Ariba Network plus Dynamic Discounting give startup Mediafly cash flow benefits, help in managing capital

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

The latest BriefingsDirect podcast, from the 2012 Ariba LIVE Conference in Las Vegas, explores the latest in cloud-based collaborative commerce with Mediafly, a startup company that delivers cloud-based applications for content management and distribution on mobile devices for Fortune 500 companies.

We’ll learn how Chicago-based Mediafly, through the Ariba Network, gained insight and control over its cash flow and found new means of managing capital and in aiding its ability to support ongoing operations, as well as to drive future growth.

To hear more about how they did it, Interarbor Solutuons Principal Analyst Dana Gardner interviews two executives from Mediafly, Carson Conant, CEO, and John Evarts, Chief Financial Officer and Chief Operating Officer. [Disclosure: Ariba is a sponsor of BriefingsDirect podcasts.]

Here are some excerpts:

Gardner: Tell me about your startup company and why managing cash flow is so important.

Conant: Mediafly is the leader in the presentation platform market. What that means is that we’re the company that helps bridge the gap between large Fortune 1000 companies, their internal systems, and primarily mobile applications, but also things like Internet-connected televisions, and so forth.

Large companies create lots of video. It could be live broadcast, sales presentations, training videos, and TV and movie industry content. When they're trying to distribute that content to make it available on all of these emerging devices, particularly at that large scale, they need a provider like Mediafly.

Think of all the TV and movie productions that are going on the studios. Those companies have thousands of video files that they're housing inside of their four walls. They're trying to expose that content to all of their executives and staff, everybody from the makeup artist that needs to watch the last three dailies to the CEO and the president.

Perfect platform

Now, they want to be able to do that on iPads, iPhone, Android, and on televisions connected to the web. We're the perfect platform, because there is so much that has to go on that so many gears are turning to make all that happen.

That’s a perfect solution for the cloud, and those companies now integrate with us so that that material is available to all the different stakeholders on all of these different devices. So we’ve dropped ourselves in and filled the gap between their in-house systems and all of these mobile devices.

Gardner: As a small company, what are you facing, when it comes to the financial pressures?

Evarts: As a small company, we often don't have a balance sheet that’s attractive to banks, among other things. As we seek things like angel investment or equity investment, we need to do things that are extremely capital efficient with those funds.

When we have an opportunity for revenue, especially revenue at large corporations, Fortune 100 companies, these are large contracts. As a small organization, contracting with larger organizations, it’s absolutely critical for us to manage that cash flow well and have visibility into the cash flow.

As we said, we’ve been growing very quickly. So our recurring revenue has grown by 3x over the last two years. As we grow quickly, we need to have that visibility into cash management, because it’s absolutely critical that we staff at the right time relative to taking advantage of opportunities that are out there in the market.

Gardner: So looking at this from an elasticity point of view, larger companies have a bit more wiggle room. As a smaller company you don't, but you need to grow fast. Help me understand what led you to do things differently in order to make this elasticity work in your favor.

Conant: We’re very fortunate. One of our largest customers is in the media entertainment space and we did a large seven-figure deal with them over a series of years. But the way that they do invoicing and transactions is through the Ariba Network. They said, "For you to get paid, join the Ariba Network."

So that was the first thing that got us onto the network. What was amazing is that once we got on there, as John said, it was unlike a lot of our other transactions with similarly large companies. In those companies it’s just like a black box. You've got a several hundred thousand-dollar invoice that goes out, and you may not know if that’s going to come in in two weeks or six weeks.

What was amazing to us with Ariba was the ability to know exactly where we were in that payment process. Ultimately we took advantage of this program they call "dynamic discounting," which allowed us to accelerate cash for a couple of basis points.

Huge ramifications

So for a fairly inconsequential amount of money to us, we were able to get paid in about 14 days instead of 60 days. It had huge ramifications on our business. What that did for us is allowed us to interact with them in a way that they preferred, but still have the nimbleness that we need from it as being a small company.

Gardner: So visibility and predictability are really important. In the past, people would generally go to a bank to get a line of credit and pay a high interest rate in order to have that accordion to manage their cash flows. You’ve found a way to do this, not through a bank, but through working directly with your customers and perhaps even incentivizing them to help you with your cash flow and visibility and your saving on the interest. It sounds like a win-win all around.

Evarts: It's an excellent opportunity for us to work with a partner and deepen that partnership with our vendors. We’ve found that, as Carson said, for a few basis points of a concession on the contract, we’re able to factor 100 percent of the contract value of the invoice.

When that occurs, the advantage to us is that we're able to immediately take advantage of it, as soon as it hits the system, to take 100 percent of those otherwise unknown collection periods. When we can reduce the collection periods from 60 days all the way to 14 days. We’re in a much stronger financial position, because we can take advantage of those dollars.

Conant: The first time we took advantage of dynamic discounting, it was relatively early in a development cycle for a security package that we were in the process of building. What that did allowed us to get access to cash to bring in additional resources to accelerate those featured enhancements.

It sparked additional Fortune 100 contracts. It was fundamentally game changing for us.

Literally, two weeks after signing this deal with one of the largest entertainment companies in the world, we were in the board room with one of the largest global banks in the world touting these new security features we had, which we otherwise wouldn’t have had for maybe 60 days.

It sparked additional Fortune 100 contracts. It was fundamentally game changing for us. We joke that it would be interesting if all of our customers leveraged something like dynamic discounting. It would be transformative for our business. It would drastically accelerate how we can deploy cash. Then you think about it in terms of what could it do for the economy.

If all these companies were taking advantage of this, it would boost the stability and the growth of their partners and their vendors. It would be something. That’s why we’re so vocal about it.

