Cloud Computing by Industry: Novel Ways to Collaborate Via Extended Business Processes

Transcript of a sponsored BriefingsDirect podcast examining how cloud computing methods promote innovative sharing and collaboration for industry-specific process efficiencies.

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

Today, we present a sponsored podcast discussion on how to make the most of cloud computing for innovative solving of industry-level problems. As enterprises seek to exploit cloud computing, business leaders are focused on new productivity benefits. Yet, the IT folks need to focus on the technology in order to propel those business solutions forward.

As enterprises confront cloud computing, they want to know what's going to enable new and potentially revolutionary business outcomes. How will business process innovation -- necessitated by the reset economy -- gain from using cloud-based services, models, and solutions?

It's as if the past benefits of Moore's Law, of leveraging the ongoing density of circuits to improve performance while also cutting costs, has now evolved to a cloud level, trying to (in the context of business problems) do more for far less.

Early examples of applying cloud to industry challenges, such as the recent GS1 Canada Food Recall Initiative, show that doing things in new ways can have huge payoffs.

We'll learn here about the HP Cloud Product Recall Platform that provides the underlying infrastructure for the GS1 Canada food recall solution, and we will dig deeper into what cloud computing means for companies in the manufacturing and distribution industries and the "new era" of Moore's Law.

Here to help explain the benefits of cloud computing and vertical business transformation, we welcome Mick Keyes, senior architect in the HP Chief Technology Office. Welcome, Mick.

Mick Keyes: Thank you, very much.

Gardner: We are also joined by Rebecca Lawson, director of Worldwide Cloud Marketing at HP. Hello, Rebecca.

Rebecca Lawson: Hello.

Gardner: And, we're also joined by Chris Coughlan, director of HP's Track and Trace Cloud Competency Center. Welcome to the show, Chris.

Chris Coughlan: Thanks, very much.

Gardner: I'd like to start with Rebecca, if I could. Tell us a little bit about the cloud vision, as it is understood at HP. Where does this fit in, in terms of the business, the platform, and the tension between the technology and the business outcomes?

Overused term

Lawson: Sure, I'm happy to. Everyone knows that "cloud" is a word that tends to get hugely overused. Instead of talking specifically about cloud, at HP we try to think about what kinds of problems our customers are trying to solve, and what are some new technologies that are here now, or that are coming down the pike, to help them solve problems that currently can't be solved with traditional business processing approaches.

Rather than the cloud being about just reducing costs, by moving workloads to somebody else's virtual machine, we take a customer point of view -- in this case, manufacturing -- to say, "What are the problems that manufacturers have that can't be solved by traditional supply chain or business processing the way that we know it today, with all the implicated integrations and such?"

That's where we're coming from, when we look at cloud services, finding new ways to solve problems. Most of those problems have to do with vast amounts of data that are traditionally very hard to access by the kinds of application architectures that we have seen over the last 20 years.

Gardner: So, we're talking about a managed exposure of information, knowledge, and things that people need to take proper actions on. I've also heard HP refer to what they are doing and how this works as an "ecosystem." Could you explain what you mean by that?

Most of those problems have to do with vast amounts of data that are traditionally very hard to access by the kinds of application architectures that we have seen over the last 20 years.

Lawson: As we move forward, we see that, different vertical markets -- for example, manufacturing or pharmaceuticals -- will start to have ecosystems evolve around them. These ecosystems will be a place or a dynamic that has technology-enabled services, cloud services that are accessible and sharable and help the collaboration and sharing across different constituents in that vertical market.

We think that, just as social networks have helped us all connect on a personal level with friends from the past and such, vertical ecosystems will serve business interests across large bodies of companies, organizations, or constituents, so that they can start to share, collaborate, and solve different kinds of issues that are germane to that industry.

A great example of that is what we're doing with the manufacturing industry around our collaboration with GS1, where we are solving problems related to traceability and recall.

Gardner: So, for these members within the ecosystem, their systems alone cannot accomplish what having a third party or cloud-based platform can accomplish in terms of cooperation, collaboration, coordinated and managed, and even governed business processes.

