Cloud Computing Means More Than Cost Savings: New Models Will Transform Business, Say HP and Capgemini

Transcript of BriefingsDirect podcast on cloud computing adoption, low-risk transitional strategies and innovative business opportunities.

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Dana Gardner: Hi, this is Dana Gardner, principal analyst at Interarbor Solutions, and you're listening to BriefingsDirect. Today, we present a sponsored podcast discussion on vision and strategy for cloud computing.

We'll be talking with executives from Capgemini and Hewlett-Packard (HP) on how they see the value and opportunity unfolding around cloud computing, and so-called private-cloud architectures. Many enterprises and service providers are now grappling with how cloud models and economics will impact them.

The specter of a challenging business climate may well hasten the need to seek IT resources that are supported through greater utility approaches to save money, as well as to reach Internet audiences and gain global Web efficiencies.

There are also a host of innovations around the various cloud models that are now just emerging and that we're only beginning to discover. These amount to being able to do business in new ways and using cloud models to accomplish things that simply could not be done before.

The goal is to take advantage of what cloud models offer, but to do so with low risk and in alignment with enterprise IT dictates and requirements around management, security, governance, and visibility.

Here now to provide an in-depth look how cloud models are changing our world is Andy Mulholland, global chief technology officer at Capgemini. Hi, Andy.

Andy Mulholland: Hi, there. Good to be on the call.

Gardner: We're also joined by Tim Hall, director of services-oriented architecture (SOA) products at HP Software and Solutions. Welcome, Tim.

Tim Hall: Thanks, Dana.

Gardner: And also we have Russ Daniels, vice president and CTO of cloud services strategy at HP. Good to have you with us, Russ.

Russ Daniels: Thanks, happy to be here.

Gardner: Russ, let's start with you. We've heard so much about cloud, grid and utility. There are so many different words in respect to these technologies, and these approaches have been around for quite some time, but we seem to be in a state of building excitement.

More opportunity is being associated with cloud computing. Why don't you help us and our audience understand, first and foremost, what is cloud -- and probably just as important -- what it is not?

Daniels: You can argue about what the technology industry is really good at, but I would say the one thing that we definitely excel at is hype. We can take any term and get very excited about it. We start redefining everything that we were already doing with the expectations associated with that new term. We certainly think of what's been happening with cloud in terms of two things that are going on. We think they are both incredibly important to our customers. They both provide great opportunities, but they are quite distinct.

What most hype is really about a year ago we would have described as utility computing. It's this concept of being able to treat all of your resources as pools that you can flexibly bind to the workloads to match up the demands and priorities of the business in a way that improves the agility of the business and also has a huge contribution to the cost structure.

That's important stuff. There is a lot going on there, but it's focused primarily on being able to improve the ability to deliver the workloads that exist in the business today.

We think there is also another thing going. That's what we focus on, when we talk about the cloud, and it's a new model for constructing software. It's a new design pattern, and it allows you to solve problems that really have been out of reach. You can take business needs, which if you tried to address them in the context of traditional IT design and delivery models, would tend to fail or under deliver.

The cloud allows you to go after those problems, to open new markets for the business, to allow it to reach out to customers that it hasn't been able to get to, to improve its differentiation in the market, and to contribute to the real goals of the business itself. That's what we think is exciting about the cloud.

Gardner: Is there something that the people should not confuse the cloud with, something that the people might be thinking it can do that that is really outside the scale of what we are really talking about?

Complexity won't go away

Daniels: There's this vision that's been painted by some in the industry that we're going to flip a switch in a year or so, and all of the existing data centers will just be shut down. There will be these few hyper-scale providers of compute capacity some place remote to the business, and businesses will just plug a wire into the wall and out will flow compute.

That's an incredibly naïve perspective -- that computing will become as fungible and undifferentiated as electrical power. It's certainly true that we can improve the effectiveness, cost efficiency, speed, and agility of IT by taking advantage of virtualization and automation technologies, but we shouldn't imagine that it means that all of the complexities of the world go away.

What's most important for our customers, when they think about this, is not to think of cloud as being an alternative delivery mechanism for everything that IT does today. It's much more an enabler to do things that IT really can't do successfully today.

Gardner: Let's go to Andy Mulholland at Capgemini. What has changed about the world we live in now that makes this cloud vision so appealing and so seductive?

Mulholland: I agree very strongly with Russ that when something new comes out, the industry does tend to get a little over-excited -- but cloud is more significant, because people are thinking again about what they are going to do over the next couple of years with very tough trading conditions.

On one side, there is this premise that it can help me look at how I manage and reduce my cost. Perhaps more importantly, we should say it the other way around. It enables me to address how I deal with a more variable business pattern and pay for what I need when I need it.

Many of the things a business does today are relatively fixed. The enterprise applications, the enterprise resource planning (ERP) systems, we know what they do. The systems they run on are very predictable in their load. Everything works, and that's to Russ's point about how [the cloud] doesn't change everything.

But, what we have is a growing desire and a growing need to find new things in the front office, about how we run our business more effectively, how we get into markets more effectively, and how we trade better. These tend to be small fast-moving projects. They make a very big difference, and we simply don't want the same time scale in provisioning for them.

Increasingly, probably over the next couple of years, people don't want to spend capital on them. They'll want to pay for them operationally. They represent a new market, a new technique, a new set of standards, and a new set of technologies. All of that comes together in where cloud is going to go and make the difference to businesses.

So, it's an interesting time, when what I want from technology in the business is shifting to more porous, across-the-firewall business on the Web, and at the same time I desire to manage how much I spend, how quickly I spend it, or whether I can attribute cost directly to how much I need when I need it. It's being driven by more care about the financial side.

Gardner: Let's go to Tim Hall. When we talk about this ability to have elastic resources, provisioning IT resources as they are needed, and reducing costs and waste as a result, we are really getting more toward an economic story. What are the root problems that we are trying to solve here? What is it about the way IT is done now that needs cloud?

Hall: There are a bunch of things, Dana. I can't tell you how many customers I've visited in the last 12 to 18 months who have told me they can't install another server in their data center, and the reason is that they are out of power and cooling.

There's been a lot of talk recently about energy efficiency and this trend toward painting the world green. A lot of the new hardware appliances and other things that are coming on the market are consuming lower power, offering better cooling technologies, and have advanced automation capabilities. We can do things with managing those systems.

There's where virtualization technology come to play. We can use these pieces of hardware more efficiently, and all of this is trying to contribute to lowering the complexity of what we've currently got. The two things that you continue to see IT wanting to do are reduce cost and reduce complexity. The ways in which they're doing that come at it from two different dimensions. One is an operational dimension, and the other is from this generation of applications. A technology refresh is happening in both of those areas.

Interest in 'private' cloud

Gardner: Andy, we have heard a quite a bit about private cloud, taking these architectural advantages and not necessarily going through an outsourced provider, but building them out on your own in your organization. What are you seeing in terms of the interest in the private cloud for enterprises among typical customers of Capgemini and HP? How does that differ from what they might want to do with the more public clouds? What's the breakout? How much interest in either public or private?

Mulholland: If you're going to do it internally, it's much more tied up with the way you're running your business and probably around the way you're adopting social software and collaboration tools. I often talk about it in the terms of a distributed business. If we look at what's happening to business today, the old adage was that we will sell more of less, we will reduce the numbers of lines, try to sell more of each line, and that will make us able to optimize the process, and do all the good things we know.

What's happening today in most markets is that businesses are seeing quite the reverse. They are selling less of more. They have to have more products, more variation and better tailoring for niches to win new business, new share, and better revenue -- at better margins.

When you move to that model, one of the challenges is how to support it. If I'm only going to have a few product lines, and I am going to run them for three years, I can train people, build knowledge, and operate in a different way. Instead, what we are seeing is, as I move to the other model, I need a lot more flexibility in the way I find the person who knows how we share and build information, etc.

The whole idea is social software. That means provisioning in a very different way, and that leads people to consider how to do that, particularly in distributed businesses. Is there a more effective way than having hundreds of different instances in different places, hundreds of appliances, or whatever you might think of?

