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Packaged composite applications emerge

By Brian McDonough

Packaged composite applications (PCAs) represent new opportunities for software and services vendors alike. Enterprise portal software users benefit when access to information and applications is provided within the context of a business process. Typically, however, users are served information and applications that provide easier navigation across computing resources, but with little integration or relevancy to a business process.

Portlets have been developed that begin to integrate information, while composite applications have been implemented in cases where a process management capability is needed to provide a more appropriate solution to the portal software user. When software and services vendors package those composite applications, they become available for use by a wider audience and create new market opportunities for automating processes that require services from two or more applications and enhancements from collaborative capabilities and corporate information.

IDC offers a technical definition of "composite applications" that includes the following key points:

  • Within the context of the portal software market, and regardless of interoperability issues that may arise between components, composite applications access two or more applications (or application services) as dictated by a process management software layer.

  • The types of packaged composite applications that will be more successful in the marketplace provide cross-functional process automation while serving appropriate content for improved decision making, including human interfaces to collaborative application services.

  • The need to integrate structured and unstructured information and multiple applications for the purpose of executing business processes without developing redundant application services will drive adoption of PCAs. Enterprise portal software can provide a consistent human-application interface and reduce administration overhead associated with deploying more applications to users.

Situation overview

Although there are companies that deploy portal sites across the enterprise, enterprise portal software is often purchased to solve specific departmental business problems. To demonstrate the measurable financial benefits of its products to the buyer, the portal software vendor has sought ways to more closely align its tools with a given business solution. The rise of e-business applications built on top of portal software emerged in the form of corporate dashboards, human resource management portals, customer relationship management portals or variants of other existing applications consisting of simpler interfaces to content thought to be most appealing to the intended audience.

As portal implementations occur often, more complex business applications are developed by the customer, software vendor or services firm charged with delivering a solution to a business problem. Domain expertise is captured in the form of a repeatable business process, and relevant information and applications are integrated into the process. Rather than maintain a custom application that may rely on integration with other applications based on changing standards and unique upgrade schedules, the customer may request that the custom application be packaged and supported by the software or services firm to ensure compatibility and reduce the risk associated with unknown future component changes.

Alternatively, services and software firms are seeing opportunities to automate new processes based on customer demand and experiences with solution implementations for a job role, industry or business problem. Oftentimes, a packaged transactional processing software application is not suitable or the solution may require functionality already existing in a client site, such as financial management, human resource management or e-mail management software. Reuse of components existing in the enterprise with the addition of new functionality keeps the total cost of ownership for IT investments down while providing an adequately attractive opportunity for selling new services and software.

Software and services firms will continue to market an increasing number of PCAs to address a wide variety of automation requirements. However, some PCAs may not have a large enough market to support their continuing development and sale, while other large opportunities are not addressed because the customer hasn't supported their development. Companies seeking to capitalize on the larger PCA opportunities must evaluate customer requirements for new or improved business process automations and proactively offer solutions to the installed base. While that is nothing new to the applications markets, there has been a trend away from the practice due to customer budget reductions that have forced a need to demonstrate software with measurable benefits. Messaging applications such as e-mail have long been purchased without the need to demonstrate an ROI, but new collaborative-based applications are undergoing more scrutiny by the customer.

Future outlook

IDC believes that PCAs, based on its definition, represent new opportunities for software and services vendors alike. The interoperability of components based on events to automate a business process is essential to meeting the definitional requirement for a PCA and thus demonstrates a new opportunity for software vendors when compared with previous hopes for component-based architectures. Software and services vendors will need to integrate existing application services with newly purchased application services to support portal initiatives intending to bring cross-functional business process automation to heterogeneous IT environments. Understanding the types of applications typically existing as part of those environments, as well as the types of new functionality sought by portal buyers, will help vendors of portals and PCAs increase sales and deliver more appropriate customer solutions.

According to survey research conducted among 230 qualified portal prospects and buyers by IDC in April 2003, portal prospects are likely to have the following applications existing within their organization and wish to integrate them with the portal (sorted by most likely to exist and be integrated): e-mail, search engines, Web-based reporting, document management, CRM, ERP, workflow and data warehouses.

The research also indicates that portal prospects are likely to purchase the following applications and integrate them with the portal (sorted by most likely to be purchased new and be integrated): Web content management, categorization, analytics, text mining, various vertical applications, team workspace management and knowledge exchange software (KES).

Combinations of existing software functionality with newly purchased functionality and the portal and process management software can yield new applications that solve business problems that were not able to be addressed by transactional applications alone. For example, combinations of team workspace management, e-mail, content management and Web-based reporting with the portal and process management layer can yield a PCA for the R&D and marketing departments to share new product ideas and product development goals. In another example, a combination of text mining, e-mail, data within CRM applications, portal software and process management layer can yield the means to identify potential legal risks for a corporation as product feedback information is collected through a variety of channels.

The possibilities for combining and recombining application services with the portal and process management software layer are limitless, but each time a new composite application is developed, the TCO of the underlying components is reduced. With so many combinations possible, software vendors can begin to narrow the scope of PCA development to those offerings that solve the most pertinent business problems faced by portal buyers, whether industry-specific or job role-specific. Using the same survey data collected by IDC in April, we can identify the more attractive targets for PCA development.

Portal prospects are more likely to adopt portals to solve the following business problems (ranked by frequency of problem cited among respondents):

  • need for broader employee access to content management functions,

  • need to support e-business initiatives,

  • need to reduce the administration costs associated with managing multiple intranets,

  • need to provide a platform for aggregating Web services, and

  • need to improve customer satisfaction and retention.

Portal prospects are more likely to fall into the following industries (ranked by likelihood to adopt portal software):

  • financial services, including retail banking and insurance;

  • process manufacturing, especially pharmaceutical and chemical sectors;

  • business services, including consulting, accounting and legal services;

  • healthcare services; and

  • government agencies.

Portal prospects are more likely to adopt portals to solve business problems faced by the following job roles (ranked by frequency of department targeted for initial portal deployment):

  • corporate,

  • HR,

  • marketing,

  • sales,

  • customer service, and

  • IT.

Essential guidance to vendors

Understanding the functionality both available and demanded to create composite applications within the enterprise and identifying a buyer and the appropriate marketing message to reach that buyer will enable portal and PCA vendors to reach the most attractive opportunities for cross-functional business process automation. While that seems like an obvious statement to make, many software firms are building PCAs based on single customer engagements and then seeking a broader market for the offerings. More formal analysis of PCA requirements is needed for the PCA market to grow more rapidly in the next several years. The survey results act as guidelines that can be further validated through customer interviews and client service engagements.

Software vendors can reach buyers with a targeted solution but will also benefit from improved customer satisfaction rates by leaving behind flexible portal and process management software that allows the customer to rapidly develop and deploy other composite applications. Through adaptation to changing requirements, a company's business processes as well as its mix of application services used to support those processes will be improved on. The composite applications may exist only for the duration of a project, whether for the short term or the long term. New application services may be developed to suit a particular project and then reused or discontinued if inappropriate. Flexibility at the customer site for process automation will lead to increased customer retention and more predictable revenue streams for the provider of the tools used to achieve those goals.

Brian McDonough is research manager, Enterprise Portal Solutions, IDC (idc.com), e-mail bmcdonough@idc.com.

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