BriefingsDirect Analysts List Top 5 Ways to Cut Enterprise IT Costs Without Impacting Performance in Economic Downturn

Edited transcript of BriefingsDirect Analyst Insights Edition podcast, Vol. 38 on how businesses should react to the current economic realities and prepare themselves to emerge stronger.

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Dana Gardner: Hello, and welcome to the latest BriefingsDirect Analyst Insights Edition, Volume 38. I'm your host and moderator, Dana Gardner, principal analyst at Interarbor Solutions.

This periodic discussion and dissection of IT infrastructure related news and events, with a panel of industry analysts and guests, comes to you with the help of our charter sponsor, Active Endpoints, maker of the ActiveVOS, visual orchestration system. We also come to you through the support of TIBCO Software.

Out topic this week of March 9, 2009 centers on the economics of IT. It's clear that the financial crisis has spawned a yawning global recession on a scale and at a velocity unlike anything seen since the 1930s. Yet, our businesses and our economy function much differently than they did in the 1930s. The large and intrinsic role of information technology (IT) is but one of the major differences. In fact, we haven't had a downturn like this since the advent of widespread IT.

So, how does IT adapt and adjust to the downturn? This is all virgin territory. Is IT to play a defensive role in helping to slash costs and reduce its own financial burden on the enterprise, as well as to play a role in propelling productivity forward despite these wrenching contractions?

Or, does IT help most on the offensive, in transforming businesses, or playing a larger role in support of business goals, with the larger IT budget and responsibility to go along with that? Does IT lead the way on how companies remake themselves and reinvent themselves during and after such an economic tumult?

We're asking our panel today to list the top five ways that IT can help reduce costs, while retaining full business -- or perhaps even additional business functionality. These are the top five best ways that IT can help play economic defense.

After we talk about defense, we're going to talk about offense. How does IT play the agent of change in how businesses operate and how they provide high value with high productivity to their entirely new customer base?

Join me in welcoming our analyst guests this week. Joe McKendrick, independent IT analyst and prolific blogger on service-oriented architecture (SOA), business intelligence (BI), and other major IT topics. Welcome back, Joe.

Joe McKendrick: Thanks, Dana. Glad to be here.

Gardner: We're also joined by Brad Shimmin, principal analyst at Current Analysis.

Brad Shimmin: Hello, Dana.

Gardner: Also, JP Morgenthal, independent analyst and IT consultant. Hi, JP.

JP Morgenthal: Hi. Thanks.

Gardner: We're also joined by Dave Kelly, founder and president of Upside Research, who joins us for the first time. Welcome, Dave.

Dave Kelly: Hey, Dana. Thanks for having me. It's great to be here.

Gardner: Let's go first to Joe McKendrick at the top of the list. Joe, let's hear your five ways that IT can help cut costs in enterprises during our tough times.

Previous downturns

McKendrick: First of all, I just want to comment. You said this is virgin territory for IT in terms of managing through downturns. We've seen in our economy some fairly significant downturns in the past -- the1981-82 period, 1990-91 period, and notably 2001-2002. Those were all major turning points for IT, and we can get into that later. I'll give you my five recommendations, and they're all things that have been buzzing around the industry.

First, SOA is a solution, and I think SOA is alive and well and thriving. SOA promotes reuse and developer productivity. SOA also provides a way to avoid major upgrades or the requirement for major initiatives in enterprise systems such as enterprise resource planning (ERP).

Second, virtualize all you can. Virtualization offers a method of consolidation. You can take all those large server rooms -- and some companies have thousands of servers -- and consolidate into more centralized systems. Virtualization paves the path to do that.

Third, cloud computing, of course. Cloud offers a way to tap into new sources of IT processing, applications, or IT data and allows you to pay for those new capabilities incrementally rather than making large capital investments.

The fourth is open source -- look to open-source solutions. There are open-source solutions all the way up the IT stack, from the operating system to middleware to applications. Open source provides a way to, if not replace your more commercial proprietary systems, then at least to implement new initiatives and move to new initiatives under the budget radar, so to speak. You don't need to get budget approval to establish or begin new initiatives.

Lastly, look at the Enterprise 2.0 space. Enterprise 2.0 offers an incredible way to collaborate and to tap into the intellectual capital throughout your organization. It offers a way to bring a lot of thinking and a lot of brainpower together to tackle problems.

Gardner: It sounds like you feel that IT has a lot of the tools necessary and a lot of the process change necessary. It's simply a matter of execution at this point.

McKendrick: Absolutely. All the ingredients are there. I've said before in this podcast that I know of startup companies that have invested less than $100 in IT infrastructure, thanks to initiatives such as cloud computing and open source. Other methodologies weigh in there as well.

Gardner: All right. Let's go to bachelor number two, Brad Shimmin. If you're dating IT efficiency, how are you going to get them off the mark?

Provide a wide pasture

Shimmin: Thanks, Dana. It's funny. Everything I have in my little list here really riffs off of all of Joe's excellent underlying fundamentals that was talking about there. I hope what I am going to give you guys are some not-too-obvious uses of the stuff that Joe's been talking about.

My first recommendation is to give your users a really wide pasture. There is an old saying that if you want to mend fewer fences, have a bigger field for your cattle to live in. I really believe that's true for IT.

You can see that in some experiments that have been going on with the whole BYOC -- Bring Your Own Computer -- programs that folks like Citrix and Microsoft have been engaging in. They give users a stipend to pick up their own notebook computer, bring that to work, and use a virtualized instance of their work environment on top of that computer.

That means IT no longer has to manage the device itself. They now just manage virtual image that resides on that machine. So, the idea that we've been seeing with mobile devices making a lot of headway, in terms of users buying and using their own inside IT, we'll see extend to desktops and laptops.

I'd just like to add that IT should forget about transparency and strive for IT participation. The days of the ivory tower with top-down knowledge held within secret golden keys behind locked doors within IT are gone. You have to have some faith in your users to manage their own environments and to take care of their own equipment, something they're more likely to do when it's their own and not the company's.

Gardner: So, a bit more like the bazaar, when it comes to how IT implements and operates?

Shimmin: Absolutely. You can't have this autocracy downward slope anymore to be efficient. That doesn't encourage efficiency.

The second thing I'd suggest is don't build large software anymore. Buy small software. As Joe mentioned, SOA is well entrenched now within both the enterprise and within the IT. Right now, you can buy either a software as a service (SaaS) or on-premise software that is open enough that it can connect with and work with other software packages. No longer do you need to build this entire monolithic application from the ground-up.

A perfect example of that is something like PayPal. This is a service, but there are on-premise renditions of this kind of idea that allow you to basically build up a monolithic application without having to build the whole thing yourself. Using pre-built packages, smaller packages that are point solutions like PayPal, lets you take advantage of their economies of scale, and lets you tread upon the credibility that they've developed, especially something that's good for consumer facing apps.

The third thing I'd suggest -- and this is in addition to that -- build inside but host outside. You shouldn't be afraid to build your own software, but you should be looking to host that software elsewhere.

A game changer

We've all seen both enterprises and enterprise IT vendors -- independent software vendors (ISVs) themselves like IBM, Oracle, and Microsoft, in particular -- leaping toward putting their software platforms on top of third-party cloud providers like Amazon EC2. That is the biggest game changer in everything we've been talking about here to date.

There's a vendor -- I can't say who it is, because they didn't tell I could talk about it -- who is a cloud and on-premise vendor for collaboration software. They have their own data centers and they've been moving toward shutting down the data centers and moving that into Amazon's EC2 environment. They went from these multi-multi thousand dollar bills they are paying every month, to literally a bill that you would get for such a cellphone service from Verizon or AT&T. It was a staggering saving they saw.

Gardner: A couple of hundred bucks a month?

Shimmin: Exactly. It's all because the economies are scaled through that shared environment.

The fourth thing I would want to say is "kill your email." You remember the "Kill your TV" bumper stickers we saw in the '90s. That should apply to email. It's seen its day and it really needs to go away. For every gigabyte you store, I think it's almost $500 per user per year, which is a lot of money.

If you're able to, cut that back by encouraging people to use alternatives to email, such as social networking tools. We're talking about IM, chat, project group-sharing spaces, using tools like Yammer inside the enterprise, SharePoint obviously, Clearspace -- which has just been renamed SBS, for some strange reason -- and Google Apps, That kind of stuff cuts down on email.

I don't know if you guys saw this, but in January, IBM fixed Lotus Notes so they no longer store duplicate emails, They were cutting down on the amount of storage their users required by something like 70 percent, which is staggering.

Gardner: So what was that, eliminating the multiple versions of any email, right?

Shimmin: It was the attachments, yes. If there was a duplicate attachment, they stored one for each note instead of saying, "Hey, it's the same file, let's just store one instance of it in a database." Fixing stuff like that is just great, but it points to how big a problem it is to have everything running around in email.

Gardner: You might as well just be throwing coal up into the sky, right?

