Monday, July 20, 2015

How Big Data Powers GameStop to Gain Retail Advantage and Deep Insights into its Markets

Transcript of a BriefingsDirect discussion on how a gaming retailer uses big data to gather insights into sales trends and customer wants and needs.

Listen to the podcast. Find it on iTunes. Get the mobile app for iOS or Android. Download the transcript. Sponsor: HP.

Dana Gardner: Hello, and welcome to the next edition of the HP Discover Podcast Series. I'm Dana Gardner, Principal Analyst at Interarbor Solutions, your host and moderator for this ongoing sponsored discussion on IT innovation and how it’s making an impact on people’s lives.

Gardner
Once again, we're focusing on how companies are adapting to the new style of IT to improve IT performance and deliver better user experiences, as well as better business results.

Our next innovation case study interview highlights how GameStop, based in Grapevine, Texas uses big data to improve how it conducts its business and serve its customers. To learn more about how they deploy big data and use the resulting analytics, we are joined by John Crossen, Data Warehouse Lead at GameStop. Welcome, John.

John Crossen: Thank you for having me.
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Gardner: Tell us a little bit about GameStop. Most people are probably familiar with the retail outlets that they see, where you can buy, rent, trade games, and learn more about games. Why is big data important to your organization?

Crossen: We wanted to get a better idea of who our customers are, how we can better serve our customers and what types of needs they may have. With prior reporting, we would get good overall views of here’s how the company is doing or here’s how a particular game series is selling, but we weren’t able to tie that to activities of individual customers and possible future activity of future customers, using more of a traditional SQL-based platform that would just deliver flat reports.

Crossen
So, our goal was to get s more 360-degree view of our customer and we realized pretty quickly that, using our existing toolsets and methodologies, that wasn’t going to be possible. That’s where Vertica ended up coming into play to drive us in that direction.

Gardner: Just so we have a sense of this scale here, how many retail outlets does GameStop support and where are you located?

Crossen:  We're international. There are approximately 4,200 stores in the US and another 2,200 international.

Gardner: And in terms of the type of data that you are acquiring, is this all internal data or do you go to external data sources and how do you to bring that together?

Internal data

Crossen: It's primarily internal data. We get data from our website. We have the PowerUp Rewards program that customers can choose to join, and we have data from individual cash registers and all those stores.

Gardner: I know from experience in my own family that gaming is a very fast-moving industry. We’ve quickly gone from different platforms to different game types and different technologies when we're interacting with the games.

It's a very dynamic changeable landscape for the users, as well as, of course, the providers of games. You are sort of in the middle. You're right between the users and the vendors. You must be very important to the whole ecosystem.

Crossen: Most definitely, and there aren’t really many game retailers left anymore. GameStop is certainly the preeminent one. So a lot of customers come not just to purchase a game, but get information from store associates. We have Game Informer Magazine that people like to read and we have content on the website as well.

Gardner: Now that you know where to get the data and you have the data, how big is it? How difficult is it to manage? Are you looking for real-time or batch? How do you then move forward from that data to some business outcome?

Crossen: It’s primarily batch at this point. The registers close at night, and we get data from registers and loads that into HP Vertica. When we started approximately two years ago, we didn't have a single byte in Vertica. Now, we have pretty close to 24 terabytes of data. It's primarily customer data on individual customers, as well Weblogs or mobile application data.
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Gardner: I should think that when you analyze which games are being bought, which ones are being traded, which ones are price-sensitive and move at a certain price or not, you're really at the vanguard of knowing the trends in the gaming industry -- even perhaps before anyone else. How has that worked for you, and what are you finding?

Crossen: A lot of it is just based on determining who is likely to buy which series of games. So you won't market the next Call of Duty 3 or something like that to somebody who's buying your children's games. We are not going to ask people buy Call of Duty 3, rather than My Little Pony 6.

The interesting thing, at least with games and video game systems, is that when we sell them new, there's no price movement. Every game is the same price in any store. So we have to rely on other things like customer service and getting information to the customer to drive game sales. Used games are a bit of a different story.

Gardner: Now back to Vertica. Given that you've been using this for a few years and you have such a substantial data lake, what is it about Vertica that works for you? What are learning here at the conference that intrigues you about the future?

Quick reports

Crossen: The initial push with HP Vertica was just to get reports fast. We had processes that literally took a day to run to accumulate data. Now, in Vertica, we can pull that same data out in five minutes. I think that if we spend a little bit more time, we could probably get it faster than half of that.

The first big push was just speed. The second wave after that was bringing in data sources that were unattainable before, like web-click data, a tremendous amount of data, loading that into SQL, and then being able to query it out of SQL. This wasn't doable before, and it’s made it do that. At first, it was faster data, then acquiring new data and finding different ways to tie different data elements together that we haven’t done before.

Gardner: How about visualization of these reports? How do you serve up those reports and do you make your inference and analytics outputs available to all your employees? How do you distribute it? Is there sort of an innovation curve that you're following in terms of what they do with that data?
We had processes that literally took a day to run to accumulate data. Now, in Vertica, we can pull that same data out in five minutes.

Crossen: As far as a platform, we use Tableau as our visualization tool. We’ve used a kind of an ad-hoc environment to write direct SQL queries to pull data out, but Tableau serves the primary tool.

Gardner: In that data input area, what integration technologies are you interested in? What would you like to see HP do differently? Are you happy with the way SQL, Vertica, Hadoop, and other technologies are coming together? Where would you like to see that go?

Crossen: A lot of our source systems are either SQL-server based or just flat files. For flat files, we use the Copy Command to bring data, and that’s very fast. With Vertica 7, they released the Microsoft SQL Connector.

So we're able to use our existing SQL Server Integration Services (SSIS) data flows and change the output from another SQL table to direct me into Vertica. It uses the Copy Command under the covers and that’s been a major improvement. Before that, we had to stage the data somewhere else and then use the Copy Command to bring it in or try to use Open Database Connectivity (ODBC) to bring it in, which wasn’t very efficient.

20/20 hindsight

Gardner: How about words of wisdom from your 20/20 hindsight? Others are also thinking about moving from a standard relational database environment towards big data stores for analytics and speed and velocity of their reports. Any advice you might offer organizations as they're making that transition, now that you’ve done it?

Crossen: Just to better understand how a column-store database works, and how that's different from a traditional row-based database. It's a different mindset, everything from how you are going to lay out data modeling.
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For example, in a row database you would tend to freak out if you had a 700-column table. In the column stores, that doesn’t really matter. So just to get in the right mindset of here’s how a column-store database works, and not try to duplicate row-based system in the column-store system.

Gardner: Great. I am afraid we’ll have to leave it there. I’d like to thank our guest, John Crossen, the Data Warehouse Lead at GameStop in Grapevine, Texas. I appreciate your input.

Crossen: Thank you.

Gardner: And also thank to our audience for joining us for this special new style of IT discussion. I'm Dana Gardner, Principal Analyst at Interarbor Solutions, your host for this ongoing series of HP-sponsored discussions. Thanks again for listening, and come back next time.

Listen to the podcast. Find it on iTunes. Get the mobile app for iOS or Android. Download the transcript. Sponsor: HP.

Transcript of a BriefingsDirect discussion on how a gaming retailer uses big data to gather insights into sales trends and customer wants and needs. Copyright Interarbor Solutions, LLC, 2005-2015. All rights reserved.

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Monday, July 13, 2015

A Tale of Two IT Departments, or How Cloud Governance is Essential in the Bimodal IT Era

Transcript of a BriefingsDirect discussion on the role of cloud governance and enterprise architecture and how they work together in the era of increasingly fragmented IT.
Listen to the podcast. Find it on iTunes. Get the mobile app for iOS or Android. Download the transcript. Sponsor: The Open Group.

Dana Gardner: Hello, and welcome to a special BriefingsDirect thought leadership panel discussion, coming to you in conjunction with The Open Group's upcoming conference on July 20, 2015 in Baltimore.

