same markets and are head to head competitors across multiple product areas – however McAfee’s success is the result of a focused strategy centered on security while Symantec’s challenges all stem from the strains of the ill-fated Veritas acquisition in late 2004.

Looking back to the beginning of the decade, McAfee was imploding as a result of seemingly haphazard acquisitions and “channel stuffing”.  It took from 2001 essentially until early 2007 (with Dave DeWalt taking the CEO role) to unravel many of the faulty business decisions over the prior decade.  A prolonged revenue restatement, divestiture and other issues created continuing distractions until McAfee began to right itself with rebranding and a McKinsey-led operational overhaul in 2003-2004.  Since 2007, McAfee has executed a disciplined and active M&A approach, careful with valuation, while sharpening execution focus and delivering sustainable share gains.

The acquisition of MXLogic appears to be a case study in how to time an acquisition right – McAfee waited until the dust settled following Symantec’s $700 million October 2008 acquisition of MessageLabs (a deal that offered Symantec the requisite scale needed to move the needle).    McAfee fills out a strategic hole in the product portfolio with a SaaS messaging security offering (complementing the on-premises technology acquired from Secure/CipherTrust last year) at a far more reasonable price tag than MessageLabs (or the $625mn Google paid for Postini).   With the deal McAfee gains 40,000 small customers in the sweet spot of the SaaS security market and strong technology.   MXLogic’s John Street has been focused on growing and building and resilient standalone business throughout the downturn and prior competitive acquisitions; McAfee steps up and gains a strong franchise at a price that looks to be a great outcome for all.

Symantec at the early part of the decade made a much more rapid transformation from sleepy consumer software company to security powerhouse and Wall Street darling when John Thompson took over in 1999.  The company put together a remarkable string of successes (much at the expense of McAfee) which was capped with the acquisition of Veritas in 2005.   Veritas had emerged the gorilla of the storage software market and the combination in theory promised unprecedented market coverage and penetration.  The challenges manifested immediately with executive turnover and confusion in the ranks as two clashing cultures struggled to combine.

While the company has been through several rounds of rationalization and turnover stabilized long ago, the business continues to grapple with the challenges of scale.   CEO Enrique Salem, who took over earlier this year, is highly regarded both internally and by investors, but he has a lot of work cut out for him.   The most recent quarterly results evidenced continued challenges across the organization, with storage proving the weak link in the portfolio.    A diversified portfolio again proves the double-edged sword for Symantec; successes and shortcoming tend to net each other out.  Discussions and rumors of divestiture of the Veritas assets continue to surface, and may ultimately prove the only way to truly restore a sense of singular mission necessary to drive momentum.

SourceFire marked the first year of John Burris’ tenure as CEO with a blowout quarter and a +20% up day for the stock which reached levels seen only prior to the earnings miss post IPO.   Marty Roesch and team have done a great job focused on enhancing the product portfolio, and the board’s decision to rebuff the unsolicited tender from Barracuda last year looks to have been decisively vindicated.    Given the significant consolidation in the public markets over the past 4 years (with ISS, RSA, Secure, WatchGuard, SafeNet etc.) it’s encouraging to see SourceFire as well as ArcSight flourishing as pure-play vendors.

Check Point as well continues to execute steadily through challenging waters – the absorption of the Nokia appliance business provides a healthy level of vertical integration to the product.  In my view, Check Point’s slow and deliberate approach has resulted in a highly cohesive portfolio of products  – and while investors have faulted the company for failing to be more aggressive in the M&A side or in spending for growth, the steady results validate the consistent strategy.

WebSense remains the only high-profile negative preannouncement – the company continues to struggle with slowing bookings and competitive threats from above, below and adjacent players.  The move into DLP is playing out well, but the challenge remains to find areas of growth that will move the needle for a company of its size.   The company’s vision and roadmap are intriguing alternatives for comprehensive security solutions but the hurdles of evangelizing and displacing incumbents are nonetheless an issue.

