Time to Give Server Virtualization's Twin, Storage Virtualization, a Top Place at IT Efficiency Table

Transcript of a BriefingsDirect podcast on the improved business metrics from adopting a virtualized storage architecture.

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

Dana Gardner: Hi, this is Dana Gardner, principal analyst at Interarbor Solutions, and you’re listening to BriefingsDirect.

Today, we present a sponsored podcast discussion on storage virtualization. You've heard a lot about server virtualization over the past few years, and many enterprises have adopted server virtualization to improve their ability to manage runtime workloads and high utilization rates to cut total cost.

But, as a sibling to server virtualization, storage virtualization has some strong benefits of its own, not the least of which is the ability to better support server virtualization and make it more successful.

We're here to discuss how storage virtualization works, where it fits in, and why it makes a lot of sense. The cost savings metrics alone caught me by surprise, making me question why we haven't been talking about storage and server virtualization efforts in the same breath over these past several years.

To help us explain how to better take advantage of storage virtualization, we're joined by Mike Koponen, HP's StorageWorks Worldwide Solutions marketing manager. Hello, Mike.

Mike Koponen: Hello, Dana. How are you doing today?

Gardner: Doing very well. Thanks for joining us.

Koponen: You bet.

Gardner: As I said, a lot of folks have been taking up more server virtualization and understanding its benefits. It's become quite popular, particularly in the down economy, where cost is so important. Storage virtualization offers a number of the same types of benefits. Tell us why storage virtualization makes so much sense.

Economic environment

Koponen: Dana, you mentioned that, particularly in today's economic environment, customers need to boost efficiencies from their existing assets as well as the future assets they're going to acquire and then to look for ways to cut capital and operating expenditures. That's really where storage virtualization fits in.

It's a way to increase asset utilization. It's a way to save on administrative cost, and it's also a way to improve operational efficiencies, as businesses deal with the increasing storage requirements of their businesses. In fact, if businesses don't reevaluate their storage infrastructures at the same time as they're reevaluating their server infrastructures, they really won't realize the full potential of a server virtualization.

Gardner: A few years ago, people were putting in servers as fast as they could. Basically, their goal or their motivation was simply to keep up with demand. I have to believe that's the case with storage as well, and storage requirements are still growing rapidly. How do you both keep up with the high demand for more and try to cut cost at the same time.

Koponen: It's an excellent question and one that businesses deal with all the time. As you say, the storage requirements aren’t letting up from regulatory requirements, expansion, 24x7 business environments, and the explosion of multimedia. Storage growth is certainly not stopping due to a slowed down economy.

Storage virtualization and server virtualization are tools that businesses are using to deal with those. In the past, as you said, customers would just continue to deploy servers with direct-attached storage (DAS). All of a sudden, they ended up with silos or islands of storage that were more complex to manage and didn't have the agility that you would need to shift storage resources around from application to application.

Then, people moved into deploying network storage or shared storage, storage area networks (SANs) or network-attached storage (NAS) systems and realized a gain in efficiency from that. But, the same can happen. You can end up with islands of SAN systems or NAS systems. Then, to bump things up to the next level of asset utilization, network storage virtualization comes into play.

You can pool all those heterogeneous systems under one common management environment to make it easy to manage and provision these islands of storage that you wound up with.

Gardner: You mentioned this notion of silos of storage and I think I heard at least two or three different levels of silos of storage. Can you break that out for us? What are we really talking about, when we think about the various components at play here?

Three levels

Koponen: I break it down into three levels. One, I'd call basic virtualization. That's where you just have internal storage in your servers or direct attached storage to those servers. The next level would be what I'd call virtualized network storage. We've got SAN systems that have the ability to virtualize the arrays and the disk spindles within that SAN system.

The third level is what I call network-based storage virtualization. There, you have the ability for heterogeneous storage systems to all be managed under a common structure and virtualized as a single common pool of storage. Those would be the three levels that I break them down into.

Gardner: So, the goal with storage virtualization is not just to virtualize on each of those levels, but to virtualize them all together, so there is a single pool of storage. Is that correct, or that I am oversimplifying?

Koponen: No, that's basically it. In the second two levels I described, where you've got a SAN system, those can also come in two types. You can have a traditional one that's non-virtualized and then you can have a virtualized one, such as the HP Enterprise Virtual Array or the HP LeftHand SAN, where you have the ability to stripe data out across disk spindles and multiple drive trays, and all of that is abstracted from the system administrator.

There are different needs or requirements that drive the use of storage virtualization and also different benefits.

The storage is virtualized, and then the level above that is where you have network-based storage virtualization, such as our SAN virtualization services platform, that can take heterogeneous storage systems, multiple SAN systems for multiple vendors, and present those as one common pool of storage. It's this concept of pooling storage, but at different levels.

Gardner: Of course, it's a big management task to be able to do that and then get to the storage the way that you want to prioritize different storage requirements and some responses based on the application set or whether you're doing it for backup or archives. Is that right?

Koponen: That's true. There are different needs or requirements that drive the use of storage virtualization and also different benefits. You mentioned some of them. It may be flexible allocation of tiered storage, so you can move data to different tiers of storage based upon its importance and upon how fast you want to access it. You can take less business-critical information that you need to access less frequently and put it on lower cost storage.

The other might be that you just need more efficient snap-shotting, a replication of things, to provide the right degree of data protection to your business. It's a function of understanding what the top business needs are and then finding the right type of storage virtualization that matches those.

Gardner: It also sounds like we're taking a complete look at storage. We're looking at it from all angles and, therefore, are able to architect in such a way that we can take advantage of all the capacity we have and do that intelligently. Is that a fair assumption?

Key driver

Koponen: That's true. One key driver is boosting asset utilization. We found that in a lot of businesses they may have as little as 20 percent utilization of their storage capacity. By going to storage virtualization, they can have a 300 percent increase in that existing storage asset utilization, depending upon how it's implemented.

Gardner: Mike, tell me how this relates to server virtualization. If I've got a server virtualization program underway and I've enjoyed some benefits from that, what is taking this added step to storage virtualization going to do for me?

Koponen: Well, a couple of things, Dana. First, in order to take advantage of the advanced capabilities of server virtualization, such as being able to do live migration of virtual machines and to put in place high availability infrastructures, advanced server virtualization require some form of shared storage.

So, in some sense, it's a base requirement that you need shared storage. But, what we've experienced is that, when you do server virtualization, it places some unique requirements on your storage infrastructure in terms of high availability and performance loads.

Server virtualization drives the creation of more data from the standpoint of more snapshots, more replicas, and things like that. So, you can quickly consume a lot of storage, if you don't have an efficient storage management scheme in place.

Server virtualization drives the creation of more data from the standpoint of more snapshots, more replicas, and things like that. So, you can quickly consume a lot of storage, if you don't have an efficient storage management scheme in place.

And, there's manageability too. Virtual server environments are extremely flexible. It's much easier to deploy new applications. You need a storage infrastructure that is equally as easy to manage, so that you can provision new storage just as quickly as you can provision new servers.

Gardner: So, is this a case of a whole being greater than the sum of the parts? If we do server virtualization well and then we do storage virtualization well, not only do we get the usual benefits in terms of capacity, cost, flexibility, and intelligence at each of those perspectives, but, by combining them, we get something additional.

Koponen: Yes, you certainly do. The way I would describe that X factor of what you're getting in addition is just the highest level of business agility and flexibility. The underpinning of that would be that you're making maximum use of your assets, both your server assets and your storage assets.

Gardner: Is there something else here in terms of security, compliance, complexity, or those other necessary things to deal with nowadays? Do we get anything else in combining these two?

Increased protection

Koponen: You certainly get an increased degree of data protection by being able to meet backup windows and not having to compromise the amount of information you back up, because you're trying to squeeze more backups through a limited number of physical servers. When you do server virtualization, you're reducing the number of physical servers and running more virtual ones on top of that reduced number.

You might be trying to move same number of backups through a fewer number of physical servers. You also then end up with this higher degree of data protection, because with a virtualized server storage environment you can still achieve the volume of backups you need in a shorter window.