Lawson: That's right. In fact, I'll throw it over to Mick to talk about how this is really different and really how it serves the greater purpose of the manufacturing community. Mick?

Multiple entities

Keyes: A good example is the manufacturing industry, and indeed the whole linear type supply chain that is in use. If you look at supply chains, food is a good example. It's one of the more complicated ones, actually. You can have anywhere up to 15-20 different entities involved in a supply chain.

In reality, you've got a farmer out there growing some food. When he harvests that food, he's got to move it to different manufacturers, processors, wholesalers, transportation, and to retail, before it finally gets to the actual consumer itself. There is a lot of data being gathered at each stage of that supply chain.

In the traditional way we looked at how that supply chain has traceability, they would have the, infamous -- I would call it -- "one step up, one step down" exchange of data, which meant really that each entity in the supply chain exchanged information with the next one in line.

That's fine, but it's costly. Also, it doesn't allow for good visibility into the total supply chain, which is what the end goal actually is.

What we are saying to industry at the moment -- and this is our thesis here that we are actually developing -- is that, HP, with a cloud platform, will provide the hub, where people can either send data or allow us to access data. What a cloud will do is aggregate different piece of information to provide value to all elements of the supply chain to give greater visibility into the supply itself.

What a cloud will do is aggregate different piece of information to provide value to all elements of the supply chain to give greater visibility into the supply itself.

Food is one example, but you've got lots of other examples in different industries -- the pharmaceutical industry, of course. You've also got the aeronautical industry and the aerospace industry. It's any supply chain that's out there, Dana.

Gardner: Mick, you mentioned this hub and this platform. Is this just a blank canvas that these vertical industries can then come to and apply their needs or is there a helping hand, in addition to the strict technological fabric, that can apply some level of expertise and understanding into these verticals?

Keyes: If you look at the way we're defining the whole ecosystem, as Rebecca referred to around cloud computing, we have the cloud-optimized infrastructure, which HP has got a great pedigree in. Then, we're looking, from a platform point of view, at the next level. From this, we'll launch the different specific services.

In that platform, for example, we've got the components to cover data, analytics, software management, security, industry-specific type information, and developer type offerings as well. So, depending on what type of industry you're in, we're looking at this platform as being almost a repeatable type of offering, and you can start to lay out individual or specific industry services around this.

Gardner: The reason I asked is that there are a number of prominent cloud providers nowadays who do seem to provide mostly a blank canvas. It's very powerful. The cost benefits are there. It gives developers and architects something new to pursue, but there is not much in addition to the solution level there.

A little bit more

Keyes: When you offer or develop specific services and such for industry, you need a little bit more than being able to look at it from a technology point of view. Industry knowledge, we have found, is key, but also, when we talk to the businesses and each element of a supply chain -- and food is a good example, because it's global -- there are different cultural influences involved, such as the whole area of understanding governance and data, where it can and cannot be stored.

Technology is obviously a very important part of it, but how we look at producing services and who can consume the services is equally important. Also, we see this type of initiative as stimulating a lot of new innovation. When we use our platform to create certain pockets of data, for use of a better word, we are looking at how we can mashup different type of services.

Some companies will come with a good idea. There are other partners, excellent partners, who are developing very specific and good applications. We will use this hub and our business knowledge, as well, to look at the creation of new types of services and the mashup of different services.

It allows us also to talk to the business people in different parts of the supply chain and different industries to look at very fast, creative ways of offering new services for their industry.

There were a lot of health scares and food scares over the last year or so. We looked at that and said. "This is a very good opportunity to actually develop everything as a service."

Gardner: Chris Coughlan, tell us a little bit about your competency center, how you started, and perhaps illustrate with an example how this technological knowledge and appreciation of the business issues come together?

Coughlan: As follow-on from what Mick said, we have infrastructure as a service (IaaS), we have platform as a service (PaaS), and we have software as a service (SaaS). And, in the industry we're told was that there was going to be everything as a service. But really nobody started defining what you meant beyond SaaS.

There were a lot of health scares and food scares over the last year or so. We looked at that and said. "This is a very good opportunity to actually develop everything as a service."

