1.
US software
Produced byProduced byProduced by
Special report
The group of companies that comprise CLSA are affiliates of Credit Agricole Securities (USA) Inc.
For important disclosure information please refer to page 192.
Ed Maguire
edward.maguire@clsa.com
(1) 212 261 3997
Dominic White, CFA
(1) 212 261 7759
13 September 2010
USA
Technology
2020 foresight
Tech views of the future

2.
US software
The group of companies that comprise CLSA are affiliates of Credit Agricole Securities (USA) Inc.
For important disclosure information please refer to page 192.
Contents
Executive summary .............................................................................3
Tapping into accelerating change........................................................4
Transparent IT ..................................................................................12
Intelligent systems ...........................................................................16
Convergence .....................................................................................22
2020 interviews
Jan Baan, Cordys............................ 28 Seth Levine, Foundry Group ......... 118
Willem van Biljon, Nimbula............... 34 Glen Mella, Control4.................... 122
David Cohen, EMC .......................... 40 Geoffrey Moore, TCG Advisors ...... 131
Simon Crosby, Citrix ....................... 47 Lew Moorman, Rackspace ............ 139
Jill Dyche, Baseline Consulting .......... 58 Sanjay Poonen, SAP.................... 145
Andrew Feldman, SeaMicro .............. 65 Keith Schaefer, BPL Global ........... 150
Promod Haque, Norwest Venture ........ 70 Stratton Sclavos, Radar Partners..... 157
Timo Hannay, Nature Publishing ......... 75 Michael Skok, North Bridge .......... 164
Parker Harris, Salesforce.com........... 83 Michael Tiemann, Red Hat............ 171
Dave Kellogg, MarkLogic .................. 91 Ray Wang, Altimeter Group.......... 181
Gary Kovacs, Sybase..................... 101 Stephen Wolfram, Wolfram Rsch..... 186
Andy Lawrence, The 451 Group ........ 111
Insightful, differentiated research
Ed Maguire
edward.maguire@clsa.com
(1) 212 261 3997
Dominic White, CFA
(1) 212 261 7759
AsiaUSA
Research
TM
AsiaUSA
Research
TM
AsiaUSA
Research
TM

3.
Executive summary US software
September 2010 edward.maguire@clsa.com 3
2020 foresight
We sought the views of over 20 people in and related to the technology
industry, including venture capitalists (VCs), technologists, software
companies, authors and industry analysts to identify key themes to help
investors frame their decisions over the next several years. This report
includes transcripts of conversations touching on the world of technology in
2020. We explore key areas including cloud computing, software as a service
(SaaS), information management, enterprise applications, open source,
mobility, energy information technology (IT), social enterprise and
collaboration. We identify three “meta-themes”: the rise of transparent IT,
intelligent systems and convergence.
Technologists and investors tend to project the future in stepwise terms, but
innovations and paradigm shifts occur at an accelerating, often exponential
pace. Over the next decade, hardware, storage and computing capabilities
will improve at exponential rates, while progress in software may prove the
sole limitation. Increasingly rapid paradigm shifts (Facebook and the iPad, for
instance) reinforce that change is accelerating and will continue to surprise.
Computing will be increasingly embedded into daily life, more intuitive and
pervasive as a result of increasingly powerful and flexible software, rapid
growth of endpoint devices, availability of “instant-on” connectivity and
declining costs of hardware, bandwidth and storage. The trend of
“consumerization” really reflects complexity that is giving way to simplicity.
Intelligence will increasingly be embedded into “closed-loop” and point-of-
control systems. Solutions will benefit from growing predictive powers of
software, standards-enabled integration, pervasive connectivity and
increasing availability of sensors and remote-controlled devices. Intelligence
will extend beyond ecommerce and business to embrace physical systems,
including home networking, smart grids and location-based services.
For technology users and information consumers, the experience is
paramount. Over the next decade, the distinction between discrete software,
hardware, services and content vendors will become blurred as leading
vendors both diversify and vertically integrate through mergers and
acquisitions. Scale and specialization will define competitive differentiation.
Paradigm shifts are accelerating
?
The Web
Mobile Phone
PC
Television
RadioTelephone
Facebook
0.1
1
10
100
1860 1880 1900 1920 1940 1960 1980 2000 2020
(Years)
Source: Ray Kurzweil, KurzweilAI.net
Exploring tech views of
the future
Tapping into
accelerating change
Transparent IT -
Simplicity rules,
complexity fades into the
background
Intelligent systems -
Turning data into a
smarter world
Convergence - Cross
breeding software,
hardware, services
and content
Change in technology will
come at an increasingly
quicker pace

4.
Section 1: Tapping into accelerating change US software
4 edward.maguire@clsa.com September 2010
Tapping into accelerating change
Trying to accurately elicit directions of the future is the charter of professional
investors. By gathering data and context from the past and present, we attempt
to extrapolate future trends. The immediate considerations of near-term
dynamics of markets and the technology industry place demands on investors to
focus on issues at hand; however, it is helpful to step back from time to time to
take stock of what trends and themes will impact the dynamics of the future.
Tomorrow will give us something to think about.
Marcus Tullius Cicero
We sought the views of people in and related to the technology industry,
including VCs, technologists, software companies, authors and industry
analysts. Our intent is not to accumulate a codex of future predictions, rather
our goal is to identify key themes that may help investors frame their decisions
over the next several years. A review of demographic and geopolitical trends,
while certainly relevant, lies beyond the scope of this project.
Imagination is linear, progress is exponential
The amount of change that can occur in a decade is accelerating as
technology evolves at an exponential pace. The world of technology in 2020
will see innovations widely adopted that may now be in the earliest stages of
conception, or may not be conceived and realized for several years. Our
conversations have provided a few surprises, revealed common threads,
confirmed some prevailing views and challenged others, but overall have
provided us with a framework to guide our ongoing efforts to anticipate the
course of technological change and the investment opportunities that follow.
If we have learned one thing from the history of invention and discovery, it
is that, in the long run - and often in the short one - the most daring
prophecies seem laughably conservative.
Arthur C Clarke
We believe there is a lot of reason for optimism. The emergence of cloud
computing, the mobile internet, non-traditional user interfaces, advances in
programming science and artificial intelligence, falling costs of computing,
networking and storage place unprecedented power in the hands of everyone,
from a child with a cell phone to entrepreneurs to researchers seeking to
solve challenges of medicine. The barriers to innovation have never been
lower. Resources at hand for free or nominal cost, combined with global
availability of information, communications and collaboration tools provide a
springboard for imagination, experimentation and risk taking.
For investors, the challenge always remains a combination of timing and
careful selection. As we look to the next decade for investment opportunities,
the key themes we have indentified - transparent IT, intelligent systems and
convergence - provide a framework that we hope will help place in context
the ability to identify emerging opportunities, disruptive forces and secular
drivers along the full continuum of industry maturity cycles.
Our conversations revealed a number of key themes and predictions about
the future of tech and technology. While hardware, bandwidth and storage
will continue to increase in performance and decline in price, software
remains a key domain where there is not a Moore’s Law type paradigm of
exponential improvement.
We sought the views of
people in and related to
the technology industry
Investors inherently must
anticipate the future
The amount of change
that can occur in a decade
is accelerating
Barriers to innovation
have never been lower
The challenge always
remains a combination
of timing and
careful selection

5.
Section 1: Tapping into accelerating change US software
September 2010 edward.maguire@clsa.com 5
Three “meta-themes” provide a framework
We have identified three “meta-themes” that provide a framework for
anticipating the changes in technology and software over the next decade:
Transparent IT - Complexity is giving way to simplicity. Powerful
capabilities become more easily accessible and pervasive, while advanced
technologies become increasingly embedded in systems and the
environment.
Intelligent systems - Software and technology systems are increasingly
gaining the ability to drive intelligent automation, decision enhancement,
operational optimization and risk management in self-directed, recursive
systems. Advancements in analytics and artificial intelligence techniques,
such as machine-learning and neural nets, leverage the exponential
growth of data from the proliferation of users, devices, sensors,
applications and systems.
Convergence - Software, hardware, services, content and business
processes increasingly straddle formerly discrete definitional and
categorical barriers. We expect increasing integration, both vertical and
horizontal, a steady pace of cross-disciplinary development and M&A and a
growing emphasis on holistic solutions.
We always overestimate the change that will occur in the next two years
and underestimate the change that will occur in the next 10.
Bill Gates
What changed from 2000-2010
It is helpful to take brief measure of the changes that have occurred over
the past decade. The year 2000 saw the height of the internet bubble with
the Dow and Nasdaq hitting all-time highs, companies raising money on
little more than an idea (often spurious) and the investment community at
large applying “best case” scenarios to the transformative power of the
internet business model.
Through the crash of 2000-2001 and the creative destruction that followed,
the software industry in particular has followed a course few might have
predicted. In hindsight, it is not difficult to imagine that the parabolic tech
stock gains of the late 1990s would be followed by a crash. However, the
lackluster aggregate return of established tech giants, such as Microsoft,
Cisco and Oracle, and steady multiple compression across the sector were far
less likely to have been anticipated.
Figure 1
Largest technology companies by market cap in 2000
2000 Market cap
(US$bn)
PS
(x)
PE NTM
(x)
TTM sales
(US$bn)
Cisco 448.4 28.8 97.8 15.5
Microsoft 422.6 19.8 72.5 21.4
Intel 202.1 6.0 32.7 33.7
Oracle 201.8 21.0 97 9.6
IBM 149.8 1.6 26.9 95.8
Source: Bloomberg
Simplicity wins
Things get smarter
Solutions are neatly
wrapped and delivered
That parabolic tech stock
gains of 1990s would be
followed by crash is not
difficult to imagine
The largest tech stocks of
2000 had stratospheric
valuations . . .

