The state of enterprise architecture: Vast promise or lost opportunity?

Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Read a full transcript or download a copy. Sponsor: The Open Group.

Coming to you from The Open Group Conference in Boston, we’ve assembled a panel this week to delve into the advancing role and powerful potential for enterprise architecture (EA).

The economy’s grip on IT budgets, and the fast changing sourcing models like cloud computing, are pointing to a reckoning for EA -- of now defining a vast new promise for IT business alignment improvement or, conversely, a potentially costly lost opportunity.

The need for EA seems to be more pressing than ever, yet efforts to professionalize EA do not necessarily lead to increased credibility and adoption, at least not yet.

We’ll examine the shift of IT from mysterious art to more engineered science and how enterprise architects face the unique opportunity to usher in the concept of business architecture and increased business agility.

Here to help us better understanding the dynamic role of EA, we're joined by Jeanne Ross, Director and Principal Research Scientist at the MIT Center for Information Systems Research and noted author; Dave Hornford, an architecture practice principal at Integritas Solutions, as well as the Chairman of The Open Group Architecture Forum, and Len Fehskens, Vice President for Skills and Capabilities at The Open Group. The discussion is moderated by me, Dana Gardner, Principal Analyst at Interarbor Solutions.

Here are some excerpts:

Fehskens: [Enterprise architecture] is really just a gleam in many people’s eye at this point. If you look at the discipline of EA and compare it to mature professions like law and medicine, we’re back 200-300 years ago. We’ve been doing a lot of research recently into the professionalization of other disciplines.

Most of the people studying the subject come up with a fairly short list of characteristics of professions. They usually include things like a well-defined body of knowledge, and well-defined educational program and particular degree programs, often offered by schools that are specifically focused on the discipline, not just the department within a larger organization.

There's some kind of professional certification or vetting process and often even some kind of legal sanction, a right to practice or right to bear the title. We don’t have any of those things right now for EA.

Proprietary knowledge

The body of knowledge is widely distributed and is largely proprietary. We’re at a state similar to going to a lawyer, and the lawyers try to sell themselves based on secret processes that only they had that would allow you to get a fair shake before a judge. Or similar thing with a doctor, who would say, "Come to this hospital, because we’re the only people who know how to do this particular kind of procedure."

So, we’ve got a long way to go. The big thing we’ve got going for us is that, as Jeanne pointed out, the stakes are high and so many organizations are becoming dependent upon the competent practice of EA as a discipline.

There's a lot of energy in the system to move forward very quickly on the professionalization of the discipline, and in addition to take advantage of what we’ve learned from watching the professionalization of disciplines like law, medicine, engineering, civil architecture, etc. We’ve got long ways to go, but we are running really hard to make some progress.

Ross: The stakes are high, because organizations are becoming more digital out of necessity. It’s a more digital economy. Thus, IT is more strategic. I think people see that, but outside of people who have already embraced architecture, there is some reluctance to think that the way we get more value from IT is basically by taming it, by establishing a vision and building to standards and understanding how that relates back to new ways of doing business, and actually developing standards around business processes and around data.

... The architect’s role is to make sure that there is a vision. You may have to help provide that vision as to what that process is, and how it fits into a bigger vision. So there is a lot of negotiation and envisioning that becomes part of an architect’s role that is above and beyond just the technology piece and the methodology that we’ve worked so hard at in terms of developing the discipline.

... We’ve learned a lot about methodologies, disciplines, and tools, but there is an art to be able to take the long-term vision for an organization and not just say, "It’ll come guys, be patient," but rather, "I understand that starting tomorrow, we need to begin generating value from more disciplined processes."

... There is a piece of it that’s just not appealing [across the organization]. Besides, we feel like this should all be about innovation, which should be all exciting stuff. Architecture just doesn’t have the right feel for a lot of businesspeople.

Hornford: The stakes are high in the sense that should someone in your industry figure this out, they will change the game on you, and you will now be in a serious trouble. As long as all of your competition is struggling as long as you are, you’re okay. It’s when someone figures it out that they will change the game.

Where people are doing it well is where they are focused on business value. The question of what is business value is highly dependent. People will mention a term, “agility.” I work with a mining company. They define agility as the ability to disassemble their business. They have a mine. Someone buys the mine. We need to remove the mine from the business. A different organization will define agility a different way, but underpinning all of that is what is the business trying to achieve? What is their vision and what is their goal?

Practitioners who are pursuing this have to be very clear on what is the end state, what is the goal, what is the business transformation, and how will the digital assets of the corporation the IT asset actually enable where they’re going, so that they’re able to move themselves to a target more effectively than their competition.

... The fundamental with leadership in EA is that architects don’t own things. They are not responsible for the business processes. They are not responsible for the sales results. They are responsible for leading a group of people to that transformation, to that happy place, or to the end-state that you're trying to achieve.

If you don't have good leadership skills, the rest of it fundamentally doesn’t matter. You’ll be sitting back and saying, "Well, if I only had a hammer. If I only had authority, I could make people do things." Well, if you have that authority, you would be the general manager. You’d be the COO. They're looking for someone to assist them in areas of the business at times that they can't be there.

... If you do not lead and do not take the risk to lead, the transformation won’t occur. One of the barriers for the profession today is that many architects are not prepared to take the risk of leadership.

