Showing posts with label Workday. Show all posts
Showing posts with label Workday. Show all posts

Tuesday, July 19, 2011

Cloud and SaaS Force a Rethinking of Integration and Middleware as Services for Services

Transcript of a BriefingsDirect podcast of the role of cloud and SaaS in the changing landscape of application integration.

Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Download the transcript. Sponsor: Workday.

Dana Gardner: Hi, this is Dana Gardner, Principal Analyst at Interarbor Solutions, and you're listening to BriefingsDirect. Today, we present a sponsored podcast discussion on how major trends around cloud, mobile, and software as a service (SaaS) are dramatically changing the requirements and benefits of application integration.

In many respects, the emphasis now on building hybrid business processes from a variety of far-flung sources forces a rethinking of integration and middleware. Integration capabilities themselves often need to be services in order to support a growing universe of internal and external constituent business process component services.

Here to explore the new era of integration-as-a-service and what it means for the future is David Clarke, Director of Integration at SaaS ERP provider Workday, and who is based in Dublin. Welcome, David. [Disclosure: Workday is a sponsor of BriefingsDirect podcasts.]

David Clarke: Hi, Dana. Good to be here.

Gardner: As I said, the past is necessarily prologue when it comes to integration. Why have the platforms, applications, and data of the past forced a certain approach to integration, and why is that ill-suited to what we are expecting and seeing more of every day with cloud and SaaS?

Clarke: One thing is that historically applications were built, structured, and architected in very different ways. When you tried to knit those things together, there was quite a diverse set of requirements, which needed to be addressed. And, there was a very wide variation in their architectures. So that implied a very general-purpose middleware that had to cope with many different and very diverse scenarios. That was one factor.

A second factor was that the middleware and the integration tended to come as an afterthought. So, it couldn't really influence or inform the way that the application platforms themselves were designed.

Those two things together made it more difficult than it needed to be. Then, what we're starting to see -- and what we are certainly hopeful of seeing in this generation built around cloud -- is that those two things aren’t necessarily the case. So, we can benefit more from having integration designed in upfront, and having a more consistent overall architecture, so that it’s essentially easier for it to plug into.

One third variable might be that customers historically also discounted or underestimated the likely impact or complexity of doing integration. They tended to come to them as an afterthought and then struggled with them. This time around, to some extent, they've been burned by previous generations. So they're more wary, and are additionally including integration more in their upfront planning.

Gardner: We're not necessarily talking about throwing the baby out with the bath water here. We're still going to be doing integrations in the traditional way. It's just that we need to add another category, and it seems that there is a benefit in that. We can use many of the tools, many of the underlying technologies that supported traditional middleware, and extend that into this services environment.

Clarke: Correct. There’s nothing fundamentally new, in some sense. I've worked in several generations of integration and middleware technology, and each one is a refinement of the past, and you're standing on the shoulders of giants, to badly paraphrase Newton.

Packaged and presented

A
lot of the underlying technology you're using for integration, a lot of the underlying concepts, are not that new. It's just the way that they're being packaged and presented. In some cases, it's the protocols that we're using, and certainly some of the use models. But the ways you're accessing them and consuming them are different. So, it is in that sense [this is] evolutionary.

Gardner: What has probably changed the most are the requirements. The problem set that we're addressing has changed. How has it changed? Perhaps this would be an opportunity for you as well to explain what Workday is, what it does, and how you came to be a part of the Workday team.

Clarke: Historically, integration technology was sold as a stand-alone and on-premise offering. Companies would buy or build applications, and then, as their business processes evolved, they found a need to integrate them and connect them together. So, they would license middleware and use that to achieve that.

There have been a couple of generations of middleware technology companies that have helped customers do this. They shared some of the characteristics around certain generations of technology.

So you had companies like TIBCO Software in the early days, folks from the financial sectors. Then you had companies like BEA Systems focused on the Java generation of middleware and application servers. And then, you had more XML and web services-centric companies.

As a middleware vendor, you're trying to solve essentially any and every problem.



You had those three generations, but what was common to them all was that they were quite divorced from the application experience. And that was my background in pure middleware, building and selling that technology.

A strength and a weakness of that was that it was very general purpose. As a middleware vendor, you're trying to solve essentially any and every problem. To draw on the Eclipse Foundation's motto: middleware is a general-purpose platform that can do everything or nothing. In many cases, people ended up spending a lot of money on this general-purpose middleware and essentially achieving nothing, which was frustrating.

Workday is an applications company. We're an on-demand apps company and we build and serve human capital management (HCM), financials, and enterprise resource planning (ERP) application suites.

Cape Clear, which was my former company, was acquired by Workday about three years ago. We were partners, but as Workday’s business expanded significantly, they saw that providing a compelling and a differentiated integration experience in the context of this new cloud architecture was going to be something that was very important to them. So they acquired Cape Clear and we became part of the overall Workday organization.

The first surprise to me was that I had always worked for companies where it was difficult essentially to explain what we did. You couldn't really go to your grandmother and describe middleware technology, whereas you could at least go and explain financial systems or HCM systems.

Overarching context

That then flowed all the way down through to how we positioned, thought about, described, and marketed the technology. It has certainly been my experience that it's a lot easier to describe, position, plan, and explain integration technology when you have this overarching context of an application domain.

That's been very instructive and has interesting implications in the future for the nature, or indeed the existence, of a stand-alone in the middleware market. That might be an interesting topic we could talk about later.

The other observation is that the consistency of these use cases make our jobs somewhat easier. What's also been interesting is the nature of the load and the scale profiles that we're seeing.

A lot of middleware applications that we used to see were technically complex to achieve, but were often relatively low volume or relatively low scale. But, in large-scale companies, when you're dealing with their core systems of record around financials and HCM, you're looking at very large data sets, with very significant scalability requirements, and very significant performance constraints. That has interesting implications for how you think about and implement your middleware solutions.

Gardner: So there seem to be two fundamental things going on here. One, is taking integration to the on-demand or SaaS domain, but second, there is also this embedding integration functionality into the application.

One of the perpetual holy grails of the middleware industry, when it was a stand-alone undertaking was to find a way to express and expose middleware and integration concepts in a way that they could be used by mere mortals.



People, when they use Workday -- whether they are human resources professionals or employees in these organizations, whether they're partners or suppliers to these enterprises that are using Workday -- they're not thinking about integration. They're thinking about human resources, benefits, payroll, and insurance.

Tell me how this shift to on-demand, as well as embedding into the application, changes the requirements. How does someone like yourself who is crafting the middleware integration capabilities need to shift their thinking in order to go “to the cloud,” but also become part-and-parcel with the application?

Clarke: One of the perpetual holy grails of the middleware industry, when it was a stand-alone undertaking, was to find a way to express and expose middleware and integration concepts in a way that they could be used by mere mortals, by business analysts, by people who weren't necessarily very deep technologists with deep technology expertise.

In my experience, the middleware industry never achieved that. So, they didn't really ever find a metaphor or a use model that enabled less skilled, but nonetheless technically savvy, people to use their products.

As you observe in the applications game, you absolutely have to get there, because fundamentally what you're doing here is you are enabling companies and individuals to solve business problems and application problems. The integration arises as a necessity of that or as a consequence of that. In and of itself, it isn't useful.

Designing applications

The most specific thing that we've seen is how we build, manipulate, and use extremely sophisticated integration technology. We spend a lot of our time thinking about how to design that into the application, so that it can be experienced and consumed by users of the application who don’t know anything about XML, Java, web protocols, or anything like that.

To give you one very simple example, the most common use case of all probably is people getting data, perhaps from our system, doing something with it -- a simple transformation -- and then delivering it or putting it somewhere else, perhaps into our system.

That model of "get, transform, and put" is intuitively straightforward, but historically that has always been realized in a complicated way in the middleware stack. We've built a very simple tool inside of our application, and it's now the most heavily used integration component in our system.

Business analysts can very easily and visually define what they are getting and putting it in terms of the business concepts and the business objects they understand. They can define very simple transformations, for example, going from a payroll input to a check, or going from a report of absences by departments to a payroll input.

They're consuming and using integration technologies in a very natural way in the context of their day-to-day working in the web layer in these systems. They're not programmers. They're not developers. They're not thinking about it that way.

It's quite empowering for the teams that we have had working on this technology to see if it's usable in that way by the business analysts here. It's the closest I've seen people get to capturing this unicorn of enabling integration technology to be actually used by business people.

It's the closest I've seen people get to capturing this unicorn of enabling integration technology to be actually used by business people.