6.
Section 1: Tapping into accelerating change US software
6 edward.maguire@clsa.com September 2010
Figure 2
The declining valuations of the former top five technology companies
2010 Market cap
(US$bn)
PS
(x)
PE NTM
(x)
TTM sales
(US$bn)
Cisco 132.2 3.5 15.8 38.1
Microsoft 199.5 3.3 15.5 60.0
Intel 112.3 3.2 13.5 35.1
Oracle 113.4 4.5 14.7 25.3
IBM 170.9 1.9 12 88.4
Source: Bloomberg
Alternately, the rise of companies, such as Google and Salesforce.com, from
startup origins as well as the mainstream acceptance of virtualization and
cloud computing are dramatic developments that have reshaped the industry
landscape. However, these developments sprung from ideas that had
germinated well ahead of the new Millennium.
Similarly, the advent of the mobile internet and many of its manifestations,
such as smartphones and mobile applications, were clearly envisioned in the
late 1990s. That the ideas were ahead of their time resulted in significant loss
of venture investments, but steady progress over the decade has led to a
definitive paradigm shift at the beginning of the 2010s.
The explosive rise of social-networking technologies, such as Facebook and
Twitter, has occurred in a far more compressed time frame. With the
number of Facebook users approaching half a billion and Twitter nearing
200 million, this is remarkably rapid adoption for applications in only a few
years. As investors seek to extrapolate future trends from historical
perspective, it is helpful to qualify any expectations in the context of
exponential change.
Nobody, 20 years ago, forecast the internet.
Bryan Appleyard
In his book The Singularity is Near, Ray Kurzweil makes a compelling case
that we should expect continuing exponential change in technology and
society at large, so that over the next century we will see not 100 years of
progress. It will be more like 20,000 years of progress at today’s rate.
The idea that progress in technology occurs at exponential rates is most
illustrated by comparing mass adoption of inventions over the past 150
years. One only has to look at the rapid growth of Facebook and the vision
of tablet computing the iPad has catalyzed to see these accelerating
paradigms. The ramifications of this are significant. Over the next decade,
we can anticipate that successful new innovations will see adoption at
increasingly rapid pace.
Ideas behind Google,
virtualization and SaaS
sprung before the
new Millennium
Adoption of social
networking technologies
occurred in a far more
compressed time frame
The rate of change
is accelerating
Adoption of new
technologies is
exponentially faster
. . . but have reverted to
market multiples
over time

7.
Section 1: Tapping into accelerating change US software
September 2010 edward.maguire@clsa.com 7
Figure 3
Adoption paradigms are accelerating
?
The Web
Mobile Phone
PC
Television
RadioTelephone
Facebook
0.1
1
10
100
1860 1880 1900 1920 1940 1960 1980 2000 2020
(Years)
Source: Ray Kurzweil and KurzweilAI.net
The principle of Moore’s Law, which holds that processor performance can
double every 18 months, has held fast since the 1970s, while price
performance of DRAM continues to improve along a similar dynamic.
Figure 4 Figure 5
MIPS growth since 1970 DRAM price/performance since 1970
Core i7 Extreme
(i980EE)
Core 2 Extreme
(Qx6700)
Pentium 4 (600)
Pentium 4 (3066)Pentium III
Pentium 4 (1700)
Pentium II
Pentium
486
386
286
8086
8080
8008
4004
0
0
1
10
100
1,000
10,000
100,000
1,000,000
1970 1975 1980 1985 1990 1995 2000 2005 2010
(MIPS)
100
1,000
10,000
100,000
1,000,000
10,000,000
100,000,000
1,000,000,000
1970 1975 1980 1985 1990 1995 2000 2005 2010
(DRAM bits/US$)
MIPS = Millions of instructions per second. Source: Ray Kurzweil and KurzweilAI.net
The power of wireless handheld devices similarly reflects an accelerating rate
of performance, while the bandwidth capacity of the internet is growing at
exponential step functions.
The rate at which new
inventions reach
widespread adoption
is accelerating
Moore’s Law has held fast
since the 1970s
Wireless handheld
devices showing
accelerating rate
of performance

8.
Section 1: Tapping into accelerating change US software
8 edward.maguire@clsa.com September 2010
Figure 6 Figure 7
Smartphone/PDA processing power since 1994 Internet backbone BPS since 1965
0
1,000
2,000
3,000
4,000
5,000
6,000
1995 1997 1999 2001 2003 2005 2007 2009 2011
(MIPS)
1.0E+04
1.0E+05
1.0E+06
1.0E+07
1.0E+08
1.0E+09
1.0E+10
1.0E+11
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
(Bits per second)
MIPS = Millions of instructions per second; BPS = Bits per second. Source: Ray Kurzweil and KurzweilAI.net
In fact, the dynamic of exponential cost and performance improvement is
occurring across a broad range of technologies. While improvement occurs at
different rates, the consistent historical trend remains a common dynamic
across different hardware technologies.
Figure 8
Time to double (or half)
Dynamic RAM memory “half pitch” feature size 5.4 years
Dynamic RAM memory (bits per dollar) 1.5 years
Average transistor price 1.6 years
Microprocessor cost per transistor cycle 1.1 years
Total bits shipped 1.1 years
Processor performance in MIPS 1.8 years
Transistors in Intel microprocessors 2.0 years
Microprocessor clock speed 2.7 years
Source: Ray Kurzweil and KurzweilAI.net
I never think of the future. It comes soon enough.
Albert Einstein
We highlight a few key predictions for the progress of technology, data and
connectivity over the next 10 years:
The National Science Foundation predicts the number of internet users will
reach almost 5 billion by 2020, an increase from 1.7 billion users in 2010
and 360 million in 2000. Vast numbers of people in developing countries
will gain access to the web as a result of declining costs and exponential
technology improvement.
The worldwide mobile subscriber base is forecast to increase from 4.6
billion at end of 2009 to 7.5 billion by end of 2020. (Source: Portio
Research 2009)
Worldwide mobile penetration will touch 94% by end of 2020 from 64% in
2009. (Source: Portio Research 2009)
The first commercial quantum computer will be available by mid-2020.
(Source: Cisco IBSG 2009)
By 2020, the number of
internet users will reach
almost 5 billion
Worldwide mobile
subscribers will reach 7.5
billion by end-2020
Exponential cost and
performance
improvement occurs
across technologies

9.
Section 1: Tapping into accelerating change US software
September 2010 edward.maguire@clsa.com 9
In the next 10 years, we will see a 20x increase in home-networking
speeds. (Source: Cisco IBSG 2009)
The adoption of Internet Protocol version 6 (IPv6) will dramatically
increase the availability of unique IP addresses, hence the number of
unique devices that can be connected to the internet. IPv6 addresses are
128 bits long, whereas IPv4 addresses (the prior standard) are 32 bits.
While the IPv4 address space contains roughly 4.3×109 (4.3 billion)
addresses, IPv6 has enough room for 3.4×1038 (340 trillion trillion trillion
unique addresses.)
By 2020, a US$1,000 personal computer will have the raw processing
power of a human brain. (Sources: Hans Moravec, Robotics Institute,
Carnegie Mellon University 1998; Cisco IBSG 2006-2009)
The world’s data will increase sixfold in each of the next two years, while
corporate data will grow fiftyfold. (Source: Technorati)
By 2020 worldwide, the average person will maintain 130 terabytes of personal
data, up from ~128 gigabytes today. (Source: Cisco IBSG, 2009)
The extrapolation of exponential progression in microchip processing power
shows that we will be able to get to 10-14th / 10-16th calculations per
second, possibly by the end of this decade. Justin Rattiner of Intel believes
that 3D chips will take off where standard silicon chips leave off. Through
the transition, Moore's Law will continue.
Worldwide volume of all digital data will grow from 1.2 million petabytes
(or 1.2 zettabytes) in 2010 to 35 zettabytes in 2020. (Source: IDC 2010).
Note: 1 zettabyte is equal to 2 to the 70th
power (binary), 10 to the 21st
power or 1 sextillion bytes. This equates to a billion terabytes (a terabyte
is equal to a trillion bytes or a million megabytes).
Looking forward, we identify a few common threads from our conversations:
Simplicity rules - Consumers and business want a straightforward experience
and will care less about the pieces that make up a solution. Complex
technology systems will continuously be broken down into components and
exposed as services to create a simpler experience for users.
Solutions will predominate - The convergence of hardware, software
and services will result in pre-integrated solutions productized and
delivered as “application appliances.” Recent M&A illustrates this direction,
with IBM’s software acquisitions, Oracle’s acquisition of Sun and Intel’s
acquisition of McAfee.
Scale wins the platforms, innovation fragments apps - Scale and
scope stake out defensible high ground in the cloud. Cloud services will be
about cost efficiencies and flexibility, and providers with distribution
networks and the capital resources will be best positioned. Google,
Amazon, Microsoft, Salesforce.com and Rackspace are early leaders, but
we expect growing presence from telecom carriers, such as AT&T and
Verizon, as well as integrators, such as IBM and Fujitsu. This will alter the
competitive landscape as software vendors compete directly with
hardware vendors (SAP vs IBM, Oracle vs HP, Symantec vs Dell, and Cisco
vs Microsoft).
In the next 10 years, we
will see a 20x increase in
home-networking speeds
Worldwide digital data
will grow from 1.2 million
petabytes in 2010 to 35
zettabytes in 2020
Consumers and
businesses want a
straightforward
experience
Expect pre-integrated
solutions productized
and delivered as
“application appliances”