Fehskens: A phrase that you’ll hear architects use a lot is "compelling value proposition." The authority of an architect ultimately comes from their ability to articulate a compelling value proposition for architecture in general, for specific architect in a specific situation. Even if you have a compelling value proposition and it falls on deaf ears, for whatever reason, that’s the end of the road.

There isn’t any place you can go, because the only leverage an architect has is the ability to articulate a compelling value proposition that says, "I’ve recognized this. I acknowledge this is promise, but here’s why you have reason to believe that I can actually deliver on this and that when I have delivered on this, this thing itself will deliver these promised benefits."

But, you have to be able to make that argument and you have to be able to do it in the language of the audience that you're speaking to. This is probably one of the biggest problems that architects coming from a technical background have. They'll tell you about features and functions but never get around talking about benefits.

... Architects are ultimately charged with making sure that whatever it is that they're architecting is fit for purpose. Fitness for purpose involves not doing any more than you absolutely have to. ... The architect’s approach to dealing with the architectural way of problem solving means that agility and cost cutting sort of are not short-term focuses. They are just built into the idea of why we do architecture in the first place.

... My experience with businesspeople is they don’t really care how you do something. All they care is what results you're going to produce. What you do is just a black box. All they care about is whether or not the black box delivers all the promises that it made.

To convince somebody that you can actually do this, that the black box will actually solve this problem without going into the details of the intricacies and sort of trying to prove that if I just show you how it works then you’ll obviously come to the conclusion that it will do what I promise, you can’t do that that. For most audiences that just doesn’t work. That’s probably one of the most fundamental skills that architects need in order to work through this problem -- getting people to buy into what they are trying to sell.

The thing to recognize about business agility is that it’s a journey. You don’t want to start making your compelling business values something you can't deliver for three years.

Ross: The thing to recognize about business agility is that it’s a journey. You don’t want to start making your compelling business values something you can't deliver for three years. Many times the path to agility is through risk management, where you can demonstrate the ability of the IT unit to reduce downtime to increase security or lower cost. The IT unit can often find ways to lower IT cost or to lower operational cost through IT.

So, many times, the compelling value proposition for agility is down the road. We've already learned how to save money. Then, it’s an easier sell to say, "Oh, you know, we haven’t used IT all that well in the past, but now we can make you more agile." I just don’t think anybody is going to buy it.

It’s a matter of taking it a step at a time, showing the organization what IT can help them do, and then, over time, there's this natural transition. In fact, I'm guessing a lot of organizations say, "Look, we're more agile than we used to be." It wasn’t because they said they were going to be agile, but rather because they said they were going to keep doing things better day after day.

Hornford: If we're going to look at our sourcing options, using the word "component" as opposed to "platform," I can acquire a benefit. I can acquire a benefits engine as a service or I can build my own and manage my own processes, whether fully manual or digitized. Those choices come down to my value in the business.

Different organizations will have different things that matter to them. They will structure and compose their businesses for a different value chain for a different value proposition to their customers.

If we get back to the core of what an architect has to deliver, it’s understanding what is the business’s value, where are we delivering value to my customers?

Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Read a full transcript or download a copy. Sponsor: The Open Group.

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Open Group panel: Enterprise Architects increasingly join in common defense against cyber security threats

Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Read a full transcript or download a copy. Sponsor: The Open Group.

Welcome to a panel discussion that examines the need for improved common defenses -- including advancing cooperation between enterprise architects and chief security officers -- to jointly defend against burgeoning cyber security threats. The risks are coming from inside enterprises, as well as myriad external sources.

From the panel, at The Open Group Conference this week in Boston, we’ll learn more about the nature of these borderless, external, cyber security threats, as they emerge from criminal enterprises, globally competitive business sources, even state-based threats, and sometimes a combination of these. We’ll also hear recommendations on developing smarter processes for cyber security based on proven methods and pervasive policies.

To help broaden the scope of enterprise architecture, and to develop a leverage point for "mission architecture"-levels of security and defenses, we're joined by retired Air Force Lt. Gen. Harry D. Raduege Jr., chairman of the Deloitte Center for Cyber Innovation, and who co-chairs a cybersecurity commission under President Obama; Jim Hietala, Vice President of Security at the Open Group, and Usman Sindhu, researcher at Forrester Research. The panel is moderated by Dana Gardner, principal analyst at Interarbor Solutions.

Here are some excerpts:

Raduege: With openness, come these new threats. The vulnerabilities that we have of operating in cyberspace are magnified by ... identity theft, information manipulation, information theft, cyber crime, and insider threats that are prevalent in many of our organizations and companies today. Also, the threat of espionage, of losing lots of intellectual property from our businesses, and the cyber attacks that are taking place, the denial-of-service (DOS), and also the threat that we see on the horizon -- cyberterrorism.

There's now a tremendous opportunity for us to gain the benefits of being able to communicate, not only nationally, but also internationally, and across all borders, in the area of cyber security. This is an international problem, and so an opportunity for us to take advantage of it. We’re all in this together.

Many people are bringing best practices to the table. We’re learning from each other’s experiences. The international cooperation and the opportunity to meet and discuss these areas are very valuable to all of us individually, and to our companies and to our nations.

This is the significance of this type of a gathering, to talk about the real benefits of cyberspace, but also to talk about the issues of cyber security that are facing us all. The importance of the underlying foundational aspects of having a great enterprise architecture is pointing more toward a mission architecture for business success.