We also came to the conclusion, which is very important, that there are two aspects of that. There has to be collaboration along all the various company supply chains, particularly if you want to recall something, or if you want to do track and trace. As well as that, there has to be standardization in what you are doing. So, that led to our relationship with GS1 and the development of the recall system.

Gardner: I spoke in my setup about both lowering cost and enabling new levels of productivity and innovation. Have you found that to be the case? Are you able to do both of those?

Chain of islands

Coughlan: Absolutely. If you think about it, the current recall systems in the food industry -- and Mick talked them – target from “farm to fork”, so to speak. Look at all the agencies. There's manufacturing, suppliers, retailers, and whatever. A piece of food can be caught anywhere within that supply chain, and each company and each unit in that supply chain is really behaving as an island in itself.

They might have their own systems, but then those systems are not linked. If there's a problem, you have to go from automated systems to manual systems, whatever. What we've done is we have linked all those systems up. We have agreed on a standard template from the GS1. This is the information that all those agents along the supply chain will share with each other, so that food can be recalled very quickly and very effectively.

If that's done, you can see that from the health and safety issue. You can see it from a contamination issue. You can see it from getting items off shelves and preventing items from being shipped. This can happen quite fast, as opposed to the system we have today.

Gardner: This is a payback that seems to have a very positive impact across that ecosystem, for the consumers, the suppliers, the creators, and then the brands, if they are involved.

Coughlan: Absolutely. First of all, as a consumer, it gives you a lot more confidence that the health and safety issues are being dealt with, because, in some cases, this is a life and death situation. The sooner you solve the problem, the sooner everybody knows about it. You have a better opportunity of potentially saving lives.

So we really look at it from a positive view also, about how this is creating benefits from a business point of view.

As well as that, you're looking at brand protection and you're also looking at removing from the supply chain things that could have further knock-on effects as well.

Keyes: Just to interject there. Those are very good points that Chris is making. We see a big appetite from different people in supply chains to get involved in this type of mechanism, because they look at it from a brand or profit center point of view. As a company, you'll be able to get greater visibility into your process or into your brand efforts right through the consumer.

In the older way supply chains worked, as Chris mentioned, it was linear -- one step up, one step down. The people at the lower end of the supply chain, for use of a better word, often weren't able to find out how the products were being used by consumers.

We have SaaS now, not just to any individual entity in the supply chain, but anybody who subscribes to our hub. We can aggregate all the information, and we're able to give them back very valuable information on how their product is used further up the supply chain. So we really look at it from a positive view also, about how this is creating benefits from a business point of view.

Gardner: So, a critical business driver, of course, is the public-safety issue. But, in putting into place this template of cloud process, we perhaps gain a business intelligence (BI) value over time with greater visibility across these different variables in the supply chain itself.

Addressing food safety

Keyes: Absolutely. There are quite a lot of activities you see around the world at the moment around greater focus on food safety. In the U.S., for example, HR 2749, a bill that's gone to Congress, is really excellent in how it looks to address the whole area of food safety.

If you look at that, it's leaning towards the concept of greater integration in supply chains. Regulatory bodies, healthcare bodies, and sectors like that will very quickly be able to address any public safety issues that happen.

We're also looking at how you integrate this into the whole social-networking arena, because that's information and data out there. People are looking to consume information, or get involved in information sharing to a certain degree. We see that as a cool component also that we can perhaps do some BI around and be able to offer information to industry, consumers, and the regulatory bodies fairly quickly.

The key to this is that this technology is not causing the manufacturers to do a lot of work.

Coughlan: The point there is that cloud is enabling a convergence between enterprises. It's enabling enterprise collaboration, first of all, and then it's going one step further, where it's enabling the convergence of that enterprise collaboration with Web 2.0.

You can overlay a whole pile of things --carbon footprints, dietary information, and ethical food. Not only is it going to be in the food area, as we said. It's going to be along every manufacturing supply chain -- pharmaceuticals, the motor industry, or whatever.

Gardner: Rebecca, do you have something you want to offer?

