Case Study: How Cloud Extend for Salesforce Integrates Complex Sales Efforts for PSA Insurance & Financial Services

Transcript of a sponsored BriefingsDirect podcast on how a cloud integration helped a major financial services company provide productivity tools for account executives.

Listen to the podcast. Find it on iTunes/iPod. Download the transcript. Learn more. Sponsor: Active Endpoints.

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 creating business process integration, extension, and coordination even in a diverse cloud-services environment.

We'll examine a case study that shows how account executives for a financial services firm are integrating their sales and fulfillment efforts across Salesforce.com customer relationship management (CRM) and other business applications resources.

And, we'll see how the new Cloud Extend for Salesforce solution from Active Endpoints further supports a range of business development and consulting achievements. These managed processes, in essence, bind together critical sales and financial product delivery goals to better support a long-term business engagement.

I'm here with the IT Director and the Marketing Director from PSA Insurance & Financial Services to better understand how they've accomplished their vision for greater control and management of diverse and dynamic sales and consulting processes using Cloud Extend for Salesforce. [Disclosure: Active Endpoints is a sponsor of BriefingsDirect podcasts.]

Please join me now in welcoming our panel. We're here with Andrew Bartels, IT Director for PSA Insurance and Financial Services. Welcome to the show, Andrew.

Andrew Bartels: Thank you, Dana.

Gardner: We’re also here with Justin Hoffman, Marketing Director for PSA Insurance and Financial Services. Welcome Justin.

Justin Hoffman: Thank you very much, Dana, glad to be here.

Gardner: We're also here with Eric Egertson, Vice President, Business Development and Strategic Accounts at Active Endpoints. Welcome, Eric.

Eric Egertson: Thanks Dana, it’s a pleasure to be here.

Gardner: It seems like you at PSA have been thinking for quite some time about how to do things better and it sounds like you’ve had success with Salesforce in moving into a software-as-a-service (SaaS) and cloud services capability and recognizing some of the advantages that comes with that, but it seems like something was missing.

I’d like to go first to Justin. What was it that you wanted to do as marketing director? What was missing from the way in which you were engaging with your clients? We're also going to find out some more about PSA in a moment?

Stalled initiative

Hoffman: We actually had tried a Salesforce implementation two or so years ago and we found that our adoption was not nearly what we would have hoped it to be. There were several reasons for that. One, we really didn’t customize Salesforce to the degree that we needed to. Two, there wasn't integration with any other systems. And, three, the participation was voluntary. There was some interest, but it was somewhat sporadic, and overall the initiative just petered out.

We did know that that having right CRM for PSA is critical for how we do business and could help us capitalize on some lost opportunities and better manage our existing client base.

We didn’t give up on the effort. We said to ourselves that we needed to get this right the second time. We were open to staying with Salesforce and we were open to looking at other CRMs, but we’ve learned a lot on our first round and we knew that we had to do better the second time.

Gardner: And what, in a nutshell, was missing? What is it that you really weren’t getting from this that you wish you had?

Hoffman: We were sitting in a room with the whiteboard and said, "What should this thing be. What should this CRM system do for us, our account executives, our sales and service people that are going to be using it?" One of the things that really rung through was that it needed to be easy and unintimidating.

We have some people who are very progressive technology users and they very much embrace it. And we have other portions of the population for whom there is a bit of an intimidation factor.

We have some people who are very progressive technology users and they very much embrace it. And we have other portions of the population for whom there is a bit of an intimidation factor. We knew that if we did it right, we'd have to find a way to wash that away, put things in plain English, make it simple and intuitive for people, and that would help drive adoption.

Gardner: As I understand it, this has been a challenge because you have a very diverse group of services. You span insurance and financial services. You've been around for over 80 years. Tell us a little bit about PSA, what you do, and then why it’s been such a challenge given the breadth and depth of your portfolio?

Hoffman: We're an independent, multidiscipline financial services firm based in Hunt Valley, Maryland. We also have two satellite offices, one in York, Pennsylvania and one in the DC Metro Area, and we do a lot of things for a lot of different people.

On the business side of the house, we provide property and casualty insurance for businesses. We’re also brokers and consultants for employee benefit plans and retirement plans.

For individuals we offer every kind of insurance you could ever need, from homeowners and auto, to life, long-term care, and disability. We also have a private-client division that serves very up-market consumers, those that have multiple homes, exotic cars, special collections, and need very sophisticated insurance programs and advice. Finally, we also offer wealth management services.

Different audiences

We do a whole lot of different things for a whole lot of different audiences. For organizations that are laser-focused, that are in one industry, that serve one specific audience, I’d imagine pretty much everything is easier for them. We need to develop systems, protocols, plans, sales systems, and things of that nature that can work in all these diverse circumstances to support these different clients and support them all well.

Gardner: Let's go to Andrew. As IT Director, you were hearing what your marketing director was saying. I imagine that you were eager to try to find a solution for him. What is it that you did in terms of trying to fulfill this, and how did you end up being able to get closer to the true vision that he had?

Bartels: As Justin has very eloquently put, we really present a value proposition at PSA, which is a truly integrated set of services. That’s a phrase or a word that you hear a lot, but unfortunately, in my experience, a lot of organizations fail to deliver where the rubber meets the road, which ultimately is the actual transactional systems that they have in place. What you find is that a lot of those systems are completely segregated, and we at PSA faced that challenge. We obviously have a lot of transactional systems on the back end to support various business units that present the services to our clients.

Ultimately from Justin’s vision and from the corporation’s vision, we wanted a system that could bring all of this together. We went out and looked at a number of different products knowing all the time that we had Salesforce in house, but that we had a troublesome initial rollout. Ultimately, we came to a conclusion that Salesforce was the right product for us, but we really had to roll it out in a different way, shape, or form.

Part of Justin’s vision, though, was that he and Senior Vice President-Business Development Ed Kushlis felt that even though Salesforce is a relatively easy user interface, because of the challenges that some of our users have, they felt it had to be easier. They felt it just had to, as I like to say, lead us down the garden path.

So Justin and Ed brought the idea to me of what we call a "Warm-up Plan," and I'm sure Justin is going to address that more, but the more I looked at this, the more I realized that, given native Salesforce functionality, what they wanted to do wasn’t going to be possible. We weren’t going to be able to do it without a lot of custom code.

In my past experience, when you attempt to custom code, a lot of money is invested upfront to develop a relatively static product.

This was a path that I wasn’t really all that keen to go down, because in my past experience, when you attempt to custom code, a lot of money is invested upfront to develop a relatively static product. In my experience, the idea didn’t stay static. Ultimately, people wanted to change what had been created.

So you’d invested a lot of money to create something that then had to be changed and modified again, and I was very, very against this concept. Justin, would you say we had our moments there?

Hoffman: That’s right. We felt like we really knew what we wanted. A very large portion of what we do is work with the salespeople to coach them, to help them make sure that they stay on top of their opportunities, and really work their leads to fruition.

So we felt so strongly about it, but when we were presenting Andrew with our need, there didn’t seem to be an option that made sense. Once he educated us in what it really meant to bring to life our vision, we started to get our heads around it and to recognize that it wasn’t going to be something that we weren’t going to be able to build one time, invest all of these resources in this code and development, and then never be able to touch it again, never be able to evolve it.

Fluid and flexible

Just knowing us, knowing our organization, the way we're opportunistic, the way markets shift, the way dynamics change, we needed to be fluid and have flexibility. Andrew helped us understand how we were really going to be painting ourselves into corner, if we were to push forward with the custom code route.

Gardner: So Andrew, you decided not to go custom code. You wanted this to be fluid and dynamic. You wanted the folks to be able to relate to it, tease out the value and then improve on that, sort of an iterative improvement over time. What did you find? What’s fulfilled that need?

Bartels: First, we looked at a product from Salesforce, which was something called Visual Process Manager, which I saw demoed at Dreamforce in San Francisco last year for the first time. I was very excited when I initially saw it. After we delved into it, for various reasons, including the maturity of the product and the fact that it wasn’t a true cloud-based product, we soon realized that Visual Process Manager at that time wasn't going to fulfill our needs. We really needed something that was fully integrated into Salesforce.

As an organization, we spent a tremendous amount of time and resources getting our users comfortable with the Salesforce UI. I had obviously invested a lot of time myself in looking at options.

Finally, I'm quite a follower of Twitter. There are a number of people that I follow that I respect. I came across a tweet about something called Cloud Extend. It was literally one tweet by somebody that I follow on Twitter.

I can’t emphasize enough how important driving adoption is when it comes to the implementation of any CRM, never mind Salesforce.

I clicked through and there I was on the Cloud Extend website. As I read about it, I suddenly said -- obviously dealing with a webpage I clicked through to from a tweet -- "You know what, if this does what they said can do, this is exactly what we need in order to achieve the goal of creating warm-up plans" that Justin referred to earlier.

I filled out the web form, and the next day in the office, I called Justin and Ed into my office and said, "You know guys, I’ve got to show you something." I must admit I was almost giddy. I said I don’t want to get ahead of myself yet, but if this product does what I think it does, they’ve nailed it. This is exactly what we at PSA have been looking for to help drive adoption.

I can’t emphasize enough how important driving adoption is when it comes to the implementation of any CRM, never mind Salesforce. At PSA, we're dealing with very successful individuals. We're not dealing with anybody that’s got a broken system, that’s doing something that doesn’t work. Every single one of our associates has been successful in his career. So our objective with rolling out Salesforce was to improve their effectiveness, to make them more productive.

As Justin mentioned earlier, adoption is tough. When I looked at what I saw is the potential of Cloud Extend, as it was defined there, I thought "Wow, this really is going to help us drive adoption across the organization."

Gardner: I’d like to hear more about that adoption, but I think it’s important for us to dig in a little bit deeper on what Cloud Extend for Salesforce is and does. So, let’s go to Eric.

Eric, how did this product come about? I'm sure you are probably delighted to hear the way that it’s being described. But give us a little history about how you came to realize what was missing and how an organization like PSA could benefit?

Moving to the cloud

Egertson: Dana, I’d be happy to do that. Andrew’s comments here really illustrate the benefit of moving to the cloud for business process management (BPM) software like the software that Active Endpoints develops.

Active Endpoints has been developing a commercial-grade process automation platform called ActiveVOS since 2003, and our customers use this process automation platform to develop really high-value applications. They deploy those applications on premises, and they get very high return on investment (ROI) and very high value from those applications.

