Transcript of a BriefingsDirect podcast recorded at the Hewlett-Packard Software Universe 2009 Conference in Las Vegas the week of June 15, 2009.
Listen to the podcast. Download the podcast. Find it on iTunes/iPod and Podcast.com. Sponsor: Hewlett-Packard.
Dana Gardner: Hello, and welcome to a special BriefingsDirect podcast series coming to you on location from the Hewlett-Packard Software Universe 2009 Conference in Las Vegas. We’re here in the week of June 15, 2009 to explore the major enterprise software and solutions trends and innovations that are making news across the global HP ecology of customers, partners and developers.
I'm Dana Gardner, principal analyst at Interarbor Solutions, and I'll be your host throughout this special series of HP Sponsored Software Universe live discussions.
Please join me in welcoming two executives from Hewlett-Packard's Software and Solutions group. We’re here with Scott Kupor, vice president and general manager of software-as-a-service (SaaS). We’re also here with Anand Eswaran, vice president of professional services. Welcome.
Scott Kupor: Thank you, Dana.
Anand Eswaran: Glad to be here, Dana.
Gardner: We’ve heard a lot here at the conference about various new sourcing options, looking to the future and thinking about how to deliver applications in a different way over time. This whole SaaS phenomenon, if you will, over the past several years has had a lot of people thinking about this for business applications.
But, Scott, in your group, there’s been quite a heritage of using SaaS for delivery of infrastructure and productivity in the development and cycle for application creation in IT departments. Tell us a little bit about where SaaS has been, and perhaps we can get a better sense of where it’s going to go.
Kupor: That's a great point. When people think about SaaS, Salesforce.com is obviously what comes to mind, a really traditional application. At HP for the last nine years, we've been selling IT management applications as a service delivery option. If you think about things like testing, performance management, or project and portfolio management (PPM), for example, those are traditional IT applications that we’ve been selling with this similar delivery model.
Gardner: Now that we can get a better sense that there is interest, and now that cost efficiencies have become top of mind for many organizations, where do you suppose this SaaS model can go next?
Kupor: It’s interesting. What we’ve been hearing from customers today at the conference are two key things. Number one, the cost benefits that initially drove them to SaaS are ever present and incredibly more important in this financial environment. The benefits are really coming to fruition. The second is that we’re starting to see a migration of SaaS from what was traditionally testing services toward other more complex and more customizable IT management applications.
The prime example of that is that we’re hearing a lot of interest from customers around IT service management (ITSM), service desk applications, and service management applications. These are things that have traditionally been the domain of inside-the-firewall deployments. Customers are now getting comfortable with the SaaS model so much so that they’re looking at those applications as well for deployment in a SaaS environment.
Gardner: Of course, when we free up these functional sets as services, that gives us more flexibility in how they’re consumed and delivered. Anand, I wonder if you could help us explain how moving from a SaaS deployment helps professional services, organizations, and folks create a better solution approach to some of the problems that IT departments are facing.
A conscious shift
Eswaran: Absolutely, Dana. That’s been the consistent focus and feedback from all the customers over the past 12 months. We’ve made a very conscious shift from what was inherently deployment of products. The approach right now is transformed into what business outcomes can we achieve for the customer, which is something which we would have been unable to do some time back.
We have changed focus now from deploying a single product set to achieving outcomes like reduction of outages by 40 percent, increasing quality, getting service-level agreements (SLAs) to a certain point, and guaranteeing that level of service. That’s been hugely helpful.
The second thing that has been interesting is the huge focus on intellectual property and best practices that we bring to the table right now. This accelerates time-to-market. That was one of the feedbacks we heard last year at the conference. Over the past 12 months, we put a services R&D organization in place. This has massively changed how intellectual property best practices accelerates time to market for the customers, and we're getting very good feedback this year.
The last thing, which is the end game, is that this all gets us to the point of what customers refer to as "killing the game," getting to a point of being able to offer outcome-based pricing and guaranteeing that outcome, as opposed to the traditional consulting model of billing rates and hours.
Gardner: This strikes me as a little counterintuitive. You think of SaaS and you think of a simple delivery of a functional set. Professional services would be something you’d do for setting up and deploying, crafting, and requirements ahead of a methodological approach. Scott, help me understand, from your perspective, how SaaS and professional services create a whole greater than a sum of the parts?
Kupor: SaaS ultimately is really a deployment option for customers. They’ve always had the option of in-house deployment. SaaS now gives them the option to deploy that application potentially in a third-party data-center environment. It doesn’t obviate the need for the solutions focus, though, that professional services ultimately can bring.
Remember, all these are complex IT management applications, they have third-party integrations. They have custom code that customers are building on top of it. Those are all areas of domains of expertise for the services organization. Through the work that the two of us are doing together, we can deliver a cost-effective delivery option for customers, but without having to sacrifice the complexity, integration, and customization opportunities that they demand for these applications.
Gardner: Then, looking at this as well from a cost perspective, many organizations have gone to SaaS for business applications, because they don’t sense that those applications differentiate them per se, when it comes to a Salesforce automation or human resources.
You’re not going to change your market position by having a better HR department. You might look to outsource. So, is there a same effect within the IT department? Some of these aspects, perhaps PPM, is something that isn’t going to differentiate that IT department. They might look for someone to do a “better, faster, cheaper.”
Kupor: Particularly in this financial environment, “better, faster, cheaper” is still the predominant thing that customers are looking at. I don’t know if it’s a mis-perception or how best to describe it, but I don’t think people should believe that moving towards a SaaS model necessarily means that they get a lesser degree of service or that they can’t still leverage their own process, their own IT, or their own systems to create meaningful differentiation for their business.