I'm Dana Gardner, Principal Analyst at Interarbor Solutions, and I'll be your host and moderator as we examine the role that cloud governance and enterprise architecture play in an era of increasingly fragmented IT.
Gardner

Not only are IT organizations dealing with so-called shadow IT and myriad proof-of-concept affairs, there is now a strong rationale for fostering what Gartner calls Bimodal IT. There's a strong case to be made for exploiting the strengths of several different flavors of IT, except that -- at the same time -- businesses are asking IT in total to be faster, better, and cheaper.

The topic before us is how to allow for the benefits of Bimodal IT or even multimodal IT, but without IT fragmentation leading to fractured and even broken businesses.
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Here to update us on the work of The Open Group Cloud Governance initiatives and working groups and to further explore the ways that companies can better manage and thrive with hybrid IT are our guests. We're here with Dr. Chris Harding, Director for Interoperability and Cloud Computing Forum Director at The Open Group. Welcome, Chris.

Dr. Chris Harding: Thank you, Dana. It’s great to be here.

Gardner: We're also here with David Janson, Executive IT Architect and Business Solutions Professional with the IBM Industry Solutions Team for Central and Eastern Europe and a leading contributor to The Open Group Cloud Governance Project. Welcome, David.

David Janson: Thank you. Glad to be here.

Gardner: Lastly, we here with Nadhan, HP Distinguished Technologist and Cloud Adviser and Co-Chairman of The Open Group Cloud Governance Project. Welcome, Nadhan.

Nadhan: Thank you, Dana. It’s a pleasure to be here.

IT trends

Gardner: Before we get into an update on The Open Group Cloud Governance initiatives, in many ways over the past decades IT has always been somewhat fragmented. Very few companies have been able to keep all their IT oars rowing in the same direction, if you will. But today things seem to be changing so rapidly that some degree of disparate IT methods are necessary. We might even think of old IT and new IT, and this may even be desirable.

But what are the trends that are driving this need for a multimodal IT? What's accelerating the need for different types of IT, and how can we think about retaining a common governance, and even a frameworks-driven enterprise architecture umbrella, over these IT elements?

Nadhan: Basically, the change that we're going through is really driven by the business. Business today has much more rapid access to the services that IT has traditionally provided. Business has a need to react to its own customers in a much more agile manner than they were traditionally used to.

Nadhan
We now have to react to demands where we're talking days and weeks instead of months and years. Businesses today have a choice. Business units are no longer dependent on the traditional IT to avail themselves of the services provided. Instead, they can go out and use the services that are available external to the enterprise.

To a great extent, the advent of social media has also resulted in direct customer feedback on the sentiment from the external customer that businesses need to react to. That is actually changing the timelines. It is requiring IT to be delivered at the pace of business. And the very definition of IT is undergoing a change, where we need to have the right paradigm, the right technology, and the right solution for the right business function and therefore the right application.

Since the choices have increased with the new style of IT, the manner in which you pair them up, the solutions with the problems, also has significantly changed. With more choices, come more such pairs on which solution is right for which problem. That's really what has caused the change that we're going through.
With more choices, come more such pairs on which solution is right for which problem.

A change of this magnitude requires governance that goes across building up on the traditional governance that was always in play, requiring elements like cloud to have governance that is more specific to solutions that are in the cloud across the whole lifecycle of cloud solutions deployment.

Gardner: David, do you agree that this seems to be a natural evolution, based on business requirements, that we basically spin out different types of IT within the same organization to address some of these issues around agility? Or is this perhaps a bad thing, something that’s unnatural and should be avoided?

Janson: In many ways, this follows a repeating pattern we've seen with other kinds of transformations in business and IT. Not to diminish the specifics about what we're looking at today, but I think there are some repeating patterns here.

There are new disruptive events that compete with the status quo. Those things that have been optimized, proven, and settled into sort of a consistent groove can compete with each other. Excitement about the new value that can be produced by new approaches generates momentum, and so far this actually sounds like a healthy state of vitality.

Good governance

However, one of the challenges is that the excitement potentially can lead to overlooking other important factors, and that’s where I think good governance practices can help.

For example, governance helps remind people about important durable principles that should be guiding their decisions, important considerations that we don’t want to forget or under-appreciate as we roll through stages of change and transformation.

At the same time, governance practices need to evolve so that it can adapt to new things that fit into the governance framework. What are those things and how do we govern those? So governance needs to evolve at the same time.

There is a pattern here with some specific things that are new today, but there is a repeating pattern as well, something we can learn from.

Gardner: Chris Harding, is there a built-in capability with cloud governance that anticipates some of these issues around different styles or flavors or even velocity of IT innovation that can then allow for that innovation and experimentation, but then keep it all under the same umbrella with a common management and visibility?

Harding: There are a number of forces at play here, and there are three separate trends that we've seen, or at least that I have observed, in discussions with members within The Open Group that relate to this.

Harding
The first is one that Nadhan mentioned, the possibility of outsourcing IT. I remember a member’s meeting a few years ago, when one of our members who worked for a company that was starting a cloud brokerage activity happened to mention that two major clients were going to do away with their IT departments completely and just go for cloud brokerage. You could see the jaws drop around the table, particularly with the representatives who were from company corporate IT departments.

Of course, cloud brokers haven’t taken over from corporate IT, but there has been that trend toward things moving out of the enterprise to bring in IT services from elsewhere.

That’s all very well to do that, but from a governance perspective, you may have an easy life if you outsource all of your IT to a broker somewhere, but if you fail to comply with regulations, the broker won’t go to jail; you will go to jail.

So you need to make sure that you retain control at the governance level over what is happening from the point of view of compliance. You probably also want to make sure that your architecture principles are followed and retain governance control to enable that to happen. That’s the first trend and the governance implication of it.

In response to that, a second trend that we see is that IT departments have reacted often by becoming quite like brokers themselves -- providing services, maybe providing hybrid cloud services or private cloud services within the enterprise, or maybe sourcing cloud services from outside. So that’s a way that IT has moved in the past and maybe still is moving.

Third trend

The third trend that we're seeing in some cases is that multi-discipline teams within line of business divisions, including both business people and technical people, address the business problems. This is the way that some companies are addressing the need to be on top of the technology in order to innovate at a business level. That is an interesting and, I think, a very healthy development.

So maybe, yes, we are seeing a bimodal splitting in IT between the traditional IT and the more flexible and agile IT, but maybe you could say that that second part belongs really in the line of business departments -- rather than in the IT departments. That's at least how I see it.

Nadhan: I'd like to build on a point that David made earlier about repeating patterns. I can relate to that very well within The Open Group, speaking about the Cloud Governance Project. Truth be told, as we continue to evolve the content in cloud governance, some of the seeding content actually came from the SOA Governance Project that The Open Group worked on a few years back. So the point David made about the repeating patterns resonates very well with that particular case in mind.
I think there's a repeating pattern here of new approaches, new ways of doing things, coming into the picture.

Gardner: So we've been through this before. When there is change and disruption, sometimes it’s required for a new version of methodologies and best practices to emerge, perhaps even associated with specific technologies. Then, over time, we see that folded back in to IT in general, or maybe it’s pushed back out into the business, as Chris alluded to.

My question, though, is how we make sure that these don’t become disruptive and negative influences over time. Maybe governance and enterprise architecture principles can prevent that. So is there something about the cloud governance, which I think really anticipates a hybrid model, particularly a cloud hybrid model, that would be germane and appropriate for a hybrid IT environment?

David Janson, is there a cloud governance benefit in managing hybrid IT?

Janson: There most definitely is. I tend to think that hybrid IT is probably where we're headed. I don’t think this is avoidable. My editorial comment upon that is that’s an unavoidable direction we're going in. Part of the reason I say that is I think there's a repeating pattern here of new approaches, new ways of doing things, coming into the picture.

Janson
And then some balancing acts goes on, where people look at more traditional ways versus the new approaches people are talking about, and eventually they look at the strengths and weaknesses of both.

There's going to be some disruption, but that’s not necessarily bad. That’s how we drive change and transformation. What we're really talking about is making sure the amount of disruption is not so counterproductive that it actually moves things backward instead of forward.

I don’t mind a little bit of disruption. The governance processes that we're talking about, good governance practices, have an overall life cycle that things move through. If there is a way to apply governance, as you work through that life cycle, at each point, you're looking at the particular decision points and actions that are going to happen, and make sure that those decisions and actions are well-informed.