The barrier, though, to broader and faster adoption of products like ActiveVOS is that with on-premise software you have to go through acquiring the licenses and getting the capital expense approved and you also have to go in and interface ActiveVOS to the systems that you want to use in your process automation.

By moving to the cloud, there are two big benefits, and we’ve heard Andrew talk about those so far. One is that you can get started at much lower cost and much faster because you don’t have to provision hardware. You don’t have to acquire licenses through CAPEX expenditures, but probably, even more importantly, Active Endpoints does the interfacing of ActiveVOS to the systems that you want to use for process automation.

So with our product, Cloud Extend for Salesforce, which we are formally introducing at Dreamforce at the end of August 2011, we built that product on top of the commercial-grade platform, ActiveVOS, and we pre-integrated it with the Salesforce web services interfaces.

They don’t have to buy licenses, but more importantly, they don’t have to integrate the services to the systems they want to use in their process automation flows.

So people like Andrew and Justin can get started with the product very quickly. They don’t have to worry about any integration or interfacing. They can just start building out their process automation flows, testing them and, as Andrew said, you can quickly change those around. Those interfaces use all open standards.

So they are very reusable, and it gives you a flexible platform, where Andrew and Justin can tweak, change, and modify their process flows. It’s all done in the cloud. They don’t have to buy licenses, but more importantly, they don’t have to integrate the services to the systems they want to use in their process automation flows.

Gardner: When I first saw the demo of this, what jumped out at me was the fact that you don’t know that you're in Cloud Extend. You feel like you're still in Salesforce that there is this visual acuity, because I think you leverage the application programming interfaces (APIs) that you live and breathe Salesforce, which is fine, but you get a lot more in the process -- and I guess that’s a pun.

What is this visual benefit and how does that extend to other process elements that you might want to bring into Salesforce that you couldn’t otherwise?

Egertson: Andrew, and Justin can speak to the user experience as well, but the user experience, when using Cloud Extend, is directly integrated into the Salesforce.com UI. As Andrew mentioned, you don’t have to go out of Salesforce at all. As you're working on something in Salesforce, there is a section in the Salesforce screen, where you can choose what type of process flow you want to run as the user. You just click on a button and then you're stepped through a series of screens, all of which appear within a pane within the Salesforce UI.

Direct integration

Developing the process flows is also integrated directly into the Salesforce UI. You go in and, through a set of guidance trees, set up the series of steps that you want to walk a sales rep or producer through. The sales manager, somebody like Justin working hand-in-hand with Andrew, do that directly in the Salesforce user interface.

Gardner: Let's go back to Justin. You had this great thing that Andrew developed for you come in. How is it that using Cloud Extend with Salesforce with your account execs led them down this garden path? What did it do that got this adoption jump started and then into overdrive?

Hoffman: We believe ease of use to be a huge driver in adoption, being able to just ask questions in plain English, present simple answers for them to choose or select, which then drives the next set of questions that they’re going to be asked.

It just couldn’t be easier. It couldn’t be less intimidating. It washes away any anxiety that people might have or any perception of "This Salesforce thing is a pain to use." The way that you’re able to craft these guides is so straightforward, so easy to use, all that goes away.

I liken it to the concept of the airport kiosk. When you go to check-in, you punch in a few pieces of information and all you’re doing is answering the questions that are presented clearly and simply on the screen. There is actually very complex work that’s being done behind the scenes, but you, as the user, don’t have to have any comfort level with technology, it's just there. There are questions. You answer them, and all the information falls into the right place.

This thing is really easy to use and we’re getting all the information where it needs to be.

That concept is working for us and Salesforce and it just drives the general perception of, "This thing is really easy to use and we’re getting all the information where it needs to be." All of the reporting, all of the workflows, all of the views are populated sufficiently to support how we sell.

I’d like to elaborate on how we’re going to be using the warm-up plans. We knew that we didn’t want to automate to the degree that we take this thinking out of the hands of our account executives.

We're in a business where there is very long lead cycle. You might meet someone and you might not get a first meeting with them where you actually come in and talk to them about their business, what you can do for them for many, many months. After that, you might not get the business for a year-and-a-half.

So it's really important to stay in touch with people, to build trust, to establish credibility, and to work yourself along this very long lead cycle to stay focused, stay driving ahead, to get yourself that first appointment. That’s where people really shine. Our hit ratio is quite high, once people have gotten that first appointment.

These guides are really good about prompting people to take action, giving them options as far as how they’d like to warm up this lead. Use your discretion as a salesperson. Are you going to make a phone call? Then go ahead and here’s some coaching for that phone call. Are you going to send an email? Well, we make it really, really easy to send an HTML email through Salesforce. Are you going to invite them to one of our proprietary events? We make it really easy to do that through our guides.

Guiding, not forcing

But, we don’t tell them how to heir prospecting and we’re not directly reaching out to the prospect without our account executives because they know the relationship. They know the stage it's in. They know the conversations they’ve had with the people. They know their pain points. We’re really guiding them, but we’re not forcing them. We’re not overriding. We’re respecting the fact that these are seasoned sales professionals.

Gardner: Back to you Andrew, I get this about how the sales folks, the account execs, can work this the way that they work, that they don’t have to adapt their behavior and patterns to the application. There is much of a meeting between them. At the same time, I’ve heard that as IT Director, you didn’t have to get involved with defining how that would happen.

So help me understand how that works? How is it that you can outsource this, have it as a true SaaS service, but also get that level of granular adaptability to these individual wants and requirements?

Bartels: I think everybody can appreciate that. The corporate IT departments really have a lot going on. Nobody is sitting around doing nothing. One of the challenges that many organizations confront, when marketing or business development comes to them with an IT need, is where does that fall in the priority queue when it comes to the priorities that are in front of IT?

One of the things was really refreshing about Cloud Extend is that it literally is as simple as point-and-click. I am sure a lot of people listening to this have installed apps from the Salesforce AppExchange. Getting Cloud Extend up and running in your Salesforce Org really is as simple as installing one of those managed packages from the AppExchange. You click through it, and boom, bang, it's done. It was amazing to me that it was as easy as they said it would be, and it truly, truly was.

Cloud Extend, to my amazement, was truly point-and-click. You don’t even have to install a separate application onto a PC.

It's as simple as dropping the Cloud Extend UI into the various object pages that you’re looking to use it in. Something that is really worth mentioning is that Cloud Extend is truly cross-object. You get a lot of apps out there that you can use in leads, but you can't use in accounts, or you can use them in opportunities and you can't use them in leads.

One of the things that was amazing about Cloud Extend is they thought through that. They said, "Look, this workflow engine can be applied to almost any object in Salesforce and we need to make it point-and-click easy to get it in and make it happen." From my point of view, it's the ability to easily deploy an application this powerful straight into the Salesforce Org and then be able to hand it over to the marketing and business development folks and say, "Go wild."

Justin and I have had a conversation backwards and forwards about how much support they would need. The wonderful thing is that when you install Cloud Extend straight into Org, it comes with a set of predefined guides that just work. You can pull up the guide design and say, "Okay, how did they do this?" It literally is point-and-click.

Salesforce likes to sell itself as 80 percent clicks, 20 percent code. I can say that Cloud Extend, to my amazement, was truly point-and-click. You don’t even have to install a separate application onto a PC. The entire experience, both from the user point of view and from the designer point of view, exists within the Salesforce UI. It is simply another app to click and select.

It ties into all your Salesforce profile permissions, and it just works. From an IT point of view, from having to support the myriad of applications that we support, I can't tell you how refreshing it is. I think Justin would agree with me here. If you can design a process on a whiteboard, you can most likely design a process using Cloud Extend and the guide designer within the UI of Salesforce.

Simple deployment

So from our point of view, the fact that we could deploy a workflow tool with the lineage that Cloud Extend has, coming from its roots in Socrates and things like that, and plug it in without deploying a single server or installing a single application was amazing for me and somebody that was responsible for prioritizing the tasks that my team need to focus on.

This was truly eye-opening and I said to Justin that when I see products like this I really realize that the cloud is coming of age. This is the future and this is what the future will look like.

Hoffman: To piggyback on what Andrew is saying here, I'm really excited that I'm going to be able to sit down with, say, our Senior Vice President-Business Development Ed Kushlis and talk through new ideas, changes in markets, and new opportunities. We can sit down with these guides and play with them, and you don’t have to have an IT background. I don’t know anything about code and I don’t have to, all I have to understand is what opportunity we’re seeing in the market and how our people sell.

We can get a good way down the road of building a guide without having to grab Andrew and engage him at least on the front-end. He is someone at the organization whose time is in very high demand. He is not your average IT person and when I say that, he has got a great strategic mind. He has got good business sense, it's true, and there are a lot of different people from the ops side, from the business development side, from the administrative side who are coming to him and asking for his help, his assistance on how we streamline things and how we can be smarter about things at PSA.

So if Ed and I have to get in that queue, well, we have to get in that queue. Alternatively, we can get right in, work on these guides and get ourselves a good way towards creating these new guides that will be dropped into Salesforce. If we can’t get it 100 percent ourselves, we are going to get it pretty darn close. That gives us a lot of freedom and a lot of agility.

At Dreamforce, at the end of August 2011, we'll make Cloud Extend commercially available.

Gardner: Thanks for that, Justin. Let’s go to you, Eric. It sounds like you are making Andrew look good because he doesn’t have to go through lot of clicks and spin his wheels getting this thing running. You're making Justin look good because he is able to help his sales executives do their job better. And you're making Salesforce look good, because you're able to exploit Salesforce and all the resources that they have added to it and the single sign on, what have you.

So tell us little bit, Eric, what is going to happen at Dreamforce? We're here in August, and it’s coming up fast. What’s going to happen at Dreamforce and where do you go next with this?

Egertson: At Dreamforce, at the end of August 2011, we'll make Cloud Extend commercially available. We've been working with PSA in our early access program and, as you’ve heard, they’ve had some success there rolling out the warm-up plans using Cloud Extend. I really liked what Andrew said toward the end of his last comment there, where cloud computing is what enables us to deliver the ease of use that customers always expect, but oftentimes do not receive.

If we had to roll this out all on premise and then have somebody like Andrew assign a development team to make the interfaces work, that’s a big barrier to adoption. That’s a big delay. By delivering this in the cloud, pre-integrated with Salesforce, it all just works. We’re able to get our customers up and running quickly.

Back to your question though, Dana, at Dreamforce, the product will become commercially available. We expect to sign up many customers at the show and immediately thereafter, we will go live with this.