Shimmin: Exactly. To add to that, we should really turn off our printers. By employing software like Wikis, blogs, and online collaboration tools from companies like Google and Zoho, we can get away from the notion of having to print everything. As we know, a typical organization kills 143 trees a year -- I think was the number I heard -- which is a staggering amount of waste, and there's a lot of cost to that.

Gardner: Perhaps the new bumper sticker should be "Email killed."

Open, but not severe

Shimmin: Printing and email killed, right. My last suggestion would be, as Joe was saying, to really go open, but we don't have to be severe about it. We don't have to junk Windows to leverage some cost savings. The biggest place you can see savings right now is by getting off of the heavy license burden software. I'm going to pick on Office right now.

Gardner: How many others do you have to pick from?

Shimmin: It's the big, fat cow that needs to be sacrificed. Paying $500-800 a year per user for that stuff is quite a bit, and the hardware cost is staggering as well, especially if you are upgrading everyone to Vista. If you leave everyone on XP and adopt open-source solutions like OpenOffice and StarOffice, that will go a long, long way toward saving money.

Why I'm down on printing is, the time is gone when we had really professional, beautiful-looking documents that required a tremendous amount of formatting and everything needed to be perfect within Microsoft Word, for example. What now counts is the information. It's same for 4,000-odd features in Excel. I'm sure none of us here have ever even explored a tenth of those.

Gardner: Maybe we should combine some of the things you and Joe have said. We should go to users and say, "You can use any word processor you want, but we're not going to give you any money," and see what they come up with.

Shimmin: You're going to find some users who require those 4,000 features and you are going to need to pay for that software, but giving everyone a mallet to crack a walnut is insane.

Gardner: I want to go back quickly to your email thing. Are you saying that we should stop using email for communication or that we should just bring email out to a cloud provider and do away with the on-premises client server email -- or both.

Shimmin: Thanks for saying that. Look at software or services like Microsoft Business Productivity Online Suite (BPOS). You can get Exchange Online now for something like $5 per month per user. That's pretty affordable. So, if you're going to use email, that's the way to go. You're talking about the same, or probably better, uptime than you're getting internally from a company like Microsoft with their 99.9 percent uptime that they're offering. It's not five 9s, but it's probably a lot better than what we have internally.

So, yeah. You should definitely explore that, if you're going to use email. In addition to that, if you can cut down on the importance of email within the organization by adopting software that allows users to move away from it as their central point of communication, that is going to save a lot of money as well.

Gardner: Or, they could just Twitter to each other and then put all the onus on the cost of maintaining all those Twitter servers.

Shimmin: Nobody wants to want to pay for that, though.

Gardner: Let's go to JP Morgenthal. I'm expecting "shock and awe" from you, JP. What's your top five?

Morgenthal: Shock and awe, with regard to my compadres' answers?

Gardner: Oh, yeah. Usually you have a good contrarian streak.

The devastation of open source

Morgenthal: I was biting my tongue, especially on the open source. I just went through an analysis, where the answer was go JBoss on Linux Apache. Even in that, I had given my alternative viewpoint that from a cost perspective, you can't compare that stack to running WebSphere, or WebLogic on Windows. Economically, if you compare the two, it doesn't make sense. I'm still irked by the devastation that open source has created upon the software industry as a whole.

Gardner: Alright. We can't just let that go. What do you mean, quickly?

Morgenthal: Actually, I blogged on this. Here's my analogy. Imagine tomorrow if Habitat for Humanity all of a sudden decided that it's going to build houses for wealthy people and then make money by charging maintenance and upkeep on the house. You have open source. The industry has been sacrificed for the ego and needs of a few against the whole of the industry and what it was creating.

Gardner: Okay. This is worth an entire episode. So, we're going to come back to this issue about open source. Is it good? Is it bad? Does it save money or not? But, for this show, let's stick to the top five ways to save IT, and we'll come back and do a whole show on open source.

Morgenthal: I'd like to, but I've got to give credit. I can't deny the point that as a whole, for businesses, again, those wealthy homeowners who are getting that Habitat for Humanity home, hey, it's a great deal. If somebody wants to dedicate their time to build you a free home, go for it, and then you can hire anybody you like to maintain that home. It's a gift from the gods.

Gardner: What are your top five?

Morgenthal: Vendor management is first. One thing I've been seeing a lot is how badly companies mismanage their vendor relationships. There is a lot of money in there, especially on the IT side -- telecom, software, and hardware. There's a lot of play, especially in an industry like this.

Get control over your vendor relationships. Stop letting these vendors run around, convincing end-users throughout your business that they should move in a particular direction or use a particular product. Force them to go through a set of gatekeepers and manage the access and the information they're bringing into the business. Make sure that it goes through an enterprise architecture group.

Gardner: It's a buyers market. You can negotiate. In fact, you can call them in and just say, "We want to scrap the old license and start new." Right?

Morgenthal: Well, there are legal boundaries to that, but certainly if they expect to have a long-term relationship with you through this downturn, they've got to play some ball.

With regard to outsourcing noncritical functions, I'll give you a great example where we combined an outsourced noncritical function with vendor management in a telco. Many companies have negotiated and managed their own Internet and telco communications facilities and capability. Today, there are so many more options for that.

It's a very complex area to navigate, and you should either hire a consultant who is an expert in the area to help you negotiate this fact, or you should look the scenario where you take as much bandwidth as you use on an average basis, and when you need excess bandwidth, team in the cloud. Go to the cloud for that excess bandwidth.

Gardner: Okay, number three.

Analyze utilization

Morgenthal: Utilization analysis. Many organizations don't have a good grasp on how much of their CPU, network, and bandwidth is utilized. There's a lot of open space in that utilization and it allows for compression. In compressing that utilization, you get back some overhead associated with that. That's a direct cost savings.

Another area that has been a big one for me is data quality. I've been trying to tell corporations for years that this is coming. When things are good, they've been able to push off the poor data quality issue, because they can rectify the situation by throwing bodies at it. But now they can't afford those bodies anymore. So, now they have bad data and they don't have the bodies to fix up the data on the front end.

Here is a really bad rock and hard place. If I were them, I'd get my house in order, invest the money, set it aside, get the data quality up and allow myself to operate more effectively without requiring extra labor on the front end to clean up the data on the back end.

Finally, it's a great time to explore desktop alternatives, because Windows and the desktop has been a de-facto standard, a great way to go -- when things are good. When you're trying to cut another half million, million, or two million out of your budget, all those licenses, all that desktop support, start to add up. They're small nickels and dimes that add up.

By looking at desktop alternatives, you may be able to find some solutions. A significant part of your workforce doesn't need all that capability and power. You can then look for different solutions like light-weight Linux or Ubuntu-type environments that provide just Web browsing and email, and maybe OpenOffice for some light-weight word processing. For a portion of your user base, it's all they need.

Gardner: Okay. Was that four or five?

Morgenthal: That's five -- vendor management, outsourcing, utilization analysis, data quality, and desktop alternatives.

Gardner: Excellent. Okay. Now, going to you, Dave Kelly, what's your top five?

Optimize, optimize, optimize

Kelly: Thanks, Dana, and it's great to come at the end. I don't always agree with JP, but I liked a lot of the points that he just made and they complement some of the ones that I am going to make, as well as the comments that Brad and Joe made.

My first point would be, optimize, optimize, optimize. There's no doubt that all the organizations, both on the business side and the IT side, are going to be doing more with less. I think we're going to be doing more with less than we have ever seen before, but that makes it a great opportunity to step back and look at specific systems and business processes.

You can start at the high level and go through business process management (BPM) type optimization and look at the business processes, but you can also just step it down a level. This addresses what some of the other analysts have said here. If you look at things like data-center optimization, there are tremendous opportunities for organizations to go into their existing data centers and IT processes to save money and defer capital investment.

You're talking about things like increasing the utilization of your storage systems. Many organizations run anywhere from 40 to 50 percent of storage utilization. If you can increase that and push off new investments in additional storage, you've got savings right there. The growth rate in storage over the past three to five years has been tremendous. This is a great opportunity for organizations to save money.

It also references what Brad said. You've got the same opportunity on the email side. If you look at your infrastructure on the data-center side or the storage side, you've got all this redundant data out there.

You can use applications. There are products from Symantec and other vendors that allow you to de-duplicate email systems and existing data. There are ways to reduce your backup footprint, so that you have fewer backup tapes required. Your processes will run quicker, with less maintenance and management. You can do single-instance archiving and data compression.

Gardner: Dave, it sounds like you're looking at some process re-engineering in the way that IT operates.

Kelly: You can certainly do that, but you don't even have to get to that process re-engineering aspect. You can just look at the existing processes and say, "How can I do individual components more efficiently." I guess it is process reengineering, but I think a lot of people associate process reengineering with a large front-to-back analysis of the process. You can just look at specific automated tasks and see how you can do more with less in those tasks.

There are a lot of opportunities there in terms of like data center optimization as well as other processes.

The next point is that while it's important to increase your IT efficiency, while reducing cost, don't forget about the people. Think about people power here. The most effective way to have an efficient IT organization is to have effective people in that IT organization.