Gardner: While you have put quite a bit of emphasis on the tool side in order to make this something that mere mortals can adjust and operate, you've also done a lot of heavy lifting on the connections side. You recognized that in order to be successful with an integration platform, you had to find the means in which to integrate to a vast variety of different types of technologies, services, data, and so forth. Tell me what you've done, not only on the usability, but on the applicability across a growing universe of connection points.

Clarke: That’s another interesting area. As you say, there are thousands or millions of different types of endpoints out there. This being software, it can map any data format to any other data format, but that’s a trivial and uninformative statement, because it doesn’t help you get a specific job done.

Essentially what we've been trying to do is identify categories of target systems and target processes that we need to integrate with and try to optimize and focus our efforts on that.

For example, pretty much the majority of our customers have a need to integrate to and from benefit systems for 401(k), healthcare, dental, visual plans, and so forth. It's an extremely common use case. But, there is still a wide diversity of benefits providers and a wide variety of formats that they use.

We've studied the multiple hundreds of those benefits providers that we've experienced by working with our customers and we've abstracted out the most common format scenarios, data structures, and so forth, and we have built that into our integration layer.

Configure your data set

You can very easily and rapidly and without programming configure your specific data set, so that it can be mapped into and out of your specific set of benefits providers, without needing to write any code or build a custom integration.

We've done that domain analysis in a variety of areas, including but not limited to benefits. We've done it for payroll and for certain kinds of financial categories as well. That's what's enabling us to do this in a scalable and repeatable way, because we don’t want to just give people a raw set of tools and say, "Here, use these to map anything to anything else." It's just not a good experience for the users.

Gardner: David, you mentioned that Cape Clear was acquired by Workday about three years ago, and Workday has been growing very rapidly. Have you been surprised by the adoption rate and pattern around SaaS, and now we're talking about cloud and hybrid cloud? Did this happen faster than you were expecting, because it certainly caught me by surprise.

Clarke: Totally. I remember when we originally became part of Workday several years ago, we were doing some sort of product planning and strategic thinking about how we were going to integrate the product lines and position them going forward. One of the things we had in our roadmap at the time was this idea of an appliance. So we said, "Look, we can envision the future, where all the integration is done in the cloud, but we frankly think it's like a long way off. We think that it's some years off."

For that reason, we articulated and embarked on a path of offering what we were calling an appliance, which essentially would have been an on-premise component to the integration stack or of the integration stack that would be deployed at customer sites. We thought the world wasn’t going to be ready soon enough to put the integration technology and stack in the cloud as well.

It just became clearer and clearer to us that there was an appetite and a willingness in our customer and prospect base to use this technology in the cloud.



Happily that turned out to have been incorrect. Over the course of the ensuing 12 months, it just became clearer and clearer to us that there was an appetite and a willingness in our customer and prospect base to use this technology in the cloud.

We never really went ahead with that appliance concept, it didn’t get productized. We never used it. We don’t need to use it. And now, as I have conversations with customers and with prospects, it just is not an issue.

In terms of it being any kind of philosophical or in principle difficulty or challenge, it has just gone away. It totally surprised me, as well, because I expected it to happen, but thought it would take a lot longer to get to where it has got to already.

Gardner: There is a certain irony, because we were all involved with service-oriented architecture (SOA) and kept waiting for that to get traction, and were a little bit distressed that it wasn’t catching on. Then, lo and behold, this concept of SaaS and cloud leapfrogs and catches on much faster than we thought. So, it is an interesting time.

When we go back to enterprises, we recognize that this “consumerization” of IT is taking place, where the end-users, the zeitgeist of expectations, is now at the point where they want IT in the enterprise to work as well and in the same manner as it does for their personal lives. How does that shift the thinking of an enterprise architect?

Clarke: Superficially, enterprise architects are under a lot of pressure to, as you say, to present technologies in ways that are more familiar to customers from their personal lives. The most specific example of that is the embrace of mobile technologies. This isn't a huge surprise. It's been a pretty consistent pattern over a number of years that workforce mobility is a major influence on product requirements.

Mobile devices

We've seen that very significant proportions of access to our system is via mobile devices. That informs our planning and our system architecture. We're invested heavily in mobile technologies -- iPad, Android, BlackBerry, and other clients. In my experience, that’s something that's new, with the customer enterprise architects. This is something they have to articulate, defend, and embrace.

Historically, they would have been more concerned with the core issues of scalability, reliability, and availability. Now, they've got more time to think about these things, because we as SaaS vendors have taken a lot of things that they used to do off of their plates.

Historically, a lot of time was spent by enterprise architects worrying about the scalability and reliability of the enterprise application deployments that they had, and now that’s gone away. They get a much higher service level agreement (SLA) than they ever managed to operate by themselves when they run their own systems.

So, while they have different and new things to think about because of the cloud and mobility, they also have more head space or latitude to do that, because we have taken some of the pain that they used to have away.

Gardner: I suppose that as implications pan out around these issues, there will be a shift in economics as well, whereby you would pay separately and perhaps on a capital and then operating basis for integration.

They also have more headspace or latitude to do that, because we have taken some of the pain that they used to have away from them.



If integration by companies like Workday becomes part-and-parcel of the application services -- and you pay for it on an operating basis only -- how do traditional business models and economics around middleware and integration survive? How do you see this transition working, not only for the functionality and the architecture, but in dollars and cents?

Clarke: I'd certainly hate to be out there trying to sell middleware offerings stand-alone right now, and clearly there have been visible consolidations in this space. I mentioned BEA earlier as being the standard bearer of the enterprise Java generation of middleware that’s been acquired by Oracle.

They are essentially part of the application stack, and I'm sure they still sell and license stand-alone middleware. Obviously, the Oracle solutions are all on-premise, so they're still doing on-premise stuff at that level. But, I would imagine that the economics of the BEA offering is folded very much into the economics of the Oracle application offering.

In the web services generation of middleware and integration, which essentially came after the enterprise Java tier, and then before the SOA tier, there was a pretty rapid commoditization. So, this phenomenon was already starting to happen, even before the cloud economics were fully in play.

Then, there was essentially an increased dependence or relevance of open source technologies -- Spring, JackBe, free stacks -- that enabled integration to happen. That commoditization was already starting to happen.

Open source pressure

So even before the advent of the cloud and the clear economic pressure that put on stand-alone integration, there was already a separate pressure that was originating from open source. Those two things together have, in my view, made it pretty difficult to sustain or to conceive a sustainable integration model.

A lot of the investment dollars that have gone into something like integration market are now going elsewhere in infrastructure. They're going into storage. They're going into availability. They're going certainly to cloud platforms. It would need to be a brave venture capitalist now who would write a check to a company coming in with a bright idea for a new on-premise middleware stack. So that business is gone.

Gardner: We're also seeing some investment around taking open source middleware and integration capabilities and extending them to the cloud. It's not as difficult for an open source company, because their monetization has been around maintenance and support, more of an operating expense. We certainly haven’t seen too much in the way of a general-purpose integration cloud from any of the traditional on-premises middleware vendors.

Do you think in 10 years, or maybe 5, we won’t even be thinking about integration? It will really be a service, a cloud service, and perhaps it will evolve to be a community approach. Those people who need to be connected to one another will either structurally move toward some standardization or, perhaps in a more ad hoc or organic way, provide the means by which they could more easily play well together?

Clarke: There are a couple of things that we see happening here. I'll make two main observations in this area.

There is an important difference between a general-purpose platform or integration platform and then a more specific one, which is centered around a particular application domain. Workday is about the latter.



First, at the risk of losing half our audience with the jargon, there is an important difference between a general-purpose platform or integration platform and then a more specific one, which is centered around a particular application domain. Workday is about the latter.

We're building a very powerful set of cloud technologies, including an integration cloud or an integration platform in the cloud, but it’s very focused on connecting essentially to and from Workday, and making that very easy from a variety of places and to a variety of places.

What we're not trying to create is a general-purpose platform, an associated marketplace, in the way that maybe somebody like Salesforce.com is doing with AppExchange or Google with App Engine for app development. In a sense, our scope is narrower in that way, and that’s just how we're choosing to prosecute the opportunity, because it’s harder to establish a very horizontal platform and it’s just difficult to do.

I referred earlier to the problem that middleware companies traditionally have of doing everything and nothing. When you have a purely horizontal platform that can offer any integration or any application, it’s difficult to see exactly which ones are going to be the ones that get it going.

