Anyone interested in the future of business software will want to read John Hagel’s post on the tensions between service-oriented architecture (SOA) and Web 2.0 and how those tensions might come to be resolved. Despite the fact that SOA and Web 2.0 share a common heritage and a common goal, the proponents of each have formed two distinct camps, with little love lost between them. As Hagel explains, SOA has become the realm of the conservative corporate IT department, while Web 2.0 is the territory of the hacker barbarians trying to storm the gates. The SOAers, says Hagel, focus on “connecting applications and databases,” while the Web 2.0ers “put a lot more emphasis on the opportunity to connect people together and to support their collaborative efforts.”

He continues:

Both sets of technologies share the same vision, but they are deeply skeptical of each other in terms of the approach used to accomplish this vision. Web 2.0 champions dismiss SOAs as much too rigid and slow moving in terms of building platforms for cumulative creation. Here’s the irony. SOAs initially generated significant interest within the enterprise because they appeared to offer a much more flexible and rapid way to build new application functionality relative to traditional enterprise application architectures.

What happened? SOAs were hijacked by an alliance of CIOs and IT consulting firms, each with their own reason for extending the effort required to deploy SOAs … The growing appeal of Web 2.0 technologies [to business managers] in part stems from this hijacking of SOAs.

Hagel suggests that it will likely be the Web 2.0 advocates, bypassing IT departments, that will push companies to take the next step toward simpler, more modular software:

What is required to break this SOA logjam? Two things. First, Web 2.0 technologists need to work on connecting directly with line executives of large enterprises without trying to go through the IT departments. Second, they should avoid the temptation to present grand visions of new architectures and concentrate instead on starting points where these technologies can deliver near-term business impact.

That makes sense – but only if you assume that Web 2.0 collaboration tools, like wikis and tagging, will actually pay off within businesses in a broad and substantial way. There are, as I wrote previously, reasons for caution here. If Web 2.0 technologies fail to fulfill the promises being made for them, they could end up slowing rather than accelerating the transition to the next generation of business software. My own sense is that it may be software-as-a-service (SaaS) providers, more than the Web 2.0 crowd, that will end up breaking the logjam, not only through their discrete application services but through integration platforms like Salesforce.com’s AppExchange. I hope Hagel in the future will offer his view about the role of SaaS in the evolution of the web-services model.

We live in interesting times, economywise. If you’re focused on the so-called “Web 2.0 bubble,” you’re looking through the wrong end of the telescope. The price of money is going up. The prices of oil and other commodities are going through the roof. The real estate bubble is still happily inflated. Stock markets around the world are shooting up, wildly so in developing countries. America’s debt-ridden economy is floating buoyantly on other people’s cash, particularly the scratch donated by our friends in OPEC and China, even as the value of the dollar falls. Consumer confidence just hit a four-year high.

Either the globalization of the economy has overthrown all the old verities, and replaced them with new verities we have yet to figure out, or else we’re living on borrowed time (and money). Which is it? I don’t know, but it seems wonderfully appropriate that the background noise on the soundtrack right now should consist of the voices of Andrew Fastow, Jeffrey Skilling and Ken Lay.

Want a good case of whiplash? First read Robert Scoble’s blog entry about curing Microsoft of its corporate “angst.” Then read John Dvorak’s new PC Magazine column about the company.

Scoble’s long post, built around a bizarro riff on Martin Luther King’s “I have a dream” speech, lays out a five-point plan for ” tun[ing] up Microsoft’s economic engine and get[ting] ready for the 2010’s.” One of his five recommendations is that the company should buy every employee a top-of-the-line Dell box with two or three screens (one of which could be used to play Second Life). The others are somewhat less silly.

Dvorak provides a terse, contrarian view. He says that Microsoft’s angst isn’t a symptom of a problem; it is the problem:

It must have some of the lowest corporate self-esteem for any dominant company in the history of modern business. The company is like the panicky old woman wondering how she lost a penny in her purse while giving exact change in the express line at the grocery store. Hey lady, you are holding things up!

Microsoft’s seemingly permanent state of fear about its impending doom, argues Dvorak, leads it to reflexively pursue defensive projects that end up backfiring. His main example: the seemingly successful launch of Internet Explorer in response to Mark Andreessen’s trash-talking about how Netscape was going to take over the world. By bundling the free browser with Windows, Dvorak says, Microsoft opened the door to endless legal hassles, security nightmares, and PR imbroglios: “If you were to put together a comprehensive profit-and-loss statement for IE, there would be a zero in the profits column and billions in the losses column – billions.”

His radical prescription for the company:

It needs to face the fact that this entire preoccupation with the browser business is bad for the company and bad for the user. Microsoft should pull the browser out of the OS and discontinue all IE development immediately. It should then bless the Mozilla.org folks with a cash endowment and take an investment stake in Opera, to influence the future direction of browser technology from the outside in. Then, Microsoft can worry about security issues that are OS-only in nature, rather than problems compounded by Internet Explorer.

Of this I can assure you. People will not stop buying Microsoft Windows if there is no built-in browser. Opera and/or Firefox can be bundled with the OS as a courtesy, and all the defaults can lead to Microsoft.com if need be.

I’m not completely convinced by Dvorak’s argument, but there’s definitely something to what he’s saying. His article forces you to think about Microsoft and its strategy in new ways. And, more broadly, it forces you to reconsider the truism that corporate paranoia is always a good thing. Too much paranoia can, it seems, be as dangerous as too little.

Tim O’Reilly writes about the Business Week cover story on the online game Second Life:

Beth Goza of Second Life excitedly showed me the magazine, turning to the table of contents and showing me the picture of her avatar: “That’s me!” she said. She sheepishly added that people who didn’t spend as much time in SL as she does might not understand, but to her, it is just as much her picture as a photograph of her first-life body. She’s totally right: and for some people, the aptly named “second life” (which could easily be a description of the whole class of virtual worlds rather than just a particular virtual place) is as important as their first life.

God, that’s so sad.

The best business model ever created has to be the float. You hold on to other people’s money for them, and you get to keep the interest. It’s a beautiful thing. One of my favorite business stories is the tale of how J.C. Fargo, the president of American Express, became so annoyed trying to get cash while on an 1890 trip through Europe that he went home and invented the travelers cheque. What he didn’t even realize is that the float on all those cheques would quickly become a huge money maker for his company. He must have felt like he had fallen into a big tub of cash.

I’ve been thinking about the great little float that Google’s got going with AdSense. AdSense is the program that allows publishers to run Google ads on their sites (like those ugly little boxes over there in the right column) and earn a cut of the ad revenues. It sounds totally win-win, but there’s a catch: Google doesn’t pay you until your AdSense balance goes over $100. That’s nothing for the relatively small number of big sites that make serious AdSense dough, but it’s actually a big hurdle for most AdSense members, who may only make a few cents or a few dollars a week. In a post earlier this month, blogger Scott Karp talked about the frustrations of the $100 rule:

Google AdSense has an onerous policy of only paying publishers when they earn more than $100. I have $22.60 stuck in my AdSense account, with little hope of getting it out any time in the foreseeable future. In fact, if I abandoned AdSense now, Google would get to keep that $22.60. (It’s clear to me now why Google has so much cash in its coffers — stealing from the little guy!)

Karp then went on to ask his readers to click on his AdSense ads in order to get his balance over $100, a move that seems to have landed him in hot water with Google’s enforcers.

I think Karp’s mistaken about not being able to get his $22.60 from Google. If you’re one of the five losers on earth who has actually bothered to read the AdSense fine print (yes, I’m one of them), you’ll know that if you formally terminate your AdSense membership, by sending an email to adsense-support@google.com, then Google will send you your balance in 90 days, as long as it’s more than ten bucks. (If it’s less than $10, you’re hosed. That turns into Larry and Sergey’s walking-around money, I guess.)

Google doesn’t seem to disclose how many sites are enrolled in AdSense, but it has to be a hell of a lot. Last year, Google took in about $2.7 billion through ads on other people’s sites, accounting for 44% of its ad revenues. Most of that money probably came through big sites, but a decent portion must have come from the little guys. When you add up all the under-$100 AdSense balances earned by the Scott Karps of the world, the total must be a pretty impressive number. That’s free working capital for Google, or it can invest the stash and make even more money. It’s a devilishly good idea.

But it gets even better. Once a little publisher gets a little balance in his account, he becomes more likely to stick with the AdSense program. After all, he doesn’t want to “lose” the money he’s already earned (and, like Karp, he probably doesn’t realize that he would be able to get it by terminating his account). He struggles on, earning a penny here and a penny there, waiting month after month for the $100 mark to arrive. He becomes another Google sharecropper, one of the thousands working the rocky soil of the AdSense plantation. And all the while Google gets to hold onto the poor sap’s meager earnings, using them for its own purposes. In many cases, I’m sure, the less-than-$100 balances never get collected, and Google gets to pocket them for good.

Better than any other company on earth, Google knows the power of very small amounts of money. Collect enough nickels and dimes and quarters and dollars, and you can make billions. The $100 AdSense hurdle may seem like a little thing, but it’s making Google some serious money. At the very least, I bet it pays for the cafeteria at the ‘Plex.

It was exactly one year ago today that I posted my first entry on Rough Type. Here are some official statistics:

Total number of entries: Lots

Total number of words: Don’t even want to know

Out-of-pocket costs (est.): $1,650

Revenues (est.): $225

Net loss (est.): $1,425

(Welcome to the wacky world of citizen media, where journalism is an avocation, like fox hunting used to be.)

Opportunity cost of author’s time: Less than he thinks

Number of comments and trackbacks: Thousands and thousands

Percentage of above represented by spam: At least 80%

Current Technorati rank: 689 (2,834 links from 1,085 sites)

Average daily page views at start of year: 0

Average daily page views now: 6,589

I believe that represents some kind of exponential rate of increase, which I’m pretty sure is a sign that the singularity is near, which I take as an indication that the time is right for a vacation.

Bye.

A fascinating discussion has broken out in the comments to my earlier post, A beautiful mindlessness. I recommend reading it, and adding to it, if you’re interested in the effect of the web on cognition and intelligence.

Elsewhere, there are some related posts of note. The Leading Wedge writes of:

[a] situation I have been aware of for several years now. I keep telling myself that it is time to sit down and to start coming up with my own judgements and thoughts, but I keep putting it off because I learn something new by reading the constant flows of others’ opinions and the “news” on the Internet.

Yes, distraction does seem to be the currency of the web, and it’s intoxicating.

Tim Bray, after dutifully dismissing the critics of the internet’s “atomized information,” gets around to being a critic himself:

It doesn’t bother me that much of the prose I read these days has an age measured in hours, or is evanescent electronic text, or is produced by principals rather than intermediaries. But here’s what I’m coming to think: in text, short form tends to drive out long form. Our novelty-seeking chimpanzee minds would rather chew through a bunch of tasty little morsels than a full balanced meal.

I find references to “chimpanzee minds” and “mammalian brains” and the like to be offensive, lazy and stupid, but I think Bray makes a very good point. The more we suck in information from the blogosphere or the web in general, the more we tune our minds to brief bursts of input. It becomes harder to muster the concentration required to read books or lengthy articles – or to follow the flow of dense or complex arguments in general. Haven’t you, dear blog reader, noticed that, too?

Loryn at growstate writes:

Technology may change our intellectual environment, but doesn’t govern our behavior. We choose how we adapt. We choose our objectives and data sources and whether we challenge our assumptions. We choose on what to focus. We can choose.

I would agree that technology doesn’t take away our individual free will, but I would strongly disagree that technology doesn’t heavily influence, and in many cases even govern, our collective behavior. Of course it does. And in providing the context in which we “choose our objectives and data sources and whether we challenge our assumptions,” it can, and I think does, influence how we think. Adaptation does not always involve conscious choice.

Finally, Bill de Hora, after praising my “calculated cynical faux-Ludditism,” says, “Watching Carr criticize, undermine and attempt to devalue IT technology, particulary web technology, while doing so using web technology is so wonderfully ironically dissonant.” What can I say? I cheerfully confess to being part of the problem.