Anyone could have predicted it – IBM buys SPSS

The universe of publicly traded business analytics companies contracted by one as IBM announced the acquisition of SPSS, the predictive analytics vendor, in a cash deal worth $1.2 billion.  At a multiple of 2.9X EV/TTM sales, this works out to the same multiple IBM paid for FileNet several years back.  While this is a far cry from the  4.1x EV/TTM revenue SAP paid for Business Objects, the 3.4x EV/TTM revenue Oracle paid for Hyperion and the 4.9x EV/TTM sales IBM paid for Cognos, the 40% premium appears to be a great outcome for shareholders and management.  SPSS had felt the pinch of the downturn earlier this year, and had struggled to build a coherent growth strategy via M&A over the years.   With low-hanging operational fruit already harvested in the 2004-2007 period, there appeared to be little room left to squeeze additional profitability from the model.

SPSS has always occupied a unique niche in the market.   In contrast to the Business Intelligence vendors Business Objects and Cognos, which leapfrogged each other with horizontal offerings to become $1bn+ peers, SPSS has always been dwarfed by the private $2bn+ behemoth SAS Institute.  Lacking a direct public comp, investors never quite seemed to get their arms around SPSS’ story and market positioning.  Unlike SAS, SPSS also lived in the world of perpetual licenses (with the exception of some term deals in education) and the need to report quarterly results as a public company – which can align to create challenges when deal flow is “lumpy”.

Predictive analytics is potentially the most powerful branch of the broader data analysis software – the application of sophisticated statistical and mathematic methods to predict the most likely outcome is highly germane for businesses to maximize opportunity (increase revenues), increase efficiencies and manage risk.   The challenge for users is fitting the appropriate algorithm or predictive model to the business problem.  This requires an understanding of the data, the mathematics/statistics and most of all the context of the specific business problem.

One analogy I liked to use is that predictive analytics is like socket wrench (you need to match the correct whether its 17/32 or 9/16 to the problem at hand) while Business Intelligence is like a screwdriver (highly versatile in a generalized sort of way).    The key to successful implementation is the application of the right tools and expertise to the specific context.  IBM’s professional services group has built a practice around SPSS for the past several years, which set the stage for the eventual acquisition.  The deal fits nicely with the Cognos and Ascential technologies, with an added benefit of SPSS’s sole BI product for AS400 (originally acquired from Showcase).   All in all, today’s news was not a surprise to anyone – the only surprise is that it ultimately took as long as it did.

This leaves the public BI and Data Warehousing vendors Actuate, MicroStrategy, Informatica, Teradata and scattered microcap players remaining as potential acquisition targets.  The On Demand BI vendors have so far failed to generate the same disruptive impact in the BI market as Salesforce.com and its ilk have had on the traditional CRM vendors.

Enterprise 2.0 – Knowledge/Content Management redux

I have been less active on the blog over the past few weeks largely due to other commitments and focus on social networking sites, particularly Twitter and FaceBook – and this led me to attend the Enterprise 2.0 conference last week in Boston.  This was the first time I had attended an event focused on this topic – and it gave me a chance to better understand how social technologies are being used in an Enterprise environment.

What struck me about the event was how many of the same challenges there are to the Knowledge Management technologies in the late 1990s and early 2000s.  ROI is still soft and a challenge to justify corporate commitment.  I heard numerous discussions of how the challenges of determining and defining return remains a hurdle to adoption.   The market reminds me of the Content Management, Enteprise Search market a decade ago, with dozens of competitors, a few leaders and many vendors with very similar messages.

• A couple of observations:
  The social media community (regardless of the Enterprise focus) maintains roots in entertainment and media.   There were a lot fewer mentions of hard technical topics such as integration, security and other IT related issues than areas such as governance, branding and usage analytics.
• As a measure of creative vs. corporate character, there was a sea of Macs (which dominated the shopw floor) and only a smattering of PCs.
• Business appears to be strong for the leading vendors, including Jive, Mzinga, Atlasssian and others.
• Nonetheless, the plethora of vendors with similar stories based around social networking platforms suggests that a shakeout is inevitable.