Gardner: So, it's better control, better understanding, higher utilization, and lower cost. If someone is interested after hearing this, where do you start, how do you undertake a journey? I assume you don't do this all at once, but rather it's something you need to do on a rollout basis. Where do you start when it comes to storage virtualization?

Koponen: Step one is assessing your environment and understanding what your starting point is going to be. Is it a greenfield environment, where you've got a lot of departmental, work-group type servers that you don't have tied into shared storage or virtualized storage? It might be starting with putting in place virtualized storage to support those.

You're more exposed now to that single physical server going down, because, if that single physical server goes down, you've lost multiple applications, and not just one.

Or, do you have existing SAN systems in place that are just underutilized. Then, you might look at putting in place, say, the HP SAN Virtualization Services Platform (SVSP), to get a higher degree of asset utilization out of the existing systems.

It depends on where you're starting from. So, step one is to determine that, figure out where your most underutilized assets are, and what's causing you the most pain today from a management complexity standpoint. Or, it could be the case that you don't have an adequate business continuity plan in place. That's your key factor in where to start. So, it's assessing that starting point, Dana.

Gardner: Let's drill into that business continuity one for a second. That's pretty important. What does virtualizing your storage bring to the table, when it comes to data recovery, disaster recovery, backup, archiving, or continuity issues?

Koponen: Well, first, when you virtualize your servers, you're taking multiple applications and running them on a single physical server. You're more exposed now to that single physical server going down, because, if that single physical server goes down, you've lost multiple applications, and not just one. So, the need for high availability goes up.

Server virtualization suppliers like VMware, Microsoft, and Citrix, all have capabilities to provide high availability on the application side. You need to make sure you match that with high availability on the storage infrastructure side, so that you've got the same capabilities within your storage from a high availability standpoint as you do your sever infrastructure.

Gardner: Right, it doesn't make sense to have the applications humming along at whatever requirements are, if the storage and data can't keep up.

High application availability

Koponen: Exactly. From an HP portfolio standpoint, we have some innovative products like the HP LeftHand SAN system that's based on a clustered storage architecture, where data is striped across the arrays and the cluster. If a single array goes down in the cluster, the volume is still online and available to your virtual server environment, so that high degree of application availability is maintained.

Gardner: Mike, how about some examples? For folks that have done this already, what are the typical scenarios? What are some of the paybacks? What's the usual case scenario?

Koponen: Dana, there was a white paper recently done by IDC on the business value of storage virtualization. It looked at a number of factors -- reduced IT labor, reduced hardware and software cost, reduced infrastructure cost, and user productivity improvements. Virtualized storage had a range of payback anywhere from four to six months, based on the type of virtualized storage that was being deployed.

It found asset utilization increases up to 300 percent, savings of administrative cost of 2x to 3x, and shrinking back-up times by up to 80 percent as well. The benefit in the payback was really compelling. That IDC paper is posted on the HP website.

Virtualized storage had a range of payback anywhere from four to six months, based on the type of virtualized storage that was being deployed.

Gardner: What are some of the business returns? Clearly, we've got some cost benefits and technology benefits that folks in the IT department would enjoy, but what would we expect from storage virtualization for the larger business outcomes or goals?

Koponen: You have these benefits of reduced CapEx and OpEx that companies can take to the bottom line, particularly in these economic times, and you also have improved business agility as well. Let's say, a company makes an acquisition and they've got to merge an existing IT resource into their existing IT infrastructure. The ability to do that is going to be greater, given that you've got a virtualized storage infrastructure in place.

Gardner: That gives more agility for changing your organization from a merger and acquisition perspective. How about sourcing, when it comes to what we think about now as cloud computing? Is there some benefit in having virtualized storage that gives you more options for your sourcing?

Koponen: Well, it gives you more options in terms of the flexibility with which you manage your internal cloud, how you can meet your quality of service levels to your internal user community, and how you partition out storage to them, because you can make much more efficient use of those resources. Using your outsourced cloud providers, you can augment that existing server and storage capacity that you've got in place.

Gardner: Returning to the road map of how you would get started and involved with this, what else do you need to consider other than certain technologies? Is this something that's going to change the nature of your organization? Are we going to be asking different folks inside of IT, and perhaps outside of IT, to work together in ways they hadn't before? What are the cultural implications?

Combining resources

Koponen: That's a good question, Dana. In the case of enterprise organizations, you may have the storage management done by a particular set of folks. Then, you may have the management of it, the server infrastructure, done by another set of folks. This will bring those two sets of resources together and provide them more efficient platform to be able to work together.

In medium-sized businesses, it's all about being able to manage storage assets without having to have expert storage administrators in place, so that server administrators can manage the storage assets as easily as they do their server assets.

Gardner: I wonder, if there's something we left out. Is there another item around this that folks should be aware of?

Koponen: I don't think so. However, for people who want to learn more about storage virtualization and what HP has to offer to improve their business returns, I suggest, they go to www.hp.com/go/storagevirtualization. There they can learn about the different types of storage virtualization technologies available. There are also some assets on that website to help them with the justification of putting storage virtualization within their companies.

HP has very strong relationships with all of the server virtualization suppliers in the marketplace, so that we can bring complete solutions to bear on customers.

Gardner: Just to be clear. When HP approaches storage virtualization, you're working with a number of different vendors and suppliers and different technologies. This is really quite a heterogeneous landscape. Is that correct?

Koponen: That's correct. HP has very strong relationships with all of the server virtualization suppliers in the marketplace, so that we can bring complete solutions to bear on customers. We use best-of-breed technology from the entire ecosystem.

Gardner: Well, thanks. We've been hearing about server virtualization in the past few years, but today, we've taken the time to look at a sibling, storage virtualization. It involves improved runtime workloads in the server side, getting the storage and data that it needs, but there is also a lot of pure, economic rationale for going about the storage virtualization on its own.

Here to help us better understand the whys and hows of storage virtualization is Mike Koponen. He's the HP StorageWorks Worldwide Solutions Marketing Manager. Thanks for your time, Mike.

Koponen: Thank you, Dana.

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

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

Transcript of a BriefingsDirect podcast on the improved business metrics from adopting a virtualized storage architecture. Copyright Interarbor Solutions, LLC, 2005-2010. All rights reserved.

Security Skills Offer Top Draw Across Still Challenging U.S. IT Jobs Outlook

Edited transcript of BriefingsDirect Analyst Insights Edition podcast, Volume 48, on where to find opportunities in IT during this stage of the recession.

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

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

Gain additional data and analysis from Foote Partners on the IT jobs market.

Dana Gardner: Hello, and welcome to the latest BriefingsDirect Analyst Insights Edition, Volume 48. I'm your host and moderator Dana Gardner, principal analyst at Interarbor Solutions.

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

Our topic this week on Analyst Insight Edition centers on the IT job landscape for 2010. We have with us here today David Foote, CEO and chief research officer, as well as co-founder, at Foote Partners LLC of Vero Beach, Fla.

David closely tracks the hiring and human resources trends across the IT landscape. He'll share his findings of where the recession has taken IT hiring and where the recovery will shape up. We'll also look at what skills are going to be in demand and which ones are not. David will help those in IT, or those seeking to enter IT, identify where the new job opportunities lie.

So, please join me in welcoming David Foote to our show. Hello, David.

David Foote: Great to be here, Dana.

Gardner: First, tell us a little bit about yourself, your background, and then a bit more about the Foote Partners.

Foote: I started my career in technology in Silicon Valley, just about the time the IBM PC came to market. About half of the 10 years I spent there were working with vendors. I started in consumer electronics, in the games business.

Then, I gravitated to consulting, particularly with extremely rapid-growth technology companies, those that were making their first billion within four years. That led to becoming an analyst, and I started at Gartner in the '90s.

I was recruited to META Group to start and run their service for CIOs. While I was there, the discovery I made was that there was so much the analyst community was offering executives in IT and in business around vendors and products, and not much on the execution side.

Once we've made all of our purchases, how do we actually execute and get this stuff done? That's a spending issue, a people issue, a workforce issue, and, these days, very much a skills issue, and there really wasn't much being done.