Evarts: As a small organization that is very nimble and trying to innovate, it speeds up and accelerates the pace of innovation that we’re able to generate. The new features that we offered to this first client, we were immediately able to turn and sell to one of the leading investment banks as the same security capability.

So when we’re able to quickly accelerate and bring new innovations to market, obviously everybody benefits. Mediafly benefits, and ultimately, our customers are going to benefit as well.

Level playing field

Gardner: And what strikes me is that this seems to be a level playing field between you, a small company, and as you point out, some of the largest media companies in the world. You’re playing with the same rules with Ariba being the trusted arbiter.

Conant: Absolutely. There are probably two or three technologies that we've taken advantage of that have just come into play in the last three to five years. One of them is cloud-based infrastructure. We don't have to buy servers anymore. That’s allowed a company of our size to outpace and out-compete companies that have been around for a long time and provide enterprise services to Fortune 100 global companies.

Then, you look at Ariba, and it's very similar. It allows us to interact with them the same way that they would interact with another large company. Doing business with us doesn’t feel different than doing business with another large company.

They get what they want, we get some additional visibility and some things that are valuable to us. But, these technologies have just come into play in the last three to five years, and it's really allowed a company like Mediafly to exist.

Gardner: A lot of times, analysts like myself focus on the technology behind the cloud, but it's really a game changer, when it comes to business processes and allows for the compression of what used to be latency in terms of business functions, monetization, and cash flow. Now, when everybody has visibility, when the level field is there for all participants, it's much more efficient and direct, and we’re just starting to pick some of the fruit of that.

These technologies have just come into play in the last three to five years, and it's really allowed a company like Mediafly to exist.

Evarts: And you touched on it. Creating scalable solutions is absolutely critical and it allows a small organization with relatively limited initial capital, first to be able to scale to a level, and participate in the Ariba Network, and basically have the same credentials as some of the largest companies in the world.

Folks who are transacting with Mediafly are doing it in the exact same way that they do with other Fortune 100 peers. To some degree, to us, it's a competitive advantage, and we feel that way. We feel that if we're on the system, we’ve been vetted, and other folks are using us on the system. It's an excellent credential for us to have and a nice reference for us.

We feel that this Ariba Discovery concept is extremely valuable to us as a small organization, as we look to scale as a lead generation opportunity and ultimately, as we’re transacting business.

Gardner: We’ve touched briefly on how this could be a go-to market benefit for you. Let's expand on that. How in providing a discount incentive to cash flow, and using the Ariba Network, does that end up getting you more customers?

Evarts: One of the tools that we’re just trying to tap into is this concept called Ariba Discovery. Discovery allows you to self select a series of industries, what they call commodities. That allows you to say, "These are the services that we offer." Then, large companies are able to go on that system and say, "These are the services that we're looking for." So it's really kind of a matchmaking function.

While we’ve only scratched the surface -- we feel we're relatively new to this system -- we feel that this Ariba Discovery concept is extremely valuable to us as a small organization, as we look to scale as a lead generation opportunity and ultimately, as we’re transacting business.

We feel that as a small vendor, if there are a number of individual companies that are looking to leverage this system, we're happy to make a light concession, obviously, for the right amount of basis points and just for the right timing. We're able to then take advantage of that, accelerate cash in. When non-financial companies, at the end of third quarter last year, had $3 trillion sitting on their balance sheets, you know that there's a ton of liquidity out there that will be invested, and is going to be invested in different ways.

One way that folks can take advantage of it is using a system like Ariba in order to support the supply chain, investing in their current partners.

Of, for, by the cloud

Gardner: So you're sort of of, for, and by the cloud. When it came to moving toward Ariba and using some of their services, did that work as an off-the-cloud service, where there wasn't anything on premise or you didn’t have to have your IT people involved in? How friendly a cloud player did Ariba turn out to be?

Conant: Extremely friendly, relative to some other more manual processes that some of our other customers leverage. The best example that is our ultimate discovery of the dynamic discounting program. Our controller noticed a checkbox in our interface. It's a web-based interface and he asked John, "This looks interesting. Should we take advantage of it?" We said, "Yeah, let's try it on our first invoice."

This was not some training that had to happen before we understood how to use this system. It was a couple of checkboxes, and now we are getting paid earlier.

To me, that's really what the cloud is. A company like Ariba, in my opinion, has done a really good job of abstracting, so you're left with just an elegant functionality and it's in the cloud. It's all web-based. There's nothing we had to deploy on premises.

We're a cloud company. So it feels natural. I can't even imagine how simple it must seem to somebody who's used to using things on premises.

Not only can we now take full advantage of their entire cloud-based infrastructure, but it was very easy for us as a small vendor to get onto this system.

Evarts: One of the key elements for us was the ease to get on the system. When a customer whose that large asks you to join, and you're as small as you are, you say absolutely, how quickly and when. Ariba was absolutely fantastic in helping us to get onto this system and then ultimately helping us navigate, within the course of a couple of hours max, to have been fully integrated into the system. Not only can we now take full advantage of their entire cloud-based infrastructure, but it was very easy for us as a small vendor to get onto this system.

Gardner: On the other side, the flip side of the coin, these global Fortune 500 companies were familiar with Ariba. You didn’t have to drag them along and convince them. There was already the established trust and credibility.

Conant: We’re still scratching the surface, as more and more companies are moving this way. It seems like a lot of the people that we’re talking to are moving into cloud-based procurement solutions, things like Ariba. As more time goes on, more and more of our customers will be on Ariba and leveraging dynamic discounting and so forth.