The way we're doing this is therefore more specific. We have a similar set of technologies and so on, but we're really basing it very much around the use case that we see for Workday. It’s very grounded in benefits integrations, payroll integrations, financial integrations, payment integrations. And every one of our deployments has tens, dozens, hundreds of these integrations. We're constantly building very significant volume, very significant usage, and very significant experience.

Developing marketplace

I can see that developing into a marketplace in a limited way around some of those key areas and possibly broadening from there.

That's one of the interesting areas of distinction between the strategies of the platform vendors as to how expansive their vision is. Obviously expansive visions are interesting and creating horizontal platforms is interesting, but it’s more speculative, it’s riskier, and it takes a long time. We are more on the specific side of that.

You mentioned collaborating and how this area of business processes and people collaborating in the community. I referred earlier to this idea that we're focusing on these key use cases. What’s arising from those key use cases is a relatively small set of documents and document formats that are common to these problem areas.

Lately, I've been reading, or rereading, some of the RosettaNet stuff. RosettaNet has been around forever. It was originally created in the early '80s. As you know, it was essentially a set of documents, standard documents, interchange formats for the semiconductor or the technology manufacturing industry, and it has been very successful, not very prominent or popular, but very successful.

What we see is something similar to RosettaNet starting to happen in the application domain where, when you are dealing with payroll providers, there is a certain core set of data that gets sent around. We have integrated to many dozens of them and we have abstracted that into a core documentary that reflects the set of information and how it needs to be formatted and how it needs to be processed.

These are very good vectors for cooperation and for collaboration around integrations, and they're a good locus around which communities can develop standardized documents.



In fact, we now have a couple of payroll partners who are directly consuming that payroll format from us. So, in the same way that there are certain HR XML standards for benefits data, we can see other ones emerging in other areas of the application space.

These are very good vectors for cooperation and for collaboration around integrations, and they're a good locus around which communities can develop standardized documents, which is the basis for integration. That’s intriguing to me, because it all derives from that very specific set of use cases that I just never really saw as a general-purpose integration vendor.

Gardner: Getting back to adoption patterns and economics, it seems as if what you are proposing, and what Workday is supporting, is this application-level benefit. A business process, like a network, is perhaps more valuable as the number of participants in the process increases, and become able to participate with a fairly low level of complexity and friction.

It's sort of a derivative of Metcalfe's Law, but at the business process level, which is quite different than trying to corral an integration community around a specific platform with the intent of getting more people on that platform and having a long-term flow of license revenue as a result.

So, if we make this shift to a Metcalfe's law-type of "the more participants, the more valuable it is to all of those participants," shouldn’t we expect a little bit of a different world around integration in the next few years?

Business process

Clarke: That’s right, because of the distinction you mentioned. We don’t really see or envisage this very transactional marketplace, where you just have people buying a round of maps or integrations and installing them. We see it happening in the context of a business process.

For example, hiring. As somebody hires somebody into Workday, there are typically many integration points in that business process -- background checking, provisioning of security cards, and creation of email accounts. There is a whole set of integration points. We're increasingly looking to enable third parties to easily plug-in into those integration points in a small way, for provisioning an email account, or in a big way, like managing a whole payroll process.

It’s that idea of these integrations as being just touch points and jumping-off points from an overall business process, which is quite a different vision from writing cool, stand-alone apps that you can then find and store from inside of our platform marketplace.

It’s that idea of an extended business process where the partners and partner ISVs and customers can collaborate very easily, and not just at install time or provisioning time, but also when these processes are running and things go wrong, if things fail or errors arise.

You also need a very integrated exception handling process, so that customers can rapidly diagnose and correct these errors when they arise. Then, they have a feeling of being in a consistent environment and not like a feeling of having 20 or 30 totally unrelated applications executing that don’t collaborate and don’t know about each other and aren’t executing the context within the same business process. We're keen to make that experience seamless.

You also need a very integrated exception handling process, so that customers can rapidly diagnose and correct these errors when they arise.



Gardner: I can also see where there is a high incentive for the participants in a supply chain or a value chain of some sort to make integration work. So perhaps there is an incentive toward cooperation in ways that we hadn’t seen before. I am thinking of, at least in the human resources field, where it’s in my best interest as an insurance company or as a payroll benefits provider, for example, to work with the SaaS or cloud provider in this regard -- to the betterment of our mutual end users.

Do you already see that the perception of cooperation for integration is at a different plane? Where do you expect that to go?

Clarke: Totally, already. Increasingly -- pick an area, but let's say for learning management or something -- if we integrate, or if multiple people integrate to us or from us, then customers already are starting to expect that those integrations exist.

Now they're starting to ask about how good they are, what's the nature of them, what SLAs can they expect here? The customers are presuming that an integration, certainly between Workday and some other cloud-based service, either exists already or is very easy and doable.

But they're looking through that, because they're taking the integration technology level questions for granted. They're saying, "Given that I can make such an integration work, how is it really going to work, what's the SLA, what happens if things go wrong, what happens when things fail?"

What's really interesting to me is that customers are increasingly sophisticated about exploring the edge cases, which they have seen happen before and have heard about them before. They're coming to us upfront and saying, "What happens if I have issues when my payroll runs? Who do I go to? How do you manage that? How do you guys work with each other?"

Consistent information

We, therefore, are learning from our customers and we're going to our ISV and services partners, like our payroll partners, our learning management partners, our background checking partners and saying, "Here is the contract that our customers expect. Here is the service that they expect." They're going to ask us and we want to be able to say that this partner tests against every single update and every single revision of the Workday software. They will handle a seamless support process where you call one number and you get a consistent set of information.

Customers are really looking through the mere fact of a technical integration existing and asking about what is my experience going to be and actually using this day-to-day across 50 geographies and across population of 20,000 employees. I want that to be easy.

It’s a testament to the increasing sophistication of the integration technology that people can take that for granted. But as I say, it’s having these increasingly interesting and downstream effects in terms of what people are expecting from the business experience of using these integration systems in the context of a composite business process that extend beyond just one company.

Gardner: Moving toward closing up our conversation, David, you have raised the issue here about that one throat to choke, if you will. When you have a massive, complex, integration landscape, does it makes sense to focus on the application provider as that point of responsibility and authority? Or does it have to be federated?

Have you seen any models emerge, something that we probably could not have predicted but needs to happen on its own, in a real world setting that indicates how that issue of trust and authority might pan out?

Clarke: What we are gradually feeling our way toward here is that for us that’s the central concept of this federation of companies. We think obviously of Workday being in the middle of that. It depends on what your perspective is, but you have this federation of companies collaborating to provide the service ultimately, and the question is, where do they choke?

And it's not realistic to say that you can always come to Workday, because if we are integrating to a payroll system on behalf of somebody else, and we correctly start off and run the payroll or send the payroll requests, and then there is an error at the other end, the error is happening ultimately in the other payroll engine. We can't debug that. We can't look at what happened. We don't necessarily even know what the data is.

As we run any integration in our cloud, there is a very consistent set of diagnostics, reporting, metrics, error handling, error tracking that is generated and that's consistent.



We need a consistent experience for the customer and how that gets supported and diagnosed. Specifically, what it means for us today is that, as we run any integration in our cloud, there is a very consistent set of diagnostics, reporting, metrics, error handling, error tracking that is generated and that's consistent across the many types of integrations that we run.

Again, as our partners become more savvy at working with us, and they know more about that, they can then more consistently offer resolution and support to the customers in the context of the overall Workday support process.

For us, it’s really a way of building this extended and consistent network of support capability and of trust. Where customers have consistent experiences, they have consistent expectations around how and when they get support.

The most frustrating thing is when you are calling one company and they're telling you to call the other company, and there isn’t any consistency or it’s hard to get to the bottom of that. We're hopeful that enlightened integrations around business processes, between collaborating companies, as I have described, will help me to get some of that.

Gardner: It certainly sounds like in the coming years the determining factors of who will be the winner in cloud integration won't be necessarily the one with the biggest, baddest platform -- although that's certainly important. But the one that demonstrates the trust, the SLA response, and maintenance, and generally who becomes a good partner in a diverse and expanding ecosystem will win.

Clarke: That's right. The technology is important, but it's not enough. People just don't just want technology. They want well-intentioned and an honest collaboration between their vendors to help them do the stuff efficiently.

Gardner: Very good. Thanks. You've been listening to a sponsored BriefingsDirect podcast on how major trends around cloud, mobile, and SaaS are dramatically changing requirements and benefits of integration. For more information on Workday's integration as a service, go to http://www.workday.com/solutions/technology/integration_cloud.php.