Empower your people

There's a lot of stress going on in most companies these days. There are a lot of question about where organizations and businesses are going. As an IT manager, one thing you need to do is make sure that your people are empowered to feel good about where they're at. They need to not hunker down and go into this siege mentality during these difficult times, even if the budgets are getting cut and there's less opportunity for new systems or new technology challenges. They need to redirect that stress to discover how the IT organization can benefit the business and deal with these bad times.

You want to help motivate them through the crisis and work on a roadmap for better days, and map out, "Okay, after we get through this crisis, where are we going to be going from here?" There's an important opportunity in not forgetting about the people and trying to motivate them and provide a positive direction to use their energy and resources in.

Gardner: They don't want to get laid off these days, do they?

Kelly: No, they don't. Robert Half Technology recently surveyed 1,400 CIOs. It's pretty good news. About 80 percent of the CIOs expect to maintain current staffing levels through the first half of this year. That's not a very long lead-time at this point, but it's something. About 8 or 9 percent expected to actually hire. So everyone is cutting budgets, reducing capital expenditures, traveling less, trying to squeeze the money out of the budget, but maybe things will stay status quo for a while.

The third point echoes a little bit of what JP said on the vendor management side, as well as on using commercial software. Organizations use what they have or what they can get. Maybe it's a good time to step back and reevaluate the vendors. That speaks to JP's vendor management idea, and the infrastructure they have.

So, you may have investments in Oracle, IBM, or other platforms, and there may be opportunities to use free products that are bundled as part of those platforms, but that you may not be using.

For example, Oracle bundles Application Express, which is a rapid application development tool, as part of the database. I know organizations are using that to develop new applications. Instead of hiring consultants or staffing up, they're using existing people to use this free rapid application development tool to develop departmental applications or enterprise applications with this free platform that's provided as part of their infrastructure.

Of course, open source fits in here as well. I have a little question about the ability to absorb open source. Perhaps at the OpenOffice level, I think that's a great idea. At the infrastructure level and at the desktop level that can be a little bit more difficult.

The fourth point, and we've heard this before, is go green. Now is a great time to look at sustainability programs and try to analyze them in the context of your IT organization. Going green not only helps the environment, but it has a big impact, as you're looking at power usage in your data center with cooling and air conditioning cost. You can save money right there in the IT budget and other budgets going to virtualization and consolidating servers. Cutting any of those costs can also prevent future investment capital expenditures.

Again, as JP said about utilization, this is a great opportunity to look at how you're utilizing the different resources and how you can potentially cut your server cost.

Go to lunch

Last but not least, go to lunch. It's good to escape stressful environments, and it may be a good opportunity for IT to take the business stakeholders out to lunch, take a step back, and reevaluate priority. So, clear the decks and realign priorities to the new economic landscape. Given changes in the business and in the way that services and products are selling, this may be a time to reevaluate the priorities of IT projects, look at those projects, and determine which ones are most critical.

You may be able to reprioritize projects, slow some down, delay deployments, or reduce service levels. The end effect here is allowing you to focus on the most business critical operations and applications and services. That gives a business the most opportunity to pull out of this economic dive, as well as a chance to slow down and push off projects that may have had longer-term benefits.

For example, you may be able to reduce service levels or reduce the amount of time the help desk has to respond to a request. Take it from two hours to four hours and give them more time. You can potentially reduce your staffing levels, while still serving the business in a reasonable way. Or, lengthen the time that IT has after a disaster to get systems back up and operating. Of course, you've got to check that with business leaders and see if it's all right with them. So, those are my top five.

Gardner: Excellent, thank you. I agree that we're in a unique opportunity, because, for a number of companies, their load in the IT department is down, perhaps for the first time. We've been on a hockey-stick curve in many regards in the growth of data and the number of users, seats, and applications supported.

Companies aren't merging or acquiring right now. They're in kind of stasis. So, if your load is down in terms of headcount, data load, newer applications, now is an excellent time to make substantial strategic shifts in IT practices, as we've been describing, before that demand curve picks up again on the other side, which its bound to do. We just don't know when.

As the last panelist to go, of course, I am going to have some redundancy on what's been said before, but my first point is, now is the time for harsh triage. It is time to go in and kill the waste by selectively dumping the old that doesn't work. It's easiest to do triage now, when you've got a great economic rationale to do it. People will actually listen to you, and not have too much ability to whine, cry and get their way.

IT really needs to find where it's carrying its weight. It needs to identify the apps that aren't in vigorous use or aren't adding value, and either kill them outright or modernize them. Extract the logic and use it in a process, but not at the cost of supporting the entire stack or a Unix server below it.

IT needs to identify the energy hogs and the maintenance black holes inside their infrastructure and all the inventory that they are supporting. That means ripping out the outdated hardware. Outdated hardware robs from the future in order to pay for a diminishing return in the past. So, it's a double whammy in terms of being nonproductive and expensive.

You don't really need to spend big money to conduct these purges. It's really looking for the low-lying fruit and the obvious wasteful expenditures and practices. As others have said today, look for the obvious things that you're doing and never really gave much thought to. They are costing you money that you need to do the new things in order to grow. It's really applying a harsh cost-benefit analysis to what you are doing.

It would also make sense to reduce the number of development environments. If you're supporting 14 different tools and 5 major frameworks, it's really time to look at something like Eclipse, Microsoft, or OSGi and say, "Hey, we're going to really work toward more standardization around a handful of major development environments. We're going to look for more scripting and doing down and dirty web development when we can." That just makes more sense.

It's going to be harder to justify paying for small tribes of very highly qualified and important, but nonetheless not fully utilized, developers.

Look outside

It's also time to replace costly IT with outside services and alternatives that we have discussed. That would include, as Brad said, your email, your calendar, word processing, and some baseline productivity applications and consider where you can do them cheaper.

I do like the idea of saying to people, "You still need to do email and you need still to do word processing, but we no longer are going to support it. Go find an alternative and see how that works." It might be an interesting experiment at least for a small department level at first.

That means an emphasis on self-help, and in many aspects of IT it is possible. Empower the users. They want that power. They want to make choices. We don't need to just walk them down a blind path, tell them how to do mundane IT chores, and then pay an awful lot of money to have them doing it that way. Let's open up, as Brad said, the bazaar and stop being so much of a cathedral.

I suppose that means more use of SaaS and on-demand applications. They make particular sense in customer relationship management (CRM), sales force, and in human resources procurement and payroll. It's really looking to outsource baseline functionality that's not differentiating your organization. It's the same for everybody. Find the outsourcers that have done it well and efficiently and get it outside of your own company. Kill it, if you are doing it internally.

It's really like acting as a startup. You want to have low capital expenditures. You want to have low recurring costs. You want to be flexible. You want to empower your users. A lot of organizations need to think more like a startup, even if they are an older, established multinational corporation.

My second point is to create a parallel IT function that leverages cloud attributes. This focuses again on what Joe mentioned, on the value of virtualization and focusing on the process and workflows -- not getting caught up in how you do it, but what it ends up doing for you.

The constituent parts aren't as important as the end result. That means looking to standardize hardware, even if it's on-premises, and using grid, cloud, and modernized and consolidated data center utility best practices. Again, it's leveraging a lot of virtualization on standard low-cost hardware, and then focusing the value at a higher abstraction, at the process level.

It's standardizing more use of appliances and looking at open-source software. I also have to be a little bit of a contrarian to JP. I do think there's a role for open source in these operations, but we are going to save that for another day. That's a good topic.

This is another way of saying doing SOA, doing it on-premises, using cloud and compute fabric alternatives, and trying to look outside for where other people have created cloud environments that are also very efficient for those baseline functions that don't differentiate. That creates a parallel function in IT, but also looks outside.

I agree wholeheartedly with what's been said earlier about the client. It's time to cheapen, simplify, and mobilize the client tier. That means you can use mobile devices, netbooks, and smart phones to do more activities, to connect to back-end data and application sets and Web applications.

Focus on the server

It's time to stop spending money on the client. Spend it more on the server and get a higher return on that investment. That includes the use of virtual desktop infrastructure (VDI) and desktop-as-a-service (DaaS) types of activities. It means exploring Linux as an operating environment on the desktop, where that makes sense, and look at what the end users are doing with these clients.

If they're at a help desk and they're all using three or four applications in a browser, they don't need to have the equivalent of a supercomputer that's got the latest and greatest of everything. It's time to leverage browser-only workers. Find workers that can exist using only browsers and give them either low-cost hardware that's maybe three or four years old and can support a browser well or deliver that browser as an application through VDI. That's very possible as well.

It means centralizing more IT support, security, and governance at the data center. It even means reducing the number of data centers, because given the way networks are operating, we can do this across a wide area network (WAN). We can use acceleration, remote branch technologies, and virtual private networks (VPNs). We can deliver these applications to workers across continents and even across the globe, because we're not dealing with a B2C, we are dealing with a B2E -- that is, to your employees.