What's great is that each one that is using Ariba is already set up. It's just a matter of them attaching our profile or however it happens behind the scene. But there are not a whole lot of additional process. That’s what's neat about the network effect. Once multiple parties are on a network, it's just a matter of connecting the two lines together.

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

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For Acorda Therapeutics, disaster recovery protects vital enterprise assets and smooths way to data center flexibility and migration

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

The next BriefingsDirect case study discussion targets how biotechnology services provider Acorda Therapeutics has implemented a strategic disaster recovery (DR) capability to protect its highly virtualized IT operations and data.

See how Acorda Therapeutics’ use of advanced backup and DR best practices and products has helped it to manage rapid growth, cut energy costs, and gain the means to recover and manage applications and data faster. Also learn how these advanced DR benefits have led to other data center flexibly and even migration benefits.

Sharing more detail on how modernizing DR has helped improve many aspects of Acorda Therapeutics’ responsiveness is Josh Bauer, Senior Manager of Network Operations at Acorda Therapeutics in Hawthorne, NY. The discussion was moderated by Dana Gardner, Principal Analyst at Interarbor Solutions. [Disclosure: VMware is a sponsor of BriefingsDirect podcasts.]

Here are some excerpts:

Gardner: What do you perceive as being different today about DR than just a few years ago? Is this really a fast-moving area?

Bauer: One of the most prominent changes is recovery time. You no longer need to restore from physical tape and see recovery times of upwards of 24 hours, something that we hadn’t seen until recently. We implemented Site Recovery Manager (SRM) from VMware and we can now do that same recovery in about four hours.

We're constantly replicating using RecoverPoint and we can get data up to the minute, versus tape, where you are at the whim of whether the backup completed on time -- did everything go to tape, and when was it done? It could have been two days ago, versus now, when it's data that’s 100 percent synced up to a minute ago.

When we had about 80 employees, we probably barely had a terabyte, and now with 350 employees we easily have over 14 terabytes.

Gardner: I am also wondering, because you are in the healthcare and biotechnology field, are there aspects of the new DR that appeal to you from a compliance or regulatory perspective as well?

Bauer: Definitely. Four times per year we have to prove that we can recover all of our software and data by doing a DR test. Until we had SRM, we had to do it all from tape, from a cold facility, and it would take us a day, sometimes a day-and-a-half. That’s just not the best way to do things. But now, with SRM, we can always do these tests on the fly, even from our office, from home, or from wherever.

Gardner: Tell me a little bit more about Acorda Therapeutics. You were founded in 1995. Tell us what you do, so our audience can understand the type of company you are and type of products and services you provide.

Recent growth

Bauer: We create treatments for people with multiple sclerosis, spinal cord injuries, or other neurological disorders. We have two marketed drugs in the market right now, the most recent of which, Ampyra, helps people with multiple sclerosis walk better, and it has been a huge success. And that's the main reason we've been growing so much lately.

Prior to virtualization, we were spending a lot of time managing our infrastructure, with all those physical servers. Once we virtualized everything, we spent way less time managing the infrastructure and could spend more time helping the business.

In fact, the IT department itself has become less like a computer repair shop and more like a strategy center. I'm constantly being brought into projects to help the business make the right decisions when it comes to any type of technology.

The next logical step would be to have my team spend less time doing these four-times-a-year DR drills the way I described before. With SRM it’s a few clicks. We're saving so much time and we are able to do other things.

The IT department itself has become less like a computer repair shop and more like a strategy center.

Gardner: Tell me how you got to the point today, where you can deal with something like 14 terabytes and moment-by-moment backup capability?

Strategic partner

Bauer: It all really started at VMworld. That’s been a fantastic way for me to learn what's out there, what's coming up, and just staying in the know. That’s actually where I met International Computerware, Inc. (ICI), who is one of our strategic partners for storage and virtualization.

I had approached them with the growth issue. We had already started doing virtualization on our own. I had used it at a previous company, but I wasn’t familiar with SRM, and it looked like it might be a nice fit for improving our DR. So ICI came in and they sort of held our hands and helped us with that project.

Specific to storage, they have also helped us make sure that we do better management of growth, anticipate our growth, and show that we have more than what we're going to need, before the growth happens, and they've done some analysis on like what we have. We brought them in before things got too bad.

Since using VMware, we've noticed uptime upwards of three nines monthly. Before that, when we were mostly a physical environment, it was nowhere near that much. We had physical servers going down all the time.

VMware immediately gained our trust, seeing that they came out with this product for DR. It was a name that we trusted. Then, we played with it for a while, and it worked out fantastically.

It's all about trusting VMware and then, again, ICI, working with them. They just know their stuff. We have a lot of different partners we work with, but we prefer to use ICI, because they really focus on doing things properly. It's more about working with someone that really knows what they are doing. They understand that we have some skills, as well. They're not trying to sell us something we don’t need.

95 percent virtualized

We are 95 percent virtualized here. The only thing that’s not virtual is our fax server, which requires a physical fax board and that’s about it. Everything else is virtual.

Gardner: So this is across all tiered apps, tier one, three, four?

Bauer: That’s correct, our SQL apps, our Exchange, everything you can think of is virtualized.

Gardner: I understand you're using vSphere 5. You're on vCenter SRM 5. That only came out towards the end of last year. So you just jumped right on that.

Bauer: Oh, I didn’t waste any time. We were very excited about it, especially this new option of using a failback, which wasn’t really part of SRM Version 4.

They've certainly fixed some of the bugs, and the interface is much better. The whole testing process seems to be a lot more smooth.

