WSO2: The 8th Largest OSS Company – 2017 Results and 2018 Plan

I joined WSO2 because of Open Source Software (OSS)’ potential.

Open source enables a transparent innovation and business model. Intellectual property published with an open source license can be consumed with freedoms not available with commercial licenses. Customers buy WSO2 subscriptions with clarity that our business goal is their successful deployment of open source to address their digital challenges.

Can IBM or Oracle say the same?

We align WSO2’s interests with customers by IP transparency through open source and the Apache-way.

In public markets, a company discloses business and financial information regularly to the public with disclosures to protect investor, facilitate capital formation, and to maintain fair, orderly and efficient markets. Additionally, our customers, by purchasing our subscriptions, are making a dependency upon us. Their awareness and confidence in our business and financial health is necessary to establish an equitable engagement.

To further the alignment we have with customers, WSO2 will now annually report key business and financial results.

We are pleased to share that WSO2 is financially sound.

WSO2 is comprised of two businesses: OSS subscriptions and professional services. Subscriptions are renewable and we use SaaS metrics for tracking KPIs in pro forma financials. The ARR and customer metrics reflect our subscription business and our EBITDA is for the company.

In 2017, we will exit our Annualized Recurring Revenue (ARR) between $24.5 – $25.5M, a growth of 52%, up from 46% growth the previous year. Our gross margin for the recurring business is 88% and will increase in coming years. In 2017, we will turn our first profit with $603K EBITDA and generate $2.7M cash from operations.

We acquired 150 new customers in 2017 and more than 80 new subscription customers. Our new customers start with professional services during their technology evaluation and either continue consuming WSO2 open source or transition to a WSO2 subscription for access to patches, security updates and incident support.

We use dollar-based net retention rate to measure our ability to retain customers and expand their use of our subscriptions. Historically, customers have expanded their use of our IP and subscriptions over time as they realize the benefits of speed and innovation that come with engaging WSO2.

To support growth, we began significantly hiring in support, sales and marketing in Q3 finishing the year with a 482 headcount.

2017, by all accounts, is a successful year for WSO2.

We attribute the results to:

  1. The passion and commitment of the employees and partners that put customer needs ahead of their own. We track our NPS at 25. We are striving for a 50 NPS, which is rare for enterprise software given the spectrum of customer needs.
  2. Product and intellectual property expansion to service cloud-native architectures, which are, along with microservices, dominating customers’ future deployment expectations. This advanced architecture lets us process 5 trillion transactions, 40 million identities, and 200,000 APIs across our customers. We estimate that 25% of our customers are cloud deployments across our public cloud or within megaclouds.
  3. The continued rotation within IT from proprietary to open source software. We have seen a dramatic rise in the number of organizations which have open source mandates, especially in emerging market territories, public sector, and system integrators.
  4. Maturity and continuity of operations. We have 69 employees with >5 years service and 23 with >10 years. More than 2/3 of employees with us five years ago are with us today. Our employee mix is 33:67 for female:male creating a vibrant culture of diversity. Also, other than myself, the WSO2 management team has not changed since 2013. This has allowed a long-term open source vision to nurture in equal measures across the company.

WSO2 is the 8th largest OSS company and largest integration OSS company. An OSS company derives more than 50% of its revenues from OSS support subscriptions. The top OSS companies are:

  1. RedHat
  2. Pivotal
  3. Mozilla
  4. Canonical
  5. Hortonworks
  6. Suse
  7. MongoDB
  8. WSO2

Acquia, MuleSoft, Cloudera, Alfresco, Actian, Sophos, Forgerock, and Datastax were not included due to their open core model and dependency upon proprietary licensing.

We expect the coming year to continue playing to our strengths. Trends tied to growth in programmable endpoints across devices, identities, apps, APIs, and data will increase. Integration is now central to digitization. Every program is an integration and every developer an integration specialist. This compounds the challenges to creating and governing integration endpoints that is the emphasis of our business.