Business focus

So, I developed a number of products and took them out to my own company in 1997. I co-founded this company with a former senior partner at McKinsey. We not only have that big IT executive and trends focus as analysts, but also very much a business focus.

We've also populated this company with people from the HR industry, because one of the products we are best known for is the tracking of pay and demand for IT salaries and skills. It's been a wild ride over 13 years, but that's pretty much it. We are in the execution business.

The last thing I'll say is that we have a proprietary database -- which I'll be drawing from today -- of about 2,000 companies in the U.S. and Canada. It covers about 95,000 IT workers. We use this base to monitor trends and to collect information about compensation and attitudes and what executives are thinking about as they manage IT departments.

Gardner: Before we get into where we're going in 2010, maybe we should pause and take a look at what's happened for the last three years. We know the bigger story about the recession, but what has happened in IT hiring? What have the last three years and, more specifically, 2009 been like?

Foote: One of the biggest trends has been in defining who an IT person is. For many years, IT people were basically people with deep technical skills in a lot of areas of infrastructure, systems, network, and communications. Then, the Internet happened.

All of a sudden, huge chunks of the budget in IT moved into lines of business. That opened the door for a lot of IT talent that wasn't simply defined as technical, but also customer facing and with knowledge of the business, the industry, and solutions. We've been seeing a maturation of that all along.

What's happened in the last three years is that, when we talk about workforce issues and trends, the currency in IT is much more skills versus jobs, and part of what's inched that along has been outsourcing.

We have labor arbitrage now. If you need to get something done, you can certainly purchase that and hire people full-time or you can rent it by going anywhere in the world, Vietnam, Southeast Asia, India, or many other places. Essentially, you are just purchasing a market basket of skills. Or, these days, you can give it over to somebody, and by that I mean managed services, which is the new form of what has been traditionally called outsourcing.

In execution, you don't have to hire bodies. It's not so much about hiring, but about how we determine what skills we need, how we find those, and how we execute. What's really happened in two or three years is that the speed at which decisions are made and then implemented has gotten to the point where you have to make decisions in a matter of days and weeks, and not months. To move an organization, or shuffle resources around, which in this case are people and skills, is tough to do in these very, very short time frames.

So, agility, flexibility, and speed of execution in a global market have been extremely important. In the recession, the idea of being constrained by costs has really tested the mettle of a lot of managers -- how good they are as leaders and managers. Clearly, we have seen that a lot of them are not, but a lot of them are.

Resisting the temptation

There have been some interesting behaviors during this recession that I haven't seen in prior recessions. That lead me to believe that people have really resisted the temptation to reduce cost at the expense of what the organization will look like in 2011 or 2012, when we are past this recession and are back into business as usual.

Do you have the people and the skills necessary for the long-term or were you stupid enough to let people go, simply because they weren't the right person at the right time, in the right spot, and were vulnerable? People have learned something. That's been a big difference in the last three years.

Gardner: So, clearly this is a complex issue. Shuffling people around and maintaining skills, while also recognizing there is a pressure for cost, but also wanting to be mindful of what the recovery is going to look like, has all got to be done carefully. But, generally, did IT, as a sector, fare better than other sectors in this recession? Was it as bad as it was perhaps back in 2001-2002?

Foote: IT has always done better. You have to realize that unemployment in IT is usually half of what it is in the general job market, if you look at Bureau of Labor Statistics (BLS) numbers. I can tell you right now that jobs, in terms of unemployment in IT, have really stabilized.

We put out a report recently. Every month we look at the BLS numbers, and in this most recent report we saw that if you look at the five bellwether segments in the BLS where you would find IT jobs, in the last three months there has been a net gain of 11,200 jobs in these five categories. If you look at the previous eight months, prior to September, there was a loss of 31,000 jobs.

There has been a real stability, and in the case of the services industry in particular, a BLS segment called Management and Technical Consulting Services has gained 11,600 jobs in the first 11 months of 2009, including gains for the last five months.

Looking for talent

So, let's just say that, going into 2010, the services industry will absolutely be looking for talent. There's going to be probably a greater need for consultants, and companies looking for help in a lot of the execution. That's because there are still a lot of hiring restrictions out there right now. Companies simply cannot go to the market to find bodies, even if they wanted to.

Gardner: So, 2010 is already a recovery period for IT. IT's not as bad as other sectors in this recession, but clearly this is spotty. This isn't across the board that we're seeing these recoveries already. What are the hot areas that you can see so far for hiring picking up in IT?

Foote: Well, number one, overall in 2010, we're not going to see any kind of, what I would call, a meaningful return to employment in IT. It's going to be a very slim-to-no chance of any noticeable hiring, particularly if you look at the way things were in 2008. I don't see that happening in 2010. At the earliest, 2011.

There are certain areas, for example, like security, where there is a tendency to not want to hire talent outside, because this is too important to a company.

Companies are still very nervous about hiring, or to put it this way, investing in full-time talent, when the overhead on a full-time worker is usually 80-100 percent of their salaries. If they can find that talent somewhere else, they are going to hire it.

There are certain areas, for example, like security, where there is a tendency to not want to hire talent outside, because this is too important to a company. There are certain legacy skills that are important, but in terms of things like security, a lot of the managed services that have been purchased in 2009 were small- to medium-sized companies that simply don't have big IT staffs.

If you have 5,000, 6,000, or 7,000 people working in IT, you're probably going to do a lot of your own security, but small and medium size have not, and that's an extremely hot area right now to be working in.

Generally speaking, Dana, you're not going to see much happening in hiring in 2010, except maybe certain industries or niche skills, which I will talk to today. Security is one. Enterprise resource planning (ERP), particularly around SAP is another. We're looking at eCommerce, whole market basket of eCommerce jobs and skills, and web development. We can talk about a few of those as we go on today. There are pockets, but overall, don't expect much.

Gardner: Right. So, as with the general economy, doing more with less will continue for some time. I think people have a sense that productivity can be squeezed out in a number of ways, and just because the recession technically might be over, doesn't mean that they are going to stop looking for that productivity.

I guess the question then moves to, if you are an IT person, and you already have a job, what skills should you be investing in? Where should you be taking your own skills in order to make yourself more valuable, perhaps to your current employer, or perhaps even to ensure your ongoing employment with a particular company? Where are the hot skills?

Security gains value

Foote: We track the value of skills and premium pay for skills, and the only segment of IT that has actually gained value, since the recession started in 2007, is security, and it has been progressive. We haven't seen a downturn in its value in one quarter.

Since 2007, when this recession started, overall the market value of security certs is up 3 percent. But if you look at all 200 certified skills that we track in this survey that we do of 406 skills, overall skills have dropped about 6.5 percent in value, but security certifications are up 2.9.

It is a tremendous place to be right now. We've asked people exactly what skills they're hiring, and they have given us this list: forensics, identity and access management, intrusion detection and prevention systems, disk file-level encryption solutions, including removable media, data leakage prevention, biometrics, web content filters, VoIP security, some application security, particularly in small to medium sized companies (SMBs), and governance, compliance, and audit of course.

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Gain additional data and analysis from Foote Partners on the IT jobs market.

Most recently, we've seen some nice numbers go up in the certifications related to auditing. You tend to see that towards the end of the year and the beginning of the year when a lot of this auditing happens. There are few more that I could mention, but these are areas in security for which companies have said they are absolutely looking for talent and skills.

Oh yes. The public sector has been on a real tear.

Gardner: Does this cut across both public and private sectors, do you break that out?

Foote: Oh yes. The public sector has been on a real tear. As you do, we get a lot of privileged information. One of the things that we have heard from a number of sources, I can't tell you the reason why, is that a lot of recruiting is happening in the private sector right now with the National Security Agency and Homeland Security -- in-the-trenches people.

I think there was a feeling that there weren't enough real deep technical, in-the-trenches kind of talent, in security. There were a lot of policy people, but not enough actual talent. Because of the Cyber Security Initiative, particularly under the current administration, there has been a lot of hiring.

Gardner: And that of course reduces the pool available to the private sector?