Cloud-enabled

All of the Cloud Extend technology is already cloud-enabled. It’s all based on open standards, knows all about web services. It’s multi-tenanted, so that we can host hundreds of customers and all of the data is segregated. It’s mobile-enabled. All of Cloud Extend guides will run on an iPad just as well as on laptop or a desktop and it’s socially enabled.

We work with Salesforce Chatter. We work with Jigsaw, and we can work with LinkedIn. So all of those things are there, as far as where we will take the product. We will continue to develop along the lines of social and mobile, but we also have the capability to pull in other SaaS applications.

Just as we’ve improved the usability and the sophistication of what you can do with Salesforce, we plan to do that for other SaaS applications as well. Cloud Extend for Salesforce is built on a commercial-grade development platform, and we can very easily, almost trivially, port this to other SaaS applications to enable process automation within any SaaS application.

In terms of where we'll take this, we'll keep our eye on the trends in mobile computing and social computing, as well as the plethora of SaaS applications that are out there. We'll be enabling process automation and workflow in those SaaS applications as well.

Gardner: So Eric, the big question for me is, you are able to provide these process innovation and flexibility benefits within those specific SaaS applications. How about across them? Is there going to be an opportunity to extend business process value among and between different SaaS that would be sort of that multiple cloud of clouds integration capability?

Egertson: That’s exactly the big picture, Dana. You’ve hit the nail on the head there. Even today, as we work with PSA and other Cloud Extend for Salesforce customers, if they need to reach out of Salesforce to another SaaS application or to an on-premises application again because the underlying technology is our ActiveVOS process automation platform, it’s very easy for us to enable that.

You can envision, in the very near future, an ecosystem where Cloud Extend is set up to integrate with an interface to many different SaaS applications.

You can envision, in the very near future, an ecosystem where Cloud Extend is set up to integrate with an interface to many different SaaS applications. With a little consulting work from us, we're able to interface that to on-premise applications and do exactly what you described, Dana, which would be to integrate across cloud applications, from a workflow or process automation perspective.

You would probably always have one SaaS application as your host, say Salesforce, but it would be pulling data from other systems, perhaps NetSuite, if it’s an ERP system, or Workday for HR information. But, the host SaaS application could be one of those other applications that pulls data from Salesforce.

The future, and it’s a near future for us, is that we will enable integration and process automation across SaaS applications in the cloud.

Gardner: We're just about out of time. I want to circle back to Andrew and Justin. I know it’s early, I know you are early adopters and it’s hard to quantify benefits when you’ve got such a long lead value proposition that you are focused on, but are there any metrics of success here? Do you have any either anecdotal or quantitative measurement that you can point to and say, this is working for us in the following way?

Sales statistics

Hoffman: As you pointed out, it's a little bit early to point to that, but when you talk about the metrics that mean something to us, there’s something that we knew to be intuitively true that I came across in an article, and I’d like to read it to you. These are just some quick stats regarding sales, what it takes, and where actually sales come from. They very much back up the concept of the warm-up plan.

Again, these warm-up plans not only help guide people towards what they are going to do, but they are going to keep people on track. They are going to keep people diligent about their follow-up, so I’ll read them off to you quickly.

About 48 percent of salespeople never follow-up with the prospect, these are not industry specific or PSA specific, they are just general sales stats. So, 48 percent of people never follow-up with the prospect. Only 25 percent make a second contact. Only 12 percent make three contacts. Only 10 percent make more than three contacts.

Now, if you look at where sales come from, only 2 percent of sales are made on the second contact, 5 percent on the third, 10 percent on the fourth, and 80 percent of sales are made between the fifth and twelfth contact.

Knowing that to be true in our guts and then to see these stats that we have just recently come across, it makes us very certain that having these warm-up plans and the other guides that are going to be available to us now are going to be huge difference makers for PSA.

Bartels: From my point of view, I look at the amount of investment of time and resources that we have put into integrating our back-end systems and bringing data that is critical to the whole sales process into Salesforce, any tool, Cloud Extend being one of them, that really allows us to get the maximum return on investment on what we have done with Salesforce is huge. It’s absolutely huge.

Anything that helps and makes that process simpler is going to drive return on investment.

Anybody who's used Salesforce, customized Salesforce, and added custom fields that are specific to their vertical realize very quickly that Salesforce can become a very deep product. Cloud Extend really enables us to ensure that our account executives, even though they may not be technology efficient, are really applying best practices when it comes to utilizing Salesforce and collecting the information that we as an organization know is absolutely critical to collect.

So anything that helps and makes that process simpler is going to drive return on investment, both in Cloud Extend, but most of all in the huge investment that we've put into Salesforce. That’s just a big, big plus for us at PSA.

Gardner: Very good. I'm afraid we're going to have to leave it there. You have been listening to a sponsored podcast discussion on the new Cloud Extend for Salesforce solution from Active Endpoints. We've seen how it’s enabled PSA Insurance & Financial Services to manage their diverse processes and bind together critical sales and financial product delivery resources for better business results.

I’d like to thank our guests. We have been joined here by Andrew Bartels, IT Director at PSA. Thank you so much, Andrew.

Bartels: Thank you, Dana.

Gardner: We have also been here with Justin Hoffman, Marketing Director at PSA. Thanks so much, Justin.

Hoffman: My pleasure. Thank you.

Gardner: And lastly, Eric Egertson, Vice President, Business Development and Strategic Accounts at Active Endpoints. Thank you, Eric.

Egertson: Dana, thank you very much.

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

Listen to the podcast. Find it on iTunes/iPod. Download the transcript. Learn more. Sponsor: Active Endpoints.

Transcript of a sponsored BriefingsDirect podcast on how a cloud integration helped a major financial services company provide productivity tools for account executives. Copyright Interarbor Solutions, LLC, 2005-2011. All rights reserved.

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

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 the importance of business process management (BPM), especially for use across a variety of existing systems, in complex IT landscapes, and for building flexible business processes in dynamic environments.

The current economic climate has certainly highlighted how drastically businesses need to quickly adapt. Many organizations have had to adjust internally to new requirements and new budgets. They have also watched as their markets and supplier networks have shifted and become harder to predict.

To better understand how business processes can be developed and managed nimbly to help deal with such change, we're joined by a panel of users, BPM providers, and analysts. Please join me in welcoming David A. Kelly, senior analyst at Upside Research. Welcome to the show, Dave.

David A. Kelly: Thanks Dana, glad to be here.

Gardner: We're also joined by Joby O'Brien, vice president of development at BP Logix. Hi, Joby.

Joby O'Brien: Hi, Dana, how are you doing?

Gardner: Good. We are also joined by Jason Woodruff, project manager at TLT-Babcock. Welcome Jason.

Jason Woodruff: Thank you, Dana.

Gardner: Let's start off with you, Dave. Tell us a little bit about how the business climate that we are in that has made agility and the ability to swiftly adapt not just a nice-to-have, but a must-have.

Kelly: You hit it on the head in the intro there, when you talked about dynamic business environments. That's what people are facing these days. In many cases, they have the same business processes that they have always had, but the landscape has shifted. So, some things may become more important and other things are less important.

What's important in any case is to be able to drive efficiency throughout an organization and across all these business processes. With the economic challenges that organizations are facing have had, they've had to juggle suppliers, products, customers, ways to market, and ways to sell.

As they're doing that, they're looking at their existing business processes, they are trying to increase efficiencies, and they are trying to really make things more streamlined. That's one of the challenges that organizations have had in terms of streamlining what's going on within their organization.

Gardner: Dave, just as a sort of level-check on IT, as more organizations have elevated data and applications and infrastructure even into services, IT has become a bit more nimble, but what we are really focusing on are the processes. How we can utilize these services, create workflows, apply logic and checks and balances across how things are conducted, and pull together people and process as much as it affects what IT does at its core?

Two levels

Kelly: You've got two levels. As you said, there are core IT operations and applications that are out there, but the real business value that's happening today is being able to tie those things together to be able to add on and address the business needs and the business processes.

In many cases, these processes cross applications and services. As you said, some organizations

We're seeing that it's difficult sometimes for an organization, especially right now, to look at something on a one-, two-, or three-year plan.

are even getting into cloud solutions and outside services that they need to integrate into their business processes. We've seen a real change in terms of how organizations are looking to manage these types of processes across applications, across data sources, across user populations.

That's where some of the real pressure has come from the changes in the economy in terms of being able to address those process needs more quickly and in a much more flexible and nimble approach than we have seen previously.

This is probably a good point to talk about the fact that BPM solutions have been around for quite sometime now, and a lot of organizations have really put them to good use. But, over the past three or four years, we've seen this progression of organizations that are using BPM from a task-oriented solution to one that they have migrated into this infrastructure solution.

This is great, if you can support that, but now with the changes and pressures that organizations are facing in the economy and their business cycles, we see organizations look for much more direct, shorter term payback and ways to optimize business processes.

Gardner: Let's go to Joby O'Brien at BP Logix. Joby, Dave just mentioned the fact that we have sort of an infrastructure approach to BPM, but where the rubber hits the road is how business processes get adapted, changed, implemented. This also cuts between where the business side sees value and where the IT side can provide value.

Perhaps you could tell us a little bit about where you see the BPM market now, and how things are a little different than they were a few years ago?

O'Brien: Actually, the points that Dave made were great, and I agree completely. We're seeing that it's difficult sometimes for an organization, especially right now, to look at something on a one-, two-, or three-year plan. A lot of the infrastructure products and a lot of the larger, more traditional ways that BPM vendors approach this reflect that type of plan. What we're seeing is that companies are looking for a quicker way to see a return on their investment. What that means really is getting an implementation done and into production faster.

One of the things we are also seeing is that part of that thrust is being driven heavily by the business users. Instead of being a more traditional IT-oriented approach, where it's again a longer-term implementation, this new approach is being driven by business needs.

When there are particular business needs that are critical to an organization or business, those are the ones they tend try to address first. They are looking for ways to provide a solution that can be deployed rapidly.

Same level of customization

One interesting thing is that they are also still looking for the same level of customization, the same level of flexibility, that they would have in a much larger or infrastructure-type approach, but they still want that rapid deployment of those applications or those implementations.

We're also seeing that what they are doing in a lot of cases is breaking them apart into different pieces based on priority. They take the processes that are most critical, and that are being driven by the business users and their needs, and address those with a one-at-a-time approach as they go through the organization.

It's very different than a more traditional approach, where you put all of the different requirements out there and spend six months going through discovery, design, and the different approaches. So, it's very different, but provides a rapid deployment of highly customized implementations.