Organizations like The Open Group are working on the common standards that are so important for the international community to comply with and to have as guiding factors. Education is very important, developing a cyber mindset across all people of the world, not only in the government organizations, but for industry, and also the individual users at home.

The aspects of education and training and awareness of what’s going on there in cyber is paramount for proper operation, but also for the protection of your critical information.

The aspects of education and training and awareness of what’s going on there in cyber is paramount for proper operation, but also for the protection of your critical information.

Sindhu: Traditionally, security has been a point technology. Even in the government space, there has been a lot of focus around just technologies. We have seen saw how the importance of point technologies has been overemphasized, rather than risk analysis and process.

Today, many organizations, including the public and private sector, are waking up to the fact that technology alone is not the answer. It’s the process and people as well. That’s where deriving these best practices would be a key in collaborating with the private and public sector and bringing in an architecture.

As far as this interconnectivity is concerned, you'll see lot of different business-to-business (B2B) and business-to-consumer (B2C) interactions. It happens today. Today, business partners and distributors do business on the go, on social media, either Twitter feeds or Facebook, or something I call ad-hoc communication through their mobile devices. This is the nature of today’s interaction. This is the nature of B2C and B2B interactions.

... And in the 21st Century we'll have a lot more innovations and more technology adoption in a much more accelerated fashion.

The smart concept

That’s where the smart concept comes in. This entails smartening our physical infrastructure, our critical infrastructures like utility, healthcare, financial services, transportation, public safety, and also city administrations, down to the IT system itself.

It will use of lot of IT enablement from either the cloud or communication infrastructure, things like RFID technologies, 4G technologies, and solar technologies, to embed lot of situational awareness, analytics, and locationing into the systems.

This is a smart kind of a concept that embeds itself into smart city infrastructure where all the different components embed all the IT technologies together. There are other initiatives like smart grid or smart healthcare that are embedding these IT technologies as well.

That's a great way to start the 21st Century with this innovation, but the need for security arises at the same time. As Gen. Raduege mentioned, cyberspace is a new frontier, or information security in the cyber world, is a new frontier.

Today, many organizations, including the public and private sector, are waking up to the fact that technology alone is not the answer.

That’s where we have to address lot of different issues and problems around policy, architecture, and best practices. It’s only going to get more serious, as we connect a lot of different systems that were not connected in the past.

One of the key aspects of smartness is cross-industry and cross-team collaboration. Today, when we start to look at some of the smart deployments, either in the vertical sectors like utilities, healthcare, or even other private-sector industries, we see more and more that security is getting attention from the board-level and C-level executive.

Similarly, enterprise architecture is getting its attention as well. Going forward, we see a great emphasis on combining these two initiatives, even though it’s still a very nascent stage at the board-level talks and C-level talks. We're not seeing a huge focus on cyber security in some instances, but of course it’s changing. It’s increasing.

It's fair to say that the security and enterprise architecture will play a key role, as both concepts mingle together to bring about best practices in architecture in the early phases into planning, deployment, and delivery of the smart services.

Hietala: It’s still early in the process of really bringing enhanced security into the professional enterprise architecture. So, in The Open Group Architecture Framework (TOGAF), three of the nine iterations of it, we've added significant security information and content that enterprise architecture need to bear in mind in developing architectures.

But that work is ongoing. We have a couple of projects both to enhance the security of TOGAF, and also to work to collaborate with the Sherwood Applied Business Security Architecture (SABSA) folks, another security architecture development methodology, to harmonize those two approaches.

There's a lot of work ongoing there, and there's a lot of work needed in developing reference architectures outside of purely IT. We have a document that we are updating called Enterprise Security Architecture. It will be published this fall, and updates some work that was done five or six years ago, sort of an IT reference architecture.

From an enterprise perspective, looking at mission success and thinking about cyber security really is the Chief Information Security Officer (CISO) role inside a given enterprise. That probably is most relevant to address the issues. The interesting thing is that many of the new developments that we’re looking at -- whether it's smarter hospitals, smarter medical devices, smarter electrical grid -- are industry specific and they require a lot of cooperation between organizations in an industry.

There's a role for standards and industry organizations to pull together and come up with some common standards to facilitate better security.

There's a role for standards and industry organizations to pull together and come up with some common standards to facilitate better security, maybe better frameworks or things like that, that can be leveraged across an entire industry.

We see a need, as you start to look at cyber security and the different kinds of architectures, to develop new reference architectures to address some of these new applications of IT technology to everyday life. If you think about networks in cars or networks of smart devices comprising the power grid, what does security look like for those things? Our membership is starting to look at some of those and trying to determine where we can add some value for the industry.

Raduege: The Internet has changed our world, and the way we operate. For years, we've had enterprise architects who have been working down the hall or in the basements of organizations, and who have been trying to figure out the best way of technically aligning the Internet and all of the interconnected networks to make it work as best it could.

Now that this world of cyber has really come upon us, it has really elevated the importance of the enterprise architect into the higher levels of an organization, just because of the threats that are constantly coming upon us in our business operations and our mission success.

The enterprise architect has now gotten the attention of the C-suite executives and organization leadership. But, they don’t like to think as much about enterprise architecture, because it really has that technical connotation as my colleagues here have mentioned, we're really talking and focusing more now on the people and the process aspects of running the business properly.