Smart place to be

Foote: Well, you could say that, but I believe that there are more people that have gotten religion and listen to people like us. We've actually gone out on a limb and we have been saying for about a year and a half that, bar none, for short and long range IT job security, the smartest place to be is, ironically, in IT security.

Unlike a lot of other job segments, pay and demand has risen steadily for the last two years. Neither budget nor headcount has diminished during the recession. There is this perfect storm of drivers right now that is driving momentum, and that is the idea of more regulation, constant fear of increasing threats, greater customer expectations and demands aimed at vendors who have responded. If you look at the Oracles and the Ciscos, they have built a lot of security into their products now.

The other thing, which isn't spoken about a lot, has been the splitting of the operational securities activity side from the business and strategic risk side. That has created a lot of job opportunities in security for people who don't come at it from this deep, in-the-trench technology focus. You can now work in a line of business or in a corporate staff without these deep technical skills, and work in governance and risk management side of that. It has attracted people into the field who didn't think they had the chops to really do it.

As more people come into the field, supply starts to match demand, and it has been such that there has been a pretty steady increase in pay, because demand has really exceeded supply in a lot of cases.

So, Dana, what you've seen is a lot of people who were network administrators and systems administrators now choosing security as a career. As more people come into the field, supply starts to match demand, and it has been such that there has been a pretty steady increase in pay, because demand has really exceeded supply in a lot of cases.

Gardner: Now, another big issue that we have heard about in the last year is cloud computing. And I see from your list of where hiring has taken place the strongest and SAP and ERP, but also open-source operating systems, virtualization, IP networks, social media, PHP, and what is called web-oriented architecture (WOA). Is there a building sense that the cloud hysteria is not just vapor, but that there is now starting to be a call for these sorts of jobs that might be driven by cloud-computing activity?

Foote: Let's be careful about what we call cloud. There's a lot of disagreement as to what cloud computing actually means. Let's call it managed services for a second. That market is projected to be a $66 billion market by 2012. Most people estimate the global managed services market at between $22 billion and $31-32 billion right now.

You're seeing compound annual growth rates in various segments of managed services, particularly in networking of between 19 and 39 percent, between now and 2012-2013. There absolutely is this x-factor. If people choose managed services, and many of them are right now, more will companies need to hire many full-time workers.

We're saying that you'll see increase in headcount in IT, because as companies farm out some of the work that they don't want to do and purchase services in those areas, that allows them to reshuffle their workforce and put people into a lot of other areas, which don't get a lot of mention, except from companies like ours.

Business technology work

And, that is the number of IT people you see in product development groups, marketing, finance, accounting. There are so many IT people now that don't work in IT departments under a CIO, but work in the lines of businesses, doing all kinds of business technology work.

They are in product development groups right now, because most companies have gotten smart and said, "Security is a product feature now, because our customers tell us it is. We need to have IT people involved from the very beginning as we are conceiving our products, which we'll be delivering over the web and supporting and maintaining, and all of that stuff."

I don't want to simplify it, but the definition of an IT worker has really changed quite a bit over the years. When I visit companies, I can't really tell if a person is “IT" or not, because they are in the fabric of companies.

Plus, there is all that market intelligence that can be gained. The web has become central to business globally.

That's one of the reasons right now that in 2010 we'll see a lot of activity around eCommerce and web development, in places you wouldn't exactly expect. It's cost effective to deliver products over the World Wide Web, and companies have simply now defined that as a launching point or as a delivering mechanism for a lot of what they do.

Plus, there is all that market intelligence that can be gained. The web has become central to business globally.

Gardner: That’s probably going to become probably more the case over the next several years, right?

Foote: At some point, where we have an IT department, or where we just have a bunch of consultants, analysts, and expeditors, a lot of the work traditionally done will be farmed out -- either rented, as I said before, or given over -- but that doesn’t diminish the number of people working in IT. It just changes what they do on a day-to-day basis.

Gardner: If service management is a hot area, does that affect the regions where hiring would be taking place? You look at the U.S. and Canada. Are there any geographic or regional trends afoot that we should look at vis-à-vis security, the recession, or even this emphasis on managed services providing?

Foote: I don’t know if we have enough time in this forum to go much outside of North America, but I would say, yes, of course, it’s global.

Gardner: And global, but it's not in terms of regions?

Foote: You mean around the world?

Gardner: Let’s just stick with North America for now.

Managed services

Foote: I talked about managed services before. It looks like one of the hottest areas right now in managed services is in networking and communication: Metro Ethernet, VPNs, IP voice, and wireless security. And if you look at the wireless security market right now, it’s a $9 billion market in Europe. It’s a $5.7 billion market in Asia-Pacific. But in North America it’s between $4 and 5 billion.

There's a lot of activity in wireless security. We have to go right down into every one of these segments. I could give you an idea of where the growth is spurting right now. North America is not leading a lot of this. Other parts of the world are leading this, which gives our companies opportunities to play in those markets as well.

For many years, as you know, Dana, it was everybody taking on America, but now America is taking on the rest of the world. They're looking at opportunities abroad, and that’s had a bigger impact on labor as well. If you're building products and forming alliances and partnerships with companies abroad, you're using their talent and you're using your talent in their countries. There is this global labor arbitrage, global workforce, that companies have right now, and not just the North American workforce.

For many years . . . we were reminding companies that the way that you need to run yourself is to be flexible, to have an extremely agile workforce.

Is it appropriate to always think of a home labor force? No, it’s appropriate to think of your labor force all around the world. And it’s cost-effective too. Look at the number of people that IBM has displaced in Europe and North America and moved those jobs over to places like India. That’s our world now.

Gardner: So, just as the idea about cloud computing is that you go for resources when you need them and acquire them the best way that you can under the particular circumstances, you think there is a parallel from cloud computing into hiring. You don’t necessarily hire people. You acquire skills. You pick them up and then you drop them as you need them. Is there a strong parallel there? It’s like a human resources cloud of skills that you can have elasticity with?

Foote: For many years, to anyone who would listen, we were reminding companies that the way that you need to run yourself is to be flexible, to have an extremely agile workforce. Companies had such trouble with that idea, because they were so used to the idea of hiring people, keeping them around, reskilling them, and carrying so much inappropriate skills. The idea is that, at any one moment, six months to six months to six months to six months, the mix of skills you need changes.

The idea they finally learned is that it’s better to mix-and-match your skills. Hire people up front who you know are flexible enough in terms of the market basket of skills, the multidimensionality they bring into the job, when they start, knowing that you are going to be moving that person around in the company. You're going to be tweaking their skills from here to there.

Not cutting it

The idea of a specialist who came in -- this is our Microsoft guy, this is our Lotus guy, this is our Novell guy or girl -- ain't cutting it. Companies are looking for Swiss Army knives quite a bit, when they hire people. If they need deep specialists, often they will go to the market, independent consultants, or contractors to get a lot of that deep skill. Then, when it’s over, bye, bye.

Gardner: To this issue of recruitment, traditional recruitment methods seem to be giving way to more social-media or community-generated word of mouth, but in a digital format sort of activity. Can you help us, David, understand a little better about what’s shifting in terms of how companies are recruiting these skills?

Foote: Right now, about 80 percent of employers are using or tell us that they are using or plan to use social media to fill vacancies. Ninety five percent of employers that we talked to use LinkedIn in one way or another. On the recruiting side, about 60 percent of recruiters that we talked to use Facebook.

Right now, about 80 percent of employers are using or tell us that they are using or plan to use social media to fill vacancies.

Now, that was 36 percent in 2008 and 59 percent in 2009. Forty two percent of recruiters use Twitter. You're looking at a situation now where companies have finally decided to do this, after many years of being unwilling to change the traditional method of recruiting. That was to use body shops and headhunters, collect CVs and resumes, apply the software that searches through them with filters. You had a lot of people who are incredibly good at what they do, but who don’t have certification get knocked out.

