WSO2: Our 2018 Results and 2019 Plan

10th straight year of subscription growth!

WSO2 had a stellar 2018 fiscal year. Continuing with the tradition began last year of financial transparency, I am pleased to share WSO2’s 2018 financial achievements and our 2019 plans.

WSO2 is starting our 14th year of operations. As our technology has become accepted as the best for open source integration, our business has started to grow at an increasing rate.

10th straight year of subscription growth; financial sound operations

WSO2 Subscriptions is our primary business. Customers purchase subscriptions to get support with an SLA, patches, security scanning, and developer query time. Subscriptions are purchased annually and are renewable. We use SaaS-style metrics and Annualized Recurring Revenue (ARR) as the benchmark for measuring the scale of our product sales.

In 2018, we exited with $37M in ARR, an expected growth of over 51% year-over-year. We added over 100 new subscription customers. We have more than 525 customers that have purchased a subscription or other professional services from us.

We now have customers in 65 different countries and in 2018, we crossed a milestone where more than 50% of our product sales originate outside North America. By the end of 2019, 65% of our business will reside outside North America making WSO2 a truly international-first business.

Financially, WSO2 is strong. We increased our balance sheet by $3.5M from operating cash flows while substantially increasing our staffing, opening new offices in Berlin, Mexico, and Australia, and continue long-term investments into next generation technologies like Ballerina.

WSO2 flirts around with GAAP profitability. We have profitable quarters, but don’t get there annually. Subscription businesses recognize revenue ratably over a 12 month period causing the revenue benefit from sales to appear delayed. This behavior is why we emphasize cash flow from operations as a better reflection of our business’ financial profitability.

Last year, WSO2 was the 8th largest pure open source software company. Given our growth rate, WSO2 is now the 6th largest open source company and we anticipate growing into the 5th over the next year!

WSO2 in 2019

In 2018, most of the changes that were made to the business were driven by territory expansion, globalizing our sales organization, expanding our field quality initiatives, and revamping our partner programs to capitalize on the dramatic increase in demand that we have seen in emerging markets.

In 2019, we will accelerate these initiatives while introducing a significant evolution of our product and open source initiatives.

We expect to grow 45–65% in 2019, exiting the year with more than 750 customers across 80 countries. We anticipate Latin America, Africa, and APAC to be the highest growth segments.

We’ll hire ~150 people through the year and expect to have close to 700 full time employees by year’s end.

For 2019, all WSO2 employees contributed to our strategic planning, and we have developed the WSO2 2019 vision; a commitment and description of our values, goals and strategies that will be driving our core efforts.

WSO2 2019: Our internal framework that helps us keep our priorities straight

WSO2’s 2019 Strategies and Priorities

When WSO2 was started, it was an experiment of middleware, integration and open source ideas. Those ideas unlocked a form of unanticipated profitability and prosperous employee base. We look back and then ask:

Could openness be a radical, more scalable, more profitable approach to integration software and business? How would WSO2 practice an open integration business alongside our open source licensing?

We use this mindset to collectively identify our strategic priorities for this year. Internally, we describe these efforts as Unifying Integration, Proving Ballerina, Win In Every Country, Open Everything, Agility Thought Leadership, and Culture of Transparency.

From a customer and investor perspective, we will:

  1. Launch New, Community-Driven Open Source Projects. We have written extensively on the evolution of integration; the need for the composable enterprise, standardizing reference architectures for integrations, and how microservices are shifting integration into code-first, instead of config-first capabilities. To further these ideas, we have community-driven efforts underway on new open source efforts including Cellery, Siddhi, a micro ESB, and a micro identity server. We will make public introductions as these efforts are readied for enterprise adoption.
  2. Invest Deeper Into API Management, IAM, and ESB. WSO2 is the industry-recognized leader in open source API management and IAM. We are one of the most widely adopted ESBs and recognized for the 1000s of enterprise integration projects we support. We are significantly expanding our engineering and dedicated support in these domains, effectively doubling our capacity by the end of 2019.
  3. Open WSO2 Hidden IP. We have pockets of intellectual property that is closed because we have the repositories hidden. This includes our cloud operating IP, certain types of configuration, and internal systems. Technically, our marketing, support, and sales content is not open either. We will open source all of this hidden IP.
  4. Open More of our Company Practices. We are expanding our partner network and simplifying how outsiders can participate with WSO2 in development, delivery and sales. We expect to grant 1000 certifications throughout 2019 and double the number of outside contributors to WSO2 projects and contributions made by WSO2 to external open source projects.
  5. Establish WSO2 as Open Source Champions. When outsiders engage in an open process started by someone else, they are joining a community. A community is a collection of people who share similar values. Committing to an open business model, in turn, means that we are advocates for community. We open our doors so that others may walk through. WSO2 will work on programs that make it easier for new developers to become participants in open source, create courses about how to run your own open source projects, and hiring dedicated staff that will be open source community champions within and outside WSO2.