We sometimes say that governance helps us do the right things right. So governance helps people know what the right things are, and then the right way to do those things.

Bimodal IT

Also, we can measure how well people are actually adapting to those “right things” to do. What’s “right” can vary over time, because we have disruptive change. Things like we are talking about with Bimodal IT is one example.

Within a narrower time frame in the process lifecycle, there are points that evolve across that time frame that have particular decisions and actions. Governance makes sure that people are well informed as they're rolling through that about important things they shouldn’t forget. It’s very easy to forget key things and optimize for only one factor, and governance helps people remember that.

Also, just check to see whether we're getting the benefits that people expected out of it. Coming back around and looking afterward to see if we accomplish what we thought we would or did we get off in the wrong direction. So it’s a bit like a steering mechanism or a feedback mechanism, in it that helps keep the car on the road, rather than going off in the soft shoulder. Did we overlook something important? Governance is key to making this all successful.

Gardner: Let’s return to The Open Group’s upcoming conference on July 20 in Baltimore and also learn a bit more about what the Cloud Governance Project has been up to. I think that will help us better understand how cloud governance relates to these hybrid IT issues that we've been discussing.

Nadhan, you are the co-chairman of the Cloud Governance Project. Tell us about what to expect in Baltimore with the concepts of Boundaryless Information Flow, and then also perhaps an update on what the Cloud Governance Project has been up to.
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Nadhan: When the Cloud Governance Project started, the first question we challenged ourselves with was, what is it and why do we need it, especially given that SOA governance, architecture governance, IT governance, enterprise governance, in general are all out there with frameworks. We actually detailed out the landscape with different standards and then identified the niche or the domain that cloud governance addresses.

After that, we went through and identified the top five principles that matter for cloud governance to be done right. Some of the obvious ones being that cloud is a business decision, and the governance exercise should keep in mind whether it is the right business decision to go to the cloud rather than just jumping on the bandwagon. Those are just some examples of the foundational principles that drive how cloud governance must be established and exercised.

Subsequent to that, we have a lifecycle for cloud governance defined and then we have gone through the process of detailing it out by identifying and decoupling the governance process and the process that is actually governed.

So there is this concept of process pairs that we have going, where we've identified key processes, key process pairs, whether it be the planning, the architecture, reusing cloud service, subscribing to it, unsubscribing, retiring, and so on. These are some of the defining milestones in the life cycle.

We've actually put together a template for identifying and detailing these process pairs, and the template has an outline of the process that is being governed, the key phases that the governance goes through, the desirable business outcomes that we would expect because of the cloud governance, as well as the associated metrics and the key roles.

Real-life solution

The Cloud Governance Framework is actually detailing each one. Where we are right now is looking at a real-life solution. The hypothetical could be an actual business scenario, but the idea is to help the reader digest the concepts outlined in the context of a scenario where such governance is exercised. That’s where we are on the Cloud Governance Project.

Let me take the opportunity to invite everyone to be part of the project to continue it by subscribing to the right mailing list for cloud governance within The Open Group.

Gardner: Just for the benefit of our readers and listeners who might not be that familiar with The Open Group, perhaps you could give us a very quick overview -- its mission, its charter, what we could expect at the Baltimore conference, and why people should get involved, either directly by attending, or following it on social media or the other avenues that The Open Group provides on its website?
Until an Open Group standard is published, there is no official Open Group position on the topic, and members will present their views at conferences.

Harding: The Open Group is a vendor-neutral consortium whose vision is Boundaryless Information Flow. That is to say the idea that information should be available to people within an enterprise, or indeed within an ecosystem of enterprises, as and when needed, not locked away into silos.

We hold main conferences, quarterly conferences, four times a year and also regional conferences in various parts of the world in between those, and we discuss a variety of topics.

In fact, the main topics for the conference that we will be holding in July in Baltimore are enterprise architecture and risk and security. Architecture and security are two of the key things for which The Open Group is known, Enterprise architecture, particularly with its TOGAF Framework, is perhaps what The Open Group is best known for.

We've been active in a number of other areas, and risk and security is one. We also have started a new vertical activity on healthcare, and there will be a track on that at the Baltimore conference.

There will be tracks on other topics too, including four sessions on Open Platform 3.0. Open Platform 3.0 is The Open Group initiative to address how enterprises can gain value from new technologies, including cloud computing, social computing, mobile computing, big data analysis, and the Internet of Things.

We'll have a number of presentations related to that. These will include, in fact, a perspective on cloud governance, although that will not necessarily reflect what is happening in the Cloud Governance Project. Until an Open Group standard is published, there is no official Open Group position on the topic, and members will present their views at conferences. So we're including a presentation on that.

Lifecycle governance

There is also a presentation on another interesting governance topic, which is on Information Lifecycle Governance. We have a panel session on the business context for Open Platform 3.0 and a number of other presentations on particular topics, for example, relating to the new technologies that Open Platform 3.0 will help enterprises to use.

There's always a lot going on at Open Group conferences, and that’s a brief flavor of what will happen at this one.

Gardner: Thank you. And I'd just add that there is more available at The Open Group website, opengroup.org.

Going to one thing you mentioned about a standard and publishing that standard, is there a roadmap that we could look to in order to anticipate the next steps or milestones in the Cloud Governance Project? When would such a standard emerge and when might we expect it?

Nadhan: As I said earlier, the next step is to identify the business scenario and apply it. I'm expecting, with the right level of participation, that it will take another quarter, after which it would go through the internal review with The Open Group and the company reviews for the publication of the standard. Assuming we have that in another quarter, Chris, could you please weigh in on what it usually takes, on average, for those reviews before it gets published.
I want to step back and think about what are the changes to project-related processes that new approaches require.

Harding: You could add on another quarter. It shouldn’t actually take that long, but we do have a thorough review process. All members of The Open Group are invited to participate. The document is posted for comment for, I would think, four weeks, after which we review the comments and decide what actually needs to be taken.

Certainly, it could take only two months to complete the overall publication of the standard from the draft being completed, but it’s safer to say about a quarter.

Gardner: So a real important working document could be available in the second half of 2015. Let’s now go back to why a cloud governance document and approach is important when we consider the implications of Bimodal or multimodal IT.

One of things that Gartner says is that Bimodal IT projects require new project management styles. They didn’t say project management products. They didn’t say, downloads or services from a cloud provider. We're talking about styles.

So it seems to me that, in order to prevent the good aspects of Bimodal IT to be overridden by negative impacts of chaos and the lack of coordination that we're talking about, not about a product or a download, we're talking about something that a working group and a standards approach like the Cloud Governance Project can accommodate.

David, why is it that you can’t buy this in a box or download it as a product? What is it that we need to look at in terms of governance across Bimodal IT and why is that appropriate for a style? Maybe the IT people need to think differently about accomplishing this through technology alone?

First question

Janson: When I think of anything like a tool or a piece of software, the first question I tend to have is what is that helping me do, because the tool itself generally is not the be-all and end-all of this. What process is this going to help me carry out?

So, before I would think about tools, I want to step back and think about what are the changes to project-related processes that new approaches require. Then secondly, think about how can tools help me speed up, automate, or make those a little bit more reliable?

It’s an easy thing to think about a tool that may have some process-related aspects embedded in it as sort of some kind of a magic wand that's going to automatically make everything work well, but it’s the processes that the tool could enable that are really the important decision. Then, the tools simply help to carry that out more effectively, more reliably, and more consistently.

We've always seen an evolution about the processes we use in developing solutions, as well as tools. Technology requires tools to adapt. As to the processes we use, as they get more agile, we want to be more incremental, and see rapid turnarounds in how we're developing things. Tools need to evolve with that.
Once you've settled on some decisions about evolving those processes, then we'll start looking for tools that help you automate, accelerate, and make consistent and more reliable what those processes are.

But I'd really start out from a governance standpoint, thinking about challenging the idea that if we're going to make a change, how do we know that it's really an appropriate one and asking some questions about how we differentiate this change from just reinventing the wheel. Is this an innovation that really makes a difference and isn't just change for the sake of change?