I had the chance to speak to a couple of dozen vendors in the market – and while I was impressed with the evolution of technology, and the inherent value of many of the tools, I must admit I am having difficulty differentiating between the vendors given my relatively limited exposure.
It would not be surprising to see the Enterprise 2.0 (essentially Web 2.0 technology for business) follow the path of Content Management over the past decade.  I would expect a few flameouts, some near-term pain, a couple of waves of consolidation and potentially one or two pure-plays that will prevail.  The challenge for vendors targeting the enterprise is that content (unstructured or structured) tends to gravitate toward the larger platform vendors (IBM, Oracle, Microsoft, EMC).

OpenText remains the last pure play in the market after consolidating the ECM space – and could remain a viable independent with growing scale.  Potentially disruptive could be the consumer – based platforms  like Google or even FaceBook, should they target the enterprise with a strong product that accommodates business security and governance requirements there could be significant impact on the traditional enterprise platform vendors.

Just posted blog from Interop: http://ping.fm/ltZGp

Interop: Early Signs of a Modest Recovery in IT Spending?

I spent this past week at the Interop Conference in Las Vegas, an annual event that has grown beyond its networking origins to encompass a broad range of technologies related to the data center.   While attendance appeared to be down somewhere between 15-20% from last year’s 17,000 attendees, the sessions were well attended and show floor attendance was healthy.

Tone of Business is Improving

Comments from attendees at the show suggested that there is a modest improvement in the overall IT spending environment. A survey of conference attendees by Network Instruments showed confidence in the IT economy was high with only 22% of organizations having experienced IT department layoffs. On average, budgets are actually expected to increase by 3 percent over the next 12 months. This was consistent with what I heard from attendees, who largely were far more optimistic on the whole that attendees at last month’s RSA Conference.

Cloud Computing, Virtualization and Green IT in focus

There were three major themes at Interop this year: Cloud Computing, Virtualization and Green IT. The event has absorbed some of the content from the Sand Hill Group’s Software event, which was acquired last year while presented along separate tracks. The interest in Cloud Computing was robust: Treb Ryan, CEO of Opsource (and one of my favorite industry observers) noted that when his company’s representatives were invited to speak at two simultaneous tracks the Cloud panel was standing-room only while attendance at the other session was far more modest.

The Interop trade show is still an “old-school” event with attention-getting gimmicks at the booths, lovely “booth babes” corralling interest from passers-by and even a boxing ring set up in the center of the trade show by vendor Xirrus .   Notable were  the types of vendors choosing to participate – beyond the switching stalwarts like Cisco, Juniper, HP et al there was strong representation from power management (both hardware and software) vendors typified by APC,  traditional data center management players like Avocent, lots of security, mobile computing and cloud vendors.

Also interesting was who was not in attendance: while McAfee had a presence, Symantec did not.   One SMB focused integrator pointed out the absence of several vendors that historically target the mid- market including Microsoft, Linksys and NetGear.    Interop is clearly a show with more of a focus on the data center, which necessarily targets the larger enterprise.

Re- imagining the data center

As companies move to a demanding a more portable workload environment with increased capacity – the ability to provide dynamic computing on demand is critical. Integration between applications and networks needs to be stronger, requiring greater organizational coordination.
One of the key challenges is conflict with vendor interest – data centers are heterogeneous  while vendors want to lock customers into a more proprietary stack.  It is critical to have a standards based approach to swap components in and out of the infrastructure.   While vendor-driven vertical integration helps with deployments in the short term, proprietary lock-in has significant drawbacks as a long term strategy.

