Thursday, July 10, 2008

HP Information Management Maven Rod Walker Describes How BI Helps Business Leaders Innovate

Transcript of BriefingsDirect podcast recorded at the Hewlett-Packard Software Universe Conference in Las Vegas, Nevada the week of June 16, 2008.

Listen to the podcast here. 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 live at the Hewlett-Packard Software Universe Conference in Las Vegas. We are here in the week of June 16, 2008. This sponsored HP Software Universe live podcast is distributed by BriefingsDirect Network.

We now welcome to the show Rod Walker, the vice president for Information Management in Hewlett Packard's Consulting and Integration (C&I) group. Welcome to the show, Rod.

Rod Walker: Thank you very much, Dana. It's a pleasure to be here.

Gardner: We are going to talk about some of the high-level business values that are being derived in the field from business intelligence (BI), data warehousing, data integration and generating quality data from the vast storm of information content data that's available to companies. This is, I suppose, a real competitive issue. This is what companies use to develop strategy, and to help them figure out where to take their businesses.

First off, let's tell our listeners a little about the information management practice, and a little bit about your background.

Walker: Thank you. I have been in the IT business, consulting business, for 37 years at this point. I came to Hewlett-Packard a year-and-a-half ago with the acquisition of Knightsbridge Solutions. They are one of the pre-eminent consulting firms in the BI and data warehousing space, and I was the CEO at Knightsbridge.

Gardner: All right. First, help us understand the problem out there. What's the issue? Is it that there is just too much data, that it's not good data, there is redundant data, all the above?

Walker: It's all the above and more. What we have is Global 2000, Fortune 500 companies that are struggling with all kinds of different issues, whether it's increasing market share, increasing the wallet share with their customers, dealing with compliance issues, competitive issues, or growing their business on a global basis, instead of regional basis.

They've all got different kinds of things that they are doing, and where we come in is we help them optimize different parts of their business. More and more, companies are becoming more fact based, data driven, and analytically focused, in terms of how they are running their businesses? So, they are using that to competitive advantage, to solve all these different types of business problems.

Gardner: So, no more just calling it from the gut?

Walker: Yeah, this is not shoot from the hip. This is, "How do we use the numbers to get ahead?"

Gardner: And, just having numbers isn't enough. It really is about distilling the numbers and finding the gems of information in there.

Walker: Yeah, and actually what we're seeing is that this type of work has evolved from where it's been a small group of analysts sitting in the back room, running models and making recommendations to management, to the point where you now have tiers of people throughout the organization -- from the CEO down to the individuals who interact with the customers -- and what they all need is better information.

Some of them need it in real time, and all this information needs to be provided from a consistent multi-tiered data infrastructure for the enterprise, so that they all are, in effect, operating off at the same facts, at different levels of details, and different levels of aggregation. But it all needs to be consistent, and the data that is used internally needs to be consistent with the data that's provided externally at the same time.

Gardner: Okay, let's unpack that a little bit in looking at some use-case scenarios. Why don't you tell us a little bit about how certain companies are out there are deriving a high business value from these activities? Can you perhaps give us an example from the health-care sector.

Walker: From the health care sector, one of the hot topics in health care these days -- and it's good for all of us -- is how do you improve patient outcomes? How do you improve the quality of patient care and ultimately the degrees of success in treatment? What we are seeing is that more and more of the providers of health-care services are trying to use their clinical data that they are gathering on a systematic basis -- what was this patient' problem, how did we treat him, and what was the end result?

We have both individual, if you will, hospital chains, trying to gather this information and doing it on their own, as well as various consortiums, who have the advantage of bringing in the clinical data literally from hundreds, if not thousands of hospitals, putting it into a consistent database. Then, what you can do is hunt through that data for best practices.

I can go into one hospital and say, "For this disease, for this treatment regime, what are my patient outcomes? And how do they compare, to the patient outcomes of hundreds of other hospitals?" If I am near the bottom, I've got a problem, and I better go fix it, for the sake of the quality of the care that I am providing and to avoid lawsuits and so forth. On the other hand, if I am in the top three percent, that is a marketing opportunity.

I can turn that back around and go out in the marketplace and say that for cardiac care or diabetes care, whatever the case may be, I am one of the top 10 best in the country. You hear that as consumers. You hear the stuff out there now where people are actually advertising, that they are really good in some aspect of health care.

Gardner: It's more of a marketplace?

Walker: It's absolutely a marketplace and the good news is that it's becoming competitive on the dimensions that we care about. First and foremost, what's the success in treating your illness. This is a hallelujah for all of us, and it's all because the data is becoming collectible, presentable and analyzable -- and people are doing it.

Gardner: And you can analyze that data with a certain a level of anonymity for the patients?

Walker: It has to be.

Gardner: Right.

Walker: It has to be. It's required. So the data is anonymized, and that's fine. For the kind of analysis they need to do, you don't need to know who the patient was, and you don't need any identifying information that would allow you to figure out who the patient is. It's readily anonymized.

Gardner: Right, and the fact that we are here in Las Vegas in a casino, raises a question about analytics. Do you do any analytics for the gaming industry?

Walker: Not yet, although, if you want an example of that, go see the movie "21" or read the book, "Bringing Down the House." There are your analytics for the gaming industry. Of course, it's not the one they want to talk about.

Gardner: All right. Well, speaking of markets, companies are looking for ways of exploiting their IT resources, getting return on their investment from their IT spend, and being able to up-sell and cross-sell the customers that they do have data on is becoming a great way to do that.

Walker: A lot of the work we do with our customers tends to be how they deal with their customers. And there's a lot of different aspects to this. It starts with, and it's kind of basic, just understanding your customer. Many of the big, complex organizations we deal with are still operating as collections of silos. They are typically, product based and geographically based, and both of those things make it difficult for them to really understand all the interactions they have with an individual customer.

They do not know when a customer walks in the door, calls, or goes on their Website, or whatever the case may be, if this is one of my best customers. Just because this person doesn't have a lot of money in a bank account doesn't mean, they don't have big mortgages, run a big company, and have huge certificates of deposit (CDs) or something else. If you just look at what they are doing on this one transaction in that one account, you completely misread who this customer is. So, trying to really understand your customer and who they are is a piece of the puzzle.

Then, the next piece of the puzzle is how do you increase your wallet share with that customer from the standpoint of how do you make sure they are loyal, particularly the ones that you highly value and are very profitable for you? Then, how do you interact with them and say, "Hey, you've got these services. How about this one?"

And, if they are big enough customer, you may make them a special offer or give them a better deal, and maybe you add a little bit to that CD rate that you are going to offer them. Then, the next trick that they run into is, when and how and under what circumstances do you make that offer?

It's one thing to send out a mailing based on some batch review of your customer files overnight, once a month, or once a week, but we are really finding that our customers want to do more and more is, when they are there visiting that Website, when they are in the branch, when they are doing that transaction, you want to really hit them at the point of sale with the offer right then. So, if somebody's made that big deposit, maybe that's the time you want to talk to him about a CD, or market basket question. They are buying a lot of something, well, how about this accessory or this other thing that tends to go with it? Hit him with it right now.

Gardner: And today, I suppose, more and more companies are interfacing with their customers and prospects, through the Web and through applications. We see self-help portals. We see people actually wanting to do business through the Web, but to have the analytics to then offer them the right path throughout that sales process becomes critical.

Walker: And, not only are the paths multiplying, but what we need to do in terms of how we architect these kinds of solutions and systems, is make sure that you can make that specific offer to that customer, no matter which channel he is contacting you through. It could be the call center. It could be the Web. It could be that kiosk. It could be physically walking into a store or a branch.

Gardner: It could be increasingly your cell phone.

Walker: It could be a cell phone, absolutely. So the answer is that it doesn't matter how they have contacted you. You want to have the same analytics, the same class of offer to be presentable through any channel, anytime, anywhere.

Gardner: So, it's so much more than a single view of the customer. It's really an amalgamated view of what that customer probably would want next?

Walker: Absolutely, and this is all based upon analytics. I don't doubt that there are some businesses who will use this not just to up-sell and cross-sell some customers, but maybe in some cases they drive a few of them away at the same time.

Gardner: If not done properly.