Governance helps people challenge their thinking and make sure that it’s actually a worthwhile step to take to make those adaptations in project-related processes.

Once you've settled on some decisions about evolving those processes, then we'll start looking for tools that help you automate, accelerate, and make consistent and more reliable what those processes are.

I tend to start with the process and think of the technology second, rather than the other way around. Where governance can help to remind people of principles we want to think about. Are you putting the cart before the horse? It helps people challenge their thinking a little bit to be sure they're really going in the right direction.

Gardner: Of course, a lot of what you just mentioned pertains to enterprise architecture generally as well.

Nadhan, when we think about Bimodal or multimodal IT, this to me is going to be very variable from company to company, given their legacy, given their existing style, the rate of adoption of cloud or other software as a service (SaaS), agile, or DevOps types of methods. So this isn’t something that’s going to be a cookie-cutter. It really needs to be looked at company by company and timeline by timeline.

Is this a vehicle for professional services, for management consulting more than IT and product? What is n the relationship between cloud governance, Bimodal IT, and professional services?

Delineating systems

Nadhan: It’s a great question Dana. Let me characterize Bimodal IT slightly differently, before answering the question. Another way to look at Bimodal IT, where we are today, is delineating systems of record and systems of engagement.

In traditional IT, typically, we're looking at the systems of record, and systems of engagement with the social media and so on are in the live interaction. Those define the continuously evolving, growing-by-the-second systems of engagement, which results in the need for big data, security, and definitely the cloud and so on.

The coexistence of both of these paradigms requires the right move to the cloud for the right reason. So even though they are the systems of record, some, if not most, do need to get transformed to the cloud, but that doesn’t mean all systems of engagement eventually get transformed to the cloud.
There are good reasons why you may actually want to leave certain systems of engagement the way they are.

There are good reasons why you may actually want to leave certain systems of engagement the way they are. The art really is in combining the historical data that the systems of record have with the continual influx of data that we get through the live channels of social media, and then, using the right level of predictive analytics to get information.

I said a lot in there just to characterize the Bimodal IT slightly differently, making the point that what really is at play, Dana, is a new style of thinking. It's a new style of addressing the problems that have been around for a while.

But a new way to address the same problems, new solutions, a new way of coming up with the solution models would address the business problems at hand. That requires an external perspective. That requires service providers, consulting professionals, who have worked with multiple customers, perhaps other customers in the same industry, and other industries with a healthy dose of innovation.

That's where this is a new opportunity for professional services to work with the CxOs, the enterprise architects, the CIOs to exercise the right business decision with the rights level of governance.

Because of the challenges with the coexistence of both systems of record and systems of engagement and harvesting the right information to make the right business decision, there is a significant opportunity for consulting services to be provided to enterprises today.

Drilling down

Gardner: Before we close off I wanted to just drill down on one thing, Nadhan, that you brought up, which is that ability to measure and know and then analyze and compare.

One of the things that we've seen with IT developing over the past several years as well is that the big data capabilities have been applied to all the information coming out of IT systems so that we can develop a steady state and understand those systems of record, how they are performing, and compare and contrast in ways that we couldn’t have before.

So on our last topic for today, David Janson, how important is it for that measuring capability in a governance context, and for organizations that want to pursue Bimodal IT, but keep it governed and keep it from spinning out of control? What should they be thinking about putting in place, the proper big data and analytics and measurement and visibility apparatus and capabilities?

Janson: That’s a really good question. One aspect of this is that, when I talk with people about the ideas around governance, it's not unusual that the first idea that people have about what governance is is about the compliance or the policing aspect that governance can play. That sounds like that’s interference, sand in the gears, but it really should be the other way around.
Good governance has communicated that well enough, so that people should actually move faster rather than slower. In other words, there should be no surprises.

A governance framework should actually make it very clear how people should be doing things, what’s expected as the result at the end, and how things are checked and measured across time at early stages and later stages, so that people are very clear about how things are carried out and what they are expected to do. So, if someone does use a governance-compliance process to see if things are working right, there is no surprise, there is no slowdown. They actually know how to quickly move through that.

Good governance has communicated that well enough, so that people should actually move faster rather than slower. In other words, there should be no surprises.

Measuring things is very important, because if you haven’t established the objectives that you're after and some metrics to help you determine whether you're meeting those, then it’s kind of an empty suit, so to speak, with governance. You express some ideas that you want to achieve, but you have no way of knowing or answering the question of how we know if this is doing what we want to do. Metrics are very important around this.

We capture metrics within processes. Then, for the end result, is it actually producing the effects people want? That’s pretty important.

One of the things that we have built into the Cloud Governance Framework is some idea about what are the outcomes and the metrics that each of these process pairs should have in mind. It helps to answer the question, how do we know? How do we know if something is doing what we expect? That’s very, very essential.

Gardner: I am afraid we'll have to leave it there. We've been examining the role of cloud governance and enterprise architecture and how they work together in the era of increasingly fragmented IT. And we've seen how The Open Group Cloud Governance Initiatives and Working Groups can help allow for the benefits of Bimodal IT, but without necessarily IT fragmentation leading to a fractured or broken business process around technology and innovation.
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This special BriefingsDirect thought leadership panel discussion comes to you in conjunction with The Open Group’s upcoming conference on July 20, 2015 in Baltimore. And it’s not too late to register on The Open Group’s website or to follow the proceedings online and via social media such as Twitter and LinkedIn.

So, thank you to our guests: Dr. Chris Harding, Director for Interoperability and Cloud Computing Forum Director at The Open Group; David Janson, Executive IT Architect and Business Solutions Professional with the IBM Industry Solutions Team for Central and Eastern Europe and a leading contributor to The Open Group Cloud Governance Project, and Nadhan, HP Distinguished Technologist and Cloud Advisor and Co-Chairman of The Open Group Cloud Governance Project.

And a big thank you, too, to our audience for joining this special Open Group-sponsored discussion. This is Dana Gardner, Principal Analyst at Interarbor Solutions, your host and moderator for this thought leadership panel discussion series. Thanks again for listening, and do come back next time.

Listen to the podcast. Find it on iTunes. Get the mobile app for iOS or Android. Download the transcript. Sponsor: The Open Group.

Transcript of a BriefingsDirect discussion on the role of cloud governance and enterprise architecture and how they work together in the era of increasingly fragmented IT. Copyright The Open Group and Interarbor Solutions, LLC, 2005-2015. All rights reserved.

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Wednesday, July 08, 2015

HP BSM and IT Data Access Spur New Business Benefits at Swiss Insurer and Turkish Mobile Carrier

Transcript of a BriefingsDirect discussion on how two organizations have been improving their application’s performance via total performance monitoring and metrics.

Listen to the podcast. Find it on iTunes. Get the mobile app for iOS or Android. Download the transcript. Sponsor: HP.

Dana Gardner: Hello, and welcome to the next edition of the HP Discover Podcast Series. I'm Dana Gardner, Principal Analyst at Interarbor Solutions, your host and moderator for this ongoing discussion on IT innovation and how it’s making an impact on people's lives.

Gardner

Our next innovation case study panel discussion explores how improved business service management and data access improvements at a Swiss insurance company and a Turkish mobile phone carrier help to spur new business benefits and IT performance issues resolution.

By more deeply examining how applications are performing via total performance monitoring and metrics these enterprises slashed mean time to resolution and later significantly reduced the number of IT incidents.
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To learn more about how to build high confidence that IT disruptions can be managed, and even headed off in advance, please join me in welcoming our panelists, Thomas Baumann, IT Performance Architect at Swiss Mobiliar in Bern. Welcome, Thomas.

Baumann

Thomas Baumann: Hello, Dana.

Gardner: Nice to have you with us. We're also here with Merve Duran, Management System Specialist at Avea in Istanbul. Welcome.

Merve Duran: Hello, Dana.

Gardner: Thomas, tell us about Swiss Mobiliar and what you’re doing to increase the performance of your applications.

Largest insurance company

Baumann: Swiss Mobiliar is Switzerland’s largest personal insurance company. It’s also the oldest insurance company, founded in 1826, and every third Swiss household is insured at Mobiliar. We are number one in household contents insurance.

