THINK IT Services

I had an opportunity to speak to the Mid-Atlantic CIO Forum at Towson University last week about new strategies and tactics for fully capitalizing on today’s Cloud alternatives. Because the group is composed of CIOs primarily from mid-size and large-scale enterprises with a lot of custom built applications and systems already in place, their biggest challenge is determining how to integrate the latest Cloud services into their legacy operations. Managing ‘hybrid’ Clouds is becoming a common challenge.

I had spoken to this group a couple of years ago when the concept of Cloud computing was just emerging. At that time, they were primarily interested in better understanding what the concept meant and why they should consider it. Like many CIOs, the attendees of this session are now trying to determine where, when and how to deploy Cloud services to meet their day-to-day needs and achieve their long-term corporate objectives.

Although some debate continues to swirl around the merits of public versus private clouds, most industry observers agree that the vast majority of organizations will utilize a mix of on-premise and ‘on-demand’ applications and computing resources to support their business operations. Therefore, the key to success is properly managing this hybrid operating environment to get the maximum value from the new Cloud resources will extending the life of existing on-premise systems and software.

While most IT organizations have been managing mixed environments for a long time, the advent of Cloud-based services adds a new wrinkle to this age-old challenge. Rather than simply acquiring and installing a traditional on-premise system or software application into a traditional computing environment, capitalizing on a leading Cloud solution entails a new set of considerations.

Beyond evaluating a Cloud solution’s ability to meet the organization’s functional requirements, the IT team must thoroughly assess how well the Cloud vendor can deliver on its promises.

This means determining how it has architected its service delivery infrastructure to ensure maximum availability and optimal performance. It is also important to investigate the vendor’s customer support capabilities and policies to fully understand how the vendor will respond if there is a service delivery or other important support issue. This means determining what service level assurances the vendor provides and how it compensates the customer if it fails to meet these obligations.

Equally important is determining the financial viability of the vendor. As a relatively new market segment, the Cloud is attracting a growing assortment of relative start-ups. This “Cloud Rush”, can’t sustain all the players and an industry shake-up is likely. Therefore, many vendors will either fail or be acquired by others. Considering how these scenarios could impact an organization’s dependency on a Cloud service is important.

IT and business decision-makers can also take advantage of a growing number of Cloud vendors that are providing unprecedented transparency regarding the reliability and performance of their services. Many are offering online ‘Trust’ sites that show the availability and latency levels of their services real-time.

A widening array of Cloud-based management tools are also coming to market which provide a ‘single-pane of glass’ dashboard that can help CIOs and their IT teams more easily deploy, monitor, measure and maximize the value of their hybrid Cloud resources.

Disclosure: This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet.

Despite some skepticism from industry analysts about the ability of Software-as-a-Service (SaaS) vendors to deliver viable business intelligence (BI) solutions a few years ago, today’s Cloud-based analytic tools are increasingly demonstrating that they can quickly generate tangible benefits to organizations of all sizes, especially mid-market companies.

The growing interest in Cloud-based analytics is easy to understand given the escalating pressures facing businesses contending with rising customer expectations and intensifying competitive. Businesses not only have to synthesize a widening array of internal and external data sources, they must also make timely and useful analysis available to an increasingly dispersed workforce so they can make better day-to-day business decisions.

The Cloud is the perfect enablement platform for analytic tools to respond to these demands. THINKstrategies sees the Cloud responding in three ways.

First, every leading Cloud solution includes a basic set of analytic tools to satisfy users’ rudimentary needs, including activity tracking and reporting capabilities.

Second, every leading Cloud vendor is tracking usage rates and behavior patterns to better understand how their solutions are being utilized so they can continuously fine-tune and enhance their Cloud offerings.

Third, a growing number of Cloud vendors which have gained a critical mass of customers are beginning to examine how they can package the aggregated metadata they are accumulating to produce useful benchmark statistics and key performance indicators (KPIs) that help users understand how they compare and contrast to their peers. This is a unique value-add which only Cloud-based solutions built on a shared, multi-tenant architecture can provide.

IBM’s recent acquisition of DemandTec is the latest example of the growing focus on Cloud analytics in the marketplace. DemandTec delivers Cloud-based analytics software businesses use to track customer online and in-store buying patterns to identify trends so they can make better pricing, packaging, and other marketing decisions to generate higher revenues and profits.

