Microsoft Plans Novel Pricing on BizTalk 2006
Type: Competitive Intelligence Report
Analyst: S. Willett
Report Date: November 8, 2005
Module: Application Infrastructure
ID: CIR20886 |
Current Perspective: Neutral
Vendor Importance: Moderate
Market Impact: Moderate/Low |
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Summary
Event Summary
November 7, 2005 -- Microsoft Corp. announced that it will include 16 new application and technology adapters in the Enterprise and Standard editions of BizTalk Server 2006 at no additional charge, including adapters for Oracle Corp., PeopleSoft, and Siebel Systems Inc. This announcement marks a significant break from the industry norm of charging additional license fees for application and technology adapters, and offers customers a simple and cost-effective way to reduce the complexity of purchasing, building, and implementing application integration and business process automation solutions. Separately, Microsoft announced pricing, licensing, and product timelines for BizTalk Server 2006.
Analytical Summary
• Current Perspective: Neutral on Microsoft’s “official” launch of BizTalk 2006, as the new adapter packaging builds on the firm’s pricing advantage, although other features have already been discussed and the product is still in early release.
• Vendor Importance: Moderate to Microsoft as the firm needed to increase BizTalk’s functionality, particularly process and BAM, in order to make it attractive to the next generation of composite applications.
• Market Impact: Low to moderate on the market as this simply adds to the pricing pressure it has been putting on the integration and middleware markets, although many competitors are unlikely to imitate this exact pricing strategy as they target different segments.
Perspective
Current Perspective: Neutral
We are taking a neutral stance on Microsoft’s official launch of BizTalk 2006 (along with SQL Server 2006 and Visual Studio 2006), after its unofficial launch at its developer conference in June. The company didn’t disclose any new features in the product, which is still in early release, but instead rolled out new packaging and pricing. With the launch, Microsoft said it will bundle BizTalk 2006 with 16 adapters, including adapters for SAP, JD Edwards, Oracle Database, Oracle Application Suite, PeopleSoft, Siebel, TIBCO Rendezvous, TIBCO EMS, OneWorld XE, JD Clarify CRM, and DB2. It will also price the product a bit higher—Enterprise Edition will now be around $30,000 a CPU, about 20% higher than the previous pricing and the standard edition will be hiked to $8500. This works out in the end to a significant price reduction for some customers, even if they only use one or two of these adapters. This move cements Microsoft’s role as a “disrupter” in the integration market with much lower prices than traditional EAI players such as TIBCO, IBM, webMethods, and others.
Microsoft also reiterated features in BizTalk 2006 it had previously talked about at its developer conference in June. The orchestration has been improved and design and modeling is now done directly in BizTalk (instead of Visio). There are also more business-level views into processes. The company has made a number of improvements in the BAM capability and manageability. Specifically, users can now more easily bring in data from outside of the business process flow into a BAM console, including data from messaging and integration servers, or from SQL Server. There will also be out-of-the-box KPIs. Additionally, there will be various portal interfaces for different roles (IT, systems management, business users, etc.) and more integration with the Microsoft Management Console. This will help the firm in the growing BPM and “composite application” market, which also concentrates more business logic in the middleware layer where Microsoft is strong, as opposed to ERP applications.
On the negative side, this is the second announcement by Microsoft of BizTalk 2006, with only a few additional details (the adapters and pricing). The product is only in early release, which Microsoft calls Community Technical Preview, the beta is due later this year, and the final version in the first half of 2006. Microsoft has a negative reputation for long beta cycles and late products (it has improved on this score in recent years). It needs to break these negative preconceptions with an earlier release; otherwise, competitors will move in to respond to the new features and pricing. In terms of adapters, Microsoft has probably just reached parity with competitors such as IBM, TIBCO, and others who have had their own stable of adapters for years. In a larger context, Microsoft is not showing much vision in terms of SOAs. It has a strategy of putting a number of Web Services standards into Windows, through the Windows Communication Foundation (WCF), formerly called Indigo. However, it plans no distinct “ESB” product. Its services around SOA planning have been less than other large software firms and its plans for “composition applications” that run on top of SOAs are cursory at best. The firm should attempt to address this, perhaps with a product that takes advantage of the WS-* standards with just a subset of BizTalk functionality. It should also consider an SOA management offering as well as a better registry tool. A Windows Composite Application program should also be considered.
Positives and Concerns
Competitive Positives
• Microsoft officially launches BizTalk 2006 (along with SQL Server 2006 and Visual Studio 2006), after its unofficial launch at its developer conference in June. The company has announced a strategy of including application and other adapters into the product at a slightly higher overall price. For example, the enterprise edition of BizTalk Server 2006 will now be around $30,000, about 20% higher than the previous pricing. The standard edition is $8500. If the 16 adapters are included, including application adapters into Oracle, PeopleSoft, and Siebel, this is a significant price reduction for some customers, even if they only use one or two of these adapters. This move cements Microsoft’s role as a “disrupter” in the integration market with much lower prices than traditional EAI players such as TIBCO, IBM, webMethods, and others.