I would like to thank our guest. We have been here with David Clarke, Director of Integration at Workday. Thanks so much, David.

Clarke: Thanks, Dana.

Gardner: This is Dana Gardner, Principal Analyst at Interarbor Solutions. Thanks again for listening, and come back next time.

Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Download the transcript. Sponsor: Workday.

Transcript of a BriefingsDirect podcast of the role of cloud and SaaS in the changing landscape of application integration. Copyright Interarbor Solutions, LLC, 2005-2011. All rights reserved.

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Friday, April 29, 2011

Case Study: How Fairchild Semiconductor Has Leveraged the Workday Integration Cloud

Edited transcript of a BriefingsDirect podcast on new forms of cloud-based integration and its use in enterprise business processes.

Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Download the transcript. Learn more. Sponsor: Workday.

Dana Gardner: Hi, this is Dana Gardner, Principal Analyst at Interarbor Solutions, and you're listening to BriefingsDirect.

Today, we present a sponsored podcast discussion on how new forms of cloud-based integration are helping a major high-tech company build new relationships among and between extended enterprise business processes.

We'll examine how Fairchild Semiconductor has been an early adopter of integration platform as a service (iPaaS). The venerable Silicon Valley company has been using graphical tools to build integrations among and between far-flung applications and services but with those integration platforms housed in a newly unveiled Workday Integration Cloud. [Disclosure: Workday is a sponsor of BriefingsDirect podcasts.]

We’ll learn here from the chief technology officer at Workday on what the integration cloud approach can do and how it points to a future in which broad integration capabilities are increasingly built into software-as-a-service (SaaS) applications.

This cloud-based integration model will prove far less vulnerable to the complexity, fragility and cost that plagues traditional on-premises middleware integration methods. It should also spur the evolution of services ecosystems among multiple business service providers and application providers.

So here to dig into what makes integration as a service (IaaS) tick and what it means for the future is Paul Lones, Senior Vice President for Information Technology at Fairchild Semiconductor. Welcome, Paul.

Paul Lones: Thank you.

Gardner: We’re also here with Stan Swete, the Chief Technology Officer at Workday. Welcome back, Stan.

Stan Swete: Thanks, Dana.

Gardner: Let me start with you, Paul. What's the problem now with integration? Why is this different than a few years ago? Why is it that we need to adopt a different take on integration?

Lones: For companies like Fairchild that are really trying to take advantage of some of the new capabilities that SaaS providers are offering and put together a broader group of applications, integrations are a new challenge, a broader challenge than they have been traditionally.

Gardner: And what is it about what Workday is doing as an application provider that makes this interesting -- the human resource management, the human resource (HR), equation. We’ve seen integrations in some other service orientations, such as in the supply chain side of things. Why was this a challenge?

Custom integration

Lones: Traditionally, in the HR arena, there has been no such thing as a standard integration. Every benefit provider, every payroll service provider that you want to work with requires a custom integration. That’s always been true, and having the set of tools that we now have at our disposal makes that a lot easier.

Gardner: So, in a sense, the HR ecosystem challenge is a really good place to try to perfect or advance iPaaS. Do you agree with that?

Lones: Absolutely.

Gardner: Stan, let's go to you. What needed to change and when you looked at this issue of your ecosystem and how it tied things together, what sort of requirements did you have for integration that now you can pass along to your customers?

Swete: We still look at it as having the same requirements for enterprise integration. Especially for hub systems like human capital management, there are ton of other systems that you have to integrate with. So the requirements are daunting and are still there. It's been the same for a while at enterprise software.

What we see as being a cloud vendor, a SaaS vendor, is just new opportunities to leverage the SaaS model to do integration a little bit differently, have the application vendor take on more of the ownership of the integration issue and use the fact that we've got all of our customers running on a single version of the product to tie some integration logic to that and bring more control and stability to that integration for our customers and our partners.

Gardner: Why is it, Stan, that the traditional systems, platforms, and middleware that are in place are not up to this task? Why not just turn the switch on your on-premises integrations and start tying together these cloud and SaaS based services?

Swete: There's just a split today between the technologies and the platforms that are used to execute integration and convey data and then the application’s endpoints that are involved with and tied up in the logic of that integration.

It's not that no one is up to it, but it's just that that gap splits responsibilities where maybe they don’t have to be split. What we’re trying to do is marry it, use what we know about our applications to create integration logic, and then embed technology that hasn’t been embedded with applications before to help with the delivery of that.

That hasn't replaced every single kind of middleware technology that you need. You still need a middleware technology behind your firewall. You still need specialized middleware technology in the cloud to do things that it does best. But, for the application-centric part of integration, application vendors can do more.

Gardner: Paul, at Fairchild, you've adopted a number of SaaS system approaches or services approaches. One of them is Workday. You have mentioned a few others to me earlier. When you look at your ability to absorb and adopt and exploit more SaaS, how does integration fit into that? Is this something that needs to be solved in order for you to proceed?

Critical enabler

Lones: It's a critical enabler to take advantage of some of the capabilities that we see are available to us and can help us in our business. We look for two things. One, we want to find a supplier that thinks of this in a more holistic ecosystem-like way, and that has a series of application-level partners, that we can add to our overall architecture and overall application capability.

In addition to that, we look for good integration tools, because even beyond those partnerships, we still have to do a lot of integration work.

Gardner: And how long has Fairchild been using Workday for their human capital management activities?

Lones: We've just recently gone live with Workday and several of their partners and have completely transformed our human capital management landscape with Fairchild.

Gardner: When you started to do this, I would think that that involved a number of integration points. Perhaps you could share how that works and then we would like to hear more from Workday about why their Workday Integration Cloud announcement has come to up to the bat to start swinging at this problem.

Lones: Sure. For the Workday partners who I was talking about earlier, those integrations are handled between Workday and their partner, which reduced our integration burden. We don't have to maintain those, as both of those applications continue to improve. In addition to that, we've built 28 application integrations ourselves, largely to benefit service providers and payroll service providers around the world.

Gardner: And you were using your tools or leveraging some of the investments you have made? How did you build those integrations?

Lones: We were fortunate enough that we were able to get some early access to the toolset that Workday is now making available to their broader customer and partner base.

I had a small team of IT staff that was completely unfamiliar with Workday when they first started, and we put them to work on these integrations. We were able to complete these 28 integrations in less than 120 days, which I think was pretty good performance.

Gardner: Just for comparison sake, how long would that perhaps taken in a traditional enterprise application integration (EAI) environment?

Lones: I wouldn't want to necessarily put a date on that. We do know that from an overall project implementation perspective that an on-premises application typically will take 2-3 times as long to execute, and I'd expect that the integration piece would have a similar scaling.

Gardner: Alright. Well, let's dig in a little bit more with the announcement recently that Workday made -- something called the Workday Integration Cloud. Stan, give us the top-down understanding of what this is about.

Important components

Swete: The Workday Integration Cloud is an extension of Workday's cloud that we use to host and process our on-demand applications and it has several really important components. One is a platform component. The tools that Paul mentioned that they used to build integrations, up until today, have been there for Workday developers. The announcement makes these tools fully available to Workday customers and to Workday partners.

In addition to the tools, there is a rich enterprise service bus (ESB) execution environment that runs the results of these developmental tools. We offer not only the tools to build integration systems but the execution environment for the integration systems. And then we've a set of scheduling and monitoring tools that our customers can use to directly schedule and monitor the execution of their integrations.

So those three things taken together form the platform, that's part of the integration cloud. The resulting integration systems we also consider a part of the cloud. Workday for some time has been building what we call Packaged Integrations and Connectors. We have a library of those that we can make available to our customers.

Fairchild has used some of these. These integrations are built with our tooling by us and for our customers. Packaged integrations really just look like another Workday product, but they handle both ends of the integration challenge.

We also have connectors that handle our end of it but build logic out. The main example is a payroll interface product that lets our customers, gives our customers a starting point for hooking up Workday human capital management to the variety of international payrolls many of our larger customers have.

This is very solid ESB technology, well thought of by the engineering talent that we now own.



Packaged integrations from Workday is another component of the Integration Cloud and the final one is just the body of integrations that our customers and partners create.

These are the intellectual property of our customers and our partners. Workday does facilitate sharing of those definitions if the customer and partners are interested, but there is that growing body of application as well. Those things taken together are the Workday Integration Cloud.