They have now said, "If you are an employee, let’s talk to those people in your audience." You have got a brand, and your brand is you. It’s a combination of technical skills, your personality, and other skills that you have. What is it that companies are hiring when they hire you, beyond simply what you see on paper in terms of skills? What have you done? What solutions have you been a part of? If you worked in SAP, how many cycles have you gone through? Have you been through two or three full development cycles?

Using social media sites, you're going right upfront answering the kind of questions that people ask you in a job interview. You're networking in places like LinkedIn, where you can actually get people to recommend you. Recruiters are looking at those recommendations that are given by executives and by colleagues. They are right there. You see it. It’s an online picture of you and your brand.

Why wouldn’t you use social media, if you look at the kind of numbers I just gave you? The recruiters and employers, they are all using it. You should be smart as a worker in IT to connect with them there.

Going back to security for a second, it’s unbelievable to me the number of boutique, niche security consulting firms that I have been talking to over the last two and three years who say that the demand for their services is greater than their ability to meet that demand. They are in a perpetual situation of not having enough consultants on board to do the work that comes their way.

Now that’s unbelievable. Why can't they connect to the people? There are reasons for that. If you go to RSA conferences or SAP TechEd conferences, you meet all these people who say, "I have been looking for a job for months and months and months and I just can’t find one." I say to them, "Well, exactly how are you looking for that job? Are you on LinkedIn? Are you using Facebook? Are you using Twitter? There are people out there that want to find you. They can’t find you. You have to find them and make yourself available to them." Basically, it’s old fashion networking, web-enabled, that's what social networking is.

Strut your stuff

Gardner: Perhaps there's never been a better time, if you have good stuff to strut, to strut it in these forums. And, there's never been a better time, if you're recruiting, to use these tools to find those folks that you need to fit that exact need that you have.

Foote: Yes. And those areas right now seem to be in security, SAP, web development, eCommerce applications and systems, business intelligence (BI). There are number of areas that we have identified in 2010 that will be hot.

You can go to our website. We put out a hot list where we look at all the data we have: pay and demand data and what 2,000 companies are telling us they are looking for in the market. We put all that into a list of 24 certifications and 32 non-certified skills, and we rank them 1, 2, 3, 4, 5, and you can see that list.

If you are anywhere in the top 15 or 20, get out there, pound the pavement, and be smart.

It's updated every three months as to what the hot skills are. These are skills people are looking for. People should get ahold of that hot list and map to it. Where are you on that list? If you are anywhere in the top 15 or 20, get out there, pound the pavement, and be smart.

Gardner: What about the not-so-hot list? Are there certain IT niches or skill sets that just seem to be drying up, where there is really no demand or very little growth?

Foote: Well, always. Yes. Do you want to talk about those?

Gardner: Yeah. What's the new not-hot list?

Foote: I haven't looked at that list lately, but we do get calls, about every two years, from an enterprising editor or a reporter, who wants to publish the dead or dying list. We say to them, "This is going to kill your career as a writer, if you do this, because anybody who is on that list, and that's their specialty, is going to come after you." It has happened where reputations have been badly sullied. You can Google "Foote Partners' dead and dying skills" and you can find us, because we contribute to every one of these lists for good or bad.

Gardner: At the risk of being overly reality-oriented, let's take that plunge anyway and come up with a few areas that just don’t seem to be growing any more.

Foote: There are a number of networking skills that have fallen out of favor over the years. Things like Smalltalk. I would say probably the C language, not C++ and C#, but I would say the C language probably has taken hits. There have been a number of older web development, web authoring tools that are no longer on that list.

I wouldn't put Gigabit Ethernet on that in general, but I think there are some people that will tell you that certain old brands of Gigabit Ethernet, like 1 Gig versus 10, would be falling more out of favor. The OS/2 from IBM, is that still hanging around? It's probably dead.

There are so many dead skills that companies have just abandoned them as platforms and products. There are still people around that might have those skills. So yeah, there are plenty of dead skills.

What's hot

Gardner: Back to the more lively news. What certification areas are hot? You mentioned the idea of being a Swiss Army knife as a person, the walking in with multiple skills. I would think that having multiple certifications would be a very strong thing to have, make you more valuable and more interesting. What sort of certifications should people be looking at?

Foote: Well, the certifications that are on our current hot list that are doing quite well -- in fact, the first and sixth positions -- are Red Hat certification engineers, open systems, Linux. Twelve of 24 on this list of hot certifications are security.

In order, the GIAC Certified Incident Handler is at the number three position. The ISC-squared Systems Security Certified Practitioner is at number four. Check Point Certified Security Administrator is at number eight. The CISA, the gold standard auditing certification from ISACA is number 11. And then at positions 14, 15, 16, Check Point Security Expert, the Forensics Analyst, and Intrusion Analyst from SANS Institute.

One not related to security is Cisco Certified Design Expert, which is the number five position. That is an excellent advanced-level certification.

One not related to security is Cisco Certified Design Expert, which is the number five position. That is an excellent advanced-level certification. Again, it's always on our list, somewhere in the top ten positions most of the time.

What's interesting this time is that the SAS-Certified Advanced Programmer is there. Before, I mentioned BI, and now we see SAS coming in at number seven on that, so good news for SAS. BI and business analytics is on our hot list, as I mentioned before, as strong skills for 2010.

Even the Java Programmer Certification from Sun. Java is also number eight out of 32 on our non-certified skills hot list too. As I look at eCommerce and web development skills, we're looking at things like the Microsoft Commerce Server, Microsoft SharePoint, C++, SOAP, Python, Perl, a number of those. The certifications, I think, are mainly in the areas of open systems, security, and believe it or not, things like WebSphere.

Some of the service-oriented architecture (SOA) skills are back. There has been sort of a resurgence of not these big grand, huge SOA projects, but point solutions. Small-chunk SOA has made a comeback this year. We see that both in the number 12 ranked certification, the Certified Solutions Developer - WebSphere from IBM. And then you see the BEA SOA Enterprise Architecture Certification. In that regard, what I didn't mention before is, architecture continues to be a good skill area for 2010.

What's interesting about architecture is its one of those skills, as we've said to people, is a long run kind of career opportunity for you. There will always be a great need for architects, and most companies will tell us that. They have been flat lining as far as pay in those certifications in 2009 because of cost containment.

You don’t look at architect skills and certifications as short-term investments, but more sort of long-term, core competency skills for organizations. So, the focus has gone off of architecture a little bit.

Need for architects

On the other side of this recession, I think you'll see what we saw in 2007 and 2008, which is a lot of companies looking for architects. They're continually telling us, "We don’t have enough of these architects around here. We need more of them." I mean, enterprise architects, data architects, security architects, SAP architects, and information architects, a whole lot of them.

I'd like to see that come back in 2010. I always put architecture on the list, but it comes down to how much money people have, and how short range a lot of their decisions are.

Gardner: To just touch briefly on the notion of having a cross-pollenization of skills. In the past, someone with an engineering degree and an MBA would have done well in certain sectors. Are there any two areas that we might not think intuitively would be related, but that stack up really well in 2010, if you wanted to combine skills in a way that would give you an advantage in the market?

When you look at IT hiring in the last two or three years, you see that they want IT people working in their marketing departments, their human resource departments, their finance and accounting departments, operations, and logistics.

Foote: Well, I have been saying for a while, and also for 2010, is if you are in college, you want a minor in computer science and a major in something like mathematics, marketing, finance, or accounting. When you look at IT hiring in the last two or three years, you see that they want IT people working in their marketing departments, their human resource departments, their finance and accounting departments, operations, and logistics.

They want people with that kind of background to understand what that part of a business does. Then, they want that person to help them to think through how technology can either have them do it quicker and more efficiently to raise the bar on their ability to deliver services internally in those areas.

I have often said that you can easily have a major in any of the functional areas of business that I just mentioned and have some sort of knowledge that you have gained, either through a degree or by personal experience in IT, and you would be a very strong candidate for a lot of companies.

These are those jobs that don’t fall under the corporate CIO, but under the lines of business, where you are an IT person working in a line of business, usually under a CTO or some managing director level person in IT. But, you're working in a P&L part of the business. Your job is to figure out how to make money, how to increase profitability, and how to improve customer satisfaction. There are so many ways that IT has been able to do that. As I pointed out before, you're also now involved in product development in these areas.