You can support the scale with fewer data centers and lower cost clients. It's a way to save a lot of money. Again, you're going to act like a modern startup. You're going to build the company based on what your needs are, not on what IT was 15 years ago.

My fourth point is that BI everywhere. Mine the value of the data that you've got already and the data that you are going to create. Put in the means to be able to assess where your IT spend makes sense. This is BI internal to IT, so BI for IT, but also IT enabling BI across more aspects of the business at large.

Know what the world is doing around you and what your supply chain is up to. It's time to join more types of data into your BI activities, not just your internal data. You might be able to actually rent data from a supplier, a partner or a third-party, bring that third-party data in, do a join, do your analysis, and then walk away. Then, maybe do it again in six months.

It's time to think about BI as leveraging IT to gain the analysis and insights, but looking in all directions -- internal, external, and within IT, but also across extended enterprise processes.

It's also good to start considering tapping social networks for their data, user graph data, and metadata, and using that as well for analysis. There are more and more people putting more and more information about themselves, their activities, and their preferences into these social networks.

That's a business asset, as far as I'm concerned. Your business should start leveraging the BI that's available at some of these social networks and join that with how you are looking at data from your internal business activities.

Take IT to the board level

Last, but not least, it's time for IT to be elevated to the board level. It means that the IT executive should be at the highest level of the business in terms of decision and strategy. The best way for IT to help companies is to know what those companies are facing strategically as soon as they're facing it, and to bring IT-based solutions knowledge to the rest of the board. IT can be used much more strategically at that level.

IT should be used for transformation and problem solving at the innovation and business-strategy level, not as an afterthought, not as a means to an end, but actually as part of what ends should be accomplished, and then focusing on the means.

That is, again, acting like a startup. If you talk to any startup company, they see IT as an important aspect of how they are going to create value, go to market cheaply, and behave as an agile entity.

That's the end of my five. Let's take the discussion for our last 10 minutes to how IT can work on the offense. I'll go first on this one. I think it's time to go green field. It's time to look at software as a differentiator.

The reason I bring this up is Marc Andreessen, who is starting a venture capital fund with Ben Horowitz. They were both at Opsware together and then at HP, after they sold. Andreesen told Charlie Rose recently that there is a tragic opportunity from our current economic environment. A number of companies are going to go under or they're going to be severely challenged. Let's take a bank, for example.

A bank is going to perhaps be in a situation where its assets are outstripped by its liabilities and there is no way out. But, using software, startups, and third-party services, as Andreessen said, you can start an Internet bank. It's not that difficult.

You want to be able to collect money, lend it out with low risk at a sufficient return, and, at the end of the day, have a balance sheet that stands on its own two feet. Creating an Internet bank, using software and using services combined from someone like PayPal and others makes a tremendous amount of sense, but that's just an example.

There are many other industries, where, if the old way of doing it is defunct, then it's time to come in and create an alternative. Internet software-based organizations can go out and find new business where the old companies have gone under. It doesn't necessarily mean it's all the software, but the business value is in how you coordinate buyers and sellers and efficiencies using software.

Take something like Zipcar. They're not in the automotive business, but they certainly allow people to gain the use of automobiles at a low price point.

I'd like to throw out to the crowd this idea of going software, going green field, creating Internet alternatives to traditional older companies. Who has any thoughts about that?

Morgenthal: On the surface there are some really good concepts there. What we need are state and federal governances and laws to catch up to these opportunities. A lot of people are unaware of the potential downside risks to letting the data out of your hands into a third-party candidate's hands. It's questionable whether it's protected under the Fourth Amendment, once you do that.

There are still some security risks that have yet to be addressed appropriately. So, we see some potential there for the future. I don't know what the future would look like. I just think that there is some definite required maturity that needs to occur.

Gardner: So, it's okay to act like a startup, but you still need to act like a grownup.

Morgenthal: Right.

Gardner: Any other thoughts on this notion of opportunity from tragedy in the business, and that IT is an important aspect of doing that?

Evolving enterprises

McKendrick: I agree with what you're saying entirely. You mentioned on a couple of occasions that large enterprises need to act like small businesses. About 20 years ago, the writer John Naisbitt was dead-on with the prediction that large enterprises are evolving into what he called confederations of entrepreneurs. Large companies need to think more entrepreneurially.

A part of that thinking will be not the splitting up, but the breaking down of large enterprises into more entrepreneurial units. IT will facilitate that with the Enterprise 2.0 and Web 2.0 paradigm, where end users can kind of shape their own destiny. You can build a business in the cloud. There is a need for architecture; and I preach that a lot, but smaller departments of large corporations can kind of set their own IT direction as well with the availability.

Gardner: We're almost out of time. Any other thoughts about how IT is on the offensive, rather than just the defensive in terms of helping companies weather the downturn?

Shimmin: I agree with what you guys have been saying about how companies can behave like startups. I'd like to turn it around a little bit and suggest that a small company can behave like a large company. If you have a data center investment already established, you shouldn't be bulldozing it tomorrow to save money. Perhaps there's money in "them thar hills" that can be had.

Look at the technologies we have today, the cloud-enablement companies that are springing up left and right, and the ability to federate information and to loosely coupled access methods to transact between applications. There's no reason that the whole idea that we saw with the SETI@home and the protein folding ideas can't be leveraged within the company's firewalls and data centers externalize. Maybe it's storage, maybe it's services, maybe it's an application or service that the company has created, that can be leveraged to make money. It's like the idea of a house putting a windmill in and then selling electricity back to the power grid.

Gardner: Last thoughts?

Kelly: I would add one or two quick points here. Going on the offense, one opportunity is to take advantage of the slowdown and look at those business processes that you haven't gotten to in a long time, because things have been so hectic over the past couple of years. It may be a great time to reengineer those using some of the new technologies that are out there, going to the cloud, doing some of the things we've already talked about.

The other option here is that it may be a good time to accelerate new technology adoption. Move to YouTube for video-based training, or use Amazon's Kindle for distributing repair manuals electronically. Look at what the options are out there that might allow you to remake some of these processes using new technologies and allow you to profit and perhaps even grow the business during these tough economic times.

Gardner: So economic pain becomes the mother of all invention.

Kelly: Exactly.

McKendrick: We've seen it happen before. Back in 1981-1982 was when we saw the PC revolution. The economy was in just as bad a shape, if not worse, than it is now. Unemployment was running close to 10 percent. The PC revolution just took off and boomed during that time. A whole new paradigm had evolved.

Gardner: Very good. Well, I would like to thank our panelists this week. We've been joined by Joe McKendrick, independent IT analyst and prolific blogger. Also, Brad Shimmin, principal analyst at Current Analysis; JP Morgenthal, independent analyst and IT consultant; and Dave Kelly, founder and president of Upside Research. Thanks to all. I think we've come up with a lot of very important and quite valuable insights and suggestions.

I'd also like to thank our charter sponsor for the BriefingsDirect Analyst Insights Edition podcast series, Active Endpoints, maker of the ActiveVOS visual orchestration system, as well as the support of TIBCO Software.

This is Dana Gardner, principal analyst at Interarbor Solutions. Thanks for listening, and come back next time.

Listen to the podcast. Download the podcast. Find it on iTunes/iPod and Podcast.com. Charter Sponsor: Active Endpoints. Also sponsored by TIBCO Software.

Special offer: Download a free, supported 30-day trial of Active Endpoint's ActiveVOS at www.activevos.com/insight.

Edited transcript of BriefingsDirect Analyst Insights Edition podcast, Vol. 38 on how businesses should react to the current economic realities and prepare themselves to emerge stronger. Copyright Interarbor Solutions, LLC, 2005-2009. All rights reserved.

BriefingsDirect Analysts Discuss Service Oriented Communications, Debate How Dead SOA Really Is

Edited transcript of BriefingsDirect Analyst Insights Edition podcast, Vol. 36, on communications as a service and the future of SOA in light of hard economic times.

Listen to the podcast. Download the podcast. Find it on iTunes/iPod. Learn more. Charter Sponsor: Active Endpoints. Additional underwriting by TIBCO Software.

Special offer: Download a free, supported 30-day trial of Active Endpoint's ActiveVOS at www.activevos.com/insight.

Dana Gardner: Hello, and welcome to the latest BriefingsDirect Analyst Insights Edition, Volume 36. This periodic discussion and dissection of IT, infrastructure related news event with a panel of industry analysts and guests comes to you with the help of our charter sponsor Active Endpoints, maker of the Active VOS visual orchestration system, as well as through the support of TIBCO Software.

I'm your host and moderator, Dana Gardner, principal analyst at Interarbor Solutions. Our topic this week, the week of Jan. 12, 2009, starts and ends with service-oriented architecture (SOA) -- dead or alive?

We're going to begin with an example of what keeps SOA alive and vibrant, and that is the ability for the architectural approach to grow inclusive of service types and therefore grow more valuable over time.

We're going to examine service-oriented communications (SOC) a variation on the SOA theme, and a way of ushering a wider variety of services -- in this case communications and collaboration services from the network -- into business processes and consumer-facing solutions. We're joined by a thought leader on SOC, Todd Landry, the vice president of NEC Sphere.