So, in one direction, we see that trend. In the other direction, we see a trend where people want to sell or consume services from other people or sell to other people as businesses. It's a bit like with mashups. Everyone always points to the housing map, but the other one to point to is the number of people who use some version of Google Maps on which to build something. That's making it available to be used. Cloud services can be delivered in that manner, so people on the Internet can consume and buy services from you to blend in with what they want to do as well.

When you look at that argument and you look at what's happening, you start to recognize there are already a number of very well known brands that sell through the Internet and combine their services, which are effectively doing this already. The challenge in this is how it moves from being something that a handful of Web-based businesses are using. How do more businesses learn how to exploit that market and take their share of commercial revenue from that market?

Daniels: Can I just expand a little bit on what Andy said here, because it's probably the most important thing for people to work through? There are really these two things going on, and there is a relationship between them.

One is simply how do I deliver my existing workloads at lower cost by taking advantage of virtualization and automation? I might do that in my own data center, and many of our customers are in fact doing that. As I do that, it also gives me the flexibility to get those same kinds of resources externally, and that could be an advantage through some variable cost perspective.

But, there is this other thing going on that's really critical. It's not simply a matter of how infrastructures are architected. Whether you have an internal utility or external utility, it's much more how you design software and what kinds of problems you are solving.

When we think about the cloud, we don't think it's just a matter of how infrastructure is packaged, but it's really a combination of the impact of service oriented architecture (SOA) starting to break apart applications. We think more about the services to separate out the data from the applications, so that you can get at the data without having to go through complex application integrations.

That's one major piece. There's another piece around taking advantage of Web 2.0 innovations, which includes both how you can create rich user experiences in the context of browsers in these remote execution models, but also significantly it's the social dimension. How can you take advantage of the innovation that's occurred in the consumer space by understanding the importance of bringing people together?

Scaling up, scaling down

Finally, all of that is being enabled by a design pattern that allows these kinds of workloads to scale up, scale down, and be able to handle huge amounts of potential demand, but do it in a very flexible and economic way.

It's the combination of all those things together that allow businesses now to start to use technology to solve problems, to create advantages, and as Andy was saying -- particularly in these uncertain times -- to tackle these problems in a way that lets them move where the opportunities are. It lets them experiment readily and to try things, without finding themselves in huge, long-term commitments when some of those experiments fail.

Gardner: It sounds, Tim, as if cloud computing is getting an advantage from a psychological point of view. It's changing the way people think about IT and application development. It helps us understand how this thinking needs to move into the enterprise. Who at the enterprise level is in charge of making sure that cloud computing happens properly?

Hall: That's exactly where governance comes in. This can't be a free for all. The question is how you organize, govern, and provide guidance for what's available. What has been looked at? How do we handle issues of compliance, especially as you get into some more interesting regulatory requirements?

We're finding that certain data cannot exist outside the borders of a particular country, and so it can't be a free for all. You have to establish a culture of governance and build up processes and procedures within IT. How are you going to tackle the policy complaints issues and some of the consistency checking that are going to need to go on?

One thing Andy mentioned at the top, which is very interesting, is the charge-back model and the variable costs that go along with this. Are you sure you know what those costs are? Do you know where they break in terms of scale? Do you have control over who is gaining access to these resources, so it doesn't become a free for all?

If you have two organizations entering into a trading partner agreement for some kind of cloud-based services, and you're distributing the use of that service more broadly within your organization, who is responsible if somebody is violating the terms of use? As Russ said, it's establishing these policies and procedures and formalizing them in a way that IT can effectively be in control of them to take advantage of these opportunities. I think it's critical.

Mulholland: An interesting point you made there Tim is that you really stress the challenge that says we have a very variable business model. Everybody is getting more and more into the variable business model, and it's very difficult to stay in control. It's very difficult to attribute cost to the various diverse activities, and it's very difficult sometimes to look the auditor in the eye and say you actually knew how all of this worked.

These are new challenges. Let's get back to Russ's point. We've got new challenges here, and what's happening is that it's almost happening ad-hoc. In many companies, they're trying to exploit these things, but they are doing it with a complete lack of structure. By bringing in a cloud model successfully, you're actually introducing some structure to support the very activities that people are increasingly experimenting with in their businesses today.

Gardner: This notion of successfully implementing cloud models certainly seems top of mind for organizations. Russ Daniels, what's the first step? Is this an organizational shift, a mindset shift, technology, all the above? How do you get a handle on making this a successful transition?

Daniels: If you think in these two dimensions, every IT organization struggles with simply delivering on the commitments that they have today, and every organization struggles to free up money to innovate and deliver new business value. When you think about the opportunities to take advantage of infrastructure as a service, it's important to sort through those services that IT is delivering to the business and understand which ones are best suited and are most likely to be able to be moved into those forms to drive down cost.

What we find with our customers is that many workloads are important to the business, but they are not mission critical. In many of these workloads, good-enough delivery is good enough.

There are other workloads that are mission critical. They are the things that when they go down, the business goes down. Those things you have to put a huge amount of focus on and deliver at the highest possible quality. So, distinguishing between those types of workloads, identifying those where good-enough delivery is appropriate, and moving those into virtualized and automated delivery models, positions you to take advantage of external infrastructure capabilities as appropriate. That's one side.

The key challenge

The other side is one I think all of us have always realized. The key challenge for any IT organization is to understand what the business really needs, where the business value is, and how technology can help deliver that. This question of business-IT alignment is always the heart of the problem, and it will be certainly be true in terms of how the business chooses to go after cloud-based opportunities.

We think the cloud is great for connecting. It's great for connecting business to business. It's great for connecting business to its customers. It's great for connecting people to people. It's great for connecting the experiences that people have, as they move through their day and the changing circumstances they find themselves in.

All of that connecting is enabled in the cloud, because the cloud provides a persistence. It's a great place to capture state, because the services exist over long durations, and they have pervasive access, so you can get at that state and the context related to that state. It's those capabilities that make the cloud so great for connecting.

Where is connecting important to your business? That's ultimately a business question, not a technology question. The focus should be on having people who can map from what the business needs to understanding how to exploit this new expressiveness that the cloud brings to solve the most pressing challenges, or to exploit the most exciting opportunities that the business faces.

Gardner: Andy, as organizations on the business side recognize how to take advantage of these connections of doing business differently, vis-à-vis the cloud and other partners, they are going to come back to the IT department and say, "Now enable it."

Is there an advantage for those organizations that already have embraced and embarked on a SOA journey and who have implemented governance and managing services internally? Are they are going to be in a better position when those business people come and ask for them to get cloud oriented?

Mulholland: It's pretty logical, when you follow through what we've been talking about. If you're talking about connecting to and using an environment largely based on services, whether you put a big “S” or a small “s,” i.e., business services, or technology services in SOA, it's pretty obvious that if you have no way internally to relate to that, you're going to have a problem.

The good news about this conversation is that we've talked a lot about the new world and new challenges, and the things people are starting to do, which involves that new world. We carefully separated the idea that the old world is immediately going to jump into this.

The point about that is, if you have been doing new stuff, and you are building new stuff inside the organization, you really ought to have started doing that around SOA. If you're using services correctly internally, then of course, you can cross the firewall and start to use services outside, and blend them together.

The big question is how people think about deploying SOA internally. Some months ago, Russ and I were discussing this. We felt that there was a serious disconnect in people's understanding. For some, it's "Oh, let's try this project with SOA. I'm not actually recognizing it as more than a project, or recognizing it as a significant move inside the business, addressing this new generation of fast moving, fast changing things which are much more in the front office, much more likely to involve the Internet and the Web in some way or other."

Most of the SOA people were thinking about what I called "EAI 2.0." It's just a better way of doing technology integration. Some companies have grasped the idea that it's about doing better business and putting the business costs together in a different way. But, it's still quite a tough issue to address. I'm sure Tim would have some pretty good war stories about how that issue has played out with the things he's seen, as well as some things I have seen in that space.

Gardner: How about that, Tim? How well are organizations that have not necessarily embarked meaningfully on SOA positioned to take advantage of cloud?