A brief recap of interesting vendor developments -

• NetIQ has launched a new product that enables Virtualization Management around VMWare’s VSphere – this enables a management layer on top of the VMware stack.   The team has correctly identified the huge pain points associated with managing virtualized infrastructures and looks to have put together an attractive approach to reduce management overhead and complexity.
• Barracuda Networks continues to see success in the market driven by the focus on providing small to medium businesses a way to address security and compliance challenges.  In the last year the company has made three acquisitions to extend the product portfolio.  The company acquired open-source SSL VPN vendor 3SP and has seen healthy market share gains since releasing its own branded SSL VPN product with highly competitive pricing.
• Avocent has made significant headway merging its KVM and Serial management capabilities into a single device.  The new MergePoint product allows organizations to model the configuration and resource consumption of servers in the data center.  The product enables an IT user to model the impact of adding a new application or planning upgrade cycles.  The visual depiction of data center assets is intuitive and represents an important development for the team.
• Fusion I/O had perhaps the most spectacular booth display with several video screens simultaneously displaying 1,024 HD video feeds.  Fusion I/O is a solid state hard drive storage company with the legendary Steve Wozniak as CTO.  The high density, high performance storage allows for significant efficiency gains and cost savings despite the high per GB price point.
• Open Service is a new generation of SEIM vendor employing a variety of automation techniques including accelerated realtime parsing algorithms, the ability to distribute analysis across a global organization and a columnar database architecture that accelerates analytics.  The company appears to be gaining ground against many of the earlier generation of SIEM vendors.
• Extrahop is a network performance management startup led by the engineers behind F5’s BigIP product.  The solution employs an agentless approach to pinpoint difficult performance issues tapping the data that flows through the network in a non-intrusive manner.   The focus on Layer 4-7 analysis reflects the F5 origins but the approach appears highly promising in a market that has been historically fragmented.
• Airwatch is a Mobil Device Management vendor that has developed a platform based on extensive experience managing 10s of thousands of mobile access points.  The company’s origins come from managing supply chains out of Manhattan Associates.
• Fastsoft is a relatively young company focused on the Application Acceleration market.  In contrast to vendors such as Riverbed and Citrix, the company offers a single-sided approach to acceleration (no termination device required).  The solution accomplishes this by re-engineering the TCP protocol (which is loss-based) and adjusts based on latency to provide better utilization of the pipe.
• NKrypt is a promising startup out of the Toronto area that has taken an On Demand approach to secure email.  The company enables secure email networks with persistent DRM policy enforcement.   The system works on Outlook and provides granular policy controls (including the ability to recall a message with no time limit).  Notably the solution can handle very large files (up to 2GB) which is well suited to managing medical image files, which require content security.  Given the challenges prior approaches have faced, this solutions seems to offer a far more transparent and usable technology.
• RhoMobile is a well-positioned startup offering an open source development platform for mobile applications.  The Rho platform allows developers to write applications once which can be converted into native applications for mobile devices.  This approach offers significant ROI particularly because mobile developers (notably on the Symbian platform) are so much more costly.
• Joyent is a cloud hosting vendor that has developed an acceleration platform for that helps large social networking applications enjoy better performance.
• Modius is one of the earliest software vendors focused on measuring power consumption across an organizations IT and physical infrastructure – providing an analytic framework for measuring and reducing energy costs.
• Racksense provides a solution for modeling the data center to simulate failures and provide a business case for resource and systems planning.
• Univa UD is a High Performance Computing vendor working on extending the power of clustering to the cloud.   The company is looking to extend is strong reputation in enterprise data centers to the service provider market.

Visiting the Musical Giants – Weather Report

One of the seminal if perhaps the greatest “jazz fusion” groups out of the wave in the 1970’s was the brainchild of saxophonist Wayne Shorter and keyboardist Joe Zawinul, both of whom had served as sidemen to Miles Davis and carved out distinguished identities as composers and instrumentalists.

Weather Report was a pivotal force in my expanding awareness of music as a teenager – this was shared by a circle of close friends who were drawn together by a mutual passion for music growing up in Washington DC in the 1970s and 1980s. Unlike many of the bands of the era, Weather Report’s music continues to sound fresh today, not “dated” as a result of the compositional gravitas of Zawinul and Shorter, instrumental virtuosity of the various lineups and particularly Zawinul’s orchestral sensitivity of tone, timbre and arrangement in the group’s recordings.

Zawinul and Shorter represented the core of the lineup with several different rhythm sections. The earliest incarnations included Miroslav Vitous on the bass and drummers Alphonse Mouzon and Eric Gravatt. The first Weather Report recordings were more exploratory and improvisational – characterized by free-ranging performances that combined deep grooves, exotic rhythms and imaginative playing. The first couple of recordings including Weather Report and I Sing the Body Electric extended the probing spirit of Miles Davis’s late 1960’s bands and the landmark recording Bitches Brew. The free-form, intuitive approach would slowly coalesce into a more formally arranged style with the next lineups.