Gardner: That's very interesting, because in the past, let's say, 10 or 20 years, the conventional wisdom was that you wanted to have a general business education background, but then specialized in IT. I think what I am hearing from you is that you want to have a jack-of-all-trades, general sense of IT skills and maybe some certifications, but then specialize in a particular business function. Is that what's happened, a sort of a flip?

Multiple areas

Foote: Yeah. Right now, you can hear this by talking to anybody. We talk to a lot of people who hire and we ask them exactly what they need and what they're looking for. And they will say, "I need somebody who understands our business and our customers, who really understands this industry and the products that we supply in this industry. And, oh, by the way, they should have a good IT background too." It's the third or fourth thing they may mention.

Now, of course, if it's in security or if it's in routers or something like that, they may be looking for a deep certified person in that infrastructure specialty. This is particularly true in areas like SAP and ERP, and in Oracle. Look at what SAP has done in its product strategy. They have really gotten down to industry and function.

You're really looking at being a specialist in finance and accounting systems, sales distribution or logistics, or even global travel management, and you become an expert in that area using SAP products. So, you're an IT person, but you are specializing in a domain that is usually functional or industry.

That's what a specialist is in IT these days. They have a technical specialty and they have a business specialty . . .

That was a smart move for SAP, and a lot of companies have taken to that sort of segmentation of the market. That's what a specialist is in IT these days. They have a technical specialty and they have a business specialty, and it's probably in a function within that business that is supported and enabled by technology.

Gardner: Well, just to recap a little bit, we have said that the recession has certainly hurt the IT sector. There are fewer jobs, not as severe in cuts in terms of some others, perhaps half the general unemployment rate in IT. Things have leveled out. We're seeing some rehiring in specific areas, late in 2009, going into 2010.

You expect 2010 to be fairly flat, not a huge spike in demand, but in specialized areas that we have talked about, security being prominent among them. There's going to be growing demand. There's going to be this opportunity to position yourself, if you have that right balance of technology, skills, and business acumen.

But, you expect things to be picking up later in 2010, perhaps 2011, where we might see a bit more of that significant growth. And, the hot skills and being able to present yourself through a social network makes a lot of sense. Did we miss anything?

Foote: No, but the projection of late 2010 or 2011, that's for hiring. There is still a tremendous amount of investment and money moving around in 2010, but the focus is more on skills than it is on hiring full-time workers. That creates a lot of opportunities for contractors and independent consultants, as I pointed out before, which is supported by the BLS numbers.

The IT services business, the systems integrators (SIs), the small boutique consulting firms, are going to get a lot of play in 2010, because there won’t be a lot of full-time workers added to companies in that period.

They're still in a time where they are going to have a lot of work to do and they've got to get it done. They won’t have nearly the restrictions in renting or giving over some of this activity to managed services, but they still will have certain restrictions in full-time hiring, and that full-time hiring will be in niche areas and in the four, five, or six specializations I have mentioned.

Gardner: So, perhaps it's a good time, if you've got the right skills, to hang your shingle up, go into your own boutique consultancy, maybe partner up with a few other folks that are in complimentary skill sets, and then promote yourself through a social network. This will be a good time to do something like that.

Foote: Yeah. But, as a person who has actually hung a shingle a lot and competes against those big firms, you have to have a lot of intestinal fortitude if you are going to do that. I'd recommend that the best thing you could do is find old pals who you used to work with -- even if it was five, six, seven, eight years ago -- and network with them. You might find that they're interested in bringing you on, because I do think there is going to be much more activity in 2010.

And then, in 2011, we may see a return to some full-time hiring. Then, you can choose whether you want to go back into working for a big company or a small company, or stay as a consultant. Again, Dana, consulting and that kind of activity is not for everybody’s personality.

Gardner: Excellent. We've had a deep penetrating and interesting discussion about IT hiring and trends. I certainly want to thank our guest David Foote, CEO and chief research officer, as well as co-founder at Foote Partners LLC, in Vero Beach, Fla. Thanks so much, David.

Foote: You bet, Dana.

Gardner: I also want to thank our sponsors for this BriefingsDirect Analyst Insights Edition podcast, and that would be Active Endpoints and TIBCO Software.

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

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

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

Gain additional data and analysis from Foote Partners on the IT jobs market.

Edited transcript of BriefingsDirect Analyst Insights Edition podcast, Volume 48, on where to find opportunities in IT during this stage of the recession. Copyright Interarbor Solutions, LLC, 2005-2010. All rights reserved.

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Technical and Economic Incentives Mount Around Seeking Alternatives to Mainframe Applications

Transcript of the third in a series of sponsored BriefingsDirect podcasts on the rationale and strategies for application transformation.

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

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Gain more insights into "Application Transformation: Getting to the Bottom Line" via a series of HP virtual conferences. For more on Application Transformation, and to get real time answers to your questions, register to access the virtual conferences for your region:

Access the Asia Pacific event.
Access the EMEA event.
Access the Americas event.

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Dana Gardner: Hi, this is Dana Gardner, principal analyst at Interarbor Solutions, and you’re listening to BriefingsDirect.

Today, we present a sponsored podcast discussion on why it's time to exploit alternatives to mainframe computing applications and systems. As enterprises seek to cut their total IT costs, they need to examine alternatives to hard to change and manage legacy systems. There are a growing number of technical and economic incentives for modernizing and transforming applications and the data center infrastructure that support them.

Today, we'll examine some case studies that demonstrate how costs can be cut significantly, while productivity and agility are boosted by replacing aging systems with newer, more efficient standards-based architectures.

This podcast is the third and final episode in a series that examines "Application Transformation: Getting to the Bottom Line." The podcast, incidentally, runs in conjunction with a series of Hewlett-Packard (HP) webinars and virtual conferences on the same subject.

Access the Asia Pacific event. Access the EMEA event. Access the Americas event.

Here with us now to examine alternatives to mainframe computing, is John Pickett, Worldwide Mainframe Modernization Program manager at HP. Hello, John.

John Pickett: Hey, Dana. How are you?

Gardner: Good, thanks. We're also joined by Les Wilson, America's Mainframe Modernization director at HP. Welcome to the show, Les.

Les Wilson: Thank you very much, Dana. Hello.

Gardner: And, we're also joined by Paul Evans, Worldwide Marketing Lead on Applications Transformation at HP. Welcome back, Paul.

Paul Evans: Hello, Dana.

Gardner: Paul, let me start with you if you don't mind. We hear an awful lot about legacy modernization. We usually look at it from a technical perspective. But it appears to me that in many of the discussions I have with organizations is that they are looking for more strategic levels of benefit, to finding business agility and flexibility benefits. The technical and economic considerations, while important in the short-term, pale in comparison to some of the longer term and more strategic benefits.

Pushed to the top

Evans: Where we find ourselves now -- and it has been brought on by the economic situation -- is that it has just pushed to the top an issue that's been out there for a long time. We have seen organizations doing a lot with their infrastructure, consolidating it, virtualizing it, all the right things. At the same time, we know, and a lot of CIOs or IT directors listening to this broadcast will know, that the legacy applications environment has somewhat been ignored.

Now, with the pressure on cost, people are saying, We've got to do something, but what can come out of that and what is coming out of that?" People are looking at this and saying, "We need to accomplish two things. We need a longer term strategy. We need an operational plan that fits into that, supported by our annual budget."

Foremost is this desire to get away from this ridiculous backlog of application changes, to get more agility into the system, and to get these core applications, which are the ones that provide the differentiation and the innovation for organizations, able to communicate with a far more mobile workforce.

At an event last week in America, a customer came up to me and said, "Seventy percent of our applications are batch running on a mainframe. How do I go to a line-of-business manager and say that I can connect that to a guy out there with a smartphone? How do I do that?" Today, it looks like an impossible gap to get across.

What people have to look at is where we're going strategically with our technology and our business alignment. At the same time, how can we have a short-term plan that starts delivering on some of the real benefits that people can get out there?