My role at Swiss Mobiliar is Minister of Performance. I'm responsible for optimizing all the applications, infrastructure, etc.

Gardner: Tell us about the challenges that you’ve had in terms of keeping all of your applications performing well. How many end users do you support with those applications?

Baumann: There are about 4,500 internal users, but we also deliver applications directly to our customers. So that makes a group of users that’s at about 2.5 million people.

Gardner: What requirements have you been trying to meet in terms of better performance and how do you go about achieving that?

Baumann: About three years ago, we had a very reactive service model. We were only listening to customers or users complaining about bad response times, unresolved tickets, and things like that. Additionally, our event console was at the end of its life. So we were thinking about a more comprehensive solution.

We chose HP’s Real User Monitoring (RUM) and HP’s Operations Management i (OMi) to help us decrease our mean time to repair and to obtain a better understanding of end-user performance and how our applications are used by our customers.

Gardner: Thomas, how important is the acquisition of data and the use of that data? Have you changed either your attitude or culture when it comes to being data-driven, as a path to this better performance?

Baumann: Yes. Initially we had very little data, and data that was generated by syntactical measurements. Now, we measure real end-user traffic at all times, at all locations, and from all users, for the top applications that we have. We don’t use it for all applications.

Gardner: Do you have any sense of performance metrics and improvements? How do you measure your success?

Performance index

Baumann: Regarding end-user response times, we created a performance index, comparable to New York Stock Exchange's Dow Jones Index. Calculating the average response times of the most important functions of an application, and the mean time of all these response times, gives us this performance score value.

We started in 2012, and there was a performance score value of 100, just to have a base level where we can measure the improvement. Now, with an important sales application, we're at 220, an increase of a factor of 2.2 in performance.

Gardner: Have you been able to translate that through some sort of a feedback loop or the ability to predict where problems either are or are beginning, so that you can head off problems altogether? Has that been something you’ve been able to achieve?
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Baumann: Yes. OMi helped us to achieve this, because now we're able to detect very small incidents before they start to impact our service. In many cases we can avoid a major incident or a large problem that would lead to an availability problem in our company just by analyzing those very small defects or incidents that are detected by our machines.

Gardner: Before your customers and users detect them?

Baumann: Exactly. Sometimes you tell the customers that they have to do this and this, and they're very surprised because they didn't know there was a problem before I mentioned it.

Gardner: Let’s now go to Merve at Avea. Tell us a little bit about your company, how large it is, and what you’re doing to improve your application’s performance?

Duran: Avea, is the sole GSM 1-800 mobile operator of Turkey and was founded in 2004. It’s the youngest operator in Turkey, and we perform as management at Avea’s IT domain.
Mobile users are much less tolerant to application errors, slow response times and poor usability.

Gardner: What did you put in place and what were you trying to improve upon as you’ve gone to a higher level of performance? How did you want to measure that? How did you want to improve?

Duran: As an example, we have more than 20 mobile applications in Avea for iOS and Android-based mobile devices. We know that these applications get many hits in a day and we know that the response times of these hits play a significant role in the overall user experience.

Duran
Also we know that mobile users are much less tolerant to application errors, slow response times and poor usability. That’s why we needed to manage our mobile application performance. So we are using HP Real and Synthetic User Mobile Monitoring solutions at Avea.

Gardner: Have you been able to measure and determine how that performance has improved? What you’ve been able to use to determine the success of your activities?

Duran: Before this solution, we had almost no end-user data on hand, so root cause analysis was too hard for us and it took long times when a problem occurred. Also we didn't know how many problems were occurring. With this solution, we can do the root cause analysis and we know how many issues are occurred. Before this solution, we only found out if the customers complained. So the mobile RUM and BPM solution are quite important to us.

Metrics of success

Gardner: Looking to the future, Thomas, where do you see things going next? What’s the next plane of improvement when it comes to applications? Where do you see yourselves going next at your organization?

Baumann: For now, we use RUM to analyze response times. What we start to do now is analyze the behavior of the user: How are they using our applications? We can improve the workflow of whole business process by analyzing how the applications are used, who is using them, from which location, etc.

Gardner: And do you see the data that you’re gathering and using, being used in other aspects of IT? Does this have an adjacency benefit in some way, or is this something that you're just using specifically for application performance?
We can improve the workflow of whole business process by analyzing how the applications are used, who is using them, from which location.

Baumann: For now, we use it specifically for application performance, but we see large opportunities to mix these data with other data to get more insight and have a greater overview of how applications are used.

Maybe we can compare it to an airplane. We were flying as a visual-only flight and now we've migrated to instrumental flight. We also have those black boxes so we can analyze how all those measurements developed over the last period, what happened exactly before the crash, or in general how the systems are used and how we can improve it.

Gardner: That's a very good analogy. It's one thing to just get to your destination. Now, you can make that much more scientific and understood. Therefore, you can devise your future based on a plan rather than a reaction. That's important.

I just want to go in one more direction before we end, and that would be the type of applications that you're using. Do you see more of a feedback loop to your developers? You're doing most of your activity in operations, but as we know that the better you design an application, the better it will then perform.

DevOps is an important trend these days. Do you see yourselves as application performance professionals starting to have more impact on the development process of feedback of information to developers, maybe the next generation of an application, or may be for entirely new applications. Any thoughts, Merve?

Quite helpful

Duran: For BPM mobile solution, yes, this is quite helpful for us, because we can use this solution when we develop a new release of an application. So it will be good to test it before new application releases.

Gardner: Thomas, any thoughts about bringing your information and intelligence back into testing or even development itself?

Baumann: For development, it's more difficult. We still develop a couple of applications, but most of them we purchase. So there isn't much direct influence on development. But for testing there are a lot of possibilities.

Gardner: We've been learning about how two organizations have been improving their application’s performance via total performance monitoring and metrics. We've been talking with a Swiss insurance company and a Turkish mobile phone carrier.
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I'd like to thank our guests, Thomas Baumann, IT Performance Architect at Swiss Mobiliar in Bern, and Merve Duran, Management System Specialist at Avea in Istanbul.

I'd also like to thank our audience as well for joining us for this special new style of IT discussion. We've explored solid evidence from early enterprise adopters about how big data changes everything for IT, for businesses and governments, as well as for you and me.

I'm Dana Gardner, Principal Analyst at Interarbor Solutions, your host for this ongoing series of HP-sponsored discussions. Thanks again for listening, and come back next time.

Listen to the podcast. Find it on iTunes. Get the mobile app for iOS or Android. Download the transcript. Sponsor: HP.

Transcript of a BriefingsDirect discussion on how two organizations have been improving their application’s performance via total performance monitoring and metrics. Copyright Interarbor Solutions, LLC, 2005-2015. All rights reserved.

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Tuesday, June 30, 2015

Securing Business Operations and Critical Infrastructure: Trusted Technology, Procurement Paradigms, and Cyber Insurance

Transcript of a BriefingsDirect discussion on ways to address supply chain risk in the information technology sector market.

Listen to the podcast. Find it on iTunes. Get the mobile app for iOS or Android. Download the transcript. Sponsor: The Open Group.

Dana Gardner: Hello, and welcome to a special BriefingsDirect thought leadership panel discussion coming to you in conjunction with The Open Group's upcoming conference on July 20, 2015 in Baltimore.

Gardner
I'm Dana Gardner, Principal Analyst at Interarbor Solutions, and I'll be your host and moderator as we explore ways to address supply chain risk in the information technology sector market.

We'll specifically examine how The Open Group Trusted Technology Forum (OTTF) standards and accreditation activities are enhancing the security of global supply chains and improving the integrity of openly available IT products and components.

We'll learn how the age-old practice of insurance is coming to bear on the problem of IT supply-chain risk. By leveraging insurance models, the specter of supply chain disruption and security ills may be significantly reduced.
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To update us on the work of the OTTF, and explain the workings and benefits of supply-chain insurance, we're joined by our panel of experts. Please join me in welcoming Sally Long, Director of The Open Group Trusted Technology Forum. Welcome, Sally.

Sally Long: Thank you.

