By: Lawrence Jacobson, Insurance consultant for Europe, the Middle East and Africa, FICO Posted: 26th April 2013 Copyright FICO © 2013

Bankers will be very familiar with the Basel Accord regulations and the tremendous financial pressure they are putting on retail banking. For insurers, regulatory demands have a different brand name: Solvency II.

Like Basel, the Solvency II Directive is a European regulatory framework aimed at building systemic stability by ensuring insurance companies hold enough capital reserves to cover monumental losses. And like Basel, the cost of implementing this approach is massive. The Financial Services Authority estimates that this package of regulations will cost insurers more than £2 billion. And if anything, Solvency II is even more complex than Basel II, due to the widely differing regional regulations governing insurance, and the diversity of insurance products.

Doubts have been growing about whether insurers can meet the original deadline of January 2014 to set aside capital as required under Solvency II. In October, the FSA said that 2016 would be a more realistic target. Extending the deadline may reduce the cost, but insurers don’t just need more time to make it work, they need more ideas on how to make it work at a lower cost.

Ideally, compliance projects should have a business benefit as well. Here are four areas that insurers can use to work down the cost of Solvency II while making their business decisions stronger. Best of all, none of these approaches requires a complete overhaul of processing systems.

Enterprise connection
Most insurers still work with disparate systems across lines of business, process areas or even geographies. As insurers often need to react quickly to changing market conditions and regulations, this creates serious challenges. With a number of organisational silos these strategy changes require implementation across multiple systems in order to be fully effective. Extending decisions across new channels can also necessitate duplications in various technologies, again increasing the cost of managing change.

Business rules can create a single view across the enterprise. Without any further hardware investments, this allows insurers to implement strategy changes once so decision applications can be deployed without modification across any operating environment. This reduces the costs of updating policies and decision strategies, but also makes it easier to pull data from disparate systems for the models and reports needed for Solvency II.

Solvency II, if addressed correctly, also means significant changes to core systems, interfaces and databases/warehouses. However, the new technology insurers have implemented to support Solvency II may not be well connected to legacy systems, which makes updates and reporting a challenge. Insurers have used business rules as part of legacy modernisation projects in order to pull data from legacy systems. Using technologies that can tap into standard and proprietary data sources, from various legacy systems, databases or other documents can aid in the extraction of value from legacy assets making more accurate, timely data available.

Data management
The insurance industry is data-heavy, but that data is often not readily available either for reporting or for decision making, because it is stored in too many formats and locations. This increases the cost of doing business and satisfying regulatory reporting.

As part of legacy system modernisation, many insurers have considered how to create a 'single source of truth' that can read different databases and any number of data sources, such as spreadsheets, documents, data management systems, etc. This reduces the costs of reporting, and of making sub-optimal reserving or other decisions because of poor data quality. Furthermore, it can reduce the time and expense needed to format data for modelling purposes—typically the longest part of any modelling project.

Speaking of modelling, it’s incredibly important for insurers to consider the overall economic picture when developing their risk models. One best practice being adopted by leading European banks is to explicitly model the likely performance of customers in different economic scenarios, and use this forecast to understand the bank’s liability under the likeliest future outlook. This approach would work well for insurers in areas like claims reserving, as there is a direct—but largely unmodelled—relationship between economic performance and claims volumes. Taking this into account would certainly show regulators an additional level of risk management diligence.

Business ownership and control
Solvency II rules are still evolving and are certain to change as the framework is tested. Changing business rules and decisions usually requires extensive reprogramming efforts and can even involve reverse engineering. A lot of time and expense will be poured into the IT support queue here, not only delaying changes but also restricting the productivity of the IT group.

Business rules separate decision logic from the hard-coded policy system, enabling business users to make changes independently. We have seen that when business users can change and deploy rules without much IT intervention, they can save 40–50% of the total cost of change.

Model governance
The Solvency framework places great importance on transparency. Internal model validation is a key issue addressed in pillar 2 of the regulation and requires that models be examined for accuracy on a regular basis. To avoid unfavourable audits—which cost time and money—most insurers are keen to demonstrate model accuracy.

By using automated systems for model governance, insurers can now only reduce the time spent on reviewing and managing models, they can detect model 'degradation' earlier. Rebuilding models ensures performance stays high, which means lower losses. Banks are now adopting the same kind of model governance approach, largely in response to regulatory pressure.

One more approach to Solvency II cost reduction bears mentioning: optimisation. This analytic approach is ideal for solving problems with multiple objectives and various inputs, such as different models and data sources. For insurers who have wrung the maximum savings from the ideas mentioned above, the next stage may well involve using optimisation to improve business performance while satisfying regulatory requirements.

Larry Jacobson is an insurance consultant for Europe, the Middle East and Africa at analytics company FICO com (www.fico.com). 

By: Clive Longbottom, Head of Research, Quocirca Posted: 28th February 2013 Copyright Quocirca © 2013

Since the original Basel Accord was agreed and signed in 1988, central governments, driven by the EU, have been trying to ensure that financial institutions were managed in such a way as to provide a solid platform to the global economy. Starting with Basel I, increasing levels of central oversight have been put in place to try and maintain a good view on what could be happening within the markets. Through the Capital Requirements Directive (CRD), first instituted in 2007, certain levels of capital are required to be held by the banks and insurance companies so that they are able to weather any economic storms that come the way of the markets.

CRD IV is the latest version, and it nominally came into effect on January 1st, 2013. "Nominally" will be covered later...

At the highest level, the basis for CRD IV is covered under the Basel II and Basel III Accords for the banks and under Solvency II for insurance companies, which increase the amounts of common equity and Tier 1 Capital that the institutions are required to hold. Basel II also covers how the banks will need to provide centralised prudential reporting—and this mandates the use of the extended business reporting language, XBRL.

In October 2012, Quocirca carried out research across the UK, Germany, France, Italy and Spain for EMC to gauge the preparedness of financial institutions for the use of XBRL as well as their understanding of the whole CRD IV process.

The research provided some interesting findings—just under half of respondents felt that adopting XBRL would be a major impact on the business, with 65% saying that integrating existing systems into an XBRL system would be of major concern. Unfortunately, only 25% of respondents had even chosen an XBRL solution for something that was to be mandated as of January 1st (at the time, only 3 months away), leaving the notion of the financial markets being ready to meet the implementation date as being a bit far-fetched.

But, back to the "nominally". As the financial markets collapsed, the EU went into prevarication mode. There was always a transition period built in to CRD IV and Basel III, but this was meant to be for a move along a maturity model with everyone essentially staying in step along a defined set of processes. Although the nominal dates for CRD IV and Basel III remained as 1st January, the EU started to change the goalposts, saying that banks must hold more liquid assets and so lower their risk if facing another meltdown.

Country financial bodies, such as the Financial Services Authority (FSA) in the UK, had to move to more of an advisory mode—without agreement from the centre, little in the way of solid process guidance could be provided by them.

So, although few banks and insurance companies were ready for the requirements of CRD IV and Basel III on 1st January, it makes little difference, as the central bodies concerned were still fiddling while the economy burned.

However, this is not an adequate excuse for the financial institutions concerned to be so far away from being able to meet the technical requirements of CRD IV. The need for centralised prudential reporting is still there—and the failure to plan to implement XBRL systems means that these institutions are incapable of meeting this need.

At some stage, the Powers That Be will get their act together and CRD IV will become law with the necessary Directives in place. Financial institutions would do well to ensure that they are implementing the right systems now to meet their reporting needs—without them, they will fall foul of legal requirements, which could cost dear in fines.

Quocirca's report on the subject can be downloaded for free here.

By: Andy Jones, Director and General Manager, Europe, Xerox Global Document Outsourcing Posted: 26th August 2011 Copyright Xerox Global Document Outsourcing © 2011

The saying is probably as old as the marketing business: It costs more to acquire a new customer than to keep an existing one.

Many companies today focus the bulk of their marketing budgets on acquiring new customers. But what happens after that? Once prospects become customers, they typically receive an ongoing series of routine communications that do little to deepen the relationship or build the brand. Statements and invoices, policy notifications and updates—these “transactional” documents convey important information. But that’s about it.

In a world where competition is intensifying and long-term customer loyalty is increasingly viewed as a prize corporate asset, the failure to maximise the impact of these valuable touchpoints represents a missed opportunity to improve the bottom line.

This customer opportunity can be most commonly seen within the financial services industry. If a bank has a 20 percent customer attrition rate on average, the firm must acquire 20 percent net new clients each year just to remain in the black. The cost of customer acquisition averages 200 euros per retail account.  So it’s easy to see why using marketing spend effectively to maintain customer loyalty is essential to revenue stability and, ultimately, growth. Not only this, customer experience will be a key competitive battleground for financial institutions going forward; customers will join for a superior experience and customers will leave over a poor one.

We offer the following tips to financial services institutions to make the most of customer communications:

1. Strike early: Most cross-selling opportunities occur during the first few months of a customer relationship. Research shows that banks that communicate with customers early and often in the relationship improve cross-selling results and lower attrition rates. Customer welcome packs are a common means of building on the initial relationship; they need to be crafted carefully and tailored to the customer and product needs.

2. Be responsive: By scanning and electronically storing the documents needed to open an account, banks can provide a faster, more efficient account-opening process, obtain information for more personalised communications, ensure greater data accuracy and increase compliance. Looking through paper records or shunting them off to storage facilities will not be deemed adequate in the future. Start thinking now about back file conversions, information repositories and comprehensive workflow capabilities to make servicing the customer a natural and seamless act for your customer service agents.

3. Take inventory: Any communication with a customer—by phone, web or face-to-face—is an opportunity to acquire data about their life stages, attitudes, needs and preferences. The information can then be centralised and integrated into the bank’s inventory of brochures, catalogues, fulfilment literature, direct mail and statements so that details about individual customers or targeted segments can be placed in a bank’s own document templates to deliver greater impact. Analytics will be crucial; banks can take a page from what retailers do in this regard, in order to know your customer well enough to both sell and service him.

4. Get personal: While most information from banks today appeals generically to a mass audience, they are more likely to generate sales if they personalise every document, e-mail, etc. Incorporating variables in documents such as the customer’s name, product type or life event is the key to generating response rates that far outstrip the typical 0.5–2 percent expected from direct-mail campaigns. Of course you also need to know if your customer will welcome personalised communication or if it will be considered an invasion of privacy. 

For example, getting personal can go hi-tech with quick response codes (QR codes), modules that marketers print on communications for customers to scan with smartphones, directing them to a personalised landing page with tailored information about products and services, case studies, helpful tools, etc. In order for QR codes to be effective, marketers should stay true to the basic principles of marketing. People will only engage and interact with the content if it is relevant to them. The content on the initial communications piece must be relevant in order for the person to be interested in navigating to the landing page, and the content on the site must be relevant in order for the person to spend a meaningful amount of time there.  

5. Keep it simple: Keep product information—including rates and fees—as simple as possible (and feasible given regulatory requirements) so bank staff can explain them and customers can understand them.

6. Be creative: Customers say they would be more responsive to more informal and creative communications from their financial institution; get the marketing and legal departments to work together to produce understandable and compliant communication.

7. Change the channel: Different customers prefer different communications channels (direct mail, e-mail, online, text messages, etc.), so ask early in the relationship which method the customer prefers and stick with it. Communicate offers in terms that customers or prospects will readily understand, through the channel they prefer, and at a time when they are open to receiving it.

8. Embrace social media: Don’t be afraid. In the modern communications landscape, customers are increasingly expecting their service providers to communicate with them via social media. Bank executives must ask themselves: What are our consumers’ expectations and requirements around social media? What information do they want shared via social media, and what conversations do they want to participate in? To address these questions, banks have begun to create social media teams charged with transforming traditional methods of doing business. Beyond social channels, however, banks must decide whether to build the infrastructure and processes to manage the social media communications, or to “borrow” the infrastructure and process instead (meaning: outsource it). Social media channels are fabulous opportunities to learn what your customers are thinking about.

Personalising customer communications promises to be an effective way to maintain customer loyalty and win new customers when done efficiently. The document supply chain is crucial to this end: In many cases banks keep a large marketing inventory, employ multiple service providers, and duplicate many processes—slowing down the document supply chain and incurring unnecessary costs. To be able to reap the benefits of personalised communications knowing when to engage a third-party solution provider who specialises in optimising business processes is becoming more important.

Lloyds Banking Group, the UK’s largest retail bank, understands that a strong business process outsourcing partner can automate workflow, consolidate vendors and improve touch points with their customers. Working with Xerox, the bank has transformed its document supply chain and is now supporting its excellent customer service with high-quality, targeted marketing materials while at the same time streamlining business processes and realising savings in cost and time. Suppliers can bring innovation, use technology and process enhancements in customer care, transaction processing as well as document and digital asset management capabilities to improve efficiencies.

Power is changing hands in the industry, slowly but inexorably. Power is moving to the customer. Customers will insist on dealing with their financial institution when and where they choose, with their preferred channel and on their terms. Customers will want to be in control and know that their financial institution consciously put them in control with their needs first. Improving the customer communications process is a vitally important step for attracting and retaining the right customers.

By: Louella Fernandes, Principal Analyst, Quocirca Posted: 19th July 2011 Copyright Quocirca © 2011

It is hard to believe that, in the 21st century digital age, one of the most business-critical documents—the invoice—is still created and sent mostly in paper format. In 2010, of the 30 billion invoices sent in Europe, only 10% were done so electronically. In a global economy where many other processes are being automated, a reliance on any paper-based business process seems archaic. But so far, attempts to move to true 100% electronic invoicing have been hindered by market fragmentation, cost and concerns around legal standards and interoperability. However, the emergence of managed services which provide a hybrid approach to total invoice management promise to help businesses make a gradual transition to electronic invoicing, by processing both paper and electronic invoices based on buyer and supplier preferences.

A recent Ricoh study [1] shows that, on average, 42.5 per cent of all business critical information is still in hard copy format. There is no doubt that invoicing contributes to this figure, as it remains one of the last bastions of manual processing and is labour-intensive, inefficient, costly and error prone. Quocirca estimates that the cost of processing paper invoices through manual means can range anywhere from €8 to €10 per invoice, which is significant when applied across the mountain of paper such that many businesses process on a daily basis.

Manual processes can also result in slow invoice reconciliation making it difficult to secure early-payment discounts, which in turn can result in poor supplier relationships. Furthermore, companies that continue to rely on paper-based invoicing methods may have difficulty preparing audit trails for closing books and meeting the requirements for European VAT audits. Ricoh’s study also indicates that only 39% of companies have the ability to follow an audit trail for all their business critical documents. A high reliance on paper also comes at an environmental cost—not only in paper waste but also in the associated energy costs of transporting the physical invoices.

It is unsurprising therefore that more businesses want to implement electronic invoicing (e-invoicing) to remove manual processes, speed up invoicing cycles and eliminate non-value add activities for accounts departments. Benefits of e-invoicing are far-reaching. Quocirca estimates that e-invoicing can enhance business efficiency through reducing the costs of handling invoices by up to 70%. The most obvious benefits are the direct cost savings for sending the invoice (paper, postage and printing) and in processing (accepting the invoice, processing and approving it) for the recipient.

These compelling drivers are now set to broaden e-invoicing adoption, enabling more organisations to begin the transition to electronic invoicing. In 2011, approximately 5 million European businesses are expected to send or receive electronic invoices. Initiatives such as the European Commission’s plans to revise the E-Signatures Directive in 2011 are a bid to encourage businesses to make more use of electronic invoices. Electronic invoicing is also part of the European Commission’s flagship “A Digital Agenda for Europe” which wants to see e-invoicing to be the predominant form of invoicing by 2020.

 Today the market is categorised by a mix of software products deployed on-premise and hosted services, most of which offer integration to enterprise resource planning (ERP) systems, compliance with varying country regulations and supplier on-boarding. E-invoicing networks are becoming more popular as invoices, regardless of data standards, are interchanged via a third party service providers or invoice portals. Once enrolled in a network, which may charge an upfront fee as well as an on-going fee, a supplier can send electronic invoices to any customer on the network. However such networks rely on full supplier and buyer participation, and generally appeal to larger businesses. Smaller suppliers may have little incentive to participate in networks and may not be able to justify the joining fee. But in a competitive environment they can feel under pressure to comply in order to retain the business. Meanwhile, as businesses move to electronic invoicing at a different pace, they will find themselves operating disparate processes for handling paper and electronic invoices. Poor integration of these processes is costly and inefficient.

As full e-invoicing requires buy-in along the whole supply chain, a big-bang approach to e-invoicing is not realistic. Consequently, some leading businesses are adopting a hybrid approach which provides a phased transition to e-invoicing, whilst enabling them to retain paper-processes for some suppliers and buyers where appropriate. A managed service provider (MSP) takes full control of the invoice process—including the manual capture of paper invoices and document scanning, the handling of a diverse range of invoice receipt formats (e.g. xml, CSV, EDI, fax, email or paper) and the sending of invoices in a buyer’s preferred format. Software is developed, maintained and operated by the MSP, with customers paying a “fee per transaction”, enabling lower costs.