The front-office people, the C-suite executives and leaders of organizations, instead of thinking about enterprise architecture from a technical aspect, are becoming much more interested in a mission architecture.

In other words, what's the architecture needed to complete my mission so that I can have success -- whatever your mission is, if it’s government activity or whether it’s industry. Mission architecture has taken on new meaning that takes into account the technical architecture, but also adds the workforce domain and the process elements of the organization.

Architecture is important, but there is no silver bullet to it. Since the smart concept is industry-wide and is global, there could be many references to architectures that could go in.

So, mission architecture is really pointing toward business success, whatever your business is, whether it’s government operations or industry.

Sindhu: Architecture is important, but there is no silver bullet to it. Since the smart concept is industry-wide and is global, there could be many references to architectures that could go in. Some things have started to happen.

For example, the Department of Homeland Security came over to IT risk baseline about a year-and-a-half ago. It collaborated with the IT vendors and IT sector in general and started to create this risk baseline, which comes about in the earlier phases of architecture.

As you develop a framework, you take feeds from the various industry standards and regulatory compliance mandates and you start to create a risk baseline, a risk profile that touches every single silo of people, process, and technology. Over the time, you do the collaboration, internally, but externally as well.

Hietala: Definitely there is a need for increased public-sector and private-industry cooperation. We have an initiative here, The Open Group's Acquisition Cybersecurity (ACS) Initiative. It was brought to us by the Department of Defense as a consulting effort. They wanted an organization to pull together private industry and try to drive some standards looking at the supply chains to the major IT suppliers. That work is ongoing and that would be a good reference of an initiative like that.

Sindhu: The role of the architecture and security has to be involved right from the planning phase, where you manifest the value of security being built in, either to the products or in general to the architecture? That has to be the first step -- that we acknowledge the need to embed that into the overall process.

Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Read a full transcript or download a copy. Sponsor: The Open Group.

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HP virtual conferences tackle data center transformation trends, methods, solutions

Learn more about Data Center Transformation via free HP virtual conferences:
Europe, Middle East, Asia -- July 13
Americas -- July 14
Asia Pacific Japan -- July 15

HP is continuing its series of free virtual conferences, giving IT professionals online access to briefings on business and technology trends about data center transformation (DCT) from HP executives and third-party experts. During the newest upcoming events, which run July 13-15, those attending will have the opportunity to listen to, and chat with, technology experts from HP, as well as hundreds of other IT professionals.

Hosted by Helen Tang, HP WW Data Center Transformation Lead for HP Enterprise Business, this virtual conference series features top HP executives describing how DCT helps companies respond quickly to changing business needs and shift spending from maintenance to innovation. [Disclosure: HP is a sponsor of BriefingsDirect podcasts.]

The free, half-day virtual events, organized by region, explore IT strategies and solutions to avoid performance pitfalls and to achieve more predictable results. They discuss DCT and explore approaches for delivering significantly higher data center results in a shorter time-frame. The purely online events also provide keynotes and other "auditorium" sessions, an exhibit area, and an opportunity to network online.

Keynote speaker Donna Scott, Vice President and Distinguished Analyst with Gartner research, will present “Choosing the right data center and IT architecture to meet the needs of the business.”

Other sessions include:

• Three signs that it’s time to transform your data center
  
  
• Building a converged infrastructure environment to overcome application and IT sprawl in the data center
  
  
• Data center facilities optimization strategies for design, reliability and environmental efficiency
  
  
• Closing keynote case study: Data center transformation results in billion dollar annual savings.

Speakers include: Hande Sahin-Bahceci, Data Center Transformation Manager, HP Technology Services; Bob Meyer, HP's Worldwide Solutions Lead; Duncan Campbell, VP of HP's Worldwide Marketing; Peter Gross, Vice President and General Manager of HP Critical Facilities Services; Jay Mellman, Sernior Director for Worldwide Marketing HP Networking; and Pete Karolczak, Senior Vice President and General Manager of HP Enterprise Services.

The conference will be offered for Europe, The Middle East and Asia on July 13, the Americas on July 14, and Asia Pacific and Japan on July 15. Follow the links in the below box to learn more and register.

Learn more about Data Center Transformation via free HP virtual conferences:
Europe, Middle East, Asia -- July 13
Americas -- July 14
Asia Pacific Japan -- July 15

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Ariba Live discussion: How cloud alters landscape for ecommerce, procurement and supply chain management

Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Read a full transcript or download a copy. Sponsor: Ariba.

Welcome to a special BriefingsDirect podcast coming to you from the Ariba LIVE 2010 Conference in Orlando.

This podcast is a presentation of a May 25 stage-based panel event on the implications of cloud computing for procurement, supply-chain management, and a host of other business functions. For those of you unable to attend the actual conference, please now listen to this lively and informative panel by a group of noted industry analysts.

Here is the moderator of our discussion, Tim Minahan, Chief Marketing Officer at Ariba.

Minahan: When discussing heady topics like the cloud, procurement, and finance, and looking at the future of business-to-business (B2B) commerce, we thought it important for you to hear from the experts. So we have assembled a panel of the leading analysts -- the folks that you turn to to benchmark your performance, uncover best practices, and make IT buying decisions.

I'd like to welcome our panelists: Mickey North Rizza from AMR Research (a Gartner company), Chris Sawchuk from The Hackett Group, Robert Mahowald from IDC, and Bruce Guptill from Saugatuck Technology.