Gardner: And just to be clear, this is designed for your customers. This isn't just a general purpose integration service that you are opening up writ large. This is about your ecosystem and your customers, is that right?

Swete: The beauty of it is that it's based on middleware from a company formerly called Cape Clear that Workday acquired three years ago. I think that's very important to mention that. So it's not like we, an apps vendor, just did our take on an ESB. This is very solid ESB technology, well thought of by the engineering talent that we now own.

Built-in integration

W
e're taking this technology and integrating it into our applications, building integration into our applications as the way we refer to it, and then making the combined product available to both our customers and our partners. The partners are the equally important point. Systems integration partners from Workday can get access to these tools and this platform.

Gardner: And how about the pricing. Is this something that you would just check a box off and get a different bill for? How does this relate to the existing suite of application services you providing?

Swete: The Workday Integration Cloud platform is being made available at no additional cost to Workday customers and Workday partners. We make our money selling our application services.

Gardner: I'm intrigued by this notion of making integration part of the application. I think the history of this, Paul, has been that over the years, new applications and platforms, and even models of computing would come along. You would get great productivity from the application, you would buy and install and master the platform, and then you would be faced with an integration problem.

This is happened over and over again. We've seen it with mainframes to client-server and then into multi-tier and distributing computing and then ultimately with web and now cloud computing.

Companies like ours and many companies working on this are moving from a monolithic internal application orientation to one that's more of a hybrid model.



Given that integration has been a bolt-on, something that's been delivered after they shift in an application model, why now change? Why is integration and the application coming together now?

Lones: Part of it is that our approach to overall enterprise architecture is changing. Companies like ours and many companies working on this are moving from a monolithic internal application orientation to one that's more of a hybrid model, where we want to really take advantage of the new capabilities and the quicker pace of development and deployment of improvements that SaaS providers offer.

Therefore, integrations naturally become a critical part of that, because the number of applications that we use in our business increases somewhat with this sort of approach.

Gardner: Same question to you, Stan. Why this need to bring an application and its integration features together?

Swete: The challenge here is that the requirements in the large problem of integration haven't changed, and there have been a lot of tools developed to address the issue. Some results have been achieved, but I don't think anyone is satisfied with how maintainable enterprise integration is. And, we happened to think the answer is to build more robust integration where the integration definitions themselves are more informed by what exists and what's changing in the application.

Hub system

That's the opportunity that we were seeing. We came on to it by just being the provider of an application that is going to be the hub system and be hooked up to a lot of different systems.

We knew that integration was going to be front and center for us as a brand new SaaS vendor six years ago. One of the differences we wanted to make was to do more about the problem. So, we started with an investment of technology.

Where that has led us is really tying what can get done with integration technology to what applications know about, everything from their security model to, in our case, we leverage a lot the fact that we know about people and how they are organized. So, we're able to have integration definitions that can get routed around for the appropriate approvals before certain steps happen.

That’s unique, but it's breaking down the separation between integration that would be built by one side of the company and tying it back to who it's really serving, the other side of the company.

For payroll integration, the payroll admin can be hooked into the fact that a major feed of HR data is going out to a payroll system and they can get a check on that before it happens. That’s something we’ve built in and we’ll continue to look for those opportunities. I still think it's actually early days for what our integration tools can leverage inside the application.

You still have to have experts on integration middleware and we have that, but the real benefit we think comes from blurring the distinction and marrying these things together.



Gardner: So, the system of record for HR and the governance and policies about employees and their roles in the organization can now be applied pretty seamlessly to who gets to do integrations and/or how integrations as part of a business process would work. Am I reading that right?

Swete: Yeah, how they get executed, how they get approved is all built in to the same sort of system that you use to schedule a report or any other thing you’d do in your application. For us, it's just an extension of the application, rather than a hard line and then some integration technology that no one on the app side understands.

There still are differences. You still have to have experts on integration middleware and we have that, but the real benefit we think comes from blurring the distinction and marrying these things together.

Gardner: So you mentioned some tools and Paul mentioned very compelling timeframe for creating 28 integrations. Who are the people who use these tools typically and are they same old software engineers that were building EAI connections, or is this a wider group of people? Who can take advantage of this tool capability?

Swete: We’ve taken the approach of splitting the development tools into a framework that is more geared for developing simple integrations, as we call them. This is one-way data in or one-way data out of Workday to third-party systems, and we have a tool called the Enterprise Interface Builder (EIB) that is a non-programmer could use. You still need to know that you are sending something to a secure FTP location, but you don’t have to be a developer.

Sets of choices

We give you a graphical user interface, we give you a selected set of choices for how you can source data, a selected set of choices for how you can transform it, and a select set of choices for how you can deliver it. You can save that, and then you have a definition that you can then schedule on a recurring basis. That’s built for non-developers.

The other tool that we have has a completely different personality. It's what we call Workday Studio. This is the developer tool that we have used to build our integrations, and it is now available for our customers. But, on this one, you want to be a developer. You're not doing programming, but you are working in an Eclipse-based framework with detailed control over integration components and orchestration of how data flows. So, this is a technical development tool.

The thing it creates is the same thing that the EIB creates, an integration system that can then be executed in Workday, but the creation of it is much more technical.

Lones: Along those lines, this is really a marriage between having a strong, skilled team of developers with a great tool set. So, it's not a substitute for having well-skilled staff in the IT organization.

Gardner: What about the idea here that integration can be better and newly leveraged because we’ve solved with a SaaS provider’s multitenancy architecture some of these thorny and complex issues about version heterogeneity within the organization?

A lot of times companies might want to update an application, but fear breaking or disrupting integrations. That integration in the traditional sense can become an impediment to the advancement of features and functions in applications.



A lot of times companies might want to update an application, but fear breaking or disrupting integrations. That integration in the traditional sense can become an impediment to the advancement of features and functions in applications.

Paul, did it occur to you that the multitenancy, the fact that everyone is on the same version of this app and that all the integrations follow through by virtue of the responsibility of the vendor, not the user, that that’s sort of added bonus. How have you recognized that and what does it mean to you?

Lones: It's an important part of thinking about the use of SaaS applications in a company like Fairchild. To the extent that it's easy to maintain those integrations through the improvement cycle, we are going to be much more willing to follow a SaaS model, because upgrades come every three or four months, depending on who the supplier is.

We like that model. We'd much rather have a small incremental improvement every three or four months than have this huge disruptive step function upgrade. Really, it typically is more like a reinstallation that occurs for large monolithic installed applications every two or three years. You need to have your integrations keep up, and that's an important consideration.

Gardner: So it's interesting, Stan. You have a user like Fairchild, using these tools, building these integrations, moving more towards a multiparty ecosystem process-oriented benefit, but the responsibility on those integrations is with you.

It seems as if you're really giving an awful lot here. How can you do that with a strong sense of confidence? Isn't there a risk that if these integrations start breaking that you are in the catbird seat?

Levels of the game

Swete: Yeah, well, there are levels of the game for how you can leverage the support you get out of the core application that we keep moving forward. One level of the game is for us that's very important in the integrations we build and sell are ones that can just share the application definitions. So, we support those across all the updates and verify that the logic of those is going to work.

For the integrations tools, we can put smarts into the tools that share how the applications are constructed in that. It gives our customers a leg-up that they can start with these components. Then they can create integrations that are a little bit more impervious to being broken by changes in the applications, because they're sharing metadata back into the applications.

Lots of integrations are built on our application programming interface (API) and so we've got to be rigorous about versioning the API and having a contract to support back versions that gives us a certain amount of insurance. It's not like that with some of these opened in the tools that there couldn't be logic and coding errors that are put in and those are the ones that we would have to encounter together with our customers and we're not going to debug every single one of those.

So, for different levels of the game, more packaged, complete support, on up to the more open-ended integrations, you do what you can to try to make it so the integrations are a little bit more robust than what would have been built with a separate tool set.

Gardner: Paul, it sounds less like a buyer-seller relationship than a partnership. Do you view it that way?

Our experience to date is that companies like ours have more of a voice in the feature improvements of the application.



Lones: We do. Our experience to date, working with providers like Workday and some of the other SaaS providers that we are fortunate enough to do business with, is that companies like ours have more of a voice in the feature improvements of the application.

There tends to be, and certainly it's the case with Workday, a much more active community of clients, users, that are sharing information about everything from somewhat technical to very business process-oriented experiences that all of us have had. That's a very different experience.

In some ways, it's sort of ironic to me that we view it quite a bit more as a partnership. A lot of people perhaps think that it's a SaaS application and, if things don't work out, then when your contract is up, you just go find another SaaS provider.