Those businesses in the e-invoicing vanguard are already reaping the benefits. Ricoh, an MSP that provides such services, cites the example of a sportswear manufacturer who operated an expensive and inefficient invoicing process. Mailing 4.5 million paper invoices and statements a year, they outsourced their entire invoice process, planning to transition from paper to electronic invoicing over three years. Using Ricoh’s i-Invoicing service, according to customer preference, invoices are either uploaded to a web portal for online viewing, or printed and dispatched by conventional means. Customers are able to download and pay bills by logging on to the secure web portal. The number of paper-based transactional documents distributed by Ricoh on the manufacturer’s behalf is expected to reduce by 3.6 million per annum, saving €3 million.

By not restricting the format of invoices, a managed service ensures that the benefits of e-invoicing are not limited to just large enterprises, but also extended to SMEs who will gain access to a wider market of potential customers and suppliers, especially larger organisations who may prefer working with e-capable trading partners. E-invoicing will be a major factor in making business process more efficient for many businesses in the future. Those that start now will be ahead of the game as the e-invoicing market steadily builds towards critical mass.

Read Quocirca's report at: Electronic Invoicing: Ready for Prime Time

[1] Ricoh Process Efficiency Index, June 2011. www.ricoh-europe.com/thoughtleadership

By: Dana Gardner, Principal Analyst, Interarbor Solutions Posted: 6th July 2011 Copyright Interarbor Solutions © 2011

Dana Gardner: Hello, and welcome to a special BriefingsDirect podcast series coming to you from the recent HP Discover 2011 conference in Las Vegas. We're here to explore some major enterprise IT solutions, trends, and innovations making news across HP’s ecosystem of customers, partners, and developers.

We're now going to focus on Genworth Financial, and talk about a number of different products used to improve application delivery, performance testing, and also operational integrity. Then, we'll look at the transition to a more comprehensive role for those tools, working in concert, and eventually with the opportunity to have an Executive Scorecard view into operations vis-à-vis these products and solutions.

We're here to talk about Genworth Financial’s experience with Tim Perry, Chief Technology Officer for the Retirement and Protection Division at Genworth Financial in Richmond, Virginia. Welcome to the show, Tim. [Disclosure: HP is a sponsor of BriefingsDirect podcasts.]

Tim Perry: Thanks. Good to be here.

Gardner: Tell me about your stock in trade? What is Genworth Financial and why is technology so important to you?

Perry: Genworth Financial is an insurance company that covers many different areas like life insurance, long-term care insurance, mortgage insurance, wealth management, and things like that, and we're here for a number of reasons. We use HP for helping us just maintain and keep a lot of our applications alive.

Gardner: Could you give us a sense of your operations, the scope of your IT organization?

Perry: Our IT organization is, depending on the division, hundreds of employees, but then we also have contractors that work internationally on our behalf. So, throughout the world, we’ve got developers in different places.

Gardner: How about some metrics around the number or types of applications that you're using?

Perry: We have a gazillion applications, like every big company has, but for our division alone, we have around 50 applications that are financially important, and we track them more than any of the others. So that gives you a feel for the number of applications. There are a lot of small ones, but 50 big ones.

Gardner: Let’s take a tour through the way in which you are using HP products, you have ALM, PPM, Performance Monitoring, and BSM. Give me some perspective on what you are doing with these HP products?

Perry: Let me start with a little bit of a roadmap. We brought in Quality Center, way back before ALM. We brought that in mainly for requirements management and for testing. That one has evolved over the years to the point where we really wanted to get traceability for developers, testers, business analysts, everything. That’s what we're hoping for in the ALM stack of things on its own.

PPM came in for a lot of different reasons. Project Portfolio Management was a piece of it. We had a very raw portfolio of what we are working on. Since then it’s become a service request management within our division, much like what you do with the helpdesk, but for our division in applications, everything from account request to marketing, workflow approvals, things like that. So PPM has taken on life of its own.

The newest one is performance engineering, and performance engineering to us means performance monitoring and performance testing. We’ve had performance testing for a while but we’ve not been great at monitoring and keeping track of our applications as they are living and breathing.

Those are the three big silos for us, and I just want to mention that’s the reason this HP Performance Suite that we are about to talk about is intriguing to us because it starts to glue all of this together.

Gardner: On June 1, HP announced its IT Performance Suite, and a number of people are taking a really deep look at it here at Discover. Tell me what your initial perceptions are and what your potential plans are?

Perry: Just like our own internal applications, it felt as if up until now a lot of these suites that HP provides stood on their own and didn't have a lot of integration with each other. What I am starting to see is a lot of synergy around good integrations. The Executive Scorecard is probably the epitome of it, the top of it, that talks to these executives about where things are, the health of the applications, how we're doing on projects, all those things that are the key performance indicators that we live and breathe.

That’s cool, but in order to get the scorecard, that implies data is available to the scorecard and integrations are there in place. That combination is the magic we're looking for.

Gardner: And how about the KPIs? That would bring some standardization and allow you to be able to start doing apples-to-apples comparisons and getting a stronger bead on what is the reality of your IT and therefore, how you can improve on it.

Perry: It appears that HP has looked at 170 or so KPIs that the industry, not just HP, but everybody, has said are important indicators. We can pick and choose which ones are important to us to put them on the scorecard. Those are the ones that we can focus on from an integration standpoint. It’s not like we have to conquer world hunger all at once.

Gardner: I’ve heard folks say that the scorecard is of interest, not just for IT, but to bring a view of what’s going on in IT to the business leadership and the financial leadership in the organization, and therefore, make IT more integral rather than mysterious.

Perry: I have to say this. Our IT organization is part of operations. Last year, at this same event, we had more operations folks here than IT. I think HP should take the IT moniker off and start talking more about "business operations." That’s just my personal view of this, and I agree, this helps us not just roll up information to IT executives, but to our actual operations folks.

Gardner: Do you have any sense of what the integration and the continued evolution of a lifecycle approach to IT and quality has done for you? Do you have any metrics of success, either from a business value perspective or just good old speeds-and-feeds and cost perspective?

Perry: Without having actual numbers in front of me, it’s hard to quantify. But let’s just say this, with Quality Center in particular, it’s helped us a lot with traceability between the business requirements and the actual testing that we are doing. I don’t know how to measure it here, but it’s been a big thing for us. The piece that's missing right now is the developer integration, and we just saw a lot of that this week. I'm looking forward to evolving that even more. That’s been a big deal.

Gardner: Perhaps if I ask you that same question a year from now, at Discover 2012, you’ll have some hard numbers in metrics, right?

Perry: Oh, I’d love to be able to go and have a presentation at one of the sessions that we’ve had such great experience with Performance Suite. I’ll be here talking a lot about it. I’d love to do that.

Gardner: Okay, great. We’ve been talking about how IT performance measurement and application lifecycle management improvements are coming together for a "whole greater than the sum of the parts" and looking forward to more of a scorecard and performance metrics viewpoint and comparison capability in the near future.

We’ve been talking with Tim Perry, Chief Technology Officer for the Retirement and Protection Division at Genworth Financial. Thank you, Tim.

Perry: It’s good to be here, and thank you.

Gardner: And I’d like to thank our audience for joining this special BriefingsDirect podcast coming to you from the HP Discover 2011 Conference in Las Vegas. I'm Dana Gardner, Principal Analyst at Interarbor Solutions, your host for this series of user experience discussions. Thanks again for listening and come back next time.

Listen to the podcast. Find it on iTunes/iPod. Download the transcript.

Transcript of a BriefingsDirect case study podcast on how Genworth Financial uses ALM and Performance Management tools from HP to improve IT's track record. Copyright Interarbor Solutions, LLC, 2005-2011. All rights reserved.

Ask a CFO if they would like a 30-plus percent annual return on capital, while making their financial processes more efficient, and you’d probably get your hand bitten off. Especially in the current climate, which tempts businesses to hold onto their cash for as long as possible.

At the end of 2009 UK businesses had significantly improved the time it takes them to settle their bills, according to Experian’s Late Payments Index, the global information services company. Firms were paying their late bills an average of just under 21 days after agreed terms—an improvement of over 2.5 days compared with the previous year.

But while everyone’s doing it, it isn’t good for supplier or partner relationships. Nor does it make the best financial sense. So why do organisations persist in holding onto cash?

CFO versus CPO
Looking at the issue from the traditional CFO viewpoint, the only leverage they have on suppliers is payment terms and the retention of working capital. On the other hand, the traditional view of the head of purchasing is NOT to squeeze suppliers by extending payment terms, because of the risk this might incur to the company’s supply chain. 

So the arm-wrestling contest between purchasing and payment continues. What’s more, the contest is usually over very small percentages. A typical business reserve account gives around 3% interest, or just 0.25% per month. It’s better than nothing, but does it compensate for the squeeze on suppliers and the risk it causes?

Doing the maths
The alternative is dynamic discounting. While paying suppliers early to improve your own cashflow seems counter-intuitive—and is likely to cause some internal controversy—the figures certainly add up. 

Let’s assume that by offering to pay invoices in 10 days instead of 30, a company negotiates an average additional discount across its suppliers of 2%. That’s nearly six times what it would earn in interest by delaying payments. Furthermore, the return on capital would be 2% in 20 days, or over 36% annually—a figure which would soothe the most ruffled feathers. 

Even if the negotiated early-settlement discount was half of the above—just 1%—that’s an 18% annual return on capital. Whilst there is some discrepancy between achievable returns in practice and theory, there is NO argument that the payoff achievable through returns on capital employed by better management of supply chain finance is vastly superior to those achieved by e-invoicing, scanning and the resultant head count reduction. 

Capturing the discounts
Although the figures are compelling, there’s still the issue of ensuring that payment systems are capable of tracking and hitting early settlement deadlines. So how can you be sure of achieving this? 

The secret is gaining control of the purchase-to-pay process, which then gives financial managers a choice of how and when to pay, in order to best suit their working capital strategies.

Having an automated invoice processing solution is a key first step, to ensure that the invoice is received electronically or data is taken off paper documents through scan and OCR thus enabling electronic processing. However, it’s vital to look beyond simply scanning and capturing of invoice data, and uploading it onto the accounting system. 

The most vital stage is what happens after the invoice is digitised—the matching of the invoice to its corresponding PO or contract and other supporting documents, so that all evidence for prompt approval and payment is available to AP and other staff involved in the approval process.

The second issue is ensuring that the staff who approve invoices can do so quickly and easily. Manual tasks like finding supporting documentation, checking and consolidating can cause delays that could mean early settlement deadlines are missed. Not forgetting the costs associated with downstream journal corrections, and other corrective measures that arise in a manual—or less than fully automated—process.

Automatic for the payments
So automation is critical, as is the ability for AP staff to access their invoice workflow wherever they are. A cloud-based solution is ideal for these circumstances, so the workflow can be processed on handheld devices, laptops, or when working from home. 

Integration with core business systems is also critical, so that any exceptions (such as invoices without orders or incorrect coding) can be highlighted, and escalated where needed. This way, automation can be applied allowing management by exception. This also means that targets like settlement deadlines can be built into workflow, so they can be hit every time and ensure savings are captured. 

Benefiting from your banking
Many organisations already have the building blocks in place for integrated purchase-to-pay solutions, which in turn would give them the capability of deploying dynamic discounting to suppliers and partners, boosting capital and reducing the cost of doing business. 

Another option is to look at Reverse Factoring, working with your bank. Where traditional factoring uses an invoice as the underlying asset for financing, Reverse Factoring brings the qualified invoice into play. In essence, traditional factoring deals with the supplier’s receivables from many ‘unknown’ buyers, whereas Reverse Factoring deals with the payables of one well-known buyer.

The weakness with traditional factoring is, the factor company does not know whether the supplier really delivered the promised goods or services, or whether the delivered goods or sent invoice will be contested by the buyer. As a result, only about 70% of the invoice value would normally be financed. 

However with Reverse Factoring, the buyer approves the invoice prior to the financing organisation settling with the supplier, thus enabling financing of 100% of the invoice value.

So back to the beginning—the keys to Accounts Payable automation or P2P are control and choice. If you have the control over your process, which gives you insight into the real financial data as a Finance manager, you have the choice of how and when to pay your supplier. This in turn allows you to maximise the return on your capital.

The fundamental point is to ensure that systems are integrated, so that staff can track the status of invoices throughout the payment cycle. If you can’t approve an invoice within 5 days you will not have the choice of reverse factoring or dynamic discounting. 

But for companies that have that integration and control over their cycle, purchase-to-pay automation offers a real payback. 

By: Gerry Brown, Analyst - Digital Marketing & CRM, Bloor Research (Moved) Posted: 9th November 2010 Copyright Bloor Research © 2010

I met with Brian Gentile, CEO of open source BI vendor Jaspersoft. Brian is a self-proclaimed “fan of new generation software”. Here is what he believes constitutes new generation software—and how it differs from traditional enterprise software. This article explores further the tenets of the recent article ‘Is the traditional BI market in decline?’.

First, Jaspersoft has built a club of volunteers who give time and effort to the cause. It’s a bit like the parents’ committee at a well-run primary school where parents want a stake in creating the best learning environment for their kids. Jaspersoft has 175,000 registered programmers in its ‘community’ of fans who have a similar ownership stake in Jaspersoft.

These unpaid end users fix bugs and develop enhancements to Jaspersoft’s open source product, iReport. They champion the product, and provide ‘free’ programming and powerful word-of-mouth recommendations to other potential users. In addition they vote on the new features for the next release—so product development is largely driven by user priorities.

Second, the software architecture is lightweight, web-based, has open APIs, and is easy to install and upgrade. Everything is built on the Java platform and the whole software suite is only 500MB. It requires little installation and professional services consulting support, and is available both for web download and through Jaspersoft’s OEM partners as a SaaS deployment.

Third, it’s low-cost and affordable. The entry level price for the commercial version is $10,000.

Compare this with how the enterprise software vendors tackle these areas:

First, enterprise software vendors have a network of resellers, complementary software vendors, and systems integrators and consultants. These mercenaries add value to the core product only where and when it is in their best commercial interest. Vendor loyalty is typically low—software and services partners often jump ship to where the profit potential is highest. Acts of charity are not high on their agenda.

Product development rests on the needs of a small number of key customers—who may or may not be representative of the market. The vendors control which features are included or excluded from the commercial release.

Second, the traditional enterprise software architecture is heavyweight and leans towards proprietary lock-ins. For example, SAP Business Objects’ BI suite is said to contain c. 30GB of code (ie 60x the size of Jaspersoft’s BI suite). Installation and upgrades are typically long and rely on on-site consulting and services provision over many months.

Third, enterprise software is expensive. Brian reckons Jaspersoft software costs around 1/10 of the cost of comparable commercial enterprise software. The enterprise vendors’ business models demand a premium price in excess of $100K for the most part. Implementation services expenses could double that cost.

So, Jaspersoft has built quite a compelling value proposition. Participative, collaborative, lightweight, fast to implement, transparent and open, and lower cost than its legacy competitors. Granted, it is mainly adopted and used by techie programmers, and it doesn’t offer the sexy front end user experience of SAP Business Object’s Crystal reports, for example. Neither does Jaspersoft offer the comfort of the size and support resources of an SAP or similar. However Jaspersoft is clearly doing something right as iReport downloads are now at the staggering rate of a 250,000 per month.

So what can customers learn from Jaspersoft’s software development techniques?

1) Engage with the hearts and minds of your community (ie ‘The Business’)—not on the basis of “it’s your job to help IT” but rather that “it’s fun to be involved and your contribution will be recognised”. Co-creation and collaboration are the watchwords.

2) Create and choose software that is light, flexible, and easy, and incorporates ‘the wisdom of crowds’. Don’t get dragged down by miles of inflexible code that cannot be re-purposed to reflect the business challenges of tomorrow. SOA is very important here.

3) Experiment with low cost web-based solutions. If they don’t work, junk them, and try something else. Don't put all your eggs in one big enterprise software investment basket with an uncertain outcome.

By: Simon Holloway, Practice Leader - Process Management & RFID, Bloor Research Posted: 7th October 2010 Copyright Bloor Research © 2010

The process associated with securing a commercial lease or loan, commonly referred to as asset finance originations, is getting more and more complex and therefore the need to automate has grown. Leasing capital assets is just one way companies are moving expenditures from CAPEX to OPEX budgets. Leasing is a process by which a firm can obtain the use of a certain fixed asset for which it must pay a series of contractual, periodic, tax deductible payments. Other companies opt to secure commercial loans in order to meet their operational and cash flow needs. The asset finance organisations who handle these lease or loan applications are operating in a cut-throat market and are finding they need to differentiate themselves. Yet, until recently, they were limited in their ability to perform risk assessments because of internal technology hurdles. They often support multiple back-office processing systems which could not share customer information, needed a great deal of individual customised programming, and often required expensive upgrades to maintain over time. But this situation is changing. Rapport360 from International Decision Systems is the first front-office asset finance solution Bloor has come across to provide seamless integration with multiple back-office processing systems. In doing so, decision-makers get full visibility into customer risk across system platforms so they can make better credit decisions and gain a competitive advantage.