10.
Section 1: Tapping into accelerating change US software
10 edward.maguire@clsa.com September 2010
Internet time arrives - 10 years later. The accelerating pace of
paradigm shifts creates a dynamic where competitive advantages can
arise and crumble more rapidly than ever. Though it is not a stretch to
assume companies like Microsoft, IBM, SAP, HP, Google and Oracle will
remain powerful forces in the tech industry, it will be incumbent on their
management teams to ensure they remain as relevant in 2020 as they
are today.
Who benefits, who faces disruption?
We identify vendors who appear well positioned to benefit from accelerating
change over the next decade. This list is far from comprehensive, but
provides a general framework for evaluating secular beneficiaries and
companies potentially under threat:
Cloud-service providers - Scale is important for infrastructure as a
service, and there is a rush underway to build out datacenter capacity to
accommodate the expected demand. Key players include Microsoft,
Amazon.com, Google, Rackspace and IBM. Other important
infrastructure- and platform-as-a-service providers include AT&T, Fujitsu,
Savvis, Equinix, Terremark, OpSource, Joyent, GoGrid, NaviSite,
NetSuite, Intuit and enabling services, such as Akamai.
Startups - The growing availability and falling cost of cloud-computing
services lowers barriers for entrepreneurs. The environment favors new
providers of mobile and vertical applications, developers of algorithmic
services and ecommerce/personal data brokers.
We identify vendors who stand to benefit from the disruptive technologies
that create new markets:
Integration and middleware - Vendors that provide integration
platforms for the cloud, connected devices and smart grids are well
positioned to enable new environments of networked services. These
include Informatica, IBM, SAP/Sybase, Pervasive, Oracle,
Syniverse, private vendors Boomi, Iris Wireless, Motricity, mBlox
and others. Traditional infrastructure-management vendors, such as BMC,
CA, Symantec and others, have important roles in managing complexity,
but must balance challenges from legacy businesses.
Cloud-infrastructure vendors - At least for the near term, vendors that
specialize in networking infrastructure for cloud computing (both public
and private clouds) are well positioned for a capital-spending buildout.
These vendors include Cisco, Juniper Networks, F5 Networks,
Riverbed Networks, HuaWei and others. Public software vendors that
provide and manage cloud-computing infrastructure include VMWare,
Citrix, Microsoft and Red Hat. There is a vibrant ecosystem of cloud-
focused startups including Univa HD, Platform Computing and Elastra.
Sensors, home networking and smart devices - There is opportunity
for providers of a new generation of connected devices that will enable
intelligent systems. These include smart meters and industrial control
systems (iTron, GE, Honeywell, Siemens, APC/Schneider Electric,
Emerson, Eaton) as well as software vendors that will enable smart grid
and networked home solutions (Control4, BPL Global, SilverSpring
Networks, GridPoint).
Cloud-services and
infrastructure vendors are
positioned well
Integration, networking,
and smart-device vendors
are positioned well
Connected devices create
opportunities for new and
old industries

11.
Section 1: Tapping into accelerating change US software
September 2010 edward.maguire@clsa.com 11
Providers of mobile and location-based services - These include
technology, internet, media and communications-services companies. Key
vendors include Google, Facebook, Nokia, Microsoft, Apple, Yelp,
foursquare, Twitter, Verizon, AT&T, Sprint, DoCoMo, BT and many
others, both public and private.
We identify which vendors could face disruption to their businesses:
Legacy packaged-software applications - This includes on-premises
applications from the likes of Oracle, SAP, Sage, Lawson, Epicor,
Kenexa, JDA Software, Infor, Kronos and others.
Relational database vendors - On-premises database vendors could
face some disruption from an increasingly fragmented technology
landscape. These vendors include Oracle, IBM, Microsoft, Teradata
and others.
Non-integrated hardware vendors - Commodity server, hardware,
storage and networking technologies will face ongoing pricing erosion and
increasing concentration in the customer base. We expect hardware
vendors to acquire for scale, expand into higher-margin services and
software for differentiation.
Legacy application,
database and hardware
vendors are at risk

12.
Section 2: Transparent IT US software
12 edward.maguire@clsa.com September 2010
Transparent IT
We believe innovation over the next decade will be ruled by a consistent trend
toward “transparent IT” - technology that is so simple that the underlying
complexity becomes invisible to the user. In other words, the difficult stuff will
be increasingly distant from end users.
Any sufficiently advanced technology is indistinguishable from magic.
Arthur C Clarke
Over the next decade, computing will become increasingly embedded in the
daily life of consumers, businesses and other organizations. Computing will
become more intuitive and pervasive with the evolution of more powerful
software, rapid growth of endpoint devices, availability of “instant-on”
connectivity and declining costs of hardware, bandwidth and storage. We see
the continuous elevation of simplicity of experience to the user as logic controls
the underlying systems, processes and infrastructure with increasing power.
Technology happens. It's not good, it's not bad. Is steel good or bad?
Andy Grove
Four critical vectors are likely to drive accelerating innovation of software and
systems toward transparent IT:
Cloud computing - A paradigm shift in computing
The ramifications of the shift to cloud computing cannot be understated. Most
of our conversations referenced the transformative impact that cloud
computing will have on the availability of flexible and increasingly cheap
computing power. The first generation of public clouds from Amazon, Google,
Rackspace, Salesforce.com and Microsoft Azure provide field validation of the
viability of the model.
Virtualization has been an enabling technology for cloud computing. The
ability to run multiple workloads on a shared server to improve server
utilization, to run a single workload across multiple servers for scale and to
quickly scale up or down server images provides compelling efficiencies in
terms of cost, power and flexibility.
Commitment to the cloud model is evidenced by the rapid pace of
investment in datacenter infrastructure by corporations, colocation
providers, systems integrators, telecom carriers and others. We are seeing
aggressive allocation of R&D resources toward cloud-infrastructure
initiatives by software companies of all sizes. Notably, Microsoft (which
operates the largest R&D organization in the software industry) disclosed
that 70% of its developers are focused on the cloud, and this would soon
move to over 90%.
Lew Moorman, CTO of Rackspace, comments on the laws of accelerating returns:
‘There are laws of accelerating returns on these technologies at play. Going
from mainframe to mini computer was a small advance . . . the PC
becomes a transformative advance and I think this next step is again
another exponential leap. With cloud computing, we now have ubiquitous
computing. Not only does everyone have computing power at their
fingertips, they have the power of a datacenter at their fingertips. They
have the ability to manipulate and access all types of data; to connect with
and do things with that data; to create and store new data.
Over the next decade,
computing will become
increasingly embedded in
daily life
Complexity gets pushed
down, logic moves to
higher levels
The ramifications of the
shift to cloud computing
cannot be understated
Commitment to the cloud
model is evidenced by
rapid investment in
datacenter infrastructure

13.
Section 2: Transparent IT US software
September 2010 edward.maguire@clsa.com 13
We are just starting to understand the potential of cloud computing. It is
just starting to transform companies and individuals’ lives.’
Importantly, the availability of cloud-based resources is lowering barriers for
startups, which in turn should fuel accelerating innovation.
Stratton Sclavos of Radar Partners comments on lower barriers to startups:
‘Eighty percent of the entrepreneurs that come into our firm looking for seed
capital or A-round capital already have an application up and running, if not
hosted on Amazon then hosted somewhere like Rackspace . . . The capital
efficiency that can be applied to developing, introducing and then iterating
on these new applications is phenomenal to us and we don’t think that is
going to change. In fact, we think it is going to get more and more like that.
More interesting is that the capital efficiency for a venture firm trying to
launch these new companies is much better.’
The mobile internet - “Any device, always on, anywhere”
The rapid adoption of smartphones and the growing availability of wireless
internet is a key vector for realizing the vision of pervasive computing and a
wealth of related applications, including micropayments, content streaming,
multiplayer gaming, location-based services, enterprise applications, etc.
The introduction of high-speed mobile networks based on technologies
including high-speed packet access (HSPA), worldwide interoperability for
microwave access (WiMAX) and long-term evolution (LTE) will encourage
adoption of data-based applications. Over the next 10 years, we expect the
move to 5G wireless to make significant progress toward the “always-on”
high-speed internet connection.
More advanced mobile networks will support a new range of applications,
including content, shopping, HDTV, collaboration, social networking, video
conferencing, robust gaming and additional personalized offerings. This in turn
will expand the range of devices beyond phones, PDAs, smartphones and
laptops to embrace additional audio, video, sensors, industrial devices and
appliances. The availability of greater bandwidth will facilitate adoption of
advanced applications, which in turn should drive further growth of data traffic.
Figure 9
Smartphone penetration growth forecast
0
10
20
30
40
50
60
2007 2008 2009 2010CL 2011CL 2012CL 2013CL
Smartphone share Smartphone growth YoY(%)
Source: Credit Agricole Securities (USA)
Availability of cloud-
based resources is
lowering barriers
for startups
More advanced mobile
networks will support a
new range of applications
Adoption of smartphones
and wireless internet help
realize the vision of
pervasive computing
We expect smartphones
to continue to take
share of global
handset shipments

14.
Section 2: Transparent IT US software
14 edward.maguire@clsa.com September 2010
The proliferation of mobile applications is representative of the variety of
innovations enabled by smartphones and the mobile internet, and this will be
reflected both in consumer and enterprise adoption. Examples of the types of
mobile applications expected to see healthy growth include money transfer by
short message service (SMS), mobile search and browsing, location-based
services, mobile music and video services, near-field communications
services, mobile health monitoring and many others. The ability to combine
location awareness with content streaming will enable applications that can
deliver content to users based on their specific location and preferences (for
marketing, entertainment or educational purposes).
David Cohen of EMC comments on the impact of mass connectivity:
‘Another jump in terms of the numbers, just in sheer distribution the
number of people with cell phones is at least an order of magnitude more
than people who have highly connected PCs. It is probably much higher than
that. If you look at sensor networks, wireless point-of-sale devices and RFID
data collectors, there is also a massive expansion from where we were with
tethered devices in previous generations. We are talking about connectivity
that is literally on a planetary scale.’
Gary Kovacs of Sybase sees mobility as a paradigm shift, not just technology:
‘I think many people who have been around mobility for a long time don’t talk
about mobility as a phone anymore. We talk about it much more as a method
of interaction . . . basically accessing cloud services through devices. What I
love about that is I can go to my PC, I can go to my iPad, and I can go to my
iPhone or my Blackberry and I can get a file from my online service and it just
saves. In 10 years, we will have machine to machine and we will have devices
that are always on. I think we will have much less in our lives that take a
boot-up cycle.’
User interfaces - “See me, feel me, touch me - think me?”
The development of new types of interfaces promises to expand the
experience of computing beyond the traditional keyboard/mouse, touch and
speech-based interaction currently available. The development of new types
of touch and haptic interfaces promises to enable new types of applications
- for gaming, enabling the disabled, medical procedures, industrial
processes, training, simulation and therapy. Haptic interfaces have
applications in virtual reality (by enabling real touch to operate in artificial
environments) and through teleoperation (using real touch to operate in real
environments via computer).
Motion-control interfaces are becoming mainstreamed particularly in the
realm of video gaming. Microsoft’s Kinect enhancement for Xbox integrates
speech recognition, 3D sensing and motion sensing in an integrated,
controller-less user experience, while Nintendo’s Wii and the Sony Move
technologies exploit motion-control capabilities. Startups, such as Oblong, are
exploring non-physical interfaces for computing.
There is also growing progress on brain computer interface (BCI) technology.
Currently, research is focused on physical implants (mostly to benefit the
disabled through physical mobility and prosthetics), but there is also growing
progress in non-invasive brain interfaces that track brain activity to control
computing and physical devices.
Mobility is a paradigm
shift, not just technology
New types of interfaces
promise to expand the
experience of computing
There is growing progress
on brain computer
interface technology
Innovations and
connectivity enable a new
class of mobile
applications to emerge

15.
Section 2: Transparent IT US software
September 2010 edward.maguire@clsa.com 15
Over the next decade, we expect advancements in non-traditional computing
interfaces to be accompanied by new software applications that will match the
tactile or sensory interface to a matching function or automation. This is one
of the areas where we expect innovation to be quite surprising and to have a
paradigm-shifting impact on the experience of transparent IT.
Development tools & standards - Simpler, more powerful
The evolution of higher-level languages that bring development closer to the
business process puts increasing power in the hands of business users and
veils the underlying complexity of code. The evolution of the open-source
programming model has created in aggregate over 1 billion lines of freely
available open-source code that developers and business users can build upon
to create applications and new businesses. Standards, such as HTML 5,
promise to enable a new class of rich, interactive and mobile applications,
while markup languages (ie, variants of XML and BPML for business process)
help enhance data interchange and interoperability and increasingly
distributed environments.
Jan Baan, chairman & chief innovation officer of Cordys, believes new languages
will change the role of developers from coding to process orchestrators:
‘The new generation of development language is 5GL. This increasingly
takes the developer out of the process. Instead, we have the business
driving the use of the commodity type of components that are decoupled
with services that have been established.’
Michael Tiemann, VP of public affairs for Red Hat, highlights the transformative
role that the open-source model plays in software development:
‘I believe the open-source model for software development and
intellectual development has been quite disruptive over the last decade .
. . cultivating these communities of innovation and enabling a rise of
incredibly pervasive powerful technology that is really powering a new
transition to cloud-based computing.
Open source has wonderful economics compared to proprietary software in
terms of cost model, but the fact that this open-source model can run at
such a high level of quality in such a robust manner, with so much
interoperability, I think that’s the reason you see companies like Google,
other companies who are putting open-source infrastructures together like
Amazon.com able to achieve levels of scale and start making forward
progress by simply remediating the existing software.’
Figure 10
Open-source project defect densities
Year Findings Details
2004 985 defects in 5.7 MLOC of Linux kernel source
code
2005 Linux kernel grew 4.7%, defect density
decreased 2.2%
100% of all "serious" defects identified fixed
within six months
2006 Survey expanded to entire LAMP Stack and 32
OSS programs, no correlation found between
size and defect density
2008 Survey expanded to 250 OSS projects
consisting of more than 55 MLOC. Defect
density reduced additional 16% since 2006
Funded by Department of Homeland Security
2009 According to Coverity, overall integrity, quality
and security of open-source software is
improving. Products with near-zero defects
have increased from 11% to 36% and project
involvement has increased more than 50%
since 2008
Rung 2 projects (Rung 1 have zero defects)
increased from 11% to 36%
Source: Opensource.org
Standards such as HTML 5
promise to enable a new
class of rich, interactive
and mobile applications
Open source has
wonderful economics, but
also a high level of quality
New languages will
change the role of
developers from coding to
process orchestrators
Open-source project
defect densities are
relatively superior

16.
Section 3: Intelligent systems US software
16 edward.maguire@clsa.com September 2010
Intelligent systems
Over the next decade, we expect to see intelligence increasingly embedded
into systems, benefiting from growing predictive powers of software,
standards-enabled integration, “always-on” connectivity and the increasing
availability of sensors and remote-controlled devices. The concepts behind
intelligent systems have been around for decades, but the gating factors have
been the limitations of connectivity, throughput and computational power.
The Star Trek computer doesn't seem that interesting. They ask it random
questions, it thinks for a while. I think we can do better than that.
Larry Page
The proliferation of data from corporate applications provides unprecedented
visibility into operations and business. New generation sensors and radio
frequency identification (RFID) tracking generate huge amounts of data which
can be used to improve energy efficiency and optimize broad functional
aspects of the supply chain. Technologies related to data warehousing,
business intelligence and predictive analytics have matured and are easier
and faster than ever to deploy.
Applications and systems will leverage the power of predictive analytics and
advanced techniques to optimize business processes, improve collaboration,
target information flow and reduce risk. We have seen the mainstream
acceptance of business intelligence and data warehousing over the past three
decades, while leading independent BI vendors Hyperion, Cognos and
Business Objects were absorbed by Oracle, IBM and SAP, respectively, in
2007. This wave of consolidation effectively mainstreamed business-
intelligence software within the enterprise IT ecosystem, and these
technologies have continued to rank as high priorities since.
Prediction and optimization embedded in the walls
The value of predictive analytics has continued to grow with increases in
computational power. If business intelligence is largely historical facing,
predictive analytics look to the future, to improve marketing accuracy and
operational efficiencies and reduce risk of all types. In the past, predictive
capabilities have been employed in a number of specific types of scenarios:
online search and advertising, to improve query results and better
target ads,
all types of marketing, to improve effectiveness and revenue “lift” from
campaigns,
manufacturing, to anticipate potential quality assurance issues,
financial-risk management, to help mitigate portfolio or credit risk (credit
scores are a prominent example).
The holy grail of analytics is to “close the loop” from data to insight, to
prediction, to action. In many cases, such as marketing, the value of human
interpretation of predictive analytics is critical to optimize decisions.
Analytics will be increasingly embedded into real-time operational and
transactional systems. We already see this dynamic playing out in
ecommerce, with marketing and merchandizing optimization attempting to
anticipate what the user may be interested in. Amazon, Netflix Pandora,
We expect to see real-
time intelligence
increasingly embedded
into systems
There is more data
available and analytic
technologies
have matured
Value of predictive
analytics continues to
grow with increases in
computational power
The holy grail of analytics
is to “close the loop” from
data to insight, to
prediction, to action

17.
Section 3: Intelligent systems US software
September 2010 edward.maguire@clsa.com 17
Google and others target consumer interests in books, movies, music and
search. Operational systems increasingly incorporate analytics into domain
specific tasks: pricing and inventory optimization, IT performance
management, and QA in manufacturing. Integration of predictive analytics
throughout the value-chain of products and services, from production to end
user, will enable the realization of “mass customization.”
There will be growing integration between physical and logical, with
systems that incorporate data from sensors and physical systems, apply
predictive analytics recursively to improve experience, operational or other
efficiencies. This is a consequential trend in nascent stages. Some of the most
visible manifestations of this include the growing prevalence of embedded
intelligence in passenger autos, such as self-diagnosing systems and location-
aware navigation systems that route around traffic jams. Examples of the
types of solutions that will incorporate physical/logical intelligence are: smart
grid (including demand/response energy management, municipal traffic
management solutions, critical infrastructure management, and networked
home-control solutions), self-diagnosing and correcting datacenter
management, networked video surveillance and security systems, location-
aware services, such as smart billboards.
Figure 11
An example of location-aware services
Source: IBM
Several underlying trends enable the rise of intelligent systems:
Big data. This refers to large sets of data of all types (created by
enterprise and internet applications, the proliferation of audio, video and
social-networking data) that have historically proven unwieldy and even
impossible to manage and analyze. Leading internet companies, such as
Yahoo, Facebook, LinkedIn, Twitter and AOL, commonly generate large
amounts of data, often over 100 terabytes of data each year. Preparing
this data for analysis can double or even triple the size. This is driving
new approaches to structure the data to find new ways to analyze and
visualize effectively.
There will be growing
integration between
physical and
logical systems
Big data drives new
approaches to structure
data to find new ways to
analyze and visualize
IBM is developing
intelligent billboards