If you ever have the very unlikely event of a a disaster, when you do a recovery, you're now operating off of the disaster equipment or recovery equipment. While that’s happening, people are still saving files and generating new data. If you were to just simply turn on the original equipment again, all that data would be lost. So you need to fail back to re-sync everything.

With SRM Version 4, you had to configure two one-way recovery systems. So it would take a lot more time. But now with failback, it's a lot more smooth, kind of built-in.

Gardner: Do you actually have separate data centers that you are backing up to? What's the topology or architecture that you're using?

Bauer: We have two separate data centers, recovery and production. At the moment they're only a few towns apart, but we are shopping around for a data center much further away. We hope to do that in the next six months or so.

Gardner: Looking to the future, one other area I wanted to hit on, which is important to a lot of folks, especially in some overseas markets, is this issue about energy. Did you have any impact on energy and/or storage costs associated with the total life cycle of the data?

Bauer: We reduced the footprint by easily 75 percent by not needing so many physical servers. That’s a pretty huge shout-out to VMware there. Also, we're not using that much power. We don’t need as big a data center. Not as much cooling is needed. There's a whole assortment of things, when you take out all the physical servers.

Gardner: Now, looking to the future, other areas that people have described as a segue from going to high virtualization, exploiting the latest technologies in DR, is to start thinking about desktop virtualization infrastructure (VDI) and desktop-as-a-service. They're even looking at cloud and hybrid-cloud models for hosting apps, then backing them up and recovering them in different data centers, which you've alluded to. Do you have any thoughts about where this could possibly lead?

Bauer: In fact, if you were going to ask me what my next initiative was going to be, and you didn’t mention desktops, that’s the first thing that would have come to mind. We're starting to explore replacing our laptops with virtual desktops. I'm hoping this is something that we could implement next year.

Right way to go

This seems like the right way to go, because our helpdesk team spends too much time swapping out laptops or replacing laptops that are dropped on the ground. You're looking at a small thin client, which is the fraction of the cost of a laptop. Plus, the data is no longer kept in a laptop. There are no security or compliance issues. You can l just give them a thin client, and they are back in business.

It makes everybody in this company, especially at the top-level, nervous to know that some sensitive data still does make it out to the laptops. We tell people to save everything to their network drives, but without using thin clients and virtual desktops, there's no other way to force that.

Gardner: How about advice for those folks that might be moving towards a more modern DR journey, as you described it? What would you advise to them as they begin, and what lessons might you have learned that you could share?

Bauer: First off, do it. You're going to be glad that you did. The good thing about this is that you can do it in parallel with your current DR plans. You don’t have to change your existing recovery plans. You can take as much time as you want to set it up right. And the key is to set up a demonstration for the key business owners and players that are going to make the decision on the change.

Set it up right with a handful of important apps, important VMs, and then just show it to people. Once they see how great it works, you're definitely going to want to change.

It's always helpful to have some outside help. No matter how skilled you are, it's always good to have a second pair of eyes look at the work that you did, if for nothing more than to confirm that you've done everything you could and your plans are solid. It's helpful to have a partner like ICI.

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

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Proper security and protection measures enable rapid cloud adoption, say HP experts on discussion panel

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

It now falls to CIOs to not only rapidly adapt to cloud computing, but to find the ways to protect their employees and customers as they adopt cloud models – even as security threats grow.

This is a serious -- but not insurmountable challenge.

Cloud computing has clearly sparked the imagination of business leaders, who see it as a powerful new way to be innovative and gain first-mover advantages -- with or without traditional IT's consent.

This simply now means that the center of gravity for IT services is shifting toward the enterprise’s boundaries – moving increasingly outside their firewalls. And so how can companies have it both ways -- exploit cloud's promise but also provide enough security to make the risks acceptable? How can organizations retain rigor and control while pursuing cloud benefits?

In a special BriefingsDirect sponsored HP Expert Chat discussion on how to define and obtain improved security, I recently moderated an in-depth session with Tari Schreider, HP Chief Architect of HP Technology Consulting and IT Assurance Practice. Tari is a Distinguished Technologist with 30 years of IT and cyber security experience, and he has designed, built, and managed some of the world’s largest information protection programs.

In our discussion, you’ll see the latest recommendations for how to enable and protect the many cloud models being considered by companies the world over.

If you understand the security risk, gain a detailed understanding of your own infrastructure, security can move from an inhibitor of cloud adoption to an enabler.

As part of our chat, we're also joined by three other HP experts, Lois Boliek, World Wide Manager in the HP IT Assurance Program; Jan De Clercq, World Wide IT Solution Architect in the HP IT Assurance Program; and Luis Buezo, HP IT Assurance Program Lead for EMEA. [Disclosure: HP is a sponsor of BriefingsDirect podcasts.]

If you understand the security risk, gain a detailed understanding of your own infrastructure, and follow proven reference architectures and methods, security can move from an inhibitor of cloud adoption to an enabler.

Here are some excerpts from our discussion on how to make the move:

Schreider: It's always a pleasure to be able to chat about some of the technology issues of the day, and certainly cloud computing protection is the topic that’s top of mind for many of our customers.

I want to begin talking about the four immutable laws of cloud security. For those of you who have been involved in information security over time, you understand that there is a certain level of immutability that is incumbent within security. These are things that will always be, things that will never change, and it is a state of being.

When we started working on building clouds at HP a few years ago, we were also required to apply data protection and security controls around those platforms we built. We understood that the same immutable laws that apply to security, business continuity, and disaster recovery extended into the cloud world.

First is an understanding that if your data is hosted in the cloud, you no longer directly control its privacy and protection. You're going to have to give up a bit of control, in order to achieve the agility, performance, and cost savings that a cloud ecosystem provides you.