International Decision Systems (IDS) was founded in 1974 and is headquartered in Minneapolis, MN with sales offices in the UK, Australia and Singapore and a development centre in Bangalore, India. The company specialises in the asset finance software market, providing solutions which support the full lifecycle covering both front and back office operations (see Figure 1 below). For back office portfolio management, IDS provides:

• InfoLease, which provides support for leasing operations, covering functionality for loans, reporting and regulatory compliance; and
• ProFinia, which manages lease and loan portfolios along with their underlying assets and collateral.

For the front office, IDS provides:

• InfoAnalysis, which is a solution for transaction quoting including tracking of critical sales data for salespeople; and
• Rapport, which enables contract origination including credit applications, product pricing, partner relations and booking.

Figure 1: Full Asset Finance Management Lifecycle

IDS has over 250 customers in 34 countries including Wells Fargo, Bank of America, GE Capitol, John Deere, Dell, RBS Asset Finance, Olympus, Xerox, CAT, Volvo and Daimler.

Terry Welty, Chief Marketing Officer at IDS, explains “The main challenges in managing the current asset financing process are high cost, low productivity, and limited visibility of customer risk data. Often there is a large amount of re-keying which results in poor data quality and a lack of synchronisation between back-office applications. This process also slows response time and potentially results in lost sales. Perhaps one of the biggest problems, however, is that because different back-office systems do not share information, decision makers are unable to see the “big picture” of customer risk across different business units and geographic locations which can lead to difficult decision-making.”

October 2010 sees the launch of a new version of the IDS Rapport solution called Rapport 360™. Rapport has always provided support for the management of workflow, screens and rules to enable organisations to provide best practices. It contains a pricing engine that supports matrix, rate card pricing, as well as asset and risk-based scenarios. Information from CRM systems, credit bureaus, and other financial and asset information resources is able to be incorporated into the system to provide a single view. Rapport supports the creation, distribution, and management of origination documents as well as bid, quote, and proposal letters.

Figure 2: Rapport 360 Coverage

So what is different about this release? Katie Emmel, Director of Product Management at IDS, told me that IDS has now added the ability to support simultaneous integration with multiple back office servicing systems through a feature called Smart Synchronization. Emmel said, “Customer records can now be updated instantly in all applicable systems. Rapport 360 provides a single, consolidated view of customer risk by capturing delinquency and exposure information.” The other key differential I identified was that administrators in user organisations are able to manage workflow, screens and rules to regulate and establish best practices across an organisation without having to use IT resources or the vendor. Rapport 360 provides support for the complete origination process from quotation through decisioning to final booking.

But what does this mean to you? The support for multiple back-office and smart synchronisation means that costs can be lowered and valuable staff resources can be refocused. Customers also gain by receiving faster response time. One of the biggest improvements, however, is that, by seeing the complete picture associated with customer exposure, finance companies can make better decisions, reduce risk and therefore improve profitability and ROA.    

Bloor recommends any organisation involved in leasing to take a serious look at this new product from IDS. From what we have seen, it fills in many of the gaps that were previously missing from solutions in this marketplace.

By: Dana Gardner, Principal Analyst, Interarbor Solutions Posted: 6th October 2010 Copyright Interarbor Solutions © 2010

The trend toward converged infrastructure—a whole greater than sum of the traditional IT hardware, software, networking and storage parts—is going both downstream and upstream.

HP today announced how combining and simplifying the parts of IT infrastructure makes the solution value far higher on either end of the applications distribution equation: At branch offices and the next-generation of compact and mobile all-in-one data center containers.

Called the HP Branch Office Networking Solution, the idea is that engineering the fuller IT and communications infrastructure solution, rather then leaving the IT staff and—even worse—the branch office managers to do the integrating, not only saves money, it allows the business to focus just on the applications and processes. This focus, by the way, on applications and processes—not the systems integration, VOIP, updates and maintenance—is driving the broad interest in cloud computing, SaaS and outsourcing. [Disclosure: HP is a sponsor of BriefingsDirect podcasts.]

HP's announcements today in Barcelona are also marked by an emphasis on an ecosystem of partners approach, especially the branch office solution, which packages 14 brand-name apps, appliances and networking elements to make smaller sub-organizations an integrated part of the larger enterprise IT effort. The partner applications include WAN acceleration, security, unified communications and service delivery management.

Appliances need integration too
You could think of it as a kitchen counter approach to appliances, which work well alone but don't exactly bake the whole cake. Organizing, attaching and managing the appliances—with an emphasis on security and centralized control for the whole set-up—has clearly been missing in branch offices. The E5400 series switch accomplishes the convergence of the discrete network appliances. The HP E5400 switch with new HP Advanced Services ZL module is available worldwide today with pricing starting at $8,294.

Today's HP news also follows a slew of product announcements last month that targeted the SMB market, and the "parts is parts" side of building out IT solutions.

To automate the branch office IT needs, HP is bringing together elements of the branch IT equation from the likes of Citrix, Avaya, Microsoft, and Riverbed. They match these up with routers, switches and management of the appliances into a solution. Security and access control across the branches and the integrated systems are being addressed via HP TippingPoint security services. These provide granular control of application access, with the ability to block access to entire websites—or features—across the enterprise and its branches.

Worried about too much Twitter usage at those branches? The new HP Application Digital Vaccine (AppDV) service delivers specifically-designed filters to the HP TippingPoint Intrusion Prevention System (IPS), which easily control access to, or dictate usage of, non-business applications.

The branch automation approach also support a variety of network types, which opens the branch offices to be able to exploit more types of applications delivery: from terminal serving apps, to desktop virtualization, to wireless and mobile. The all-WiFi office might soon only need a single, remotely and centrally managed locked-down rack in a lights-out closet, with untethered smartphones, tablets and notebooks as the worker nodes. Neat.

When you think of it, the new optimized branch office (say 25 seats and up) should be the leader in cloud adoption, not a laggard. The HP Branch Office Networking Solution—with these market-leading technology partners—might just allow the branches to demonstrate a few productivity tricks to the rest of the enterprise.

Indeed, we might just think of many more "branch offices" as myriad nodes within and across the global enterprises, where geography becomes essentially irrelevant. Moreover, the branch office is the SMB, supported by any number and types of service providers, internal and external, public and private, SaaS and cloud.

Data centers get legs
Which brings us to the other end of the HP spectrum for today's news. The same "service providers" that must support these automated branch offices—in all their flavors and across the org chart vagaries and far-flung global locations—must also re-engineer their data centers for the new kinds of workloads, wavy demand curves, and energy- and cost-stingy operational requirements.

So HP has built a sprawling complex in Houston—the POD Works—to build an adaptable family of modular data centers—the HP Performance Optimized Datacenter (POD)—in the shape of 20- and 40-foot tractor-trailer-like containers. As we've seen from some other vendors, these mobile data centers in a box demand only that you drive the things up, lock the brake and hook up electricity, water and a high-speed network. I suppose you also drop them on the roof with a helicopter, but you get the point.

But in today's economy, the efficiency data rules the roost. The HP PODs deliver 37 percent more efficiency and cost 45 percent less than a traditional brick-and-mortar data centers, says HP.

Inside, the custom-designed container is stuffed with highly engineered racks and the cooling, optimized networks and storage, as well as the server horsepower—in this case HP ProLiant SL6500 Scalable Systems, from 1 to 1,000 nodes. While HP is targeting these at the high performance computing and service provider needs—those that are delivering high-scale and/or high transactional power—the adaptability and data center-level design may well become more the norm than the exception.

The PODs are flexible at supporting the converged infrastructure engines for energy efficiency, flexibility and serviceability, said HP. And the management is converged too, via Integrated Lights-Out Advanced (ILO 3), part of HP Insight Control.

The POD parts to be managed are essentially as many as eight servers, or up to four servers with 12 graphic processing units (GPU), in single four-rack unit enclosures. The solution further includes the HP ProLiant s6500 chassis, the HP ProLiant SL390s G7 server and the HP ProLiant SL170s G6 servers. These guts can be flexibly upped to accommodate flexible POD designs, for a wide variety and scale of data-center-level performance and applications support requirements.

Built-in energy consciousness
You may not want to paint the containers green, but you might as well. The first release features optimized energy efficiency with HP ProLiant SL Advanced Power Manager and HP Intelligent Power Discovery to improve power management, as well as power supplies designed with 94 percent greater energy efficiently, said HP.

Start saving energy with delivering more than a teraFLOP per unit of rack space to increase compute power for scientific rendering and modeling applications. Other uses may well make themselves apparent.

Have data center POD, will travel? At least the wait for a POD is more reasonable. With HP POD-Works, PODs can be assembled, tested and shipped in as little as six weeks, compared with one year or longer, to build a traditional brick-and-mortar data center, said HP.

Hey, come to think of it, for those not blocking it with the TippingPoint IPS, I wish Twitter had a few of these on those PODs on the bird strings instead of that fail whale. Twitter should also know that multiple PODs or a POD farm can support large hosting operations and web-based or compute-intensive applications, in case they want to buy Google or Facebook.

Indeed, as cloud computing grains traction, data centers may be located (and co-located) based on more than whale tails. Compliance to local laws, for business continuity and to best serve all those thousands of automated branch offices might also spur demand for flexible and efficient mobile data centers.

Converged infrastructure may have found a converged IT market, even one that spans the globe.

By: Philip Howard, Research Director - Data Management, Bloor Research Posted: 6th October 2010 Copyright Bloor Research © 2010

You can tell that complex event processing (CEP) was not initially developed by a company because no marketing man would ever have allowed a technology to be referred to as complex. In fact, the man generally regarded as the father of CEP, David Luckham, is a professor at Stamford University and he invented the term to describe the processing of complex events, as opposed to any idea that event processing is, in itself, particularly complex. He defines a complex event as “an event that could only happen if lots of other events happen”. For example, to use CEP (or any other technology for that matter) to recognise fraud means recognising the pattern of events that indicates that type of fraud: so this pattern consists of the “lots of other events”. To take a more prosaic example, the completion of an online shopping basket is a complex event that is dependent on a whole series of preceding steps.

Also, bear in mind that events are not limited to a single environment: for example, the availability of hotel rooms represents a complex event that will be influenced by such diverse individual events as the weather, time of year, whether there are any conferences in town and how many, the state of the economy and so on.

So, CEP is essentially about monitoring those individual steps or (micro)events or, in some cases, transactions, and then looking to see if they make up the complex event you are looking for. Or, of course, you might be looking for any one of a number of different complex events so there are multiple patterns against which the incoming event data must be tested against.

That’s it, basically. Of course there are bells and whistles that you can add to make the software faster or easier to use or look prettier but, essentially, CEP is about two things: monitoring events and then looking to see if those events fit into patterns that you are looking for or, sometimes, looking for events that don’t fit an expected pattern (anomaly detection). If you think about what the intelligence communities do, those responsible for squashing terrorist threats before anyone is affected, they are looking for a series of events to establish and identify a complex event that might be a threat. That’s the type of things they’ve been doing for years and businesses can leverage the same approach.

So, the question, naturally, is what can CEP do for your business? And the answers are as diverse as industry and commerce. Two generic examples are a) any environment in which you might want to prevent and/or detect fraud or criminal behaviour or any sort of unwanted behaviour (even if it is not actually illegal but is, perhaps, against corporate governance policies); and b) any network that you need to monitor, whether that be a road, rail, pipeline, computer or utility network. In its broadest sense you can even think of a shop-floor production line as a sort of network and certainly CEP has been employed on the shop-floor as it has in airports and by airlines.

An even more generic example is when you want to link events to a process of some sort. It is often the case that many business processes, for example, are embedded within application software while other processes have been formally modelled and are managed within a BPM (business process management) environment. And then, of course, informal processes abound. One of the issues that arises is how to link these together, and one answer to that is to use CEP, treating each step in a business process and each transaction as an event in its own right. However, this is not limited to business processes per se but any sort of environment where processes are involved, including process manufacturing (the shop-floor again), communications processes (not necessarily within communications companies), integration processes (witness Informatica’s acquisition of AgentLogic) and so on.

Finally, there lots of specific use cases: monitoring PC fleets for carbon emissions, monitoring stock ticks within capital markets, monitoring automated number plate recognition systems, monitoring patient heart rates and so on and so forth.

The bottom line is that if you need something monitored then you may need CEP. It might be because you need to detect a problem (typically, something anomalous has happened); or because there is an opportunity to buy stock or up-sell or cross-sell to an existing customer because you have recognised a particular pattern of events that predicts a higher than usual success rate (using CEP in conjunction with predictive analytics); or because you need to prevent, or at least detect, unwanted behaviour such as a security breach or potential fraud. But whatever your requirement is don’t get put off because it is called complex: it isn’t or, at least, it doesn’t have to be (with the right vendor).

By: Dana Gardner, Principal Analyst, Interarbor Solutions Posted: 4th October 2010 Copyright Interarbor Solutions © 2010

Look for a sharp uptick in cloud computing from financial services firms over the next two years, along with similar increases in cluster and grid technologies. This increased interest comes from a concern over the current data explosion and the firms' lack of scalable environments, insufficient capacity to run complex analytics, and contention for computing resources.

These findings come from a recent survey conducted by Wall Street & Technology in conjunction with Platform Computing, SAS, and the TABB Group. [Disclosure: Platform Computing is a sponsor of BriefingsDirect podcasts.]

Completed in July, the survey found noteworthy differences in the challenges being faced by both buy- and sell-side firms, with sell-side institutions more likely to report a lack of a scalable environment, insufficient capacity to run complex analytics, and contention for computing resources as significant challenges.

According to the survey, data proliferation and the need to better manage it are at the root of many of the challenges being faced by financial institutions of all sizes. Two-thirds (66 percent) of buy-side firms and more than half (56 percent) of sell-side firms are grappling with siloed data sources. The silo problem is being exacerbated by organizational constraints, including policies prohibiting data sharing and access, network bandwidth issues and input/output (I/O) bottlenecks.

Too much data
Ever-increasing data growth is also cause for concern, with firms reporting that they are dealing with too much market data. Sixty-six percent of respondents didn't think their analytics infrastructures would be able to keep pace with demand over time.

Both buy- and sell-side firms plan to increase their focus on liquidity and counterparty risk in the next 12 months. Counterparty risk management was ranked as the highest priority for the sell side (45 percent) with liquidity risk following at 43 percent. Liquidity risk and counterparty risk scored high for the buy side with 36 percent and 33 percent, respectively.

The financial institutions plan to turn to a combination of technologies including cloud computing and grid technologies. Within the next two years, 51 percent of all respondents are considering or likely to invest in cluster technology, 53 percent are considering or likely to buy grid technology, and 57 percent are considering or likely to purchase cloud technology.

The report, “The State of Business Analytics in Financial Services: Examining Current Preparedness for Future Demands,” is available for download at http://www.grid-analytics.wallstreetandtech.com. (Registration required.) Wall Street & Technology, in conjunction with the survey sponsors, will host a webinar to discuss in-depth key findings of the survey on October 7 at 12 pm ET/9 am PT. For more information, visit: http://tinyurl.com/2ulcesm.

By: Dana Gardner, Principal Analyst, Interarbor Solutions Posted: 30th September 2010 Copyright Interarbor Solutions © 2010

Management and governance are the arbiters of success or failure when we look across a cloud services ecosystem and the full lifecycle of those applications. That's why governance is so important in the budding era of cloud computing.

As cloud-delivered services become the coin of the productivity realm, how those services are managed as they are developed, deployed, and used—across a services lifecycle—increasingly determines their true value.

And yet governance is still too often fractured, poorly extended across the development-and-deployment continuum, and often not able to satisfy the new complexity inherent in cloud models.

One key bellwether for future service environments and for defining the role and requirements for automated cloud governance is in applications development, which, due to the popularity of platform as a service (PaaS), is already largely a services ecosystem.

Here to help us explain why baked-in visibility across services creation and deployment is essential please join Jeff Papows, President and CEO of WebLayers and the author of Glitch: The Hidden Impact of Faulty Software, and John McDonald, CEO of CloudOne Corp. The discussion is moderated by BriefingsDirect's Dana Gardner, Principal Analyst at Interarbor Solutions.