It’s really all about just making sure that those people have the best ability to deliver the application expertise with least amount of cost involved. That’s really the sourcing option people are moving towards.
Gardner: Anand, is there something more that you wanted to add to this perception about the intersection of customization and solutions with a SaaS delivery model?
Customers care about outcomes
Eswaran: I'd go back to what I started with, which is that the customers care about the business outcomes they need to create for themselves. As Scott talked about, SaaS is a very viable delivery option right now. When we talk about capital expenditures (CapEx) versus operating expenses (OpEx) and how you shift expenses, it allows customers to have flexibility around that. But, eventually, customers are looking to solve a business problem. They’re looking to create a defined business outcome, where all of this trends forward, it becomes a service for the customer.
All of what we do at the back end, whether it’s how we leverage SaaS, what products we use, what software we use, what consulting and professional services we use, all of that is going to be transparent to the customer. What they care about is a service, which we will deliver to the customer. SaaS enables us to get to that service, get to that time-to-market much faster.
Gardner: Help me understand where we’ll start to see more SaaS delivery in the context of an IT department?
Kupor: What we’re seeing, and we’ve heard this a lot from our customers today, is that they’re actually interested in looking at how do I, as an IT department, deploy my own applications in a third party cloud environment. You hear a lot of people talking about infrastructure on demand or computing power on demand.
People are looking toward these third-party products as a way to basically take an application they’ve built in-house and deploy them externally in, perhaps, an Amazon environment or a Microsoft environment. Where the interesting opportunity is for us, as a management vendor, is that customers will still need the same level of performance, availability, security, and data integrity, associated with applications that live in a cloud environment as they have come to expect for applications that live inside their corporate firewall.
We’ve been talking to customers a lot about something called Cloud Assure, which is the first service offering that HP has brought to market to help customers solve those management problems for applications they choose to deploy in a cloud-based environment.
Gardner: This almost sounds like cloud consumption and governance as a service. Is that fair?
Kupor: You’re right. At the end of the day, this is about governance. That’s really what IT’s job is -- to help deploy business applications and govern the integrity, security, the authenticity, and the performance of those applications.
If you go back to where we started this discussion, SaaS, cloud, and all these fancy words, really are different types of deployment models for customers. Whether you deploy it in-house, or whether you deploy it in a third-party cloud environment, you still care about that common theme of governance, security, and all the other things that go along with that.
Gardner: Let’s hear a bit about how to get started. If you’re in an IT department, you like some of this, you want to say to your higher-ups, "I’ve got some evidence of why this will work for us," how would you get started?
Robust education services
Eswaran: There are a couple of things. In addition to all the deployment mechanisms we have in our portfolio, we also have a very robust education services arm. One of the things we’re doing is making sure that education services are available to enable customers on not just the products we have and the solutions we can create, but also the different options they have from a delivery perspective.
We also know that travel budgets and travel freezes are a critical component of why customers are not able to send enough people to get educated. We have also created certain leading-edge portfolios within education services. These enable us to deliver instructor-led training, on a virtual basis, to simulate the exact same interaction that customers need to experience.
So, education services and everything we’re doing about it is a very viable option to help them get enabled on all the different delivery models in addition to solution-based and product-based enablement.
Gardner: How about this notion of professional services over time becoming simply a way of picking and choosing among a variety of different services that could be composed, if you will, into a solution. Do you think that’s where we’re headed?
Eswaran: Absolutely, Dana. We come back to the central theme, which you hear and which we firmly believe in. Everything is eventually going to get transformed into a service for the customer, so that they can actually focus on the core business they are in. When you have things transformed into a service, everything we do to offer that service should be transparent to the customer.
It becomes a services-led engagement, but that’s where we clearly differentiate "services" from "service," the singular, which is the eventual outcome the customer needs to create for themselves. That’s why we really partner well between SaaS and Professional Services. We believe that we are on a path of convergence to eventually get to offering business value and a service to a customer.
Gardner: Scott, how do you see this path of convergence shaping up?
Kupor: Yeah, I really agree with everything that Anand said. At the end of the day, we want to figure out for customers, look, what’s the best way to get the outcome you want?
In some cases, that may be a deployment option. It might be engaging a professional services to develop a solution, but, at the end of the day, all these things come together. People have used this term “everything-as-a-service.” It’s a common nomenclature these days, but really does describe where we think the industry is going.
Gardner: Well, great, thanks. We’ve gotten a deeper understanding of where SaaS is headed for IT departments. I want to thank our guests. We’ve been talking with Scott Kupor, vice president and general manager of SaaS at HP Software and Solutions Group. We’ve also been joined by Anand Eswaran, vice president of professional services at HP. Thank you both.
Eswaran: Pleasure was mine, Dana.
Kupor: Thanks, Dana.
Gardner: Thanks for joining us for this special BriefingsDirect podcast, coming to you on location from the Hewlett-Packard Software Universe 2009 Conference in Las Vegas.
I'm Dana Gardner, principal analyst at Interarbor Solutions, your host for this series of HP sponsored Software Universe Live Discussions. Thanks for listening, and come back next time.
Listen to the podcast. Download the podcast. Find it on iTunes/iPod and Podcast.com. Sponsor: Hewlett-Packard.
Transcript of a BriefingsDirect podcast recorded at the Hewlett-Packard Software Universe 2009 Conference in Las Vegas the week of June 15, 2009. Copyright Interarbor Solutions, LLC, 2005-2009. All rights reserved.