Gardner: We're also here with Andras Szakal, Vice President and Chief Technology Officer for IBM U.S. Federal and Chairman of The Open Group Trusted Technology Forum. Welcome back, Andras.

Andras Szakal: Thank you for having me.

Gardner: And Bob Dix joins us. He is Vice President of Global Government Affairs and Public Policy for Juniper Networks and is a member of The Open Group Trusted Technology Forum. Welcome, Bob.

Bob Dix: Thank you for the invitation. Glad to be here.

Gardner: Lastly, we are joined by Dan Reddy, Supply Chain Assurance Specialist, college instructor and Lead of The Open Group Trusted Technology Forum Global Outreach and Standards Harmonization Work Group. Thanks for being with us, Dan.

Dan Reddy: Glad to be here, Dana.

Gardner: Sally, please give us an update on The Open Group Trusted Technology Forum (OTTF) and the supply-chain accreditation process generally. What has been going on?

OTTP standard

Long: For some of you who might not have heard of the O-TTPS, which is the standard, it’s called The Open Trusted Technology Provider™ Standard. The effort started with an initiative in 2009, a roundtable discussion with U.S. government and several ICT vendors, on how to identify trustworthy commercial off-the-shelf (COTS) information and communication technology (ICT), basically driven by the fact that governments were moving away from high assurance customized solution and more and more using COTS ICT.

Long
That ad-hoc group formed under the OTTF and proceeded to deliver a standard and an accreditation program.

The standard really provides a set of best practices to be used throughout the COTS ICT product life cycle. That’s both during in-house development, as well as with outsourced development and manufacturing, including the best practices to use for security in the supply chain, encompassing all phases from design to disposal.

Just to bring you up to speed on just some of the milestones that we've had, we released our 1.0 version of the standard in 2013, launched our accreditation program to help assure conformance to the standard in February 2014, and then in July, we released our 1.1 version of the standard. We have now submitted that version to ISO for approval as a publicly available specification (PAS) and it’s a fast track for ISO.

The PAS is a process for adopting standards developed in other standards development organizations (SDOs), and the O-TTPS has passed the draft ISO ballot. Now, it’s coming up for final ballot.

That should bring folks up to speed, Dana, and let them know where we are today.

Gardner: Is there anything in particular at The Open Group Conference in Baltimore, coming up in July, that pertains to these activities? Is this something that’s going to be more than just discussed? Is there something of a milestone nature here, too?

Long: Monday, July 20, is the Cyber Security Day of the Baltimore Conference. We're going to be meeting in the plenary with many of the U.S. government officials from NIST, GSA, and the Department of Homeland Security. So there is going to be a big plenary discussion on cyber security and supply chain.

We'll also be meeting separately as a member forum, but the whole open track on Monday will be devoted to cyber security and supply chain security.

The one milestone that might coincide is that we're publishing our Chinese translation version of the standard 1.1 and we might be announcing that then. I think that’s about it, Dana.

OTTF background

Gardner: Andras, for the benefit of our listeners and readers who might be new to this concept, perhaps you could fill us in on the background on the types of problems that OTTF initiatives and standards are designed to solve. What’s the problem that we need to address here?

Szakal: That’s a great question. We realized, over the last 5 to 10 years, that the traditional supply-chain management practices -- supply-chain integrity practices, where we were ensuring the integrity of the delivery of a product to the end customer, ensuring that it wasn't tampered with, effectively managing our suppliers to ensure they provided us with quality components -- really had expanded as a result of the adoption of technology. There has been pervasive growth of technology in all aspects of manufacturing, but especially as IT has expanded into the Internet of Things, critical infrastructure and mobile technologies, and now obviously cloud and big data.

Szakal
And as we manufacture those IT products we have to recognize that now we're in a global environment, and manufacturing and sourcing of components occurs worldwide. In some cases, some of these components are even open source or freely available. We're concerned, obviously, about the lineage, but also the practices of how these products are manufactured from a secure engineering perspective, as well as the supply-chain integrity and supply-chain security practices.

What we've recognized here is that the traditional life cycle of supply-chain security and integrity has expanded to include all the way down to the design aspects of the product through sustainment and managing that product over a period of time, from cradle to grave, and disposal of the product to ensure that those components, if they were hardware-based, don't actually end up recycled in a way that they pose a threat to our customers.

Gardner: So it’s as much a lifecycle as it is a procurement issue.

Szakal: Absolutely. When you talk about procurement, you're talking about lifecycle and about mitigating risks to those two different aspects from sourcing and from manufacturing.

So from the customer's perspective, they need to be considering how they actually apply techniques to ensure that they are sourcing from authorized channels, that they are also applying the same techniques that we use for secure engineering when they are doing the integration of their IT infrastructure.

But from a development perspective, it’s ensuring that we're applying secure engineering techniques, that we have a well-defined baseline for our life cycle, and that we're controlling our assets effectively. We understand who our partners are and we're able to score them and ensure that we're tracking their integrity and that we're applying new techniques around secure engineering, like threat analysis and risk analysis to the supply chain.

We're understanding the current risk landscape and applying techniques like vulnerability analysis and runtime protection techniques that would allow us to mitigate many of these risks as we build out our products and manufacture them.

It goes all the way through sustainment. You probably recognize now, most people would, that your products are no longer a shrink-wrap product that you get, install, and it lives for a year or two before you update it. It’s constantly being updated. So to ensure that the integrity and delivery of that update is consistent with the principles that we are trying to espouse is also really important.

Collaborative effort

Gardner: And to that point, no product stands alone. It’s really a result of a collaborative effort, very complex number of systems coming together. Not only are standards necessary, but cooperation among all those players in that ecosystem becomes necessary.

Dan Reddy, how have we done in terms of getting mutual assurance across a supply chain, that all the participants are willing to take part? It seems to me that, if there is a weak link, everyone would benefit by shoring that up. So how do we go beyond the standards? How are we getting cooperation, get all the parties interested in contributing and being part of this?

Reddy: First of all, it’s an evolutionary process, and we're still in the early days of fully communicating what the best practices are, what the standards are, and getting people to understand how that relates to their place in the supply chain.

Reddy
Certainly, the supplier community would benefit by following some common practices so they don’t wind up answering customized survey questions from all of their customers.

That's what's happening today. It's pretty much a one-off situation, where each customer says, "I need to protect my supply chain. Let me go find out what all of my suppliers are doing." The real benefit here is to have the common language of the requirements in our standard and a way to measure it.

So there should be an incentive for the suppliers to take a look at that and say, "I'm tired of answering these individual survey questions. Maybe if I just document my best practices, I can avoid some of the effort that goes along with that individual approach."

Everyone needs to understand that value proposition across the supply chain. Part of what we're trying to do with the Baltimore conference is to talk to some thought leaders and continue to get the word out about the value proposition here.

Gardner: Bob Dix, the government in the U.S., and, of course, across the globe, all the governments, are major purchasers of technology and also have a great stake in security and low risk. What’s been driving some of the government activities? They're also interested in using COTS technology and cutting costs. So what role can governments play in driving some of these activities around the OTTF?

Risk management

Dix: This issue of supply chain assurance and cyber security is all about risk management, and it's a shared responsibility. For too long I think that the government has had a tendency to want to point a finger at the private sector as not sufficiently attending to this matter.

Dix
The fact is, Dana, that many in the private sector make substantial investments in their product integrity program, as Andras was talking about, from product conception, to delivery, to disposal. What’s really important is that when that investment is made and when companies apply the standard the OTTF has put forward, it’s incumbent upon the government to do their part in purchasing from authorized and trusted sources.

In today's world, we still have a culture that's pervasive across the government acquisition community, where decision-making on procurements is often driven by cost and schedule, and product authenticity, assurance, and security are not necessarily a part of that equation. It’s driven in many cases by budgets and other considerations, but nonetheless, we must change that culture to focus to include authenticity and assurance as a part of the decision making process.
Often those acquisitions are made from untrusted and unauthorized sources, which raises the risk of acquiring counterfeit, tainted, or even malicious equipment.