The next immutable law is that when your data is burst into the cloud, you no longer directly control where the data resides or is processed.

One of the benefits of cloud-based computing is that you don’t have to have all of the resources at any one particular time. In order to control your costs, you want to have an infrastructure that supports you for daily business operations, but there are ebbs and flows to that. This is the whole purpose of cloud bursting. For those of you who are familiar with grid-based computing, the models are principally the same.

Different locations

Rather than your data being in one or maybe a secondary location, it could actually be in 5, 10, or maybe 30 different locations, because of bursting, and also be under the jurisdiction of many different rules and regulations, something that we're going to talk about in just a little bit.

The next immutable law is that if your security controls are not contractually committed to, then you may not have any legal standing in terms of the control over your data or your assets. You may feel that you have the most comprehensive security policy that is rigorously reviewed by your legal department, but if that is not ensconced in the terminology of the agreement with a service provider, then you don’t have the standing that you may have thought you had.

The last immutable law is that if you don’t extend your current security policies and controls in the cloud computing platform, you're more than likely going to be compromised.

You want to resist trying to create two entirely separate, disparate security programs and policy manuals. Cloud-based computing is an attribute on the Internet. Your data and your assets are the same. It’s where they reside and how they're being accessed where there is a big change. We strongly recommend that you build that into your existing information security program.

Gardner: Tari, these are clearly some significant building blocks in moving towards cloud activities, but as we think about that, what are the top security threats from your perspective? What should we be most concerned about?

The reason to move to cloud is for making data and assets available anywhere, anytime.

Schreider: Dana, we have the opportunity to work with many of our customers who, from time to time, experience breaches of security. As you might imagine, HP, a very large organization, has literally hundreds of thousands of customers around the world. This provides us with a unique vantage point to be able to study the morphology of cloud computing platform, security, outages, and security events.

One of the things that we also do is take the pulse of our customer base. We want to know what’s keeping them up at night. What are the things that they're most concerned with? Generally, we find that there is a gap between what actually happens and what people believe could happen.

I want to share with you something that we feel is particularly poignant, because it is a direct interlock between what we're seeing actually happening in the industry and also what keeps our clients up late at night.

First and foremost, there's the ensured continuity of the cloud-computing platform. The reason to move to cloud is for making data and assets available anywhere, anytime, and also being able to have people from around the world accept that data and be able to solve business needs.

If the cloud computing platform is not continuously available, then the business justification as to why you went there in the first place is significantly mooted.

Loss of GRC control

Next is the loss of span of governance, risk management, and compliance (GRC) control. In today’s environment, we can build an imperfect program and we can have a GRC management program with dominion over our assets and our information within our own environment.

Unfortunately, when we start extending this out into a cloud ecosystem, whether private, public, or hybrid, we don’t necessarily have the same span of control that we have had before. This requires some delicate orchestration between multiple parties to ensure that you have the right governance controls in place.

The next is data privacy. Much has been written on data privacy and protection across the cloud ecosystem. Today, you may have a data privacy program that’s designed to address the security and privacy laws of your specific country or your particular state that you might reside in.

However, when you're moving into a cloud environment, that data can now be moved or burst anywhere in the world, which means that you could be violating data-privacy laws in another country unwittingly. This is something that clients want to make sure that they address, so it does not come back in terms of fines or regulatory penalties.

Mobility access is the key to the enablement of the power of the cloud. It could be a bring-your-own-device (BYOD) scenario, or it could be devices that are corporately managed. Basically you want to provide the data and put it in the hands of the people.

You have to make sure that you have an incident-response plan that recognizes the roles and responsibilities between owner and custodian.

Whether they're out on an oil platform and they need access to data, or whether it’s the sales force that need access to Salesforce.com data on BlackBerrys, the fact remains that the data in the cloud has to land on those mobile devices, and security is an integral part.

You may be the owner of the data, but there are many custodians of the data in a cloud ecosystem. You have to make sure that you have an incident-response plan that recognizes the roles and responsibilities between owner and custodian.

Gardner: Tari, the notion of getting control over your cloud activities is important, but a lot of people get caught up in the devil in the details. We know that cloud regulations and laws change from region to region, country to country, and in many cases, even within companies themselves. What is your advice, when we start to look at these detailed issues and all of the variables in the cloud?

Schreider: Dana, that is a central preoccupation of law firms, courts, and regulatory bodies today. What tenets of law apply to data that resides in the cloud? I want to talk about a couple of areas that we think are the most crucial, when putting together a program to secure data from a privacy perspective.

Just as you have to have order in the courts, you have to have order in the clouds. First and foremost, and I alluded to this earlier, is that the terms and conditions of the cloud computing services are really what adjudicates the rights, roles, and responsibilities between a data owner and a data custodian.

Choice of law

However, within that is the concept of choice of law. This means that, wherever the breach of security occurs, the courts can actually go to the choice of the law, which means whatever is the law of the land where the data resides, in order to determine who is at fault and at breach of security.

This is also true for data privacy. If your data resides in your home location, is that the choice of law by which you follow the data privacy standards? Or if your data is burst, how long does this have to be in that other jurisdiction before it is covered by that choice of law? In either case, it is a particularly tricky situation to ensure that you understand what rules and regulations apply to you.

The next one is transporter data flow triggers. This is an interesting concept, because when your data moves, if you do a data-flow analysis for a cloud ecosystem, you'll find that the data can actually go across various borders, going from jurisdiction to jurisdiction.

The data may be created in one jurisdiction. It may be sent to another jurisdiction for processing and analysis, and then may be sent to another location for storage, for intermediate use, and yet a fourth location for backup, and then possibly a fifth location for a recovery site.