The DemandTec acquisition comes about year after IBM closed another acquisition of a Cloud-based analytics company, called Coremetrics, which focuses on Web analytics which enable users to develop more targeted online marketing campaigns.

As CIOs’ fears about data security and privacy in the Cloud subside, they are being replaced by a growing interest in utilizing Cloud-based analytics tools and the computational power of the Cloud to attain better insight into business effectiveness.

The most appealing aspect of the new wave of Cloud analytic solutions is that businesses don’t have to invest millions of dollars to build costly data warehouses, implement complicated BI software, or hire an army of expensive consultants to try to gain a competitive advantage.

Instead, a growing number of enlightened IT and business decision-makers in mid-sized enterprises are recognizing that they can take advantage of a widening array of Cloud-based analytic tools to achieve their corporate objectives at a fraction of the cost, in far less time, and without the risks associated with legacy BI systems.

This is particularly important to mid-size organizations which lack the skills and financial resources to make major investments in BI systems. Cloud analytics gives these mid-market enterprises tools they otherwise could not afford, and levels the playing field to enable them to gather and interpret real-time data to better compete with larger players and start-ups.

Disclosure: This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet.

IBM has become the latest company to agree to speak and sponsor the Cloud Channel Summit, hosted by THINKstrategies, the Cloud Computing Showplace and Rising Tide Media on Monday, November 7.

IBM joins a growing list of sponsors, partners and speakers participating in the one day forum focused on building successful channel relationships in the Cloud. Other Summit sponsors include GoodData, Safenet, SoftServe, AppDirect, Agilis Solutions and Scribe Software.

The Cloud Channel Summit will take place at the Computer History Museum in Mountain View, CA. It will bring together senior executives from leading Cloud Computing vendors and their channel company counterparts to share industry best practices and innovative ideas for building profitable and successful channel partnerships in the Cloud.  

The Cloud Channel Summit will kickoff with a keynote presentation by Google’s Director of Channels and Business Development, Stephen Cho, entitled, “Making Rain in the Channel: New Opportunities in Cloud Computing.”

IBM’s participation in the Cloud Channel Summit represents a major endorsement of our event and clearly shows the growing importance of the channel’s role in the Cloud.

Click here to learn more about the Summit and to register for the event.

Today’s official launch of Microsoft Office 365 squarely positions the company as the latest major contender seeking to win a share of the rapidly growing Cloud Computing marketplace.

Although Microsoft has been saying that it is “All In” and funding a TV ad campaign which has made the catchphrase “To the Cloud” popular, Microsoft 365 represents the company’s boldest offering to date. The company has been watching its Office suite suffer attacks from Google Apps for years. In fact, Google Apps are quickly becoming the basic productivity suite of choice for most new college graduates entering the workforce.

Many of these new entrants to the workforce are forgoing email altogether by relying more on Facebook, Twitter and text to communicate. In response to these trends, Salesforce.com is pushing its Facebook-like Chatter communications platform as a dramatic switch from traditional email.

IBM is also attacking the Microsoft Office franchise with its revamped LotusLive offering. And, VMware is pushing its Zimbra alternative. You can also expect Apple to put more emphasis on its web-based productivity tools to build on its iCloud platform which has already captured plenty of market attention.

All of these players recognize that the first step in the corporate migration process to the Cloud tends to be via email. While this seems like an easy place to start the journey to Cloud-based alternatives, there are still plenty of risks associated with moving in this direction, ranging from reliability to security.

One of THINKstrategies’ most recent clients, Exoprise, recently conducted a survey which found plenty of interest in Cloud-based email alternatives, but an equal amount of apprehension about the uncertainties regarding these offerings as well.

Exoprise has devised a Cloud-based tool which can help organizations evaluate their on-premise versus Cloud email alternatives by assessing current and projected usage patterns. It is offering free access to the assessment tool so IT and business decision-makers can determine if Microsoft 365 fit their needs.

Unlike in the case of Microsoft’s many ill-fated operating system adventures of the past which it was able to withstand because there was limited competition, a failure to jumpstart its Cloud offerings with Microsoft Office 365 will adversely impact its position in the market because of the growing success of Google Apps and other Cloud alternatives.

Therefore, you can expect Microsoft to put plenty of effort into making Office 365 a success to better position the company in the Cloud for the longhaul, even if it cannibalizes some of its traditional Office software revenue initially.

