Global Economics

New-Style Software the Talk of CeBit


At the computer industry conference in Germany, "service-oriented architecture" emerges as the next big thing in business programs

A market analyst, asked about the big trends at this year's CeBit computer industry trade fair in Hanover, Germany, replies: "Lots of buzz words." True enough. And one of the words (or phrases) buzzing loudest was "service-oriented architecture," or SOA.

The term has been around for several years, but this year the business software concept—which refers to applications that are chopped up into LEGO-like modules and delivered over networks to desktop PCs—seems to have reached critical mass.

German software maker SAP (SAP), which began working on SOA in 2003, reports a surge in new customers for SOA products and services in recent months. Peter Ryan, senior vice-president at Sun Microsystems (SUNW) in charge of sales for Europe, agrees: "I think it's here. Lots of people are making huge bets on it in their R&D labs."

On the acres of floor space reserved for enterprise software providers at CeBit, which continues through Mar. 21, nary an exhibitor failed to mention SOA, which the digital cognoscenti pronounce so it rhymes with "boa."

508 Flavors

But one problem with service-oriented architecture is that even seasoned programmers take a while to understand what it is. Less a kind of software than a concept, SOA attempts to take the automation of corporate procedures to a new level.

The whole purpose of enterprise software is to let computers do the many repetitive tasks inherent in modern corporate operations—paying people, issuing invoices, collecting payment, ordering raw materials, shipping products, and so on.

Over the years, SAP and competitors such as Oracle (ORCL) have gotten more sophisticated at automating these so-called business processes, tailoring their software to a wide range of industries and also making such software accessible to smaller businesses. Walldorf (Germany)-based SAP offers 508 industrial flavors just for its All-in-One software, which is aimed at midsize companies.

However, one of the disadvantages of enterprise software has been that the enterprise often had to adjust its processes to fit the software rather than the other way around. SOA, by contrast, is meant to be more "business-driven," to use another buzz phrase. Its components can be broken down and rearranged to better accomplish what needs to be done.

Automation Made Simple

The city of Dusseldorf is one example of an organization proving that SOA isn't just garbage. Using SOA tools based on SAP's core NetWeaver and MySAP software, the city set up a system to automate collection of bulky waste. Via a Web portal, citizens can request pickup of an old washing machine or a pile of old furniture.

The SAP software then takes care of the rest, scheduling appointments, planning the most efficient route for the sanitation trucks, billing citizens, and making sure the money is collected. All this used to be done by an overworked clerk, says Rolf Schumann, sales director for SAP NetWeaver in Europe, the Middle East, and Africa.

Another advantage of SOA is that it can knit together disparate pieces of software from different vendors to accomplish a specific task. At its stand at CeBit, IBM (IBM) illustrated the concept with a programmable water fountain.

Using a touch screen, visitors could drag and drop different music samples, lighting patterns, and spray formations into whatever sequence they wanted. The fountain then executed the sequence.

Connecting Various Programs

Service providers and software makers have spent several years educating their customers about SOA. Now, says Barbara Schädler, chief marketing officer of Fujitsu Siemens computers, "it's understood, and customers are really interested."

One big advantage of SOA tools is that they link up software programs that once were incompatible. For example, a company can more easily connect a cutting-edge consumer e-commerce portal to its back-office finance operations, and even to an ancient program running in the bowels of the company that hasn't been touched in 20 years.

But that trait of SOA is also a potential threat to the likes of SAP and Oracle. It could become easier for smaller software providers to find cracks in the giants' dominance of enterprise software. Says Sun's Ryan: "It's a threat and an opportunity. If they embrace SOA and have the best-of-breed products, then it's an opportunity." At CeBit, everybody is looking for exactly that.

Ewing is BusinessWeek's European regional editor .

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