This is not an atypical example. You could have five triggering events across five different borders. So you have to understand the legal obligations in multiple jurisdictions.

The onus is predominantly placed on the owner of the data for the integrity of the data. The CSP basically wants no direct responsibility for maintaining the integrity of that data.

The next one is reasonable security, which is, under the law, what would a prudent person do? What is reasonable under the choice of law for that particular country? When you're putting together your own private cloud, in which you may have a federated client base, this ostensibly makes you a cloud service provider (CSP).

Or, in an environment where you are using several CSPs, what are the data integrity disclaimers? The onus is predominantly placed on the owner of the data for the integrity of the data, and after careful crafting of terms and conditions, the CSP basically wants no direct responsibility for maintaining the integrity of that data.

When we talk about who owns the data, there is an interesting concept, and there are a few test cases that are coursing their way through various courts. It’s called the Berne Convention.

In the late 1990s, there were a number of countries that got together and said, "Information is flowing all over the place. We understand copyright protection for works of art and for songs and those types of things, but let’s take it a step further."

In the context of a cloud, could not the employees of an organization be considered authors, and could not the data they produce be considered work? Therefore wouldn’t it be covered by the Berne Convention, and therefore be covered under standard international copyright laws. This is also something that’s interesting.

Modify policies

The reason that I bring this to your attention is that it is this kind of analysis that you should do with your own legal counsel to make sure that you understand the full scope of what’s required and modify your existing security policies.

The last point is around electronic evidence and eDiscovery. This is interesting. In some cases it can be a dual-edged sword. If I have custody of the data, then it is open under the rules of discovery. They can actually request that I produce that information.

However, if I don’t directly have control of that data, then I don’t have the right, or I don’t have the obligation, to turn it over under eDiscovery. So you have to understand what rules and regulations apply where the data is, and that, in some cases, it could actually work to your advantage.

Join the next Expert Chat presentation on May 15 on support automation best practices.

Different risk profiles

Your risk profile may be different, if you are the custodian, versus the risk profile if you're the owner of the data. This is something that you can very easily put together and present to your executives. It allows you to model the safeguards and controls to protect the cloud ecosystem.

Gardner: We certainly know that there is a great deal of opportunity for cloud models, but unfortunately, there is also significant down side, when things don’t go well. You're exposed. You're branded in front of people. Social media allows people to share issues when they arise. What can we learn from the unfortunate public issues that have cropped up in the past few years that allows us to take steps to prevent that from happening to us?

Schreider: These are all public events. We've all read about these events over the last 16-18 months, and some of them have occurred within just the last 30 days or so. This is not to admonish anybody, but basically to applaud these companies that have come forward in the interest of security. They've shared their postmortem of what worked and what didn’t work.

What goes up can certainly come down. Regardless of the amount of investment that one can put into protecting their cloud computing environment, nobody is immune, whether it’s a significant and pervasive hacking attempt against an organization, where sensitive data is exfiltrated, or whether it is a service-oriented cloud platform that has an outage that prevents people from being able to board a plane.

When an outage happens in your cloud computing environment, it definitely has a reverberation effect. It’s almost a digital quake, because it can affect people from around the world.

You want to make sure that you have a secure system development lifecycle methodology to ensure that the application is secure and has been tested for all conventional threats and vulnerabilities.

One of the things that I mentioned before is that we're very fortunate that we have that opportunity to look at disaster events and breaches of security and study what worked and what didn’t.

I've put together a little model that would reanalyze the storm damage. if you look at the types of major events that have occurred. I've looked at the control construct that would exist, or should exist, in a private cloud and the control construct that should exist in a public cloud, and of course in a hybrid cloud. It's the convergence of the two, and we would be able to mix and match those.

If you have a situation where you have an external threat that infiltrates an application, hacks into it, compromises an application, in a private cloud environment, you want to make sure that you have a secure system development lifecycle methodology to ensure that the application is secure and has been tested for all conventional threats and vulnerabilities.

In a public cloud environment, you normally don’t have that same avenue available to you. So you want to make sure that you either have presented to you, or on behalf of the service provider, have a web-application security review, external threat and vulnerability test.

In a cloud environment, where you are dealing in the situation of grouping many different customers and users together, you have to have a basis to be able to segregate data and operation, so that one of that doesn’t affect everybody.

The level of investment that you make in protecting your cloud environment should be commensurate with the value of the assets that are being burst or hosted in that cloud environment.

Protection through layers

We're a big believer in, whether it's cloud or just in security, having an information technology architecture that's defined by layers. What is the business rationale for the cloud and what are we trying to protect? How should it work together functionally? Technically, what types of products and services will we use, and then how will it all be implemented?

We also have a suite of products that we can bring to our cloud computing environment to ensure that we're securing and providing governance, securing applications, and then also trying to detect breaches of security. I've talked about our reference architecture.

Something that's also unique is our P5 Model, where basically we look at the cloud computing controls and we have an abstraction of five characteristics that should be true to ensure that they are deployed correctly.

As I mentioned before, we're either a principal member, contributing member, or founding member of virtually every cloud security standards organization that's out there. Once again, we can't do it by ourselves, and that's why we have strategic partners with VMwares and the Symantecs of the world.

Gardner: There's a question here about key challenges regarding data lifecycle specifically. How do you view that? What are some of the issues about secure data, even across the data lifecycle?

Key challenges

Luis Buezo: Based on CSA recommendations, we're not only talking about data security related to confidentiality, integrity, and availability, but there are other key challenges in the cloud like location of the data to guarantee that the geographical locations are permitted by regulations.