In the second half of our show, we'll revisit the purported demise of large-scale SOA and find where the wellsprings of enterprise architectural innovation and productivity will eventually come from.

We’ll also delve into the psychology of IT. What are they thinking in the enterprise data centers these days? Somebody’s thoughts might resuscitate SOA or perhaps nail even more spikes into the SOA coffin.

Here to help us calibrate the life span of SOA is this week’s BriefingsDirect Analyst Insights Panel. Please welcome Tony Baer, senior analyst at Ovum. Hey, Tony.

Tony Baer: Hey, Dana how are you doing? I hope you're keeping warm up there.

Gardner: Oh yes. Jim Kobielus, senior analyst at Forrester Research. How are you, Jim?

Jim Kobielus: Hi, Dana. Hi, everybody.

Gardner: Joe McKendrick, independent analyst and prolific blogger on ZDNet and ebizQ. Hey, Joe.

Joe McKendrick: Hey, Dana. Great to be here.

Gardner: Dave Linthicum, founder of Linthicum Group and Blue Mountain Labs.

Dave Linthicum: Hey, Dana.

Gardner: JP Morgenthal, senior analyst at Burton Group.

JP Morgenthal: Good morning.

Gardner: And, Anne Thomas Manes, vice president and research director for application platform strategies at Burton Group. Welcome to the show, Anne.

Anne Thomas Manes: Thanks, Dana.

Gardner: As I mentioned, we’re welcoming our guest Todd Landry, vice president of NEC Sphere. Let’s go to you first, Todd. First of all, welcome to the show.

Todd Landry: Good morning, Dana. We’re joining you today from sunny Chicago, where it started out at minus 17 degrees.

Gardner: Many of us are at or under zero this morning.

Landry: We're looking forward to the balmy weather.

Gardner: I hope you get to move south soon. First, tell us what you mean by SOC and help our listeners, who might not be familiar, understand a little bit about NEC, which is based in Tokyo, and Sphere in particular within that larger organization.

Variety of Applications

Landry: Sounds great, Dana. With SOC, what we're really talking about here is the fact that organizations today use a variety of business applications to help them improve efficiency and drive productivity in their organizations.

But, if you look at any implementation and then what happens in the business, the real connective tissue between all of these includes people. The decisions and actions that take place in a business on a day-to-day basis are highly dependent on these people being effective.

Therefore, the manner in which we can help them with their communications and help them collaborate becomes a critical factor in how the workflows can be more effective and more efficient. We've looked at that and said the more you can make communications into business applications, the more you can make communications a more natural part of an SOA.

The workflow can naturally connect people, when they become part of that workflow process. It should streamline how those processes can be completed, and therefore the result is streamlining how businesses can be effective.

Gardner: Well, exactly what types of services are we talking about here? Is this simply mashing up instant messaging into some more applications? Is it more than that? What’s the scale that we are talking about?

Landry: The idea of being able to click-to-call has been around for quite some time. With the more recent technologies mashing up the directory listings, mashing up a call function inside of a business application, is much more achievable and can be done much easier manner than it has in the past.

Now, that said, we can go to the next step and to give you examples. In one view, we are reaching a human for an approval on a transaction. It can be instigated from the business application itself. So, notifications reaching out to individuals to get approvals, using voice technology for actual voice imprint signatures, is one method.

Another example of use is digital assets of the corporation. As we are all aware there are times when we unfortunately have to have organizations come in and collect a lot of emails and history to help the organization. As part of that, organizations are now looking at dialogues between humans, whether they were voice, text tool, conference calls, or exchanges via email. They become part of the digital assets of the corporation.

When we look at communications wrapping those dialogues with some metadata, bringing them back up into content management system so they become indexable, they may become part of the digital assets of the corporation and become uniquely valuable.

Gardner: Just quickly tell us about Sphere. You were acquired by NEC just a year or two ago, right?

Landry: That’s correct, Dana. Sphere Communications was founded in 1994 with a focus on a mission of turning communications hardware into software and, as a result of turning it into software, building it more like a business application.

About 18 months ago, we concluded a transaction with NEC Corp., headquartered in Tokyo. Our focus stays on the software aspect of building communications for the business environment, but we do that now in the context of a much larger organization.

Gardner: With this philosophy of converting the hardware to software as software services, these communications functions can now be brought into a wider variety of business processes, particularly if you're using SOA, mashups, or a variety of different development frameworks and types. The goal here is to bring people into process. Is that fair?

The SOC Ultimate Goal

Landry: That’s really the ultimate goal. On any given day in a business, do people care about doing the mashup or do they care about having their business be more effective, especially in these times? We believe that people will continue to look for more efficiency in their IT infrastructure. They'll continue to look for how people can be more connected, not only internally but with their customers. At the end of the day, you're right. It’s really about how people get more interconnected with the business process.

Gardner: How about this taxonomy? Why do we have to have another acronym, another three letter word, SOC? Wouldn’t this simply be part and parcel with SOA? Why do you see them as different?

Landry: Well, if there isn’t one born, and then it won’t ever die, right? We looked at it and had to communicate to the industry the concept of how communications integrates into frameworks in the IT infrastructure. SOA is a one term still used out there to define an approach. When we built our communications platform, we opened up all its services in a manner that we believe fit very naturally into the concept of a SOA. Therefore, our communications platform is really more service oriented than it is a closed and proprietary traditional PBX-oriented system.

Gardner: Lets go to our panel. Tony Baer, we've talked about this disconnect between processes and the business world, SOA architectural values, and people. I think we had a show devoted almost entirely to the BPEL for People spec when it came out.

Clearly, if SOA is not to wither and die on the vine, bringing people into the process, finding ways of creating new types of efficiencies and innovations, not just repaving cow paths but doing something quite new all becomes important. From your perspective, Tony, what’s the important deal here with bringing communications services into the play?

Baer: I hate to use a cliché, but it’s like the last mile of enterprise workflow and enterprise processes. The whole goal of workflows was trying to codify what we do with processes and trying to implement our best practices consistently. Yet, when it comes to verbal communications, we’re still basically using technology that began with the dawn of the human voice eons ago.

Gardner: I've seen people use sign language.

Baer: Well, that maybe too, and smoke signals.

Gardner: A certain finger comes up from time to time in some IT departments.

Kobielus: At least the use of a trusty index DTMS finger.

Gardner: There you go.

Baer: Exactly, and maybe some other fingers as well. But the fact is that in some cases, there's a huge gap. An example is in the area of compliance. It was a well-publicized case. I won't mention the name of the corporation, because I don’t want to get us into legal trouble here. But, there was a major case of cooking the books. The CEO went to jail, but his predecessor, under whom it was alleged these practices began, was never touched. Allegedly, it’s because he left no trail of breadcrumbs. He never used email. It was all spoken.

The idea of being able to manage and integrate spoken communications may actually be a critical gap in compliance strategy. I could see that as being an incredible justification for trying to integrate voice communications. Another instance would be with any type of real-time supply chain or with trading.

Very often, when I call my broker, the message says please do not leave voice messages on the phone. Provide trading instructions. We can now start to track all that. I'm not sure that it’s such a great idea to leave trading instructions in a voice mail, but there are lot of areas where you're integrating voice communications that could provide business value.

Gardner: Jim Kobielus, isn’t there more to this on the consumer side as well? We've got these hand-held devices that people are using more and more with full broadband connectivity for more types of activities, straddling their personal and business lives and activities. We know Microsoft has been talking about voice recognition as a new interface goal for, what, 10 years now. What’s the deal when it comes to user habits, interfaces, and having some input into these back-end processes?

An Important Extension

Kobielus: That’s a huge question. Let me just unpeel the onion here. I see SOC as very much an important extension of SOA or an application of SOA, where the service that you're trying to maximize, share, and use is the intelligence that’s in people’s heads -- the people in the organization, in your team. You have various ways in which you can get access to that knowledge and intelligence, one of which is by tapping into a common social networking environment.

In a consumer sphere, the thing is the intelligence you want to gain access to is intelligence sets residing in mobile assets -- human beings on the run. Human beings have various devices and applications through which they can get access to all manner of content and through which they can get access to each other.

So, in a consumer world, a lot of the SOC value proposition is in how it supports social networking. The Facebook environments provide an ever more service-oriented environment within which people can mash up not only their presence and profiles, but all of the content the human beings generate on the fly. Possibly, they can tag on the fly as well, and that might be relevant to other people.

There is a strong potential for SOC and that consumer Facebook-style paradigm of sharing everybody’s user-generated content that’s developed on the fly.

Gardner: Joe McKendrick, it seems that bringing communications into the stew really does add value. These are the areas that traditionally have been separate. People did voice activities, they did communications, and they also did data and application activities. Straddling the two was something you did with wetware, with your mind or your hands. Do you think that SOC is perhaps a catalyst to increase value in SOA?