Hall: The really interesting point is who is driving the initiative. So some of the things that Andy mentioned are being driven from the bottom up. Folks are looking at this as an integration technology, instead of a complete transformation of how they deliver service orientation or business services more comprehensively and more flexibly to address some of the unique challenges that the business is facing. And of course, they're asking IT to do more with less and better faster.

Four important things

You're not going to do it using the same old technologies that you had in your bag. There are four important things that we're learning about how to do things better as we move forward in the IT landscape. SOA adoption, as a transformational agenda, is a microcosm of some concepts that apply very specifically to cloud and preparing people for cloud adoption.

The four things are, first, once you start to move into these loosely coupled technologies, you have the opportunity to do intermediation, and that intermediation can largely be transparent. What that means is that you have an opportunity to do things like compliance checking for such things as information that shouldn't be leaving the firewall, for example.

The second thing is that you have the opportunity to invest in and capture significant amount of metadata about the things that you are using, be it things that you built or things that you are consuming from a third party. That leads to the ability for you to do more in terms of automation.

The third thing is the notion of formalizing the relationships between the consumers and providers of these capabilities. I think of this as a volume control, if you will, where you do want to capture, at a minimum, the fact that somebody is using some service, be it inside or outside the four walls of your data center. Depending on the relationship you have with that person, you may want more structure. You may want more formalization and structure in that agreement, all the way up to what Andy and Russ mentioned around charge back.

Finally, it's just the whole notion of moving away from capability centric IT and moving more towards service orientation. We shouldn't be worried about fan speed and CPU power. We should be looking at whether we have a capability and how flexible is it for us to deliver that at any sort of scale.

This goes to Russ's comments about how we identify effectively, from the top down, what's really core to the business and what's going to drive and fuel the business activities, versus what is contextual and can be delivered at some level of quality, but simply isn't core to the central focus of the organization.

Gardner: Being involved with social media, I encounter lots of comments. There is plenty of dialog going around, but it seems clear to me that there are still plenty of naysayers out there about cloud, particularly for companies that are considering putting certain applications and services or data up in the cloud.

Time and time again, I hear people saying they will never do that. It's not secure. Russ Daniels, what are some of the boundaries here as to what should or shouldn't be brought into the cloud, at least in a medium or short term, in terms of IT functions and application set?

Daniels There is a set of low-level concerns, when you think about a workload that an enterprise depends upon. There's a set of requirements associated with that workload that includes things like security, which is an obvious one. There's a need for compliance, so can you satisfy your auditors that, in fact, you are managing your proprietary information appropriately. Those kinds of things you can understand as being requirements for any delivery method that you would consider for that workload.

We have to saw through that. Certainly, many of the infrastructures of the service offerings that exist on the market today are relatively simple and can't satisfy many of those demands that enterprises have. That's one of the reasons why you see the uptake for these things frequently happening at the level of the department in an enterprise, where either they don't have the sensitivities, or they lack the awareness of those business risks.

That's one piece of it. There is a different angle, though. The cloud allows us to go after problems that we haven't been successful in addressing before. To be successful doing that, we have to design things. We have to get the design right, as Andy was saying, because service orientation is at the heart of this. It's around how I understand the services that facilitate the goals and objectives of my business. Understanding those services in the context of the business is absolutely critical.

Too much of what's happened in the SOA space has been limited to technical enablement. That's absolutely critical, but isn't sufficient. You have to also understand from the business concerns how to capture the key roles and responsibilities of the business. How do I understand the information that's necessary for those roles to fulfill those responsibilities and where that information needs to be exchanged? That's what I can model as the service. Then, I'm modeling those services in the context of business concerns about implementation.

Getting that picture in your head, and then taking advantage of the cloud, allows you to solve these problems in a way that isn't limited simply to what you can do within your own business. It can be extended across your supply chain. It can be extended across your channels and customers, so you can address more broadly the ecosystem in which you operate. The cloud lets you do that.

Interactions and transactions

Mulholland: Can I pick up on this note? As you can probably tell, we've all worked together on this and share it. One of the keys in this, when we have talked about it with people -- to pick up some of Russ's point -- is the difference between interactions which is a lot of this new market, and transactions which was the old IT market.

When you look at any IT system, it's fundamentally about getting a safe transaction to record what you have done. But, if you think about someone trying to decide what they're going to buy from you, like buying an airline ticket, deciding which flight and how much money they're going to pay and which extras they're going to have, it's a lot of interactions. The speed at which interactions go back and forth isn't that critical if it takes a half second longer.

To get back to Russ's point that he made very clearly, it's something different. State is a big issue in it. Data is not the same issue in the same way, as we are used to seeing with applications. When you start to see it that way, you start to understand why we are using a cloud-based service in this way. It's a perfectly acceptable commercial risk-reward, or whatever word you want to think of in terms of, "Is the service-level agreement (SLA) good enough to choreograph this?" We are trying to just put something different here.

Gardner: Andy, here's a follow up. The cloud naysayers, have they got some things wrong?

Mulholland: I'm not sure they've got things wrong. There's a huge temptation -- I have to avoid it personally, and I am sure everyone else does -- that when you're shown something new, you try and apply it to what you have already, and you try and bend it to fit. Much of what I hear from the naysayers is the assumption that the cloud is about applying it to the current generation of IT, and some of the issues that we touched on earlier.

Actually, it's also about understanding that you have a new set of challenges, a new set of requirements from the business, and therefore, these are not easily addressed in the old way. You need to change what you are doing. It's not so much that they’re wrong, but that they're looking at the wrong thing as the target for where they should be applying the idea of how to use cloud computing.

Daniels Andy hit it exactly right. Frequently, when people think about what they are trying to do, they think in the context of those existing services that they deliver to the business, and many of those are, in fact, transactional. We don't think the cloud is great for “transactionality,” for deep, technical reasons.

In the cloud, you need to be able to scale arbitrarily and you need to be able to do that where you get linear increase in throughput, as you scale out horizontally, which says there is a huge dependency on being able to work concurrently and to work in parallel. Transactional workloads don't lend themselves to that.

It's very difficult to fan out the transactional workloads, because ultimately that item can only be taken out of inventory once, and so you have to bring everything back together. The two-phase commit design pattern isn't very well suited to horizontal scaling. So, the place where the cloud is great is where you're not focused on supporting transactions, but interactions, where you are connecting. It's being able to take state from participants in an extended supply chain and propagate that information up through data feeds, up into a cloud service.

For example, that information might be related to the carbon footprint related to material flowing through an extended supply chain. Each of the participants in an extended supply chain can simply publish a data stream that captures the carbon footprint of the materials that they will be producing. Now, you can run analytics in the cloud, using search-like algorithms, to answer questions about the carbon footprint for some end products. You don't have to do the detailed process integrations. You don't have to provide detailed transactional integrations across the supply chain system to support it.

It's exactly that new expressiveness that allows us to go after problems that we really couldn't have done affordably in the past. Because we couldn't do them that way, we ended up doing things manually and in emergencies. If you think about product traceability, it's the same problem, very difficult to deal with from a technology integration perspective in the traditional ways. As a result, when there's a problem, we have people pawing through information spreadsheets manually and providing the answers too late to be helpful.

Gardner: Given that we're dramatically changing the way we're doing things in order to take advantage of these efficiencies and new capabilities, do we need to create a new hierarchy or metric organizationally?

That is to say, the role of architect now needs to include someone who sees this all through a cloud perspective. Do we need a higher order architect, perhaps at a services level? I guess the question is, how does IT and/or that intersection between business and IT change in order to take advantage of this properly?

Mulholland: I'll have a shot at this. It's something that we've been tracking with some interest, because we focus much more strongly on the business and to how the technology is used. We rely on HP to give us the products to be able to marry up to that business requirement.

If you track backward through this, in 2006, Tim O'Reilly tidied up his views on what Web 2.0 is and how it works. He started to add to it ideas of a business model of how business using it might be different.

About three months after that, Andrew McAfee at Harvard coined the term Enterprise 2.0 in Harvard Business Review Online, and started to build the idea of a business-model innovation. In other words, your business model could be different to present products, deal in markets, do supply chains, and the kind of things Russ was just mentioning.