Kelly: It's almost a bottom-up approach to BPM, instead of taking the top-down, large-scale infrastructure approach. Those definitely have their place and can be really powerful, but, at the same time, you can also take this bottom-up approach, where you are really focused on, as Joby said, individual processes that can be aggregated into larger business processes.

Gardner: Let's go to Jason Woodruff at TLT-Babcock. First, Jason, tell us a little bit about your company. You are in the industrial space. Then, as an IT project manager, tell us a little bit about what your business side has been looking for.

Woodruff: Sure, Dana. First of all, just to give a background of what TLT-Babcock does, we are a supplier of air handling and material handling equipment, primarily in the utility and

That requires flexibility and ultimately usability, not only from the implementation stage, but the end user stage, and to do so in the most cost-effective manner.

industrial markets. Our spectrum of products range from new product to after-market, which would include spare parts rebuilds. We rebuild our own equipment, customer equipment, and competitor equipment as well. So, we have our hands in a lot of markets and lot of places.

As a project manager, my job, before I got involved in our BPM solutions, was simply to manage those new product projects. Serving in that capacity, I realized a need for streamlining our process. Right now, we don't want to ride the wave, but we want to drive the wave. We want to be proactive and we want to be the best out there. In order to do that, we need to improve our processes and continuously monitor and change them as needed.

So, the direction was given, "Let's do this. How are we going to do it? What do we need to do? What is it going to take? Let's get moving." After quite a bit of investigation and looking at different products, we developed and used a matrix that, first and foremost, looked at functionality. We need to do what we need to do. That requires flexibility and ultimately usability, not only from the implementation stage, but the end user stage, and to do so in the most cost-effective manner. That's where we are today.

Gardner: Okay. Jason, you didn't just write down one day on a blackboard or a white board, "We need Nimble BPM." You probably started with whatever the requirements that your business side gave to you. What allowed you to get from a long-term perspective on BPM to being more proactive and agile?

Needed a change

Woodruff: As I said, the drive was that we needed to make a change. We knew we needed to make a change. TLT-Babcock wants to be the best. We looked within and said, "What can we change to achieve that? What are our weaknesses? Where can we improve?" We made a list of things, and one of the big ones that jumped out was document control.

So, we looked at that. We looked at why document control was an issue and what we could do to improve it. Then, we started looking at our processes and internal functions and realized that we needed a way to not just streamline them. One, we needed a way to define them better. Two, we needed to make sure that they are consistent and repetitive, which is basically automation.

The research drove our direction. We evaluated some of the products and ultimately selected BP Logix Workflow Director. The research really led us down that path.

Gardner: Let's go back to Dave Kelly. Dave, for this sort of requirement of faster, better, and cheaper, what is the requirement set from your perspective in the market for Nimble BPM?

Kelly: An important thing for Nimble BPM is to be able to embrace the business user. Jason just referenced being able to bring the end users into the process in a cost-effective manner and allow them to drive the business processes, because they are ultimately the beneficiaries and the people who are designing the system.

Another aspect is that you have to be able to get started relatively quickly. Jason mentioned the need for that terms of how they identified this business need to be competitive and to be able to

Another thing that's important is to be able to handle ongoing changes and to define potential solutions relatively quickly. Those are some of the key drivers.

improve the processes. You don't want to spend six months learning about a tool set and investing in it, if you can actually get functionality out of the box and get moving very quickly.

Another thing that's important is to be able to handle ongoing changes and to define potential solutions relatively quickly. Those are some of the key drivers.

O'Brien: There's one thing that Jason said that we think is particularly important. He used one phrase that's key to Nimble BPM. He used the term "monitor and change," and that is really critical. That means that I have deployed and am moving forward, but have the ability, with Workflow Director, to monitor how things are going -- and then the ability to make changes based on the business requirements. This is really key to a Nimble BPM approach.

The approach of trying to get everybody to have a consensus, a six-month discovery, to go through all the different modeling, to put it down in stone, and then implement it works well in a lot of cases. Organizations that are trying to adapt very quickly and move into a more automated phase for the business processes need the ability to start quickly.

Monitoring results

They need the ability to monitor results, see what's going on, and make those changes- without having to go through some type of infrastructural change, development process, or rebuild the or retool the application. They need to be able to provide those types of real time monitoring and resulting changes as part of the application. So, that phrase is so important -- the concept of monitor and change.

Gardner: Joby, to Dave's point about getting the tool in a position that the end user, the business driver and the analyst, can use, are we talking about compressing the hand off and the translation between the business side requirements and necessities, especially in a dynamic environment and then implement and refer back? How do we compress this back-and-forth business, so that it becomes a bit more automated, perhaps Web-based and streamlined?

O'Brien: That's a really good question. One of the things we see is that, especially for somebody who's just moving a manual process or a paper-oriented process to an electronic process or an automated one -- people who haven't actually done that yet and this is new to them -- it's difficult sometimes for them to be able to lay out all of the different requirements and have them be exact.

Once they actually see something running, they see it as Web-based, they see their paper-based forms turn into electronic forms, they see their printed documents stored electronically, and

The idea or the approach with the Nimble BPM is to allow folks like Jason -- and those within IT -- to be able to start quickly.

they have different ways of getting reports and searching data inevitably there are changes.

The idea or the approach with the Nimble BPM is to allow folks like Jason -- and those within IT -- to be able to start quickly. They can put one together based on what the business users are indicating they need. They can then give them the tools and the ability to monitor things and make those changes, as they learn more.

In that approach, you can significantly compress that initial discovery phase. In a lot of the cases, you can actually turn that discovery phase into an automation phase, where, as part of that, you're going through the monitoring and the change, but you have already started at that point.

Kelly: Dana, I'd just add that what you are saying here is what you've seen in the development of agile development methodologies over the past 10 years in the software arena, where organizations are really trying to develop applications more quickly and then iterate them.

I think that's what Joby's talking about here in terms of the Nimble BPM is being able to get out of the starting block much more quickly. The thing can then be adjusted dynamically over time, as the business really discovers more about that process.

User expectation

O'Brien: I completely agree. The other is the expectation of the users, even if it is nimble, for something faster, Just getting out of the block quicker is not sufficient. There is usually still an expectation about a relatively high degree of sophistication, even with doing something quickly. In most of these cases, we will still hear that the customer wants integration, for example, into their back-end systems.

They've got applications. They've got data that's stored in a lot of different systems. In a lot of cases, even when they're trying to go do something very quickly, what they are doing is still looking to have some type of an integration into existing systems, so that the BPM product now becomes that coordinator or a way of consolidating a lot of that information for the business users.

Gardner: l'd like to drill down a little bit on how this affects process. Jason, at your organization, when you started using BPM, did you notice that there was a shift in people and their process? That is to say, was there actual compression from what the business side needed and what the IT side could provide?

Woodruff: Yeah, that comes with the territory. We saw this as an opportunity not just to implement a new product like Workflow Director, but to really reevaluate our processes and, in

We'll sit down, find out what they need, create a form, model the workflow, and, within a couple of days, they're off and running. The feedback has been overwhelmingly positive.

many cases, redefine them, sometimes gradually, other times quite drastically.

Our project cycle, from when we get an order to when our equipment is up and operating, can be two, three, sometimes four years. During that time there are many different processes from many different departments happening in parallel and serially as well. You name it -- it's all over the place. So, we started with that six-month discovery process, where we are trying to really get our hands around what do we do, why do we do it that way and what we should be doing.

As a result, we've defined some pretty complex business models and have begun developing. It’s been interesting that during that development of these longer-term, far-reaching implementations, the sort of spur-of-the-moment things have come up, been addressed, and been released, almost without realizing it.

A user will come and say they have a problem with this particular process. We can help. We'll sit down, find out what they need, create a form, model the workflow, and, within a couple of days, they're off and running. The feedback has been overwhelmingly positive.

Gardner: It strikes me that when you demonstrate that you can do that, you open up this whole new opportunity for people to think about making iterative and constant improvement to their jobs. Before, they may not have even tried, because they figured IT would never be able to take it and run with it.

A lot more work for IT

Woodruff: It's interesting that you say that, because that's exactly what's happened. It's created a lot more work for us. One of the things we just implemented -- and this was one of those couple-of-day things -- involved a lot of issues where there was some employee frustration. Things weren't getting done as quickly as we thought they could be. People were carrying some ideas internally that they hadn't shared or shared through the existing channels, and results weren't being presented.

Sort of at the spur of the moment, we said, "We can address this. We can create an online suggestion box, where people can submit their problems and submit their ideas, and we can act on it." We got that turned around in a week, and it’s been a hit. Within the first couple of days, there were well over a dozen suggestions. They're being addressed. They're going to be resolved, and people will see the results. It just sort of builds on itself.

Gardner: Now, in some circles they call that Web 2.0, social networking, or Wikis. Collaboration, I suppose, is the age-old term. I want to go back to Joby at BP Logix. Do you see that the Nimble BPM approach, and this invigorated collaboration, is what gets us to that level of productivity that, as Jason pointed out, lets them push the wave rather than have to ride on someone else's?

O'Brien: Actually, we do. It's funny that Jason had mentioned that particular process. We see that also with many of the other customers we are working with. They are focused on the initial project or the business area that they are trying to address. They will take care of that, but then, as people see the different types of things that can be done, these small offshoots will occur.

A lot of these are very simple processes, but they still require some type of a structure. In some cases, some degree of compliance is also associated with them, and they need the ability to be

With everything somebody is doing, having some degree of management, some degree of control, visibility, auditing, tracking, is important

able to put those together very quickly. Some are simple things, the things that are one-off type of workflows or processes that have originated within an organization. It just happens to be the way they do business.

It's not something traditional, like an IT provisioning or some type of sales-order processing. There are those one-off and unique ways that they do business, which now can provide a degree of collaboration.

Gardner: So, we need to marry the best of ad hoc in innovation, but keep it within this confines of "managed," or it could spin out of control and become a detriment.

O'Brien: That's probably one of the key pieces to almost all of these. With everything somebody is doing, having some degree of management, some degree of control, visibility, auditing, tracking, is important. Inside an organization, there can be hundreds of different processes, little ad-hoc processes that people have created over the years on how they do business.

Some of those are going to stay that way, but with others there needs to be more of a management, automation, auditing, or tracking type of approach. Those are the types of processes, where people don't initially look at them and say, "These are the types of things that I want to automate, so let me bring a BPM tool in."

Getting control

They walk into that area because they realize that a Nimble BPM tool can address those very quickly. Then they start getting some degree of control almost instantaneously, and eventually work their way into full compliance within their industry -- tracking, auditing, automation, and all of the goodness associated with the traditional BPM tool.