McKendrick: Absolutely. There always have been two levels to this discussion. On the upper level, you’re looking at a lot of business traditionally driven by serendipity. That's the chance encounter in the hallway between two people. Or, it's a phone discussion that may evolve to, "By the way, did you hear about such and such a company laying off or such and such company moving to this market."

One challenge that’s always been out there is to figure out a way to capture this more informal transmission of knowledge that highlights business opportunities. If there's a way to at least capture even a segment of that, to digitize it, and put it into the knowledge base. I think that’s a great advance for companies.

Gardner: So it’s bringing tacit knowledge into play with business processes. Is that what you’re getting that?

McKendrick: Exactly. We heard a lot about artificial intelligence (AI) a couple of decades back, and that showed a lot of promise for capturing some of the knowledge. You had these Jedi Knights that seemed to know everything and had everything in their heads. Once they left the organization, that was it. They walked out of the door with the knowledge and moved to Florida or Arizona. That has been the challenge for AI. Now we refer to it as knowledge management, being able to capture this knowledge, this serendipity, and these informal channels the voice communications.

Landry: It’s human nature to use reference points, historical reference points of dialogs -- whether they’re written or wherever I find them -- to remind me of a topical discussion and bring me tighter into the fold of a particular thread. Think of how we use email. Often, there's a thread of email that helps us go back and look at the history of the dialog that occurred. This has happened in pseudo real time basis with instant messaging these days.

As you described, the natural tendency is a quick discussion at the water cooler. To the degree that we can capture that information, put it in a format that’s indexable, and in my day-to-day workflows as an individual be able to pull that up as I am having more and more dialogs, it becomes very useful referenceable information about why we made certain decisions in the business. That’s one aspect we look at there.

Text-Mining Capability

Kobielus: One of the services in the infrastructure of the SOC that will be critically needed in a consumer or a business environment is a text-mining capability within the cloud. That can go on the fly to all these unstructured texts that have been generated, and identify entities in relationships and sentiments to make that information quickly available. Or, it can make those relationships quickly available through search or through other means to people who are too busy to do a formal search or who are too busy to even do any manual tagging. We simply want the basic meanings to just bubble up out of the cloud.

Gardner: Dave Linthicum, it seems like we're just finding ways of joining different networks. There were the telephone networks. We have had IM networks that are still based on Internet protocols, but are doing their own thing. We've had all these disparate communications types and modes that have popped up over the years and now we are trying to bring them to some kind of harmony.

Do you agree that this is really what SOA, as an approach, should do, and that we don’t need a subset of SOC? And, what are your clients looking for in terms of how communications relates to business applications and processes?

Linthicum: Well, if you're going to take services like this, expose them as services, and make easier use of them, then it’s there. You have to create the integration yourself through very disparate mechanisms and things like that. People are always struggling, trying to figure how to aggregate this stuff and its solutions. This is definitely one approach and it’s viable on the market.

As SOA evolves, they are much more rudimentary. We'll talk about later about the whole "death of SOA" thing. The fact of the matter is that people are just getting their arms around exactly what a service is and how you take multiple services and turn them in solutions.

What's occurring, especially with the downturn in the economy, is that people are focused on more tactical and, what I call a shorter, SOA issues. They're trying to solve particular problems with particular instances of technology. Some organizations have the potential for doing that.

When you look at SOA, you talk about this whole big strategy around structuring services and aggregating those services into solutions. But, if you really look at what people want to do, they want to solve particular tactical problems in a very short period of time and show a very quick value proposition. The ability to take all these communications and actually turn them into services and leverage them is a wonderful use case within the context of SOA. It makes sense.

Gardner: Todd Landry, even though we're in such tight economic circumstances, cost savings obviously need to be part of just about any activity. Is there a clear return on investment (ROI) from your perspective in doing away with the hardware and the PBX-based infrastructure around telecom at least inside of enterprises and going to pure software?

Are you able to really demonstrate that going to software, not only for the purposes of extending it into business processes but just alone as replacement for the cost of a traditional PBX infrastructure, is a good story?

The Two Levels

Landry: There is, and there are two levels. I can put some examples around that. At the first level, remember the three large guys with tool belts who show up in a moving van. They roll some big thing that looks like a refrigerator into the secret room and everybody says, "Yeah, that’s the phone system." Nobody knows how it works, except for the specialist who's been through 10 months of training. These systems are very, very costly to maintain these days. They are specialty hardware, very proprietary, and the maintenance alone has become quite an issue now.

Imagine all that capability being delivered to you as part of a download. You run it on the same computing infrastructure that you use for many of your other business applications and you administrate and manage it in the same way. You don’t have to look very hard at that to imagine some significant efficiencies in IT infrastructure. If it’s built in a way where it opens up its services, you can look at some real examples in the business.

Suppose I have a customer who is a major distributor of airline parts. The issue with parts for aircraft is that they are under strict inspection. Once they are put into the distribution center and shipped to a mechanic, they can no longer be restocked without going through a very expensive, re-inspection process.

What happens with airline mechanics is they'll call in to get certain parts and not being sure what they really need, they'll order three or four different parts. The theory is they'll just send the one’s back that they didn’t need.

This has been a big problem for the distributor. What they've utilized is an actual recording of the dialog between the mechanic and the order entry as that order is posted. They can now go back and very easily pull up that transaction and pull forward the recording. Therefore, the mechanic and the airlines have to take those parts.

These are just real, street-level business issues that I've dealt with. We have several of those scenarios, where once you look at inefficiencies in your business and look at how the human action makes that transaction occur, you can apply the technology to overcome it.

Gardner: JP Morgenthal, we've got cell phones, mobile Internet devices, netbooks, this notion of always on and multi-modality always on. Now just saying that you've got voice, text, and the ability to have two-way communications -- synchronous and asynchronous -- begs the necessity for bringing more communications into business processes. Do you agree with that?

Morgenthal: I definitely do. Clearly from an analyst perspective, you can talk about it and give it a very analytical representation, but the interesting thing is that I actually have real world experience in data behind this. Before coming back to being an analyst and joining Burton in November, I had my own software company, Avorcor, and we had developed supply-chain management as a service.

One things I did was integrate with an open-source communications project called StarPound, which is business-process management integrated with Asterisk, and we built a demonstration that really illustrated the value proposition in the warehouse.

I'd been working with a number of companies who had warehouse issues, and we were basically normalizing those issues by instituting a new services architecture and layering that on top of that legacy system, so they could build their business processes.

One of the biggest issue was they were still communicating exceptions that were happening in the warehouse because device limitations were scanners and text in a very noisy environment. Everyone agreed that the best communications tool in that environment was their cell phone because it vibrated. Well, the Blackberry now has vibration too. So, that’s also a valid form of communication.

If you tie this as a unified communications strategy to the business process, it’s very effective and not only is it very effective, but -- I hate to say it -- it begs only more constant information overload.

Years ago, we took it for granted. You didn't get things for a couple of days, because the communications pipeline took that long to complete. Now, we expect things in microseconds. So, it's enhancing the expectations of people in general because of that. But still, I think overall productivity goes up tremendously, and we move much more effectively toward a real-time event architecture across communications and systems and people. It’s really fascinating to watch and it’s very effective.

Gardner: Anne Thomas Manes, we think about crossing these gaps between what were traditionally telephony technologies, and now it can exercise the services and access the services, but there remains a cultural gap. Analysts, architects, and developers are not always thinking along the communications network line of reasoning. They don’t always look necessarily for these on-ramps and off-ramps to business processes. Do we need to try to encourage developers and architects to think differently around SOC capabilities, as they increase their business agility?

Change the Way We Talk

Manes: We’ll get into the "SOA is dead" discussions later. One thing that I have pushed is not that service orientation needs to go away, but that we need to change the way we talk about it. What we need to be focusing on are services that actually provide value to the developers who need access to capabilities and to the business guys who need the capabilities to be inherent inside their systems.

When we're talking about communications services, you want to make sure that those services are very easy to access. With communications services, when you start looking inside PBXs, voice over IP, and those kinds of things, that’s arcane and completely out of the realm of normal development skills that you would get in a Web developer.

Now, we do have some nice capabilities like click to call, and those are set up as drop-in components that people can now use inside their Web applications. Wouldn’t it be nice, if we actually had a much more powerful communications service that a developer can use to communicate with a customer, communicate with a shop manager, or communicate with whatever at this point in the application?

They can call out to a communications service and specify, "Here is who I want to talk to. Here is the information I want to send. And, here is the method through which I want send it." And, and then they can have the communications service completely take care of the whole processes associated with making that work.

I can guarantee that a developer is going to choose that over, "Oh, I have to write all kinds of arcane code in order to figure out how to send an email or how to launch a phone call." So, building these services that simplify a very complex process is extremely valuable from a productivity perspective.

You can also look at it from another perspective and that is that I can call out to this communications service. This goes back to the first conversation we were having about this topic, which is, "I need to make sure that I actually record this and capture this in my CRM system or I need to audit it for whatever reason."

You can apply policy to the service and have that be something that you can manage and maintain from a policy perspective, which is separate from the code that’s actually implemented in the application or in the communications service.