It is true that there might be a little bit more flexibility, but what we’re finding so far in our experience, and it is early, is that the receptivity and the sense of making improvements together, I think it will actually stick longer than maybe some of the traditional software applications.

Gardner: And just to help our listeners understand the extent of your project with Workday, how many employees were involved? Tell us a little bit about your organization, Fairchild Semiconductor, and your global footprint.

Global base

Lones: Fairchild Semiconductor has roughly 10,000 employees worldwide. We're a semiconductor manufacturing company. We have manufacturing facilities in the United States and throughout Asia. Our customer base is global, our employee base is global. Over 70 percent of our business is in Asia and 70 percent of our employees are in Asia. Having the capability to provide a core HR platform like this to that broad a set of colleagues around the world is really exciting for us, and to be able to support our internal customers and the HR group.

Gardner: And have you brought all of those 10,000 employees up on Workday or has it been a staggered rollout? How has that worked?

Lones: We’re at the very end of our go-live process and we introduced this to our colleagues around the world on April 4.

Gardner: One thing that’s interesting is the degree of integration complexity when you’re dealing with multiple markets. So if you’ve brought all of these employees around the world up on this system -- different payroll, different benefits, different government, different cultures -- how is that issue something you can tackle, given that Workday’s integration was a service to you?

Now, we’re looking forward to doing some additional integrations with some of our local payroll systems.



Lones: Well, we had a lot of payroll integrations. I don’t think we would have gotten those all done in the time frame we did without having that capability that Stan mentioned. In fact, with our legacy system, we actually stopped doing payroll integrations, because they were too hard.

Now, we’re looking forward to doing some additional integrations with some of our local payroll systems to improve that connectivity between our system of record for HR and the payroll service providers that we didn’t build integrations to in the past.

Traditionally, we built integrations only for our large-sized locations. There are smaller-sized locations where we have sales offices, and the like and we typically didn’t build those integrations. We’re going to go back and look at doing that now.

Gardner: Well great. Stan, let's take a look to the future. Where can this go? It seems if this is a proving ground given the number of different integration points, a global organization like Fairchild. I know you’re pointing this at your ecosystem and your customers, but if IaaS works here, couldn’t it potentially work anywhere?

Swete: It could work anywhere but we’ve got a lot to do here. I think that when we look toward the future, there are just several different dimensions where we have to build this up. One is something that Paul has been mentioning -- just the value of the ecosystem and I think we've got a good start, but there is a lot of building we can do there.

That is, we can use the fact that this platform is out there and available and proven to attract more and more partners to it both development partners as well as application partners who can be the other endpoint in integrations that we can support.

So, building out packaged integrations for us to enhance the ecosystem is one aspect. Deepening what the tools are doing is going to be a never-ending task. We’re just starting to have ideas about how to share application’s functionality, and embed that inside the tools to make them more powerful integration tools. I very much look forward to continuing to enhance our toolset and that will benefit the integrations our customers and partners build.

The final aspect is the one you hit on, community. We have to encourage people to want to share these integrations. We didn’t need to do more to automatically support that because our partners are going to be generating these things, as our customers, and in the SaaS community, there is just this great notion about sharing the things you do. So, we see supporting that and we can ultimately see that even leading to selling some of the things you do. All of those are potential features for this space.

Gardner: It seems to me a very extensible model.

Swete: Well, let's hope so. We think we’re just starting.

Gardner: Well great. You’ve been listening to a sponsored BriefingsDirect podcast discussion on how new forms of cloud-based integration are helping Fairchild Semiconductor build new relationships among and between extended enterprise business processes. They're doing that using the Workday Integration Cloud.

I’d like to thank our guests, Paul Lones, Senior Vice President for Information Technology at Fairchild Semiconductor. Thanks, Paul.

Lones: Thank you.

Gardner: And Stan Swete, Chief Technology Officer at Workday. Thanks, Stan.

Swete: Thank you, Dana.

Gardner: This is Dana Gardner, Principal Analyst at Interarbor Solutions. Thanks for listening and come back next time.

Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Download the transcript. Learn more. Sponsor: Workday.

Edited transcript of a BriefingsDirect podcast on new forms of cloud-based integration and its use in enterprise business processes. Copyright Interarbor Solutions, LLC, 2005-2011. All rights reserved.

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Tuesday, November 09, 2010

Architecture is Destiny: Why the Revolution in Business Interactions Can't Work on Conventional Databases

Transcript of a sponsored BriefingsDirect podcast on moving beyond relational databases and relying on services-based architectures.

Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Download the transcript. Sponsor: Workday.

Additional resources:

The Real SaaS Manifesto (whitepaper)
Things Large Enterprises Need to Know About SaaS
Strength from the Core: Why Bolted-On BI Doesn't Work for HR
Built-In Business Intelligence
Real Saas
Notes from Workday's Technology Summit

Dana Gardner: Hi, this is Dana Gardner, Principal Analyst at Interarbor Solutions, and you're listening to BriefingsDirect.

Thanks for joining this sponsored podcast discussion on how IT architectures at software-as-a-service (SaaS) providers provide significant advantages over traditional enterprise IT architectures.

We will look at how one human resources management (HRM), financial management and payroll SaaS provider, Workday, has from the very beginning moved beyond relational databases and distributed architectures that date to the mid-1990s. Instead, Workday has designed its architecture to provide secure transactions, wider integrations, and deep analysis off of the same data source -- all to better serve business needs.

The advantages of these modern services-based architecture can be passed on to the end users -- and across the ecosystem of business process partners -- at significantly lower cost than conventional IT.

I'm here now with a technology executive from Workday to explore how architecting properly provides the means to adapt and extend how businesses need to operate, and not be limited by how IT has operated.

So please join me now in welcoming Petros Dermetzis, Vice President of Development at Workday. Welcome to BriefingsDirect, Petros.

Petros Dermetzis: Hello, Dana. How are you?

Gardner: Very good. What is it that is different about a Workday stack versus a traditional enterprise IT stack?

Dermetzis: The luxury that Workday had at the very beginning was to start with an absolutely clean slate. Enterprise resource planning (ERP) solutions evolved over time and started adding technology solutions as problems occurred.

We have a unique opportunity to stand back and see what history and evolution provided over the past 20 years and say, "Okay, how can we provide one technology stack that starts addressing all those individual problems that started appearing over time?"

Gardner: It sounds as if a SaaS provider like Workday almost has the luxury of working the main architecture problem, rather than working many problems from what was already in place. Tell me about this clean slate. How important is that? How big of an advantage is that?

Climbing a ladder

Dermetzis: It’s a huge advantage. Look at most ERP vendors, for example. They started with a need to report data and very quickly realized it was like climbing a ladder of hierarchic needs. When you get your basic reporting right, you need to start analyzing data.

The technologies at the time, around the relational models, don’t actually address that very well. Then, you find other industries, like business intelligence (BI) vendors, appeared who tried to solve those problems.

What we try to do at Workday is understand holistically what the current problems are today, and say, "This is a golden opportunity." This is opposed to finding all existing technologies, cobbling them all together, and trying to solve the problems exactly the same way.

Is there a totally different innovative approach to addressing those problems?

Gardner: I have to imagine too that the requirements are different. Back when ERP was just coming into the mainstream, it was about just getting a handle on processes. Now, we're at the point of refining and extending processes. It’s a different set of requirements.

Dermetzis: If you go back in time to when mainframes started appearing, it was about transactions, capturing transactions, and safeguarding those transactions. IT was the center of the universe and they called the shots. As it evolved over time, IT began to realize that departments wanted their own solutions. They try to extract the data and take them into areas, such as spreadsheets and what have you, for further analysis.

We want to take it more to an area which is business interactions, and interactions can happen from humans or machines.



Obviously, they were solving the problem incrementally, as they were going along. What we tried to do was address it all in the same place. Where we are right now is what I would describe as very business transaction-centric in what I define as legacy applications. Then, we want to take it more to an area which is business interactions, and interactions can happen from humans or machines.

Gardner: Just for the edification of our listeners, Workday is focused on human resources management (HRM) and other employment-related issues, but also increasingly moving into a larger ERP and the business applications set. The important fact here is that in human resources you need to relate to outside entities. Maybe it’s payroll, maybe it’s insurance or healthcare. This puts you in an interesting position of mastering the integrations, something that’s probably going to become more important with cloud computing and other aspects of business over the coming years.