Gardner: Jason, this all sounds great in theory, but when you put it into practice, are these small improvements, or what are the metrics? What is the payback? How can you rationalize and justify doing this in terms of a steadfast, predictable, even measurable business result?

Woodruff: I don't know if anybody can really answer that question in black and white, but there are several paybacks. We haven't spent a lot of time doing a calculation of our return on investment (ROI) financially. It's so obvious that the number doesn't really matter as far as we are concerned at this point.

We save a lot of time. To put a figure on it is tough to do, but we save a considerable amount of time. More importantly it allows us to reduce errors and reduce duplication of work, which

. . . It allows us to reduce errors and reduce duplication of work, which improves our lead-time and competitiveness. It's just a win-win. So, it doesn't really matter what the number is.

improves our lead-time and competitiveness. It's just a win-win. So, it doesn't really matter what the number is.

Gardner: Well, how about your relationships with the rest of the organization? When the folks at TLT-Babcock think of IT, do they perhaps perceive you a little differently than they may have in the past?

Woodruff: While I do have a background in IT, that wasn't my role at TLT-Babcock, and still isn't. As a project manager working on customer-driven projects, I am the end user. This current situation came about when I expressed not just my and several other people's comments that we could improve here.

Because I had that background from a previous life, so to speak, I became the natural choice to head this charge. Now, I don't spend as much time in project management. I spend very little time doing that and focus, primarily, on troubleshooting and improving processes.

I've got this role that Joby talked about -- management of these ad hoc things. Bring me your ideas and bring me your problems and we will be the umbrella over all of this and coordinate these efforts, so that we're implementing solutions that make sense for everybody, not just on a narrow focus.

Gardner: Perhaps, I oversimplified in referring to this as business versus IT, but a better way to phrase the question might be how has this changed your culture at your organization from where you sit?

In the early stages

Woodruff: It's interesting, because we're in the early stages here of implementation. We have a couple of processes out and a couple in testing. In the last couple of weeks, just for the first time, we gave a company-wide demonstration of Workflow Director, what it does, how we're going to use it, and, looking down the road, how the processes we have known and grown to love, so to speak, will be changing using this new tool.

That really was a spark that gave each of the users a new look at this and an idea of how this tool is going to affect the tasks that they do each day, their own processes. That's when these ideas started flowing in, "Can you use it to do this? Can you use it to do that?" When they see that, they say, "Oh, that's cool. That's slick. That's so easy." So, we're right at that turning point.

Gardner: Well, we'll have to come back in a while and see how that cultural shift has panned out. Meanwhile, let's go to Joby. For those organizations like Jason's that want to take a Nimble BPM tool and make themselves nimble as a result, how do they get started? Where do you begin to look to implement this sort of a benefit?

O'Brien: Let me make sure I understand the question. How do they typically get started or what organization brings us in?

Gardner: How do you get started in saying, "We like the idea of Nimble BPM that then enables as a catalyst nimble business processes. Where do we begin? How do we get started?"

O'Brien: Almost always, that request will be initiated or driven from some business need, a lot of times from a business unit, and occasionally from IT. So, it's going to be driven from a lot of

That really was a spark that gave each of the users a new look at this and an idea of how this tool is going to affect the tasks that they do each day, their own processes.

different places, but it's almost always going to be geared around the idea of the ability to respond quickly to some type of automation and control around a particular process.

In most cases, at least in our experience, there is usually a primary factor that causes the organization to bring in the product and start the implementation, and that's what they are focused on addressing. From there it grows into other areas, very much like Jason just described. When people start gaining visibility into the types of things that can be done and what that actually means, we generally see the tool growing into other areas.

Gardner: Now, David Kelly, that gets back to your earlier statements, if you are going to start from a tactical pain point and then realize benefits that can then be presented perhaps more horizontally and strategically across the organization, you can't do that sort of crawl-walk-run approach, if you've got to do a two-year multi-million dollar infrastructure approach, better to have something you can do at that more iterative level.

Kelly: Exactly. I think Jason highlighted that in terms of what he just said, in terms of getting these workflows and processes out there showing them to the rest of the company then watching as, all of a sudden, the idea started exploding in terms of how those could be applied. It's the same kind of thing.

From what I have seen, a lot of organizations -- Joby has mentioned this -- start with any process in the organization that needs automation. There are probably multiple processes that need automation, monitoring, or some kind of control.

Just look around

You don't have to think big-picture BPM solution. Just look around. It could be a request management. It could be tracking something. It could be sharing documents or controlling access to the documents. It could be something that adds on to an enterprise resource planning (ERP) system that you need to have additional control over.

There are multiple processes, even in highly automated organizations, that still need automation. You can start in an area like that with a task and with a specific kind of scenario, automate that, use a Nimble BPM product tool like this, start down that road, and then expand beyond there. Jason provides a really good example of that.

Woodruff: If I can jump in again here to expand on that point, something comes to mind here. The question was asked, how does this process start, how do you get started on this path? The two years prior to even looking at BP Logix, we had brought in two, maybe three, different subject matter experts to develop our current in-house system. This was to do just what you said David, do a little something here, a little something there, not necessarily as a global approach to streamlining everything, not workflow software but just something to get results.

Well, we weren't getting anything done. We would get one little thing that wasn't very useful to somebody and something else that wasn't useful to somebody else, and we were just sort of spinning our wheels. Within a few months of getting BP Logix products in our hand, we are off and running. It’s pulling us through in some ways.

So it was just the lack of results that said, "We've got to find something better." So we went out and did that research I talked about earlier, and here we are a few months down the road, and I can say that we are now driving that wave.

Gardner: Okay. Well, I'm afraid we are about out of time, but we have been discussing how in dynamic business environments a nimble approach to BPM can start at the tactical level and even lead to cultural change and swift paybacks. Helping us understand the ability to draw down processes into something that can be measured and used in a managed environment, we have been joined by Joby O'Brien, development manager at BP Logix. Thanks Joby.

O'Brien: Thank you.

Gardner: David A. Kelly, senior analyst at Upside Research. Thanks again, Dave.

Kelly: You're welcome, Dana. Great to be here.

Gardner: We also appreciate Jason Woodruff joining us. He is the project manager at TLT-Babcock. Thanks for your insights and sharing, Jason.

Woodruff: Thank you. It's my pleasure.

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. Download the transcript. Find it on iTunes/iPod and Podcast.com. Learn more. Sponsor: BP Logix.

Transcript of a sponsored BriefingsDirect podcast on how Business Process Management can help enterprises solve productivity problems and rapidly adapt to changing economic conditions. Copyright Interarbor Solutions, LLC, 2005-2009. All rights reserved.

BriefingsDirect Analysts Discuss Software AG-IDS Scheer Acquisition and Prospects for Google Chrome OS

Edited transcript of BriefingsDirect Analyst Insights Edition podcast, Vol. 44 on Software AG's acquisition of IDS Scheer and the implications of the Google Chrome operating system.

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

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Dana Gardner: Hello and welcome to the latest BriefingsDirect Analyst Insights Edition, Volume 44. 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, comes to you with the help of our charter sponsor, Active Endpoints, maker of the ActiveVOS visual orchestration system, and through the support of TIBCO Software.

Our topic this week on BriefingsDirect Analyst Insights Edition, and it is the week of July 13, 2009, centers on Software AG's bid to acquire IDS Scheer for about $320 million. We'll look into why this could be a big business process management (BPM) deal, not only for Software AG, but also for the service-oriented architecture (SOA) competitive landscape that is fast moving, as we saw from Oracle's recent acquisition of Sun Microsystems.

Another topic for our panel this week is the seemingly inevitable trend toward Web oriented architecture (WOA), most notably supported by Google's announcement of the Google Chrome operating system (OS).

Will the popularity of devices like netbooks and smartphones accelerate the obsolescence of full-fledged fat clients, and what can Google hope to do further to move the market away from powerhouse Microsoft? Who is the David and who is the Goliath in this transition from software plus services to software for services?

Here to help us better understand Software AG's latest acquisition bid and the impact of the Google Chrome OS are our analysts this week. We are here with Jim Kobielus, senior analyst at Forrester Research. Hi, Jim.

Jim Kobielus: Hey, Dana. Hello, everybody.

Gardner: Tony Baer, senior analyst at Ovum.

Tony Baer: Hey, Dana, good to join you again.

Gardner: Brad Shimmin, principal analyst at Current Analysis.

Brad Shimmin: Hi there, Dana, and hi, everyone out there.

Gardner: Jason Bloomberg, managing partner at ZapThink.

Jason Bloomberg: Good morning, everybody.

Gardner: JP Morgenthal, independent analyst and IT consultant.

JP Morgenthal: Hey Dana, and for you fellow people, that's @JPMorgenthal for you.

Gardner: There you go. Also, Joe McKendrick, independent analyst and ZDNet and SOA blogger. Welcome, Joe.

Joe McKendrick: Hi, Dana, glad to be here.

Gardner: Let's start on the whole Software AG bid. JP, I just learned this morning that you were an architect there at IDS Scheer. Tell us a little bit about why you think this is a big deal.

Morgenthal: No, I wasn't at IDS. I was at Software AG. I was there prior to the webMethods acquisition.

Gardner: Yes. My mistake. Sorry.

Morgenthal: No problem. It's really interesting. When we first started thinking about building out a SOA platform and making Tamino the heart of it, the metadata repository, it was one of the key applications we saw for Tamino in a SOA platform. I actually was looking for different metadata partners.

I looked at IDS Scheer back then and that's what they were sowing a while back, so I had lost track of them and come back to find that now they're driving the whole concept of business process design, which is really interesting.

It seems that the general consensus on the acquisition, though, seems to be focused heavily on their association with SAP, and that the move seems to be driven by more of a business relationship than a technical relationship. If you look at the platforms, there is some overlap between the webMethods platform and the ARIS platform.

So, it would make sense that, if they were going after something, it wouldn't be just more design functionality. There has to be something deeper there for them to grow that business even larger, and certainly SAP is a good target for going after more additional business.

Gardner: So, is this an acknowledgment that SAP needs a SOA partner and that this is Software AG's move on the dance floor to sort of step up the music a bit?

Morgenthal: SAP probably doesn't believe that they need an SOA partner, but I think that the fish are starting to nip around the outer boundaries. SAP customers are to the point now, where they are looking for something more immediate, and obviously the redevelopment of SAP as a complete SOA architecture is a long-term endeavor.