Walker: Well, maybe on purpose. Maybe, I don't want to you as a customer.

Gardner: I see. Weed them out.

Walker: Weed them out at the same time.

Gardner: Interesting. Let's move on to another use case. Energy is a big topic these days. People are wondering when the price of oil will start coming down, instead of going up. What can analytics and business intelligence bring to those, who are now out there looking for the increase in the oil supply?

Walker: Well, there are a lot of different kinds of things, as you might imagine, that the energy companies are applying analytics to. We have been involved with them in both the retail sales side in terms of the analytics there -- the energy trading business, in terms of how do you swap and trade crude as well as finished products on a worldwide basis? And we have got involved in some other things, like centralizing well information.

If you look at how an exploration or production company deals with well information, they may go out and sign up for leases, and so they gather a whole bunch of lease information. They've got an exploration unit, that goes out and actually drills the well and collects a lot of information about that well. They've got a production company that collects information around the well as it produces. These are all different functional silos. You've got a legal department that does the negotiations and does the deals. They've got their file cabinets full of paper and information around those wells.

Then, of course, you've got the finance organization that has to take the money that's obtained from selling the products that come out of that well, and then redistribute it back to the owners of the well, and the royalty owners, and to some degree, each of these different business units keeps their own information around the wells, as opposed to there being one master of repository, the data of record, certified data for that well. So, there is an opportunity for them to be much more efficient, and make that data available on a consistent accurate basis to everybody who needs it.

Gardner: A single view of the petroleum.

Walker: A single view of the well, at least.

Gardner: How about one more used case scenario, risk management? How does an organization reduces exposure to risk, perhaps shore up its security, and maybe even be mindful of compliance and regulatory issues, vis-à-vis BI.

Walker: If you take the banking industry, for example, banking is slowly going global. You've got these huge banks operating around the world. They've got all kinds of regulatory compliance issues to deal with, both on an international basis with Basel II, as well as on a country-by-country basis. So, of course, you have to feed accurate information, consistent information to all of the different regulatory bodies.

At the same time, part of that is also managing your operational risk on an worldwide basis, and that could be anything from your currency risk to your interest rate exposure or your customer credit risk. It's one thing to look at your customer credit risk in terms of this subsidiary of that company, but what about the rest of the company, or what about their risk in this country, versus the risk on a global basis?

Do you have that information collected in a way that you can assess all those risks and apply your judgments and make your operational decisions appropriately. That's just one aspect of risk management that we have been involved with, in that case numerous banks, but it can also be things like a credit card fraud, ultimately, in real time, analyzing the transactions as they come in. There are just lots of other risk factors out there on an industry-by-industry basis.

Gardner: You raised the issue about real time. Many times we think about analytics as having data that's been sitting around for a while. It will stay, and we can take some time to go in and look it over, but, I think, increasingly, we are finding enterprises seeking to analyze things a bit more on the fly. How does that relate to what you are doing?

Walker: Well, there are some relatively easy examples of that kind of thing. A couple we just alluded here. One I just mentioned was the credit card fraud aspects of this. There are other people who look at trading opportunities and trading analytics. Whether it's equity markets, energy markets, or whatever kind of markets they trade in, if you can do your analytics just a little bit faster than the next guy, and get your trades in a little bit quicker, that can mean serious money, and we have run into some of those kinds of issues as well.

Then, one of the big emerging areas for real time gets back to this business of customer interaction on a real time basis, if the customer calls the call centers, shows up in the branch, and then goes on the website. You don't want to be looking at yesterday's data, if he's doing all of those things today.

So, you want to see his transactions he has done all at the same time. You want that complete view of the customer. There's another less real-time aspect to this. When you're talking about a complete view of the customer, the other thing we are seeing is, it's not just the transaction information. It's not just the structured information that we gather from all these systems.

There are studies out there that say, 60 percent of the data you have in your organization is actually not structured data at all. It's in documents, e-mails, and other forms of images, audio, and video, whatever the case may be. One of our challenges first is to get people to have a 360-degree view of the customer.

The next thing is to have them have a complete view of the customer. What is everything we have in our organization that we have about that customer? Can I get at it, when I need to get at it, either when I am dealing with the customer real time, or even if it's not real time? The point is that I've got to be able to get all the relevant data, not just the stuff that's easy, because it's in the systems.

Gardner: Very interesting, I think this certainly shows how IT investment has many new and additional forms of payback. We're really just getting into the icing on the cake, right?

Walker: Absolutely, and as the technology continues to evolve, and we get better and better at this, and as our customers go through the maturity process and mature with the technologies and the business issues, they are getting smarter and smarter about what they can accomplish with this. You actually see them progress from using data, to using information, to streamlining the business, and then getting to the point where they really try to innovate, compete, and alter their strategies based on the information they are now able to bring to the table.

Gardner: It really shows how IT can be an competitive advantage in a very significant way.

Walker: Absolutely, and all the trends and demographics in business come back to kind of where we started, which is that it's all about business becoming more analytic data driven, and really trying to optimize, not just their operations, but their market share, and how they compete against their competition. At the same time, how can I just do a better job serving my customers?

Gardner: Great, we have been talking with Rod Walker, he's the vice president for Information Management in Hewlett-Packard's Consulting and Integration Group. I really appreciate your time.

Walker: Delighted to be here, and happy to talk anytime.

Gardner: This comes to you as a sponsored HP Software Universe live podcast recorded at the Venetian Resort in Las Vegas. Look for other podcast from this HP event at website, under "Software Universe Live Podcasts," as well as, through the BriefingsDirect Network. I would like to thank our producers on today’s show, Fred Bals and Kate Whalen, and also our sponsor Hewlett-Packard.

I'm Dana Gardner, principal analyst at Interarbor Solutions. Thanks for listening, and come back next time for more in-depth podcasts on enterprise software infrastructure and strategies. Bye for now.

Listen to the podcast. Sponsor: Hewlett-Packard.

Transcript of BriefingsDirect podcast recorded at the Hewlett-Packard Software Universe Conference in Las Vegas, Nevada. Copyright Interarbor Solutions, LLC, 2005-2008. All rights reserved.

HP's Adaptive Infrastructure Head Duncan Campbell Discusses Data Center Efficiency and Energy Conservation Best Practices

Transcript of BriefingsDirect podcast recorded at the Hewlett-Packard Software Universe Conference in Las Vegas, Nevada the week of June 16, 2008.

Listen to the podcast here. 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 live at the Hewlett-Packard Software Universe Conference in Las Vegas. We are here in the week of June 16, 2008. This sponsored HP Software Universe live podcast is distributed by BriefingsDirect Network.

We are joined now by Duncan Campbell, the vice president in-charge of the Adaptive Infrastructure program at HP. Welcome to show, Duncan.

Duncan Campbell: Great. My pleasure to be here, Dana.

Gardner: You know, a lot has been said about data centers and how they are shifting, how people are trying to bring in more capability at higher scale to deal with more complexity, and, of course, cut costs and even labor resources. That is to say, automate whenever possible. Tell us a little bit about how you characterize or describe the data center situation and the challenges the companies are facing right now.

Campbell: It will be my pleasure. In fact, Dana, what we're seeing is almost a perfect storm happening here in the data center right now, and the next generation data center is, in fact, a hot topic. It's a hot topic not just because we're here in Las Vegas and it's 102 degrees, but, in fact, the fundamental design center of the data center is being challenged right now and it's really under siege by a number of different factors.

One of the things you talked about is cost, and another one of the things is energy efficiency. Another key element that we are seeing at this point really has to do with the fundamental challenge that customers who are striving more-and-more to deal with automation have less time. We have an excellent opportunity here to have conversations with customers and partners of Software Universe about the adaptive infrastructure, which is HP's program for the next generation data center.

Gardner: What is different from this next generation data center, the one that we are working with, working toward even, and what was described as a very modern up-to-date data center five years ago?

Campbell: Good question. Fundamentally, what HP has is a strategy that allows our IT managers to be much more engaged with lines of business, because we are allowing IT, at this point, really to participate in a dialogue to be much more engaged with lines of business, as it relates to how IT can be fundamentally thought more as not just a cost-type of agenda, but in fact be more fundamental to driving the business.

That being the case, Dana, we have six fundamental technology enablers that we work with customers to select from to design their next generation data center, and these six technologies are really critical. One has to do with the type of systems they choose, and more and more it's becoming a reality where they are becoming more dense. These systems are drawing more power, so we need to work with customers on how best to design those solutions.

Second, are key enablers around energy-efficiency type of technologies. The third is around virtualization. The fourth is around management, and then we also have security, and finally automation. These are some of the key technologies that are part of the adaptive infrastructure.

Gardner: Now, it seems that the architects and the decision-makers, the specifiers in the operations units of large organizations, have their hands full these days, and, as you've mentioned, have energy issues to contend with. They are also dealing with consolidation in many cases and legacy modernization, bringing more of a services orientation to their applications for purposes of reuse and governance and extending across multiple business processes, assets and resources. So, in an efficiency drive it seems that there is a notion of having to fly the airplane and change the wings at the same time.

I also hear from a lot of enterprises concerned that manual processes are not scaling. When it comes to test, a bug, change management, issues around performance management, making a printout and sticking up on the wall and finding the time-stamps for incidents and uncovering the root causes that way is not scaling. How does HP come in with products and services to help companies manage these multiple major trends that are impacting them?

Campbell: Well, I think you did nail some of the key needs. So, we would agree entirely. It's not just about a rip-and-replace strategy. It is dealing with those core issues that you spoke of, both in terms of cost, energy, and some other elements around quality of service to be more aligned with the line of business and then speed.

So, to your point about how to get started, most customers understand the basic value proposition around the adaptive infrastructure, which is about this 24/7 lights-out computing environment. It's based on modular building blocks, using very off-the-shelf software and comprehensive services.

One thing that we do that is unique. We provide specific assessment services for our customers, and this is not just about product. It's really more understanding their needs, where they set the baseline of their specific needs by business. And, it's not just about technology. It's about their governance management and organizational type of needs. Then, we design specific recommendations on how to proceed, given their specific environment.

Gardner: Because we're at a user conference and a technology forum, I am assuming that there is some news to be had here, or perhaps you can share some of that with us. Something about blade servers, I believe it was.

Campbell: Exactly, and so I hope you are holding onto your hat there. One of the things about the adaptive infrastructure, people are always looking for proof points. They say, "Yeah, great strategy. I understand the value proposition, Duncan, but it's all about the proof points in making it real."

Last year, we had both our blade systems, which was really it's an adaptive infrastructure in a box. It includes virtualization. It includes blade storage and servers and management capabilities.

One of the areas that people fundamentally love, which was rock-solid business and high availability, were our non-stop servers, and they say, "Are you just abandoning that?" No, the news that we are offering here is that we're going to now have brand new bladed non-stop systems that are going to be a fundamental proof point of our adaptive infrastructure.

Were bringing some of those high-availability features people love, but in more of this adaptive infrastructure type of environment. And it's one of the one thing our software customers love, because as you start to kick up service-oriented architecture (SOA) projects, specific business continuity projects, or strategy applications, you have to have adaptive infrastructure that provides that type of value to you.

Gardner: Let's return to the energy issue. I'm also seeing some news coming out of these events this week around dynamic smart cooling. That's a mouthful. What does it really mean?

Campbell: Good question. Dynamic smart cooling. The one thing that you should understand when we talk about energy-efficiency, is it's about not just the new technology, which is always improving, but some of the facilities type of capabilities we have. So, we have some fantastic new services from our EYP services, which HP acquired, that designs most of the new data centers on Planet Earth at this point. Among the new capabilities we have around the data center, the key one is dynamic smart cooling.

Barclays Bank, for example, recently adopted it across their whole company to save greater than 13 percent of their data-center cost. It manages the air flow in your facilities. So, in combination with services, plus this new technology that came from HP labs, plus the new servers and software elements, this is the type of winning combination customers demand and expect from HP.

Gardner: We are also, I believe, going to see some news later in the week around change management and problem management and resolution. I don't have the details, and we can't pre-announce that, but it does bring to mind the question about hardware/software services, these major trends, methodologies and maturity models, the Information Technology Infrastructure Library (ITIL).

For those folks managing multiple dimensions of IT operational integrity and efficiency, how do you get a handle on a holistic, top-down approach that includes elements of hardware, energy, software, change management, and IT systems management? Is there a whole greater than the sum of the parts here?

Campbell: We are finding that customers are demanding that holistic approach, which is why dealing with the company with the size and the depth and breadth of HP makes a lot of sense. Some of the software attributes that you've mentioned here at HP really do come to bear when you think about the adaptive infrastructure. Some of the fundamental building blocks from Opsware are great examples of that.

When you think about data-center automation, that is a great example, and Forrester recently called HP's Opsware product suite the number one offering out there. And that's in combination with, as I mentioned before, some of our maturity-model type of assessment that we do with our largest customers. It is a fantastic dialogue in assessment built on rich set of data best practices, where we understand where they are trying to go with their environment, and then work with them on specific recommendations. It's a fantastic process that we engage in with customers.

Gardner: I suppose an important aspect of going holistic is that people don't want iterative payback. They are looking for substantive efficiency and performance improvements. To that element, do you have some examples of companies or a matrix? What is the baseline? Are people looking for 15-20 percent that says "Yeah, I am ready to go holistic?" Is this more up towards 30-40 percent? What are the bottom line elements of what these customers are expecting from these kinds of major activities?

Campbell: Good question. We have a very robust solution called our Data Center Transformation Solution from HP, which is a composite of some concrete specific solutions with specific return-on-investment type of numbers in the range you mentioned for energy-efficiency IT consolidation, and business continuity in data center automation.

As you are saying, though, lots of customers don't have the time or the runway to expect a long-term project with a speculative type of payback. What we do is break it into bite-size chunks, into fundamental progress, with return-on-investment in these concrete solution areas.

Gardner: Let's look to the future a little bit. We are hearing a lot these days about cloud computing. Many people think of that as a greater utility function that someone else does, but for some of the enterprises that I speak to, they actually like the idea of private clouds -- taking the best of the technology and efficiencies at a cloud computing approach.

I believe it is taking the methodology and approach, as well as the technology set, and using that to support their services, their data, and perhaps start doing more platform as a service, integration as service activities, but for their internal constituencies, and then, over time, into their partners and business ecologies. What do you see coming from an adaptive solutions perspective for cloud computing?

Campbell: From my standpoint, I think you've nailed it, because we do not see our major enterprise customers turning over lock, stock, and barrel, their whole IT environment to a perhaps less insecure type of environment with less predictive type of results.

What we see, though, is that customers like attributes of the cloud. So, the private cloud concept that you speak of here is much more near-and-dear to the heart as we've heard from some of our advisory type of customers and our lighthouse customers. From that standpoint they are looking very much to an adaptive infrastructure to provide those type of attributes of a cloud, but still under the control and under the security type of requirements that they have for their specific enterprise and their domains.

Gardner: So, when we think of the next next-generation data center architectures and the requirements for them, do you think cloud computing is going to play a significant role in that?

Campbell: That's the hot topic, and it's interesting, because of these specific benefits that we provide with the adaptive infrastructure around speed, cost, quality of service, and energy. It turns out those value propositions still remain true. So, we see this as more of an opportunity for us to provide new technology innovation for our customers through some of the attributes of the cloud. There are a lot of people working on this within HP, but I think it's providing customer choice, while providing no specific benefits in the next generation data center, and that is exactly our plan.

Gardner: Very good, and just to close out our discussion, you announced today the non-stop blade servers. When will those be available in the market?

Campbell: At this point, that news is being transmitted as we speak, and so as our press release comes across the wire we will all know that, and read that with great relish and anticipation.

Gardner: Okay, we could fill that in a little later in a future podcast. But, thank you. We've been speaking with Duncan Campbell. He is the vice president in charge of Adaptive Infrastructure and the Adaptive Infrastructure Program here at Hewlett-Packard. Also, you're delivering, I believe, some keynotes and other discussions at the live event throughout the week.

Gardner: This comes to you as a sponsored HP Software Universe live podcast recorded at the Venetian Resort in Las Vegas. Look for other podcast from this HP event at website, under "Software Universe Live Podcasts," as well as, through the BriefingsDirect Network. I would like to thank our producers on today’s show, Fred Bals and Kate Whalen, and also our sponsor Hewlett-Packard.

I'm Dana Gardner, principal analyst at Interarbor Solutions. Thanks for listening, and come back next time for more in-depth podcasts on enterprise software infrastructure and strategies. Bye for now.

Listen to the podcast. Sponsor: Hewlett-Packard.

Transcript of BriefingsDirect podcast recorded at the Hewlett-Packard Software Universe Conference in Las Vegas, Nevada. Copyright Interarbor Solutions, LLC, 2005-2008. All rights reserved.

HP Software's David Gee on Next Generation Data Center Trends and Opportunities

Transcript of BriefingsDirect podcast recorded at the Hewlett-Packard Software Universe Conference in Las Vegas, Nevada the week of June 16, 2008.

Listen to the podcast here. 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 live at the Hewlett-Packard Software Universe Conference in Las Vegas, Nevada. We are here in the week of June 16, 2008. This sponsored HP Software Universe live podcast is distributed by BriefingsDirect Network.

We now welcome David Gee, vice president of marketing for HP Software. Welcome to the podcast, David.

David Gee:: It's great to be here. Thanks so much for spending the time with us. I appreciate it.

Gardner: Now, you have been the master of ceremonies here at the conference main stage presentations, and, interestingly for me, you have been taking a lot of questions from the audience. How did you come up with this interactive approach to the keynotes?

Gee:: Actually this is the second year we have tried it as one of the objectives, when you have an audience of this size. This is the largest we have ever done, around 3,000 people. When we have a main stage, and want to have interactivity with an audience of that size, we utilize a technology through chat lines.

Some of the presentations and some of the sessions that we had on the main stage utilize this technology. That allows folks in the audience to either text or e-mail questions during the session. Then, we post them on the big screen and the speaker or speakers have an opportunity to answer those. We have used it in a number of sessions. A good example would be with folks like Tom Hogan, who runs the software business, and Mark Hurd, our chairman and CEO, who hosted a joint chat-line session on the first day of the event.

Today, we had an external speaker to focus on the environment Jean-Michel Cousteau, to talk about how the oceans really impact our lives and things that we can be doing to conserve and rejuvenate the world for our children and our grandchildren. So, we've covered, across the entire spectrum from business and technology to some of the more thoughtful topics that are top of mind today.

Gardner: I think it's very effective, mixing social networking into the presentation, which makes it two-way rather than just "the word" coming on down from high. So, congratulations on that.

I want to talk to you today about data center transformation. We've heard a lot over the last several days of what can be done with data centers these days. There are great advances in hardware and blades and cooling systems. We're seeing a great deal of interest in virtualization, and you announced an alignment of your products with the VMware virtualization suite. Tell us a little bit about the opportunity here. How far into data center transformation are we? If we were a baseball game, where do you think we are at this point?

Gee:: I'll preface that with my lack of sophistication and knowledge of baseball, but if we assume it has nine innings, and it doesn't end in a draw at that point, I would say we are probably in the second or third innings. Customers today, companies today, particularly those who have acquired businesses, are divesting businesses, or expanding into new markets are having to deal with integration and consolidation of what they have from a data center standpoint, and it falls into a couple of categories.

One is do you want to drive down the operational cost of what you are doing -- and consolidating and transforming data centers is an element of that certainly -- and the other is to free up resources that are being utilized by basically just keeping the lights on. It's also creating an environment where a business can be more agile and innovate on top of an IT platform or a set of IT platforms. With both of those, drivers are happening concurrently. It's not just a cost discussion.

If you focus purely on a cost discussion, then what you are missing is how to align business with IT specifically and how to generate this environment, where you can really deliver innovative services to the customer and really transform the people and the processes that you are doing inside of your organization.

It's walking and chewing gum, and we are about a third of the way through that. There are lots of enabling technologies that allow us to do that, but it really has to start from a desire from the CEO and the board, who are looking at IT spend as an opportunity to drive efficiency and speed and lower risk from a corporate standpoint, so you can think about the consolidation of data in your organization.

How many versions of the truth does a company have about a particular thing, and, even if you are looking at the elephant, which bit of the elephant are you, in fact, looking at. All of those converged to really drive this desire to transform the data center. The third leg of that stool is the more efficient your data centers are, you can pack them more densely, utilize virtualization, and you can have a later generation of server storage that have a lower power footprint and cooling footprint.

The third element of that is can you lower the overall physical footprint and lower the power bill per se. If you talk to CIOs, and we did some activity with CIOs earlier in the week, how many of them ever see the electric bill? Less than one-third of CIOs today see the electric bill, but that's up from one-sixth a year ago. My guess is that two-thirds, maybe three-quarters of CIOs and IT executives will be seeing the power bill. It's a cost center that you want to drive down, not just from an economic standpoint, but from a social responsibility standpoint as well.

Gardner: I think it's clear to most people that over time they need to modernize, consolidate, and take advantage of new technologies, but there are also some accelerating trends in the market. You've mentioned the energy issue. As the cost go up, there's more impetus from an economic standpoint to go in and re-jigger, re-engineer and re-conceptualize your data centers. What are some of the other trends? It seems also that the amount of data is exploding. What is it? It doubles every 18 months, I believe, according to some studies.

You also have things like service-oriented architecture (SOA) and more reliance on dynamic application and business processes, all of which also will place more demand. So, do you think we're at a point where the need to seriously re-engineer and re-conceptualize a data center is actually accelerating?

Gee:: Almost certainly, and for all the factors that you described, but at the end of the day it has to be driven by a set of business processes that require high levels of service, lower costs, and the flexibility to innovate on those services. If you are opening a new manufacturing plant somewhere else in the world, you are serving customers in new geographies and you are merging with new businesses.

Take the airline industry -- companies like Northwest and Delta, for example, who are going through the early stages of what will probably be consummated in this process. Spend time with the IT leaders from Northwest and they are talking exactly about that. Their impetus is, their spend on IT looks different from Delta's spend on IT. Their sophistication looks different from that of Delta's, and how do you bring the best of both worlds together to give the passenger a better experience?

Can I put kiosks in airports? How much of my interaction with a customer is really being driven electronically and online? The stats are incredible. The growth of how much electronic transaction is taking place, versus having to go talk to or deal with a customer service representative physically in an airport or on the phone, and that level of transaction rises dramatically. You have to have the capability to be able to live with those high levels of service.

Another good example would be, as you go through the airport, if a name is on a watch list and your system for integrating the watch list with the Transportation Security Administration (TSA) -- the folks that manage the security in airports -- goes down, everybody has to be screened, re-screened, and triple-screened. What does that do from profits and loss standpoint and the customer-satisfaction standpoint, to give just one example?

Gardner: So the data centers that may have been created to serve an employee base are now not only doing that, but serving a vastly different and growing customer base and supply chain environment?

Gee:: Yes, more-and-more applications that historically have been internal only you are exposing to your partner community. And, in some cases, your end users and your customers -- and they are finding new ways to interact with you. So across the board the confluence of all of those things is really driving this need for a higher level of quality of service, a lower price point for those services, and flexibility for those services.

Then you can get down underneath and see what impact that has on technologies like SOA, virtualization, or the management of change. How do you put automation into the data center to not just take an economic viewpoint on it, but to reduce errors -- and most outage is ultimately self-inflicted -- so can you apply automation, quality, and performance, pre-production and in production and then post-production for remediation.

Gardner: We are seeing an environment where the impetus and the requirements for doing data centers better are hastening. We are seeing complexity and more requirements in terms of the demand. And we, of course, are looking for cost savings and efficiencies -- all at the same time.

Let's unpack this move toward the next generation data center. According to some of the information that I have seen here at Software Universe, the spend on hardware is projected to be fairly constant and the amount of data is accelerating. What really is the delta in both demand and opportunity over the next five years in the management of these next generation data centers? Explain how that works.

Gee:: In the land of virtualization, where you have a server now doing multiple jobs, the complexity around management actually will explode in a couple of dimensions. One is the physical management of server storage network processes and applications.

The second dimension is this explosion that you've mentioned before around the volume of information, whether it's e-mail, voice, or text. The digitization of content is growing at an exponential rate, and the way companies are going to communicate with customers or employees is exploding exponentially. We can think about voice and data in terms of e-mail and databases, but it's also wikis, blogs, mashups, Facebook, MySpace, all of the above, and then the distribution of that content.

Today, the traditional way to look at that would be on a 12-inch LCD display, but the phone is becoming ubiquitous, and we need to look at the transcoding and being to able to interact and have the information available, as well as the security of that information from a risk-management standpoint on hand-held devices.

Then you have Generation Y coming along. The thought of picking up the phone and talking to somebody to answer a question, get support, transact business with you is completely alien. In fact, even e-mail, to some extent, is completely alien. It's more around SMS, it's around wiki, and it's around IM in particular.

The explosion of interaction, plus the explosion of digitized content, is being created and is creating a management challenge. It falls into a several dimensions. One is, do I manage information and what is the duplication around that information? How much of it is duplicated?

Second, do I have it stored somewhere from a business-continuity standpoint to make sure that I know where it is and who has access to it? The third is, am I storing the right information so that if I am required to recover or extract that from a regulatory standpoint, I can do that? And the fourth is, how do I dispose information?

It's a bit like applications. Most companies never turn off an application. How many companies are thinking about the disposal of information, so that they don't get overwhelmed by it.

Gardner: HP has gone through a dramatic consolidation of data centers from 85 to 6 or 7, I believe, and from something like 12,000 applications down to a few thousand. I've forgot the exact numbers. What have you learned in the process that you've gone through internally about the role of management in terms of the ability to, as you put it earlier, chew gum and walk at the same time?

Gee:: I think the first thing we learned in this process was that we didn't know how many projects were going on and we had one or more of everything. The first thing you have to do is be crystal clear and use the tools available to deal with things like project and portfolio management, identify the projects that are in flight, prioritize those projects accordingly, and re-prioritize them based on business need.

Then, you need to kill things that are either duplicative or low priority, so you can focus on the things that really matter. That then drives application consolidation and retirement, as you mentioned, and also the transformation of how we manage our data centers.

We had 700-plus data marts, which goes to my comment before about how many versions of the truth there are. Even we defined gross margin differently across multiple lines of business. Now, we have a single view of what a gross margin is. We've consolidated those data marts into an enterprise data warehouse and given people the right level of access to be able to conduct that level of business. So it's a multi-faceted piece.

The second thing I would say is, if you are going into that transformation, it's a CEO and board-level decision. It requires the commitment and the support, and unwavering support, because there are going to be roadblocks and bumps along the way, as certain things get turned off and some things become unexpected.

This is the journey we're on and this is why we're going to go do it. We're going to drive down our operational cost of IT. We're going to free up dollars for innovation. During that process, it's going to be bumpy, but here's why and here's what it's going to do to delight our customers in terms of, if you buy a PC, how do you get support for that PC?

Well, guess what, we used to have implementations of support in 85 countries. Now, we are in three, so you should get a much higher quality of support. How are service and storage able to deliver telemetry data effectively, so that we can drive down support costs and provide a high quality of service to our customers? It's across the entire spectrum of any business. Hewlett-Packard just happens to be one of the world's largest tech companies. So, we want to be a showcase for that as well.

Gardner: So far, the cost savings have been pretty substantial. You've gone from four percent of revenue to two percent of revenue devoted to IT operations and capital expense. Is that right?

Gee:: That's correct, but it doesn't come without a cost. We made a couple of commitments early on. One was a massive, multi-billion dollar capital expenditure. You talked about our data-center consolidation. There are three primary sites, all of which are mirrored, so that's six. We built six new data centers and we run them on HP. So, it's a green field, and we now have an evergreen strategy as to what sits in those data centers.

But you have to invest to save or spend to save, and you can't do one without the other. You can't expect to go from four percent to two percent doing what you are currently doing. As to my point about the commitment about the CEO and the board, there is a cap-ex commitment that you have to have to drive what is a longer-term operating expense advantage.

Gardner: Interestingly enough, at this time in the maturity and evolution of IT, we're seeing, through the Information Technology Infrastructure Library (ITIL) and some other endeavors, more of a standardization around the methodologies of how to run your IT department.

It seems to me that we are at this point in the business where we are standardizing on the concept of what at a data center is. We are standardizing quite a bit of what constitutes infrastructure in the right way to support multiple application types, and legacy installed base. And, we are also managing our IT departments on a more methodological advanced mature basis. Does that describe what's going on, if you look at this in total? Is IT really growing up?

Gee:: IT certainly is growing up, because the percentage of revenue that is being spent on IT continues to be a material part of any business' business. I think part two of that is no business is a business without IT. IT has become the business.

If you talk to a company like UPS, for example, the bulk of their competitive advantage is around the logistics capability that is in turn driven by IT. So, the answer to your question is yes. It varies by geography, in terms of the level of sophistication in process-oriented geographies. The US is a pretty good example of that. Western Europe is fairly well advanced with that. They are dealing with it, and they are dealing with transformation of legacy.

If you move the dial to other parts of the world, places like Russia and China, which have less in the way of legacy, and they are adopting the processes from the get-go effectively in green field. So, that creates another set of interesting opportunities.

The third leg of this stool is that we haven't spent much time talking about applications, but gathering the requirements, functionally testing those applications, ensuring that they are delivering performance and quality are required.

Then, the last leg of this stool is the security that you require as you expose these applications to end users on the Web. It's going to be fundamental in ensuring that you are delivering what your customers or your end users are demanding.

Gardner: Very good. We have been talking about the maturity of IT, the next generation data centers, and the need for increased and more sophisticated management to get to the destination -- while still keeping the trains running on time. Joining us has been David Gee:, vice president of marketing for HP Software. Thanks very much for joining us.

Gee:: Thank you so much for your time today.

Gardner: This comes to you as a sponsored HP Software Universe live podcast recorded at the Venetian Resort in Las Vegas. Look for other podcast from this HP event at website, under "Software Universe Live Podcasts," as well as, through the BriefingsDirect Network. I would like to thank our producers on today’s show, Fred Bals and Kate Whalen, and also our sponsor Hewlett-Packard.

I'm Dana Gardner, principal analyst at Interarbor Solutions. Thanks for listening, and come back next time for more in-depth podcasts on enterprise software infrastructure and strategies. Bye for now.

Listen to the podcast. Sponsor: Hewlett-Packard.

Transcript of BriefingsDirect podcast recorded at the Hewlett-Packard Software Universe Conference in Las Vegas. Copyright Interarbor Solutions, LLC, 2005-2008. All rights reserved.

ITIL's Influence Extends Beyond IT Operations to Enhance SOA, Portfolio Management and Change Management

Transcript of BriefingsDirect podcast recorded at the Hewlett-Packard Software Universe Conference in Las Vegas, Nevada the week of June 16, 2008.

Listen to the podcast here. 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 live at the Hewlett-Packard Software Universe Conference in Las Vegas. We are here in the week of June 16, 2008. This sponsored HP Software Universe live podcast is distributed by BriefingsDirect Network.

We now welcome to the show two folks who are dealing with the implementation of the Information Technology Infrastructure Library (ITIL) in enterprises. We are joined by Sean McClean. He is a principal at KatalystNow in Orlando, Florida. Welcome to the show, Sean.

Sean McClean: Hi. Thanks. Pleasure to be here.

Gardner: We are also joined by Hwee Ming Ng, she is a solution architect in the Consulting and Integration (C&I) unit in HP. Welcome to the show.

Hwee Ming Ng: Hi, glad to be here.

Gardner: We've been talking about ITIL quite a bit this week at the conference. For those who might not be familiar with it, why don't you give a quick overview one of what KatalystNow does and also perhaps a very brief primer on ITIL?

McClean: Okay, thank you. KatalystNow handles mentoring and learning and training solutions for ITIL and tools, principally in the HP Service Manager service support space. ITIL itself is a broad set of process concepts, much like many types of businesses. It's about the business of doing IT. It's a set of concepts focused on how do we frame and format the business of doing IT.

Gardner: And Hwee Ming, why don't you tell us a little bit about your role at HP?

Ng: I am a consultant with C&I and I focus primarily on delivering solutions at customer sites, and recently I've been working on updating the HP Reference Model to make sure it's in line with the recommendation in ITIL, version 3.

Gardner: First, let's give our listeners a little bit of history of ITIL. We've basically taken this from a technology-centric to a business-centric capability and focus, from version 2 to version 3. Can you tell us a little bit more about the progression and history of ITIL?

McClean: Sure, ITIL has kind of have an interesting level of development and actually it started out in England with the original organization, the Office of Government Commerce (OGC). In version one, what people started realizing was, whether you're talking about your faxes, your daisy-wheel printers, or your laptops of today, we still have infrastructure elements to support the business. At that point, they were simply focused -- let's make sure that we keep those fax machines or the copiers and the big computers running.

They started saying, "Well, maybe we need to get a process around how to keep them running in a way that's consistent with all of the other businesses." OGC did a great job of looking at the ongoing tasks. No matter what the organization, you do it the same way.

Gardner: The group that handles a lot of the government functions?

McClean: Yes, and essentially they were working with lots of organizations through contract who have IT, and in those engagements they started realizing more-and-more often, we're all doing the same stuff with the same equipment. So, why can't we standardize the processes?

Every other element of business has a set of rules and standards. Financial is the one we all go back to. Mostly, financial has been the same way since the abacus. We follow that set of processes, and we all agree on them.

Now, obviously, there have been some changes in that recently, but the ITIL process is the same kind of growth curve. Initially they were just going to handle the technology. Then, they started saying, "Well, the technology in an organization really supports the business." And then they started saying, "Let's take that a step a further and let's start strategically meeting the IT piece with the business. Instead of how to do the service, how do we do the service to support the business to get the job done?"

Gardner: I suppose in its history, IT sort of created an ongoing dissonance with business, because a lot of times products come out, technologies evolve, and they get adopted. Then you say, "How can we make the best use of this in the business?" It isn't always from, "Here are our business goals. Now let's go find the right processes and the right systems to support that." So, we've had it kind of backwards.

McClean: I think it's interesting how that's evolved, because I think there has been some of that. And some of it has been the case of technology is obviously complex, and so a lot of times the translation from "here is the business" to "here is the piece in the business" gets disconnected, because it becomes so involved.

If I could draw it on a map, we tend to look at knowledge evolving in pyramids. It becomes higher and higher, as you reach the apex of that area of knowledge. Maybe we're talking about biology or we're talking about IT. Even within IT, we move to the apex of networking, say, TCP/IP. You have to know all of those pieces.

By the time you get to the top of that, it's a little hard to keep track of what's going on on the other side of the world, which is the business of whatever we're doing. In the presentation we talked about today, I was saying we're in the business of selling.

A company I worked with was in the business of selling shoes. A guy used to walk around the organization, in the IT department specifically, and say, "What's your job?" If the person's answer was, "I do e-mail," they were out of the job, because the real answer is, "I do e-mail, that's supports communication between the organizations, so we can sell shoes." That piece gets disconnected over time, because it gets to higher and higher technology levels.

Gardner: I listened to your presentation earlier today and enjoyed it. One of the things that seems to be recurring theme was this notion of cultural change, and how there is a business culture and there is an IT culture, and ITIL is starting to move towards a sharing of culture or a common ground between these cultures. Why don't we get into a little bit about why and how cultures can shift, even as technologies perhaps stay the same?

Ng: With ITIL v3, there is a lot of emphasis in looking at IT as a strategic partner with business. Instead of having technology drive IT, we are really looking at what value IT delivers to the business. One of the main drivers that we see is the IT organization having to demonstrate the value that they are providing and justifying the investment in IT.

A good way to do that is to ensure that whatever the IT organization is doing aligns very closely with the overall business strategy. When you really look at ITIL v3, they start by managing the full lifecycle of service, managing it through the strategy piece of it, taking it through design, looking at the transitioning, the operation piece of it, and then having a process assuring continuous improvement to the service. So, we are looking at much broader view of the end-to-end lifecycle management of our service.

Gardner: And, when we talk about cultural change, are we talking about having the culture within the IT organization change? Are we talking about having the culture in business change towards IT or both?

Ng: I think it's a combination of both. The business would have to see that value add that is being provided by IT and that the technology that's being provided does drive a lot of the business outcomes. For example, in a bank, the technology or the infrastructure that is needed to support the bank is quite complex, and a new innovation in the IT department could generate a lot of new revenue streams. So, you want to make sure that there is that alignment between business and IT. The whole planning and strategy pieces need to come together. It's really a combination of both sides.

Gardner: Okay, we also heard you talking a little about services-oriented architecture (SOA). Now, that also requires cultural change. I have seen some studies, particularly Summit Strategies did a study, that showed the folks who had embarked upon ITIL methods and appreciate IT as a managed and matured business function were seemingly better off when it came to implementing SOA methodologies and concepts. Why do you think that's the case?

McClean: Hwee Ming and I just talked about this yesterday, and I want to have her opinion first, because I think it was one of those areas where she's got more of an understanding than I do.

Gardner: Okay, Hwee Ming?

Ng: When you talk about SOA or the infrastructure, you really need to view it not as individual IT components that you're working with or individual components that you're trying to piece together, but from the end user point of view. They want to view it as a service. So, that kind of mindset is quite important, if you are moving from an infrastructure-centric or technology-centric to a more open interface, providing value, and aligning that to a service, and that's why there is a lot of alignment in the two.

McClean: So, if you perceive IT as supporting a bunch of products, SOA may become a little bit more difficult, maybe it'll be a little bit counter-intuitive, but if you think of IT as delivering services, then SOA perhaps has a bit more continuity and alignment.

Ng: And, you also come down to the fact that when IT organization or the technical people are talking about interfacing with each other, they are no longer looking at it as point-to-point connection or an interface protocol level. They look at it as wrapping the technology in an open interface as a service, and they provide that to another organization in the same IT organization. So, it really does drive that.

McClean: In my mind, it's kind of interesting as well, because I think at this point, we transition to the idea of looking at IT as providing services. A moment ago, Hwee Ming talked about the idea that we're moving into that concept of IT providing the services. You can almost put it in the front and say that potentially now you create a technology service, which used to be simply to support the business.

Nowadays, if you look strategically, you can create new IT services that help drive the business. We're looking at, as Hwee Ming mentioned, interfaces for things that we are doing on the Web. So, we start architecting new things, which creates new business opportunities in the business of whatever you are in business of. And, you look at all the different interfaces to drive new business that wasn't there before.

Gardner: Okay, we talked about services, but there are still products out there and underneath there that allow a lot of this to take place. You brought HP Service Manager to market. I believe it's been updated this week. Can you tell us a little bit about how HP Service Manager fits into this progression and the shifts going on in IT?

Ng: With Service Manager, one of the big shifts is in closer alignment to the data processes, and we're also looking at some of the SOA piece of it to wrap service interfaces. So, one of the great pushes is to federate the model like a CMS or distributing a process. As IT organizations get more complex, maybe a change management process will not be in one single tool. So, you really look at Service Manager 7 as bringing together configuration management and project and portfolio management (PPM) and things like that.

So you really look at individual products providing the services, the Web-service interface that other products had leveraged. Previously, we were doing a lot of point-to-point integration at the application level or the data level. Now, we are trying to bring it up and integrate it through the other service level.

Gardner: How about you, Sean? Do you have anything to offer on the role of HP Service Manager, particularly the newest edition?

McClean: If you look at HP Service Manager, and also the processes -- as Hwee Ming being the senior architect of the reference model was starting to get to that point -- previously we would provide a tool and we would ask you, "Now what do you need?" and we would architect that tool.

Now we are really driving more and more towards an area where business are saying, "Look, we need to continue doing the business. We don't have time to tell you what we need. Why don't you do it the way you did it in whatever other organizations you gave us this product for?"

If you start combining the ITIL processes, and the more detailed level of ITIL processes you see in ITIL v3 with the Service Manger tool, you are starting to see people saying, "Okay, instead of one piece over here and one piece over here, let's integrate them, even if they are separate tools. Let's look at them and how do they fit into the larger picture of the processes of ITIL v3 and maturation process of that. And, let's make sure that Service Manger matches and aligns with that bigger picture so that the businesses don't have to go through all the detail of bit-by-bit designing something for themselves."

Gardner: In your presentation today here at the Software Universe conference, you said that subscriptions are key for supporting life cycle, what did you mean by that?

Ng: If you really look at it, to be able to manage your service efficiently you really need to know the service that you are offering is adding value to your business. One good way of measuring that is by being able to look at who is using the service and the demand for the service.

Having a subscription managed through the whole lifecycle of a service is key. When you are rolling out new services, subscribers actually subscribe to it, requesting changes to the subscriptions, and managing that all the way to the end of the service lifecycle. They cancel their subscription, when they no longer need the service due to changes in business environment or just changes in the role.

Gardner: I see. So, it's the business model that shifts how IT conceives of itself, and with subscriptions, where people can opt-in or opt-out, there is even a market force in effect. It's supply and demand, and if you're not offering the value that people think is commensurate with the subscription, then they cancel it. That really creates a whole new dynamic of response and refinement in IT.

Ng: It's actually quite a key communication of management of service from the IT point of view. It also helps in planning services. If you see a pick-up in the subscription, you could actually plan for expansion of the service, having the infrastructure and the capacity to support that. And, the reverse. If you see a service having not enough subscription, you might want to scale down the infrastructure that's behind that supporting it. The other aspect is in planning or budgeting -- which areas you should focus in, where you're seeing demand, and things like that.

Gardner: And, that's little different from a customer perspective, as well, instead of just having an application or a set of applications thrown at them, saying "Here, use it, you are going to get charged for it no matter what." That might even leave people with a little sour taste from the start, when it comes to IT.

McClean: I always find it interesting. IT has grown and matured. We always looked at the IT department as a black box. Someone wanders into the organization and says, "We need 'X' amount of dollars for a server that does this." And, you go, "Uh-oh. They are IT. I don't know what they do, but it must be important."

When you start move into this model, as Hwee Ming explained, where we are going through subscriptions, we're just trying to get to people being able to focus on, "Oh, they do work just like the rest of the business." And, that has to happen, because it helps the businesses embrace IT as well. Once everybody starts realizing it's an aspect of business, that makes more sense to everybody.

Gardner: It's a more natural relationship. This is how most people actually do business?

McClean: Yeah.

Gardner: You also mentioned that knowledge management (KM), in the context of ITIL, is important. I didn't know what you meant by KM. Are you talking about KM like we need to know who is good at what in our company, or we need to take both structured and unstructured content and data and make it available for people when they are doing research, or is this KM in the context of IT something else?

Ng: A quote we have been using quite often is that the focus on KM is really to be able to get the right content to the right people at the right time. This is what we are trying to do. We're trying to provide the information that is needed by the service desk to perform their work, or provide the information via Web to the end user, so that they can troubleshoot their own problem. It's about providing the right information to the right people.

Gardner: I see. So, it's the knowledge for more self-help, which takes the burden off the help desk, and then it's more knowledge in the right context to the help desk, so that they can better provide services to the people when they call in.

McClean: Yeah, I think it's interesting, because people will say "Well, we're in the information age." Then, you go forward with that and say, "Okay, if information were moving a little bit faster, then knowledge is becoming more of a commodity." What do you do with a commodity? You have to organize it and make it easily distributable, because you've got to get it to everybody that wants it.

Gardner: It's the information age, where I still can't get my VPN to work.

McClean: Right. So, we need to be able to put that in such a way in an organizational structure that you can get it as quickly as possible when you need it.

Gardner: Okay. I guess we should close up our discussion of ITIL, where we look at what's to come next? Obviously, there is a lot of adoption going on, different companies and regions and industries, and verticals adopting these things at different rates. We hear a lot about version 3 of ITIL, what should we expect with something around version 4 and when?

McClean: I think whether we are talking ancillary tools. In ITIL version 2, the thing that people constantly would drive back in training classes was, "Okay, this all makes sense to me." Some people would even say, "Well, this is common sense. So how do I do it? I get that it's important to do these certain aspects of a process, and it makes sense, but how."

Now, in ITIL version 3, we're saying, "Here's how we need to apply it more to the business." Now we're going to start seeing the design of those concepts and processes and alignment of those to the tools, so that when you look at a tool and you go to use this tool, you can quickly check here's how and here's why. We'll see that with the solutions like the blueprint and solutions like the Reference Model, where we're diving down into the ITIL process and getting more in depth. Other architects are looking at the tools and saying, "Here is where that tool connects to this process." So, the business can see those connections as well.

Gardner: Hwee Ming, where do you see the next advances in ITIL coming?

Ng: I see v3 is still relatively new in the adoption phase, and we are seeing a lot more customers wanting to go to ITIL and adopt v3. The next iteration, if we want to do it, will be driven from the field experience, collaboration, and leveraging the best practices that people see in the field. So, I see that as a more collaborative effort in the next revision.

Gardner: I see, so more toward how to manage the teams that you've already put in place that are more business-oriented and more process-oriented?

Ng: I think the next revision of ITIL probably would get a lot of content from consultants or the organization, looking at how ITIL v3 has been used in the organization and what are the best practices and improvements, and driving that back to the business model.

McClean: It's new to me, because that again drives you back to the business model where you say, "We have to figure out what our constituents want so we can continue to provide it to them." When you start researching, the business needs drive more of that.

Gardner: And, that makes sense, rather than "We'll figure out what you are supposed to do and tell you what to do. Maybe we'll have a discussion about it and come up with the best solution."

McClean: Right, and we'll take the information that you provide us in terms of the business and start applying it to what we do on our side to support that.

Gardner: Well great, we've been looking at ITIL through the lens of people who are in the field implementing it and some of the issues that customers for HP and KatalystNow are adjusting to ITIL and perhaps what they'll be doing with their future IT departments culturally and in terms of process.

Well, I want thank Sean McClean, he is a principal at KatalystNow. Thank you for joining and sharing your insights.

McClean: Thanks very much. It was a pleasure.

Gardner: We've also been talking with Hwee Ming Ng, a solution architect in the Consulting and Integration Group at HP in San Francisco. Thanks.

Ng: Thanks a lot. Glad to be here.

Gardner: This comes to you as a sponsored HP Software Universe live podcast recorded at the Venetian Resort in Las Vegas. Look for other podcast from this HP event at website, under "Software Universe Live Podcasts," as well as, through the BriefingsDirect Network. I would like to thank our producers on today’s show, Fred Bals and Kate Whalen, and also our sponsor Hewlett-Packard.

I'm Dana Gardner, principal analyst at Interarbor Solutions. Thanks for listening, and come back next time for more in-depth podcasts on enterprise software infrastructure and strategies. Bye for now.

Listen to the podcast. Sponsor: Hewlett-Packard.

Transcript of BriefingsDirect podcast recorded at the Hewlett-Packard Software Universe Conference, in Las Vegas, Nevada. Copyright Interarbor Solutions, LLC, 2005-2008. All rights reserved.

Tuesday, July 08, 2008

Dan Rueckert of HP Consulting Digs into ITIL's Role in Accelerating SOA, IT Service Management

Transcript of BriefingsDirect podcast recorded at the Hewlett-Packard Software Universe Conference in Las Vegas, Nevada the week of June 16, 2008.

Listen to the podcast here. 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 live at the Hewlett-Packard Software Universe Conference in Las Vegas. We are here in the week of June 16, 2008. This sponsored HP Software Universe Live podcast is distributed by BriefingsDirect Network.

We now welcome to the show, Dan Rueckert. He is the worldwide practice director for service management and security practices in HP's Consulting Integration Group. Welcome to the show, Dan.

Dan Rueckert: Thanks, Dana, it's good to be here.

Gardner: We're going to talk about the Information Technology Infrastructure Library (ITIL) version 3 and the methodologies used for managing the IT function. One thing that struck me as I have been reading about ITIL and how people are using it, is this notion of "what is IT?"

ITIL almost fundamentally rechecks that, and it begs the question of whether IT is a product or a service within an enterprise and to its constituents and users. How do you react that? What's your answer to that question?

Rueckert: It's really emerged now as a service, as far as how you provide services from an IT function to a business as a service provider. You start to get into internal, external, and shared services as a whole. The other thing is that a year later with v3, you are starting to break out of the data center. That's one of these key drivers of the service lifecycle, which is a key concept that has come out of ITIL v3. Also, the involvement of strategy is involved with the true operation side. So, you really start to look at how to align business with IT on an ongoing basis.

Gardner: For those of our listeners who might not be familiar with ITIL, why don’t you give us a quick overview of what it is and where the state of ITIL's evolution is?

Rueckert: ITIL is a standard best practices out of the Office of Government and Commerce (OGC) in the U.K., and has been around almost 20 years now. As of May 27, 2007, v3 was released, but it's one of these standards that has really been accepted from a customer user base globally.

It made lot of sense in the fact that it truly reflects best practices, from a customer perspective, in what has been going on over the years. Version 3 really is working with how the evolution of IT has gone. If you go to v2, it was very service centric around the data center, but v3 has now taken on the business alignment piece -- how does IT provide value to the business on an ongoing basis?

For me, it has been exciting in the fact that it's breaking down these barriers or silos across IT and within the businesses. We've have seen that a lot. Also, acceptance of v3 is far greater, because it has reached out from the traditional IT-centric view to the business.

Gardner: And so, a lot of IT organizations are siloed functionally and technologically, in many cases. If the end goal becomes customer satisfaction and being able to represent the business goals of the organization better through IT -- be it as a product or a service -- how does an organization start on this path of bringing these silos inside their organizations into more of a concerted effort toward a common services goal?

Rueckert: Actually, one of the new areas, as far as the v3 goes, is around service strategy. It's truly driven how to bring together and look at the business values or metrics that are needed in aligning from a service perspective.

It brings together the key metrics and values that need to come out of that, taking a customer through this service lifecycle from strategy to design, transition, operations, and a continuous service improvement cycle. In a lot of cases over the years, that's made sense. A lot of people worked with Deming and some other methodologies and have been getting into these lifecycles that now have been adopted, and it just makes good business sense. It isn't something that is to me IT centric, but it just makes good business sense.

And the neat thing about ITIL v3 is that it isn't just about IT. Business people could take up service strategy and use that in other ways in their business as a whole. It's truly one of the more exciting books coming out.

Gardner: I've also heard it said, when it comes to IT services, that these services have a lifecycle, and that organization should think of them in the context of a lifecycle. Software Universe relates to the notion of IT operation's lifecycle and data center modernization and transformation. It seems like an awful lot going on, a lot of moving parts. Do you need to do the data center first and then do ITIL, or you do ITIL and then the data center and other transformation? What's the right order, do you have any sense for this?

Rueckert: What started to happen within HP is using the processes or the ITIL as a foundation, meaning, as you start to grow, ITIL and service management become enablers for data center transformation, as a whole. You can take those components, and say, "I am working on core things around provisioning, or incident problem," start to build that around those areas, and grow from there.

Within our key initiatives, service management becomes an enabler for data center transformation, consolidation, and some virtualization. Also, the processes become a baseline to say, “How am I doing from the point of view of that business outcome?” If I know what I am doing today, and how I automate or virtualize things, I know I can measure that delta on an ongoing basis to provide value back to the business.

Gardner: Okay, we also spoke today with Ben Horowitz in the Business Technology Optimization group. How does the design develop requirement phase of IT relate to ITIL? Is ITIL more focused on operations, or how does application development, as a set of functions, fit in?

Rueckert: That really gets into the design and transition pieces now within design -- how requirements are accumulated by working with your customers or the business itself -- compiling those, understanding not just about pure business, but understanding other aspects of where I am going from needed scalability issues or strategy, and then getting into transition as I start to build and implement. What is the back end as far as acceptance and tests? So, it has an immediate applicability from an application perspective.

Gardner: The whole must be greater than sum of the parts.

Rueckert: Correct.

Gardner: I have also been seeing more information on how ITIL can help manage complexity, and, of course, there are many different types of complexity organizations are facing -- virtualization, services-oriented architecture (SOA), and so forth.

A recent study by Summit Strategies found that, for the folks they talked to, having done ITIL early and adopted some of the methodologies and approaches allowed them to then progress into SOA with more success. Tell us a little bit of what you think about SOA and ITIL, and whether ITIL approaches also might ameliorate other complexities?

Rueckert: It's a very good example, Dana. as you start to break down these into components and service lifecycles. When you talk about SOA and some of the aspects there, you are really saying, "How am I defining some type of service?" You start to say, "What are those foundation services that I need," and you start to build off of that.

It's just like concepts around configuration management services, or the configuration management database (CMDB) as far as that. You want to start wide and shallow to get a good feel, and then build into these areas that are pain points, as you move forward. You don't want to try to automate or design the world, really just align it with your business as a whole.

Gardner: How do companies and IT departments more specifically rationalize this from a business case? Are there financial paybacks? Are there qualitative paybacks? When an organization is evaluating ITIL, and they need to make a business case for it, what do you usually tell them?

Rueckert: We are really seeing maturity. The nice thing about going from v2 to v3 is that we have lot of historical basis now as far as the core IT skills and the building of ROI off of that. We are really expanding that into greater cost-benefit analysis upfront.

We don't just wait until the end to define the metrics of our values for success. It's really being done upfront, and saying, "Here is our vision and here are the metrics we are going measure as we move towards going into production on end state," and seeing those things as far as a continuous service improvement cycle.

Gardner: Are there any aspects to ITIL that reflect compliance or regulatory impacts? Are there certain verticals or companies that have to do this, in a sense, don't have a choice?

Rueckert: Right now we are seeing the alignment. When v3 came out, this was another exciting part where they really worked with some of the other standards. So, when we talk about the IC or ISO 20001 and 27001 around security, the COBIT, as far as a compliance perspective, they were working together.

They knew that these standards existed and started to incorporate those types of terminology. They hit key points by saying, "You need to be thinking about this as you're designing some of your services as a whole and understanding that moving forward." Then, as you get into more prescriptive methods, like with what we are doing around some of our processes, we are building these controls into defined best-practice processes within some of our reference models. So, it combines both.

Gardner: We've now seen lots of studies and evidence that 70 or 80 percent, certainly the lion's share, of spending on IT goes to maintaining existing systems, and investment and innovative new technologies don't always get the funding that many folks would want. Is there something about ITIL that helps shift that? Is part of it designed to make more efficient the processes that then would reduce the cost around maintenance and upkeep that might, in fact, provide more money for advancing technology?

Rueckert: That's a piece of the strategy, and you start to understand your demand and how you're allocating budgets and priorities against this. As I get more optimized or efficient on current day-to-day processes, and also as I combine technology to automate those, I am seeing the payback that then can fuel that innovation on an ongoing basis.

Gardner: We have seen some product announcements here at Software Universe, change management and problem resolution enhancements to products. Is there is something about those capabilities in the BTO group that dovetails well with ITIL from your perspective?

Rueckert: Definitely. It gets back to further automaton. In some cases -- those areas that might include labor-intensive activities or checks or compliance activities, further automation and audit trails -- efficiencies in the day-to-day operations allow other things to be done from an innovative perspective.

Gardner: Great. We have been discussing ITIL and how IT departments can better organize and manage themselves and provide IT as a set of services to their constituencies and their users inside of large enterprises. We have been speaking with Dan Rueckert, he is a worldwide practice director for service management and security practices, inside of HP's Consulting and Integration (C&I) group. Thanks for your time Dan.

Rueckert: Thank you, Dana.

Gardner: This comes to you as a sponsored HP Software Universe live podcast recorded at the Venetian Resort in Las Vegas. Look for other podcast from this HP event at website, under "Software Universe Live Podcasts," as well as, through the BriefingsDirect Network. I would like to thank our producers on today’s show, Fred Bals and Kate Whalen, and also our sponsor Hewlett-Packard.

I'm Dana Gardner, principal analyst at Interarbor Solutions. Thanks for listening, and come back next time for more in-depth podcasts on enterprise software infrastructure and strategies. Bye for now.

Listen to the podcast. Sponsor: Hewlett-Packard.

Transcript of BriefingsDirect podcast recorded live at the Hewlett-Packard Software Universe Conference in Las Vegas. Copyright Interarbor Solutions, LLC, 2005-2008. All rights reserved.