Gardner: How about that, Todd Landry? Do we still require developers to do arcane integrations, or are there application programming interfaces (APIs) and/or other means of automating and easing the ability for developers to exploit communications services?

Landry: I'm really glad you raised that point, because we know your example of click-to-dial has been around for a while, but the execution of that has been very complex. A lot of companies that have enabled that have done it using people who are rich in telecom protocol experience and things like that.

With SOC platforms, we see it as creating an abstraction to those telecom functions -- such as making a call, recording a call, or setting up media streams -- and hiding that all from the developer. You are welcome to a white paper that describes this approach of abstracting the communications complexity.

When we looked at it in terms of how you would make it available to the applications developer, for example, our tools include Web services description language (WSDL) files that can be imported into your environment. So, you can take an IBM Rational environment, bring in functions available on the communications system and use application and Web-type technologies, without having to understand the complexities of underlying telecom protocols. That’s probably one of the most critical things that we need to do on the communications side to allow the developer community to benefit from this.

Gardner: Isn’t there another approach to this, in addition to trying to ease the actual development, to make these services all part of the same cloud? Perhaps salesforce.com or Google might start offering more telephony services within their cloud. Therefore, the integrations are being done within their infrastructure and it becomes easier for developers to create processes. Do you expect that SOC will have a role in how some of these cloud providers increase their value to developers and then therefore to end-users?

Distributed Cloud SOC Services

Landry: Yes, and in the way we deploy today in many of our customers, we would, in some respects, describe it as a private cloud, because of way it’s built and because of way it’s a distributed and shared service within the enterprise.

We've got a handful of cases where we deployed that in more of a service-provider approach and you could argue that, because the consumer, the enterprise, has some stuff on premises they can also overload that or use services from the local provider. It’s built on that kind of model.

There's is another piece of this that says these platforms are bringing together multiple forms of media, so that you can utilize text messaging, audio, or video communications. You can do screen-sharing data collaboration in a simpler and more consistent fashion and you can utilize one set of services to do that.

Whether they're deployed as a cloud and the enterprise is using those services from within a cloud or whether they've made the decision to do them on premises, both are very viable and, in many cases, both are being done today.

Gardner: Okay, last question on SOC. Dave Linthicum, with the emphasis on cloud nowadays, do you see bringing these communications services into a cloud portfolio as a way of enticing more enterprises to get involved, particularly if we're talking about reaching out to consumers through these communications channels? Where do you see SOC and cloud intersecting?

Linthicum: They already are, probably not as formal services and definitely not as integratable data into the enterprise, but anything that’s a value within enterprises, as we are finding, ultimately will be something that some start up or even some big company packages up as a set of services and sticks them up in the cloud.

If you look in ProgrammableWeb, you'll find that there are a ton of services that are very communications oriented. They're probably not as sophisticated as the ones we're talking about now, but as more and more people adopt that as a paradigm and need these things to build enterprise composites or even mashups, then you're going to see a lot of movement in that direction, because it’s a fairly simple thing ultimately to do.

It’s going to be a very high value service to sell. You're not competing with the guys who are giving the stuff away for ad share. And, it’s just going to be another value cloud out there that people can leverage and integrate within their enterprise.

Kobielus: I want to add one last observation before we go to the "SOA is dead" topic. In order for this integration to happen in the cloud, the cloud providers need to federate their new registries with those of their enterprise customers. But, humans are reachable through a different type of registry called a directory, lightweight directory access protocol (LDAP) and other means.

Cloud providers need to federate their identity management in a directory environment with those of their customers. I don’t think the industry has really thought through all the federation issues to really make this service oriented, business communications in the cloud scenario a reality any time soon.

Gardner: So we need an open Wiki-like phone book in the sky.

Kobielus: Exactly.

SOA: Dead or Alive?

Gardner: All right. Let’s move on to our next subject -- "SOA: dead or alive?" Anne, you created a little bit of stir with a recent blog or around declaring SOA under significant pressure, particularly as a result of the economic climate, because people are not going to spend money without that verifiable ROI.

These large-scale SOA implementations are too complex and taking too much time. The economic climate is going to postpone, if not kill them outright. Did I get it right, and what’s been your position since the blog, in terms of the viability of SOA?

Manes: Certainly, lots of people have refuted my claim. At the same time, I've had at least as many people, and probably more, I am dead-on right. My goal with the blog post was to at least get the conversation going, and I think I managed to do that effectively.

I still believe that if you go before a funding board this year -- if you are an IT group and you are trying to get funding for some projects -- and you go forward with a proposal that says we need to do SOA, because SOA is good, it’s going to get shot down. Instead, what you have to go forward with is very specific value-add projects that say we need to do this, we need to do that, and we need to do that.

You need to talk about what services you're going to provide. In the example of communications services, there's a really strong value proposition associated with creating communications services. Likewise, going forward with a request to say, "We need to build a billing service which replaces the 27 different billing capabilities that we have in each of our product applications out there."

That’s a very strong, financially rich, good ROI type of proposal that’s going to win. But, it's not going to work, if you go forward and just say, "Oh, we need to go get an ESB. We need to go get some registry and repository technologies. We need to invest in all the SOA infrastructure. We need to do SOA just because SOA is what everybody is telling me we need to do."

Just talk about the services and talk about the practices that are going to help improve the architecture of your systems. Talk about doing application rationalization and talk about reducing the redundancy within your environment.

Talk about dismantling the 47 data warehouses you have that contain customer information and create a set of data services instead that actually gives you a richer, cleaner and more complete information about your customers. Those are things that are going to win.

Gardner: Does that mean that we're really still heading toward SOA, but we're just going to do it through a variety of tactical measures, and ultimately, without even realizing it, you're going to be doing SOA and that, at some point, you might need to rationalize that at a higher architectural abstraction with such things as ESBs and wider governance? Does that sound right?

Manes: Yes and no. It’s absolutely critical that you still have a strong architectural group. One of my favorite comments that came back from the blog post were the number of people who said, "Basically, we just really suck at doing architecture."

One of the primary reasons that a lot of SOA initiatives are failing is because people don’t actually do the architecture. Instead, what they do is service-oriented integration, as opposed to SOA. If you're truly doing architecture, then you're doing an analysis of your applications architecture, figuring out why you have so much extra garbage in your environment, and figuring out what you should actually start to get rid of.

You still need to have that planning group which is very strongly focused on setting the priorities. But then, what you go forward with in terms of funding are the projects that are actually going to help you achieve your architectural goals.

Bunker Mentality

Gardner: Another observation I had from watching the discussion that you helped create is that there seems to be quite a bunker mentality out there right now. A lot of people in IT are saying, "Listen, we're not going to do anything. We are going to just hunker down and keep it the way it is. We don’t need to innovate now. Wait until we get through this terrible crisis and then we will figure out how to be modern or agile."

On the other hand, I am seeing people saying, "No, now is the time to get innovative, to leapfrog, to take advantage of the pressure to reduce waste and look for efficiencies which ultimately will allow us to be more competitive not only in the short-term but over the long-term." Are we really looking at a typical, conservative-liberal breakdown in terms of the philosophy inside of IT department?

Manes: I suspect that you're going to have a lot of organizations that don’t have a lot of architectural maturity following the first camp, which is, "We're going to cut out everything. We’re just going to focus on tactical projects."

But, the folks who have a little more architectural maturity recognize the value of taking this opportunity, when lots and lots of projects are no longer going forward. They can say, "Well, now is a great time for us to start focusing on architecture and figure out how we can position ourselves to take advantage of the economy, when it does finally turn around."

Gardner: Okay. Tony Baer, we're heading into this deep depression, recession, whatever you want to call it. Those companies that aren’t very good at architecture will probably, if they hunker down, fall even further behind. Those organizations that have some budget to play with, that are not in survival mode alone, and are looking to be something bigger and better on the other side of the recession, they move further ahead. Are we coming into a bifurcation of who does IT better or worse, based on this recession?

Baer: I don’t think there is any question about that. I'd call that the Walmart strategy. Take a look at the previous recession. To some extent, the same thing is happening now that happened back in the recession of 2001-2002. Walmart actually increased its spending for expansion with the expectation that its low-price strategy was sound. In other words, its marketing architecture was sound for that period, but that it would be better prepared for the upswing, when the recovery happened.

I think what Anne is saying right now is that organizations that did get ahead of the curve with SOA, that thoughtfully began the architecture process and rationalized it, will go ahead, because there will be real economies at some point compared to traditional application development.

Those that have been basically doing what Joe McKendrick has called "just a bunch of web services" are just going to essentially retrench and say, "We just can’t afford to create more spaghetti right now. We are just going to do it a lot of break fixes." So, I would totally agree with Anne there.

Gardner: Joe McKendrick, are we going through an acceleration of winners and losers in IT, particularly at a sort of company-strategy level and core-competency level?

McKendrick: Yeah, Dana, absolutely. I've always said that the companies that have gravitated towards SOA are the companies that will probably do well anyway. Those are the companies with more visionary management and more tightly integrated approaches to business. Those are the companies that we've seen in all the case studies that over recent years that have gravitated towards SOA. Let’s face it, if they didn’t have SOA, they probably would have been doing okay anyway, because they're well-managed companies.