Gardner: In the first two parts of our series, we looked at several case studies that showed some remarkable return on investment (ROI). So, this is not just a nice to have strategic maturity process, but really pays dividends financially, and then has that longer term strategic roll-out.

Evans: Absolutely. These things have got to pay for themselves. An analyst last week, looked me in the face and said, "People want to get off the mainframe. They understand now that the costs associated with it are just not supportable and are not necessary."

One of the sessions you will hear in the virtual conference will be from Geoffrey Moore, where he talks about this whole difference between core applications and context -- context being applications that are there for productivity reasons, not for innovation or differentiation.

Lowest-cost platform

With a productivity application you want to get delivery on the lowest-cost platform you possibly can. The problem is that 20 or 30 years ago, people put everything on the mainframe. They wrote it all in code. Therefore, the challenge now is, what do you not need in code that can be in a package? What do you not need on the mainframe that could be running on a much more lower cost infrastructure or a completely different means of delivery, such as software as a service (SaaS).

The point is that there are demonstrably much less expensive ways of delivering these things. People have to just lift their heads up and look around, come and talk to us, and listen to the series and they will begin to see people who have done this before, and who have demonstrated that it works, as well as some of the amazing financial rewards that can be generated from this sort of work.

Gardner: John Pickett, let's go to you. We've talked about this, but I think showing it is always more impressive. The case studies that demonstrate the real-world returns tend to be the real education points. Could you share with us some of the case studies that you will be looking at during the upcoming virtual conference and walk us through how the alternative to mainframe process works?

Pickett: Sure, Dana. As Paul indicated, it's not really just about the overall cost, but it's about agility and being able to leverage the existing skills as well.

One of the case studies that I will go over is from the National Agricultural Cooperative Federation (NACF). It's a mouthful, but take a look at the number of banks that the NACF has. It has 5,500 branches and regional offices, so essentially it's one of the largest banks in Korea.

One of the items that they were struggling with was how to overcome some of the technology and performance limitations of the platform that they had. Certainly, in the banking environment, high availability and making sure that the applications and the services are running were absolutely key.

At the same time, they also knew that the path to the future was going to be through the IT systems that they had and they were managing. What they ended up doing was modernizing their overall environment, essentially moving their core banking structure from their current mainframe environment to a system running HP-UX. It included the customer and account information. They were able to integrate that with the sales and support piece, so they had more of a 360 degree view of the customer.

We talk about reducing costs. In this particular example, they were able to save $40 million on an annual basis. That's nice, and certainly saving that much money is significant, but, at the same time, they were able to improve their system response time two- to three-fold. So, it was a better response for the users.

But, from a business perspective, they were able to reduce their time to market. For developing a new product or service, that they were able to decrease that time from one month to five days.

Makes you more agile

If you are a bank and now you can produce a service much faster than your competition, that certainly makes it a lot easier and makes you a lot more agile. So, the agility is not just for the data center, it's for the business as well.

To take this story just a little bit further, they saw that in addition to the savings I just mentioned, they were able to triple the capacity of the systems in their environment. So, it's not only running faster and being able to have more capacity so you are set for the future, but you are also able to roll out business services a whole lot quicker than you were previously.

Gardner: I imagine that with many of these mainframe systems, particularly in a banking environment, they could be 15 or 20 years old. The requirements back then were dramatically different. If the world had not changed in 20 years, these systems might be up to snuff, but the world has changed dramatically. Look at the change we have seen in just the last nine months. Is that what we are facing here? We have a general set of different requirements around these types of applications.

Pickett: There are a couple of things, Dana. It's not only different requirements, but it's also being driven by a couple of different factors. Paul mentioned the cost and being able to be more efficient in today's economy. Any data center manager or CIO is challenged by that today. Given the high cost of legacy and mainframe environment, there's a significant amount of money to be saved.

It's not a one-size-fits-all. It's identifying the right choice for the application, and the right platform for the application as well.

Another example of what we were just talking about is that, if we shift to Europe, Middle East, and Africa region, there is very large insurance company in Spain. It ended up modernizing 14,000 million instructions per second (MIPS). Even though the applications had been developed over a number of years and decades, they were able to make the transition in a relatively short length of time. In a three- to six-month time frame they were able to move that forward.

With that, they saw a 2x increase in their batch performance. It's recognized as one of the largest batch re-hosts that are out there. It's just not an HP thing. They worked with Oracle on that as well to be able to drive Oracle 11g within the environment.

So, it's taking the old, but also integrating with the new. It's not a one-size-fits-all. It's identifying the right choice for the application, and the right platform for the application as well.

Gardner: So, this isn't a matter of swapping out hardware and getting a cheaper fit that way. This is looking at the entire process, the context of the applications, the extended process and architectural requirements in the future, and then looking at how to make the transition, the all important migration aspect.

Pickett: Yes. As we heard last week at a conference that both Paul and I were at, if all you're looking to do is to take your application and put it on to a newer, shinier box, then you are missing something.

Gardner: Let's go now to Les Wilson. Les, tell us a little bit about some studies that have been done and some of the newer insights into the incentives as to why the timing now for moving off of mainframes is so right.

Customer cases

Wilson: Thanks, Dana. I spend virtually every day talking directly to customers and to HP account teams on the subject of modernizing mainframes, and I'll be talking in detail about two particular customer case studies during the webinar.

Before I get into those details though, I want to preface my remarks by giving you some higher level views of what I see happening in the Americas. First of all, the team here is enjoying an unprecedented demand for our services from the customer base. It's up by a factor of 2 over 2008, and I think that some of the concepts that John and Paul have discussed around the reasons for that are very clear.

There's another point about HP's capabilities, as well, that makes us a very attractive partner for mainframe modernization solutions. Following the acquisition of EDS, we are really able to provide a one-stop shop for all of the services that any mainframe customer could require.

That includes anything from optimization of code, refactoring of code on the mainframe itself, all the way through re-hosting, migration, and transformation services. We've positioned ourselves as definitely the alternative to IBM mainframe customers.

In terms of customer situations, we've always had a very active business working with organizations in manufacturing, retail, and communications. One thing that I've perceived in the last year specifically -- it will come as no surprise to you -- is that financial institutions, and some of the largest ones in the world, are now approaching HP with questions about the commitment they have to their mainframe environments.

We're seeing a tremendous amount of interest from some of the largest banks in the United States, insurance companies, and benefits management organizations, in particular.

Second, maybe benefiting from some of the stimulus funds, a large number of government departments are approaching us as well. We've been very excited by customer interest in financial services and public sector. I just wanted to give you that by way of context.

In terms of the detailed case studies, when John Pickett first asked me to participate in the webinar, as well as in this particular recording, I was kind of struck with a plethora of choices. I thought, "Which case study should I choose that best represents some of the business that we are doing today?" So, I've picked two.

The first is a project we recently completed at a wood and paper products company. This is a worldwide concern. In this particular instance we worked with their Americas division on a re-hosting project of applications that are written in the Software AG environment. I hope that many of the listeners will be familiar with the database ADABAS and the language, Natural. These applications were written some years ago, utilizing those Software AG tools.

Demand was lowered

They had divested one of the major divisions within the company, and that meant that the demand for mainframe services was dramatically lowered. So, they chose to take the residual applications, the Software AG applications, representing about 300-350 MIPS, and migrate those in their current state, away from the mainframe, to an HP platform.

Many folks listening to this will understand that the Software AG environment can either be transformed and rewritten to run, say, in an Oracle or a Java environment, or we can maintain the customer's investment in the applications and simply migrate the ADABAS and Natural, almost as they are, from the mainframe to an alternative HP infrastructure. The latter is what we did.

By not needing to touch the mainframe code or the business rules, we were able to complete this project in a period of six months, from beginning to end. They are saving over $1 million today in avoiding the large costs associated with mainframe software, as well as maintenance and depreciation on the mainframe environment.

They're very, very pleased with the work that's being done. Indeed, we're now looking at an additional two applications in other parts of their business with the aim of re-hosting those applications as well.

They are saving over $1 million today in avoiding the large costs associated with mainframe software, as well as maintenance and depreciation on the mainframe environment.