Our 2018 operating plans include:

  1. Continue investing into Ballerina, and relaunch it with a developer GTM that focuses on solving integration problems for the next 20 years.
  2. Expand sales and marketing by opening offices in new territories, establish our first resellers and distributors, and growing our sales, marketing and channel organizations.
  3. Continue our investment in cloud-native architectures with the generational release of API Manager 3 and Enterprise Integrator 7 along with investing into cloud infrastructure installers.
  4. Invest into broadening the value of our subscriptions: launching a Technical Account Manager program, expanding our Long Term Support policies, bundling cloud-native operations tools within our subscriptions, broadening the scope of our managed cloud services, expand test grid coverage to incorporate ecosystem technologies, and exploring the inclusion of a security scanning service.
  5. Launch research initiatives into open source blockchain, AI, machine learning, and General Data Protection Regulation.
  6. Formalize the CTO office. Our co-founder, Paul Fremantle, will return full time as our CTO January 1st after completing his PhD in Computer Science. The CTO office will receive investment to formalize the production of our Corporate Reference Architecture, Corporate Reference Methodology, Global Technology Outlook, and Global Market Outlook.
  7. More than doubling our investments into marketing, enablement, and market education programs.
  8. Renewed focus on open source governance to better engage the community and their involvement in the evolution of our projects.
  9. Expanding our sales territories from 4 to 9 and separating our OEM ISV business.

We expect our ARR growth rate, EBITDA, and cash generation to increase in 2018. We’ll exit the year with approximately 560 employees.

All this means we can – and will – create a lot more open source that helps IT digitize assets.

We will be working to turn WSO2 into an IT-household brand, bringing our form of integration into every application and service you are building. If you are new to WSO2 or open source, 2018 will be a great year for you to learn more about how we can help you solve your digitization challenges. Get in touch with me directly: tyler@wso2.com.

Since this blog post includes future operating plans, predictions, estimates, and forecasts, this is a good time to point out that we have lawyers, and that our lawyers want you to know that this information represents our current judgment on what the future holds and it is subject to risks, uncertainties, and other nightmares. In other words, don’t be crazy by drawing conclusions that have undue reliance on this blog post and understand that we may revise anything.

Why Swiss Chocolate Relies on WSO2

The Swiss Federal Office of Information Technology, Systems and Telecommunication (FOITT) is one of the internal ICT service providers in the Federal Administration. It supports the administration by developing and providing efficient, secure, and user and public-friendly IT solutions. As part of its responsibilities, FOITT manages more than 40,000 enterprise users of two of their key platforms – one an electronic customs declaration process for imports/exports and the other, an automated way to manage revenue from taxes.

While these platforms have proved successful, FOITT embarked on a digital transformation initiative to make these more efficient. What they had hoped to achieve was the ability to scale to provide a more seamless experience to users.

At WSO2Con US 2017 Dr. Gion Sialm, chief architect at FOITT, explored how they leveraged WSO2 technology to achieve their objectives. They worked together with Yenlo, a WSO2 Premier Certified Partner, to implement their solution. To illustrate how the two platforms work, Gion took the example of Swiss chocolate – the process of importing cocoa to make chocolate and the distribution of the end product within and outside Switzerland.

The e-Dec (Electronic Declaration) Platform

All goods, and in this instance the import of cocoa and export of chocolate, need to be declared and there’s a specific process that needs to be followed. Given that it’s a fairly complex process involving many functions and stakeholders, FOITT created the e-Dec platform to simplify this process. What it essentially did was digitize this process and made it more efficient and user-friendly. As with any digital platform, the e-Dec platform too needed to be refreshed and revamped to be more aligned with new requirements.

For instance, the platform had a lot of different protocols and some were extremely outdated like POP3S and FTPS. Apart from this challenge, the application was based on the Oracle WebLogic Server, which follows the eXtended Architecture (XA) pattern. “Previously, WSO2 products didn’t support XA, but because of FOITT’s requirement, it’s now a part of their feature list,” noted Gion.

The Fiscal-IT Platform

On the retail side, all goods, like chocolate, sold within Switzerland carries a value-added tax (VAT). Previously, these transactions were done manually so FOITT built the Fiscal-IT platform that automated this process. Again, like the e-Dec platform, this too required improvements to further streamline this process.

