Cloud and SaaS Pave the Way to Increased Efficiency in IT Budgets
Cloud and SaaS Pave the Way to Increased Efficiency in ITBudgetsTranscript of a sponsored BrieﬁngsDirect podcast, part of a series on application lifecyclemanagement and HP ALM 11 from the HP Software Universe 2010 conference in Barcelona.Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Download thetranscript. Sponsor: HP.Dana Gardner: Hello, and welcome to a special BrieﬁngsDirect podcast series, coming to you from the HP Software Universe 2010 Conference in Barcelona. Were here the week of November 29, 2010 to explore some major enterprise software and solutions, trends and innovations, making news across HP’s ecosystem of customers, partners, and developers. [See more on HPs new ALM 11 offerings.] Im Dana Gardner, Principal Analyst at Interarbor Solutions, and I’ll be your hostthroughout this series of Software Universe Live discussions. [Disclosure: HP is a sponsor ofBrieﬁngsDirect podcasts.]We are now joined by two executives from HP to discuss the software as a service (SaaS)market. We are here with Kevin Bury. He is the Vice President and General Manager of HPSoftware as a Service. Welcome.Kevin Bury: Dana, it’s great to be here.Gardner: And we are also here with Neil Ashizawa. He is the Manager of Products for HPSoftware as a Service. Welcome back, Neil.Neil Ashizawa: Hi. Thanks, Dana.Gardner: Let’s start with you, Kevin. Tell me a little bit about the market. We’re seeing a lot ofinterest in SaaS, we are also hearing a lot about cloud. Are people already using cloud? Are theyconfusing SaaS and cloud? What is, in a sense, the continuum in real world practice now withSaaS and cloud?Bury: We are seeing a lot of interest in the market today for SaaS and cloud. I think it’s anextension of what weve seen over the last decade of companies looking at ways that they candrive the most efﬁciency from their IT budgets, and as they are faced especially in these tryingeconomics times of trying to do as much as they can, theyre looking for ways to optimize ontheir investment.
When you look at what they are doing with SaaS, it gives them the ability to outsource applications, take advantage of the cloud, take advantage of web technologies to be able to deliver those software solutions to their customers or constituents inside of the business, and do it in a way where they can drive speed to value very, very quickly. They can take advantage of getting more bang for their buck, because they don’t have to have their people focused on those initiatives internally and theyre able to do it in a ﬁnancial model that gives them tremendous value, because they cantreat it as an operating expense as opposed to a capital expense. So, as we look to the interest ofour customers, were seeing a lot more interest in, "HP, help us understand what is available as aservice."Various components then include SaaS, infrastructure as a service (IaaS), certainly platform as aservice (PaaS), with the ultimate goal of moving more and more into the cloud. SaaS is astepping stone to get there, and today about half of all of the cloud types of solutions start withSaaS.Gardner: Neil, how do you see that? Are folks well into this, or is it still in the planning stages?Somewhere in betweenAshizawa: Were somewhere in between, to be quite honest. About a year, year-and-a-half ago, it was a lot earlier, and people were still trying to get their minds wrapped around this idea of cloud. Were at a stage now where a lot of organizations are actually adopting the cloud as a sourcing strategy or they are building other strategies to adopt it. Were probably past early adopter and more into mainstream. I anticipate it will continue to grow and gain momentum. Gardner: Neil, is there a confusion in the market between SaaS and cloud? Are some thinking that they are doing cloud computing, and is there something that’s still being done outside the purview of IT? Or, is IT now becoming more involvedin perhaps a gatekeeper role with SaaS and/or cloud.Ashizawa: Now, IT is becoming much more involved. I would say that they are actuallybecoming more of a broker. Before, when it came to providing services to drive business, theywere more focused on build. Now, with this cloud theyre acting in a role as a broker, as Kevinsaid, so that they can rebuild the business beneﬁts of the cloud.Gardner: Kevin, when we hear that cloud word, a lot falls underneath it. Were hearing, ofcourse, SaaS, PaaS, and IaaS. How do you see the market evolving? Are we going to move in acontinuum? Is there overlap? What’s the relationship between companies as they adopt SaaS, asperhaps their development organizations work with PaaS, and ultimately will they be engagingwith infrastructure services off the wire?