The companies that really could have used SOA, the companies not likely to be adopting SOA, or not likely be looking at SOA, as Anne and Tony discussed, those are the hunker-down companies, the companies that have fairly unsatisfactory architectures or no architectural approach. We're going to be seeing that going forward as well.

Gardner: To further refine this, Dave Linthicum, are we talking about companies that are good at IT, regardless of what’s in their quiver whether it’s SOA, Web oriented architecture (WOA), or communications and SOC? Regardless of the tools that you have at your disposal, it’s how well you use them that defines you, and if you fall further behind and you don’t adopt more tools, that’s a bad thing. Is that oversimplifying it?

IT Talent Shortage

Linthicum: Not really. The point that I made is the same point I have been making for a long period of time. We have talent shortage in the world of SOA. There are companies out there that have some very good IT talent, and they can take SOA, WOA, or cloud computing, look at the business problems, make some very nice systems, and automate the business nicely.

However, the majority of people out there who are wrestling around with architecture are ill equipped to solve some of the issues. They have a tendency to focus in wrong areas. Anne hit this in her blog as well. It was brilliant.

In the area of, "Let’s do quick tactical things, and look at this as a big systemic issue we are looking to solve," it just becomes too big, too complex. They try to solve it with things that are too tactical and just don’t have enough value. There are no free lunches with SOA or any kind of an architectural approach or any thing we have to improve the business.

You're going to have to break things down to their functional primitive and build them up again. You're going to have to think long and hard about how your architecture relates and links back to the business and how that’s going to work.

I wish there were something you could buy in a box or something you could download or some cloud you can connect to, but at the end of the day it’s the talent of the people who are doing the job. That’s where people have been falling down. Over and over again, in the last three years, we have identified this. I don’t think anybody has taken steps to improve it. In fact, I think it’s gotten worse.

Gardner: JP Morgenthal, without trying to be derogatory, it sounds like those people who do just tactical things, who are not evolving to a larger culture at a business-process level, at a agility level are kind of like Neanderthals. They were walking around Europe 25,000-100,000 years ago. Then, these Homo sapiens come on the scene and maybe have a little higher abstraction of skills, competency, look strategically at IT, much more services-oriented that eventually will overtake the landscape. Does that sound right?

Morgenthal: It's a great question. To say that you are going to be successful in business because you focused on IT architecture is a stretch. When we did our 2009 predictions, one of my predictions was the rise of disposable computing. For a certain class of businesses, it’s going to be okay to have "good enough" software and not worry about, "Am I going to be using the same application 20 years out," -- really moving the thought processes from 3-5 year plans to 5-9 month plans.

When you talk about things in that range, SOA falls apart as a requirement, because that’s something that you definitely want to engage in where you have longevity or a long-term strategy to apply. Including cloud computing and the rise of start ups in the cloud, or at least their IT infrastructure in the cloud, versus building data centers, is going to introduce an opportunity for that to occur.

There is a class of organizations that hears SOA. They're going to get IT staff that come from an environment where people did SOA. There's going to be a little culture clash, because the executives there are going to be saying, "I don’t get this. I don’t get you. Who are you? I want my cell phone to do this, this and that, and I can make it do that by looking at it sideways. You’re telling me I've got to go spend all this money. Are you nuts?"

So, you have that going on, and then you have organizations that are involved in some very complex business opportunities in the financial sector or in the manufacturing sector. If they don’t look at their business and model it in a way that their systems mirror what they are doing one for one, they’re going to continue to fight that impedance mismatch that’s been going on since the early days of computing.

Then, the mismatch made sense, because the costs of computing were so expensive that we had to take small bites, chew on it, and make it work. Now, with the cost of computing where it’s at, we should be disregarding that notion, reexamining our systems, and saying our systems should meet our business requirements one for one. We shouldn’t have this discrepancy that when I talk business, it needs to be translated for IT purposes.

Gardner: Todd Landry, for some organizations, SOA is dead, at least during the economic downturn. For other organizations, it could be alive and well. From your perspective, what differentiates these organizations? How do you separate the innovator class from the "let’s just keep it simple and do our jobs and hope for the best" class?

Landry: Finding them and separating them is probably an arduous task. During tough economic times, the question of what projects should be worked on becomes more of a financial question than just it’s a cool technology question. During better times, we do many different projects and don’t spend time looking at the business benefit.

JP’s point of, "if you do technology architecture, your business will get better" is not real. There are hundreds of different projects you can look at in any IT infrastructure, and, especially today, people are spending more time looking at which ones will help the business operate in a more streamlined fashion.

They’re questioning what it’s going to cost to do that, how I can do that without spending outrageous dollars, and is it going to make a difference for my business? Again, the observation of cost associated with those projects becomes more heightened during these kinds of economic times.

We're looking for people who are investing in new initiatives, because they see this as an opportunity to optimize, an opportunity to streamline, and it will help them longer term. We look for those kind of people that realize that this can be seen as an opportunity, as much as a tough situation to deal with the economy.

Kobielus: The whole "SOA is dead" theme struck a responsive chord in the industry, because there's a lot of fatigue, not only with the buzzword, but the very concept. It’s been too grandiose and nebulous. It’s been oversold, expectations have been built up too high, and governance is a bear.

We all know the real-world implementation problems with SOA, the way it’s been developed and presented and discussed in the industry. The core of it is services. As Anne indicated, services are the unit of governance that SOA begot.

We all now focus on services. Now, we’re moving into the world of cloud computing and, you know what, a nebulous environment has gotten even more nebulous. The issues with governance, services, and the cloud -- everything is a service in the cloud. So, how do you govern everything? How do you federate public and private clouds? How do you control mashups and so forth? How do you deal with the issues like virtual machine sprawl?

The range of issues now being thrown into the big SOA hopper under the cloud paradigm is just growing, and the fatigue is going to grow, and the disillusionment is going to grow with the very concept of SOA. I just want to point that out as a background condition that I’m sensing everywhere.

Gardner: Anne, is there a hedge on this somehow? That is to say, can you continue to be tactical, can you avoid some of the larger cost issues around SOA, but, at the same time, not put yourself at a disadvantage 18, 24, or 36 months down the road for moving closer to SOA at that time?

Manes: My core recommendation is to think big and take small steps.

You need to do the planning, and your architecture team should be able to do that, without having to go get permission from your funding organization to do planning, because that’s what they’re supposed to be doing. But then, they have to identify quick, short, tactical projects that will actually deliver value.

That’s what they should do and are designed to do to improve the architecture as a whole. It can't be just, "Oh I have to integrate this system with that system." They really should be focusing on identifying projects that will, in fact, improve the architecture. In that way, you’ll be in a better position when things are over.

Gardner: Just to pull our two discussions together, do you think that SOC forms one of those tactical benefits that demonstrates ROI, improves productivity, but that also sets you up for larger benefits later?

Manes: Communications services, as a general rule, are valuable because having your applications integrate with communications is often challenging. But, you need to take a look at your individual corporate priorities to determine whether that actually is a higher priority this year than something else.

Gardner: Does anybody else want to chime in quickly on SOC as a tactical benefit to SOA? Todd, you must have something to say on that.

Landry: The tactical benefit we’re seeing is a lot of very specific cases already in the end-customer areas, where people have made the decision that this is important. We talk about the economy, but security concern is at an all-time high, and there is a lot of sensitivity there.

In most government organizations, they’ve now assigned a geo spatial officer, someone to go look at how the communications system is better used across the different emergency organizations, and how first responders can come together and communicate and collaborate in emergency situations.

We’ve recently demonstrated some multidimensional collaboration tools that bring together the identity of vehicles and simplify the manner in which you tie radio IP-based communications across different emergency entities. You’ve got real cases here that people are addressing today. There are some tactical activities out there related to that.

I think the point made about think big and pick small projects is really important, because it is a big ocean out there and you’ve got to pick the things that makes sense for your business.

Gardner: Great. I want to thank the panel for this week, we had Tony Baer, senior analyst at Ovum. We had Jim Kobielus, senior analyst at Forrester Research. Joe McKendrick, independent analyst and blogger. David Linthicum, founder of Linthicum Group. JP Morgenthal, senior analyst Burton Group, and Anne Thomas Manes, vice president and research director of Burton Group.

We also thank our guest, Todd Landry, vice president of NEC Sphere. I want to also thank our charter sponsor for the BriefingsDirect Analyst Insights Edition podcast series, Active Endpoints, maker of the Active VOS visual orchestration system.

We’re also coming to you through the support of TIBCO Software. This is Dana Gardner, principal analyst at Interarbor Solutions. Thanks for listening and come back next time.

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Edited transcript of BriefingsDirect Analyst Insights Edition podcast, Vol. 36, on communications as a service and the future of SOA in light of hard economic times. Copyright Interarbor Solutions, LLC, 2005-2009. All rights reserved.