Here are some excerpts:

McDonald: Cloud, from a technology perspective, is more about some very sophisticated tools that are used to virtualize the workloads and the data and move them live from one bank of servers to another, and from one whole data center to another, without the user really being aware of it. But, fundamentally, cloud computing is about getting access to a data center that's my data center on-demand.

Fundamentally, the easiest way to remember it is that cloud is to hardware as software as a service (SaaS) is to software. Basically, for CloudOne, we're providing IBM Rational Development tools both through cloud computing and SaaS.

... There's a myth that development is something that we ought to be tooling up for, like providing power to a building or water service. In reality, that’s not how it works at all.

There are people who come and go with different roles throughout the development process. The front-end business analysts play a big role in gathering requirements. Then, quite often, architects take over and design the application software or whatever we are building from those requirements. Then, the people doing the coding—developers—take over. That rolls into testing and that rolls into deployment. And, as this lifecycle moves through, these roles wax and wane.

But the traditional model of getting development tools doesn’t really work that way at all. You usually buy all of the tools that you will ever need up front, usually with a large purchase, put them on servers, and let them sit there, until the people who are going to use them log in and use them. But, while they are sitting there, taking up space and your capital expense budget, and not being used, that’s waste.

The cloud model allows you to spin up and spin down the appropriate amount of software and hardware to support the realities of the software development lifecycle. The money that you save by doing that is the reason you can open any trade magazine and the first seven pages are all going to be about cloud.

It's allowing customers of CloudOne and IBM Rational to use that money in new, creative, interesting ways to provide tools they couldn't afford before, to start pilots of different, more sophisticated technologies that they wouldn't have been able to gather the resources to do before. So, it's not only a cost-savings statement, it's also ease of use, ease of start-up, and an ability to get more for your dollar from the development process. That's a pretty cool thing all the way around.

Papows: A lot of about what’s going on in cloud computing it’s not a particularly new thing. What we used to think of was hosting or outsourcing. What’s happening now is the world is becoming more mobile, as 20 percent of our IT capacity is focused on new application development.

We have to get more creative and more distributed about the talent that contributes to those critical application development and projects. ... Design time governance is the next logical thing in that continuum, so that all of the inherent risk mitigation associated with governance and then IT contacts can be applied to application development in a hybrid model that’s both geographically and organizationally distributed.

When you try to add some linear structure and predictability to those hybrid models, the constant that can provide some order and some efficiency is not purely technology-based. It's not just the virtualization, the added virtual machine capacity, or even the middleware to include companies like WebLayers or tools like Rational. It's the process that goes along with it. One of the really important things about design-time governance is the review process.

Governance is a big part of the technology toolset that institutionalizes that review process and adds that order to what otherwise can quickly become a bit chaotic.

McDonald: The challenge of tools in the old days was that they were largely created during a time where all the people and the development project were sitting on the same floor with each other in a bunch of cubes in offices.

As the challenges of development have caused companies to look at outsourcing and off-shoring, but even more simplistically the merger of my bank and your bank. Then we have groups of developers in two different cities, or we bought a packaged application, and the best skill to help us integrate it is actually from a third-party partner which is in a completely different city or country. Those tools have shown their weaknesses, even in just getting your hands on them.

How do I punch a hole through the firewall to give you a way to check in your code problems? The cloud allows us to create a dedicated new data center that sits on the Internet and is accessible to all, wherever they are, and in whatever time zone they are working, and whatever relationship they have to my company.

That frees things up to be collaborative across company boundaries. But with that freedom comes a great challenge in unifying a process across all of those different people, and getting a collaborative engine to work across all those people.

It’s almost a requirement to keep the wheels on the bus and to have some degree of ability to manage the process in the compliance with regulations and the information about how decisions were made in such distributed ways that they are traceable and reviewable. It’s really not possible to achieve such a distributed development environment without that governance guidance.

Papows: We're dealing with some challenges for the first time that require out-of-the-box thinking. I talk about this in "Glitch." We have reached a point where there a trillion connected devices on the Internet as the February of this year. There are a billion embedded transistors for every human being on the planet.

You’ve read about or heard about or experienced first hand the disasters that can happen in production environments, where you have some market-facing application, where service is lost, where there is even brand damage or economic consequences.

... Everybody intellectually buys into governance, but nobody individually wants to be governed. Unless you automate it, unless you provide the right stack of tools and codify the best practices and libraries that can be reusable, it simply won’t happen. People are people, and without the automation to make it natural, unnatural things get applied some percentage of the time, and governance can’t work that way.

McDonald: Developers view themselves quite often as artists. They may not articulate it that way, but they often see themselves as artists and their palette is code.

As such, they immediately rankle at any notion that, as artists, they should be governed. Yet, as we’ve already established, that guidance for them around the processes, methods, regulations, and so on is absolutely critical for success, really in any size organization, but beyond the pale in a distributed development environment. So, how do you deal with that issue?

Well, you embed it into their entire environment from the very first stage. In most companies, this is trying to decide what projects we should undertake, which in a lot of companies is a mainly over-glorified email argument.

Governance has to be embedded at every step of that way, gently nudging, and sometimes shuttling all these players back into the right line, when it comes to ensuring that the result of their effort is compliant with whatever it is that I needed to be compliant to.

In short, you’ve got to make it be a part of and embedded into every stage of the development process, so that it largely disappears, and becomes something that becomes such a natural extension of the tool so that you don’t have anyone along the way realizing that they are being governed

WebLayers was the very first partner that we reached out to say, "Can you go down this journey with us together, as we begin developing these workbenches, these integrated toolsets, and delivering them through the cloud on-demand?" We already know and see that embedding governance in every layer is something we have to be able to do out of the gate.

The team at WebLayers was phenomenal in responding to that request and we were able to take several based instances of various Rational tools, embed into them WebLayers technology, and based on how the cloud works, archive those, put them up in our library to be able to be pulled down off-the-shelf, cloned, and made an instance of for the various customers that we have coming to our pipeline who want to experience this technology in what we are doing.

... The avoidance of things going badly is unfortunately very difficult to measure. That is something that everyone who attempts to do a cloud-delivered development environment and does the right thing by embedding in it the right governance guidance should know coming out of the gate. The best thing that’s going to happen is you are not going to have a catastrophe.

That said, one of the neat things about having a common workbench, and having the kinds of reporting in metrics that it can measure, meaning the IBM Jazz, along with the WebLayers technology, is that I can get a very detailed view of what’s going on in my software factory at every turn of the crank and where things are coming off the rails a little bit.

Papows: There's an age-old expression that you're so close to the forest you can't see the trees. Well, I think in the IT business we’re sometime so deeply embedded in the bark we can't see anything.

We've been developing, expanding, deploying, and reinventing on a massive scale so rapidly for the last 30 years that we've reached a breaking point where, as I said earlier, between the complexity curves, between the lack of elasticity and human capital, between the explosion and the amount of mobile computing devices and their propensity for accessing all of this back-end infrastructure and applications, where something fundamentally has to change. It's a problem on a scale that can't be overwhelmed by simply throwing more bodies at it.

Secondly, in the current economy, very few CIOs have elastic budgets. We have to do as an industry what we've done from the very beginning, which is to automate, innovate, and find creative solutions to combat the convergence of all of those digital elements to what would otherwise be a perfect storm.

So SaaS, cloud computing, automated governance, forms of artificial intelligence, Rational tooling, consistent workbench methodologies, all of these things are the instruments of getting ourselves out of the corner that we have otherwise painted ourselves in.

I don't want to seem like an alarmist or try to paint too big a storm cloud on the horizon, but this is simply not something that's going to happen or be resolved in a business-as-usual usual fashion.

That, in fact, is where companies like CloudOne are able to expand and leap productivity equations for companies in certain segments of the market. That's where automation, whether it's Rational, WebLayers, or another piece of technology, has got to be part of the recipe of getting off this limb before we saw it off behind us.

McDonald: If you have any inclination at all to see what it is that Jeff and I are telling you, give it a whirl, because it's very simple.

That's one of the coolest things of all about this whole model, in my mind. There there is simply no barrier for anyone to give this a try. In the old model, if you wanted to give the technology a try, you had better start with your calculator. And you had better get the names and addresses of your board of directors, because you're going there eventually to get the capital approval and so on to even get a pilot project started in many cases with some of these very sophisticated tools.

This is just not the case anymore. With the CloudOne environment you can sign on this afternoon with a web-based form to get a instance of let's say, Team Concert set up for you with WebLayers technology embedded in it, in about 20 minutes from when you push "submit," and it's absolutely free for the first model. From there, you grow only as you need them, user-by-user. It's really quite simple to give this concept a try and it's really very easy.

Listen to the podcast. Find it on iTunes/iPod. Read a transcript or download a copy.

By: Rob Bamforth, Principal Analyst, Quocirca Posted: 27th September 2010 Copyright Quocirca © 2010

Technology innovation is often hard to demonstrate to those in senior decision-making roles in most organisations, and generally for very straightforward reasons. Many vendors pitch their products or services as being full of benefits, but often these are simply features dressed up with a few marketing buzzwords ending in ‘ability’. The answer to the question ‘what will it do?’ is generally ‘anything’ as those flogging the idea, either from outside or with the help of internal IT champions typically ignore the unspoken part of the question ‘...for me, our company, against the competition, etc’.

It is an issue of putting the innovation into specific context.

In October 1993 the then Anderson Consulting created a dramatic way of doing this for their retail prospects in Europe, through a ‘blue sky thinking’ experience called ‘Smart Store’, built at its office in Windsor, which aimed to transport senior retail executives into the distant future of 2010. The multi-room showcased the impact of technology in a context that would grab and sometimes shock retail executives into action. Many of the concepts, such as self scanning, logistics tagging and tracking, are now pretty much the norm, so it must have been a successful, if rather expensive investment.

While Smart Store showcased other company’s technology innovation to help Anderson Consulting sell services, other centres of innovation and executive briefing centres have been built by technology companies keen to show off their thought leadership. Both IBM and Sun Microsystems developed these sorts of facilities and have tried as hard as possible to justify the generally hidden back end ‘big tin’ with applications and services set in the context of real business.

Although the theatrics rarely meet the impressive standards of Anderson Consulting, some effort still goes into filling the demonstrations with props. It might seem trivial, but there is merit in demonstrating real world examples and doing some sort of scene setting. After all, how many business leaders or managers seeking solutions to specific business problems want to be faced simply by banks of (expensive) IBM and Sun servers?

From a recent visit to Motorola’s innovation centre in Basingstoke it is clear that money had not been frittered away on superfluous theatrics. The markets being targeted and applications shown address down-to-earth everyday business needs, not blue sky concepts. The main room is filled with many diverse communications devices from simple two way radios to smart consoles for forklift trucks; all great examples of Motorola’s innovation and technical prowess, but how do they connect to business?

Rather than looking for props or theatrics, the clues come from Motorola’s recent changes in corporate structure, in particular the decision to spin off the phones division earlier in 2010 and the acquisition of Symbol in 2006.

As the spinoff of the consumer oriented mobile phone part of the company concludes in 2011, what remains is business and public sector organisation focused, covering wireless LAN, drop in cellular networks and mobile devices. Rather than having the generic devices that might be picked up as consumer friendly phones by the average office worker, the new Motorola has large ranges of more specialised devices, some offering voice communications, some mobile data, others converging both. Why? It allows Motorola to provide different devices to target the specific working needs of different groups of workers, with tools that are sometimes rugged, often just robust, but always designed and dedicated to do a particular job—hence the reason there are so many in the innovation centre.

That is all well and good and, to be honest, what you might expect from a large technically driven company with over seventy years of innovation, but while the hiving off is bringing much needed focus, it is the acquisition and subsequent slow absorption of Symbol that turns that focus into revenue. Symbol not only brought smart small IT devices to the radio company, it also introduced an ecosystem of applications, application developers and channel partners.

This has become the driver for much activity and is where the business innovation is happening; developing a mobile application to meet the business process need of an individual worker, blending small robust hardware with the right interface options to fit their role and adding the spice of well engineered radio technology.

If Motorola can stay partner friendly and avoid the arrogance that so often surrounds long term industry players who think they can do it all themselves, this sounds like a recipe for success for all parties involved.

Mobile applications that address business needs rather than massage egos or satisfy gadget lovers will appeal to the business decision makers. That should put Motorola’s mobile innovation into context, and while its innovation centre is not overly theatrical in its presentation, this is not an issue for the practical business needs being addressed.

By: Dana Gardner, Principal Analyst, Interarbor Solutions Posted: 24th September 2010 Copyright Interarbor Solutions © 2010

An often-overlooked aspect of data center transformation (DCT) is what to do with the older assets as newer systems come online. Much of the retiring IT equipment can possess sensitive data, may be sources of significant economic return, or at least need to be recycled according to various regulations.

Improperly disposing of data and other IT assets can cause embarrassing security breaches, increase costs, and pose the risk of regulatory penalties. Indeed, many IT organizations are largely unaware of the hazards and risks of selling older systems into auction sites, secondary markets or via untested suppliers.

Compliance and recycling issues, as well as data security concerns and proper software disposition, should therefore be top of mind early in the DCT process, not as an after-thought.

In a recent podcast discussion, I tapped two HP executives on how to best manages productive transitions of data center assets—from security and environmental impact, to recycling and resale, and even to rental of transitional systems during a managed upgrade process. I spoke with Helen Tang, Worldwide Data Center Transformation Lead for HP Enterprise Business, and Jim O'Grady, Director of Global Life Cycle Asset Management Services with HP Financial Services.

Here are some excerpts:

Helen Tang: Today there are the new things coming about that everybody is really excited about, such as virtualization, and private cloud. ... This time around, enterprises don’t want to repeat past mistakes, in terms of buying just piles of stuff that are disconnected. Instead, they want a bigger strategy that is able to modernize their assets and tie into a strategic growth enablement asset for the entire business.

Yet throughout the entire DCT process, there's a lot to think about when you look at existing hardware and software assets that are probably aged, and won’t really meet today’s demands for supporting modern applications.

How to dispose of those assets? Most people don’t really think about it nor understand all of the risks involved. ... Even experienced IT professionals, who have been in the business for maybe 10, 20 years, don’t quite have the skills and understanding to grasp all of this.

We're starting to see this  sort of IT hybrid role called the IT controller, that typically reports to the CIO, but also dot-lines into the CFO, so that the two organizations can work together from the very beginning of a data center project to understand how best to optimize both the technology, as well as the financial aspects.

Jim O'Grady: We see that a lot of companies try to manage this themselves, and they don’t have the internal expertise to do it. Often, it’s done in a very disconnected way in the company. Because it’s disconnected and done in many different ways, it leads to more risks than people think.

You are putting your company’s brand at stake, through improper environmental recycling compliance, or exposing your clients, customers, or patients’ data to a security breach. This is definitely one of those areas you don’t want to read about in a newspaper to figure out what went wrong.

One of the most common areas where our clients are caught unaware of is the complexity of the data security, and the e-waste legislation requirements that are out there, and especially the pace of its change.

We suggest that they have a well thought-out plan for destroying or clearing data prior to the asset decommissioning and/or prior to the asset leaving the physical premise of the site. Use your outsource partner, if you have one, as a final validation for data security. So, do it on site, as well as do it off site.

Have a well-established plan and budget up-front, one that’s sponsored by a corporate officer, to handle all of the end-of-use assets well before the end-of-use period comes.

E-waste legislation resides at the state, local, national, and regional levels, and they all differ. There's some conflict, but some are in line with each other. So it's very difficult to understand what your legislative requirements are and how to comply. Your best bet is to deal with a highest standard and pick someone that knows and has experience in meeting these legislative requirements.

There are tremendous amounts of global complexities that customers are trying to overcome, especially when they try to do data center consolidation and transformation, throughout their enterprise across different geographies and country borders.

You're talking about a variety of regulatory practices and directives, especially in the EU, that are emerging and restrict how you move used and non-working product across borders. There are a variety of different data-security practices and environmental waste laws that you need to be aware of.

A lot of our clients choose to outsource this work to a partner. But they need to keep in mind that they are sharing risk with whomever they partner with. So they have to be very cautious and be extremely picky about who they select as a partner.

This may sound a bit self-serving, but I always suggest for enterprises to resist smaller local vendors. ... If you don’t kick the tires with your partner and you don’t find out that the partner consists of a man, a dog, and a pickup truck, you just may have a hard time defending yourself as to why you selected that partner.

Also, develop a very strong vendor audit qualification and ongoing inspection process. Visit that vendor prior to the selection and know where your waste stream is going to end up. Whatever they do with the waste stream, it’s your waste stream. You are a part of the chain of custody, so you are responsible for what happens to that waste stream, no matter what that vendor does with it.

You need to create rigorous documented end-to-end controls and audit processes to provide audit trails for any future legal issues. And finally, select a partner with a brand name and reputation for trust and integrity. Essentially, share the risk.