Here are some excerpts from the discussion:

Guptill: The first thing is to figure out how to handle this cloud thing. It's the single most disruptive influence that we've seen in not just IT, but in how IT is bought, used, paid for, and how that affects how everybody does business. So how is it accounted for? Who has responsibility for managing what aspects?

If you have some of it on-premise and some of it out in the cloud, who is responsible? How is it managed? How is that budgeted for?

If you have some of it on-premise and some of it out in the cloud, who is responsible? How is it managed? How is that budgeted for? It changes the way we operate as a business, because it changes the way we spend, the way we buy, and the way we manage. It's very, very disruptive, and policies and practices really haven’t caught up yet to the reality, and we're not getting a breather. The change is accelerating.

Sawchuk: When we ask procurement executives what are they focused on going into 2010 from a technology standpoint, the number one area is just utilizing better the technology investments that they have made -- digesting them. So, it's a lot of the basics -- cleaning up our master data and just getting more utilization on our eProcurement, eSourcing types of tools in the organization.

But there are a couple of emerging trends that are occurring in the most progressive procurement organizations, in three areas. One is around collaborative technologies. Why is it so difficult to do this in business, when it's so easy with Facebook and all that type of stuff in the non-business type of world? It's not just externally that this applies, but internally as well.

The cloud offers a way to do that a lot more quickly, for less cost, in a way that is still as secure and authenticated as it would be in my IT shop.

Number two, around better management of the knowledge and intelligence across the organization, structured, unstructured, internal, and external types of information.

And lastly, driving more agility into the procurement service delivery model, which includes the technology tools.

Mahowald: For the last 10 years or so, we have seen lines of business start to get more acclimated using software-as-a-service (SaaS) services. Some of those lessons are how those services are delivered and filtered back to IT.

Virtualization, automation, and standardization are finding their ways into our IT departments and they're finding ways to do things like reduce the number of physical assets they spend their time counting, and keep them up and running, and rely more and more on external services that can safely provide the functionality that their users require.

And the typical scenario is that, if I am in the line of business and I want to build an application, or I need to have access to an IT service, I've got to go to my IT team. It can often be long and time-consuming to get that thing spun up and tested, kick all the tires, and get it up and running in the environment that is being used.

The cloud offers a way to do that a lot more quickly, for less cost, in a way that is still as secure and authenticated as it would be in my IT shop, and probably done in a way that is much, much more service enabled, for the ultimate constituency I want to serve, my user, the internal user. So, it's a big opportunity.

North Rizza: Basically, what we're seeing is that companies have a lot of pent up demand over the last couple of years. They haven't been able to change some of their business processes and automate them the way they would like to. What they've been doing is standing back, trying to get more out of their ERP systems or basic business processes. They've had to make a lot of cuts and they're not getting everything they need. What we're finding now is that spending is starting to pick up.

We're also finding that companies are looking for alternative deployment models. They're starting to say, "What can I do above and beyond just the technology application? Where else can I look for services and other opportunities that are, one, going to quickly drive value to my line of business buyer, because those are the folks that do the business day in and day out? They're the ones that need to make a difference. And finally, how do I do it quickly, without a lot of disruption, very flexible, and a great investment, but a really quick return on that investment?"

Sawchuk: When we asked CFOs in the broader enterprise, coming into 2010, what was the number one area of focus for them, it was cash. When we asked the same question to the procurement executives and community, it was cost. Cash was number 10. So the question is, are we misaligned or do we feel that we have done everything we can over the last 18-24 months and there’s nothing more to do?

When you look at this, procurement and the data as just being cost focused are fading. We've got to get much more balanced in the way we actually deliver our value, not just cost, but also working capital and other areas as well.

You wanted some examples of what these world-class organizations do around working capital and how they do it well. Number one, they measure it. They bring visibility to it. They put it on their scorecards. They have cash conversions, cycle time matrix, DPO, DIO, etc.

Number two, they manage it and the source-to-settle, purchase-to-pay process.

Number three, they create collaborative communities with procurement, with the business, finance, and treasury, around working capital strategies and objectives.

And, fourth, they actually compensate. We see organizations out there where some of the procurement folks and these folks on these collaborative communities are compensating. Up to one-third of their compensation is based on their achievement of working capital objectives.

Mahowald: In many IT organizations, as much as 55 percent of the budget is spent on keeping systems running, and that involves paying for the ongoing license and maintenance and support of software and hardware and all the power pipe cost that it takes to run an IT center.

The ability to reduce some of those costs by outsourcing them in lower-cost subscription models that are operating costs is an enormously helpful transition for many customers. CIOs that we talk to are excited about introducing cloud services and also what we call naked compute services or offsite storage to improve the efficiency of certain applications that are widely used in the organization or offsite development platforms, where they can actually build applications.

It’s a major activity for many IT organizations to build new applications, objects, and customizations on-site. If they can offshore that and not have to pay application licenses or infrastructure cost, that’s a big help to them in lowering their fixed-cost structure. Ultimately, it's a big help to make IT organizations much more lean and responsive to their needs.

Guptill: If you can take the software and put it in the cloud, and if you can take the hardware and the infrastructure service, the IT, and put it in the cloud and take advantage of that, we have all these vendors -- let's take Ariba for an example -- that have these terrific technologies, applications, and the expertise to use them. Why can’t that be delivered and used as a service, as a utility, cloud-based or otherwise?