So, how do you start moving there in an incremental fashion? A lot of SOA platform vendors are starting to identify that there is a place for them on the outer edges, until SAP gets to make its full transformation.

Gardner: Hey, Jim Kobielus, do you agree that this is more than just a technology acquisition? What do you think? Does SAP need a SOA dance partner?

Kobielus: Does Software AG?

Gardner: No, SAP, and that Software AG is perhaps an intermediary step.

Kobielus: Wow, that's an interesting question. Honestly, I don't think SAP needs another dance partner here. Let's say, hypothetically SAP acquired Software AG. What could Software AG with IDS Scheer on board offer SAP that they don't already have? There is the BPM. There is the enterprise application integration (EAI). I don't really see anything obvious.

Gardner: JP, help him out. Why did you make that statement?

Feeding at the outer edge

Morgenthal: Well, I made the statement that the groups, like the combined effort of a Software AG with webMethods and IDS Scheer actually becomes one of the feeders on the outer edges of the SAP market. While SAP is in its cocoon, it needs to turn from caterpillar into SOA butterfly, and heaven knows whether that will actually survive that transformation.

There are a lot of SOA platforms starting to eat at the outer edges of the cocoon, feeding off of that, and hoping the transformation either fails or that there will be a place for them when the SOA butterfly emerges.

Kobielus: I don't think that necessarily Software AG would be a good fit for SAP. There are a lot of redundancies. I don't think that this notion of a Teutonic hegemony has legs here.

What's really interesting here is that, clearly Software AG is on a tear now to build up their whole

I think it goes both ways. You can't separate the technology from the strategic implications of this deal

SOA stack. I blogged on this under Forrester. People didn't realize that IDS Scheer is actually now a business intelligence (BI) vendor. They've got a self-service mashup BI product called ARIS MashZone, in addition to the complex event processing (CEP) product and an in-memory analytics product.

IDS Scheer, prior to this acquisition, has been increasingly positioning themselves in the new generation of BI solutions. That's been the one area where Software AG/webMethods has been deficient, from my point of view. In these SOA wars, they're lacking any strong BI or CEP capabilities.

Now, IDS Scheer, their BI, their CEP, and their in-memory analytics is all tied to business activity monitoring (BAM), and all tied to BPM. So, it's not clear whether or when Software AG, with IDS Scheer on board, might start turning all of that technology or adapting it to be more of a general purpose BI CEP capability. But, you know what, if they choose to do that, I think they've got some very strong technologies to build upon.

Gardner: Tony Baer, how do you come down on this technology, filling in the cracks, as Jim Kobielus believes, or the larger strategic implication that JP was alluding to?

Baer: I think it goes both ways. You can't separate the technology from the strategic implications of this deal.

For one thing, I don't think SAP itself thinks it needs a partner, in that, through NetWeaver, it has tried to control the middle tier in addition to the application tier, but they've not been that humongously successful in the market.

The other thing is that, yes, they have essentially defined an architecture for exposing their processes as services. They keep changing the names of it, so I forget what the latest acronym for it is. But, from the SAP standpoint what they lack is SOA governance. They lack a lifecycle there. SAP has always been very much around its own internal governance, and that's been a really interesting omission.

Other dimensions

More broadly, there are other dimensions to this deal, which is that Software AG's webMethods business gets a much deeper process-modeling path. I don't know how redundant it is with the existing modeling. I don't think there are many BPM modeling languages that are deeper than ARIS, and that's selling pretty awesomely. As a matter of fact, you can look at Oracle, which uses it as one of the paths to modeling business process, along with the technology they picked up from BEA.

Gardner: So what's the theory there, Tony, that the tool and its popularity will drag in some more on the infrastructure side?

Baer: For Software AG, what it’s going to drag in is immediate access to the SAP base, and that's huge. It also basically lays down a gauntlet to IBM and Oracle, especially Oracle, which has an OEM agreement. All of a sudden they have an OEM agreement with a major rival, as they're trying to ramp up their fusion middleware business in their SOA governance story.

Gardner: There is a lot of that going on nowadays.

Baer: Oh heck, yes, and so I see this as being incredibly disruptive, and I think a very smart move for Software AG.

Gardner: Let's go to Brad Shimmin. It seems like we've got some jockeying going on, and there aren't really too many mid-tier SOA infrastructure players left that these other behemoths can play chess with, their little pawns that they can move in front of their other players and play one OEM's agreement deal off of another, as they all try to come up with the total stack. What's your perspective, Brad? Are we almost at the end of the SOA consolidation process?

Shimmin: I don't think so. When you look at the big players, just as you said there, Dana, with their little OEM games -- reindeer games -- that get played, those are becoming less and less of an issue.

Look to the governance. About two years ago, most of the vendors are OEM. That certainly has turned around, such that these vendors, the big players we're talking about here, are very much providing in-house stacks. That speaks to what Tony and JP have been saying about getting some governance and SAP and getting better middleware and SAP customers. That's why I think this is such a big deal, and, as Tony was saying, why it's so disruptive.

It's not just that they have a fuller stack now, but there is a more complete stack for SAP customers. NetWeaver has been hanging in there. SAP definitely thinks it is middleware, but then why else would there be so many players on the outside, providing integration services for SAP applications running on not NetWeaver

But, back to your question about the smaller players, Dana, it seems like it's now a class society, where you have the big players -- the IBMs, Oracle, SAPs, and now Software AGs of the world -- and then you have the rogue players in these open-source space that are coming up, that have room to play.

We're talking about the Red Hats, the -- I'm blanking on the others here. There are probably three or four software vendors out there that are playing just in the open-source middleware space that has a great player like WSO2. Another one that's really good is MuleSource, although they're kind of limited.

Bifurcated environment

The point is that, when you have this really bifurcated environment, it gives you fewer acquisitions and more competition, and that's what's going to be great for the industry. I don't see this as leading to further consolidation at the top end. It's going to be more activity on the bottom end.

Gardner: Jason Bloomberg, isn't there no small dose of irony that the SOA landscape is being driven by folks trying to do it all? I thought the whole notion of SOA was being able to include more players and more components to interact and interoperate. What's going on?

Bloomberg: That's a important point to bring up. This IDS Scheer announcement really doesn't have anything to do with SOA. That is surprising, in a way, but also consistent with some of the fundamental disconnect we see within Software AG, between the integration folks on one hand and the BPM folks on the other.

There are some people within Software AG, typically the CentraSite team, Miko Matsumura and his strategy team, who really understand the connection between SOA and BPM. But, for the most part, basically the old guard, the German staff, just doesn't see the connection.

This fundamentally confuses the marketplace, because you have the integration-centric SOA

Whoever wrote the press release doesn't even understand that SOA is architecture. It makes you wonder where the disconnect is.

message out of Software AG. You have the metadata-driven CentraSite message that tries to pull it together, but doesn't have a dominant position within the context of the Software AG marketing. Then, you have the BPM folks, who just don't understand that SOA has anything at all to do with BPM.

If you read the 'BPM For Dummies Book' that Software AG put together, for example, they don't even understand that SOA has any connection to BPM. Software AG released a press release a few weeks ago that described SOA as a technology. Whoever wrote the press release doesn't even understand that SOA is architecture. It makes you wonder where the disconnect is.

With the IDS Scheer acquisition, if you read through what Software AG is saying about this, they're not connecting it with their SOA story. This is part of their BPM story. This is a way for them to build their vertical BPM expertise. That's the missing piece.

They have this BPM capability that they got from webMethods, and there is some Fujitsu technology in there as well. Poor Fujitsu, I guess, is the odd one out on this one. Software AG is looking to add some vertical capabilities, but because they're not tying it with the SOA story, they run the risk of continuing to be the outlier player, when it comes time to compete against Oracle and IBM.

They don't understand

Kobielus: Let me butt in a second, because in Forrester we've been discussing this. We don't think that Software AG understands fully who they are acquiring, because they don't really fully understand what IDS Scheer has on the SOA side. They don't understand the BI and CEP stuff.

So, I agree wholeheartedly with what Jason is saying. They're acquiring them just for the BPM, but that really in many ways really understates what IDS Scheer potentially can offer Software AG.

Bloomberg: Yeah, that's a good point. It's worth highlighting that IDS Scheer does have some pretty solid SOA capabilities within the context of their BPM focus.

Now the question is what Software AG will do with that part of the story. Will it get lost in the shuffle or will it really be integrated into the overall SOA stack in a way that enables them to have a better process-driven SOA story?

That's going to be a challenge for them, because that involves some shifting of thinking, not

They're acquiring them just for the BPM, but that really in many ways really understates what IDS Scheer potentially can offer Software AG.

across the whole organization, but within this sort of old guard Software AG folks who have been resistant to this part of the story.

Morgenthal: Just to add a little more fodder, if I haven't lost track of who's who in Software AG, isn't the person who ran this acquisition Dr. Kürpick, if I have that name right. Didn't he come out of SAP, and isn't he more focused on the business process end of things than the SOA end of things?

Bloomberg: Who wants to chime in on that one?

Kobielus: It is Kürpick, but I don't know what his background is.

Morgenthal: I believe he came out of SAP, and I believe his background is on integration and BPM.

Gardner: So, JP, to your point, we seem to have a mixed understanding of whether BPM is the source or a larger infrastructure benefit. I think you were making the point that the BPM could be perhaps a point on the arrow. If you've got your tool embedded, if you've got business process expertise, and you are moving down the stack from the process level, that that could be something that would drag in other aspects of a SOA environment.

Morgenthal: This is funny, because this keeps coming up over and over. Early on, I used to work with BrainStorm Group on their SOA BPM shows, and, at the height, the BPM show got up to like 600 people. I was doing the SOA side of the story in the track.

Driving the business

At the breaks, I would go talk to these people, and the BPM people would all look at me like I was talking another language, and say, "I don't deal with that." These are people who were doing BPM initiatives in their organization, they were like, "That's for the IT guys. I'm the business." So, time and time again, I found out that the BPM people were the ones driving the business.

Now, the number of people who have been attending BPM conferences has been dropping significantly, saying basically that if training went out to the business people, the business people are doing the business analysis. They are using the BPM tools like IDS Scheer more than webMethods, which would be the IT stuff.

At the BPM level, a lot of the initiatives are still, I believe, with the business and hasn't translated down into IT dollars and IT deliverables. That's a big issue now with regard to this acquisition for Software AG. Before, they could only play on the IT side of this shop. They had no story to play with the business. Now, they can go back to all those people who are still doing this at the business initiatives and have a story for them, with a roadmap, for how to bring this into IT. I think that sells well. I think IBM uses that, but I still find IBM’s tools very IT-centric.