Bury: That a question I get asked quite frequently by our customers. Where is this thing going? When is it going to end? Is it going to end? I don’t believe it is. I think it’s an ongoing continuum, to use your word. It’s really an evolution of what services their constituents are trying to consume, and the business is responding by looking for different alternatives to provide those solutions. For example, if you look at where SaaS got started, it got started because business departments were frustrated, because IT wasn’t responsive enough.They went off and they made decisions to start consuming application service provider (ASP)source solutions, and they implemented them very, very quickly. At ﬁrst, IT was unaware of this.Now, as IT has become more aware of this, they recognize that their business users are expectingmore. So, theyre saying, "Okay, we need to not only embrace it, but we need to bring it in-house,ﬁgure out how we can work with them to ensure that we are still driving standardization, andwere still addressing all of the compliance and security issues."Corporate data is absolutely the most valuable asset that most companies have, and so they haveseen now that they have to embrace it. But, as they look down the road, it moves from just SaaSinto now looking at a hybrid model, where theyre going to embrace IaaS and Platform as aService, which really formed the foundation of what the cloud is and what we can see of it today.But, it will continue to evolve, mature, and offer new things that we don’t even know about yet.Gardner: Well, if the past is a prologue and if we learn anything from history, we’ve seen howapplications have been adopted in ﬁts and starts over the past decades. Then, integration has hadto come in, and it’s often been an issue in terms of cost and complexity. Are there some bestpractices that organizations should examine and consider now, as they move towards these newerways of distributing and using SaaS, PaaS, and IaaS?Where should you be thinking, where should you be going, if you want to head off even morecomplexity and/or pain down the road?The promise and the hypeBury: This topic often gets lost, because organizations can become overwhelmed by thepromise and the hype of cloud and what it can offer. My recommendation is usually to start withsomething small. I go out and spend a lot of time talking to our customers and prospectivecustomers. There are a couple of very common bits of feedback that I hear that CxOs are lookingat, when they view where to start with a cloud or as a service type of initiative.The ﬁrst of these is, is it core to my business? If a business process is absolutely core to whatthey are doing, it’s probably not a great place to start. However, if it’s not core, if it’s somethingthat is ancillary or complimentary to that, it’s something that may make some sense to look atoutsourcing, or moving to the cloud.
The second is if it’s mission-critical or not. If it’s mission-critical and it’s core, that’s somethingyou want to have your scarce resource, your very highly valued IT resources working on,because that’s what ultimately drives the business value of IT. Going back to what Neil saidearlier, IT is becoming a broker. They only have so much bandwidth that they can deliver tothose solutions and offerings to their customers. So, if it’s not core and it’s not critical, those aregood candidates.We recommend starting small. Certainly, IT needs to be very involved with that. Then, as you getmore-and-more comfortable and you’re seeing more value, you can continue to expand. Inaddition, we see projects that make a lot of sense, things like testing as a service, where the ITorganizations can leverage technology that’s available through their partners, but deliver via acloud or a SaaS solution, as opposed to bringing it in-house. So, those are a couple of otherexamples.Gardner: It sounds like the crawl, walk, run approach to cloud activities, stepping stones,learning as you go pilot projects, but along the way isn’t there the need for consideringintegration, security, and governance? Im thinking too about the need, not only to allowapplications that are from the cloud or SaaS to interoperate, but also thinking about how thosemight interoperate with legacy applications and data.I guess it’s the big integration question. Neil, what should IT be thinking about in terms of tryingto get on top of this integration issue sooner rather than later?Ashizawa: Clearly they should make sure that, if they are going to adopt the SaaS solution, thatthey vet out the integration possibilities -- to get out in front that. Also, integration doesn’t juststop at the technical level. There are also the business aspects of integration as well. You need toalso make sure that the service levels are going to be what your business users desire and thatyou can enforce, and also integration from the support model.If the user needs help, what’s the escalation? What’s the communication point? Who is theperson who is actually going to help them, given the fact that now there is a cloud vendor in themix, as well as the cloud consumer.Gardner: It sure sounds like this is not something I want to get done at any strategic levelwithout IT being involved. The more you think it through, the more you see that this becomessomething that requires all of the usual beneﬁts, governance, and manageability from traditionalIT. But, let’s take a step back and look at where SaaS is creeping in, so that we might knowwhere then to head it off in order to protect IT and the organization from future complexity.Kevin, where do you see the market segmentation for SaaS? Are we seeing it by application, arethere breakouts by region around the globe, or is this strictly based on the personality if you will,of one enterprise versus another?