For instance, the platform was created in a modular manner so as to have the best of breed technology for each feature resulting in a mix of multiple different technologies, like FileNet, Java and SAP, which all needed to be integrated. “Because we decided to employ microservices, we ended up with a lot of REST and SOAP APIs as well as JMS so we needed an enterprise service bus that was flexible enough to maintain these things easily,” said Gion.

The WSO2 Solution

They followed the same architecture for both platforms so as to reduce cost and speed up their go-to-market. The API Gateway, Publisher and Store components of the WSO2 API Manager as well as the WSO2 Identity Server as the Key Manager were used as their core API management solution. WSO2 integration technology was used for routing and message transformation between the sender’s and receiver’s different protocols. WSO2 analytics (not pictured in the architecture diagram above) also plays an important role in the solution — FOITT, together with their service providers, developed a dashboard using WSO2 Data Analytics Server to identify any problems that occur in the application. The user just has to type in the source and destination program and within a few seconds the metadata of all the messages is collected (message tracing) so that errors can be easily identified. The dashboard can even correlate the messages with the log files, which is a very important feature in a distributed landscape like this.

“WSO2 products relate to digital transformation like the Swiss army knife relates to MacGyver. Our platforms are evolving rapidly. In order to keep pace with this innovation it’s important to have a strong relationship and collaborate well with WSO2,” says Gion. “Automation is also key. We have to manage 11 stages throughout our platforms and doing it manually would be quite impossible,” he adds.

To learn more about how FOITT is leveraging WSO2 technology for key government initiatives, watch Gion’s presentation at WSO2Con US 2017:

ING Model Bank: Customer-Centric Integration to Remain Competitive

How does banking middleware evolve with the times to offer new services to customers and stay competitive globally? ING Model Bank underwent this transformation by using WSO2’s integration platform to perform key functions, as it sought to ensure information integrity and security, high performance, and superior customer experiences.

Traditionally, banks have big hosts given the complexity of systems and the number of processes that need to be supported. Yet to adapt to customers’ evolving needs (and new services), such systems have to change. Transforming banking middleware stacks begin with identifying three main problems and altering approaches used to tackle them:

  • Oversimplification – avoid oversimplification. Be ready to manage an “in motion” architecture and learn to design for changes (lowering costs in the process as well).
  • Big migration – apart from consuming resources, big migrations freeze an organization’s capacity to respond to customer needs. Learn to design for micro-changes instead.
  • Separating customer needs from technology – customer needs evolve, and technology must support this and processes must be linked accordingly.

A common solution to the above is to use the Bus pattern, which is a mix of the Canonical Data Model and Common Command Set, with a common communication mechanism. Implementing a Bus pattern can be done using either a broker or broker-less approach. While both these approaches have their advantages, they also have several drawbacks such as adding delays and complexity to the deployment. In such a context, Miguel Garcia, an enterprise architect at ING Model Bank, advocates using a hybrid model: “It’s by far the simpler approach.” The hybrid model has the best of both broker and broker-less approaches, and can be deployed in common scenarios faced worldwide. ING uses WSO2 integration technology (WSO2 Enterprise Service Bus and WSO2 Message Broker), by creating one common BUS created on REST and EVENT APIs managing interactions between all applications (or components).

“We use WSO2 as a broker because we really like the simplicity,” says Miguel. By using WSO2 ESB, ING is able to deploy APIs automatically from their development lifecycle using Swagger definitions with zero down-time. Integration is also accelerated by the ESB’s ability to provide API prototyping using scripting. Having successfully transformed using WSO2’s integration capabilities, Miguel also shares some best practices for undertaking similar projects:

  • In-depth knowledge of the product (such as how it manages interactions in complex scenarios) is essential for deriving the best possible benefits from the product.
  • Use the latest version of the product.
  • Use a clear templating system for traceability, monitoring and logging.
  • Clear definition of the common message and its properties to manage messages.

To find out more about these best practices, watch Miguel’s presentation:

Explore WSO2’s integration platform and how your enterprise can derive benefits from it.