Then, we have the business logic, we have the software, the applications, the functionality, and the technology, to make it happen. We can do that as an as-needed, on-demand, or subscription basis. It removes a lot of the fixed cost that we've been talking about. It reduces our reliance on fixed assets or fixed cost for what could be cyclical or temporary needs in terms of functionality. It's basically outsourcing business tasks, business functions, or business processes to the cloud. It's "cloud temping" basically.

Over time, these things start from very simple, straightforward, and standardized capabilities, similar to what SaaS, or infrastructure as a service (IaaS) started as, but we are seeing them start to evolve into more configurable or more customizable capabilities.

Pool of functionality

So that we can now -- it's just starting now, but will be much more over the course of the next four or five years -- take advantage of a large pool of business functionality that we don’t want to buy. It's not just a technology. It's not just a software. But it's the business tasks that we don’t want to buy, we don’t want to train, and we don’t want on our books. We can rent those as we need them, and when the work is done, they retire back to the cloud.

North Rizza: We found that 96 percent of those in our studies are using cloud-based solutions, but out of that 96 percent, 46 percent are geared into a hybrid cloud solution. And by hybrid we mean that they're actually using cloud technology applications. They're optimizing those against their IT on-premise investments, and further, they're extending the capabilities into cloud services technology. So they're looking at the whole gamut.

When it's executed well and done well, it allows you to execute on your working capital and supplier payment types of strategies.

The second part of that is the next leading area, and that’s 41 percent around a private cloud. The difference there is that they're looking at technology capabilities from the cloud and they're putting that with their ERP or on-premise IT investments, but they're not necessarily extending those capabilities.

... We found that those that actually deployed cloud solutions, technologies, and services and put them out there, found anywhere from 5-7 percent difference in greater value, just by deploying, versus those that are thinking about it or trying to get into the mode of, "We want to go down that path and we are thinking about that investment process."

What were the benefits? It's really interesting. The first is that they were able to drive more revenue. Understandably, if we get those cloud-based solutions, we're going to drive more revenue. If you think about that gap from 5-9 percent, that’s huge, on a revenue standpoint.

Two other points: the cost-to-serve model. They're able to look at what their costs are, what are costing to serve from the enterprise, all the way through their trading partners, all the way back out into where the demand cycle begins, from a supply chain perspective. They get more savings, and those two go hand in hand. Then lastly, it's around that business cycle time improvement aspect.

... So, while we see this as a big area, and companies keep going down this path, one of the things we also find is that it really means a sharper focus on master data management (MDM), your business processes, how that’s orchestrated, both inside the enterprise and externally into your trading partners, and understanding your governance structure. We'll see more and more of that come out, as time goes on here.

Sawchuk: We've been talking about the cloud. How does it help? First of all, and you've heard a lot about this, cloud gives you much faster, easier, and more economical access to technology solutions. Now that you're connected, you can speed the transactions across your supply base, etc.

More importantly, it gives you much more predictability in your ability to execute. For example, a lot of us say we moved our terms. We moved our terms from 45 to 60 days. When we do that, the suppliers say, "When we were on 45, you couldn't pay me on time. You moved it to 60. Can you pay me now on time?" It gives you some predictability in the execution. That's important to them.

Number two is, if you negotiate early pay discounts, you have the ability to execute and take advantage of those kinds of things that you have in your commercial agreement.

The cloud also does a couple of things. It certainly brings much more visibility to the overall activities that are occurring across the entire source-to-settle process. But also, once you are connected in this whole cloud environment, it certainly gives you access to intelligent services that exist out there. I'm talking about working capital, things like information about the financial health of your suppliers, their historical performance, the cost of capital, etc.

That kind of collision between outside the cloud and inside the organization is going to change and it could change business pretty dramatically.

Mahowald: We talked about lower cost, leaner IT organizations, because they are able to source outside of the organization, and get lower cost services. We think that kind of collision between outside the cloud and inside the organization is going to change and it could change business pretty dramatically.

Where business happens

Another thing is that, when you've got solutions that are brought in by business users -- maybe it's a salesforce.com or some other SaaS application -- it's important to them, and it's important for them, to get agility and speed to that functionality, but there are going to be many places where you are going to be brought outside of your organization, because that's where business happens.

Whether it's in a commerce cloud or another forum or marketplace for the exchange of products, you will be forced there essentially to do business, to maintain your presence in the game, see that transparency, and have it help your business. We think that's probably the most likely place for that collision to occur.

Guptill: We've researched, interviewed, and surveyed a little over 7,000 executives worldwide -- finance, procurement, HR, IT, line of business -- over the last six or seven years about what it is that they want to do with cloud IT, whether it's SaaS or IaaS, platform as a service (PaaS) or whatever. In every single case so far, they're using it to add to what they have. It's filling in the gaps. It's enabling better efficiencies, better cost. It's delivering benefits that they could not get earlier cost effectively.

When you think about it, that’s the pattern of IT investment over the last 50- 60 years. It's very, very rare that we replace what we have with whatever new is coming in. There's all this hype about new stuff is coming and it's going to change everything. It's going to get rid of this. We are going to dump that.

Within four to five years, by year end 2015, more than 50 percent of new IT spending will be in the cloud for the first time.