• The 16 adapters now part of BizTalk 2006 include adapters for SAP, JD Edwards, Oracle Database, Oracle Application Suite, PeopleSoft, Siebel, TIBCO Rendezvous, TIBCO EMS, OneWorld XE, JD ClarifyCRM, IBM DB2, and others when the final product is shipped. Some of these adapters are third-party products that Microsoft is essentially OEMing, likely at a good price. The move essentially neutralizes the weakness Microsoft had in adapters vis-à-vis EAI players and makes the product attractive to mid-market and enterprise customers, especially those concerned about pricing.
• BizTalk Server 2006 includes a host of other improvements, particularly in its orchestration or process tool. Design and modeling is now done directly in BizTalk (instead of Visio), and of course BizTalk has the same Visual Studio development interface as other Microsoft tools products, helping speed development times. There are also more business-level views into processes.
• Related to the improvement in process functionality, the company has made a number of improvements in the BAM capability and manageability. Specifically, users can now more easily bring in data from outside of the business process flow into a BAM console, including data from messaging and integration servers, or from SQL Server. There will also be out-of-the-box KPIs. Additionally, there will be various portal interfaces for different roles (IT, systems management, business users, etc.) and more integration with the Microsoft Management Console. This will help the firm in the growing BPM and “composite application” message, which also concentrates more business logic in the middleware layer where Microsoft is strong, as opposed to ERP applications.
• Also part of the BizTalk launch are the new versions of Visual Studio 2005 and SQL Server 2005. In general, the enhanced functionality strengthens the middleware stack due to the high degree of integration between these products. Visual Studio, which now has better collaboration capabilities, is the interface to BizTalk and SQL Server, which has improved analysis and query capabilities, and can be an integral part of BizTalk BAM or process applications.
Competitive Concerns
• This is the second announcement by Microsoft of BizTalk 2006, with only a few additional details (the adapters and pricing). The product is only in early release, which Microsoft calls Community Technical Preview, the beta is due later this year, and the final version in the first half of 2006. Microsoft’s long beta cycles in general give competitors a chance to respond. Microsoft continues to fight off perceptions that its products are later (it has improved on this score in recent years).
• While the new adapter strategy is a positive, especially on the pricing front, Microsoft has probably reached parity with competitors such as IBM, TIBCO, and others who have had their own stable of adapters for years. There is evidence that the adapter market is becoming a bit less important as more and more applications help expose processes as Web Services.
• Microsoft is not pushing as hard on the SOA and/or ESB front as other vendors. This was evident in this launch. It has a strategy of putting a number of Web Services standards into Windows, through the Windows Communication Foundation (WCF), formerly called Indigo. However, it plans no distinct “ESB” product. Its services around SOA planning have been less than other large software firms and its plans for “composition applications” that run on top of SOAs are cursory at best. Ironically, Microsoft is one of the firms that has the most to gain by moving application logic to these composite applications.
• Microsoft’s pricing and ease of use advantages are being challenged on two fronts. The new breed of lower cost ESB integration vendors (Sonic, Cape Clear, etc.) is one challenge. The other is from IBM, and to a lesser extent SAP and Oracle, who are reaching into the mid-market with integration middleware suited to this market.
Recommended Actions
Recommended Vendor Actions
• Microsoft should hasten to deliver BizTalk 2006 on time, or sooner, before it loses some of its competitive advantages.
• Many competitors do actually include lower level adapters (database, file, etc.) into their integration products without an extra charge.
• Microsoft should consider addressing the SOA/ESB markets with some discrete offerings. A product that relies on WS-* standards for integration is one possibility with scaled down BizTalk functionality.
• The company should provide more SOA methodology and architectural planning to its enterprise and upper-mid-market customers, while providing more scaled down guides for mid-market customers interested in some aspects of SOAs.
• The firm should also address SOA management or registry issues, with either a separate product, or add-ons to its management product. A user friendly UDDI 3.0 registry is recommended (the firm may want to OEM or license a firm in this space).
Recommended Competitor Actions
• Competitors in the integration space should attempt to match Microsoft’s pricing when they are bidding on enterprise level deals. Often pricing goes up to comparable levels in large site license deals.
• Competitors should consider adding key adapters into deals, to combat Microsoft’s moves with BizTalk.
• Competitors who are serious about providing integration to the mid-market should improve ease of use options, include B2B functionality so businesses can communicate with their partners, and rely on Web Services where possible. A connection to a hosted service (EDI or otherwise) is also a possibility here.
Recommended End User/Customer Actions
• Current BizTalk users should welcome BizTalk 2006 due to a number of improvements to the management, orchestration tool, and improved BAM functionality.
• New users should evaluate BizTalk as an alternative to other integration products, but should note that it will require other Windows software (notably the server operating system) and gains maximum advantage when used in conjunction with other Microsoft tools such as Visual Studio and Host Integration Server.
• Users should develop a long-term architectural plan to move to an SOA and should keep in mind that new composite applications, built on top of SOAs, offer a number of advantages over siloed ERP type application, in terms of flexibility, and the ability to be measured and monitored in real time.
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