A Big Hello to John Saylor, Our New General Manager – Global Channel Sales

We’re delighted to welcome John Saylor to our team as the General Manager – Global Channel Sales. John will take ownership of our partner strategy, as we look ahead to developing a closer alignment with our partner ecosystem and delivering great digital transformation experiences for customers. He’s a passionate advocate of partnering to deliver success for organizations: “More feet on the street provides a market presence and momentum that propels companies forward in the industries as an industry leader that creates market drag for each partner’s solutions – everyone wins,” says John. In building a partner network, John plans to amplify the velocity of partner onboarding of WSO2 solutions, keeping the WSO2 brand intact with a new logo “Powered by WSO2” in solutions that utilize the WSO2 embedded technology.

John comes from a very impressive, diverse, and interesting professional background spanning 36 years. This includes 23 years at Quest Software (acquired by Dell), 11 years at Hewlett-Packard, and 2 years at Western Digital. He later used his expertise to start his own company, working with several technology companies to develop their businesses.

And what does John find compelling about WSO2? Its impressive growth and of course, the people! He’s full of enthusiasm for WSO2: “My attraction was WSO2’s acceleration in the marketplace that’s helping customers adopt a 24/7 cost-effective digital transformation with APIs, events and streams, while also working with software vendors to embed technology quickly, addressing security, governance and identity as well as Open Banking. The brilliant people at WSO2 is one of the biggest assets!”

John’s other big passions include his family, the ocean, travel, live music and sporting events, car shows, and charity events. In fact, if you find yourself in Laguna Beach in California where John’s based, he’d love to show you the surfing, sunsets, music venues, and arts events in the city.

It’s great to have you in the team John!

You can reach out to John on LinkedIn and follow him on Twitter @JSaylorIII

Travis Perkins: Disrupting the Retail Industry with WSO2 Integration Technology

Travis Perkins, UK’s largest supplier of building materials, embarked on their digital transformation journey last year in the hopes of enhancing customer experiences, growing their business and improving the usability of their systems. At WSO2Con EU 2017, Christopher Stone, the head of integration at Travis Perkins, talked about the steps they took to go digital with the help of WSO2 technology and key partners.

To help understand Travis Perkins’ current situation, Christopher used an analogy coined by their previous CIO Neil Pearce – the house of IT.

By looking at all the areas of the house that need improvement, Travis Perkins realized that they needed to adopt integration technologies that would allow their systems to be flexible, future-proof, innovative, and reactive. “Integration is the plumbing, electrical wiring, and foundation — basically the rooms of the house,” said Christopher. “Effective integration and quality data are the key enablers for our digital agenda that is built on a solid foundation such as reliable cloud infrastructure and networking.”

Once Christopher explained this analogy, he explored how they previously worked on integration projects. He would most likely be a part of a program delivery team who is pressured to deliver fast and within a strict budget. This hinders their vision of the overall enterprise benefits and results in a point-to-point spaghetti architecture that leads to high maintenance costs, difficult to support, inconsistent standards, reliability issues, and limited reusability.

Today, Travis Perkins has a central integration layer powered by WSO2 integration and API management products. Services are developed according to project requirements, but built with the entire enterprise in mind using a set of policies, patterns, and standards governed by the project diagnostic team. This results in maximum reusability, easier support and maintenance, and continuous improvement in delivery, quality, and speed. The replacement of their core ERP system from a legacy system to an ERP vendor named M3, for sales order entry, sales order management, pricing, tool hire, finance, and supply chain is the largest program Christopher’s team is currently delivering on. But they have been involved in various other integration projects too. “The right tools combined with the correct mindset, architecture, and governance allows you to meet your goals in achieving good enterprise integration which benefits your company as a whole,” he says.

Many external parties helped Travis Perkins along their journey. In their early days, Wheeve, integration technology experts partnered with WSO2, gave them a theoretical and conceptual mindset on how an integration department should run. They helped set up the department and build up the team and aided them with their architecture and processes. During the delivery phase, Travis Perkins’ engineers and analysts were supplemented by ICT solutions providers partnered with WSO2 — Chakray and Mitra Innovation. They offered integration specialists well-versed in the WSO2 platform who helped analyze the requirements and worked in an Agile Scrum fashion to deliver the projects. “They have helped us come leaps and bounds, not only in delivering projects but also in terms of learning from their experience and knowledge of the WSO2 platform,” said Christopher.