About three months after that, Forrester Research produced a viewpoint, which said that this should be treated as a different branch of technology, and they called it business technology. Their argument was that, at the time when the mini computers existed around the late 1980s, and PCs and networks were just appearing, the term "information technology (IT)" was first coined to separate off a new cluster of technology that was used in a different way, i.e. around personal computing, centered on information, not on big mini systems, and transactions, and so on.

The term IT was used to describe a change, which if you think it through and remember those times -- and some of us still do -- brought us to the viewpoint that we had a different set of technologies. Applying those technologies led people to coin the term business process re-engineering, let's rethink how it works. We developed a whole new model of client-server, and finally and not least a whole new generation of ways of managing and controlling the business through enterprise resource planning.

The argument that we're extending is this: the topic we're talking about -- the cluster technologies, the role they play in a business, how you build, and deliver, and maintain them -- is a different branch with different skills and activities and therefore it should be called “business technology.” Whether you believe the argument or not is a different question, but it's very interesting that one of the foremost industry analysts actually came up with that proposal about 18 or 20 months ago.

Gardner: It sounds as if we have a transformation that needs to take place at multiple levels within these organizations. Let's focus for a second on for those companies that get it right. They can make the transformation, take advantage of these newer models, extend their boundaries, and be more into interactions, and what that entails. What's in it for them? Let's go first to Tim. For organizations that get this right, what's the payoff?

Hall: Go back to the three basic things that we've been talking about, which are decreased complexity, increased agility, and lower cost. They're the fundamentals of a business. As technologists sometimes we get too enamored with the buzzwords and the hype that Russ Daniels was mentioning at the top. We forget why we are doing this in the first place, and it's very simple. It's to take advantage of and use this business technology as a strategic weapon, while at the same time lowering cost, lowering complexity, and increasing your new business agility.

Gardner: Russ Daniels, same question. For those that get it right, what are the payoffs?

Daniels Tim's list is exactly where the focus is, but I would say again that the cloud allows you to deliver the business results that matter. In other words, it really has to be thought of in the context of IT’s technology for business, and the key business challenges that we see our customers facing today are how to develop new markets? How do they take advantage of the abilities they have and deliver them to new customers? How can they understand better what their customers need, and how can they fit in and connect with them?

The cloud provides great capabilities for that. We think that it's still early, and you can see the promise in things like the recommendation engines that you find at online shopping sites. You're searching for something, and, based on your buying history, your demographics, your search behaviors, and then comparing that to the behaviors of others, the site can provide you with suggestions about other things that might be of interest to you as well. The technology helps identify your intentions and then offers suggestions to help you find things better suited for your needs than what you could have expressed or identified yourself.

That's a wonderful opportunity, and to be able to expand that approach into more and more of the ways that a business connects has huge implications. So, it's an upside opportunity. It's enabled by the agility and by the lower cost, but the key thing is that it allows you to open the markets, to differentiate your offerings, and it allows you to improve profits or gain market share. Those are the things that businesses get.

Gardner: Andy, the last word to you.

Mulholland: Relatively speaking, [cloud computing] is unstoppable. The question is whether you'll crash into it or migrate into it. Why is it unstoppable? Because we're watching a business shift, people have to find ways to compete better in the market. Much of that is around. "How do I add smart services? How do I make products more available? How do I communicate directly and intimately with people, so they know what they want to buy from me?" All of those things are already developing in many businesses today, and people are building solutions to do that, sometimes gracefully, and sometimes not at all gracefully.

In other words, just as we had with the PC, where we basically were driven into it, some companies got there in a very ungraceful way and had to figure out afterward how to sort out the mess. Others did have a strategy, and emerged in a very graceful way. I think we're in the same situation. Users wanting social software have taken us there to run and do things better. We've been taken there by businesses needing to get into new markets.

The challenge for the CIO and the IT department is, "How will I enable that to be a graceful migration," not "How will I wait until it becomes a real issue, and then do something about it?"

Daniels: The opportunity that exists is for those people who break out of their traditional mindset around transactions and really start thinking about what this opportunity is in front of them, and how to use this innovation as a weapon. Those are the ones who are going to see the biggest benefit, because they will be able to take advantage of it more quickly. We've seen this with lots of the technology waves that have come before. Those early movers, who can break out of that traditional mindset -- whatever it was at the time -- to the next technology disruption, are the ones who see the biggest benefit.

Gardner: I'm afraid we have to leave it there. We've been discussing cloud models, impact, direction, and strategy. Andy Mulholland, the global chief technology officer at Capgemini, has joined us. Thanks so much, Andy.

Mulholland: Thank you, too, for inviting me.

Gardner: We were also were joined by Tim Hall, director of SOA products at HP Software and Solutions. Thank you, Tim.

Hall: Thank you, Dana.

Gardner: And also, Russ Daniels, vice president and CTO of cloud services strategy at HP. Thank you, Russ.

Daniels Thanks again.

Gardner: This is Dana Gardner, principal analyst at Interarbor Solutions. You've been listening to a sponsored BriefingsDirect podcast. Thanks for listening, and come back next time.

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

Transcript of BriefingsDirect podcast on clouds computing adoption, low-risk transitional strategies and innovative business opportunities. Copyright Interarbor Solutions, LLC, 2005-2008. All rights reserved.

Remote Support Offers Enterprises Avenue to Cut Operations Costs While Improving IT Systems Reliability

Transcript of BriefingsDirect podcast with HP’s Dionne Morgan and Claudia Ulrich on remote support services and value.

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

Dana Gardner: Hi, this is Dana Gardner, principal analyst at Interarbor Solutions, and you're listening to BriefingsDirect. Today, we present a sponsored podcast discussion on the need to better monitor, resolve, and automate the ongoing performance of IT systems in enterprises.

The trend around using remote support for monitoring, remediation, and maintenance automation is gaining steam in the global IT market. We expect that as these companies become even more cost conscious, they will seek to reduce their total cost of IT operations, and that remote support, best practices, and effective use cases will become even more prominent.

The goal is to free up on-premises IT personnel to focus on what they do best and to offload routine and potentially unproductive chores to organizations that specialize in these tasks, and can do them at high efficiency. We are going to hear from executives of Hewlett-Packard (HP) on how remote support works and how current users benefit from improved systems analytics and higher productivity through remote support IT services.

Here to provide the inside story on remote support is Dionne Morgan, worldwide
marketing manager in HP Technology Services. Welcome to the show, Dionne.

Dionne Morgan: Thank you.

Gardner: We're also joined by Claudia Ulrich, communications manager in Delivery Engineering at HP. Welcome, Claudia.

Claudia Ulrich: Thank you.

Gardner: Let's start by taking a look at why remote support software and services makes sense, now perhaps more than in the recent past, especially due to economic pressures. Dionne, what's the reason that remote support makes more sense now?

Morgan: As we know, IT organizations are under tremendous pressure today to help the business achieve three key business outcomes. Those include accelerating business growth, reducing cost, and mitigating risk to the business. What we've found in our research, as well as in our discussions with customers, is that IT is spending approximately 65 percent of its budget on maintenance.

For example, at many companies IT managers are discovering that simply maintaining and administrating their existing infrastructure is now one of their major expenses, and we believe there's several reasons why this is the case.

One reason is that far too much time has been spent by their staff on managing, monitoring, and troubleshooting their IT infrastructure. Obviously, this can be very expensive in both time and money. Too often, there's increased risk and unplanned downtime, which lead to an inability to meet those business objectives and achieve those business outcomes. We're also finding that system complexity is adding to the problem.

In today’s IT environment there is an abundant infrastructure, be it hardware or software, and keeping track of all this infrastructure is a daunting task. When a problem occurs in the infrastructure, finding the source and the nature of the problem, and then coming up with the resolution, can also be a daunting task.

Gardner: What is the problem set? We're seeing this all from a technology standpoint. It's clear to me how the economics work, but what are the technology issues that remote support is addressing?