When Alphonso Johnson joined to play electric bass in the band, there was a distinct shift toward more funk and groove oriented playing, and the compositions slowly became more tightly arranged. Mysterious Traveler, Tale Spinnin’ and Black Market had a more R&B influenced vibe with drummers including Chester Thompson, Ndugu Chancler, Narada Michael Walden and percussionist Dom um Romao. These albums included many tunes that would become mainstays of the live repertoire such as “Cucumber Slumber”, “Badia”, “Freezing Fire” and others.

The arrival of Jaco Pastorius on electric bass on “Barbary Coast” on Black Market kicked off the most inspired and consequential of the group’s recordings. Jaco revolutionized the sound and role of the electric bass by pulling the frets off a Fender Jazz to create an unmistakable voice on the instrument that continues to reverberate. Jaco brought a unique combination of ferocious energy, imagination and compositional depth that propelled the group to superstardom within the jazz world. The chemistry of Jaco’s kinetic drive, Zawinul’s rich harmonic textures and kaleidoscopic tonal palette and Wayne Shorter’s cerebral writing and incisive voice resulted in a groundbreaking and deeply influential sound.

“Heavy Weather” from 1976 in my view is a masterpiece and the zenith of the group’s creative prowess. One of few jazz albums to achieve gold status (due to the hit “Birdland”) the addition of drummer Alex Acuna and percussionist Manolo Badrena added explosive propulsion to the rhythmic backbone. Zawinul’s “a Remark You Made” brought Jaco’s bass into the forefront as a lead instrument, while Wayne Shorter’s “Palladium” paid homage to the legendary jazz club. The radical but deeply inspired virtuosity of Jaco’s two tunes “Teen Town” and “Havona” marked a profoundly original step in the evolution of the band. When one compares this recording to others of the era, it is remarkable how vibrant and relevant the music continues to sound today. Much credit has to go to Zawinul’s synthesizer orchestration, which has avoided sounding dated by taking an organically original approach, but the chemistry with Wayne Shorter and Jaco is unparalleled.

The group made several more recordings with Jaco including Mr. Gone – with Peter Erskine on drums the live 8:30, Night Passage and 1982’s eponymous Weather Report – though each are different these recordings stack up among the best output in the genre in my view. I had the chance to see the band with Jaco, Erskine and Robert Thomas on percussion at Meriwether Post Pavilion when I was in high school and it was an unforgettable experience.

In 1982 the band went through a radical lineup change as Eskine’s scheduling conflicts and Jaco’s volatile personality led to the new rhythm section of Omar Hakim on drums and Victor Bailey on bass. This was not widely known – and when a group of friends and I showed up to the temporary Wolf Trap (after a fire destroyed the original building) and grabbed front row seats because of the festival seating we were in for a surprise and an incredible treat. As relative unknowns with enormous shoes to fill, Omar and Victor played like they had something to prove and the concert was a transcendent experience. This lineup was to record a few more recordings including Sporting Life, Domino Theory, Procession and This is This before the group disbanded by the late 80s.

What distinguished Weather Report from other “jazz fusion” bands was the extraordinary breadth of influence. In fact the term jazz fusion does not appropriately capture their unique output. The harmonic and compositional elements drew from the most sophisticated material – Wayne Shorter’s insightful, Zen-like character provides a perfect foil for Zawinul’s intense, assertive personality. The rotating cast of drummers and percussionists contributed a truly multi-cultural palette of African, latin, Brazilian, funk, R&B and traditional jazz grooves to the mix. The different bass players each brought distinct personality to their eras and helped contribute to one of the most consequential creative efforts in music in their era.

I remain passionate about Weather Report’s music – interestingly, the relative dearth of effective cover versions of their tunes (outside of “Birdland” and “Teen Town”) by other artists is testament how important the band’s performance and arrangements are to realizing the music. Arguably the unique sounds, orchestration and performances make it difficult for other artists to cover the music with similar impact. Thankfully the recordings are still with us (R.I.P. Jaco, Joe and Dom um Romao) available to reveal their profound depth to listeners open to the adventure.

Bill Joy optimistic on innovation prospects beyond IT into medicine, materials and energy. http://ping.fm/bcpRa