Enterprises should well consider how they retire and recover value for their entire end-of-use IT equipment, whether it's a PDA or supercomputer, HP or non-HP product. Most data center transformations and consolidations typically end with a lot of excess or end-of-use product.

We can help educate customers on the hidden risk and dispositioning that end-of-use equipment into the secondary market. This is a strength of HP Financial Services (HPFS).

Typically, what we find with companies trying to recover value for product is that they give it to their facilities guys or the local business units. These guys love to put it on eBay and try to advertise for the best price. But, that’s not always the best way to recover the best value for your data center equipment.

Your best bet is to work with a disposition provider that has a very, very strong re-marketing reach into the global markets, and especially a strong demonstrative recovery process.

We're now seeing it migrate into the procurement arm. These guys typically put it out for bid and select the highest bid from a lot of the open market brokers. A better strategy to recover value, but not the best.

Your best bet is to work with a disposition provider that has a very, very strong re-marketing reach into the global markets, and especially a strong demonstrative recovery process.

From a financial asset ownership model, HPFS has the ability to come in and work with a client, understand their asset management strategy, and help them to personalize the financial asset ownership model that makes sense for them.

For example, if you look at a leasing organization, when you lease a product, it's going to come back. A key strength in terms of managing your residual is to recover the value for the product as it comes back, and we do that on a worldwide basis.

We have the ability to reach emerging markets or find the market of highest recovery to be able to recover the value for that product. As we work with clients and they give us their equipment to remarket on their behalf, we bring it into the same process.

When you think about it, an asset recovery program is really the same thing as a lease return. It's really a lot of reverse logistics—bring it into a technical center, where it's audited, the data is wiped, the product is tested, there’s some level of refurbishment done, especially if we can enhance the market value. Then, we bring it into our global markets to recover value for that product.

We have skilled product traders within our product families who know how to hold product, and wait for the right time to release it into the secondary market. If you take a lot of product and sell it in one day, you increase the supply, and all of the recovery rates for the brokers drop overnight. So, you have to be pretty smart. You have to know when to release product in small lot sizes to maximize that recovery value for the client.

We're seeing a big uptake in the need to support legacy product, especially in DCT. We're able to provide highly customized pre-owned authentic legacy HP product solutions, sometimes going back 20 years or more. The need for temporary equipment just scaling out legacy data center hardware platform capacity that’s legacy locked is an increasing need that we see from our clients.

Clients also need to ensure their product is legally licensed and they do not encounter intellectual property right infringements. Lastly, they want to trust that the vendor has the right technical skills to deal with the legacy configuration and compatibility issues.

Our short-term rental program covers new or legacy products. Again, many customers need access to temporary product to prove out some concepts, or just to test some software application on compatibility issues. Or, if you're in the midst of a transformation, you may need access to temporary swing gear to enable the move.

We also help clients understand strategies to recover the best value for decommissioned assets, as well as how to evaluate and how to put in place a good data-security plan.

We help them understand whether data security should be done on-site versus off-site, or is it worth the cost to do it on-site and off-site. We also help them understand the complexities of data wiping enterprise product, versus just the plain PC.

The one thing we help customers understand, and it’s the real hidden complexity is how to set up an effective reverse logistic strategy.

Most of the local vendors and providers out there are skilled in wiping data for PCs, but when you get into enterprise products, it can get really complex. You need to make sure that you understand those complexities, so you can secure the data properly.

Lastly, the one thing we help customers understand, and it’s the real hidden complexity, is how to set up an effective reverse logistic strategy, especially on a global basis. How do you get the timing down for all the products coming back on a return basis?

Tang: We reach out to our customers in various interactions to talk them through the whole process from beginning to end.

One of the great starting points we recommend is something we called the Data Center Transformation Experience Workshop, where we actually bring together your financial side, your operations people, and your CIOs, so all the key stakeholders in the same room, and walk through these common issues that you may or may not have thought about to begin with. You can walk out of that room with consensus, with a shared vision, as well as a roadmap that’s customized for your success.

Listen to the podcast. Find it on iTunes/iPod. Read a full transcript or download a copy.

By: Dana Gardner, Principal Analyst, Interarbor Solutions Posted: 24th September 2010 Copyright Interarbor Solutions © 2010

Sonoa Systems, a provider of application programming interface (API) solutions, has changed its name this week to Apigee.

While Sonoa originally offered a free API tools and management platform, Apigee now offers three product lines for enterprises, developers, and API providers of all sizes. The company now serves more than 7,000 developers and some 140 enterprises with API management services. [Disclosure: Sonoa Systems is a past sponsor of BriefingsDirect podcasts.]

“By unifying the company under one brand and launching our premium line, we can better serve the full spectrum of companies and developers using APIs to power their apps, mobile and multichannel strategies and business partnerships,” said Chet Kapoor, CEO, Apigee.

The traffic has been brisk. Currently, 2,500 GB of data per month and 25k messages are processed per second on Apigee Tech, says the firm.

As I heard more about the role of APIs and how managing and defining that traffic and use patterns—both incoming and outgoing—I was reminded too of the Big Data analysis value so many companies are building out.

What if you were to be able to analyse real-time data with real-time API activities? This may not be for everyone, but many mobile, e-commerce and service providers—and a boat load of web-focused start-ups—could develop some super insights.

Joining the analysis from APIs, systems logs, and data could be a killer business intelligence benefit. It might also spur new revenue by selling that analysis if you happen to find yourself at the juncture of APIs and data and either business or consumer behavior. Viva la real time analytics at scale!

Among the new and rebranded Apigee products:

• Apigee Premium: Announced on Wednesday, Apigee Premium provides advanced features on top of the Apigee Free platform, including unlimited API traffic, advanced rate limiting and analytics, and developer key provisioning. Visit https://app.apigee.com/sign_up to sign up for the preview.
• Apigee Free: A free tools platform launched last year for developers and providers to learn, test, and debug APIs, get analytics on API performance and usage, and apply basic rate-limits to protect their services.
• Apigee Enterprise: An industrial-grade API platform for enterprises using APIs to fuel their mobile, multichannel, application and cloud strategies. Previously Sonoa Systems’ core product ServiceNet, Apigee Enterprise provides API visibility, control, management and security.

By: Dana Gardner, Principal Analyst, Interarbor Solutions Posted: 23rd September 2010 Copyright Interarbor Solutions © 2010

IBM is snapping up yet another business analytics player. After purchasing OpenPages last week, Big Blue is now laying down $1.7 billion in an all-cash deal to acquire Netezza.

Netezza provides high-performance analytics in a data warehousing appliance that claims to handle complex analytic queries 10 to 100 times faster than traditional systems. Netezza appliances puts analytics into the hands of business users in sales, marketing, product development, human resources and other departments that need to actionable insights to drive decision-making.

With its latest business analytics acquisition, Steve Mills, senior vice president and group executive of IBM Software and Systems, says the company is bringing analytics to the masses.

“We continue to evolve our capabilities for systems integration, bringing together optimized hardware and software, in response to increasing demand for technology that delivers true business value,” Mills says. “Netezza is a perfect example of this approach.”

Big Blue’s long haul
Netezza fits in with IBM’s maturing business analytics strategy. Big Blue has long put an emphasis on data analysis and business intelligence (BI) as key drivers of IT infrastructure needs. The company has demonstrated a clear understanding that data analysis and BI can also be easily applied to business issues.

IBM’s relationship database, DB2, also fits into the big picture. Over the years, IBM has built a strong family of database-driven products around DB2. Essentially, IBM has successfully worked to tie the data equation together with the needs of enterprises and the strength of their IT departments.

While DB2 reaches into the past and supports the data needs of legacy and distributed systems and applications, new architectures around in-memory and optimized platforms for persistence-driven tasks are in vogue. While Neteeza's strengths are in analytics, this architecture has other uses, ones we'll be seeing more of.

Fast-forward to the Netezza acquisition. The $1.7 billion grab shows that IBM is well aware that big data sets don’t lend themselves to traditional architecture for crunching data. IBM, along with its competitors, have been developing or acquiring new architectures that focus more on in-memory solutions.

Rather than moving the entire database or large caches around on disk or tape, then, new architectures have emerged where the data and logic reside closer together—and the data is accessed from high-performing persistence.

For example, with Netezza appliances, NYSE Euronext has slashed the time it takes to load and extract massive amounts of historical data so it can run analytic queries more securely and efficiently, while reducing run times from hours to seconds. Virgin Media, a UK provider of TV, broadband, phone and mobile services with millions of subscribers, uses Netezza across its product marketing, revenue assurance and credit services departments to proactively plan, forecast, and respond to the effect of pricing and tariff changes enabling them to quickly respond with competitive offerings.

Business analytics consolidation
With the Netezza acquisition, the business analytics market is seeing consolidation as major players begin preparing to tap into a growing big data opportunity. Much the same as the BI market saw consolidation a few years ago—IBM acquired Cognos, Oracle bought Hyperion, and SAP snapped up Business Objects—vendors are now seeing big data analytics as an area that should be embedded into the total infrastructure of solutions. That requires a different architecture.

The competition is heating up. EMC purchased Greenplum, an enabler of big data clouds and self-service analytics, in July. Both companies are planning to sell the hardware and software together in appliances. The vendors tune and optimize the hardware and software to offer the benefits of big data crunching, taking advantage of in memory architecture and high performance hardware.

Expect to see more consolidation, although there aren’t too many players left in the Netezza space. Acquisition candidates include data management and analysis software company Aster Data Systems and Teradata with its enterprise analytics technologies, among others. [Disclosure: Aster Data is a sponsor of BriefingsDirect podcasts.]

Meanwhile, Oracle this week at OpenWorld is pushing against the market with its new Exadata product. The battle is on. My take is that these purchases are for more than the engines that drive analytics—they are for the engines that drive SaaS, cloud, mobile, web and what we might call the more modern work loads ... data intensive, high-scaling, fast-changing and services-oriented.

BriefingsDirect contributor Jennifer LeClaire provided editorial assistance and research on this post. She can be reached at http://www.linkedin.com/in/jleclaire and http://www.jenniferleclaire.com.

By: Dana Gardner, Principal Analyst, Interarbor Solutions Posted: 22nd September 2010 Copyright Interarbor Solutions © 2010

Morphlabs, a provider of enterprise cloud architecture platforms, has simplified the process of building and managing an internal cloud for enterprise environments -- enabling companies to create their own private cloud infrastructure.

The Manhattan Beach, Calif. company today announced a significant upgrade to its flagship product, mCloud Controller. The enhanced version introduces Enterprise Cloud Architecture (ECA), a new approach that provides enterprises with immediate access to the building blocks and binding components of a fault tolerant, elastic, and highly automated platform.

Morphlabs also announced a partnership with Zend Technologies Ltd., whose Zend Server will be shipped as part of the mCloud Enterprise, said Winston Damarillo, CEO at Morphlabs.

mCloud Controller is a comprehensive cloud computing platform, delivered as an appliance or virtual appliance, as well as providing open mCloud APIs (you can manage the ECA cloud from an iPad, for example). To support the leading platforms, mCloud Controller will have built-in ECA compliant support for Java, Ruby on Rails, and PHP.

Fittingly for enterprise private clouds, the Morph offering also provides direct integration to mainstream middleware via standards-based connectors. It also supports a plethora of VMs, from KVM to Xen, and and VMware, and allows for others cluster managers to be used as well.

Look for Morphlabs to seek to sell to both service providers and enterprises for the compatible hybrids benefits. Of course, we're hearing the same from Citrix, VMware, Novell, HP, etc. It's a horse race out there for a de facto hybrid cloud standard, all right.

Productivity gains
“PHP has been broadly adopted for the productivity gains it brings to Web application development, and because it can provide the massive scalability that e-commerce, social networking and media sites require,” said Matt Elson, vice president of business development at Zend. “Integrating Zend Server into Morphlabs’ mCloud Controller enables IT organizations to leverage the elasticity of cloud computing and automate the process of deploying highly reliable PHP applications in the cloud.”

Key features of the mCloud Controller with ECA include:

• Uniform environments from development to production to help users simplify system configuration. Applications can grow as needed, while maintaining a standardized infrastructure for ease of growth and replacement.
• Simplified system administration with automated monitoring and self-healing out of the box to avoid complicated system tuning. mCloud Controller also comes with graphical tools for viewing system-wide performance.
• Self-service resource provisioning, which frees the IT department from numerous application provisioning requests. Without any system administration skills, authorized users can start and stop computes and provision applications as needed. Billing is also included within the system.
• Streamlined application management automates the process of deploying, monitoring and backing-up applications. Users do not have to deal with configuration files and server settings.

The mCloud Controller v2.5 is available now in the United States, Japan and South East Asia. For more information contact Morphlabs at info@mor.ph.

By: Dana Gardner, Principal Analyst, Interarbor Solutions Posted: 21st September 2010 Copyright Interarbor Solutions © 2010

Aster Data has taken big data management and analytics to the next level with the announcement of its Aster Data nCluster 4.6, which includes a column data store and provides a universal SQL-MapReduce analytic framework on a hybrid row and column massively parallel processing (MPP) database management system (DBMS).

The San Carlos, Calif. company's new offering will allow users to choose the data format best suited to their needs and benefit from the power of Aster Data’s SQL-MapReduce analytic capabilities, as well as Aster Data’s suite of 1000+ MapReduce-ready analytic functions. [Disclosure: Aster Data is a sponsor of BriefingsDirect podcasts.]

Row stores traditionally have been optimized for look-up style queries, while column stores are traditionally optimized for scan-style queries. Providing both a row store and a column store within nCluster and delivering a unified SQL-MapReduce framework across both stores enables both query types.

Universal query framework
For example, a retailer using historical customer purchases to derive customer behavior indicators may store each customer purchase in a row store to ease retrieval of any individual customer order. This is a look-up style query. This same retailer can see a 5–15x performance improvement by using a column store to provide access to the data for a scan-style query, such as the number of purchases completed per brand or category of product. The Aster Data platform now supports both query types with natively optimized stores and a universal query framework.

Other features include:

• Choice of storage, implemented per-table partition, which provides customers flexible performance optimization based on analytical workloads.
• Such services as dynamic workload management, fault tolerance, Online Precision Scaling on commodity hardware, compression, indexing, automatic partitioning, SQL-MapReduce, SQL constructs, and cross-storage queries, among others.
• New statistical functions popular in decision analysis, operations research, and quality management including decision trees and histograms.

By: Dana Gardner, Principal Analyst, Interarbor Solutions Posted: 21st September 2010 Copyright Interarbor Solutions © 2010

HP is pushing the automation card again with new tools for hybrid IT environments. The company Wednesday announced “enhanced automation solutions” that set the stage for lower-cost business application deployment — whether those apps are deployed traditionally, virtually or via a cloud.

HP’s latest Business Service Automation (BSA) enhancements beef up its solutions for hybrid IT environments, which the company defines as any combination of on-premise, off-premise, physical and virtual scenarios, including cloud computing. [Disclosure: HP is a sponsor of BriefingsDirect podcasts.]

HP has identified a strong need in the enterprise, which is why it’s moving so fast on the BSA front. Although hybrid IT environments can increase a business’s agility and speed time to market, they also increase complexity, risk and costs by creating IT silos — if the environment isn’t holistically managed. HP’s new BSA software enhancements work to take the “if” out of the equation.

A 360-degree hybrid solution
This week’s BSA announcement builds on HP’s recent cloud announcements for hybrid IT environments. The just-announced software enhances the HP’s BSA portfolio to offer unified server, network, storage, and application management. The goal is to break down IT silos to simplify application development and hybrid IT management.

HP is promising financial returns for companies that adopt its solutions. According to a June 2010 ExpertROI Spotlight, conducted by IDC on behalf of HP, organizations that deploy HP BSA solutions can realize up to $4.82 in benefits for every IT dollar invested, reduce annual IT costs by up to $24,000 per 100 end users, and reduce outsourcing costs by 40 percent to 80 percent.

“Organizations are seeking solutions that deliver business applications and services with greater agility, speed and at the lowest cost to the enterprise, regardless of their IT environment,” says Erik Frieberg, vice president of Marketing, Software and Solutions at HP. “Clients can achieve up to 382 percent ROI by deploying HP’s leading automation software and leverage the benefits of new hybrid delivery models.”

HP’s acquisition of Stratavia has strengthened its automation portfolio by adding deployment, configuration and management solutions for enterprise databases, middleware and packaged applications. These solutions aim to bridge the gap between application development and operational teams. With Stratavia’s technology in its portfolio, HP said it can now provision all of the components, rapidly deploy changes and manage the ongoing configuration and compliance management.

Under the BSA hood
HP’s BSA portfolio now offers new capabilities in application deployment and risk mitigation, as well as better efficiency and productivity. For example, HP Server Automation 9.0 helps clients automate the entire server life cycle, control virtualization sprawl, and provide more flexible provisioning and deployment of applications. New Application Deployment Manager (ADM) functionality lets IT organizations automate the release process to bridge the gap between development, quality assurance and operations teams. HP said these enhancements can accelerate application deployment by up to 86 percent.