Morgan: It could be anything from actual hardware failure and trying to detect exactly where within the system the failure has occurred to a need for additional memory or additional hard drive space. Those are some of the typical problems that our customers are facing, and those are the problems where you can automate the process of identifying the nature of that problem and coming up with the solution.

Gardner: I suppose we're looking, in a sense, for needles in haystacks, as well as for elephants in the room. It's a contextual set of problems.

Morgan: That's right.

Gardner: Let's go to Claudia. Claudia, tell us what the analysis and remote monitoring requirements are? How do companies start taking advantage of remote support and what do they need to do? What do they need to put in place to get started?

Ulrich: Our remote support solution is offered to customers free of charge as part of their warranty, HP Care Pack Service, or contract obligation.

They're moving from traditional phone-in support and on site delivery to automated event reporting. This is also called "phone home" capabilities. Adding to customers' manageability solution the ability to monitor the complete enterprise environment by automatically submitting incidents to the support provider increases the level of services, which in return improves availability and reduce service cost for the customer.

On one side, we have HP Systems Insight Manager (HP SIM), which is a unified management platform to manage server and storage environment. By adding our solution, which is called Remote Service Pack (RSP), we can enhance HP SIM with remote-event diagnosis and automatic submission of hardware-event modification, which is securely sent to HP.

At the same time, the customer already knows what's going on with this environment, so that we can also report back the case status, as well as the case ID.

Gardner: Just to be clear. This is not necessarily just HP hardware, right? This is a panoply of different products that are supported?

Ulrich: That's correct. We're looking at the complete, heterogeneous IT environment. This includes servers, storage, network, not only from HP, but also from selected vendors like IBM and Dell servers, as well as Brocade and Cisco switches.

Gardner: Are we talking about labor costs or we are talking about scale in terms of why this makes sense from an economic standpoint. It seems to me that when I speak to operators, they have to pick and choose quite carefully where they put their personnel. They always seem to be behind the eight ball in terms of having enough people to manage all of the issues that they're confronted with. How would something like remote support help them better manage their personnel? Let's go to Dionne for that one.

Morgan: One reason this helps to manage personnel is because it's going to be constantly monitoring the environment 24/7. Even at the end of the day, when the staff goes home, the system is still monitoring and it helps to filter the actual events that are coming through, so that the IT organization can prioritize which of those events they need to take action on.

It's actually removing some of the mundane task of troubleshooting and prioritizing the events or the incidents. It also helps, because it reduces the amount of time they have to spend on the phone. When an event is detected, that event is sent back to the HP Support Center, so that the troubleshooting can begin. So, gone are the days when they would have to make a frantic phone calls to the support center. That process is being automated for them.

Gardner: It seems as if a quite of bit of the triage, the leg work, the background preparation, and maybe some context or automated processes have already kicked off, long before that phone calls or message goes out to the on-site person and gives him a head start on the problems solution process.

Morgan: That's right. If they think that our service technicians need to come on site, we’ve automated the process as well, where they don't have to pickup the phone and request an engineer. We can do an automatic dispatch, as needed.

Gardner: In that case, you might have someone already on premises who's been sent there and is working on the problem, and in some instances no local intervention might be necessary at all?

Morgan: That's right.

Gardner: How does this match up against the larger IT support trends and issues? We're talking about next-generation data centers, using more blades, and increasing utilization through the use of virtualization. How does this IT services and remote support approach align with, support, or augment this notion of the modernization of the data center? Let's go to Claudia on that, please.

Ulrich: Remote support is a critical piece of establishing the next-generation data center. HP has defined six enablers to build this next generation data center, and RSP can definitely contribute to these enablers. Just to mention two of them, automation as well as management of the complete data infrastructure. It also plays a critical role in establishing and operating this next-generation data center by capturing the attention of the IT industry, requiring a stable environment, and accommodating the changes as needed.

It's important to customers that they can monitor and manage all of their IT equipment, not just on a particular service, but also across the whole holistic environment. They have really one thing or solution that integrates with their business processes, and not the other way around, where they have to adjust the remote support processes.

We're really looking at this one foundation to enable consolidation and modernization of data centers, and also to be able to transition between the two, using a common management system, which we have with HP SIM. This also includes industry trends toward virtualization, as well as blade, and cloud computing, as they evolve. The RSP is already designed to accommodate those business needs.

Gardner: You mentioned cloud, and that's been a hot topic lately. It certainly seems that, at some level, organizations are going to be having more hybrid types of acceptance and utilization of services coming from a variety of cloud, host, or partner infrastructures.

It seems to me that not only solving a problem becomes important, but also identifying whose problem it is becomes more and more important over time. Is there something in the way that remote support and HP's methods work that could help in this hybridized environment, where we need to find out whose problem it is, before we can even get into the solution? How do you feel about that?

Morgan: With RSP, because we are able to monitor and troubleshoot not only the HP infrastructure, but also some other third party infrastructure, that can actually help with the troubleshooting.

For example, what we have found with customers is that, when they are using these remote support tools, they're actually able to reduce the amount of time they spend in troubleshooting by 20 percent and they're also able to increase the accuracy of the diagnosis by over 99 percent. So, with these remote support tools, if they're monitoring the heterogeneous environment that Claudia talked about, that will actually speed up the process of troubleshooting and isolating the problem.

Gardner: Let's get into a little detail about the actual view into these issues. Is there a management console? Does this align with some of the existing IT management tools, the dashboards and consoles that might be in use? This is an integration question. How does remote support integrate into existing IT management functions and tools? How about to you, Claudia?

Ulrich: RSP is offered as a plug-in to HP SIM, so it serves as the central console of managing the complete customer’s IT environment. It's offered to customers during HP SIM installation, and it's centrally hosted on the same dedicated servers and fully integrates into the view of HP SIM. This means the customer can use HP SIM, but he can also access the service attributes and the remote support functionality, as introduced by the RSP plug-in.

Gardner: How are these outputs then delivered? Do you have a choice among a Web service, an RSS feed, or communications? What are the various ways in which end user organizations can be on the receiving end of what remote support offers?

Ulrich: In the HP SIM view, the customer will have access to his complete IT infrastructure. They can already see what kind of servers, storage devices, and network devices that they have in their environment. In addition to this, they can see all the event information, including information about failing parts, the corrective actions, as well as the replace number, including their location, and even access to streaming videos.

They can also configure HP SIM to receive corrective notification, when an event is detected, and automatically submitted to HP, so that they can always understand what is happening in their IT infrastructure, and they keep control, because this is really important for customers. They like the benefits and they appreciate the benefit, but, at the same time, they always want to understand what is happening in their IT infrastructure.

Gardner: Let's look at some examples of how this works, and perhaps some metrics about how companies have saved money or increased their performance and the quality. Let's go to Dionne on that. Do you have some case studies or enterprise use-case scenarios where this has been used, and what kind of paybacks are they getting?

Morgan: Yes, RSP is being used by many HP enterprise customers. These customers represent some of the world's leading companies across many business sectors, including retail, banking, manufacturing, healthcare, and so on. All of these customers have been demanding solutions to help them increase their return on investment (ROI).

RSP is helping them to reduce their operational cost. As I mentioned before, based on customer experience and research we have done with many of these enterprise accounts, they actually have been able to reduce the amount of troubleshooting time by 28 percent, and increase the accuracy of their diagnosis by over 99 percent.

This has allowed them to get to a resolution faster, which means that it's going to help the end users get back to accessing the business services that they need. So, yes, we have thousands of enterprise customers who are using remote support today, and they are across all of the industry.

Gardner: How does this help on a compliance level? Are there some companies out there that are using this to help them with their compliance, regulatory issues, reporting issues, or audits? Then, what does this bring to the table for those organizations that themselves are acting like service bureaus, perhaps they have adopted Information Technology Infrastructure Library (ITIL), and need to have certain service-level agreement (SLA) requirements met. So, how about compliance and service-level agreements? Back to you, Dionne.

Morgan: In regard to compliance, the way that this can help customers is by having that single view of their environment. If they have to keep track of what's included in their environment and infrastructure, this is going to help them, because they do have a full view and they are able to better manage that. That really helps in terms of compliance.