Plenty of has been written about last week’s disruption of Amazon’s Web Services (AWS) which took hundreds of organizations offline, including many rapidly growing start-ups and evolving aspects of enterprise operations.

(The best I’ve read summarizing the questions raised and lessons to be learned as a result of the AWS outage was by my friend Phil Wainewright.)

After suggesting at the beginning of last week that recent issues surrounding Google could derail the rapid growth of Cloud Computing services, it is obvious that Amazon’s problems must be added to the list of sobering events which will certainly cause many entrepreneurs and enterprise decision-makers alike to re-think their Cloud strategies and deployment tactics.

Google’s support issues, combined with Amazon’s service availability problems, clearly make real two of the three greatest fears which IT and business decision-makers face when considering the widening array of Cloud alternatives. The third primal fear regarding Cloud services is the potential for a serious security infraction. To date, Cloud providers have outperformed many organizations in fending off security threats. But, a well-publicized violation would raise serious concerns about the short-term viability of Cloud services for mission-critical, core applications and business processes.

I say ’short-term’ because we all have short memories, or maybe it is fairer to say higher tolerance levels than we realize when it comes to our fears regarding web-based services. For instance, Salesforce.com has only seen greater growth since it suffered a series of serious service disruptions in 2006, and has not seen any appreciable service abandonment as a result of subsequent outages more recently. Another example is NaviSite which suffered a outage that lasted nearly a week in 2007 and was recently acquired by Time Warner Cable for $230 million.

As I said back in December 2007, “Failure Doesn’t Matter”.

However, if these problems persist not only will Amazon’s credibility and competitive position be compromised, but the commodity-services oriented aspects of the Cloud Computing business will also be set back significantly.

In the meantime, the winners as a consequence of last week’s outage and Google’s support issues are the established players who may not be offering bleeding edge services at the lowest available costs, but are promising more reliable services at reasonable prices. For instance, folks at IBM timed things perfectly with their new SmartCloud services. And, Verizon completed the acquisition of Terremark just in time to capitalize on Amazon’s problems.

There are also lots of smaller players who can win greater attention as a result of Amazon’s outage. I spoke to SmartBear in the midst of the AWS issues last week to learn more about its acquisition of AlertSite and they were eager to discuss how their combined capabilities could help organizations mitigate the risks associated with Cloud availability and performance issues.

Hopefully, Amazon and other Cloud service providers will learn important lessons from last week’s outage which will lead to improved service quality going forward. In the meantime, this event will make corporate decision-makers more aware of the tough questions they must ask the Cloud providers about their services and the standards they should set for their performance.

As I suggested a year ago, I also expect last week’s outage to reset the competitive landscape and the criteria for success, moving the advantage from the price leaders to the quality service providers.

(Disclosure: I have done consulting work with Salesforce.com, NaviSite, IBM and Verizon.)

Cisco Systems’ decision this past week to shut down its Flip video camera business generated plenty of attention because of its implications on multiple levels for the networking company and the IT industry. Here are a few of my perspectives on the meaning of this event and the lessons to be learned.

Cisco deserves credit for the boldness of its acquisition of Pure Digital, the maker of the Flip camera, in 2009 and its equally brave decision to walk away from the over $590 million investment (acquisition, development and marketing costs) in a two year span. It had hoped to use the Flip camera and other home entertainment products as catalysts for additional consumer demand for its network connectivity capabilities and its service providers’ transmission services. Although Cisco didn’t sell as many Flip cameras as it hoped, it certainly can be credited to contributing the rise in video transmission volume during the past two years and growing expectations for more video services going forward.

Few could anticipate that the popularity of simple and economical video camcorders would quickly be give way to a new generation of smartphones with built-in video recording capabilities in such a short time after Cisco’s Pure Digital acquisition. In the same way digital cameras were made nearly obsolete by embedded cameras within smartphones, the video camcorder is becoming a thing of the past as a result of a similar bundling process. It is truly amazing to consider how many formerly standalone functions of a decade ago are now merely assumed features of today’s cellphones.

The power of the smartphone has grown so strong that Cisco didn’t even publicly offer its scuttled Flip camera unit to a potential buyer. In hindsight, Cisco may have been better off buying a smartphone developer, like Motorola, rather than a videocam manufacturer to better compete in today’s increasingly competitive market.

Cisco made this move because it recognized that it had to refocus on its core networking business to fend off escalating challenges from Juniper Networks and a wave of new, offshore clone manufacturers who are threatening to commoditize its market.