Developing patternsBury: In the early stages, it was very much dictated by the personality or the willingness toembrace new technologies of the overall organization or the CIO or the business leaders of acompany. But, now a decade into this market trend, were deﬁnitely seeing some patterns start todevelop.I mentioned earlier this movement towards those applications or those areas of the business thatare not core and critical that they are looking to move outside of their data center. So that’scertainly something, when we look at things like complementing what IT does around things liketesting as a service. Security as a service is a big area that we are seeing growth in. Projectportfolio management (PPM), helping those IT organizations manage their business, the day-to-day business, are some of the areas that we are seeing a lot of growth.When I look geographically, it’s interesting. Some of the early adopters were companies in themore developed nations, the U.S., England, and Germany. Now, what were seeing is atremendous amount of interest out of some of the more developing nations, certainly in Asia,Paciﬁc, Japan (APJ) down in the South Paciﬁc. Australia and New Zealand are embracing SaaSas the primary vehicle for newest initiatives inside of IT. When we look at the BRIC countries,were seeing a lot of interest coming out of those more developing nations more so than thedeveloped nations.In the developed nations, they have already embraced SaaS and theyre starting to embrace cloudmore, but theyre now starting because of the IT governance requirement. So, to your pointearlier, were looking for much more specialized or vertical types of solutions, where we cancome in and add value, because the breadth of our portfolio has offerings for them. When youlook at the developing countries, theyre saying, "We need to look at this from a more holisticapproach," and they want to partner with someone like HP because of all the breadth we canbring in there.Gardner: So, sufﬁce it to say, Kevin, SaaS is really strategic, very important to HP as acompany.Bury: Absolutely. We see SaaS as one of the key drivers, one of the strategic initiatives for HP toembrace. As I talk with my peers on the leadership team, we recognize SaaS as one of only twoconsumption model customers have for obtaining software from HP. In the traditional licenseplay, they can consume the license and pay maintenance or, if they want to treat as an operatingexpense, it will be via the SaaS model.As we look to what we need to do, were investing very heavily in making all of our applicationsSaaS ready, so that customers can stand them up in their own data center and our data center orvia a hybrid, where we may involve either a combination of those or even include a third-party.For example, they may have a managed service provider that is providing some of the testingservices. To your point earlier about the integration, HP, because of our breadth and our depth of
our applications, can provide the ability to integrate that three-way type of solution whereasother companies don’t have that type of depth to be able to pull that off.Gardner: It shows that perhaps bigger is better in this regard.Bury: Absolutely. It’s interesting. Ive been in the SaaS space now for about nine years. In theearly days, the agility and the ability to being nimble was great for the smaller vendors. But, asSaaS now becomes much more mainstream and much more mature, big customers are nowlooking to companies like HP, because of the fact that we have the size, the depth, and thebreadth of the solutions.Looking for a relationshipTheyre looking for that relationship that is going to transcend this solution and is going to bepart of the overall relationship between HP and their organization over the long haul. So, sizedeﬁnitely matters when it comes to cloud and SaaS.Gardner: What’s interesting about the SaaS and cloud services is, there is something new aboutit, but there’s also something very reminiscent. We’ve been here before. We’ve talked aboutASPs for decades plus, and there’s been managed services for even longer.Neil, tell me a little bit about how this works as a segue, as a progression. For thoseorganizations already deeply involved with ASPs, managed services, or hosting, how do theynow best proceed towards the adoption of what we now call cloud?Ashizawa: It’s very much of an evolution. Ten years they started with ASPs, moved into more ofa managed service, and now here we are at cloud. Clearly, organizations that did adopt ASP andmanaged service are probably more comfortable with the jump to cloud.One of the key differentiators, as it’s evolved, in the way I see it, is really in the economicprinciples behind cloud versus managed service and ASP. With cloud, as Kevin mentionedearlier, you basically leverage your operation expense budgets and reduce that capitalization thattypically you would still need to do in a historic ASP or managed service.Cloud brings to the table a very compelling economic business model that is very important tolarge organizations.Bury: If I could add to that, Dana, Neil makes a couple of great points. The thing that’simportant to note here is that this is an evolution or a maturation. It’s interesting, having been inthis phase for so long, to see what customers are now looking at. And it’s something where, as Istart to look out to the future and speculate about where they want to go next, Im seeing a lot ofindications towards a model where customers will want to consume this idea of everything as aservice. We’ve even seen recently customers say, "Youre already doing this for us," whateverthat as-a-service solution might be.