Dermetzis: That’s correct. If you think of the majority of the systems out there, the way we describe them is that they were built from the ground up as islands. It was really very data centric. The whole idea was that the ERP system gave all the solutions, which in reality isn't true.

If you're managing any system with HRM systems, you need to communicate with other systems, be it for background checks, for providing information to benefit providers, connecting to third-party payrolls, or what have you.

Adopting new standards

Right now, the state of the art is hardwiring most of these central solutions to these third-party solutions, and that basically doesn't scale. That’s where technology kicks in and you have to adopt new open standard and web services standards.

Gardner: Let's drill down a bit into existing legacy architecture. It was the right architecture for the job, but the job has changed. What can be done? As you mentioned earlier, people have incrementally added on over the years more and more. They have a sort of bolt-on mentality. What's wrong with that, and what can be done to move in a new direction?

Dermetzis: I would describe it more like an onion. We keep on adding more and more and more layers of vendors, and the more the poor enterprise IT customers are trying to peel it, the more they start crying -- crying in terms of maintenance and maintenance dollars.

Just to introduce the basic concept of how applications are being built, they are being built with the idea of storing, managing, and safeguarding the transactions.

Applications are built on top of relational databases today, and then they are being designed thinking about the end-user, sitting in front of a browser, interacting with the system. But, really they were designed around capturing the transaction and being able to report straight-off that transaction.

However, all the business logic, all the security, and the whole data structure that hangs together, is known by the application and not by the database.



The idea of integrating with third parties was an afterthought. Being an afterthought, what happened was that you find this new industry emerging, which is around extract, transform and load (ETL) tools and integration tools. It was a realization that we have to coexist within the many systems.

What happened was that they bolted on these integration third-party systems straight onto the database. That sounds very good. However, all the business logic, all the security, and the whole data structure that hangs together is known by the application -- and not by the database. When you bolt-on an integration technology on the side, you lose all that. You have to recreate it in the third-party technology.

Similarly, when it comes to reporting, relational technology does a phenomenal job with the use of SQL and producing reports, which I will define as two-dimensional reports, for producing lists, matrix reports, and summary reports. But, eventually, as business evolves, you need to analyze data and you have to create this idea of dimensionality. Well, yet another industry was created -- and it was bolted back onto the database level, which is the [BI] analytics, and this created cubes.

In fact, what they used were object-oriented technologies and in-memory solutions for reasons of performance to be able to analyze data. This is currently the state of the art.

Gardner: And this is fairly expensive. When you have to buy the bolt-on, you have to manage the integrations yourselves. You have to troubleshoot where it's going to break and where it's brittle. Then, of course, you have to add what you can for security and maintenance over time to keep up that needed level of security. We're talking about some significant cost.

Why don't we address that? Why is this bolt-on approach not just problematic technologically, but also very expensive?

Things are never stable

Dermetzis: That’s absolutely true. In fact, if you think about it, you can actually buy something. You can buy an older application, a legacy application and you can bolt-these integrations and analytics components onto it. You can get it up and running, and everyone is happy.

But then, things are never stable. Vendors update things, change things. They upgrade, they apply fixes and patches, change their data models. And what you have done is, in effect, you have alienated and broken these third-party bolt-ons.

IT shops have hundreds and hundreds of integrations hanging over this all. And, the times comes when they don't want to accept anything, not even a bug fix from a vendor, because they know they're going to break their integrations. That’s just maintainability, and that’s just dollars and dollars and dollars that you need to spend to maintain things.

And you can't get new functionality, new innovative solutions, because as soon as you go back and start changing things downstream, well ... the costs are huge.

Gardner: So, with Workday, or any SaaS provider that’s architecting for the future, you're able to address some of these issues for your architecture, but you're also able to add new technology based on the architecture, not as an adjunct or an additional bolt-on product.

The reality around ERP systems is actually making all this work together.



This is happening behind the scenes. You're able to improve your security, keep up any patches that you need to do, while at the same time increasing the frequency through which these end users can enjoy these improvements.

So, we've got, I think, two benefits here. One is the initial architecture, and two is the fact that you're managing all that maintenance. Please tell me why these two aspects are important and what you did to make it improved over the past systems.

Dermetzis: The way things evolved, you started with an application, and integrations were an afterthought; they got bolted on. Analytics was an afterthought, and that got bolted on.

What we tried to do at Workday was start from a complete white sheet of paper. The reality around ERP systems is actually making all this work together. You want your transactions, you want your validations, you want to secure your data, and at the same time you want access to that data and to be able to analyze it. So, that’s the problem we set out to do.

What drove our technology architecture was first, we have a very simple mentality. You have a central system that stores transactions, and you make sure that it's safe, secure, encrypted, and all these great words. At the same time, we appreciate that systems, as well as humans, interact with this central transactional system. So we treat them not as an afterthought, but as equal citizens.

Additional resources:

The Real SaaS Manifesto (whitepaper)
Things Large Enterprises Need to Know About SaaS
Strength from the Core: Why Bolted-On BI Doesn't Work for HR
Built-In Business Intelligence
Real Saas
Notes from Workday's Technology Summit

The same treatment

Any request that comes into our system, be it from a UI or from a third-party system by integrations, we treat exactly the same way. They go through exactly the same functional application security. It knows exactly what the structure of your object model is. It gets evaluated exactly the same way and then it serves back the answer. So that fundamental principle solves most of our integration problems.

On the integration side, we just work off open standards. The only way that you can talk with a third-party system with Workday is through web services, and those services are contracts that we spec to the outside world. We may change things internally, but that’s our problem.

We're a SaaS vendor, and we do modify things and we add things, but those external contracts, which are the Web services talking to third-party systems, we respect and we don’t change. So, in effect, we do not break the integrations.

The next one is about analyzing data. As I said, there are a lot of technologies out there that do a very good job at lists and matrix reporting. Eventually, most of these things end up in spreadsheets, where people do further analysis.

But the dream that we are aiming for continuously is: when you are looking at a screen, you see a number. That number could be an accumulation of counts that you'd be really interested in clicking on and finding out what those counts are -- name of applicants, name of positions, number of assets that you have. Or, it's an accumulation. You look at the balance sheet. You look at the big number. You want to click and figure out what comprises that number.

To do that, you have to have that analytical component and your transactional component all in the same place. You can't afford what I call I/Os. It's a huge penalty to go back and forth through a relational database on a disk. So, that forces you to bring everything into memory, because people expect to click something and within earth time get a response.

The technology solutions that we opted for was this totally in-memory object model that allows us to do the basic embedded analytics, taking action on everything you see on the screen.



When you are traversing, you come to a number in a balance sheet, and as you're drilling around, what you are really doing in effect is traversing an object model underneath, and you should be able to get that for nothing.

The technology solutions that we opted for was this totally in-memory object model that allows us to do the basic embedded analytics, taking action on everything you see on the screen.

Gardner: And that common approach with the juxtaposition of the logic and the data also allows you to update your system without worrying about all of those bolted-on aspects breaking, which gets us back to that ability to update, refresh, and deliver new benefits fairly rapidly.

One code line

Dermetzis: That’s absolutely true as well. As soon as you can have the luxury of maintaining one system, let's call it one code line, and you're hanging our customers, our tenants, off that one single code line, it allows you to do very, very frequent upgrades or updates or new releases, if you wish, to that central code line, because you only have to maintain one thing.

And, there is another bit of technology that you add to that. We're a totally metadata-driven technology stack. Right now, we put out what we describe as updates three times a year. You put new applications, new features, and new innovations into the hands of your customers, and being in only one central place, we get immediate feedback on the usage, which we can enhance. And, we just keep on going on and keep on adding and adding more and more and more.

This is something that was an absolute luxury in your legacy stack, to take a complete release. You have to live through all the breakages that we mentioned before around integrations and the analytical component.

Gardner: Could you explain about that persistence layer? You started to get into it a bit with the metadata. Explain that a bit more in more detail if you would.

Dermetzis: The persistence layer is really forced by the analytical components. When you're analyzing information, it has to perform extremely fast. You only have one option, and that is memory. So, you have to bring everything up in-memory.

What you used to use in legacy system was putting things on tape for safety and archiving reasons. We use disk, and we actually believe, if you look at the future, that nearly everything will be done exclusively in-memory.



We do use a relational component, but not as a relational database. We use a relational database, which is what it’s really good at securing your data, encrypting your data, backing up your data, restoring it, replicating it, and all these great utilities the database gives you, but we don’t use a relational model. We use an object model, which is all in-memory.