The more monolithic approach to applications development and maintenance on the mainframe is a model that was probably appropriate in the days of the large conglomerates, where we saw a lot of companies trying to centralize all of that processing in large data centers. This consolidation made a lot of sense, when folks were looking for economies of scale in the mainframe world.

Today, we're seeing customers driving for that degree of agility you have just mentioned. In fact, my second case study represents that concept in spades. This is a large multinational manufacturing concern. They never allow their name to be used in these webcasts, so we will just refer to them as "a manufacturing company." They have a large number of businesses in their portfolio.

Our particular customer in this case study is the manufacturer of electronic appliances. One of the driving factors for their mainframe migration was precisely what you just said, Dana, that the ability to divest themselves from the large mainframe corporate environment, where most of the processing had been done for the last 20 years.

They wanted control of their own destiny to a certain extent, and they also wanted to prepare themselves for potential investment, divestment, and acquisition, just to make sure that they were masters of their own future.

Gardner: You mentioned earlier, John, about a two-times increase in the demand since 2008. I wonder if this demand increase is a blip. Is this something that is just temporary, or has the economy -- and some people call it the reset economy, actually changed the game -- and therefore IT needs to respond to that?

In a nutshell the question is whether this is going to be a two-year process, or are we changing the dynamic of IT and how business and IT need to come together in general?

Not a blip

Pickett: First, Dana, it's not a blip at all. We're seeing increased movement from mainframe over to HP systems, whether it's on an HP-UX platform or a Windows Server or SQL platform. Certainly, it's not a blip at all.

As a matter of fact, just within the past week, there was a survey by AFCOM, a group that represents data-center workers. It indicated that, over the next two years, 46 percent of the mainframe users said that they're considering replacing one or more of their mainframes.

Now, let that sink in -- 46 percent say they are going to be replacing high-end systems over the next two years. That's an absurdly high number. So, it certainly points to a trend that we are seeing in that particular environment -- not a blip at all.

Dana, that also points to the skills piece. A lot of times when we talk to people in a mainframe environment the question is, "I've got a mainframe, but what about the mainframe people that I have? They're good people, they know the process, and they have been around for a while." We found that HP, and moving to an HP centralized environment is really a soft landing for these people.

They can use the process skills that they have developed over time. They're absolutely the best at what they do in the process environment, but it doesn’t have to be tied to the legacy platform that they have been working on for the last 10 or 20 years.

We've found that there is a very strong migration for those skills and landing in a place where they can use and develop them for years to come.

We've found that you can take those same processes and apply them to a large HP Integrity Superdome environment, or NonStop environment. We've found that there is a very strong migration for those skills and landing in a place where they can use and develop them for years to come.

Gardner: Les, why do you see this as a longer term trend, and what are the technological changes that we can expect that will make this even more enticing, that is to say, lower cost, more efficient, and higher throughput systems that allow for the agility to take place as well?

Wilson: Good question, Dana, and you have two parts to it. Let me address the first one about the trend. I've been involved in this kind of business on and off since 1992. We have numbers going back to the late 1980s as to the fact that at that time there were over 50,000 mainframes installed worldwide.

When I next got into this business in 2004, the analyst firms confirmed that the number was now around 15,000-16,000. Just this week, we have had information, confirmed by another analyst, that the number of installed mainframes is now at about 10,400. We've seen a 15-20 year trend away from the mainframe, and that will continue, given this unprecedented level of interest we are seeing right now.

You talked about technology trends. Absolutely. Five years ago, it would have been fair to say that there were still mainframe environments and applications that could not be replaced by their open-system equivalents. Today, I don't think that that's true at all.

Airline reservation system

To give you an example, HP, in cooperation with American Airlines, has just announced that we're going to be embarking on a three-year transition of all of the TPF-based airline reservation systems that we HP has been providing as services to customers for 20 years.

That TPF environment will be re-engineered in its entirety over the course of the next three years to provide those same and enhanced airline reservation systems to customers on a Microsoft-HP bladed environment.

That's an unprecedented change in what was always seen as a mainframe centric application, airlines reservations, with the number of throughputs and the amount of transactions that need to be done every second. When these kinds of applications can be transformed to open systems' platforms, it's open season on any mainframe application.

Furthermore, the trend in terms of open-systems price performance improvement continues at 30-35 percent per annum. You just need to look at the latest Intel processors, whether they be x86 or Itanium-based, to see that. That price performance trend is huge in the open systems market.

I've been tracking what's been going on in the IBM System Z arena, and since there are no other competitors in this market, we see nothing more than 15 percent, maybe 18 percent, per annum price performance improvement. As time goes on, HP and industry standard platforms continue, and will continue, to outpace the mainframe technology. So, this trend is bound to happen.

People have to take considered opinions. Investments here are huge. The importance of legacy systems is second to none.

Gardner: Paul, we've heard quite a bit of compelling information. Tell us about the upcoming conference, and perhaps steps that folks can take to get more information or even get started as they consider their alternatives to mainframes?

Evans: Based on what you've heard from John and Les, there is clearly an interest out there in terms of understanding. I don't think this is, as they say in America, a slam dunk. The usual statement is, "How do you eat an elephant? and the answer is, "One bite at a time."

The point here is that this is not going to happen overnight. People have to take considered opinions. Investments here are huge. The importance of legacy systems is second to none. All that means that the things that John and Les are talking about are going to happen strategically over a long time. But, we have people coming to us every day saying, "Please, can you help me understand how do I start, where do I go, where do I go now, or where do I go next week, next year, or next month?

The reason behind the conference was to take a sort of multi-sided view of this. One side is the business requirement, which people like Geoffrey Moore will be talking about -- where the business is going and what does it need.

We'll be looking at a customer case study from the Italian Ministry of Education, looking at how they used multiple modernization strategies to fix their needs. We'll be looking at tools we developed, so that people can understand what the code is doing. We'll be hearing from Les, John, and customers -- Barclays Bank in London -- about what they have been doing and the results they have been getting.

Then, at the very end, we'll be hearing from Dale Vecchio, vice president of Gartner research, about what he believes is really going on.

Efficiency engine

The thing that underpins this is that the business requirement several decades ago drove the introduction of the mainframe. People needed an efficiency engine for doing payroll, human resources, whatever it may be, moving data around. The mainframe was invented and was built perfectly. It was an efficiency engine.

As time has gone on, people look at technology now to become an effectiveness engine. We've seen the blending of technologies between mainframes, PCs, and midrange systems. People now take this whole efficiency thing for granted. No one runs their own payroll, even to the point that people now look to BPOs or those sorts of things.

As we go forward, with people being highly mobile, with mobile devices dramatically exploding all over the place in terms of smartphones, Net PCs, or whatever, people are looking to blend technologies that will deliver both the efficiency and the effectiveness, but also the innovation. Technology is now the strategic asset that people will use going forward. There needs to be a technological response to that.

Over the last year or two, either John or Les referred to the enormous amounts of raw power we can now get from, say, an Intel microprocessor. What we want to do is harness that power and give people the ability to innovate and differentiate, but, at the same time, run those context applications that keep their companies alive.

That's really what we're doing with the conference -- demonstrating, in real terms, how we can get this technology to the bottom-line and how we can exploit it going forward.

Gardner: Well, great. We've been hearing about some case studies that demonstrate how costs can be cut significantly, while productivity and agility are boosted.

I want to thank our guests in today’s discussion. We've been joined by John Pickett, Worldwide Mainframe Modernization Program manager. Thank you, John.

Pickett: Thank you, Dana.

Gardner: We've also been joined by Les Wilson, America’s Mainframe Modernization director. Thank you, Les.

Wilson: Thank you for the opportunity, Dana.

Gardner: And also Paul Evans, worldwide marketing lead on Applications Transformation at HP. Thanks again Paul.

Evans: It's a pleasure.

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

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

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


Transcript of the third in a series of sponsored BriefingsDirect podcasts on the rationale and strategies for application transformation. Copyright Interarbor Solutions, LLC, 2005-2009. All rights reserved.