But, Cisco’s mistake shouldn’t dissuade it, or others, from continuing to bridge the gap between the consumer and corporate worlds. The consumerization of IT continues to reshape the tech industry as ‘prosumers’ become more of the norm and the enpowered end-user weilds greater influence over IT corporate decision-maker. As more corporations encourage their end-users to work from home or the road, these end-users are making their own decisions about the network, storage and other IT gear, as well as the service providers, that will best support their needs.

Cisco succeeded in bridging the gap between enterprise and service provider (SP) markets in the 1990s when others like 3com and Lucent abandoned this dual market strategy. By selling to both, Cisco has persuaded xSPs that it was an essential supplier to their customers. The same value proposition holds in the consumer market which is increasingly an extension of the corporate world.

But, Cisco also recognized that it was at risk of attacking too many markets and allowing its core business to be undercut. Over 25 years ago, Novell’s demise made a series of acquisitions, including WordPerfect and Borland, to spread into new markets only to have its core business attacked by Microsoft, which led to its eventual demise.

Cisco’s failure to capitalize on the Flip camera is the most obvious example of the company’s recent acquisitions falling short of expectations. Cisco has also failed to leverage its WebEx acquisition to accelerate the adoption of its videoconferencing solutions and collaboration software. Now, WebEx is being threatened by a myriad of cheaper and easier to deploy web conferencing services.

Cisco hopes to refocus its resources on selling its Unified Computing products which promise to transform the way data centers operate to meet the growing demand for Cloud Computing services. But, Cisco’s push in this direction has only helped to galvanize HP’s efforts to strengthen its own server and system sales. Ironically, despite its own leadership problems HP continues to benefit from its growing presence in the consumer market. Meanwhile, not only is Cisco trying to determine how to gain a foothold in this market, but IBM is probably lamenting its decision to relinguish its PC business which removed it from the consumer market as well.

So, Cisco’s move doesn’t mean that there isn’t a synergy to be found between the consumer and corporate worlds. It just means that you need to focus on the right set of products and services to exploit.

The recent flurry of major vendor announcements regarding their new Cloud Computing initiatives, latest acquisitions and offerings clearly shows that the “Cloud Rush” is in high gear.

Here’s a quick list of the announcements which have caught my attention over the past few weeks in chronological order since HP unveiled its Cloud ‘vision’ last month, and my views regarding their significance,

• Cisco Announces Intent to Acquire newScale, 03/29/11  – Cisco Systems has been pushing into the ‘new data center’ environment for a while with its Unified Computing solutions. It acquired newScale to improve its provisioning capabilities to make it a more viable Cloud vendor for enterprise customers and service provider partners.
• Salesforce.com to Acquire Radian6, 03/30/11  - Now that Salesforce.com has succeeded in popularizing its Chatter social networking capabilities, it wants to give its customers the necessary tools to monitor, manage and measure the effectiveness of these new features.
• Intuit, Salesforce.com Announce Strategic Alliance, 04/01/11  -  Despite its investment in FinancialForce.com and support of numerous integration tools vendors that link salesforce.com’s CRM solution with QuickBooks, salesforce.com is seeking to strengthen its position in the SMB/SME market by building a closer working relationship with Intuit which is also working with Microsoft. Intuit is also trying to reinforce its position within the SaaS/Cloud ecosystem.
• SugarCRM Acquires iExtensions, the Market-Leading CRM for Lotus Notes, 04/05/11  – SugarCRM’s growth is further proof of the growing acceptance of Open Source solutions in the market. Its acquisition of iExtensions strengthens its ties with Lotus Notes which is a pivotal part of IBM’s SaaS/Cloud efforts. And, its growing relationship with IBM illustrates how SugarCRM hopes will gain an even greater foothold in mainstream businesses. Don’t be surprised if this alliance evolves into an acquisition in the months to come.
• SITA Launches Dedicated Air Transport Industry (ATI) Cloud, 04/06/11  – I’ve been saying for the past year that the SaaS/Cloud market is entering a third stage in its evolution, moving from broadly focused horizontal business and IT management apps to a new generation of industry-specific SaaS/Cloud solutions. This new stage is a clear indication that the SaaS/Cloud movement is gaining acceptance across nearly every industry and is now viewed as an important mechanism for reengineering the fundamental business processes within various sectors. SITA has been supporting the operating needs of the airline industry since 1949, and is among the latest industry-specific providers to launch a strategic initiative aimed at Cloud Computing.
• IBM Joins Forces With Over 45 Organizations to Launch Cloud Standards Customer Council for Open Cloud Computing, 04/07/11  - IBM has been aggressively pursuing Cloud opportunities since the concept first gained attention. It made an initial effort to spearhead the Cloud standards process which caused a lot of controversy because many people were suscipious of IBM’s motives at the time. Today’s announcement will generate a more positive response because it is supported by an impressive cross-section of enterprise organizations and Cloud vendors. It also recognizes and endorses the existing Cloud inititives of various standards bodies, the most recent of which was announced by the IEEE on Monday. IBM also rolled out another wave of Cloud products and services today that further expands its portfolio of hardware, software and service offerings, and puts additional pressure on its competitors.
• Dell Invests $1 Billion in Technology Solutions and Services to Help Customers Drive Business Results Today and in the Future, 04/07/11  – Dell is not about to let IBM, HP or Oracle outpace its own Cloud initiatives. The company tried to demonstrate today the magnitude of its efforts to develop and deliver Cloud solutions and services aimed at enterprises and end-users. Dell can tell a good Cloud story because of its long history of delivering automated systems and offering Ecommerce services. It has also done a surprisingly good job leveraging its Perot Systems professional services and systems integration services to create vertical market solutions. Click here to read my initial vision of Dell’s Cloud capabilities two years ago.

These announcements and initiatives illustrate the significance of the Cloud Computing phenomenon. They also show the scalability of the market opportunities, extending from SMBs/SMEs to major industries. And, they demonstrate how the Cloud is fundamentally changing the competitive landscape and customer expectations.

HP’s new CEO, Leo Apotheker unveiled the company’s latest corporate strategy yesterday with plenty of fanfare, but little flourish.

The theme of his talk and HP’s new mantra is providing “connectivity” to the Cloud to move “Everyone On”.

While the picture he painted of this new world order and HP’s strategic response covered all the bases, there are still plenty of pieces which must come together in order to make it a reality.

Apotheker’s ‘vision’ was certainly well-conceived and his presentation was well-scripted. No one can argue with his view that,

“We see clearly a world in which the impact of cloud and connectivity is changing not only the user experience, but how individuals, small businesses and enterprises will consume, deploy and leverage information technology.”

I would also agree that ”HP is well positioned to be the trusted leader in addressing this opportunity.”  But, it faces plenty of problems capitalizing on this opportunity.

Apotheker’s four-point strategy to capture this opportunity includes:

1. “Extending its leadership in managing and optimizing today’s traditional environments;”
2. “Leveraging HP’s core strength in cloud to build and manage next-generation cloud-based architectures;”
3. “Being the trusted partner to customers by enabling the seamless transition to hybrid computing models; and”
4. “Defining and delivering the connected world from the consumer to the enterprise.”

That just about covers every angle of today’s rapidly evolving marketplace. And, HP has been inching in this direction for a while. It is not only the largest IT vendor, but also boasts a very loyal consumer, SMB, enterprise and channel following.

But, HP is also burdened with legacy products, both hardware and software, as well as cumbersome business processes. Many of its systems are too expensive. Nearly all of its software is too complex. And, too many of its business processes are too disjointed. So, attacking all of these market opportunities simultaneously in an cost-effective and profitable fashion isn’t going to be easy.

The good news is that Apotheker and HP recognize these issues and are promising to address them. Even more promising is Apotheker’s statement that they are not going to acquire more legacy systems and software to solve their problems. This will hopefully put to rest the persistent rumors that HP will acquire SAP.

Instead, HP needs to build and acquire new functional capabilities which will quickly automate its systems and SaaSify its software and services.

HP must carefully traverse the three segments of the Cloud Computing world — Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS) and Infrastructure-as-a-Service (IaaS).

While Apotheker suggested that HP must play in all three areas, I would suggest that it concentrate on SaaS and IaaS, and limit its PaaS efforts to inviting third-party developers to add onto its OpenView IT management suite via application program interfaces (APIs) which can enhance and accelerate the evolution of OpenView. I call this the “tugboat” strategy.

In order for HP to outduel IBM, I believe it must capitalize on its consumer market presence; focus on its IT management capabilities, and keep its corporate infighting to a minimum.