From a security perspective, this gives customers the flexibility to integrate these remote support processes into whatever security policies and procedures they actually have in place. So, this will comply with the security practices that they need in order to achieve their compliance.

Gardner: That's right, because this involves access to some sensitive systems.

Morgan: That's right, and it's highly secured. It's using industry-standard security protocols. In regard to service management, remote support and especially RSP, supplies some critical pieces to a company's service management model. Incident management, asset management, and continual service improvement are some of the key examples.

If you think about ITIL and the fact that we have a lifecycle that includes strategy, design, transition, operation, and continued service improvement, this is going to help to automate many of those support processes that you need on an ongoing operational basis and incident management. They can assist with help desk management and asset management. Our solution is designed to help customers in the phases of service management, especially focused on operations and continued service improvement.

Gardner: Back to you, Claudia. How should companies know if they're good candidates for this? Are there certain costs that they're incurring or downtime levels that they're suffering? Who are the people who should be saying, “Wow! I've got these key indicators. I should be looking for outside remote support for that sort of assistance?”

Ulrich: As Dionne indicated earlier, all IT organizations are under tremendous pressure to help the business achieve the business outcomes, and this is to accelerate business growth, meaning making better use of people and resources. This is enabled by using automated support processes to operate 24X7, so that the customer's IT staff can really focus on their core business activities, but, at the same time, control how remote support is integrated to enhance support processes.

Another business driver is reducing costs. For example, at many companies, IT managers understand that ongoing administration and maintenance of their existing infrastructure consumes most of the IT budget. There are several reasons why this is true. Much staff is needed in order to manage and monitor the whole infrastructure, as well as troubleshooting IT issues. This can be definitely expensive, in both time and money. Remote support can definitely contribute to this. Last, but not least, it also mitigates the risk to the business. This means to invest in solutions that help reduce unplanned downtime, which leads to an inability to meet business objective.

Gardner: Well, I think we have a much better much understanding of what remote support means, do you have any sense of the future direction? Are there other IT function sets that will fall under this umbrella? Is there an expanding trend toward the inclusion of technologies and infrastructure?

Morgan: I believe that down the road we'll see an expansion of the products that are covered by remote support. We'll begin to look at the total environment, in addition to the infrastructure. We'll also see organizations looking at how to automate processes, how to help with monitoring and troubleshooting applications. So, yes, we do believe that down the road there will be an expansion of the coverage.

Gardner: We've been talking about how to better monitor, and resolve, and automate ongoing performance of IT systems in enterprises. I want to thank out panelists, we have been talking with Dionne Morgan, worldwide marketing manager in HP Technology Services. Thank you so much, Dionne.

Morgan: You're welcome.

Gardner: And also, Claudia Ulrich, communications manager on the Delivering Engineering Team at HP. Thank you so much, Claudia.

Ulrich: Thank you.

Gardner: This is Dana Gardner, principal analyst at Interarbor Solutions. You've been listening to a sponsored BriefingsDirect podcast. Thanks for listening, and come back next time.

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

Transcript of a BriefingsDirect podcast with HP’s Dionne Morgan and Claudia Ulrich on HP remote support services. Copyright Interarbor Solutions, LLC, 2005-2008. All rights reserved.

Enterprises Can Leverage Cloud Computing Benefits While Managing Risks Through Services Governance, Say HP Executives

Transcript of a BriefingsDirect podcast on cloud adoption best practices with HP executives.

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

Dana Gardner: Hi, this is Dana Gardner, principal analyst at Interarbor Solutions, and you’re listening to BriefingsDirect. Today we present a sponsored podcast discussion on cloud computing, and how enterprises can best prepare to take advantage of this shift in IT resources use and acquisition -- but while also avoiding risks and uncertainty.

Much has been said about cloud computing in 2008, and still many knowledgeable IT people scratch their heads over what it really means. We’ll dig into the hype and opportunity for cloud computing with executives from Hewlett-Packard (HP) and EDS, an HP company. We'll discuss the pragmatic benefits -- and also the limits and areas of lingering immaturity for cloud-based delivery of mission-critical applications and data.

Here to provide the inside story on the current state of cloud computing we welcome our panel, Rebecca Lawson, Director of Service Management and Cloud Solutions at HP. Welcome to the show, Rebecca.

Rebecca Lawson: Thank you.

Gardner: Next, Scott McClellan, Vice President and Chief Technologist of Scalable Computing and Infrastructure in HP’s Technology Solutions Group (TSG). Welcome, Scott.

Scott McClellan: Thank you.

Gardner: And last, Norman Lindsey, Chief Architect for Flexible Computing Services at EDS, an HP company. Welcome, Norman.

Norman Lindsey: Thank you, sir.

Gardner: The trends and the talk around cloud have jumped around a fairly large landscape -- everything from social networking computing to Web services, video, and ... you name it. But what we are going to be talking about is primarily of interest to enterprises, and what we could continue to classify as utility or grid-type computing. First, I want to talk to Rebecca about what is changing around cloud computing, and why IT people should be taking this seriously at this time.

Lawson: Let me first say that at HP, we are really interested in just trying to articulate where we see cloud opportunities -- and how they differ from existing infrastructure, application and service environments. So the way that we define cloud at HP is that we consider it a means by which very particular types of highly scalable and elastic services can be consumed over the Internet through a low-touch, pay-per-use business model.

There is an implication with cloud that is different. It solves different problems than what we have been solving over the last few years, and it implicates both breakthroughs in technology architecture and the confluence of that with new business models.

That’s kind of a mouthful, but we basically think that the enterprise should be aware of what’s happening at the infrastructure level, at the platform level, and at the application level -- and understand what opportunities they have to further source from the cloud certain services that will directly relate to the business outcomes that their organizations are trying to achieve.

Gardner: Do you think the interest at this time is primarily an economic story, or is it convenience? What are the drivers behind all this interest in cloud computing?

Lawson: There is an overriding notion that the cloud provides a lower-cost option for computing, and that may be true in a very few limited use cases. Really, from an enterprise point of view, when they are running mission-critical applications that need security and reliability, and are operating with service-level agreements (SLAs), etc., the cloud isn’t quite ready for prime time yet. There are both technical and business reasons why that’s the case.

As far as the idea of the cost savings, it’s good to look at why that is the case in a few certain areas, and then to think about how you can reduce the cost in your own infrastructure by using automation and virtualization technologies that are available today, and that are also used in the “cloud.” But, that doesn’t mean you have to go out to the cloud to automate and virtualize to reduce some cost in your infrastructure.

Gardner: Let’s go to Norm Lindsey. There are a number of other similar overlapping trends afoot today. There’s virtualization at a number of different levels, application modernization, consolidation, next-generation data center architectures, services-oriented architecture (SOA), an emphasis on IT service management.

Does cloud intersect with these? Is cloud a result of some of these? What is, in a sense, the relationship between some of these technology trends and these economics-driven cloud initiatives?

Lindsey: A lot of these technologies are enablers for a cloud approach to services. The cloud is an evolution of other ideas that have come before it, grid, and before that Web services. All these things combine to enable people to start thinking of this as delivering service with a different business model, where we are paying for it by the unit, or in advance, or after the fact.

Virtualization and these other approaches enable the cloud, but they aren’t necessarily the cloud. What IT departments have to do is start to think about what is it they’re trying to accomplish, what business problem they’re trying to address, as they look at cloud providers or cloud technologies to try and help solve those problems.

Gardner: It also seems that we are hearing about private clouds or on-premises use of these architectural approaches, as well as public clouds or third-party sourcing for either applications or infrastructure resources. Does this boil down to a service orientation, regardless of the sourcing? Perhaps you could help people better understand the different between a private cloud and a public cloud?

Lindsey: Private cloud versus public cloud is part of this whole evolution that we’ve seen. We’ve seen people do their own private utilities versus public utilities such as flexible computing services provide. The idea of a private utility is that, within an organization, they agree to share resources and allow the boundaries to slide back and forth to hit the best utilization out of the fixed set of assets or maybe a growing set of assets.