Baer: JP, you're right on the mark there. There has always been a huge cultural divide between

The question, then, for the vendors is which vendors can really support that story in a way that doesn’t defeat the purpose by a self-serving software sales pitch.

the business folks, who felt that they own BPM, versus the IT folks, who own the architecture or the technology architecture, which would be SOA. What’s really interesting and what's going to stir up the pot some more -- and this is still on the horizon -- is BPMN 2.0, which is supposed to support direct execution.

When I was over at Oracle a few weeks back, they were talking about their strategy. They were saying, that unless a business process, as you model in BPMN, is transactionally complex, you could theoretically make that model executable and essentially ace out IT. I'm a little cynical about that, but it's going to be an interesting thing that stirs up the pot in coming months.

Bloomberg: It's interesting you mention SOA as technical architecture, because that's a fundamental misconception of what SOA is about. SOA is really more of a style of enterprise architecture that pulls together both business and IT.

But, you're right that a lot of organizations still see SOA as technical architecture, as something distinct from the BPM, and those are the organizations that are failing with SOA. That part of the "SOA is dead" straw man is that misconception of SOA as about technology. That's what’s not working well in many organizations.

On the plus side, there are a number of enterprises that do understand this point, are connecting business process with SOA, and understand really that you need to have a process driven SOA approach to enterprise architecture.

The question, then, for the vendors is which vendors can really support that story in a way that doesn’t defeat the purpose by a self-serving software sales pitch. That's always difficult, because the software sales people are there to sell the software. So you don't buy SOA. You do SOA, and doing SOA includes business process work, as well as technology work.

Telling the story

The prize goes to the vendor who really can tell that story properly. That's difficult for all of them and they're all are struggling with this. That's the story for 2010. Will it be IBM, Oracle, or Software AG who tells an architecture-driven BPM/SOA/enterprise architecture (EA) story in a way that really does help organizations solve their problems, as opposed to just pushing the software and letting customers figure out how to use it.

Gardner: Thanks, Jason. Let me go to Joe McKendrick. Joe, it sounds like something we don't talk about too often is the importance of the sales function, the sales department, and how these things enter the market. It sounds as if the sales department is selling to the business side of the house, and that's how their strategy perhaps lines up.

Or, if they've got another product set that they're going to sell to the technology side of the house, well, then that's how they're going to continue to enter the market, because that's the side where they get the PO.

But, isn’t that self-defeating, when it comes to SOA as an architectural paradigm shift, as we've mentioned here? How do we that? Is there another step that we need in bringing SOA into the market that educates or changes the sales culture so that they don't simply go after the short-term product sale, but look for more strategic sale?

McKendrick: Yeah, Dana, that's a big challenge. You're right. The sales people from the vendors have specific relationships with individuals within companies. They may tend to be IT people on one hand or you may have some folks on the business process side, depending on the types of products, and usually the paths don't cross.

I wonder, too, with SOA. That's been the challenge, as we've been discussing about SOA. It's been confined somewhat to the technical side of the house, perceptually, and the proponents of SOA tend to come from the IT side.

Gardner: I guess what I was getting at, Joe, is that the separation between SOA and products seems to be taking place not just on the buy side. It's probably taking place on the sell side as well, as is demonstrated perhaps by what we're hearing today about the IDS Scheer buy being absorbed by one part of Software AG and not across the board.

McKendrick: Absolutely. You really can’t sell SOA. Theoretically, you don't need to buy any products to start SOA in your organization. It's ludicrous to try to sell SOA, the package itself. That's something that's been discussed for years -- selling SOA in a box. You can sell individual products.

Let’s face it. It's a tough environment, and vendors are on these quarterly cycles. They need to push the product out there, and they'll call it whatever they need to call it to get the product out. Maybe SOA is even diminishing as a sales term. It's cloud nowadays.

Gardner: Jim Kobielus, do you agree that this might be what we're up against? In a down economy, sales people need to sell, and, product-by-product, that's what they're going to go after. At the same time, they do an injustice to this larger architectural shift.

Shifting the focus

Kobielus: Yeah, for sure. What gives me hope on the Software AG-IDS Scheer merger is the fact that what I heard on the briefing is that Software AG realizes they need to shift from a technology and sales driven model towards more of a solution and consulting driven business model. First of all, that's the way that you lock in the customer in terms of a partnership or an ongoing relationship to help the customer optimize their business and chief differentiation in their business.

What I found really the most valuable thing about the briefing on the acquisition that we got from them the other day was IDS Scheer adding significant value to Software AG. Software AG pointed to the business process tools under ARIS. That's a given. They focused even more on the EA modeling capabilities that IDS Scheer has, and even more on the professional services on the vertical solution side and the BPA consulting side -- consulting, consulting, consulting, relationship building, solution marketing.

I think Software AG knows that they need to put the IDS Scheer solution focus first and foremost. In a down economy, that's the way to lock in these premium engagements and these

It's interesting hearing about the BPM and SOA disconnect, and it certainly doesn't surprise me.

ongoing relationships that will be essential for Software AG to differentiate themselves from vendors like IBM, Oracle, and SAP, who have been solution focused for quite some time in the SOA sphere.

Gardner: Tony Baer, we need to wrap up on the Software AG acquisition. Are there any other takeaways that we've missed on this one?

Baer: It's interesting hearing about the BPM and SOA disconnect, and it certainly doesn't surprise me. I totally agree with Jason. The problem is that it's a perception that those business stakeholders view SOA as the technology architecture and, more specifically, business process execution language (BPEL) as that bastardized execution language, which I think is probably a little bit of envy on their part.

I can sort of understand that there is a degree of creative tension within Software AG in terms of understanding the connection between BPM and the SOA.

I very much agree with Jim -- I'm Mr. Agreeable today -- that it really is all about solution sell. I was just up doing consulting yesterday with a vendor in the tools industry and telling them that they have to do more of a solution sell.

That's a really tough nut for vendors to crack, because, as the CEO was telling me, "I agree with you, but our sales guys still have quarterly numbers that they have to meet, and if customers want product, we're not going to say no." That's a tough one.

Gardner: Brad Shimmin, do you agree that the solution sell is a multi-year process, but right now these companies need to get some POs signed? Perhaps that's what at work here in terms of filling in of the cracks with this acquisition?

Pre-sales and post-sales

Shimmin: There is pre-sales and then post-sales, and the post-sales is very separate. You have your services organization, and as everyone has been saying here, that's the key to this IDS Scheer acquisition by Software AG.

Software vendors like IBM, Oracle and SAP, which are solution based, have these well established organizations, but do nothing except go out and say, "You know what? You really need to lead with BPM, and by the way, in order to make BPM work, you need to have this great infrastructure and architecture underneath and that happens to be using our SOA components." Those guys know how to do that.

Software AG, as we said, is going to take some time to get that up to speed. In the meantime, it's all going to be driven by the numbers. You're selling infrastructure, you're selling webMethods' software endpoints to the IT folks, and you're selling ARIS to the business folks. To bring those two together is going to take quite a bit of time.

Baer: I think it's kind of important to look at IDS Scheer's numbers. They've actually flattened out. The SAP market is pretty mature. Within the webMethods space, it's younger, dynamic and growing. That could be a way to give IDS Scheer and ARIS a bit of a jolt, if Software AG can deal with those structural issues.

Gardner: Okay. In the second half of our show, let's take a look at this WOA drive. I was

Everyone thinks this is an attack at Microsoft. I'm looking at it as a Mac user and see a huge hole in the market.

impressed with the Google Chrome OS, not necessarily on its technical merits -- we don't know too much about it yet -- but the idea that Google is willing to go toe-to-toe with Microsoft and sees the marketplace is ready to absorb an OS designed of, for, and by the web.

Does anyone else share my impression that this is a harbinger of a larger shift towards the web?

Shimmin: I just think it's reflective of the shift that's already underway. When you look at Google Chrome OS, it's Linux, which is a well-established OS, but certainly not something you would call a web-oriented OS. Chrome OS is really something akin to GNOME or KDE running on top of it. So, technologically, this is nothing spectacularly new.

I think that what Google is doing, and what is brilliant about what they're doing, is that they're saying, "We are the architectural providers of the web, people who make the pipes go, and make all of you able to get to the places you want to go in the web through our index. We're going to build an OS that's geared toward you folks. We're going OEM and through vendors that are building netbooks, that are definitely making a point of contention with Microsoft. Because Microsoft, as we know, is really not pleased with the netbook vendors, because they can't run Vista or eventually Windows 7."

Gardner: Not only that, but they can't charge the full price that they would have liked to charge for an OS, because these things only sell for $400.

Shimmin: Exactly.

Morgenthal: I have differing opinion, and of course an opportunity to tick off the entire Slashdot audience. Everyone thinks this is an attack at Microsoft. I'm looking at it as a Mac user and see a huge hole in the market. I've got to pay almost $2,000 for a really good high-powered Macintosh today. All they did was take BSD Unix and really soup it up so that your basic user can use it.

Out of the slime

People on the Linux side are like, "Oh, Linux is great now. It's really usable." I've got news for you. It's no way nearly as usable as Windows or the Mac. As far as usability, Linux is still growing out of the proverbial slime.

But, if you take that concept of what Apple did with BSD and you say, "Hmm, I'm going to do that. I'm going to take Linux as my base and I'm going to really soup up the UI. I'm going to make it really oriented around the network, which I already did, and I have a lot of my apps in the Cloud, I don't necessarily need to build everything large scale. I still need to have the ability to do video, tie things in, and make that usable, but I'm also going to be able to sell it on a $400 netbook computer."

Now, you're right down the middle of the entire open market, because people can't stand Windows XP running on these netbooks. As was previously said, you can't yet run Windows 7 yet or Vista. We don't know what Windows 7 is going to look like, as far as usability, and the Mac is costing way too much.

There is a huge home run right through the middle. You just run right up the center and you've

First of all, it's vapor, because this is not going to be released, I think, until the second half of 2010.

got yourself a massive home run. It doesn't have to be about going after the enemy. It's not about hurting the enemy. It's about going after your competitors.

Gardner: If Mac OS stays in the top tier and something like Google Chrome OS comes in, the only other player to suffer is Microsoft. Isn't that who gets squeezed out?

Morgenthal: No, I actually think you're starting a grass-roots effort that could knock Apple out, because Apple's maintained its proprietary nature. If you can deliver the equivalent of an Apple-based set of functionality and the usability of the Mac on a $400 netbook, or a bigger if you want, you hurt Apple. You don't hurt Windows.