We are working to be the best integration-at-scale provider for layered and cloud native architectures

About Those Lawyers

All this means we can, and will, create a lot more open source that helps IT digitize assets, become increasingly agile, and help turn internal software development into a competitive advantage.

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, 2019 will be a great year for you to learn more about how we can help you solve your digitization, integration, identity or API challenges. I’m happy to guide you on your journey and you can get in touch with me directly at 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 draw conclusions that have undue reliance on this blog post and understand that we may revise anything.

NewWave Taps API-driven Innovations to Develop Federally Compliant Healthcare Microservices for Centers for Medicare and Medicaid Services

The Centers for Medicare and Medicaid Services (CMS) is a federal agency in the United States Department of Health and Human Services that administers the Medicare program and works with state governments to administer Medicaid. It is the single largest payer for healthcare in the United States and provides services to over 130 million Medicare and Medicaid beneficiaries. Creating a stream of relevant and timely applications and products to service their significant customer base, while ensuring compliance with federal IT regulations, poses enormous challenges to CMS.

Traditionally, it takes several hundreds of hours of manual coding to develop an application that meets the federal government’s 3-zone architecture requirement. The process is so laborious and time consuming that the solution being developed often risks being obsolete before it has even deployed. Fortunately, CMS’ healthcare technology partner, NewWave, has devised an API-based solution that develops and deploys federally compliant healthcare microservices at hyper speed.

NewWave’s mission is to work with their clients to modernize their businesses and empower them to use technology in new ways. Donghwa Kim, director of application engineering at NewWave, says, “When we solve problems, we constantly remind ourselves of three things – people, processes, and tools. And of all three, people always comes first.” In keeping with this mission, the challenge of technological obsolescence at CMS was a natural fit for the company.

Donghwa discussing this solution at WSO2Con USA

Powered by Flexible APIs

Using API-driven innovations, NewWave developed SmartApp, a powerful development accelerator that streamlines application start-up and delivery at CMS. NewWave compared several vendors and settled on the open source WSO2 API Manager, as it had all the features they required for the new solution, which above-all needed to be flexible. WSO2 API Manager allows customization and extensibility, in addition to supporting full API lifecycle management. It’s designed to fit into microservices architectures. “Also, WSO2 provides great support,” says Donghwa.

Based on JHipster, a Yeoman generator for Sprint Boot applications, SmartApp uses best-in-breed components like Spring Boot, Spring Cloud Components, MongoDB, MySQL, HTML5, Angular JS, React, Bootstrap, and OAuth to generate responsive and cloud-ready Java applications. This saves developers hundreds of hours in manual coding. Compared to traditional application development which can take several sprints and up to fifteen weeks to complete, SmartApp compresses project set up/plumbing, basic CRUD Domain implementation and custom development into 2-3 weeks.

The beauty of SmartApp is its simplicity. The user selects an application’s desired features from a list of menu items which then generates a secure, unit-tested, and standardized project structure specific to the user’s specifications. A fully functional application can be built in minutes, with no coding required. Features include auto-populated project libraries, architectures and database back-ends. SmartApp is also available as a Vagrant-ready Docker image.

The infrastructure supporting SmartApp is called SPADE (Self-Provisioning And Dashboard Environment). SPADE is an open-source DevSecOps platform-as-a-service (PaaS) that deploys and manages SmartApp microservices. It supports modern containerized deployments while complying with the government’s three-zone architecture. This infrastructure is web-based, cloud-hosted, API-driven, vendor-agnostic, open-source, hosted on-premise, and has dashboard functionality. SPADE also enables SmartAPP users to develop, test, deploy, and maintain microservices.