IBM gave away its PC business and has no handheld device or consumer market presence. It has put its software emphasis on cloud enablement rather than cloud management. Middleware is important, but so is controlling the chaos created by the Cloud. And, IBM continues to contend with political battles between its hardware, software and services divisions which not only retard its responsiveness to rapid market changes, but also compounds its costs as each group seeks to maximize its revenue streams.

HP is certainly suscepitable to the same organizational issues, but can counteract them by exploiting its channel relationships and consumer orientation.

While Dell can match HP on the consumer front, it is still playing catch-up at the enterprise level with its Perot Systems services and automated systems. And, it hasn’t been able to overcome its historic channel issues.

When Lou Gerstner took over IBM as it was coming apart at the seams and many called for its divestiture, he proclaimed that the company’s competitive advantage was its broadbased portfolio of hardware, software and services, and asserted it didn’t need a vision it needed to execute.

Apotheker also sees the benefit of a multidisciplinary corporate portfolio, but believes that it needs to be guided by a new vision to fuel its continued growth.

Converting a vision into execution doesn’t happen overnight. In fact, it will probably never be entirely fulfilled. Instead, HP will be measured by how quickly it can demonstrate it is making tangible progress in its efforts.

[Disclosure:HP, IBM, and Dell have all been THINKstrategies clients.}

Dell’s acquisition of Boomi today is the latest example of the tech industry’s herd mentality.

In the same way that Dell followed HP’s example when it purchased Perot Systems after HP acquired EDS, Dell is now copying IBM’s acquisition of Cast Iron Systems with its own move into the integration business.

Besides trying to keep up with other ’systems’ vendors, Dell is also attempting to fortify its Cloud Computing capabilities which hinge on helping potential customers cost-effectively migrate and integrate data from various legacy applications and databases into a new set of cloud services.

Dell indicated at an analyst briefing in Boston last week that it wants to ‘move up the stack’ and build a platform which can help enterprises and independent software vendors (ISVs) develop and deliver applications. Dell can’t compete with the other major Platform-as-a-Service (PaaS) vendors — including Salesforce.com, Google and Microsoft — from a software development standpoint. But, it can challenge them and others, such as Amazon and IBM, from an Infrastructure-as-a-Service (IaaS) point of view.

Why Boomi?

Because it is small enough for Dell to digest easily to test the integration market opportunities and requirements. It is still assimilating Perot Systems into its operations and corporate culture, and may not have been ready to acquire a bigger player, like Informatica or Pervasive.

Why is Boomi selling at this time?

My sense is they were at risk of becoming a victim of their own success and their rapid growth was creating operational strains which would take significant new investment to offset. Rather than make this investment, Boomi’s investors and management team felt that the Dell deal would not only give them a solid ‘exit’ but also the corporate resources necessary to ‘cross the chasm’.

It will be interesting to see if Dell is able to do a better job assimilating and growing Boomi’s business than it has with some of its previous Software-as-a-Service (SaaS) acquisitions — Everdream, SilverBack Technologies and MessageOne.

By coincidence, I heard about today’s news while attending Pervasive Software’s IntegratioNEXTconference, down the road from Dell in Austin, TX. You can bet there were a lot of smiling faces among the Pervasive staff who expect Dell’s move to trigger additional integration vendor acquisitions. I’m sure Pervasive’s counterparts at Informatica, which is also hosting a partner conference this week, were equally excited about Dell’s move.

While speculation about a Boomi acquisition has been rising since the Cast Iron Systems purchase by IBM, Dell was not high on the list of potential suitors suggested by various industry observers, including myself. Instead, the clearer candidates seemed to be HP, SAP, Oracle, EMC or even Microsoft.

All these companies continue to be likely acquirers for the handful of remaining integration vendors, including Hubspan and SnapLogic, in addition to Pervasive and Informatica. Not to be overlooked as potential buyers are also Google and Cisco Systems.

When Oracle announced its intention to acquire Sun Microsystems in April 2009, CEO Larry Ellison proclaimed the acquisition, “transforms the IT industry, combining best-in-class enterprise software and mission-critical computing systems.”

Although he was not ready to use the term at the time, it didn’t take long for Oracle to refer to its combined capabilities as a Cloud Computing solution set, which it recently put on full display at its annual OpenWorld conference.

The event was also a coming out party for its new President, Mark Hurd, the high flying former HP CEO who departed in disgrace only a month earlier. Hurd’s appointment wasn’t hard to understand given his hardware experience at HP and NCR, and now gives Oracle’s move into the system business even more significance.

HP has retaliated by announcing the appointment of Leo Apotheker as its new CEO, along with Ray Lane as its non-executive chairman of the board. Apotheker comes to HP with extensive experience in the software industry, suggesting that the company is ready to counter Oracle’s move by escalating its own efforts in the enterprise software business.

But, Apotheker comes to HP with far less success as a software executive than Hurd achieved in his comparable time in the hardware business. Apotheker resigned as CEO of SAP AG in February after the company had fallen into a deep malaise of slow sales coupled with low customer satisfaction and employee morale.

Despite his dismal record, HP has swapped a successful hardware executive for an unsuccessful software executive.

Like nearly every other industry watcher, my friends at Triple-Tree and I didn’t see this coming when we generated our own list of potential candidates, although we were half-right in suggesting Ray Lane would be a good candidate for the top job at HP, but we didn’t necessarily mean the board chairmanship role.

Apotheker’s appointment is not only aimed at attacking Oracle’s rising threat on the systems side, but is also intended to fend off IBM’s continued push into the software business as well. Big Blue has been on a software buying spree and has done more than HP to position itself in the cloud. CA Technologies has also been acquiring an assortment of young software companies squarely focused on the cloud computing phenomenon. HP also has to reexamine its relationships with Cisco Systems and Microsoft because of their moves into the server and services businesses as well.

HP has also been engaged in an escalating battle with Dell, most recently in its fight-to-the-finish bidding war for 3PAR while it was CEO-less. In addition to competing in the server market, both companies have also deepened their services capabilities by acquiring EDS and Perot Systems respectively. I’ve questioned these moves because they are focused on the old world of IT outsourcing rather than the new world of cloud computing.

But, Apotheker’s appointment also raises serious questions about why senior executives within HP continue to be passed over for the CEO job as outsiders seem to come and go. My guess is that some of these executives will be jumping ship shortly, leaving Apotheker with the additional challenge/opportunity of building a new leadership team.

So, can Apotheker transform HP into a software-driven company? More specifically, can he transform HP’s current software business into a competitive player in the Software-as-a-Service (SaaS) market? And, can he combine HP’s software, hardware and service capabilities to create a viable cloud computing portfolio which can compete on an even broader battlefield?

If the past is any indication, the odds are against him. However, anyone who is familiar with the controversy which surrounded Bill Belichick’s hiring as the New England Patriots’ head coach in 2000 knows that he arrived with plenty of skeptics because he had failed dismally in his only other head coaching experience. Yet, he proved the skeptics wrong by leading the Patriots to three Super Bowl titles in his first five years and has continued to be a contender for the better part of the past five years as well.

Maybe Apotheker can pull off a similar surprise at HP. But, he’ll be facing far greater challenges and failure could have far greater consequences.

Some are already suggesting that one of Apotheker’s first moves should be to acquire SAP, which boasts an attractive installed base of customers who currently rely heavily on IBM systems to power SAP’s enterprise applications. Acquiring SAP would enable HP to square off against Oracle and dislodge IBM from many of these accounts. But, it could also burden HP with an aging set of on-premise applications and the same set of disgruntled customers who were happy to see Apotheker leave SAP before. (I’d be more comfortable seeing HP acquire Symantec, which would fill its security and storage management void, and would fit better into HP’s product portfolio, channel strategy and corporate culture.)

Companies often make bold moves to serve as a catalyst for change. This is certainly the intent of Apotheker’s hiring. However, HP’s board better be sure they found the right guy before they compound their past mistakes by trying to become an enterprise application vendor as well. It wasn’t too long ago that Carly Fiorina was in the midst of a series of highly publicized internal battles trying to prove the logic of her proposed acquisitons of Compaq and PwC.

The Compaq acquisition, in addition to EDS, has made HP the biggest company in the tech sector. But, they haven’t made it a leader in the rapidly evolving Cloud Computing market which is transforming the tech industry.

Apotheker refused to comment about Oracle’s strategies in response to a question during his introductory press conference, but acknowledged that the technology industry is in the midst of a very disruptive transition period as demand for cloud computing services explodes. His ultimate challenge will be transforming HP into a company which can capitalize on this extraordinary opportunity.