“WSO2 is a great platform. It enables us to deliver quickly and compliments our strategy to utilize open source technology wherever possible,” Christopher concluded. “When any of our engineers come across difficulties in development, the WSO2 Subscription gives us great SLA’s. We don’t need to use production maintenance support very often, but when it does happen we have a very good relationship with WSO2 for them to support us in getting back to business as usual.”

To learn more about how Travis Perkins is successfully traversing its digital transformation path, watch Christopher’s video at WSO2Con EU 2017 below.

10 11 12 – WSO2 Identity Server Keeping the Bad Guys Away Since 2007!

WSO2 Identity Server turns 10 today on the 11th day of the 12th month of this year! Over the years the team has grown, research and development efforts have evolved, we’ve procured some big-name customers and various team members have gone on to publish stellar books on identity and access management.

To commemorate this day we thought we’d pick a few cool things (from a long list) about WSO2 Identity Server:

  • WSO2 Identity Server manages more than 40 million identities across the world.
  • Fully open source, WSO2 Identity Server has thousands of FREE users.
  • Mobile Connect support from WSO2 Identity Server is available for more than 900 million users in India.
  • Our first customer, ELM, manages over 4 million user identities and we’re still a part of their digital journey.
  • (Let the name dropping begin) Some of our other customers include Verifone, West Corporation, Verizon, HP, Seagate, Nutanix, T-Systems, and many in the educational industry such as Brigham Young University, New York University and Australian Catholic University.
  • We offer over 40 connectors in our connector store so that you can integrate with any system and enhance your system capabilities.
  • Single sign-on (SSO) and identity federation are our forte. You can ask any of our customers! Here’s a link to the latest version of the WSO2 Identity Server.
  • We were the winner for “Identity as a service” in 2011 at the KuppingerCole European identity awards. We also helped one of our customers to bag an award at EIC 2015 for their Mobile Connect implementation.
  • Prabath Siriwardena, our director of security architectures, is not only a renowned figure in the IAM space, but also the author of Advanced API Security, Maven Essentials and more.
  • Concerned about GDPR or PSD2? Want to know how Customer IAM can help you with digital transformation? We have got your covered for 2018 and beyond!

Congratulations to our IAM team for their amazing feats over the years and special thanks to one of our starting members Ruchith, who has gone off to accomplish amazing things! You can read Prabath’s blog to get the full low down on how we started.

2017 Year in Review

We’ve had an exciting year here at WSO2. Here’s a look back at everything that’s happened in 2017.

The year kicked off with a few major announcements at WSO2Con USA including the launch of Ballerina – a brand new programming language created specifically for integration,  and the repackaging of our integration products along with a whole new look of the web site.

With the advent of the second Payment Services Directive (PSD2), WSO2 ventured into the open banking market with a powerful WSO2 Open Banking solution. Since its launch, we’ve attracted 3 of the top 10 EU banks among others, and has proven to be the first choice for many.

We also turned 12 this year and to commemorate we recognized the Humans of WSO2. Speaking of humans, we had some major changes to our leadership team with Tyler Jewell taking over as CEO after  Sanjiva Weerawarana, founder and chairman, stepped down to be chief architect to focus his efforts on the development of Ballerina. Paul Fremantle (WSO2’s co-founder who was on sabbatical to complete his Ph.D) returned this year as our CTO. 

2017 has been yet another successful year for WSO2 in terms of growing the business. We added a record number of new customers from various industry verticals who have partnered with us to fulfill their digital journeys.  We are excited and humbled by what these enterprises have accomplished in terms of becoming more digital native and offering new digital experiences. While providing cutting-edge technology to build digital platforms, WSO2 helped these enterprises to evolve business models, focus on customer experiences, and optimize operations.

Recognizing these customers and their achievements, Asanka Abeysinghe, WSO2’s vice president of solutions architecture will conduct a webinar titled ‘Another Year of Digital Transformation – Learning Through Reflection’ on Tuesday, December 19. He will share his experiences on a few digital transformation projects that WSO2 was involved in and successfully implemented this year. Sign up now to see how companies like you have realized their digital transformation needs with WSO2.

Here’s to a bigger and brighter 2018!