Gardner: I appreciate your point, but I think that Apple is okay at the top tier. I think this is more aimed at the bottom of the Windows tier, and the price-sensitive audience, both in the consumer and business spaces. What do you think Jim Kobielus?

Kobielus: I think it is, exactly what you said, Dana. First of all, it's vapor, because this is not going to be released, I think, until the second half of 2010.

Gardner: Yes, second half next year.

Kobielus: And, they haven't announced any real features. They haven't announced any final pricing. It will probably be nil or nothing. There's so much that has yet to be defined here. How long ago was it they introduced Android, and how much adoption does Android have in the mobile space?

Gardner: Well, it's got developer hearts and minds, which is probably important.

"Google hegemony"

Kobielus: Yeah, yeah. People keep expecting the big "Google hegemony" to evolve or to burst out, so everybody keeps latching onto these kinds of announcements as the harbinger of the coming Google hegemony and all components of the distributed internet-work Web 2.0 world. I just don't see that happening.

I think this is exciting. They've got all these kinds of projects going, but none of them has even begun to deliver for Google anything even approximating the revenue share that they get from search-driven advertising.

So, this is interesting, but a lot of Google projects are interesting. Google Fusion Tables are interesting for analytics, but I just can't really generate a big interest in this project, until I see something concrete.

Gardner: Okay. Tony Baer, are you ho-hum on this as well, or do you think that this signals that the OS gets buried underneath that layer that is your Web interface and your ability to coordinate with cloud services level?

Baer: I vote for the ho-hum. I agree with Jim. Their business model has been, so far, throwing

Some may need netbooks. Some may want smartphones. Some, like myself, still deal with regular brick computers. It's just a diversity.

as much mud at the wall as possible and seeing what sticks. To date -- and this is one place where I would actually agree with Steve Ballmer -- they've really been a one-trick pony.

You've got to put this in perspective, The Microsoft Office base is not a growing base. It does indicate, though, that there are many types of alternative clients that are emerging, and I don't think anybody has claimed those emerging clients. So, JP has an interesting point in terms of that. It basically fills the hole that Apple is not trying to fill.

Gardner: What about the iPhone. Doesn't the iPhone fill that hole? It's a low entry at $200 and does a lot of what a PC does.

Baer: Well, iPhone, compared to a computer, is low entry, but its expensive compared to a smartphone.

Shimmin: I am sorry to interrupt you, but Apple has netbook coming out in October too, so they're trying for that market as well.

Baer: I'll grant you that point. The important thing mostly is that it does point to a new diversity of clients. Some may need netbooks. Some may want smartphones. Some, like myself, still deal with regular brick computers. It's just a diversity.

So, I think that's really what Google's move heralds. As to whether Google really actually shoots in the long run, I'm waiting for the evidence.

Gardner: Okay. Jason Bloomberg, how about you, a ho-hum or a shift?

Mostly irrelevant

Bloomberg: At ZapThink, we're focused on the enterprise. We talk primarily to enterprise architects who are really trying to figure out the big picture of how enterprise IT resources can meet the ongoing changing business needs. From that perspective, Google is mostly irrelevant. So, I'm definitely in the ho-hum category.

Sure, maybe they will carve out a niche in the netbook OS market, but from the perspective of the enterprise, that's a very small piece of what they're worried about.

Gardner: Let me go to Joe McKendrick. Joe, does what Google has brought to the table have an impact on the enterprise?

McKendrick: Eventually it does. The Google Chrome OS is kind of a marker on the road. I think back to why I started using Google several years ago, and I think why a lot of people started using it. It was so fast. I used AltaVista, Yahoo, Lycos, and all these other search engines, and I just liked Google, because it was real fast. It got me to where I was going in a very fast and efficient manner.

I don't know about Chrome delivering this capacity, but I think what's happening is that the OS is becoming more something that's getting in the way of where you want to go.

I use XP and Vista both. I'd rather just get on the computer and get immediately to where I want

Why can't everyone have a client computer, a device that simply has some kind of very thin OS and the browser connecting them to all the cloud services they need?

to go on the Web and not have to fuss around with all these features with the OS - booting up, security features, updates, patches, and so forth.

I think the world is moving that way. Why can't everyone have a client computer, a device that simply has some kind of very thin OS and the browser connecting them to all the cloud services they need?

That's what's great about smartphone. I love the smartphone because it just goes to where you need to go very rapidly. You're not fussing with the OS. It's more of an embedded, invisible, thin capability, and that's what enterprises are looking for as well.

Gardner: JP, we talked about OEM agreements and how important they are behind the scenes in the technology industry. The OEM agreements that Microsoft has with their hardware vendors are perhaps seeing some strain.

Microsoft didn't do any favors for their hardware vendors with the debacle that Vista was, particularly as that came during the precious year or two before this recession. That could have driven a lot of sales that now will probably never happen.

Do you think that Google, not only has an opportunity to come into the market, as you mentioned, with a technology, but perhaps is going to be a friend of the enemy for these hardware people. They'll probably give this thing away and allow these hardware developers, distributors and creators to benefit from the services marketplace of advertising in a sort of backhanded way, and they get basically free software from Google as a result?

Who'll win the desktop?

Morgenthal: For them, it comes down to who is going to win with the desktop applications. That's what it comes down to. The only reason these hardware vendors are making the investment in Microsoft is because customers want a Microsoft platform, most likely because they are running Office or some other Microsoft application. It's what they're trained on and still comfortable with.

There's a great video out there that Google did asking people on the street, like a Jay Leno walk by, what is a browser? About 92 percent of people didn't even know what the browser was. They're like, "The browser is Google. Yeah, I go to Google." They don't understand it's an application that renders HTML. They don't know that. They have no clue.

It's very easy in this day and age, we get on a phone, we talk, and we know the stuff inside and out. You've got to realize that 92 percent of people out there don't get it. It's easy for Microsoft to go put up a video that shows how great Vista is and how people were snookered into, "Wow, that's the next version of the OS. Look how cool it is. No, it's really Vista." Of those 92 percent of people, you don't think at least 50 percent of those are still going to come in and say, "I want a Vista machine," after seeing that? Of course they are. That's why the hardware vendors don't have a choice.

Microsoft doesn't have to worry. Yes, they want to make good friends with these people, but

I don't know what Google really wants. Basically . . . they're going to throw as much mud against the wall and see what sticks.

ultimately it's the consumers who are coming in and saying, "I want this type of machine, I don't trust that Linux stuff. I don't know anything about that. I don't want to go there. I was told if I go there, I'd better know how to actually get to a command line and work." That's what they still hear.

Gardner: Tony Baer, JP says that the hardware people don't have a choice. Does Google want to give them a choice?

Baer: I don't know what Google really wants. Basically, as Jason and I were saying, they're going to throw as much mud against the wall and see what sticks. I like Jim's metaphor on them being the Xerox PARC for Web 2.0.

If Google were serious, in other words, if they really did have a more of a strategic business plan for this, I would say yes. But, as long as it's just, "Let's just throw something else out there, and by the way, this is not going to come for another 12-18 months," I have a hard time taking this seriously.

Gardner: Brad Shimmin, suppose I'm HP, Dell, or I'm Acer, and I need to sell these $400 netbooks, because that's my only growth area right now and might be for the next two years, before these corporate budgets start growing again. I could sell that thing for $400. Microsoft is going to take $150-200 just for the OS, and Google wants to give a free OS. What am I going to do?

Let the user decide

Shimmin: I would have both of them on there, and let the users make a choice. I'm still thinking about the price tag.

Gardner: For the Microsoft OS.

Shimmin: That's what I'm saying. They want to make a buck and they'll do it the best way they can. If they're getting it free from Google, they'll put it on there as a option, but they'll still pay homage to Microsoft, because, as we've been saying, it has to be. They still have ownership of the desktop.

In my mind, the curious thing about all this is that what's made the iPhone and the BlackBerry so successful is that they're self-contained machines. The OS and the hardware are very tightly controlled and very tightly integrated. What's made the PC and the Windows OS such a pain and so detrimental to productivity is that it's very much the opposite of that.

The Mac -- and I'm a Mac user too by the way -- is that it makes us more productive. The OS

The Mac . . . makes us more productive. The OS doesn't get in the way of the Internet. It actually makes the Internet better.

doesn't get in the way of the Internet. It actually makes the Internet better. It's because it's a controlled environment, but it's really expensive to do the things that way as a company, due to costs in manufacturing.

If Google Chrome is going to go out there the way Android has gone out there, which is, "Let's look for some OEM vendors to make this work and it's going to be based on Linux," I don't ever see it actually doing what the BlackBerry and the iPhone have done in terms of making the 'net better.

I think that it's going to be for those Slashdot folks, who really like that kind of thing and want to make it go. I see this taking a lot longer for the white label stuff to really make things work as well as the closed environments have.

Gardner: Well, I'm afraid we will have to leave it there. I appreciate everyone's input.

We've been talking about the acquisition by Software AG of IDS Scheer, and also the possible impact that the Google Chrome OS could have in the market. It seems most of our people think, that's not such a big deal.

I also want to take this opportunity to thank our sponsors for the BriefingsDirect Analyst Insights Edition Podcast Series; they are Active Endpoints and TIBCO Software.

I also want to thank this week's panelists, Jim Kobielus, senior analyst at Forrester Research. Thanks, Jim.

Kobielus: Always a pleasure.

Gardner: How about a little excitement there, Jim?

Kobielus: I am still overstimulated. That's a redundant statement.

Gardner: Are you overstimulated too Tony Baer, senior analyst at Ovum?

Baer: I really love these podcasts, Dana.

Gardner: Nicely done. Brad Shimmin, principal analyst at Current Analysis.

Shimmin: Still here, and not even caffeinated.

Gardner: Jason Bloomberg, managing partner at ZapThink, thanks for joining.

Bloomberg: Come to our new SOA and Cloud Governance course.

Gardner: Excellent. JP Morgenthal, independent analyst and IT consultant. What plug do you have for us JP?

Morgenthal: Until next time.

Gardner: Joe McKendrick, independent analyst and ZDNet and other web property blogger extraordinaire in SOA and BI and all sorts of things, right?

Morgenthal: Call me Joe "not a slave to fashion" McKendrick.

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

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

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

Edited transcript of BriefingsDirect Analyst Insights Edition podcast, Vol. 44 on Software AG's acquisition of IDS Scheer and the implications of the Google Chrome operating system. Copyright Interarbor Solutions, LLC, 2005-2009. All rights reserved.

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