18.
Section 3: Intelligent systems US software
18 edward.maguire@clsa.com September 2010
Improvements in the hardware and processing architectures will allow greater
amounts of data to be manipulated and analyzed with far greater capacity.
Sanjay Poonen of SAP discusses this:
‘Behind the scenes, these intelligent systems will have voluminous data
handling capacity because much of what ends up getting processed today
in disk-based structure can be handled in in-memory structures, which can
be in memory structures which may be either physical RAM or flash.
Industries that build their reputation on voluminous amounts of data -
retail, consumer packaged goods, financial services, utilities, even
healthcare and the public sector - will be the first consumers of these
devices, appliances and software that run in the form factor, that allows
operations that took seconds to take milliseconds, operations that took
minutes, to take seconds.’
Importantly, there is an increasing range of technologies to organize and store
data that go beyond the traditional relational database promoted by Oracle,
IBM, Microsoft and others. Technologies that deal with unstructured data (ie,
Hadoop, Cassandra, Mark Logic) and analytics-focused columnar databases (ie,
Vertica, Kognitio, Sybase IQ and others) represent an emergence of an
increasing array of database types to store and leverage data. There is
increasing convergence between structured and unstructured data as vendors
(ie, Mark Logic, Attivio and others) bridge existing distinctions between data
stored in relational databases (structured data) and everything else, which
include flat files, word documents, spreadsheets, multimedia files, etc.
Jill Dyche of Baseline Consulting discusses the emerging concept of data
virtualization:
‘A lot of people are talking about software virtualization, but we are going
to start to hear a lot of buzz around data virtualization. We simply have to
assume that the days of the big behemoth mega data warehouses are over
and there will always be new data introduced by both internal and external
sources. Data like social-media interactions become important to
companies. This “data is everywhere” mindset that everyone is embracing
- by the time you are able to load all that data into a big database, it could
be irrelevant.’
Proliferation of sensors and networked devices. The growth of devices
that will be able to generate data for analysis and receive instructions
remotely will give rise to new solutions. Sensors that can measure energy
use, temperature and other conditions are being built into smart meters,
appliances, building control systems and other devices. The ability to receive
instructions (for instance, to run appliances to capitalize on low utility rates or
avert demand spikes) is critical to realizing the vision of “closed loop”
intelligent systems. The adoption of IPv6 will allow for billions more devices to
be connected to the internet, each with a unique IP address. The “Internet of
Things” will enable far more pervasive analytics.
Better analytics. Predictive mathematical and statistic algorithms improve
the more they can be tuned for effectiveness. The more data and the more
iterations, the better the predictive accuracy. The exponential improvement in
cost/performance in computation, DRAM and storage enables greater
predictive precision. The power of prediction improves as experts in the
problem domain deploy the appropriate, finely tuned algorithm. Advances in
machine learning, neural nets and other artificial-intelligence techniques
continue to empower users with a growing arsenal of analysis tools.
There are an increasing
range of technologies to
organize and store data
‘We are going to start to
hear a lot of buzz around
data virtualization’
The “Internet of Things”
will enable far more
pervasive analytics
Algorithms improve the
more they can be tuned
with more data
and iterations

19.
Section 3: Intelligent systems US software
September 2010 edward.maguire@clsa.com 19
Stephen Wolfram’s team is working on software that mines the universe of
possible programs to find the optimal software program itself:
‘One of the things that has come out of a bunch of science that I have
done is this idea that there is this computational universe of possible
programs. Even quite simple programs are useful for things, which mean
that it becomes feasible to search this computational universe for
programs that are useful for your purpose. Whether your purpose is
cleaning up images or encryption or doing routing or linguistics, it
becomes possible to not have the engineer build the program step by
step, but instead have the program be mined from this computation
universe of possibilities.
That sounds very futuristic, but it is, in our own work in Mathematica and
Wolfram Alpha, a methodology we increasingly use. So there is an
increasing number of algorithms that no human built. We found it. We
searched a trillion possible programs and one of them was the one that
was the best with respect to certain criteria and that ends up being the
one we use for such and such a function. There are a lot of places where
this type of mined algorithm will become more and more prevalent.’
The rise of social intelligence. Social networking and collaboration
technologies foster business agility, collaboration and innovation by allowing
for more fluid communications across the organization. These technologies
give rise to new sources of data for analysis as well as new avenues to insight
through the processes of “crowdsourcing.” Crowdsourcing refers to the
practice of taking problems that are typically solved by employees and
extending them to a group of individuals in order to arrive at a collective
solution. Crowdsourcing is the paradigm underlying open-source software
development, designing organizational algorithms, solving complex
collaborative questions as well as optimizing search-engine results.
Technologies, such as Facebook and Twitter, allow problems and data to be
distributed across groups of users in real-time. There is increasing interest in
using “social intelligence” - harnessing the collective wisdom of large groups
of users via technology - to solve global problems, such as energy usage and
climate change. We expect to see an increasing range of organizations
incorporate the power of social-intelligence techniques to enhance broader
analytic capabilities.
Several domains are fostering the evolution to intelligent systems:
Real-time performance management. With the mainstream acceptance of
methodologies, such as Total Quality Management (TQM), Six Sigma and
Balanced Scorecard, software technologies evolved to help management and
line workers adopt metrics-driven strategies through dashboards and
visualization tools. There is increasing interest in enabling continuous
planning processes with more frequent refreshes or real-time data updates.
Leading software vendors IBM, Microsoft, and SAP are leading the evolution
toward real-time performance management.
The key goal for performance management lies in improving the decision-
making process. We expect to see increased use of real-time analytics to
drive optimized decision making. While companies, such as Fair Isaac have
focused on enabling enterprise decision management through a combination
of analytics, domain knowledge and data management, this has historically
required a costly, highly service-oriented approach. The use of analytics to
Performance
management applies
methodologies to
specific practices
Performance
management will
increasingly focus on
real-time decisions
‘It becomes possible to
have programs be mined
from this computational
universe of possibilities’
Social technologies allow
problems and data to be
distributed across
groups of users

20.
Section 3: Intelligent systems US software
20 edward.maguire@clsa.com September 2010
optimize the internet ad networks’ placement and targeting in real time is a
key opportunity in this area. Vendors, such as Google, Akamai, Adobe and
Splunk, are positioned to chart new ground in this area. Software vendors
IBM, Microsoft, IBM and SAP are leading the evolution toward real-time
performance management.
Marketing optimization. The use of analytics is a long-standing part of
marketing and campaign management, where vendors, such as SAS and
IBM/SPSS, have provided the analytic horsepower to power effective
campaigns. Vendors, such as SaaS leader Eloqua, Responsys, Aprimo and
IBM/Unica, continue to drive incremental value through the use of scoring
and predictive analysis to complement functions related to lead generation,
campaign design and analysis of effectiveness.
Risk management, churn analysis and fraud prevention. In the wake
of the financial industry crisis, financial services have been compelled to
deploy enhanced credit risk management solutions. Solving the risk
management problem requires pulling together multiple sources of data
and applying risk analytics to detect potentially consequential changes.
Financial fraud remains a significant challenge for consumers, businesses,
banks and credit card companies, and there is consistent need for more
effective analytics to detect potential fraud with minimal false positives.
Anti-money laundering requirements continue to drive the need for more
sophisticated solutions to detect and prevent illegal financial activities.
Vendors, such as RiskMetrics, Actimize, IBM/SPSS, SAS and many others,
are focusing on the evolving challenges associated with detecting
electronic fraud.
Smart grid, smart buildings, smart datacenters. One of the most
promising areas for innovation lies in the use of software to manage energy
usage, aligning the needs of customers and utilities. The ”smart grid” is
envisioned as a system that employ two-way technologies to control
appliances and HVAC systems at a home or building, allowing customers to
automatically reduce energy usage during periods when spot energy prices
are high, and allowing utilities to manage their own resources to avoid “brown
outs” from overload or invest in costly spinning capacity. “Demand response”
technologies employ meters at the customer’s site that can be controlled by
the power utility.
Predictive technologies allow the utility to anticipate when demand may be
approaching “peak load” or monitor the spot price of energy to exceed a
certain threshold. In response, the utility can issue remote instruction to the
customers systems to reduce their demand by raising the air-conditioning
temperature or turning off a pool heater, for instance. Companies focused on
this problem include Comverge, EnerNoc and private companies
SpringSource, GridPoint and BPL Global, among others.
While there is significant promise, Andy Lawrence of 451 Group believes it will
take time to realize these visions:
‘I think we are going to get to a point where the power consumption of
corporations scales up and down as power consumption drops naturally,
without human intervention at the end of the workday, with intelligent
policies making decisions about what to turn off. It may be an energy-
management system or some kind of network of building-management
system and network-management system.
Risk management
continues to gain
importance in
financial markets
Smart-grid technologies
employ predictive
techniques to
conserve energy
Analytics enable
marketers to improve
effectiveness
of campaigns
It will take time to realize
the eco-efficient IT vision

21.
Section 3: Intelligent systems US software
September 2010 edward.maguire@clsa.com 21
I think it is going to take a couple of decades. It is not always going to be
clear that it is worth doing the retrofit and embracing the complexity. People
don’t rip out building-management systems so they can get a better view of
their energy footprint. They will do it over time. This is a long-term project.’
Software-enabled home networking also shows significant promise as the
wireless ZigBee standard enables compatible appliances and systems to be
controlled automatically from a central system. Control4 is perhaps the most
advanced vendor in this area and is focusing on enhancing its demand-
response capabilities to allow homes and hotels to automatically schedule
certain tasks (ie, running a dishwasher) or adjust climate control settings in
order to make the most cost-effective energy choices. Over the next decade,
we expect home networking and monitoring to extend to areas, such as infant
and elder care, which promise significant improvements in quality of life.
Glen Mella of Control4 describes some of the uses of monitoring technology:
‘A partner of ours, CloseBy Networks, sells a software system on top of a
Control4 deployment which essentially enables children to assist aging
parents. They can monitor things like, “Well, it’s 10am and grandma hasn’t
gone into the master bathroom, there may be something wrong because
she usually gets up at 8.” Another one is actually helping seniors get the
movie set up and play from a remote location or setting lighting scenes to
help them settle down for the evening. People are starting to experiment
with ZigBee monitoring devices - you can have a pad next to the bed, so
when they step out of the bed a signal is given. There are even ZigBee
garments that can monitor vital signs.’
Intelligence helps deliver personalized medicine. There is increasing use
of analytics and business-intelligence tools to improve both the delivery of
care for individual patients as well as fundamental research. Healthcare
providers are increasingly able to respond to demands of pandemic
prevention by using business-intelligence tools to sort clinical data to identify
which patients might be most at risk, enabling the providers to target and
prioritize vaccination programs.
Another focus is helping doctors make more accurate diagnoses and
recommend the appropriate treatments. Systems that integrate sample
analysis into decision-support applications can help pinpoint details that may
elude physicians. Public health initiatives, such as the Cancer Biomedical
Informatics Grid and UCSF’s Athena Breast Health Network, aggregate shared
data and increasingly enable researchers and physicians to improve their
research, diagnosis and treatment efforts.
RFID and the supply chain. RFID technology experienced a significant level
of hype in 2004-2005 which created a level of skepticism, but steady
adoption of the technology is paving the way for new applications and
services. RFID employs two components: a reader (or interrogator) and tag
(or label). There are many applications for the technology, which is becoming
increasingly prevalent as the cost of the tags decreases. RFID tags are used
in conjunction with mobile phones and credit cards for payments, for
automated toll collection and similar uses. It is in asset management, retail
sales and product tracking that RFID shows significant promise, enabling
manufacturers, distributors and retailers to gain granular insight into both the
supply chain and demand patterns. The tremendous amount of data
generated by RFID applications has been long anticipated as a demand driver
for data warehouse technologies from the likes of Teradata, IBM, SAP/Sybase,
Oracle and other vendors.
Home-networking
technologies increasingly
focus on managing
energy consumption
RFID applications
promote demand for data
warehousing and
predictive analytics
Business intelligence
increasingly helps to
improve patient care
Elder care is a promising
vision for home-
networking technologies