Nevertheless, they agree to share it to try and approve the utilization. The same idea is in a public utility or a public cloud, except that now a third party is providing those assets and providing that as a service. It increases the concerns and considerations that you have to bring to the party. You have to think about problems that you didn’t have to think about when you had a private utility.

When you go to a public space, security is paramount. What do I do with my proprietary information and service levels? How certain can I get what I need when I need it. The promise with the cloud is great, but the uncertainty has caused people to come up short and decide maybe it’s better if I do it myself, versus utilizing an outside service.

Gardner: Now, I think it’s fair to say that, at this point, this is all still quite new and experimental -- with developers, small companies, and some departments -- using such resources as Amazon Web Services. Clearly this is still in the very early innings, but some of the analyst firms are predicting as much as 5 percent of IT might be devoted to this in several years. While that’s a fairly large number in total, it’s still quite small in regard to the whole pie.

Let’s go to Scott McClellan. Are there really serious positive business outcomes that should entice organizations to start looking at cloud computing now?

McClellan: I definitely think there are. Basically I see the conversation happening between business and IT in two different ways, and one of them was already touched on earlier, when you were talking to Rebecca.

That has to do with the cost factor. That’s your business asking your IT department to reduce cost; CEOs put pressure on CIOs to deliver more with less.

So there are aspects of automation and virtualization that allow you to get to a more utilitized approach to delivering the services within your IT department -- to allow you to increase flexibility, reduce cost, drive up utilization, and things like that to address the cost issue. So there are real business drivers behind that, and that’s especially heightened in today’s economic climate.

In the longer term, the more overarching impact of cloud comes when your IT department can deliver value back to the business, rather than just taking cost out. Some examples of that are using aspects of social networking and other aspects of cloud computing, and the fact that cloud is delivered over ubiquitous media, the Internet, to increase share of wallet, increase market share, maybe bring higher margin to a business, and build ecosystems, and drive user communities for a business. That’s where cloud brings value to a business and that’s obviously important.

Gardner: So we have, at one level, an opportunity to take advantage of these technologies for pure efficiency’s sake for our internal IT operations. There is also this additional opportunity to use the clouds as a gateway to new or existing customers and be able to service them perhaps better through this ubiquitous medium of the Internet and perhaps at lower cost. Is that right?

McClellan: Yeah, it’s absolutely true. The former, the taking cost out is the first way. The first wave of innovation from cloud computing is coming from making services consumable on a different model, on more of a utilitized model, and that drives up utilization, etc. To unlock some of the value requires innovating at the application tier, in many cases, but absolutely you can bring both benefits to a business.

Lawson: I’ll give a concrete example of this cost. Let’s choose an example, first of a service your business needs to have -- a credit check service. Obviously, when you are selling a product, you want to make sure that your customer has credit, which, of course, is all the rage today.

You could think of a credit-check service as having a very specific business outcome. It may be that your company has an internally developed service that maybe you built, and it’s tied into your SAP, Ariba, or what have you.

Or, it may be that your credit-check service is hosted by an external service provider, but still designed in a traditional architectural manner. Or, it may be that there are credit-check services available through the cloud, designed in a different application architectural style that suits your purpose.

Either way, what IT is going to need to do is really think through its service centric way of behaving and a way of operating IT -- so that what’s appropriate for that company can be arbitrated by IT, knowing that they have to take into consideration security, speed, and accuracy. So for some companies, doing a credit check through a cloud service might be perfectly fine. For other companies, it may be way too risky for them for whatever reason.

We need to think in terms of which services provide what level of value, based on the complexion of that particular company -- and it’s never going to be the same for all companies. Some companies can use Google Gmail as an email service. Other companies wouldn’t touch it with a 10-foot pole, maybe for reasons of security, data integrity, access rights, regulations, or what have you. So weighing the value is going to become the critical thing for IT.

Gardner: It appears that the ability to take advantage of cloud computing comes from an increased services orientation, and understanding the technologies and how to take advantage of them and exploit them -- but that the larger business decisions really are around which services should or shouldn’t be sourced in a certain way, and what level of comfort and risk aversion are acceptable.

This is probably going to be something that needs to be judged and managed company-by-company, even department-by-department.

How do companies start to get a handle around that decision process which seems critical -- not just how to take advantage of the technology but in which fashion should these services be acquired and managed?

Let’s go to Norm. How do people start managing, at a local individual level, the decision process around which services might become cloud services?

Lindsey: Start by looking at the business problem that you are trying to solve, and IT has to start looking at the requirements and dealing with it as a requirements issue, as opposed to a technical issue. They need to make sure that the requirements are clear and all stakeholders understand what you are doing.

Then you can start to look around at your internal capabilities, versus external, and make some decisions as to how you want to solve that problem, whether buying an external service or creating a service internally and delivering it to your customers with your own internal utility.

Gardner: Rebecca, this raises the question, then, of … Who owns this decision-making process around cloud, utilization, and/or resource? This seems to be an abstraction above IT, but you certainly need to know what IT processes are involved here.

I know we are early in this, but is there any sense of how who owns the decision-making process around cloud is going to shake out?

Lawson: That’s a really great question, because a lot of people in the lines of business or business functions can go out to the Internet and make a decision. “Hey! We’re going to use Salesforce.com,” or what have you. Those decisions made without IT could have some really deep ripple effects that a line-of-business person might not realize.

People in the lines of business don’t think about data architecture and integrity, they don’t think about firewalls, they don’t think about disaster recovery, and they shouldn’t. That’s not their job.

So this will force IT to come closer to the people in the business and really understand what is the business objective, and then find the right service that maps to the value of that objective. Again, we can’t emphasize it enough. This should really change behavioral dynamics in IT and how they think about what their job is.

Lindsey: That’s a key point -- the IT guys become an enabler, as opposed to a gatekeeper. They know what the compliance issues are; they know what the regulatory rules are on their company to meet Sarbanes-Oxley, or whatever world they live in.

The line of business has the business problem and they need to focus on what their problem is and let IT answer the question in terms of, “These are some possible solutions. This is what they cost. Now tell me which one you do.” But these will all have to meet the myriad list of requirements that we have to live within.

Gardner: It appears to me that there are a couple of different levels of risk here. One risk would be that people start jumping into cloud and external-service consumption piecemeal, without it being governed or managed centrally, or with some level of oversight in a holistic sense.

The other risk might be that you are so clamped down, and you are so centralized and tightly managed, that no one takes advantage of efficiencies that become available through the cloud. You then have unfortunate costs and an inability to adapt quickly.

Let’s go to Scott McClellan. How are companies expected to manage these types of risks, that is to say, over-consumption or under-consumption of cloud services? How can companies become more rational in how they approach these issues?

McClellan: In the process of getting to a service-centric IT governance model, they’re going to have to deal with the governance model for deploying new services. Again, I think risk is partly a function of benefit. So when there is a marginal benefit or when the stakes are very high, you would want to be very conservative in terms of your risk profile.

Basically, within the spectrum of things that are cloud computing, you have everything from infrastructure as a service … all the way up through virtualized infrastructure, a platform on top of that, an application on top of that, or perhaps a completely re-architected true cloud-computing offering.

As you move up that spectrum, I think the benefits increase, but in not all cases are the application domains available in all of those environments.

There are several choice points here. What services are available through some cloud model, what model of availability, what are the characteristics of that model, what are the requirements for that particular service – and what are the security performance, continuity integration, and compliance requirements? Those all have to be taken in holistically and through a governance model to make the decision whether we are going to move from the traditional deployment model to a cloud-delivery model, and if so, which one.

Gardner: To me, this governance issue sounds an awful lot like what we’ve heard around SOA, and what you need to put in place to take advantage of that approach.

Rebecca, are we talking really about the same set of issues that, if you put in a good SOA infrastructure, management, governance, and capability set -- and if you organize your culture and your people to think about services – that that puts you in a good position to manage cloud? You can find were it’s appropriate, and then be able to find that balance between these risks?