What’s more, HP Network Automation 9.0 now helps clients contain costs, mitigate risk and improve efficiency of the network by automating error-prone tasks, reducing outages and enforcing policies in real-time regardless of the environment. And HP Operations Orchestration 9.0 helps clients faced with constant alerts and siloed teams improve service quality across hybrid environments. It gives clients the ability to automate the IT processes required to support cloud computing initiatives.

HP Operations Orchestration software can help manage a hybrid infrastructure through a single view while HP Client Automation 7.8 helps clients reduce administration costs for managing physical and virtual machines through a single tool. And HP Storage Essentials 6.3 helps clients reduce complexity in hybrid environments, while improving storage utilization and controlling capacity growth.

IT needs to play at productivity better
The BSA offerings come at a crossroads for enterprise IT. The fact is that IT can no longer just compete against its own past practices and cost structures. There's a looming gulf between what IT costs the IT department to provide and what a small army of outside hosts is coming to market with. IT now needs to compete against the costs structures of pure-play cloud and SaaS providers and hosts.

The solution for IT to remain competitive, and to pick and choose what to retain and what to outsource, is to make all of its systems and apps perform better and more efficiently. And it also needs the governance and management to automate those apps and systems to keep complexity and costs in line.

Visibility, automation and management are essential for IT to stay in the game against hosts, MSPs, clouds, SaaS providers, etc. And the same management allows IT to function as the best broker of services, regardless of where the servers reside. This is clearly the target HP's BSA portfolio has in its sights.

BriefingsDirect contributor Jennifer LeClaire provided editorial assistance and research on this post. She can be reached at http://www.linkedin.com/in/jleclaire and http://www.jenniferleclaire.com.

By: Dana Gardner, Principal Analyst, Interarbor Solutions Posted: 20th September 2010 Copyright Interarbor Solutions © 2010

Getting developers on board. That’s the challenge technologies from Linux to Android face every day. Genuitec has helped Eclipse overcome this challenge with Pulse. Indeed, more than one million developers around the world have now installed Pulse.

Pulse works to give software developers an efficient way to locate, install and manage their Eclipse-based tool suite, among other tools. The software essentially empowers developers to customize their installs while avoiding plug-in management issues—even when crossing operating systems. [Disclosure: Genuitec is a sponsor of BriefingsDirect podcasts.]

“When we envisioned Pulse in 2007, we knew the developer community badly needed an easy technology to help manage their Eclipse tools,” says Maher Masri, president and CEO of Genuitec, a founding and strategic member of the Eclipse Foundation. “Now with one million users, we can happily say Pulse is a great success story.”

The Pulse advantage
One of the advantages Pulse is pushing out to its one million developers is the ability to manage four years of Eclipse platform technologies from a single dashboard, including Eclipse 3.0, also known as Helios.

That’s no small feat, seeing how many enterprises standardize on older Eclipse versions, yet still demand an easy migration path to upgrade their projects, technical artifacts, and other mission-critical subsystems. Developers can even access Eclipse 3.7, also known as Indigo, as the milestones are rolled out in coming months.

This multi-year tool stack feature is part of the reason why Pulse has attracted so many Eclipse developers. Pulse is the only product on the market that supports this type of lifecycle-based stack management.

Getting to know Pulse
Pulse also provides a product family of offerings. There’s a Community Edition that’s free, a Managed Team Edition that aims at the needs of development teams, and a Private Label software delivery version designed for corporate use. Pulse Community Edition is free for individual developers, while Pulse Managed Team Edition is $60 annually. Pricing for Pulse Private Label, a software delivery and management platform, is based on individual requirements.

“Pulse, like many other powerful Eclipse-based technologies, continues to attract world-class developers to the Eclipse platform,” says Mike Milinkovich, executive director of the Eclipse Foundation. “As we continuously enhance our code base and march toward Eclipse 3.7 next summer, we’re pleased that Genuitec will continue to support developers using Eclipse with its Pulse management software.”

BriefingsDirect contributor Jennifer LeClaire provided editorial assistance and research on this post. She can be reached at http://www.linkedin.com/in/jleclaire and http://www.jenniferleclaire.com.

By: Dana Gardner, Principal Analyst, Interarbor Solutions Posted: 17th September 2010 Copyright Interarbor Solutions © 2010

Delphix has brought virtualization techniques to database infrastructure with general availability of Delphix Server, which reduces structured and relational data redundancy while maintaining full functionality and performance -- and operating in a fraction of the space at lower cost.

The Palo Alto, Calif. company, just launching this week at DEMO, says that Delphix Server solves two major IT challenges: the operational complexity and redundant infrastructure required to support applications lifecycles via multiple database caches. Delphix software installs on standard x86 servers or in virtual machines, allowing customers to virtualize database infrastructure into a "single virtual authority" and do for relational data what storage innovations and "de-dupe" have done to reduce myriad standing copies of data caches.

The interface for managing the data is very clean and time-line based down to seconds. It reminds me of an enterprise-level version of Apple's Mac OS X Time Machine, but far more granular. This allows all those with access to the data to manage it intelligently but sparingly.

While Delphix consolidates storage and reduces database provisioning and refresh times, it adds little or no impact to production systems through its innovative synchronization technology, says Jed Yueh, CEO at Delphix. Other benefits include:

• Agile application development: Delphix automates the provisioning and refresh process, enabling developers to instantly create personal sandboxes or virtual databases (VDBs) that are up-to-date and isolated from other VDBs. Developers can cut months out of project schedules and perform destructive or parallel testing to improve overall application quality and performance.

• Improved data resiliency: Patent-pending TimeFlow technology enables customers to create a running record of database changes; VDBs can be instantly provisioned from multiple points-in-time, with granularity down to the second. This time-shifting capability enables businesses to dramatically reduce the time required to recover from logical data loss.

• Storage consolidation: The average customer creates seven copies of each production database for development, testing, QA, staging, operational reporting, pilots, and training, with each copy typically having its own dedicated and largely redundant storage. Delphix creates a single virtual environment, where multiple VDBs can be instantly provisioned or refreshed from a shared footprint -- coordinating changes and differences in the background without compromising functionality or performance.

Both enterprises and service providers for SaaS and cloud will benefit from reducing the vast data redundancy across the app dev and ops lifecycle. By shrinking the hardware requirements, those hosts seeking to improve their margins gain, while enterprises and ISVs can devote the server and storage resources to more productive uses.

I should think that the app dev and test folks would grok the benefits too. Why not cut the hardware and storage costs for bringing applications to maturity by virtualizing the databases? What works for the OS and runtime works for the data.

You may also be interested in:

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• Technology, process and people must combine smoothly to achieve strategic virtualization benefits

By: Dana Gardner, Principal Analyst, Interarbor Solutions Posted: 15th September 2010 Copyright Interarbor Solutions © 2010

• Technology, process and people must combine smoothly to achieve strategic virtualization benefits
• Converged Infrastructure Approach Paves Way for Improved Data Center Productivity
  
• HP's Bill Veghte on managing complexity amid converging IT 'inflection points'

By: Dana Gardner, Principal Analyst, Interarbor Solutions Posted: 15th September 2010 Copyright Interarbor Solutions © 2010

We've all heard about client virtualization or virtual desktop infrastructure (VDI) over the past few years, and there are some really great technologies for delivering a PC client experience as a service.

But today’s business and economic drivers need to go beyond just good technology. There also needs to be a clear rationale for change -- both business and economic. Second, there needs to be proven methods for properly moving to client virtualization at low risk and in ways that lead to both high productivity and lower total costs over time.

Cloud computing, mobile device proliferation, and highly efficient data centers are all aligning to make it clear that the deeper and flexible client platform support from back-end servers will become more the norm and less the exception over time.

Client devices and application types will also be dynamically shifting both in numbers and types, and crossing the chasm between the consumer and business spaces. The new requirements for business mobile use point to the need for planning and proper support of the infrastructures that can accommodate these edge, wireless clients.

To help guide business on client virtualization infrastructure requirements, learn more about client virtualization strategies and best practices that support multiple future client directions, and see why such virtualization makes sense economically, we went to Dan Nordhues, Marketing and Business Manager for Client Virtualization Solutions in HP's Industry Standard Servers Organization. The interview is conducted by BriefingsDirect's Dana Gardner, Principal Analyst at Interarbor Solutions.

Here are some excerpts:

Nordhues: In desktop virtualization, what really comes out to the user device is just pixel information. These protocols just give you the screen information, collect your user inputs from the keyboard and mouse, and take those back to the application or the desktop in the data center.

When you look at desktop virtualization, whether it’s a server-based computing environment, where you are delivering applications, or if you are delivering the whole desktop, as in VDI, to get started you really have to take a look at your whole environment -- and make sure that you're doing a proper analysis and are actually ready.

On the data center side, as we start talking about cloud, the solution is really progressing. HP is moving very strongly toward what we call converged infrastructure, which is wire it once and then have it provisioned and be ready to provide the services that you need. We're on a path where the hardware pieces are there to deliver on that.

But you have to look at the data center and its capacity to house the increased number of servers, storage, and networking that has to go there to support the user.

So now you get the storage folks in IT, the networking folks, and the server support folks all involved in the support of the desk-side environment. It definitely brings a new dynamic.

This is not a prescription for getting rid of those IT people. In fact, there is a lot of benefit to the businesses by moving those folks to do more innovation, and to free up cycles to do that, instead of spending all those cycles managing a desktop environment that may be fairly difficult to manage.

Where we're headed with this, even more broadly than VDI, is back to the converged infrastructure, where we talked about wire it once and have it be a solution. Say you're an office worker and you're just getting applications virtualized out to you. You're going to use Microsoft Office-type applications. You don’t need a whole desktop. Maybe you just need some applications streamed to you.

Maybe, you're more of a power user, and you need that whole desktop environment provided by VDI. We'll provide reference architectures with just wire it once type of infrastructure with storage. Depending on what type of user you are, it can deliver both the services and the experience without having to go back and re-provision or start over, which can take weeks and months, instead of minutes.

Also, really a hybrid solution could deliver in the future VDI plus server-based computing together and cover your whole gamut of users, from the very lowest task-oriented user, all the way up to the highest end power users that you have.

And, we're going to see services wrapped around all of this, just to make it that much simpler for the customers to take this, deploy it, and know that it’s going to be successful.

Why VDI now?

It’s a digital generation of millions of new folks entering the workforce, and they've grown up expecting to be mobile and increasingly global. So, we need to have computing environments that don’t have us having to report to a post number in an office building in order to get work done.

We have an increasingly global and mobile workforce out there. Roughly 60 percent of employees in organizations don’t work where their headquarters are for their company, and they work differently.

When you go mobile, you give up some things. However, the major selling point is that you can get access. You can check in on a running process, if you need to see how things are progressing. You can do some simple things like go in and monitor processes, call logs, or things like that. Having that access is increasingly important.

Delivering packaged services out to the end user is something that’s still being worked out by software providers, and you're going to see some more elements of that come out as we go through the next year.

And, of course, there's the impact of security, which is always the highest on customer lists. We have customers out there, large enterprise accounts, who are spending north of $100 million a year just to protect themselves from internal fraud.

With client virtualization, the security is built in. You have everything in the data center. You can’t have users on the user endpoint side, which may be a thin client access device, taking files away on USB keys or sticks.

It’s all something that can be protected by IT, and they can give access only to users as they see fit. In most cases, they want to strictly control that. Also, you don’t have users putting applications that you don't want ... on top of your IT infrastructure.

And there is really a catalyst coming as well in the Windows 7 availability and launch since late last year. Many organizations are looking at their transition plans there. It’s a natural time to look at a way to do the desktop differently than it has been done in the past.

Reference architectures support all clients

We've launched several reference architectures and we are going to continue to head down this path. A reference architecture is a prescribed solution for a given set of problems.

A lot of the deployment issue, and what makes this difficult, is that there are so many choices.

For example, in June, we just launched a reference architecture for VDI that uses some iSCSI SAN storage technology, and storage has traditionally been one of the cost factors in deploying client virtualization. It has been very costly to deploy Fibre Channel SAN, for example. So, moving to this iSCSI SAN technology is helping to reduce the cost and provide fantastic performance.

In this reference architecture, we've done the system integration for the customer. A lot of the deployment issue, and what makes this difficult, is that there are so many choices. You have to choose which server to use and from which vendor: HP, Dell, IBM, or Cisco? Which storage to choose: HP, EMC, or NetApp? Then, you have got the software piece of it. Which hypervisor to use: Microsoft, VMware, or Citrix? Once you chase all these down and do your testing and your proof of concept, it can take quite a substantial length of time.

We targeted the enterprise first. Some of our reference architectures that are out there today exist for 1,000-plus users in a VDI environment. If you go to some of the lower-end offerings we have, they are still in the 400-500 range.

We're looking at bringing that down even further with some new storage technologies, which will get us down to a couple of hundred users, the small and medium business (SMB) market, certainly the mid-market, and making it just very easy for those folks to deploy. They'll have it come completely packaged.

Today, we have reference architectures based on VDI or based on server-based computing and delivering just the applications. As I mentioned before, were looking at marrying those, so you truly have a wire-it-once infrastructure that can deliver whatever the needs are for your broad user community.

What HP has done with these reference architectures is say, "Look, Mr. Customer, we've done all this for you. Here is the server and storage and all the way out to the thin client solution. We've tested it. We've engineered it with our partners and with the software stack, and we can tell you that this VDI solution will support exactly this many knowledge workers or that many productivity users in your PC environment." So, you take that system integration task away from the customer, because HP has done it for them.

We have a number of customer references. I won’t call them out specifically, but we do have some of these posted out on HP.com/go/clientvirtualization, and we continue to post more of our customer case studies out there. They are across the whole desktop virtualization space. Some are on server-based computing or sharing applications, some are based on VDI environments, and we continue to add to those.

With any new computing technology, the underlying consideration is always cost or, in this case, a lot of customers look at it at a cost-per-seat perspective, and this is no different.

HP also has an ROI or TCO calculator that we put together specifically for this space. You show a customer a case study and they say, "Well, that doesn’t really match my pain points. That doesn’t really match my problem. We don’t have that IT issue," or "We don’t have that energy, power issue."

We created this calculator, so that customers can put in their own data. It’s a fairly robust tool, but we can put in information about what’s your desktop environment costing you today, what would it cost to put in a client virtualization environment, and what you can expect as far as your return on investment. So, it’s a compelling part of the discussion.

Obviously, with any new computing technology, the underlying consideration is always cost or, in this case, a lot of customers look at it at a cost-per-seat perspective, and this is no different, which is why we have provided the tool and the consulting around that.

On that same website that I mentioned, HP.com/go/clientvirtualization, we have our technical white papers that we've published, along with each of these reference architectures.

For example, if you pick the VDI reference architecture that will support 1,000-plus users in general, there is a 100-page white paper that talks about exactly how we tested it, how we engineered it, and how it scales with the VMware view or with Microsoft Hyper-V, plus Citrix XenDesktop.

• Thin Is In: The Enterprise Virtualization Inflection Point
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• HP teams with Microsoft, VMware to expand appeal of desktop virtualization solutions

By: Dana Gardner, Principal Analyst, Interarbor Solutions Posted: 10th September 2010 Copyright Interarbor Solutions © 2010

We're only in the first years of the data-driven decade. More companies will be making more of their business decisions—and also added revenue—on their own data services.

Investing in good data analytics infrastructure now allows companies to know themselves and their markets far better. It eliminates guessing and brings more of a real-time picture of their operations, challenges and opportunities.

Good data organizers can also then share or sell that data and analytics to partners and/or customers, and acquire meaningful additional outside data themselves from other data services purveyors.

The trick for IT is to allow their companies to extract business intelligence (BI) from these vast data sets at an affordable price. And more companies—that is small and medium businesses—will want in on the data and analytics revolution. Competition will drive them to.

So what's needed now is a change in the economics of business intelligence via value-oriented offerings for the mid-market. Traditional entry points for large data warehouses are often $500,000 and up, not to mention the ongoing operations costs and need to acquire data and systems management skills.

BI comes to wider audience
SAS, at the A2010 conference last week, launched Rapid Predictive Modeller (RPM), a service targeting non-analytical business users to help create more BI reports. SAS RPM joins the latest release of SAS Enterprise Miner 6.2, which includes an add-in for Microsoft Excel.

These steps toward making BI and reports available to more users at a lower price will no doubt be welcome to SMBs and enterprises dripping in data, but struggling to make sense of it all.

We're only now seeing massively parallel data warehousing appliances priced at the $50,000 mark. And these appliances tend to be cheaper to administrate and operate. Aster Data Systems, for example, recently came out with a lower-cost competitive solution dubbed MapReduce Data Warehouse Appliance – Express Edition. Aster also has a new CEO, Quentin Gallivan, announced today.