22.
Section 4: Convergence US software
22 edward.maguire@clsa.com September 2010
Convergence
Users and consumers of information technology are ultimately concerned with
the experience and functions of chosen solutions. Increasingly, providers
bundle components of hardware, software, services, connectivity and content
as a complete solution. This has resulted in a blurring of the lines as offerings
and vendors straddle multiple categories. The key characteristics that have
driven adoption include accelerated time to deploy, reduced cost of integration
and implementation services and increased efficacy of the overall solution.
Information technology and business are becoming inextricably
interwoven. I don't think anybody can talk meaningfully about one without
the talking about the other.
Bill Gates
The distinction between discrete software, hardware, services and content will
become blurred into solutions. Vendors will be at once more diversified and
vertically integrated. Over the next decade, we expect convergence to be a
theme that will drive both organic development and active M&A in the
technology industry. Business models will evolve as value creation accrues in
different points in the delivery chain.
Apple and Microsoft, which have long embraced hardware as part of the
business model (via Macs, iPods/iPhones and the Xbox), have expanded into
content-based businesses (iTunes and Xbox Live) as a way to reinforce the
broader value proposition of their integrated offerings. We expect increasing
convergence over the next decade across the technology and media sectors
as software, hardware and content providers seek to bolster customer
stickiness, drive incremental revenues and create higher competitive barriers.
Figure 12
S&P 500 net debt per share
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
Q4 00 Q4 01 Q4 02 Q4 03 Q4 04 Q4 05 Q4 06 Q4 07 Q4 08 Q4 09
(US$)
Source: Bloomberg
We expect convergence to play out along several vectors over the next decade:
Everything as a Service. The mainstream acceptance of Software as a
Service over the past decade has paved the way for services to reach lower
down the stack. Platform as a Service and Infrastructure as a Service hide the
underlying complexity of compute and storage infrastructure and allow users,
service providers and application developers to access resources in holistic
Software offerings
increasingly combine
hardware, software,
connectivity and content
Business models will
evolve as value creation
accrues in different points
in the delivery chain
Corporate cash balances
and low interest rates are
spurring M&A
To those that consume
these services, the
experience is what counts

23.
Section 4: Convergence US software
September 2010 edward.maguire@clsa.com 23
fashion. To those that consume these services, the experience (functionality
or service levels) is what counts, and the environment will lead to new
competitive dynamics. Salesforce.com, Rackspace, Amazon.com, Google and
Microsoft all compete directly for emerging opportunities, but have
dramatically distinct origins.
Commoditization of IT infrastructure. A corollary to the trend toward
“Everything as a Service” and trend toward transparent IT is the continual
commoditization of compute, memory, bandwidth and storage. We expect to
see continuing convergence of hardware, storage and networking capabilities.
Cisco’s move into servers and HP’s initiatives around its ProCurve networking
equipment are only the leading edge of what we expect to be an increasing
emphasis on integration of commoditized capabilities. As hardware vendors
continue to compete on price, performance and supply chain efficiencies,
there will continue to be focus on value and differentiation from software.
Content integrates into the IT ecosystem. This is a longer-term trend, as
proprietary content and information services become increasingly integrated
into solutions. So far this has been indirect as Apple, Amazon and Barnes &
Noble have used specialized hardware and ecommerce to deliver digital
content to end users. Microsoft’s Xbox Live service builds on the Xbox
hardware console in a broader effort to deliver a complete home
entertainment solution. We expect the next phase of evolution to increasingly
stress the role of proprietary content as publishers and content producers
seek ways to monetize their intellectual assets and software vendors look to
use content to enhance value and differentiation to their user bases.
Physical and logical control systems converge. There is a slow but
steady integration between physical facilities control systems and IT systems.
One area that has seen significant interest has been energy management in
the datacenter. Part of the challenge is managing energy usage according to
the device load. This is being addressed by companies, such as APC, Emerson
(which acquired Avocent to extend its control of the datacenter) and privately
held Modius. A number of startups have sprung up around energy usage
measurement, with several companies focusing specifically on PC power
consumption (notably Power Assure and Faronics).
We expect to see increasing innovations around the integration between
physical systems and IT systems control. Beyond energy management, we
believe one of the key areas of promise is tying together physical and IT
security. For banks and high-security areas of government, this would involve
the ability to tie together physical and logical access control (ie, allowing
someone to log onto a system only when their security badge has been
scanned into the building).
How will convergence play out?
We identify several likely directions for convergence over the next decade for
software, hardware, services and content vendors. We believe the most likely
directions are:
Software vendors move into hardware and content
Hardware vendors move into software and services
Services vendors move into software and content
Content vendors move into hardware and software
Physical facilities and
logical systems controls
are converging
Expect the continual
commoditization of
compute, memory,
bandwidth and storage
One of the key areas of
promise is tying together
physical and IT security

24.
Section 4: Convergence US software
24 edward.maguire@clsa.com September 2010
Figure 13
Converging IT ecosystem
Software Content
Hardware
Connectivity
Solutions
Source: Credit Agricole Securities (USA)
Software vendors move into hardware and content
The rise of appliances that integrate both hardware and software has been a
significant trend over the past decade and we expect this to continue over the
next decade. We expect continued interest from software vendors on delivering
software in appliances as organizations seek greater ROI and deployment
efficiencies from the combined solutions. In particular, we expect application
appliances to become more common along with hybrid offerings that combine
an on-premise hardware presence with cloud-based services. Oracle’s
acquisition of Sun and Check Point’s acquisition of the Nokia Enterprise
business are examples of the types of transactions we expect to continue.
The hardware appliance approach has become increasingly mainstreamed and
adoption is spreading across numerous categories. We expect application
appliances to gain increasing ground over the next decade, following Oracle’s
lead in targeting high-end opportunities for converged systems that combine
software, networking, hardware and storage.
Figure 14
Software/hardware appliances by category
Category Representative vendors
Collaboration Bull
CRM Sage SalesLogix CRM Appliance
Data integration Cast Iron (IBM)
Data warehousing Teradata, Oracle Exadata, Netezza, SAP, IBM
e-Discovery Clearwell, StoredIQ, FTI, Kazeon (EMC)
ERP SAP (ERP in a box with Novell, Intel)
Firewall, VPN Check Point, McAfee,, Palo Alto Networks
IT management ScienceLogic
Mail security Barracuda, Cisco/Iron Port, McAfee, Trend Micro
Messaging Tibco
Search Google, Thunderstone, Index Engines
Secure web content Websense, McAfee
Storage - Deduplication, backup EMC, NetApp, HDS, 3Par, ExaGrid, DataDomain (EMC), NetApp,
Unified threat management Fortinet, Barracuda, Check Point
Video security NICE Systems
WAN acceleration Certeon, Citrix NetScaler, F5 Networks
Source: Credit Agricole Securities (USA)
The appliance approach is
increasingly mainstream,
proliferating a
cross categories
We expect application
appliances to become
more common along with
hybrid cloud offerings
Software, hardware,
connectivity and content
will converge into
holistic solutions
Appliances combining
hardware, software and
sometimes content and
services are proliferating

25.
Section 4: Convergence US software
September 2010 edward.maguire@clsa.com 25
We expect to see continued diversification of revenue streams both among
larger and smaller software vendors. Traditional perpetual license vendors
have been moving toward additional subscription-based businesses and
hardware over the past several years. Some of this has been through
acquisition, some through partnership, but the key objective is to enhance
the overall strategic value of the vendor through a broader portfolio and
reduce reliance on a single business model.
Ray Wang of Altimeter believes software companies will increasingly focus
on content:
‘Software companies are emerging to become information brokers. They
are not just delivering a solution. What the cloud is doing is allowing them
to aggregate data for prediction, for trends, and for benchmarking
purposes. Those trends drive another point where companies must
consider if they even need any of these solution providers.
We are seeing companies buy out key software assets so they can deliver
services directly to the customers without having to use a packaged
application. One of the great examples of this occurred when Roper
Industries bought a software company that just did supplier networks.’
Hardware vendors move into software and services
For hardware vendors, the appeal of software is undeniable and we expect
continuing development and M&A. This trend has been so consistent we
would expect continued consolidation in the software sector to continue to be
driven by hardware vendors.
IBM: Rational, Cognos, SPSS, Unica
HP: Mercury Interactive, Opsware, Tower (software), EDS (services)
Cisco: WebEx, ScanSafe, Ironport (Software as a Service)
Dell: 3Par attempted (appliances), Perot Systems (services)
EMC: VMWare, Documentum, RSA, Kazeon, Greenplum (software)
Intel: McAfee, Wind River (software)
Promod Haque of Norwest Venture Partners highlighted the hardware
commoditization trend:
‘We are seeing hardware get commoditized rapidly, not just in the server
space, in the compute space. You are starting to see networking vendors,
under tremendous pressure from the HuaWeis and the ZTEs from China.
The general commoditization of that space as well, at least the lower end
of that space. Over a period of time, that will happen with the high end,
but that lower end is getting commoditized.
There is a lot of emphasis on the part of companies like Alcatel Lucent, and
whether it is Extreme Networks or Brocade, and equipment providers
including Cisco and Juniper. You see Oracle now in the hardware business.
HP acquired 3Com. One of the more interesting things that we saw
recently was the IBM announcement that the entire hardware group will be
reporting to Steve Mills, who previously ran Software only.
Expect vendors to blend
software, hardware,
content and services
Software companies will
increasingly focus
on content
We expect continuing
development and M&A

26.
Section 4: Convergence US software
26 edward.maguire@clsa.com September 2010
You are starting to see some very interesting trends in that hardware, not
just compute, but compute, storage and networking are coming together.’
Services vendors move into software and content
IT services vendors, particularly the likes of Accenture, CSC and others,
commonly specialize in customized solutions that incorporate proprietary IP,
packaged software and hardware. Given the ongoing pricing pressure from
offshoring competition, we would expect North American IT-services vendors
to look to acquire or incorporate more internally developed proprietary
software and content in order to differentiate their franchises.
There have not been many large acquisitions as of yet. The Canadian IT
services provider CGI Group acquired AMS, a vendor of government
software offerings, which is a notable example from 2003. Part of the
challenge for traditional services vendors is that their valuations (on a per
employee basis and on price/sales metrics) tend to be far lower than other
areas of technology.
There have been a few examples of services vendors moving into hardware
(both IBM and Fujitsu retail legacy hardware businesses). Though not a
traditional services vendor, Google’s unsuccessful launch into hardware
through the Nexus One smartphone demonstrate that convergence is not
without risks.
Content vendors move into hardware and software
Although the indications of this trend are early, we think there are growing
signs of increasing efforts to converge solutions on the part of media
companies. As media companies seek new ways to monetize content (to
offset pressures in advertising and traditional book and periodical sales) and
technology firms seek new and recurring sources of revenue, we expect
increasing cooperation, partnerships and potentially M&A between traditional
media and publishing companies and technology firms.
Amazon’s Kindle and the Barnes & Noble Nook represent efforts by channel
players to provide a hardware-based vehicle to monetize digital content, and
of course Apple’s iPad appears to be revitalizing the business of magazines
and other periodicals in digital form. Publishers similarly are seeking ways to
monetize their own content and are developing applications to offset declines
in their traditional businesses. Reed Elsevier has sought to offset declining
sales of its hardbound medical texts and reference books by offering
specialized software applications, such as MD Consult, that allow access to
the company’s proprietary data on a subscription basis.
Expect increasing
cooperation between
media and tech firms
‘Not just compute, but
compute, storage and
networking are
coming together’
Pricing pressure coming
from offshoring
competition

27.
US software
September 2010 edward.maguire@clsa.com 27
2020 interviews
Jan Baan, Cordys.............................................................................. 28
Willem van Biljon, Nimbula .............................................................. 34
David Cohen, EMC............................................................................. 40
Simon Crosby, Citrix......................................................................... 47
Jill Dyche, Baseline Consulting ......................................................... 58
Andrew Feldman, SeaMicro .............................................................. 65
Promod Haque, Norwest Venture ..................................................... 70
Timo Hannay, Nature Publishing Group............................................ 75
Parker Harris, Salesforce.com .......................................................... 83
Dave Kellogg, MarkLogic .................................................................. 91
Gary Kovacs, Sybase ...................................................................... 101
Andy Lawrence, The 451 Group...................................................... 111
Seth Levine, Foundry Group ........................................................... 118
Glen Mella, Control4 ....................................................................... 122
Geoffrey Moore, TCG Advisors ........................................................ 131
Lew Moorman, Rackspace .............................................................. 139
Sanjay Poonen, SAP ....................................................................... 145
Keith Schaefer, BPL Global ............................................................. 150
Stratton Sclavos, Radar Partners ................................................... 157
Michael Skok, North Bridge ............................................................ 164
Michael Tiemann, Red Hat .............................................................. 171
Ray Wang, Altimeter Group ............................................................ 181
Stephen Wolfram, Wolfram Research............................................. 186

28.
Jan Baan, Cordys US software
28 edward.maguire@clsa.com September 2010
Jan Baan, Cordys
Jan Baan has over 25 years of entrepreneurial and business leadership
experience in the software industry. Internationally recognized for his key role
in creating the worldwide market for enterprise resource planning (ERP)
software, he founded Cordys in 2001, together with Theodoor van Donge, the
key architect behind Baan Company's pioneering ERP solution.
Jan founded Baan Company in 1978, soon after attending Business College.
With the development of his first software package in 1979, Jan started what
was to become a pioneering career in the ERP industry. Under Jan's
stewardship, Baan Company grew from a US$35m company in the early
1990s to US$680m in 1998. Baan became the No.2 ERP player in the
software industry. In the late 1990s, Jan became a highly successful venture
capitalist by focusing on software innovation.
The importance of the business process layer
Today, with cloud computing in the enterprise gaining traction, businesses
must re-evaluate their existing IT portfolios and transition towards the cloud
to remain competitive. Businesses are increasingly demanding a shift from
rigid business processes to more flexible and dynamic ones where a
business process layer can link all silos under a service-oriented architecture
(SOA). SOAs offer a loosely integrated suite of services that can be built
upon existing IT infrastructure which offers the flexibility and functionality of
the cloud without foregoing the benefits of the investment in on-premise IT
infrastructure.
A feature of this shift is that differentiation within software will occur not in
manufacturing, but in assembly. Users will have the ability to dynamically
change the components of a system by making systems into customizable
web services to be delivered over the web. Ultimately, complexity will be
hidden underneath a layer of processes, a phenomenon Gartner calls the
‘meta of the meta’ layer. Using the meta, or ‘data about data,’ commodity
components will enable projects to be created with no new lines of JAVA code
because best practices codified in legacy systems all the way down to the
databases will be utilized.
Business operations platform process layer
Source: Cordys
The business process
layer promises greater
flexibility for IT to
serve businesses
Differentiation within
software will occur not in
manufacturing,
but in assembly
The business process
layer hides complexity,
creating more
transparent IT

29.
Jan Baan, Cordys US software
September 2010 edward.maguire@clsa.com 29
Commoditizing complexity, simplifying process
Our discussion with Jan Baan focused on his visions of the evolution of the
business process, the commoditization of applications into best practice
components and the promise that flexibility will bring. Baan envisions
traditional enterprise-software applications becoming discrete components
that are manipulated by higher level business process orchestration. The
applications of the future will weave together these components (comprised
of formerly distinct lower level application functions) into a cohesive solution
framework. Baan effectively used the analogy of the auto and the airplane in
describing his vision for software over the next 10 years. The ability to
“componentize” functions and applications allow business users
unprecedented flexibility in matching software to the needs of the business,
not vice versa.
Key points
In the future, a business process layer will link system “silos,” with
integration via SOA.
Business Process as a Service (BPaaS) will provide the logical overlay on top
of Infrastructure as a Service (IaaS), Platform as a Service (Paas) and SaaS
to enable true multi-silo integration of software systems from the cloud.
Today, data and systems reside in silos (ERP, CRM, HRM, etc), and
integration between silos (if any) is difficult, especially as new processes
are introduced to the system(s).
Legacy systems (and new code going forward) are redesigned as web
services, which will be integrated into the business process layer,
delivered over the web with customizable interfaces.
Complexity will be commoditized down to simple elements representing
best practices.
These functions can be decoupled and then recombined with other
components, enabling mass customization via enterprise “mash-ups.”
The analogy for software is that we will see differentiation in the
assembly, not the manufacturing.
The result of this evolution is that corporations will become more agile
and efficient.
As processes are commoditized and IT becomes transparent to users,
large system integrators and consultants could find they have less
demand for their products.
The key differentiator for applications will not be the logic, but
increasingly content from the unstructured data world.
Business processes will
see the commoditization
of applications into best
practice components
Baan envisions Business
Process as a Service
integrating existing
software “silos”

30.
Jan Baan, Cordys US software
30 edward.maguire@clsa.com September 2010
Jan Baan - Interview summary
We spoke to Jan Baan, chairman and chief innovation officer of Cordys, on 17
June 2010 about his vision for the evolution of software over the next 10 years.
Jan Baan became an entrepreneur in 1978. The original vision was to tackle the
“mother of all complexity,” enterprise resource problems. This led to the rise of
Baan Software, which became one of the top ERP vendors in the late 1990s.
In the ERP era, “data was king.” These enterprise transactional applications
were based on UNIX and relational databases, which are designed to handle
structured data. This generation of applications was never built for the internet.
These have led to extraordinarily high costs. Baan cited a company that has
been in business for 150 years and is happy that its IT budget is under
US$1bn. This typical company spent US$1bn to implement an SAP system.
After buying the software for US$150m, the company needed to spend
US$850m more to customize it. This model is not only costly, but at the end,
all the user has is the application.
The computer is now mobile. We can have all the relevant data around us
along with the relevant processes. We see examples of this with many of the
new iPad applications. We have a new generation of beautiful emerging
technologies based on the internet that includes the iPad, smartphones, etc
that address only unstructured data. Increasingly, there is value for large
legacy systems (more so in healthcare than in manufacturing) to connect with
all these new devices.
The dream for Cordys 10 years ago had been to go beyond ERP, and it has taken
10 years to build a business process platform. This is focused on a completely
mobile platform that is able to leverage both structured and unstructured data.
In this new approach, data is no longer king . . . business process is.
In tomorrow’s world, we will no longer be employees, but knowledge workers
in the supply chain. This will take the form of a business process layer that
can link all of the system silos, with integration via SOA. A wealth of
possibilities exists as a result. Why not have an order to cash collection
process then link this with unstructured data rules (like Facebook in a CRM
environment), while making all compliant? We need to find ways to link
collaborative and social technologies to process, linking something like a
Google Wave to a business process, for example, using both structured and
unstructured data. This is the promise of using technology to mirror how
people naturally interact.
Today there is a lot of discussion about the transition to Saas, PaaS and IaaS.
On top, we will have Business Process as a Service. We need to follow the
commoditization of services. One supposes you could open legacy systems to
view the processes, but you end up having one view with one process. In the
future, we will access these systems from the cloud.
We realize enterprises have to combine different technology waves. Suppose
we take the analogy of the automobile. In the auto industry, there have been
different technology waves, but there are still wheels, an engine, etc. Here
the idea of using an old engine and new dashboard concept come together.
This is the same for the cloud, where we see combining the cloud and on-
premise worlds.
ERP applications were
never built for
the internet
The business process
layer will link together
underlying applications
as services
We review our
conversation with
Jan Baan

31.
Jan Baan, Cordys US software
September 2010 edward.maguire@clsa.com 31
Currently, we still have an on-premise world that needs to be combined
across silos. Technology systems are still very business centric, and the goal
is to align business in the drivers seat, controlling process. At the enterprise,
business processes have been standardized for compliance, but this is not
flexible for tomorrow’s business needs.
In a typical business entity, there are many different silos. These silos
incorporate structured data in multiple areas: ERP, CRM, product lifecycle
management (PLM), financial systems, logistics and more. The business
process layer can link together all the silos, using SOA to integrate - one rule
in a business process.
Tomorrow’s world is no longer about employees doing work directly related to
a company. This is about knowledge workers participating in a supply chain.
Workers will have their own devices which have access to their corporate
resources and will be able to access data from mobile internet connections.
For business processes, it is critical to follow steps in the appropriate order.
Process requires linear steps. Workflows, such as email, do not follow the same
pattern. A critical language enabling the rise of the cloud is business process
language. Business Process Markup Language (BPML) has been standardized for
10 years. It used to be that the human element was missing in the BPM layer.
We can now use BPML not only for compliance and system-to-system
communications, but also for human-to-human communications. The evolution
of software will allow technology to mirror behavior rather than vice versa.
Mass customization is the next wave of software
The goal is to preserve existing investments, while providing a layer of
flexibility on top of them. Like a mobile phone, the complexity underneath will
be hidden as complex processes are combined into “mass custom apps”. For
example, the iPhone external case may change with each version, but the
underlying functional components are consistent.
We are still driving our software “cars” based on what is under the hood.
Though the body and the dashboard may change, a car may have the same
wheels and engine as 10 years ago. A similar case will hold in software. We
need to look at SAP, Oracle and other applications to respect and preserve the
value of their complex capabilities.
In the past we had logic which was stored and concrete, but in the future
knowledge workers will be able to harness this logic in a better way - as
services. We can build a web service and weave it together with others to
collaborate commodity functions at the process layer.
The crucial element in IT is complexity, which creates costs and inefficiencies.
What we need to be able to do is commoditize complexity down to simple
elements that can be decoupled and recombined with other components.
Customer auditing is a decoupling point.
Think of creating software like manufacturing an airplane. Airplanes have
been manufactured in a similar way for decades. Commodity components are
built from all over and the plane is assembled in one place in the same way,
while the individual configuration is different.
Traditional enterprise
applications have been
discrete “silos”
Goal is to preserve
existing best practices
while adding flexibility
Software will see
differentiation in the
assembly, not the
manufacturing

32.
Jan Baan, Cordys US software
32 edward.maguire@clsa.com September 2010
The analogy for software is that we will see differentiation in the assembly not
the manufacturing. Not only will organizations build Software as a Service,
they will build the business itself. Tomorrow’s world will be one of mass
customization, where users will have the ability to dynamically change
components of a system. Essentially you will be able to make “mash-ups” out
of complex processes.
The way you achieve mass customization is to take vanilla, traditional
systems and make them into a web service, deliver them over web with
customizable interfaces. Baan believes Cordys had been early to the market,
but we think people are getting it now.
Commoditization preserves best practices
Commoditization means there is respect for best practices and best practices
for components. What is meant by commoditizing software is to bring
together all of these underlying application silos as a process for the
information worker. In this way, the complexity is hidden underneath a layer
of process. Gartner calls this the ‘meta of the meta’ layer.
This approach is really the only way to simplify everything. In this model,
the underlying information is hidden and the process is using information
in a way that the commoditization allows it to. Since they are
commoditized as components, there is no need to change the underlying
applications, the user doesn’t have to worry about how it comes together
and there is no need to have engineers customize when systems are built
on best practices.
The challenge with the cloud is to use the inherent strengths and underlying
processes of legacy systems, make them multi-tenant and cloud enable them.
Basically the vision is to make web services out of legacy systems, integrate
them into the business process layer. Commodity components will enable
projects to be created with no new lines of JAVA code, with the processes
engineered in the “meta-layer,” leveraging best practices codified in legacy
systems all the way down to the databases.
Business Process as a Service
For the knowledge worker, this new model requires that the business
user/developer only needs to manipulate the business process layer. This
allows the user to build upon the existing investments in IP and orchestrate a
higher level of processes that are transparent to the end user.
At Baan Software in the 1990s, there were 2000 engineers working on
various versions of the software. Programmers of yesterday made “spaghetti”
with all of the customized code. This is analogous to a car where friends come
in and change everything. In the cloud, there are new efficiencies because
there is only one version of the software.
There is no longer room to build big, monolithic enterprise applications. The
differentiator nowadays is content from the unstructured data world. It is not
functionality that is the driver, content is now the driver, and this includes
both unstructured and structured data. Content itself is stored under the
umbrella of the business process layer. In the past, it was logic that was
stored and concrete - now logic becomes used as a component.
Commoditization in
software preserves best
practice and
enables re-use
In the future, business
users will be able to
manipulate the process
layer, not underlying code

33.
Jan Baan, Cordys US software
September 2010 edward.maguire@clsa.com 33
There are still many complex common best practices. In the past, it was
about functionality. Now we like to incorporate unstructured content into the
process. For the first time, we can bring unstructured rules and content into
the process layer.
The new generation of development language is 5GL, which increasingly takes
the developer out of the process. Instead, we have the business driving the
use of the commodity type of components that are decoupled with services
that have been established. The challenge is how to make legacy on-premise
systems multi-tenant to bring them into the cloud.
The carrier for this new wave of enablement is the internet. In the 1960s,
data was king. Today it is the “meta-meta model” that enables collaborative
process. With the internet as the delivery mechanism, the end device will be
whatever the user likes. The crucial element is how to decouple different
technology components. Collaborative workspaces will bring together different
models under one view. With the XML standard, software itself can become
increasingly based on components.
IT is now participating in business decisions. Previously, IT was regarded as a
“necessary evil” for the business, but with increased flexibility from the cloud
to orchestrate and integrate processes, IT is becoming an increasingly
strategic part of the business.
In coming years, the sun will set on mainframe technology. However, client-
server technology can continue to be useful for the next 20 years if we can
decouple processes and maintain on-premise and in-the-cloud models.
5GL development
languages allow
businesses greater input
in the process
The sun will set on
mainframe technology

34.
Willem van Biljon, Nimbula US software
34 edward.maguire@clsa.com September 2010
Willem van Biljon, Nimbula
Willem van Biljon is a senior technology executive and entrepreneur who
started his career building a UNIX-based operating system for mini-computers
and the first retail debit-card payment system for one of the largest retailers
in South Africa. Building on that expertise, he co-founded Mosaic Software to
build the first high-end payment transaction switch for commodity hardware
and operating systems. Mosaic became one of the world's leading electronic
funds transfer companies with operations in more than 30 countries and was
successfully sold to S1 Corp in 2004. Willem then joined Amazon to develop
the Elastic Compute Cloud (EC2) service business plan and to drive product
management and marketing for the service.
Willem is a graduate of the University of Cape Town.
The next layer of cloud automation
Willem was part of the team that built the Amazon EC2 cloud, and his new
company, Nimbula, is focused on creating a new layer of automation to a
broad vision of cloud-based infrastructure. Our discussion focused on the next
generation of cloud-infrastructure management as organizations increasingly
seek to apply policy and provisioning in a dynamic fashion across public and
private clouds.
Key points
There will be a change in how people purchase computing resources,
driven by the desire for flexible use of hardware, cost drivers, how
applications are deployed, underutilization of servers and the desire to
change how to pay for software.
A new breed of cloud-infrastructure software will be able to automate the
orchestration of cloud resources, policy management and federation
between clouds, resulting in lower cost of implementation and
management of datacenters.
Automated and federated systems that orchestrate cloud services will
reduce the cost and complexity of IT, making it more transparent.
The continuum of new infrastructure and payment models allows for a
stream of innovation that previously would have obviated investment
hurdles and management requirements.
Projects or investments that might have been unthinkable in the past
because of resources will suddenly be trivial.
‘Previously, IT was task based, and hardware was purchased to solve a
particular task or problem. If the task didn’t warrant the cost of buying
five to 10 servers or whatever the costs would be, then it never got done.
If it now becomes trivially easy to do it, you are going to find pent-up
demand for all of these tasks that really make sense to do now.’
Summary of interview on
2 August 2010.
Full transcript follows
Nimbula is focused on
creating a new layer of
cloud infrastructure
automation
Automated and federated
systems that orchestrate
cloud services will reduce
IT cost and complexity