The result of focusing on cost and schedule is often those acquisitions are made from untrusted and unauthorized sources, which raises the risk of acquiring counterfeit, tainted, or even malicious equipment.

Part of the work of the OTTF is to present to all stakeholders, in industry and government alike, that there is a process that can be uniform, as has been stated by Sally and Dan, that can be applied in an environment to raise the bar of authenticity, security, and assurance to improve upon that risk management approach.

Gardner: Sally, we've talked about where you're standing in terms of some progress in your development around these standards and activities. We've heard about the challenges and the need for improvement.

Before we talk about this interesting concept of insurance that would come to bear on -- and perhaps encouraging standardization and giving people more ways to reduce their risk and adhere to best practices -- what do you expect to see in a few years? If things go well and if this is adopted widely and embraced in true good practices, what's the result? What do we expect to see as an insurance improvement?

Powerful impact

Long: The most important and significant aspect of the accreditation program is when you look at the holistic nature of the program and how it could have a very powerful impact if it's widely adopted.

The idea of an accreditation program is that a provider gets accredited for conforming to the best practices. A provider that can get accredited could be an integrator, an OEM, the component suppliers of hardware and software that provide the components to the OEM, and the value-add resellers and distributors.

Every important constituent in that supply chain could be accredited. So not only from a business perspective is it important for governments and commercial customers to look on the Accreditation Registry and see who has been accredited for the integrators they want to work with or for the OEMs they want to work with, but it’s also important and beneficial for OEMs to be able to look at that register and say, "These component suppliers are accredited. So I'll work with them as business partners." It's the same for value-add resellers and distributors.
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It builds in these real business-market incentives to make the concept work, and in the end, of course, the ultimate goal of having a more secure supply chain and more products with integrity will be achieved.

To me, that is one of the most important aspects that we can reach for, especially if we reach out internationally. What we're starting to see internationally is that localized requirements are cropping up in different countries. What that’s going to mean is that vendors need to meet those different requirements, increasing their cost, and sometimes even there will end up being trade barriers.

Back to what Dan and Bob were saying, we need to look at this global standard and accreditation program that already exists. It's not in development; we've been working on it for five years with consensus from many, many of the major players in the industry and government. So urging global adoption of what already exists and what could work holistically is really an important objective for our next couple of years.

Gardner: It certainty sounds like a win, win, win if everyone can participate, have visibility, and get designated as having followed through on those principles. But as you know and as you mentioned, it’s the marketplace. Economics often drives business behavior. So in addition to a standards process and the definitions being available, what is it about this notion of insurance that might be a parallel market force that would help encourage better practices and ultimately move more companies in this direction?

Let’s start with Dan. Explain to me how cyber insurance, as it pertains to the supply chain, would work.

Early stages

Reddy: It’s an interesting question. The cyber insurance industry is still in the early stages, even though it goes back to the '70s, where crime insurance started applying to outsiders gaining physical access to computer systems. You didn't really see the advent of hacker insurance policies until the late '90s. Then, starting in 2000, some of the first forms of cyber insurance covering first and third party started to appear.

What we're seeing today is primarily related to the breaches that we hear about in the paper everyday, where some organization has been comprised, and sensitive information, like credit card information, is exposed for thousands of customers. The remediation is geared toward the companies that have to pay the claim and sign people up for identity protection. It's pretty cut and dried. That's the wave that the insurance industry is riding right now.

What I see is that as attacks get to be more sophisticated and potentially include attacks on the supply chain, it’s going to represent a whole new area for cyber insurance. Having consistent ways to address supplier-related risk, as well as the other infrastructure related risks that go beyond simple data breach, is going to be where the marketplace has to make an adjustment. Standardization is critical there.

Gardner: Andras, how does this work in conjunction with OTTF? Would insurance companies begin their risk assessment by making sure that participants in the supply chain are already adhering to your standards and seeking accreditation? Then, maybe they would have premiums that would reflect the diligence that companies extend into their supply chains. Maybe you could just explain to me, not just the insurance, but how it would work in conjunction with OTTF, maybe to each’s mutual benefit.
The question is, do you buy a policy, and what’s the balance here between a cyber threat that is in your control, and those aspects of supply chain security which are out of your control.

Szakal: You made a really great point earlier about the economic element that would drive compliance. For us in IBM, the economic element is the ability to prove that we're providing the right assurance that is being specified in the requests for proposals (RFPs), not only in the federal sector, but outside the federal sector in critical infrastructure and finance. We continue to win those opportunities, and that’s driven our compliance, as well as the government policy aspect worldwide.

But from an insurance point of view, insurance comes in two forms. I buy policy insurance in a case where there are risks that are out of my control, and I apply protective measures that are under my control. So in the case of the supply chain, the OTTF is a set of practices that help you gain control and lower the risk of threat in the manufacturing process.

The question is, do you buy a policy, and what’s the balance here between a cyber threat that is in your control, and those aspects of supply chain security which are out of your control. This is with the understanding that there is an infinite number of a resources or revenue that you can apply to allocate to both of these aspects.

There's going to have to be a balance, and it really is going to be case by case, with respect to customers and manufacturers, as to where the loss of potential intellectual property (IP) with insurance, versus applying controls. Those resources are better applied where they actually have control, versus that of policies that are protecting you against things that are out of your control.

For example, you might buy a policy for providing code to a third party, which has high value IP to manufacture a component. You have to share that information with that third-party supplier to actually manufacture that component as part of the overarching product, but with the realization that if that third party is somehow hacked or intruded on and that IP is stolen, you have lost some significant amount of value. That will be an area where insurance would be applicable.

What's working

Gardner: Bob Dix, if insurance comes to bear in conjunction with standards like what the OTTF is developing in supply chain assurance, it seems to me that the insurance providers themselves would be in a position of gathering information for their actuarial decisions and could be a clearing house for what's working and what isn't working.

It would be in their best interest to then share that back into the marketplace in order to reduce the risk. That’s a market-driven, data-driven approach that could benefit everyone. Do you see the advent of insurance as a benefit or accelerant to improvement here?

Dix: It's a tool. This is a conversation that’s been going on in the community for quite some time, the lack of actuarial data for catastrophic losses produced by cyber events, that is impacting some of the rate setting and premium setting by insurance companies, and that has continued to be a challenge.

But from an incentive standpoint, it’s just like in your home. If you have an alarm system, if you have a fence, if you do other kinds of protective measures, your insurance on your homeowners or liability insurance may get a reduction in premium for those actions that you have taken.

As an incentive, the opportunity to have an insurance policy to either transfer or buy down risk can be driven by the type of controls that you have in your environment. The standard that the OTTF has put forward provides guidance about how best to accomplish that. So, there is an opportunity to leverage, as an incentive, the reduction in premiums for insurance to transfer or buy down risk.
The opportunity to have an insurance policy to either transfer or buy down risk can be driven by the type of controls that you have in your environment.

Gardner: It’s interesting, Sally, that the insurance industry could benefit from OTTF, and by having more insurance available in the marketplace, it could encourage more participation and make the standard even more applicable and valuable. So it's interesting to see over time how that plays out.

Any thoughts or comments on the relationship between what you are doing at OTTF and The Open Group and what the private insurance industry is moving toward?

Long: I agree with what everyone has said. It's an up-and-coming field, and there is a lot more focus on it. I hear at every conference I go to, there is a lot more research on cyber security insurance. There is a place for the O-TTPS in terms of buying down risk, as Bob was mentioning.

The other thing that's interesting is the NIST Cybersecurity Framework. That whole paradigm started out with the fact that there would be incentives for those that followed the NIST Cybersecurity Framework - that incentive piece became very hard to pull together, and still is. To my knowledge, there are no incentives yet associated with it. But insurance was one of the ideas they talked about for incentivizing adopters of the CSF.

The other thing that I think came out of one of the presentations that Dan and Larry Clinton will be giving at our Baltimore Conference, is that insurers are looking for simplicity. They don’t want to go into a client’s environment and have them prove that they are doing all of these things required of them or filling out a long checklist.

That’s why, in terms of simplicity, asking for O-TTPS-accredited providers or lowering their rates based on that - would be a very simplistic approach, but again not here yet. As Bob said, it's been talked about a lot for a long time, but I think it is coming to the fore.