Lawson: That’s a good observation, and there is a parallel between the notions of SOA, the loose coupling of services, and what we’re talking about here. The hard part is that services come in many different flavors and architectural styles. So in reality you might be managing a service that runs on a very old architectural style, but it really delivers value. You really want to maintain it, and it’s worth it. You might also want to adopt a Web-oriented architectural approach, vis-à-vis using some cloud services in another part of the organization.

The parallel is there. People who’ve grown up through a SOA kind of model naturally gravitate to this. The service provider and consumer relationship is a big change with cloud because, all of a sudden, providers look different than they used to.

Companies that you didn’t think of as service providers are now a service provider. You never used to think of Amazon as a company you might go to to get compute from. You used to buy books there.

So what happened? All of a sudden, lots of people can become providers in startling ways, which is great. It’s a whole new burst of creativity and possibility in the area of technology-enabled services. Obviously, we have to tread carefully, because businesses have to grow, and you’ve got to choose wisely.

Gardner: I wonder if there are other precursors to organizations being better able to take advantage of cloud computing, but at low risk. I suppose one would be IT service management, treating IT as a bureau or service provider, the charge back type of system.

Any input, Norm, on some of these other precursors that organizations might think about as they start to wonder how they can best take advantage of cloud?

Lindsey: Actually, one of them is one you haven’t brought up, which is a lot of times they are out of space and out of time. They have some idea or they have some new business. They want to load it and they are out of room in their data center.

Or it’s something that just comes up really quickly, and they need to act quickly. The flexibility and the nimbleness of the cloud enable them to respond. So, as far as the drivers inside the business, that’s one of the big ones. The other one is just running out of power and space inside of their existing facility.

Gardner: I suppose that gives them the opportunity to ramp up, but without a whole lot of upfront capital expense. They can pay for this on a per-use basis, right?

Lindsey: Precisely. You rent instead of buying. The other obvious benefit is that you have minimized your risk and you can turn it off, if things don’t go the way you want them to.

Gardner: Let’s look at some of the things that cloud computing can’t do so well. Obviously, as they say, we are in the early innings here. Let’s go to Scott McClellan on this. Not all applications can be delivered by a cloud. There are design and data issues and application programming interface (API) issues. We’re not ready for database joins and two-phase commits, and needs around transactional integrity where you need to have correction of transactions, and so forth.

Maybe you can help our listeners understand, at least for the foreseeable future, what types of applications and services might be appropriate for cloud -- and which ones would not be?

McClellan: It’s partly a matter of how modern is the application architecture that enables the service. So, it is a bit of a continuum. To some extent, the question isn’t, “Can it be delivered as a service model?” but “Can it be delivered in as a service model at the necessary scale on a cost curve that allows the service to be delivered at an attractive price?”

So it’s not a simple black and white. Is it possible to do this particular service in the cloud? You might be able to take a legacy architected application, delivered it in, say, software-as-a-service (SaaS) model, assuming it’s basic underlying architecture is relatively modern, and it can be Web-enabled and it has appropriate user interfaces and so forth to be Web-enabled.

The immaturity of some of the data services and the truly scalable cloud computing infrastructure -- examples are things like Google’s BigTable or Hadoop data-services level -- do provide some relational data semantics, but they are nowhere near as rich as the full database semantics provided by the mature database management subsystems. As you mentioned there is no way to do a join.

Gardner: It seems an important hurdle to overcome in taking advantage of cloud would be the proper mixing, if you will, of data. There needs to be some kind of a sharing, where not the entire database, but perhaps a level of meta data might be shared between different organizations, private and public.

Do you have any thoughts, Rebecca, on how HP views that sharing, that data issue? Again, that’s something for an IT department, or may be even a marketing department, to tackle.

Lawson: Obviously, there will be data that you just don’t want to share with anyone, but there is a good use-case out in the cloud for a provider to offer up a ton of data that might be valuable to a whole bunch of different consumers. Let’s say it’s demographic data, and they may want to make a marketer’s ability to access that data through a number of services very agile and very scalable. That would be an example of a potential place where somebody could write some cloud-based services or applications and offer them through the cloud.

Intelligence in data varies widely, so it’s hard to generalize. On the other extreme, inside the firewall, you might have some extremely rigorous requirements for what data goes into your enterprise data warehouse, who gets to access it, how the tables are set up, or what the security provisions are. That would be another extreme where you have no interest whatsoever in sharing that with anyone, and it’s considered core to the company.

So that’s a great example of where you have to really consider the value of the service and the output. What’s the business outcome and how should we think about where we let our data live, how we access our data, how we mash it up with other information sources. Again, the bad news is there is no simple answer; the good news is there are lots of opportunities to get very clear in what you want as a result of that data, and lots of places to get it.

Gardner: All right, let's give the last word to Scott. Clearly, the technologies are there for a scalable and agile infrastructure. The economics are apparently quite compelling.

This comes back down then to the organization behavioral risk management issue. My last question to you is, in a period of economic downturn where economics and cost issues are paramount, is cloud computing something that will be accelerated by the tough economic times, or will people back off from something like what cloud offers until they have a better picture in terms of growth?

McClellan: My personal prediction would be that the tougher economic conditions would heighten the acceleration of cloud computing, and not just because of the opportunity to save cost. Reinforcing what we brought up earlier, there are some clear opportunities to bring value to your business.

Examples of that are things like being able to drive user communities, users and consumers of whatever it is your business produces, using techniques of social networking, and things like that.

There is the question of how to use the advantages you get from cloud computing to drive differentiation for your business versus your competitors, because they’re hesitating, or not using it, because they’re being risk-averse. In addition, that compliments the benefits you get from cost savings.

The other characteristic that the tough economic conditions could have on adoption of cloud computing is that it might cause customers to shy away from particularly painful places, where the risk is super-high, but it will kind of lower the barrier or the threshold that you have to clear for the opportunities that are less extremely risky, if that makes sense.

Gardner: I think you are talking about the high upfront capital outlays to start something. If you build it, you hope they will come, that kind of thing?

McClellan: That's on the service-provider side. There could be some risk aversion on service providers building out giant infrastructures, with just the hope that someone will come and consume them. I agree with your point there.

What I really meant is that, if you are an IT shop and you are trying to decide what to move to a cloud paradigm or a cloud model, you’re likely to really focus on the places where either you can get that big win -- because moving this particular service to a cloud paradigm is going to bring you some positive differentiation, some value to your company.

Or, you are going to get that big cost savings from the places where it's the most mission-critical -- the place where you have the least tolerance for downtime, and you have the greatest continuity requirements, or where the performance SLA has been most stringent. The thinking may be, “Well, we’ll tackle that later. We’re not going to take a risk on something like that right now.”

In the places where the risk is not as great -- and the reward either in terms of cost or value looks good -- the current economic conditions are just going to accelerate the adoption of cloud computing in enterprises for those areas. And they definitely do exist.

Gardner: It gives companies a series of additional choices at a time when that might be exactly what they need.

McClellan: That's right. And in some cases, it's not super-expensive to move to this model, and you'll have a quick payback in terms of return on investment (ROI). If you are bringing value to your company and differentiation, this is a good time to do that. Strike while there is a sense of urgency. It creates a sense of urgency to strike. I guess I would say it that way.

Gardner: We’ve been discussing some of the advantages and potential pitfalls of cloud computing. It seems that the opportunities are there for those who examine it carefully and appropriately, and can balance the risks to get the rewards.

We’ve been chatting today with Rebecca Lawson, the Director of Service Management and Cloud Solutions at HP. Thanks, Rebecca.

Lawson: Thank you.

Gardner: Also, Scott McClellan, Vice President and Chief Technologist of Scalable Computing and Infrastructure at HP's Technology Solutions Group. Thanks so much, Scott.

McClellan: Thank you very much. I appreciate the opportunity.

Gardner: And also, Norman Lindsey, Chief Architect for Flexible Computing Services at EDS.

This is Dana Gardner, principal analyst at Interarbor Solutions. You have been listening to a sponsored BriefingsDirect podcast. Thanks, and come back next time.

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Transcript of a BriefingsDirect podcast on cloud adoption best practices with HP and EDS executives. Copyright Interarbor Solutions, LLC, 2005-2008. All rights reserved.