Our latest survey research, which we are just in the process of publishing right now, very strongly indicates that within four to five years, by year end 2015, more than 50 percent of new IT spending will be in the cloud for the first time. That’s within four or five years. But, that means that about 50 percent, or a little less than half, is still going to be on-premise, so that stuff is not going away.

So, over time, what's going to happen is that we have a series of decisions to make. What costs are we trying to control? How are we going to change our purchasing, procurement, management, payment, relationship management, and so on?

Then, as our traditional on-premise systems, not all of them, but as each one comes up, as they reach the end of their useful life, what do we do? Because traditionally, we would add to them, we would just build out around them, until they take over the entire data center, or we would outsource. Now, we have a combination. We can put some in the cloud and some on-premise.

Those are the decisions that we're going to have to face, as we go ahead. What goes out there? What stays in here? What goes in between? The stuff has to be made to work together. Who has that responsibility? What's it going to cost? How is that going to be budgeted? And how are we going to manage all this?

Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Read a full transcript or download a copy. Sponsor: Ariba.

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HP unleashes barrage of offerings to add more 'oomph' to Converged Infrastructure benefits

Building on the momentum of its Converged Infrastructure strategy, HP this week announced new server, storage, network and power management technologies to enable clients to shift millions of dollars in operational costs to activities that drive business innovation.

HP’s Converged Infrastructure provides a blueprint for clients that want to eliminate sprawl, complexity and excess maintenance costs. The introductions at HP Tech Forum in Las Vegas include advancements in HP BladeSystem, including several new servers, as well as innovations in HP Virtual Connect and HP BladeSystem Matrix.

Also announced were power management technologies to automate energy awareness and control of IT systems across the data center, as well as storage software that provides new levels of simplicity and automation through a single, unified architecture for data deduplication. [Disclosure: HP is a sponsor of BriefingsDirect podcasts.]

The Tech Forum announcements come on the heels of the previous week's HP Software Universe news.

Among the new offerings are:

• Three new HP ProLiant scale-up servers, which offer several industry firsts with memory footprints of up to 2 terabytes (TB) and “self-healing” memory capabilities that maximize application uptime with a 200 percent boost in availability. Optimized for data-intensive workloads, the servers reduce data center footprint, complexity, and costs with a consolidation ratio up to 91-to-1.
  
  
• Seven new HP ProLiant G7 server blades with 1 TB of memory and integrated 10Gb Virtual Connect FlexFabric technology for I/O scalability. These systems can support up to four times more virtual machines, while requiring 66 percent less hardware.
  
  
• The new HP Virtual Connect FlexFabric module, a single device that connects servers to any Fibre Channel, Ethernet and iSCSI network. This eliminates the need for multiple interconnects.
  
  
• HP BladeSystem Matrix software, which offers one-touch, self-service provisioning of applications. The “all inclusive” converged infrastructure offering enables private clouds by allowing clients to deploy complex IT environments in minutes. As a result, HP claims that clients can reduce their total cost of ownership up to 56 percent compared to traditional IT infrastructures.
  
  
• HP Intelligent Power Discovery, which creates an automated, energy-aware network between HP ProLiant servers, third-party facility management tools, and data center power grids. The software provides greater transparency and insight into power usage by creating a real-time, graphical map of energy usage across servers and facilities. By accurately provisioning energy, HP estimates that clients can extend the lives of their data centers and save up to $5 million per every 1,000 servers in one year.
  
  
• HP StoreOnce, a solution to automate data deduplication across the enterprise with a single unified architecture. It is built on patented innovation and features designed by HP Labs, the company’s research arm and reduces costs by eliminating multiple stored versions of the same data.

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I collaborate, therefore I think, therefore I am ... an enterprise

They say we have big brains because we have all needed to work better together over the past 150,000 years. The more people work together, the more tools they need to make collaboration a productive art, rather than a befuddled mess.

Rather than wait for human evolution to keep up the pace, Salesforce.com yesterday delivered its Chatter cloud-based collaboration service, based on social networking methods more common on Facebook or Twitter.

Directed first at enterprise help desk and customer service processes, Chatter has the strong potential to become a company-wide collaboration accelerant. And if that happens, more data and insights into what people do to solve problems can be identified, refined, repeated, automated, and extended. The cloud model makes this easy to afford, to get to and to expand.

Chatter, and its ilk quickly sprouting up elsewhere, can foster better, targeted and self-directing collaboration; can spur and capture the data about processes in progress, and can become a service feature within nearly any business application, process or ecosystem.

Email can not do this. Instant messaging, no. Portals, not quite. Chatter shows that email's role is overextended, counter-productive, and in need of a replacement.

But what caught me by surprise in watching Salesforce.com's Chairman and CEO Marc Benioff introduce Chatter yesterday in San Jose, CA, was not that consumer-focused social media motifs have a place in the productivity enterprise portfolio. What screams to me of "killer app" is that the data from social interaction are freer in the enterprise than they are on the open Web.

The data and analytics derived from Chatter are not defined by privacy boundaries, or the attempt to define and maintain them. Any user company controls the data, and so the data is free to be cultivated, consumed, analyzed, reused, extended, captured, codified, integrated, innovated from.

The data from social media and network activities in the enterprise therefore is far more free and open to the enterprise needs than Facebook, Twitter, Yahoo or Google are free to use or share the data they have about what their (your) users do.