But, you need to store things somewhere. In fact, we have a belief at Workday that the disk, which is more the relational component, is the future tape. What you used to use in legacy system was putting things on tape for safety and archiving reasons. We use disk, and we actually believe, if you look at the future, that nearly everything will be done exclusively in-memory.

Gardner: So, the architecture is destiny and we can see the architecture is shifting. I wonder about if I'm an enterprise IT individual. I really understand the architecture, and I enjoy your position of being able to do it the right way from your vantage point. But I can’t, as this IT leader. I have other restrictions. I have this large installed base that I need to maintain. How is it that these can coexist? How is it that a SaaS provider like Workday integrates to enterprise XYZ with a lot of legacy ERP? What’s the connection point there?

Dermetzis: The main connections that you have with systems are when you want to start creating applications or sharing information from other systems. As I mentioned before, when it comes to integrations, the only way you talk to Workday is via web services.

We still have systems that require a flat file, a comma-delimited file, that we need to send to them. That’s the point where we have a technology around our enterprise service plus our integration server that actually talks the language that we do, standards web service based. At the same time, it's able to transform any bit of that information to whatever the receiving component wants, whether it’s banking, the various formats, or whatever is out there.

We put the technology into the hands of our customers to be able to ratchet down the latest technology to whatever other files structures that they currently have. We provide that to our customers, so they can connect them to the card-scanning systems, security systems, badging systems, or even their own financial systems that they may have in house.

Gardner: I suppose the point there is that you're forward-compatible, based on our earlier discussion points about being able to move to the future, bring in new technologies, and keep up-to-date with security and other best practices, but you are also backward-compatible, based on your architecture for integration.

Straightforward approach

Dermetzis: That’s correct. In fact, it's the beauty of working with forward-thinking companies. I'll use an example of Salesforce.com. Our integration with Salesforce is totally web services talking to web services -- straightforward. We have a contract called web service. They have a similar contract. It just works, whatever we do or whatever they do. We don’t break each other.

It’s a whole different conversation, when you are trying to integrate some of our payroll output into one of our customers who has an SAP financial system. So, we are going to have to ratchet that down all the way to whatever file format that party vendor has. But we can do it, and we have the technology to put it in the hands of our customers.

Gardner: The architecture you've been describing at Workday not only benefits the end users, not only provides the forward- and backward-compatibility, but you have also architected for your own business model, I assume, which involves the need for multi-tenancy. You want to provide the lowest cost services for your own business model, but that I suppose also has architectural benefits. Tell me how the architecture relates to multi-tenancy and why that’s important for you as an organization.

Dermetzis: Multi-tenancy is one of the core ingredients, if you want to become a SaaS vendor. Now, I'm not an advocate of saying multi-tenancy A is better than multi-tenancy B. There are different ways you can solve the multi-tenancy problems. You can do it at the database level, the application level, or the hardware level. There’s no right or wrong one. The main difference is, what does it cost?

All we're looking at is one single code line that we have to maintain and secure continuously.



We believe in one single code line, and multiple tenants are sharing that single code line. That reduces all our efforts around revving it and updating it. That does result in cost savings for the vendor, in other words, ourselves.

And as far back as I can remember, when humans realized that you take time and material, package that for a profit, and send it to your end-market, as soon as you can reduce your cost of the time or the material, you can either pocket the difference, or move that cost saving onto your customers.

We believe that multi-tenancy is one of the key ingredients of reducing the cost of maintenance that we have internally. At the same time, it allows us to rev new innovative applications out to the market very quickly, get feedback for it, and pass that cost savings on to our customers, which then they can take that and invest in whatever they do -- making carpets, yogurt, or electric motors.

Gardner: This architectural approach, with its benefits around analytics, integration, the single source code, and the multi-tenancy values, the ability to adapt quickly and pass those updates along without disruption, all points to almost a revolution in how IT is conducted.

What does that mean for organizations that don’t take the plunge, whether they do this on their own architectures or they start to use more of the outside providers? It almost sounds like there is going to be a sort of a haves or have-nots split in the market in terms of how people adapt to these new IT economics?

Dermetzis: We're living through, or we're creating a revolution in the ERP industry. As always, you have early adopters. At the other end of the bell-shaped curve, you've got the laggards. When you're talking to forward thinking, modern thinking, profit-oriented, innovative companies, they very quickly appreciate that the way to go is SaaS.

Security questions

Now, they've got a bunch of questions, and most of the questions are around security -- "Is my data safe?" We have a huge variety of ways of assuring our customers that these are actually probably safer in our environment than on premise.

Some customers wait, and some will just jump in the pool with everyone else. We are in our fifth year of existence, and it’s very interesting to see how our customers are scaling from the small, lower end, to huge companies and corporations that are running on Workday.

Gardner: What can we look to in the future? If we go back to that future-proofing benefit, the architecture that you are using, the benefits and value that you are able to pass along in terms of functional improvements, more rapidly adopted, and these economic benefits, what’s next?

Is there a benefit to going into the mobile tier? Are there benefits of adopting other source applications, cloud computing or third-party ecosystems? By doing this architecture properly, what can we expect as new trends in IT and business unfold?

Dermetzis: The thing that moves incredibly fast in the market is where humans interact. If you think way back when, there were green screens, and then we moved to client server, where everything was based on a Windows-based machine. Then, you move into the Internet, so you are actually touching more and more and more users. Right now, I think the next revolution is around mobile devices.

The trick here is how you can provide similar functionality that you have on a browser-based system onto the devices very simply and quickly.



There are two types of users normally in an enterprise. First, are the users who are the administrative users, the HR partners, the procurement clerks, everyone who actually needs the back-end system, and there’s one way to address that. They normally sit in front of their computers and browsers most of the day.

Then, you have the other population, the real population of a company, which is the operational side. They don’t even care if they have a back-end ERP system. Where the future there is that they will interact with the back-end, without even knowing it’s there, via mobile devices.

The trick here is how you can provide similar functionality that you have on a browser-based system onto the devices very simply and quickly. By the way, the device world is changing continuously. The interaction that you get from an iPhone is very different than what you will get from an Android, or what you will get from a BlackBerry. So that comes back to the vendor. The way you should be architecting your product should be end-user or end-device agnostic, as much as possible.

That’s where the future is. For devices that come out of Apple, you have to go native, because people expect a certain user behavior. The better job we do there, they don’t even have to care if Workday is on the back-end. They can do their expenses, their time reporting, and their approvals.

The other devices, which are more browser-based, require something more like an HTML technology to be able to provide the solutions for those devices. So, your back-end technology must be able to be versatile enough to keep up with that growing device evolution that’s going on right now.

Gardner: So it sounds like we are back to that conundrum of the onion, where we have got yet another layer now, managing how the mobile tier and various devices within that mobile environment relate back to the logic and the data. For IT, this is not a minor, trivial issue, but a SaaS provider is going to work this through. They have to, and they probably are well on their way to doing it.

Back to technology

Dermetzis: That’s exactly right. It comes back to technology, again. What we have on the back-end, the way we build our business logic, the business logic is agnostic. If the request comes in from a user or a system, the people who actually build the business logic themselves have got no control over what it looks like.

Now, what does that mean? From a technology point of view, they focus on the business logic and the validation in that behavior, and the tool will take care of rendering it on a browser or on a mobile device.

So, today, we're an Adobe Flex-based front end browser. Tomorrow it’s Silverlight, HTML5, whatever it is. The way you architect your product, you should be able to always be on the latest and greatest technology out there, without having to rewrite your application.

Gardner: Well, great. I am afraid we will have to leave it there. We've been discussing the advantages of modern services architecture and how those benefits can be passed on to users and extend both in terms of forwards compatibility and also legacy or backwards compatibility. We've been comparing and contrasting this to what a lot of enterprises have as a vestige of the 1990s in terms of their IT.

I want to thank our guest. We've been talking about this with Petros Dermetzis, Vice President of Development at Workday. Thank you, Petros.

Dermetzis: Dana, thank you for your time.

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

Additional resources:

The Real SaaS Manifesto (whitepaper)
Things Large Enterprises Need to Know About SaaS
Strength from the Core: Why Bolted-On BI Doesn't Work for HR
Built-In Business Intelligence
Real Saas
Notes from Workday's Technology Summit

Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Download the transcript. Sponsor: Workday.

Transcript of a sponsored BriefingsDirect podcast on moving beyond relational databases and relying on services-based architectures. Copyright Interarbor Solutions, LLC, 2005-2010. All rights reserved.

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