There's data permanence, in order to guarantee that data is effectively removed, for example, when moving from one CSP to a new one, or data backup and recovery schemes. Don't assume that cloud-based data is backed up by default.

There are also data discovery capabilities to ensure that all data requested by authorities can be retrieved.

Another example is data aggregation on inference issues. This will be implemented to prevent revealing protected information. So there are many issues with having data lifecycle management.

Gardner: Our next question is about being cloud ready for dealing with confidential company data, how do you come down on that?

Jan De Clercq: HP's vision on that is that we think that many cloud service today are not always ready for letting organizations store their confidential or important data. That's why we recommend to organizations, before they consider moving data into the cloud, to always do a very good risk assessment.

They should make sure that they clearly understand the value of their data, but also understand the risks that can occur to that data in the cloud provider’s environment. Then, based on those three things, they can determine whether they should move their data into the cloud.

We also recommend that consumers get clear insights from the CSP on exactly where their organization's data is stored and processed, and where travels inside the network environment of the job provider.

As a consumer you need to get a complete view on what's done with your data and how the CSP is protecting them.

Gardner: Okay, Jan, what are essential data protection security controls that they should look for from their provider?

Clercq: It’s important that you have security controls in place that protect the entire data lifecycle. By data lifecycle we mean from the moment that the data is created to the moment that the data is destroyed.

Data creation

When data is created it’s important that you have a data classification solution in place and that you apply proper access controls to the data. When the data is stored, you need confidentiality, integrity, and availability protection mechanisms in place. Then, you need to look at things like encryption tools, and information rights management tools.

When the data is in use, it’s important that you have proper access control in place,so that you can make sure that only authorized people can access the data. When the data is shared, or when it’s sent to another environment, it’s important that you have things like information rights management or data loss prevention solutions in place.

When the data is archived, it’s important that it is archived in a secured way, meaning that you have proper confidentiality, integrity, and availability protection.

When the data is destroyed, it’s important, as a consumer, that you make sure that the data is really destroyed on the storage systems of your CSP. That’s why you need to look at things like crypto-shredding and other data destruction tools.

Gardner: Tari, how does cloud computing change my risk profile? It's a general subject, but do you really reduce or lose risk control when you start doing cloud?

When the data is destroyed, it’s important, as a consumer, that you make sure that the data is really destroyed on the storage systems of your CSP.

Schreider: An interesting question to be sure, because in some cases, your risk profile could be vastly improved. In other cases, it could be significantly diminished. If you find yourself no longer in a position to be able to invest in a hardened data center, it may be more prudent for you to move your data to a CSP that is already classified as a data-carrier grade, Tier 1 infrastructure, where they have the ability to invest the tens of millions of dollars for a hardened facility that you wouldn’t normally be able to invest yourself.

On the other hand, you may have a scenario where you're using smaller CSPs that don’t necessarily have that same level of rigor. We always recommend, from a strategic perspective when you are looking at application deployment, you consider its risk profile and where best to place that application and how it affects your overall threat posture.

Gardner: Lois, how can HP help clients get started, as they determine how and when to implement cloud?

Lois Boliek: We offer a full lifecycle of cloud-related services and we can help clients get started on their transition to the cloud, no matter where they are in that process.

We have the Cloud Discovery Workshop. That’s where we can help customers in a very interactive work session on all aspects of considerations of the cloud, and it will result in a high-level strategy and a roadmap for helping to move forward.

Business/IT alignment

We also offer the Hybrid Delivery Strategy Services. That’s where we drill down into all the necessary components that you need to gain business and IT alignment, and it also results in a well-defined cloud service delivery model.

We also have some fast-start services. One of those is the CloudStart service, where we come in with a pre-integrated architecture to help speed up the deployment of the production-ready private cloud, and we can do that in less than 30 days.

We also offer a Cloud System Enablement service, and in this we can help fast track setting up the initial cloud service catalog development, metering, and reporting.

Gardner: Does HP have the services to implement protection in the cloud?

Boliek: We believe in building security into the cloud environment from the beginning through our architectures and our services. We offer something called HP Cloud Protection Program, and what we have done is extended the cloud service offerings that I've just mentioned by addressing the cloud security threats and vulnerabilities.

We always recommend that you consider its risk profile and where best to place that application and how it affects your overall threat posture.

We've also integrated a defense in depth approach to cloud infrastructure. We address the people, process, policies, products improved, and the P5 Model that Tari covered, and this is just to help to address confidently and securely build out the hybrid cloud environment.

We have service modules that are available, such as the Cloud Protection Workshop. This is for deep-dive discussions on all the security aspects of cloud, and it results in a high-level cloud security strategy and next steps.

We offer the Cloud Protection Roadmap Service, where we can define the specific control recommendations, also based on our P5 Model, and a roadmap that is very customized and specific to our clients’ risk and compliance requirements.

We have a Foundation Service that is also like a fast start, specific to implementing the pre-integrated, hardened cloud infrastructure, and we mitigate the most common cloud security threats and vulnerabilities.

Then, for customers who require very specific custom security, we can do custom design and implementation. All these services are based on the Cloud Reference Architecture that Jan and Tari mentioned earlier, as well as extensive research that we do ahead of time, before coming out with customers with our Cloud Protection Research & Development Center.

Gardner: Tari, what should users do to determine how good their service provider is when it comes to these security issues?

Incumbent on us

Schreider: I wish we did have a rating system, but unfortunately, it's still incumbent upon us to determine the veracity of the claims of security and continuity of the CSPs.