Virtual scrum for the rest of us

Chatter helps to sort out what comes next when processes and people collide. Like with our communicative ancestors as they faced challenges in the dynamic wild, self-selecting groupings, pairings and open-ended dialogue about how to react to a situation can arise and amend via Chatter. This is a tool that entices and abets collaboration, rather than confines or stifles it. Too often machine-made silos confine today's online interactions into point-to-point email threads that swiftly run aground.

The sweet spots to try out these cloud- and participant-accelerated cooperative scrums are help desk, service desk and IT. But it can and will go much further. Already more than 6,000 of Salesforce.com's customers have adopted the new social collaboration application, out of 77,300 potential customers for the San Francisco-based SaaS business applications and services development platform provider.

HP has seen the powerful confluence of IT functions and social networking tools and UIs, as evidenced by its limited-beta 48Upper SaaS collaboration tool. I received a demo of 48Upper last week, and all the things that make Chatter powerful work there as well. I hope HP targets 48Upper beyond the IT department. [Disclosure: HP is a sponsor of BriefingsDirect podcasts.]

For while such uses as in software development and IT support are a no-brainers for Chatter and 48Upper, as they align well with agile and scrum methods, this is but the beginning. In a fast-paced business world, these app dev principles now have huge relevancy across many more business functions and processes. And Chatter can be the catalyst for doing so. It fits in well with Japanese kaizen and Deming-derived thinking too.

What's more, Metcalfe's Law has a supporting role, in that the more people that use Chatter, the more valuable it is; and there's a qualitative branch to the support -- the better the dialogue and sharing, the higher quality the thinking in the Chatter ongoing scrum, the more everyone benefits. This is the 100,000-year-old self-reinforcing frontal lobes cognition that makes us our human best ... together.

HP's Anton Knolmar recaps highlights of Software Universe conference, looks to future

Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Read a full transcript or download a copy. Sponsor: HP.

Welcome to a special BriefingsDirect podcast, an interview with Anton Knolmar, Vice President of Marketing for HP Software & Solutions, conducted by Dana Gardner, Principal Analyst at Interarbor Solutions.

The one-on-one discussion comes to you from the HP Software Universe 2010 Conference in Washington D.C. We're here the week of June 14, 2010, to explore some major enterprise software and solutions trends and innovations making news across HP’s ecosystem of customers, partners, and developers.

Here are some excerpts:

Knolmar: I'm really excited about having so many customers here. We've been sold-out, which is a good sign. Customers are also really interested in sharing their solutions and sharing their information with us. At the end of the day, where we are totally committed is providing value to those customers.

We kicked it off the first day on the main stage, with our new Executive Vice President, Bill Veghte, talking about IT as an inflection point and how, with our solution portfolio, can help our customers provide even greater value for their organizations. That was a good lead-in.

I was even more excited, when we had customers on stage. Delta Air Lines’ Theresa Wise did a fantastic job explaining the challenges they were facing with integrating and acquiring Northwest Airlines, and getting those two companies together using our portfolio.

We got compliments and feedback about Dara Torres and what she was showing on stage here, on how you can compete, independent of what age, if you try to give your best in your personal, private, and business life. This was a good learning experience for all of our customers.

Then, we moved to the next event, our blockbuster product announcement, BSM 9.0, rolling this one out across the world, with different solutions in a single pane of glass, with the automation, and simplification.

It’s not "one solution fits all," and that’s what we are trying to do with our customers as well -- a really customized solution approach.

The feedback we received from our customers is that this is exactly what they've been looking for. And, they are even looking forward to more simplification. The simpler we can make it for them in their complex life, in their complex environment, whatever comes in from cloud, from virtualization, from new technologies, the better they all feel and the better we can serve them.

It wasn't just one customer who had one story to tell. We had to set aside an executive track, where we had a different levels of customers, talking about the problems and how they're facing problems. It’s not "one solution fits all," and that’s what we are trying to do with our customers as well -- a really customized solution approach.

What they're telling us in terms of this broad range of delivery is that it's a huge opportunity for everyone in the cloud. Also, everyone is saying, "We hate the word cloud," but that’s the word everyone uses. The delivery models that are out there at the moment, the new technology, the mobility factor, the growth of the smartphones, the mobile devices, is a big thing, and will be more in the future.

Being future-ready

Our customers are still challenged with their current environment, with their legacy environment. They say, "We still have mainframes to manage and all this new technology is coming in here." What they're trying to do is, and what we are trying to equip them with the current portfolio that we have, is to manage, monitor, and make the best out of the current investments, but also with our solutions portfolio, to be future ready.

So whatever new technology comes out, they're equipped and they can adopt this immediately in their current environment. They should be really happy with what we announced this week to be future ready for their future investments, as well whatever comes up.

his was an exciting moment for us, getting our blockbuster out. A new blockbuster is coming, so stay tuned for that. That happens in September. We will also take Software Universe on the road. The next event is happening in Israel in a few weeks. We have a big crowd coming in, 1,500 customers, which is a huge gathering for Israelis.

The other piece is that we have HP TechForum, which is our sister conference, where we get the enterprise business, going on in Las Vegas this week. We're definitely excited. Stay tuned here. We're in Europe, in Barcelona, at the end of November, with our next Software Universe event.

Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Read a full transcript or download a copy. Sponsor: HP.