Aster, Netezza and Teradata are all focusing on the mid-market. Green Plum was recently bought by EMC. A recent Forrester report put Teradata, Oracle, IBM and Microsoft at the head of the data warehouse market, with Netezza, Sybase and SAP noted for niche deployments.

Oracle and HP teamed up two years ago on the Exadata appliance for Oracle warehouse workloads. And now Oracle is putting its Sun Microsystems acquisition to use for its own Exadata appliances line-up.

Expect a vendor slugfest on the lower end of the data warehousing and BI market in the next few years. It will be fascinating to see how these vendors will both enter the entry-level markets, while also seeking to maintain the high-end pricing for the largest users. There could be a value sweet spot in the middle.

We should therefore expect to see prices come down on these systems across the board, making the systems more attainable for even more types of uses and users.

By: Dana Gardner, Principal Analyst, Interarbor Solutions Posted: 9th September 2010 Copyright Interarbor Solutions © 2010

Figuring that small- and medium-sized businesses (SMBs) want the best in IT advances too, HP on Wednesday unleashed a barrage of products and services that use integration, low-cost, and simplicity to bring cutting edge enterprise IT capabilities to the global mid-market.

The new products and services—ranging from the $329 HP ProLiant MicroServer to $424 minitower PCs to simplified virtualization, networking and storage bundles—come from multiple organizations across HP, but with a singular Goldilocks target of “Just Right IT” for SMBs. [Disclosure: HP is a sponsor of BriefingsDirect podcasts.]

The slew of value-oriented offerings is also designed to give HPs various global channel partners a new horse to ride into town on as the SMBs look beyond recession-reckoning for how to grow their operations while becoming more productive. The products and services are also available from HP directly.

HP is also putting financial muscle behind the channel partners and users by providing aggressive financing options leasing, life cycle asset management and upgrade services. HP Financial Services is the second-largest captive IT leasing company in the world, said HP. Leasing provides SMBs with flexibility (with no or low upfront payments) and a path to migrate to newer technology.

While the value and utilization benefits of virtualization have been quickly adopted by larger companies and IT departments, the use of hypervisors has been slower in SMBs. To help solve that, HP has developed more complete virtualization environments using Virtualization Smart Bundles with Microsoft Hyper-V Server 2008 R2. The bundles target storage, servers and networking virtualization technology uses.

The SMB-targeted worker productivity releases include:

• HP ProLiant MicroServer, an energy-efficient file server designed for businesses with up to 10 employees to centralize information and securely access files faster (at about half the size and 50 percent quieter than most entry-level servers).
• Web connectivity in the low-cost HP Officejet Pro 8500A e-All-in-One series and HP Officejet 7500A Wide Format e-All-in-One, which allow users to send print jobs from mobile devices as well as access content from the web without a PC.
• Slashed costs and energy use in the now-available HP 500B and 505B Series Business Desktop PCs, mini-towers installed with Windows 7 with Intel or AMD processors
• Simplified HP Insight with Microsoft System Center Essentials 2010 for monitoring and management of IT from a single console so midsize businesses can adopt or expand use of virtualized servers and storage.

The SMB-targeted storage management releases include:

• Storage advancements via the 10GbE iSCSI capabilities of the HP StorageWorks P2000 G3 Modular Smart Array (MSA), which speeds the server/storage connection bandwidth by 10 times.
• HP ITSM Assessment for Virtualized Environments Service for increased system availability and process improvements
• HP Data Protector Express 5.0 Software, designed for the general user for managing data backup and recovery on single servers as well as small networks in Windows, Linux and NetWare environments.
• Simplified shared storage with the HP P4000 Virtual SAN Appliance (VSA) so those using virtualized servers (deployed on Microsoft Hyper-V or VMware virtual machines) can move to shared storage without purchasing costly physical storage area network infrastructure.

The SMB-targeted networking and communications releases include:

• HP voice-over-IP and wireless offerings with the HP V-M200 802.11n Access Point Series, which connects up to 64 simultaneous mobile users to the network at wire-like speeds.
• HP VCX 9.5 IP Telephony system and 350x IP Phones (starting at $119), which enable the convergence of voice and data onto a single network infrastructure.

SMBs are where economists look for growth to emerge from recessions, and in developing countries. For years, though, large IT vendors have focused on the top ends of the IT market. It makes a lot of sense for HP to scale the technology and offerings down to the SMBs—which is a huge total market, poised for unprecedented growth in the world's most populous regions.

Fact is, too, that due to proliferating mobile devices and wireless networks, nearly all companies of any size need to deeply embrace technology and networking to remain competitive. Data explosion also makes it unavoidable to bring in managed storage and backup, not to mention the burgeoning requirements of security and managed access.

While many of us analysts harp on about the virtues and inevitability of cloud computing, for many small companies and in many regions, the promise of cloud cannot be considered until the basics of IT are modernized and managed.

Mobile devices alone can not take the place of a LAN and managed storage. In many ways, these new HP products and bundles—with their pricing and simplicity—can be seen as stepping stones for SMBs to soon be able to exploit the value and potential of cloud-based services, too.

And then we actually might see these SMBs leap-frog their larger corporate brethren, rather than be seen as a lagging market category, in regards to IT productivity and enablement. And wouldn't that be exciting?

By: Dana Gardner, Principal Analyst, Interarbor Solutions Posted: 3rd September 2010 Copyright Interarbor Solutions © 2010

The trap of unchecked virtualization complexity can have a stifling effect on the advantageous spread of virtualization in data centers.

Indeed, many enterprises may think they have already exhausted their virtualization paybacks, when in fact, they have only scratched the surface of the potential long-term benefits.

Automation, policy-driven processes and best practices are offering more opportunities for optimizing virtualization so that server, storage, and network virtualization can move from points of progress into more holistic levels of adoption.

The goals then are data center transformation, performance and workload agility, and cost and energy efficiency. Many data centers are leveraging automation and best practices to attain 70 percent and even 80 percent adoption rates.

By taking such a strategic outlook on virtualization, process automation sets up companies to better exploit cloud computing and IT transformation benefits at the pace of their choosing, not based on artificial limits imposed by dated or manual management practices.

To explore how automation can help achieve strategic levels of virtualization, BriefingsDirect brought together panelists Erik Frieberg, Vice President of Solutions Marketing at HP Software, and Erik Vogel, Practice Principal and America's Lead for Cloud Resources at HP. The discussion is moderated by Dana Gardner, Principal Analyst at Interarbor Solutions.

Here are some excerpts:

Vogel: Probably the biggest misconception that I see with clients is the assumption that they're fully virtualized, when they're probably only 30 or 40 percent virtualized. They've gone out and done the virtualization of IT, for example, and they haven't even started to look at Tier 1 applications.

The misconception is that we can't virtualize Tier 1 apps. In reality, we see clients doing it every day. The broadest misconception is what virtualization can do and how far it can get you. Thirty percent is the low-end threshold today. We're seeing clients who are 75–80 percent virtualized in Tier 1 applications.

Frieberg: The three misconceptions I see a lot are, one, automation and virtualization are just about reducing head count. The second is that automation doesn't have as much impact on compliance. The third is if automation is really at the element level, they just don't understand how they would do this for these Tier 1 workloads.

You're starting to see the movement beyond those initial goals of eliminating people to ensuring compliance. They're asking how do I establish and enforce compliance policies across my organization, and beyond that, really capturing or using best practices within the organization.

When you look at the adoption, you have to look at where people are going, as far as the individual elements, versus the ultimate goal of automating the provisioning and rolling out a complete business service or application.

When I talk to people about automation, they consistently talk about what I call "element automation." Provisioning a server, a database, or a network device is a good first step, and we see gaining market adoption of automating these physical things. What we're also seeing is the idea of moving beyond the individual element automation to full process automation.

As companies expand their use of automation to full services, they're able to reduce that time from months down to days or weeks. This is what some people are starting to call cloud provisioning or self-service business application provisioning. This is really the ultimate goal—provisioning these full applications and services versus what is often IT’s goal—automating the building blocks of a full business service.

This is where you're starting to see what some people call the "lights out" data center. It has the same amount or even less physical infrastructure using less power, but you see the absence of people. These large data centers just have very few people working in them, but at the same time, are delivering applications and services to people at a highly increased rate rather than as traditionally provided by IT.

Vogel: One of the challenges that our clients face is how to build the business case for moving from 30 percent to 60 or 70 percent virtualized. This is an ongoing debate within a number of clients today, because they look at that initial upfront cost and see that the investment is probably higher than what they were anticipating. I think in a lot of cases that is holding our clients back from really achieving these higher levels of virtualization.

In order to really make that jump, the business case has to be made beyond just reduction in headcount or less work effort. We see clients having to look at things like improving availability, being able to do migrations, streamlined backup capabilities, and improved fault-tolerance. When you start looking across the broader picture of the benefits, it becomes easier to make a business case to start moving to a higher percentage of virtualization.

One of the things we saw early on with virtualization is that just moving to a virtual environment does not necessarily reduce a lot of the maintenance and management that we have, because we haven’t really done anything to reduce the number of OS instances that have to be managed.

The benefits are relatively constrained, if we look at it from just a physical footprint reduction. In some cases, it might be significant if a client is running out of data-center space, power, or cooling capacity within the data center. Then, virtualization makes a lot of sense because of the reduction in asset footprint.

But, when we start looking at coupling virtualization with improved process and improved governance, thereby reducing the number of OS instances, application rationalization, and those kinds of broader process type issues, then we start to see the big benefits come into play.

Now, we're not talking just about reducing the asset footprint. We're also talking about reducing the number of OS instances. Hence, the management complexity of that environment will decrease. In reality, the big benefits are on the logical side and not so much on the physical side.

Frieberg: What we're seeing in companies is that they're realizing that their business applications and services are becoming too complex for humans to manage quickly and reliably.

The demands of provisioning, managing, and moving in this new agile development environment and this environment of hybrid IT, where you're consuming more business services, is really moving beyond what a lot of people can manage. The idea is that they are looking at automation to make their life easier, to operate IT in a compliant way, and also deliver on the overall business goals of a more agile IT.

Companies are almost going through three phases of maturity when they do this. The first aspect is that a lot of automation revolves around "run book automation" (RBA), which is this physical book that has all these scripts and processes that IT is supposed to look at.

But, what you find is that their processes are not very standardized. They might have five different ways of configuring your device, resetting the server, and checking why an application isn’t working.

So, as we look at maturity, you’ve got to standardize on a set of ways. You have to do things consistently. When you standardize methods, you then find out you're able to do the second level of maturity, which is consolidate.

Vogel: It becomes more than just talking about the hardware or the virtualization, but rather a broader question of how IT operates and procures services. We have to start changing the way we are thinking when we're going to stand up a number of virtual images.

When we start moving to a cloud environment, we talk about how we share a resource pool. Virtualization is obviously key and an underlying technology to enable that sharing of a virtual resource pool.

We're seeing the virtualization providers coming out with new versions of their software that enable very flexible cloud infrastructures.

This includes the ability to create hybrid cloud infrastructures, which are partially a private cloud that sits within your own site, and the ability to burst seamlessly to a public cloud as needed for excess capacity, as well as the ability to seamlessly transfer workloads in and out of a private cloud to a public cloud provider as needed.

We're seeing the shift from IT becoming more of a service broker, where services are sourced and not just provided internally, as was traditionally done. Now, they're sourced from a public cloud provider or a public-service provider, or provided internally on a private cloud or on a dedicated piece of hardware. IT now has more choices than ever in how they go about procuring that service.

But it becomes very important to start talking about how we govern that, how we control who has access, how we can provision, what gets provisioned and when. ... It's a much bigger problem and a more complicated problem as we start going to higher levels of virtualization and automation and create environments that start to look like a private cloud infrastructure.

I don’t think anybody will question that there are continued significant benefits, as we start looking at different cloud computing models. If we look at what public cloud providers today are charging for infrastructure, versus what it costs a client today to stand up an equivalent server in their environment, the economics are very, very compelling to move to a cloud-type of model.

Without the proper governance in place, we can actually see cost increase, but when we have the right governance and processes in place for this cloud environment, we've seen very compelling economics, and it's probably the most compelling change in IT from an economic perspective within the last 10 years.

Frieberg: If you want to automate and virtualize an entire service, you’ve got to get 12 people to get together to look at the standard way to roll out that environment, and how to do it in today’s governed, compliant infrastructure.

The coordination required, to use a term used earlier, isn’t just linear. It sometimes becomes exponential. So there are challenges, but the rewards are also exponential. This is why it takes weeks to put these into production. It isn’t the individual pieces. You're getting all these people working together and coordinated. This is extremely difficult and this is what companies find challenging.

The key goal here is that we work with clients who realize that you don’t want a two-year payback. You want to show payback in three or four months. Get that payback and then address the next challenge and the next challenge and the next challenge. It's not a big bang approach. It's this idea of continuous payback and improvement within your organization to move to the end goal of this private cloud or hybrid IT infrastructure.

Vogel: We've developed a capability matrix across six broad domains to look at how a client needs to start to operationalize virtualization as opposed to just virtualizing a physical server.

We definitely understand and recognize that it has to be part of the IT strategy. It is not just a tactical decision to move a server from physical machine to a virtual machine, but rather it becomes part of an IT organization’s DNA that everything is going to move to this new environment.

We're really going to start looking at everything as a service, as opposed to as a server, as a network component, as a storage device, how those things come together, and how we virtualize the service itself as opposed to all of those unique components.

It really becomes baked into an IT organization’s DNA, and we need to look very closely at their capability—how capable an organization is from a cultural standpoint, a governance standpoint, and a process standpoint to really operationalize that concept.

Listen to the podcast. Find it on iTunes/iPod. Read a full transcript or download a copy.

By: Dana Gardner, Principal Analyst, Interarbor Solutions Posted: 1st September 2010 Copyright Interarbor Solutions © 2010

Platform Computing has paved the way to faster private cloud adoption with a low-risk, low-cost way for companies to evaluate their use of cloud computing. The Platform ISF Starter Pack, announced this week, will enable architects and IT managers to get a cloud sandbox environment up and running in less than 30 minutes, the company says.

The $4,995 Starter Pack announcement comes as a slew of vendors are focused on the adoption path for private clouds. More private cloud developments are expected at this week's VWworld conference.

Platform ISF manages application workloads across multiple virtual machine (VM) technologies and provisioning tools. It includes self-service, automated provisioning and chargeback capabilities. It supports multiple VM technologies, including ESX, Xen, KVM and Hyper-V, as well as popular provisioning tools, such as Red Hat Satellite, IBM xCAT, Symantec Altiris, and Platform Cluster Manager. [Disclosure: Platform Computing is a sponsor of BriefingsDirect podcasts.]

“Organizations have plenty of toolkits to choose from as they evaluate private cloud, but they require multiple tools that users must string together themselves,” said James Pang, Vice President Product Management for Platform. “What’s more, these toolkits can cost $50,000 or more, and require 30-plus days of onsite consulting to build and customize an evaluation environment. We wanted to provide a cheap and easy way for users to get up and running quickly with a single product."

Software and best practices
The ISF Starter Pack, which costs $4,995, includes software, best practices advice and help to set up private cloud and includes:

• One-year Platform ISF term license for 10 sockets, including support
• Half-day orientation training
• Half-day cloud building consultation
• Integration advice for Platform ISF with your internal tools

By: Dana Gardner, Principal Analyst, Interarbor Solutions Posted: 31st August 2010 Copyright Interarbor Solutions © 2010

Clearly seeing a sweet spot amid complex and costly applications support for Microsoft Exchange, SharePoint and SAP R/3 implementations, HP on Monday delivered a CloudStart package of turnkey private cloud infrastructure capabilities with a self-service, SasS portal included.

Delivered at the VMworld conference in San Francisco, HP is taking a practical approach for creating cloud and shared services deployment models that make quick economic sense by targeting costly and sprawling server farms that support seas of Microsoft, SAP and other "out of the box" business applications as services. [Disclosure: HP is a sponsor of BriefingsDirect podcasts.]

In doing so, HP is moving quickly to try and carve out a leadership position for the fast (30 days, they say) set-up of private clouds, coupled with the ease of a SaaS-based deployment, maintenance and ongoing operations portal that implements and supports the clouds and the applications they support. The targeting of costly and often inefficient Microsoft Exchange and SharePoint farms also points to the creeping separation of Microsoft's and HP's infrastructure—and cloud—strategies.

At the same time, HP's cloud hardware, software and services packaging via CloudStart exploits HP's product strengths while setting the stage for enterprise application stores, service catalogs of metered apps as services, more choices of moving to hybrid clouds, and easy segues to multiple sourcing and hosting options, all of which play into HP's Enterprise Services (nee EDS) on the hosting side.