However, there are actually a number of accepted methods to gauge whether one's CSP is secure. Many organizations have had what's referred to as an attestation. Formally, most people are familiar with SAS 70, which is now SSAE 16, or you can have an ISO 27000.

Basically, you have an independent attestation body, typically an auditing firm, that will come in and test the operational efficiency and design of your security program to ensure that whatever you have declared as your control schema, maybe ISO, NIST, CSA, is properly deployed.

However, there is a fairly significant caveat here. These attestations can also be very narrowly scoped, and many of the CSPs will only attach it to a very narrow portion of their infrastructure, maybe not their entire facility, and maybe not even the application that you're a customer of.

Also, we found that CSPs many application-as-service providers don’t even own their own data centers. They're actually provided elsewhere, and there also may be some support mechanisms in place. In some cases, you may have to evaluate three attestations just to have a sense of security that you have the right controls in place, or the CSP does.

Join the next Expert Chat presentation on May 15 on support automation best practices.

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

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Ariba Network helps Cox Enterprises manage procurement across six different ERP systems

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

The latest BriefingsDirect podcast, from the 2012 Ariba LIVE Conference in Las Vegas, explores the latest in cloud-based collaborative commerce with Cox Enterprises, a $15 billion communications, media, and automotive services company.

We'll learn how Cox, through the Ariba Network, manages multiple ERP systems for an improved eProcurement strategy, and has moved toward more efficient indirect spend efforts to improve ongoing operations and drive future growth across more than 50,000 employees.

To hear more about how they have done this, Interarbor Solutuons Principal Analyst Dana Gardner interviews Brooke Krenn, the Senior Manager of Procurement Systems for Cox Enterprises, based in Atlanta. [Disclosure: Ariba is a sponsor of BriefingsDirect podcasts.]

Here are some excerpts:

Gardner: A lot of organizations either have organically developed multiple systems for different groups or, for merger and acquisition reasons, have different ERPs. How has that been a challenge, when it comes to procurement?

Krenn: We have six separate ERP systems spanning major subsidiaries, including Cox Communications, Manheim, Cox Media Group, and AutoTrader.com. Cox is a very interesting company in that our business units are very diverse and very unique. Across four divisions and our holding company we have those six ERP systems.

So with that, obviously, there are a lot of challenges. There's not a lot of common ground, when it comes to purchasing. Across those six ERP systems we needed some way to drive consistency, as we focused on really capitalizing on our indirect spend across all the business units.

Procurement systems team

My team is the Procurement Systems Team. We fall under supply chain in Cox Enterprises. I have a team of three, and we manage our eProcurement platform, with which we do about $50 million year-end POs, and average about 1,500 POs a month. We also manage our P-Card program, which is about $130 million a year in spend, and also our fuel card program, which is about $50 million a year.

Historically, our spend, specifically the indirect spend, has been all over the place. We haven’t had a lot of visibility into that spend and haven’t had a consistent manner in which we purchased.

Ariba was one of the top contenders, simply because of the user experience was most important to us, and also how quickly we could implement it.

We had an eProcurement solution for about 10 years. We were on that software for a decade, and it was just very dated. It wasn't supported very well. We knew it was time to make that change. Where we were in the economy, everyone was looking at the most logical places to save time and money and to become more efficient. Obviously, procurement was one of those areas where we could do very quickly.

We knew the first step was replacing the software that we did have. Immediately, Ariba was one of the top contenders, as we looked for a new solution, simply because of the user experience was most important to us, and also how quickly we could implement it.

Gardner: So you’re going from an on-premises software installed affair to now more of a software-as-a-service (SaaS) and cloud affair. Was that something that was difficult or something you were looking forward to?

Krenn: Moving to the cloud in an on-demand solution was great for us. Having the on-premises software in the past, any time there was an upgrade or an update, we had to be sure IT knew about it and we scheduled the time on a night or a weekend. We had to call on resources internally within the company. So it was very exciting for us to move to an on-demand solution and all of the technology that was available with that.

A great change

For the users, it's been a great change, because now they consistently know there's one place to go. When they need to order office supplies, when they need to order something for their break room, when they need to order business cards, they know where to go. In all of our divisions and all of our locations, employees want to do the right thing. They want to purchase the right way. A lot of times they're just not sure of what to do.

So with this implementation of a new tool, we were able to really drive them in the right direction, and it was an easy solution for them. It was easy for us to implement, and it's been very easy for our end users and our employees to adopt.

Gardner: Has that, in fact, translated into other metrics of success that you could describe for us?

With this implementation of a new tool, we were able to really drive them in the right direction, and it was an easy solution for them.

Krenn: Probably one of the biggest wins for us has been just driving compliance against our contracts. We’re able to see very easily now when a location or a business unit within one of the divisions is purchasing off-contract or when they're not utilizing one of our preferred or negotiated suppliers. That's probably been the biggest win for us.

We have the visibility now to see very quickly within our P2P tool and also within our spend management tool to see where this spend is taking place and able to reach out directly to those locations or to those employees that are purchasing off-contract. Obviously, the more purchasing power we have, the more spend we are driving to these contracts, the better our pricing is going to be going forward.

Unconventional

We went about implementing our new P2P solution a bit unconventionally, you could say. About 98 percent of our transactions are actually on a supplier card -- a P-Card model, which has just been tremendously successful for us. With that, we didn't have to integrate directly into our six separate ERPs because our payment method is with that supplier card.

Ease of implementation was one of the biggest wins. Also with that is the ease of use for the end user. There's no reconciliation for them at the end of the month. We’re taking care of all of that GL coding information, all of the approvals, upfront. The supplier card model, again, has been great on the end user side as well as on the AP reconciliation side.

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

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