Better, Faster Healthcare Apps

Both SmartApp and SPADE make up the complete solution by which CMS can develop, deploy, and manage federally compliant, secure healthcare applications in a matter of minutes. CMS is now able to automate the long-drawn out process of application development, and by reducing the time spent on time-consuming tasks, they can focus more on delivering value to their customers.

Learn more about SmartApp and SPADE in this video:

Find out more about WSO2 API Manager. We were named as a Leader in The Forrester Wave™: API Management Solutions, Q4 2018 Report.

Using Open Source Technology to Solve Complex Integration Needs at American Express Global Business Travel

American Express Global Business Travel (GBT) is a travel and meetings management company, which operates in 140 countries at present. They receive over 3 million messages and make 100 million service calls, all in one day! To effectively deal with the sheer volume of messages and calls, GBT launched Global Trip Record™, a platform that captures all global bookings on various transport companies in one system and functions as their single source of real-time and historic trip data.

A Strong Orchestration Layer: The Need of the Hour

GBT was looking for a strong orchestration layer on which to build this platform. They had an existing legacy system, part of which was a Java application that had thousands of lines of code across different files. For this reason, each redeployment required IT to shut-down, then re-start, the entire system. “No integration is easy and proprietary software doesn’t allow you to change much,” says Pradeep Chintam, software engineer at GBT. “As a developer, I like working with the code everyday. We were also looking for a product that allowed customization together with reliability. Hence, the decision to use WSO2 Enterprise Integrator,” he explains.

Eventually GBT decided on a microservices approach, yet they evaluated the pros and cons carefully first. Pradeep had a lot of questions on how microservices can be used to orchestrate between services, how to proceed with service discovery, and how to perform load balancing and fault tolerance. “When discussing microservices architecture, a lot of people are of the view that you should have smart endpoint and dumb pipes. I honestly don’t agree with that. What do we want from a solution – to follow principles to the letter or an application that functions without glitches? I think many people would choose the latter, no matter how important principles are,” says Pradeep. That was exactly what was done with WSO2 Enterprise Integrator when building their new platform.

GBT has many connecting systems and wanted to enforce a single entry point to their application. Thus, the architecture is built in way that everything connects via WSO2 Enterprise Integrator, and all orchestration between microservices happen within WSO2 Enterprise Integrator itself. This architecture has worked for 2 years to date, without a single instance of downtime.

Pradeep speaking at WSO2Con

The Deployment Model

Every message passes through at least thirty microservices and all the message transformation is handled by WSO2 Enterprise Integrator. GBT scales up their microservices so that they can handle hundreds of transactions and messages per second, but they scale the Enterprise Service Bus (ESB) based on their needs. To accomplish this, GBT also also uses Apache Kafka to bring elasticity to the application, as they do not want to overload WSO2 Enterprise Integrator when connecting 30 different downstream vendors.

During the deployment model, the code is first checked into git. The architecture includes a Jenkins server where the build is triggered and it then passes to SonarQube which verifies all vulnerabilities and bugs. It is then packaged to CAR files. A plain ESB image is pulled, customized files are overwritten, and the CAR files are then copied to appropriate folders. After that, the final Docker image is created and published in their Nexus repository. Deployment is triggered in OpenShift which only receives the image tag number. OpenShift will then pull the image from Nexus, deploy it, and is finally ready to serve the request.

Unlike the industry standard, GBT does not use a governance registry in their architecture. As a result, Pradeep limited the number of instances and technologies. GBT uses a custom solution, where they use another ESB project which acts as their governance registry.

This solution is an integral component of GBT’s aim to provide travel management tools that offer millions of customers around the world the best possible travel experience. “The fact that WSO2 Enterprise Integrator is open source and allows for flexibility were big plus points for us. Apart from that, the support has been great. I’ve been using the product for over 6 years and I’ve only raised a support ticket once, which was solved within the day,” says Pradeep.

To learn more about how GBT created Global Trip Record™, watch this video: