Thursday, October 02, 2008

Interview: HP’s Paul Evans, Oracle’s Lance Knowlton on Application Modernization and IT Transformation

Transcript of BriefingsDirect podcast recorded at the Oracle OpenWorld Conference in San Francisco the week of Sept. 22, 2008.

Listen to the podcast. Download the podcast. Find it on iTunes/iPod. Learn more. Sponsor: Hewlett-Packard.

Dana Gardner: Hi, this is Dana Gardner, principal analyst at Interarbor Solutions, and you're listening to a special BriefingsDirect podcast recorded at the Oracle OpenWorld conference in San Francisco. We are here the week of Sept. 22, 2008. This HP Live! Podcast is sponsored by Hewlett-Packard (HP), and distributed through the BriefingsDirect Network.

We are here with representatives from both HP and Oracle to discuss how IT infrastructure, systems and software come together in a whole greater than the sum of the parts for many enterprises.

We are going to be discussing services-oriented architecture (SOA), application modernization, next generation data centers and how better results from computing deployments come from tighter integration and cooperation between the platform and software providers.

Joining us to discuss these issues we have Paul Evans, worldwide marketing lead for IT Transformation Solutions at HP. Welcome to the show, Paul.

Paul Evans: Thank you very much.

Gardner: Lance Knowlton, vice president for modernization at Oracle, also joins us. Welcome, Lance.

Lance Knowlton: Thanks for having me.

Gardner: You know here at OpenWorld we have 43,000 people from around the globe, bringing lots of thought leaders together, and it seems that the level of cooperation between HP and Oracle has never been stronger. I wonder if we could start with what's going on between these two large global vendors and how software support and systems come together. Let's go first to Paul. What's going on with this relationship between HP and Oracle?

Evans: Obviously, Oracle and HP have a historical relationship around systems and database. Everyone knows that Oracle is the leader in that space, and that's where the history has been, but as we move forward, the agendas of both HP and Oracle have focused more on the transformation and modernization of environments.

That is built around the desire to deploy new applications, modernize existing applications, or take a fundamental look at the underpinning infrastructure, the support applications.

For some that can be the infrastructure that is the database or the way the operating system just does what the operating system does. But, as we look into the future, the customers that we both have are looking at things like SOA to understand how they are going to architect the solutions going forward. They will incorporate the technologies from HP and Oracle.

Gardner: So this sounds more like a solutions relationship than a supplier relationship.

Evans: Our customers don't buy products. They want solutions to business issues, and that's a very glib term. The word "solution" can be overused by people in marketing, but that's what people want.

You walk into a car show room, and you want to buy a car. You don't want to buy an engine, a set of wheels, or a set of headlights. You are going there for solution for a particular need, whether it's a sports car, a family car, an SUV, or whatever it is you want. Similarly, between companies the size and scale of HP and Oracle, we have the ability to deliver those solutions, both between ourselves, and with the network of partners that we share.

Gardner: I suppose they want an Audi at the price of a Ford Focus. How do we get high performance but at reduced cost, or at least higher value?

Knowlton: Well, in the application modernization space we have seen a number of customers that are faced right now with proprietary legacy systems. These systems are costing them a lot of money, not only in dollars, but also in agility, and the lack of ability to be able to react to business conditions in that particular industry. So when we are modernizing legacy systems out of these proprietary platforms, we are helping to reduce their cost and increase agility, which is a much more beneficial approach than just simply leaving them on the proprietary platforms that they have had.

Gardner: Now this is more than simply modernizing the applications. They also want these applications to play well with the newer applications, be they packaged apps or green-field apps from either ISVs or the custom apps that the organizations are building internally. Help us understand how Oracle and HP work together, not only on the modernization, but more so on the SOA approach.

Knowlton: SOA is an approach where you take existing applications or new applications and create services on top of these applications. This is very important from the sense that you are abstracting these entry points into these systems and you no longer have the dependency of these systems in where they run today.

SOA is not only important in new application development, but also where we're leveraging legacy systems, and bringing these systems together. From this point you are no longer creating point-to-point relationships, but you are actually allowing a higher level of reuse, and many more participants can access these applications.

Gardner: Paul, if I'm in an organization modernizing apps and I am getting better integration on a services orientation, I'm not going to be just looking at my apps to transition and to transform. I'll probably be taking a hard look at the infrastructure as well. So we're talking about a multi-tiered approach here. The benefit being agility, but also lower total cost as we go to these more modern systems and platforms. What's the relationship between application modernization and the next generation data center – the end goal on the journey?

Evans: Well, all organizations are looking to modernize or transform. They all are. They're doing it in different ways, whether it's hardware, software, services, whatever it maybe. Everybody is modernizing something. Nobody is standing still.

The recent business environment we have seen over the last month or two has pointed out that business changes very quickly and people have to respond to that. IT has to also, as it will either lead or follow -- but it is intrinsically involved in that change process.

The customers that Lance and I work with come from different directions. Some come in from, "I have all aged applications that I need to transform. They're costing me a fortune. They are inflexible, and they don't respond to change. The skills of the people to support these applications are becoming limited, so we need to move now and do something."

We have other clients who come from the database environment. They're looking to provide a much stronger, more resilient database environment to look after their information, and provide a much-improved level of customer service. Or, they come in from an infrastructure point of view. "I'm running hardware. It's obsolete. It's aging. It's costing me a fortune. I want to change."

So there's no-one-size-fits-all. What we have done with the relationship between HP and Oracle is that we have studied some of these points, whether database historically, or whether it was two years ago when we started the application modernization initiative with Oracle.

We came at it from the top down, but what we are also looking at is a holistic view around what we call IT Transformation. That allows our clients to join the party from any doorway they want in terms of what they are looking for in a business benefit. That's the really exciting thing between us and Oracle, because you have two organizations with immense capability that bring that capability together to deliver these real-world cost solutions.

Gardner: We're hearing some pretty interesting news this week about deeper relationship between Oracle and HP. We're also seeing an additional partner, Intel, prominent here at the show. Tell me a little bit about the triumvirate, if you will, of Oracle, HP and Intel.

Evans: Well, the combination of what Oracle, HP and Intel can bring, is somewhat immeasurable in terms of the capabilities of three companies. Two years ago, we announced this thing called Application Modernization Initiative (AMI), which was from all three companies.

The intent here was to bring together the capabilities of the three companies and to de-risk the solutions that we could provide by doing the testing off-site in our own labs to make sure the effects what Oracle is producing, versus what HP produces, runs on what Intel produces. So you have three enormous companies with enormous capability taking the time to really ensure that the modernization solutions that we deliver to our customers actually do what they say on the box.

Gardner: Lance, what does that mean for modernization in Oracle's perspective?

Knowlton: When we talked to our customers, there are two key areas that they look at. They are having problems on their legacy. That's their applications and their data. From the applications perspective, these systems are often fragmented and siloed. They've been developed over the past 30 years, and they have been maintained so much that they no longer have the ability to keep pace with the business.

From the data perspective, often times the data is very siloed. It's very hard to leverage in future-state architecture. So for Oracle the interest that we have for HP and Intel with applications modernization is to be able to take this legacy data and legacy applications and bring them forward into a new architecture.

Oracle will often speak about SOA and Java relational databases, but it's not just enough to talk about new standards and new technologies. You have to have a process and a means of bringing those systems forward. That's what AMI brings to the party.

Gardner: In this IT transformation phase, there are different implications for different enterprises. It's happening not in an isolated fashion, but in the context of some other major trends. We have more virtualization. We have storage that has created these abstractions of data. We have the need for skills that is propelling people off of these older systems.

Tell me, Paul, about some of these trends that are underscoring and accelerating IT transformation, and what that means also for HP and Oracle.

Evans: When Lance and I worked in this thing called AMI two years ago, we had our sights firmly set on applications. What is also bubbling up, and I think technology by technology, is this whole concept around the next generation of data center, which a lot of our customers, joint customers, are looking at. Oracle, the world leader in databases, has a real interest in the data center market. From a high technology infrastructure market, we obviously are extremely interested in where people are going.

As we said earlier, there are different priorities. Some people are coming at this from a green IT issue. They want to lower their power in cooling. They want to reduce their floor space that the data center uses, or CO2 emissions.

Other people are coming at this from experimenting with newer technologies like virtualization. How can I improve the servers' utilization by actually using this virtualization technology? Other people come at it from a more straightforward way, which is, "Hey, I have an aging mainframe. I am not going to continue to pay the sort of prices that I have to do for that technology. Therefore, I am going to upgrade."

The next-generation data center is the underpinning to some degree of what we are seeing, whereas the reverse of that is what we see in the applications world. But what we are seeing is these two coming together, and I think that the real joy and benefit, as it were, and passion in this is what Oracle brings, and what HP brings. Then, of course, what we can now blend into that what HP will bring with the EDS acquisition, in terms of the skills and knowledge and industry credibility.

In terms of bringing solutions of a world-class nature, that will exploit the work that Lance and others and I have worked on over the last couple of years, but also those fundamental technologies, which of course are underpinned, by the Intel technology. So it all tends to sort of overlap and come together. As long as we can explain it to our customers in simple joined-up language, then I think we are going to have a lot of fun, and in a great position.

Gardner: How is the market reacting to this? It sounds like a fairly complex approach and, as I say, it's going to vary from enterprise to enterprise, perhaps from department to department. What's going on out there? How are people adjusting to this? Are they tentative; is there an accelerating adoption? What do you see as the trend in that regard?

Knowlton: We see a lot of pent-up demand in this particular area. Paul mentioned legacy skill sets. We have had a couple of our customers over the last month tell us that they are actually bringing back IT staff – these people were greater than 70 years old -- because they simply could no longer maintain their existing legacy applications. We hear this time and time again. There are systems that went down, and that have been maintained over such a long period of time, that they are not able to bring them back up again.

Gardner: At that age you ought to get your options to invest fairly quickly, don't you think?

Knowlton: Exactly, exactly.

Gardner: So in addition to having these skill-sets issues, we are starting to see not only pent-up demand worked at from the legacy perspective, but also we are starting to see people interested in modern architectures. Tell us, Paul, what are you seeing from HP's perspective on readiness -- how to move in a market?

Evans: As I said earlier, everybody wants to modernize. The problem is that people see it to be risky. So we have this situation where 10 percent of the customers that Lance and I go out and talk to are sort of on the move, want to modernize, are getting on with things. Eighty percent of those customers out there are watching the 10 percent to see will they stumble, will they fall, will they actually deliver improved agility, and will the cost be lower?

I think we have enough proof points now that those people are saying now is the time we have to do this. We can't keep holding back. It was like the age-old days where you were going to buy a brand new calculator or mobile phone. If you wait a week the price will go down. Well, yes, the price did go down. The problem is that for that week that you waited, you didn't have the benefit of the technology.

Customers have now gotten to that inflection point that [former Intel Chairman and CEO] Andy Grove used to talk about, which is the point that says, "We have got to move. Our competitors are moving. They are modernizing. They are delivering improved customer satisfaction and service."

Whether you are an airline or a car manufacturer, everybody is using technology to deliver richer customer experience. If you don't modernize, you have no ability to deliver that experience. That's what is driving the market, whether it's a change in applications, whether it's database, whether it's a move to SOA, or the underlying infrastructure. Here at Oracle, everyone is asking us, "What do I do, where do I start, what do I need to do?"

Gardner: Let's look at some examples. The proof of the pudding is in the eating, as they say. Lance, give us some examples perhaps of where 70-year-olds have had to be brought in, and what happens after the modernization and transformation activities?

Knowlton: There is an inherent cost of doing nothing, and, as Paul is alluding to, you can't just simply let these legacy systems stay out there, not treat them truly as an asset, and not have an ongoing plan on how to modernize them. What we have seen several times with our customers is, they have not have had that plan. They let these systems age. They become fragile over time, and now they have to figure out a strategy on how to move them forward. Often times, they feel like that this is a big-bang sort of risk.

Gardner: I know you can't always mention names, but you give me some examples of what's really happened in the field?

Knowlton: We have had one of our customers in the manufacturing area that had a system outage that was planned. They expected the system outage to be just a couple of hours. Unfortunately, they found that they couldn't bring the systems back up. This was a very critical process to the manufacturing, and after seven days they finally got the system back up. So, it was a mission-critical system, and because they didn't understand it, and because they had not modernized that system, they are exposing themselves to a tremendous amount of risk.

Gardner: So they are fairly brittle at this point?

Knowlton: Very brittle.

Gardner: Any additional examples from the HP side, Paul?

Evans: There is always one thing that Lance and I understand every day of the week. Legacy systems still, in general, run the largest organizations, whether that's in a public sector or a private sector worldwide. That's something we have to understand.

Legacy doesn't mean they are old and unused. It means they are old, but actually critical to the operation in any organization. The point is that we have to appreciate that, but in moving people from the legacy world, we are, as it were, playing with, experimenting with, and having to work with the systems that are absolutely fundamental to that company's success or failure.

That's why we have done so much in de-risking the solution, because what we have to demonstrate to these customers is that by moving from the legacy environment to a modernized environment, they are going to get improvement. They are not just going to spend a ton of money with Oracle and HP, and we are going to walk away and leave them. We are not going to do that. What we have got to ensure is that whatever they're using today we can improve on, and give them a fundamental change in the cost structure, but also a fundamental uplift in the agility.

From the example standpoint, one of our clients is an airline. These days, all of us expect to just sit at our PC, wherever it might be, and be able to choose any option we want in terms of what we are going eat on the plane, where we are going to sit, who we are going to sit next to, and are not going to sit next to, and all the rest of it.

One airline we have been working with has not been able to offer some of that capability. They have traditionally run batch mode, in which they get all the bookings in from the travel agents during the day, process them overnight, and the following day everyone knows what flight they are on.

By not being able to offer that real time capability, they have seen sales drop, because people are just not prepared to say that somebody else is going to allocate my seat when I get the airport. I want to sit. I want to print my boarding card. So, that airline is suffering real problems in terms of not being able to do that. Now, they are in that position of being on the back foot, and they have to work twice as hard to regain the position they had in the first place.

Gardner: And, that's not a band-aid solution. That's a fundamental transformation that will bring them into that real-time capability.

Evans: Well, I think the challenge is that they've spent years and years and years bringing up a loyal customer base. It's the old adage. It takes $10 to get somebody into a store, but it only takes $1 to keep them in the store. The point being, if you build up a loyal customer base, as long as you can keep delivering and pleasing them with the customer experience, they will remain loyal customers. The problem is, as soon as you trip, they can be somewhere else.

Gardner: Sure. Expectations are increasingly getting toward that real-time gratification.

Evans: Absolutely.

Gardner: Especially among the younger folks.

Evans: It's the "I want it now, and if I can't get it now, I will go and find somebody else that will give it to me now."

Gardner: We were here talking about of IT transformation, legacy systems, and modernization of applications at Oracle OpenWorld. We have been focusing also on how the services and value of Hewlett-Packard and Oracle come together on that front.

We have been joined by Paul Evans, worldwide marketing lead for IT Transformation Solutions at HP, and also Lance Knowlton, vice president for Modernization at Oracle.

Our conversation today comes to you through a sponsored HP Live! Podcast from the Oracle OpenWorld conference in San Francisco. Look for other podcasts from this live event series at hp.com, as well as via the BriefingsDirect Network. I’d like to thank our producers on today's show Fred Bals and Kate Whalen, and of course, our panelists.

This is Dana Gardner, principal analyst at Interarbor Solutions. Thanks for listening, and come back next time for more in-depth podcasts, on enterprise IT topics and solutions. Bye for now.

Listen to the podcast. Download the podcast. Find it on iTunes/iPod. Learn more. Sponsor: Hewlett-Packard.

Transcript of BriefingsDirect podcast recorded at the Oracle OpenWorld Conference in San Francisco. Copyright Interarbor Solutions, LLC, 2005-2008. All rights reserved.