Market of interest

Gardner: Dan Reddy, back to you. When there is generally a large addressable market of interest in a product or service, there often rises a commercial means to satisfy that. How can enterprises, the people who are consuming these products, encourage acceptance of these standards, perhaps push for a stronger insurance capability in the marketplace, or also get involved with some of these standards and practices that we have been talking about?

If you're a publicly traded company, you would want to reduce your exposure and be able to claim accreditation and insurance as well. Let’s look at this from the perspective of the enterprise. What should and could they be doing to improve on this?

Reddy: I want to link back to what Sally said about the NIST Cyber Security Framework. What’s been very useful in publishing the Framework is that it gives enterprises a way to talk about their overall operational risk in a consistent fashion.
Cyber insurance is more than just the risk of suppliers. It’s the risk at the enterprise level.

I was at one of the workshops sponsored by NIST where enterprises that had adopted it talked about what they were doing internally in their own enterprises in changing their practices, improving their security, and using the language of the framework to address that.

Yet, when they talked about one aspect of their risk, their supplier risk, they were trying to send the NIST Cybersecurity Framework risk questions to their suppliers, and those questions aren’t really sufficient. They're interesting. You care about the enterprise of your supplier, but you really care about the products of your supplier.

So one of the things that the OTTF did is look at the requirements in our standard related to suppliers and link them specifically to the same operational areas that were included in the NIST Cybersecurity Framework.

This gives the standard enterprise looking at risk, trying to do standard things, a way to use the language of our requirements in the standard and the accreditation program as a form of measurement to see how that aspect of supplier risk would be addressed.

But remember, cyber insurance is more than just the risk of suppliers. It’s the risk at the enterprise level. But the attacks are going to change over time, and we'll go beyond the simple breaches. That’s where the added complexity will be needed.

Gardner: Andras, any suggestions for how enterprises, suppliers, vendors, systems integrators, and now, of course, the cloud services providers, should get involved? Where can they go for more information? What can they do to become part of the solution on this?

International forum

Szakal: Well, they can always become a member of the Trusted Technology Forum, where we have an international forum.

Gardner: I thought you might say that.

Szakal: That’s an obvious one, right? But there are a couple of places where you can go to learn more about this challenge.

One is certainly our website. Download the framework, which was a compendium of best practices, which we gathered as a result of a lot of hard work of sharing in an open, penalty-free environment all of the best practices that the major vendors are employing to mitigate risks to counterfeit and maliciously tainted products, as well as other supply chain risks. I think that’s a good start, understanding the standard.

Then, it's looking at how you might measure the standard against what your practices are currently using the accreditation criteria that we have established.
The only place where you really find solutions, or at least one of the only places that I have seen is in the TTF, embedded in the standard as a set of practices that are very practical to implement.

Other places would be NIST. I believe that it’s 161 that is the current pending standard for protecting supply chain security. There are several really good reports that the Defense Science Board and other organizations have conducted in the past within the federal government space. There are plenty of materials out there, a lot of discussion about challenges.

But I think the only place where you really find solutions, or at least one of the only places that I have seen is in the TTF, embedded in the standard as a set of practices that are very practical to implement.

Gardner: Sally, the same question to you. Where can people go to get involved? What should they perhaps do to get started?

Long: I'd reiterate what Andras said. I'd also point them toward the accreditation website, which is www.opengroup.org/accreditation/o-ttps. And on that accreditation site you can see the policy, standard and supporting docs. We publicize our assessment procedures so you have a good idea of what the assessment process will entail.

The program is based on evidence of conformance as well as a warranty from the applicant. So the assessment procedures being public will allow any organizations thinking about getting accredited to know exactly what they need to do.

As always, we would appreciate any new members, because we'll be evolving the standard and the accreditation program, and it is done by consensus. So if you want a say in that, whether our standard needs to be stronger, weaker, broader, etc., join the forum and help us evolve it.

Impact on business

Gardner: Dan Reddy, when we think about managing these issues, often it falls on the shoulders of IT and their security apparatus, the Chief Information Security Officer perhaps. But it seems that the impact on business is growing. So should other people in the enterprise be thinking about this? I am thinking about procurement or the governance risk and compliance folks. Who else should be involved other than IT in their security apparatus in mitigating the risks as far as IT supply chain activity?

Reddy: You're right that the old model of everything falls on IT is expanding, and now you see issues of enterprise risk and supply chain risk making it up to the boards of directors, who are asking tough questions. That's one reason why boards look at cyber insurance as a way to mitigate some of the risk that they can't control.

They're asking tough questions all the way around, and I think acquisition people do need to understand what are the right questions to ask of technology providers.
They're asking tough questions all the way around, and I think acquisition people do need to understand what are the right questions to ask of technology providers.

To me, this comes back to scalability. This one-off approach of everyone asking questions of each of their vendors just isn't going to make it. The advantage that we have here is that we have a consistent standard, built by consensus, freely available, and it's measurable.

There are a lot of other good documents that talk about supply chain risk and secure engineering, but you can't get a third-party assessment in a straightforward method, and I think that's going to be appealing over time.

Gardner: Bob Dix, last word to you. What do you see happening in the area of government affairs and public policy around these issues? What should we hope for or expect from different governments in creating an atmosphere that improves risk across supply chain?

Dix: A couple things have to happen, Dana. First, we have got to quit blaming victims when we have breaches and compromises and start looking at solutions. The government has a tendency in the United States and in other countries around the world, to look at legislating and trying to pass regulatory measures that impose requirements on industry without a full understanding of what industry is already doing.

In this particular example, the government has had a tendency to take an approach that excludes vendors from being able to participate in federal procurement activities based on a risk level that they determine.

The really great thing about the work of the OTTF and the standard that's being produced is it allows a different way to look at it and instead look at those that are accredited as having met the standard and being able to provide a higher assurance level of authenticity and security around the products and services that they deliver. I think that's a much more productive approach.

Working together

And from a standpoint of public policy, this example on the great work that's being done by industry and government working together globally to be able to deliver the standard provides the government a basis by which they can think about it a little differently.

Instead of just focusing on who they want to exclude, let's look at who actually is delivering the value and meeting the requirements to be a trusted provider. That's a different approach and it's one that we are very proud of in terms of the work of The Open Group and we will continue to work that going forward.

Gardner: I'm afraid we will have to leave it there. We've been exploring ways to address supply chain risk in the information technology sector marketplace, and we've seen how The Open Group Trusted Technology Forum standards and accreditation activities are enhancing the security of global supply chain and improving the integrity of openly available IT products and components. And we have also learned how the age-old practice of insurance is coming to bear on the problem of IT supply chain risk.
Attend The Open Group Baltimore 2015
July 20-23, 2015
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This special BriefingsDirect thought leadership panel discussion comes to you in conjunction with The Open Group's upcoming conference on July 20, 2015 in Baltimore. It's not too late to register on The Open Group's website or to follow the proceedings online and via Twitter and other social media during the week of the presentation.

So a big thank you to our guests: Sally Long, Director of The Open Group Trusted Technology Forum; Andras Szakal, Vice President and Chief Technology Officer for IBM U.S. Federal and Chairman of The Open Group Trusted Technology Forum; Bob Dix, Vice President of Global Government Affairs and Public Policy for Juniper Networks and a member of The Open Group Trusted Technology Forum, and Dan Reddy, Supply Chain Assurance Specialist, college instructor and Lead of The Open Group Trusted Technology Forum Global Outreach and Standards Harmonization Work Group.

And lastly, a big thank you to our audience for joining us at the special Open Group-sponsored thought leadership panel discussion.

I'm Dana Gardner, Principal Analyst at Interarbor Solutions, your host and moderator for these Open Group discussions associated with the July 20 Baltimore Conference. Thanks again for listening, and come back next time.

Listen to the podcast. Find it on iTunes. Get the mobile app for iOS or Android. Download the transcript. Sponsor: The Open Group.

Transcript of a BriefingsDirect discussion on ways to address supply chain risk in the information technology sector market. Copyright The Open Group and Interarbor Solutions, LLC, 2005-2015. All rights reserved.

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