CloudStart is also what I believe is only the opening salvo in a comprehensive private cloud initiative and strategy drive that HP aims to win. Expect more developments through the fall on HP Cloud Service Automation (CSA) and applications lifecycle management products, services and professional services support offerings.

HP's VMworld news today also comes on the heels of a slew of private cloud product and services offerings last week.

Partners form ecosystem approach
The HP CloudStart package—with third-party partner ecosystem players like Intel, Samsung, VMware and Carnegie Mellon—combines the features of HP BladeSystem Matrix, Converged Infrastructure, Cloud Service Automation stack, StorageWorks, and other governance and management offerings. That on top of the globally available HP server hardware and networking hardware portfolios. HP says, however, that CloudStart is designed to integrate well with an enterprises's existing heterogeneous platforms, any hypervisor, and third-party and open source middleware.

Such mission-critical aspects as disaster recovery, security, storage efficiency, governance, patches support, compliance and audits support, and use metering and charge-backs billing are also included in the CloudStart offerings and road map, HP said.

HP also announced Cloud Maps for use with apps and solutions from VMware, SAP, Oracle and Microsoft to significantly speed application deployment via tested, cloud-ready app configurations. Cloud Maps are imported directly into private cloud environments, enabling them to develop a catalog of cloud services.

The combination of the cloud elements could lead to a "standardized" approach for creating and expanding private clouds throughout an enterprise, said Paul Miller, vice president, Solutions and Strategic Alliances, Enterprise Servers, Storage and Networking at HP. The solution is designed to be deployed on-premises but uses an HP-operated, off-premises and SaaS setup and operations portal.

And that SaaS, self-service aspect could be a key to the practical deployment of enterprise clouds, which HP sees as rapidly growing in interest in a "multi-source IT world," even if enterprises are not quite sure how to begin. HP recognizes that moving from a non-cloud problem set of complexity and sprawl to a cloud-based world of complexity and sprawl sort of defeats the purpose and economics.

IT leaders need cloud road map
"When CIOs have a simplified way to map their path to the private cloud, including all the necessary components from infrastructure and applications to services, they are more likely to identify a comprehensive and realistic deployment scenario for their organization," said Matt Eastwood, group vice president, Enterprise Platform Group, IDC, in a release. "With the HP CloudStart solution, clients now have a way to accelerate the adoption of service-oriented environments for a private cloud that matches the speed, flexibility and economies of public cloud without the risk or loss of control."

So CloudStart works to consolidate, integrate, and converge the cloud support elements—and in doing so creates a compelling alternative to IT infrastructure as usual. And maybe a standard on-ramp to the use of heterogeneous private clouds?

The HP CloudStart solution is offered now in Asia-Pacific and Japan and expected to be available globally in December.

I see the self-service portal as a critical differentiator, and could also lead to what we think of the "app stores" model for consumer and entertainment uses moving to the enterprise apps space. Because once a private cloud has been deployed, and is managed via a HP portal, applications in a service catalog via the portal could be then chosen and deployed in a common manner, all with a managed pay-as-you go metered model or other SLAs. Indeed, other apps within the enterprise could also be brought into the cloud to also be metered and charged back by usage to the business users.

Kind of reminds me of getting the values of SOA but having someone else build it out.

Accountants love this model, as it helps move IT from a cost center into an SLA-driven service center. Over time a variety of hybrid cloud offerings—perhaps leveraging the standardized CloudStart deployment model and common billing model—could be explored and transitioned to. That is, HP could then go the enterprises using CloudStart and via the management portal, offer to run those or other apps on its data centers—perhaps substantially cutting the total costs of apps delivery.

This way, the enterprise app store and service catalog becomes the interface between the IT managers and the service vendors. IT becomes a procurement and brokering function, amid—one hopes‚—a vibrant market of cloud services offerings. It makes IT into more like any other mature business function ... like materials, logistics, supply chain, HR, energy, facilities, etc.

Future of IT?
Here's where the future of IT is headed. Whatever vendor/supplier/service provider (and its ecosystem) gets to IT as a service first and best, and then offers the best long-term value, support, management and reliability ... wins.

HP clearly wants to be on the short list of such winning providers.

By: Dana Gardner, Principal Analyst, Interarbor Solutions Posted: 27th August 2010 Copyright Interarbor Solutions © 2010

A trio of cloud ecosystem companies have collaborated to offer an integrated technology platform that aims to deliver a swift on-ramp to private and hybrid cloud computing models in the enterprise.

newScale, rPath and Eucalyptus Systems are combining their individual technology strengths in a one-two-three punch that promises to help businesses pump up their IT agility through cloud computing. [Disclosure: rPath is a sponsor of BriefingsDirect podcasts.]

The companies will work with integration services provider MomentumSI to deliver on this enterprise-ready platform that relies on cloud computing, integrating infrastructure for private and hybrid clouds with enterprise IT self-service, and system automation.

No cloud-in-a-box
From my perspective, cloud solutions won’t come in a box, nor are traditional internal IT technologies and skills apt to seamlessly spin up mission-ready cloud services. Neither are cloud providers so far able to provide custom or "shrink-wrapped" offerings that conform to a specific enterprise’s situation and needs. That leaves a practical void, and therefore an opportunity, in the market.

This trio of companies is betting that self-service private and hybrid cloud computing demand will continue to surge as companies press IT departments to deliver on-demand infrastructure services readily available from public clouds like Amazon EC2. Since many IT organizations aren’t ready to make the leap, they don’t have the infrastructure or process maturity to transition to the public cloud. That’s where the new solution comes in.

Incidentally, you should soon expect similar cloud starter packages of technology and services, including SaaS management capabilities, from a variety of vendors and partnerships. Indeed, next week's VWworld conference should be rife with such news.

The short list of packaged private cloud providers includes VMware, Citrix, TIBCO, Microsoft, HP, IBM, Red Hat, WSo2, RightScale, RackSpace, Progress Software and Oracle/Sun. Who else would you add to the list? [Disclosure: HP, Progress and WSO2 are sponsors of BriefingsDirect podcasts].

Well, add Red Hat, which this week preempted VWworld with news of its own path to private cloud offerings, saying only Red Hat and Microsoft can offer the full cloud lifecycle parts and maintenance. That may be a stretch, but Red Hat likes to be bold in its marketing.

Behind the scenes
Here’s how the newScale, rPath and Eucalyptus Systems collaboration looks under the hood. newScale, which provides self-service IT storefronts, brings its e-commerce ordering experience to the table. newScale’s software lets IT run on-demand provisioning, enforce policy-based controls, manage lifecycle workloads and track usage for billing.

rPath will chip in its automating system development and maintenance technologies. With rPath in the mix, the platform can automate system construction, maintenance, and on-demand image generation for deployment across physical, virtual and cloud environments.

This trio of companies is betting that self-service private and hybrid cloud computing demand will continue to surge

For its part, Eucalyptus Systems, an open source private cloud software developer, will offer infrastructure software that helps organizations deploy massively scalable private and hybrid cloud computing environments securely. MomentumSI comes in on the back end to deliver the solution.

It's hard to imagine that full private and/or hybrid clouds are fully ready from any singe single vendor. And who would want that, and the inherent risk of lock-in a one-stop cloud shop would entail? Best-of-breed and open source components work just as well for cloud as for traditional IT infrastructure approaches. Server, storage and network virtualization may make the ecosystem approach even more practical and cost-efficient for private clouds. Pervasive and complete management and governance are the real keys.

My take is that ecosystem-based solutions then are the first, best way that many organizations will likely actually use and deploy cloud services. The technology value triumvirate of newScale, rPath and Eucalyptus—with solution practice experience of MomentumSI—is an excellent example of the ecosystem approach most likely to become the way that private cloud models actually work for enterprises for the next few years.

BriefingsDirect contributor Jennifer LeClaire provided editorial assistance and research on this post. She can be reached at http://www.linkedin.com/in/jleclaire and http://www.jenniferleclaire.com.

By: Dana Gardner, Principal Analyst, Interarbor Solutions Posted: 20th August 2010 Copyright Interarbor Solutions © 2010

As data center planners seek to improve performance and future-proof their investments, the networking leg on the infrastructure stool can no longer stand apart. Advances such as widespread virtualization, increased modularity, converged infrastructure, and cloud computing are all forcing a rethinking of data center design.

And so the old rules of networking need to change because specialized, labor-intensive and homogeneous networking systems need to be be brought into the total modern data center architecture. The increasingly essential role of networking in data center transformation (DCT) needs to stop being a speed bump and instead cut complexity while spurring on adaptability and flexibility.

Networking must be better architected within—and not bolted onto—the DCT future. The networking-inclusive total architecture needs to accomplish the total usage pattern and requirements for both today and tomorrow—and with an emphasis on openness, security, flexibility, and sustainability.

To learn more about how networking is changing, and how organizations can better architect networking into their data centers future, BriefingsDirect assembled two executives from HP, Helen Tang, Worldwide Data Center Transformation Solutions Lead, and Jay Mellman, Senior Director of Product Marketing in the HP Networking Unit. The discussion is moderated by BriefingsDirect's Dana Gardner, Principal Analyst at Interarbor Solutions.

Here are some excerpts:

Tang: As we all know, in 2010 most IT organizations are wrestling with the three Cs—reducing cost, reducing complexity, and also tapping the problem of hitting the wall with capacity from a base, space, and energy perspective.

The reason it's happening is because IT is really stuck between two different forces. One is the decades of aging architecture, infrastructure, and facilities they have inherited. The other side is that the business is demanding ever faster services and better improvements in their ability to meet requirements.

The confluence of that has really driven IT to ... a series of integrated data center projects and technology initiatives that can take them from this old integrated architecture to an architecture that’s suited for tomorrow’s growth.

DCT ... includes four things: consolidation, whether it's infrastructure, facilities or application; virtualization and automation; continuity and sustainability, which address the energy efficiency aspect, as well as business continuity and disaster recovery; and last, but not least, converged infrastructure.

Networking actually plays in all these areas, because it is the connective tissue that enables IT to deliver services to the business. It's very critical. In the past this market has been largely dominated by perhaps one vendor. That’s led to a challenge for customers, as they address the cost and complexity of this piece.

[With DCT] we've seen just tremendous cost reduction across the board. At HP, when we did our own DCT, we were able to save over a billion dollars a year. For some of our other customers, France Telecom for example, it was €22 million in savings over three years—and it just goes on and on, both from an energy cost reduction, as well as the overall IT operational cost reductions.

Mellman: Today’s architecture is very rigid in the networking space. It's very complex with lots of specialized people and specialized knowledge. It's very costly and, most importantly, it really doesn’t adapt to change.

The kind of change we see, as customers are able to move virtual machines around, is exactly the kinds of thing we need in networking and don’t have. So there has been a dramatic change in what's demanded of networking in a data center context.

Within the last couple of years ... customers were telling us that there were so many changes happening in their environments, both at the edge of the network, but also in the data center, that they felt like they needed a new approach.

Look at the changes that have happened in the data center just in the last couple of years—the rise of virtualization and being able to actually take advantage of that effectively, the pressures on time to market in alignment with the business, and the increasing risk from security and the increasing need for compliance.

For example, there's the sheer number of connections, as we went from single large servers to multiple racks of servers, and to multiple virtual machines for services—all of which need connectivity. We have different management constructs between servers, storage, and networking ... that have been very difficult to deal with.

Tie all these together, and HP felt this is the right time [for a change]. The other thing is that these are problems that are being raised in the networking space, but they have direct linkage to how you would best solve the problem.

We've been in the business for 25 to 30 years and we are successfully the number two vendor in the industry selling primarily at the edge. ... We can now do a better job because we can actually bring the right engineering talent together and solve [networking bottlenecks] in an appropriate way. That balances the networking needs with what we can do with servers, what we can do with storage, with software, with security and with power and cooling, because often times, the solution may be 90 percent networking, but it involves other pieces as well.

There are opportunities where we go from more than 210 different networking components required to serve a certain problem down to two modules. You can kind of see that's a combination of consolidation, convergence, cost reduction, and simplicity, all coming together.

We saw a real requirement from customers to come in and help them create more flexibility, drive risk down, improve time to service and take cost out of the system, so that we are not spending so much on maintenance and operation, and we can put that to more innovation and driving the business forward.

A couple of these key rules drive simplicity. The job of a network admin needs to be made as simple and have as much automation and orchestration as the jobs of SysAdmins or SAN Admins today.

The second is that we want to align networking more fully with the rest of the infrastructure, so that we can help customers deliver the service they need when they need it, to users in the way that they need it. That alignment is just a new model in the networking space.

Finally, we want to drive open systems, first of all because customers really appreciate that. They want standards and they want to have the ability to negotiate appropriately, and have the vendors compete on features, not on lock-in.

Open standards also allow customers to pick and choose different pieces of the architecture that work for them at different points in time. That allows them, even if they are going to work completely with HP, the flexibility and the feeling that we are not locking them in. What happens when we focus on open systems is that we increase innovation and we drive cost out of the system.

The traditional silos between servers and storage and networking are finally coming down. Technology has come to an inflection point.

What we see are pressures in the data center, because of virtualization, business pressures, and rigidity, giving us an opportunity to come in with a value proposition that really mirrors what we’ve done for 25 years, which is to think about agility, to think about alignment with the rest of IT, and to think about openness and really bringing that to the networking arena for the first time.

For example, we have a product called Virtual Connect, which has a management concept called Virtual Connect Enterprise Manager. It allows the networking team and the sever teams to work off the same pool of data. Once the networking team allocates connectivity, the server team can work within that pool, without having to always go back to the networking team and ask for the latest new IP address and new configurations.

HP is really focused on how we bring the power of that orchestration, and the power of what we know about management, to allow these teams to work together without requiring them, in a sense, to speak the same language, when that’s often the most difficult thing that they have to do.

When we look at agility and ability to improve time-to-service, we are often seeing an order of magnitude or even two orders of magnitude [improvement] by churning up a rollout process that might take months—and turning it into hours or days.

With that kind of flexibility, you avoid the silos, not necessarily just in technology, but in the departments, as requests from the server and storage teams to the networking team. So, there are huge improvements there, if we look at automation and risk. I also include security here.

It's very critical, as part of these, that security be embedded in what we're doing, and the network is a great agent for that. In terms of the kinds of automation, we can offer single panes of glass to understand the service delivery and very quickly be able to look at not only what's going on in a silo, but look at actual flows that are happening, so that we can actually reduce the risk associated with delivering the services.

Finally, in terms of cost, we're seeing—at the networking level specifically—reductions on the order of 30 percent to as high as 65 percent by moving to these new types of architectures and new types of approaches, specifically at the server edge, where we deal with virtualization.

HP has been recognizing that customers are increasingly not being judged on the quality of an individual silo. They're being judged on their ability to deliver service, do that at a healthy cost point, and do that as the business needs it. That means that we've had to take an approach that is much more flexible. It's under our banner of FlexFabric.

Tang: The traditional silos between servers and storage and networking are finally coming down. Technology has come to an inflection point. We're able to deliver a single integrated system, where everything can be managed as a whole that delivers incredible simplicity and automation as well as significant reduction in the cost of ownership.

[To learn more] a good place to go is www.hp.com/go/dct. That’s got all kinds of case studies, video testimonials, and all those resources for you to see what other customers are doing. The Data Center Transformation Experience Workshop is a very valuable experience.

Mellman: There are quite a few vendors out there who are saying that the future is all about cloud and the future is all about virtualization. That ignores the fact that the lion's share of what's in a data center still needs to be kept.

You want an architecture that supports that level of heterogeneity and may support different kinds of architectural precepts, depending on the type of business, the types of applications, and the type of pressures on that particular piece.

What HP has done is try to get a handle on what is that future going to look like without prescribing that it has to be a particular way. We want to understand where these points of heterogeneity will be and what will be able to be delivered by a private cloud, public cloud, or by more traditional methods and bring those together, and then net it down to architectural things that makes sense.

We realize that there will be a high degree of virtualization happening at the server edge, but there will also be a high degree of physical servers for especially some big apps that may not be virtualized for a long time, Oracle, SAP, some of the Microsoft things. Even when they are, they are going to be done with potentially different virtualization technologies.

Even with a product like Virtual Connect, we want to make sure that we are supporting both physical and virtual server capabilities. With our Converged Network Adaptors, we want to support all potential networking connectivity, whether it’s Fibre Channel, iSCSI, Fibre Channel over Ethernet or server and data technology, so that we don’t have to lock customers into a particular point of view.

We recognize that most data centers are going to be fairly heterogeneous for quite a long time. So, the building blocks that we have, built on openness and built on being managed and secure, are designed to be flexible in terms of how a customer wants to architect.

It’s best having the customer just step back and say, "Where is my biggest pain point?" The nice thing with open systems is that you can generally address one of those, try it out, and start on that path. Start with a small workable project and get a good migration path toward full transformation.

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