"Can you also take some of our people, put them back into that, and then just charge us thatmonthly or annual fee?" Neil and I spent a lot of time contemplating this idea of business processas a service. That’s what were speculating could be a next generation of SaaS or cloud. It’s theidea of customers who wanted to consume business processes as service, which is just anotherstep towards consuming everything as a service.Gardner: I was starting to think about that, when we described how you integrate both amongand between different types of services that are sourced from cloud or SaaS with your ongoinglegacy applications as services. It really does get elevated to the process level, and it’s at theprocess level where you get the agility and where you could start to get towards your Instant-OnEnterprise beneﬁts, regardless of where these were sourced.Delivering on the promiseBury: Thats one of the big things that were looking at. How will companies in the future reallybe able to deliver on the promise of what is and what we are recognizing as the Instant-On typeof enterprise? It’s the ability to take in data very, very quickly and then be able to analyze it,make assessments on it, make decisions and to be, in the term you use, very agile in the way thatthey are reacting to these inputs.In the past, companies generally have been very siloed. Information would come in and theydidn’t have the access nor the visibility into it from another division or another department.When you look at what the instant enterprise is going to, it’s the ability to consume informationvery, very quickly, analyze it, then make decisions, and make directional changes to what’s goingon inside of their environment.As-a-service and cloud are very much enablers of that, because it gives you the ability to takeadvantage of technology as an enabler, as opposed to the past when they were just to serve onesolution or one business process in the past. Now, theyre able to have that stratify the entireorganization. So, they have the insight and the agility to make real-time types of decisions.Gardner: So it sounds like this is going to be a journey for some time, with lots of potentialopportunity. But, it also sounds like something you need to do quite carefully. Given that, whatare some of the best practices? What are some of the things that you ought to have lined upwithin IT in order to progress towards some of these larger business process level goals?Bury: It’s like any IT project. The single-most important thing is not to go into it withexpectations, any preconceived expectations that it’s going to be nirvana, or that it’s going to beeasy. Moving a difﬁcult business process from in house to out of house, right into the cloud,doesn’t mean that the problem goes away or that the challenges go away from it. You still need toapproach it with discipline, rigor, and formal types of processes and methodologies, which iswhat IT is really good at.
The key is to get engaged early, learn as much as you can about the cloud and about as a service,and then look to companies like HP that have the experience in doing this. We’ve been doing itfor more than 10 years. We’ve got a lot of success stories that we can point to on how we canhelp companies take advantage of the cloud and also what to avoid when you move into thecloud.Gardner: Neil, any thoughts also on best practices in terms of getting yourself prepared for thisnew wave?Ashizawa: I very much agree with what Kevin just said. I think what Kevin was also saying isthat you really want to look for trust. If you are going to be outsourcing business processes to avendor, you really want to have that trust. What were seeing is that there is a strong linkagebetween your compliance levels that you have in your organizations and the trust that your cloudvendor can also provide you a solution that can help you maintain your compliance andstandards.So, at the end of the day, you really want to just make sure that you go into this with a trustedvendor that has a proven experience, that can really make sure that they understand your needand your requirements, and they have a SaaS solution that can really ﬁt your organization.Gardner: Very good. Weve been discussing the future of the SaaS market and how to get startedresponsibly, and move forward from a legacy and a managed services and/or ASP heritage.We’ve been talking with Kevin Bury. He is the Vice President and General Manager for HPSaaS. Thank you, Kevin.Bury: Thank you, Dana, this has been great.Gardner: We’ve also been joined by Neil Ashizawa, Manager of Products for HP SaaS. Thankyou, Neil.Ashizawa: Thanks very much, Dana.Dana Gardner: I want to thank also our listeners for joining the special BrieﬁngsDirect podcast,coming to you from the HP Software Universe 2010 Conference in Barcelona.Look for other podcasts from this event on the hp.com website, as well as via the BrieﬁngsDirectnetwork.Im Dana Gardner, Principal Analyst at Interarbor Solutions, your host for this series of SoftwareUniverse Live discussions. Thanks again for listening, and come back next time.Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Download thetranscript. Sponsor: HP.
Transcript of a sponsored BrieﬁngsDirect podcast, part of a series on application lifecyclemanagement and HP ALM 11 from the HP Software Universe 2010 conference in Barcelona,Spain. Copyright Interarbor Solutions, LLC, 2005-2010. All rights reserved.You may also be interested in: • HP rolls out ALM 11 in Barcelona to expand managed automation for modern applications • HPs new ALM 11 helps guide IT through shifting landscape of modern application development • Dave Shirk details how HPs Instant-On Enterprise initiative takes aim at shifting demands on business and governments • New book explores automating the managed applications lifecycle to accelerate delivery of business applications