Lawson: The key to this is that this technology is not causing the manufacturers to do a lot of work. For example, if I am a peanut packaging person, I take peanuts from lots of different growers and I package them up. I send some to the peanut butter companies and some to the candy manufacturing companies or whatever.

I already have data in house about what I am doing. All I have to do to participate in this traceability example or a recall example is once a day cut a report, stream the data up into the cloud, and I am done.

It's not a lot of effort on my part to participate in the benefits of being in that traceability and recall ecosystem, because I and all the other people along that supply chain are all contributing the relevant data that we already have. That's going to serve a greater whole, and we can all tap into that data as well.

Viewing the flow

So, for example, maybe there is a peanut outbreak, and I, as the peanut packaging person, can quickly go and kind of see what the flow was across the different participants of growers, retailers, consumers, and all that. The cloud technology allows us to do that, and that's why we designed it this way.

The platform that HP created in this whole ecosystem is geared towards harnessing data and information that's pretty much already there and being able to access it for key questions, which would have been nearly impossible to answer, say five years ago, when the technologies were just not around to do that.

It's a win-win-win for individual companies, which can now reduce their insurance exposure, because they've got their processes covered. They have the data. It's already shared. So, it's a major step forward for manufacturing. We think this kind of a model is not just for manufacturing. This just happens to be one good use case that we can all relate to as consumers, because everybody is afraid of a Salmonella outbreak. It affects all lives. But, it's applicable to other industries as well.

Gardner: Of course, a recent example would be the flu outbreak, as well. So, there are lots of different ways in which a common currency of shared data and information can be very critical and important.

I could care less how powerful a server is. What I care about are the problems that I am trying to solve.

I also want to look at the importance of that common currency, which, in this case, is standardized service calls and application programming interfaces (APIs), and what we have come to be familiar with as Web services is now enabling this cloud synergy across these ecosystems.

I wonder if anyone would like to take a stab at my premise that, in the past, we have looked for productivity from increased cycles in the silicon and on the hardware and in IT itself. But, is there a new possibility for a higher level of Moore's Law, so to speak, in applying these cloud approaches to productivity? Does anyone share my enthusiasm for that?

Lawson: Absolutely. In fact, I could care less how powerful a server is. What I care about are the problems that I am trying to solve. If I'm in the environmental world, if I'm government, or if I'm a financial services organization, I want to be able to creatively think about how I serve my customers.

These new technologies are allowing HP's customers to solve problems much differently than they did before, using a wider expanse of currency, as you said, which is information. Information is the currency of our era.

Structured vs, unstructured

One of the big shifts going on is that information in the past 5, 10, or 20 years has been largely held in very structured databases. That's a really good thing for certain kinds of data, but there is other data now that's just streaming into the Internet, streaming into the cloud, which is held in a more unstructured fashion.

We can now deal with that data. We can now run search and query across semistructured or unstructured data and get to some interesting results really quickly, as opposed to more traditional ways of holding certain kinds of data in a relational database. We don't think that it's going away. We just see that there is a whole new currency coming in through new ways to access information.

Coughlan: I'm a great believer in applying Moore's Law to a lot of things beyond technology -- to society, to productivity, as you said, and whatever. It's the underlying technology that originally defines Moore's Law, which actually then drives the productivity, the change in society, etc.

But, you've heard of another law called Metcalfe's Law, where he talks about the power of the network. We are bringing in the power of collaboration. What you have then are two of these nonlinear laws, which are instituting change, reducing price, doubling capacity, etc. You've even got a reinforcing thing there, which might even put Moore's Law even faster than Moore predicted himself.

Gardner: A part of this has to be, of course, cooperation and trust. What is it about the platform for manufacturing that HP has developed that enables that trust and that places this hub, this third-party, in a position where all the members of the ecosystem feel that they are protected?

We look to GS1 as the trusted advisor out there, with industry, with governments, around safety, around standards, and on traceability.

Coughlan: This is one of the reasons that we partnered with GS1 in this whole space. You're right, Dana. It would be something that industry wants to know immediately. Why would we trust an IT provider, for example, to be the trusted advisor to integrate all the different elements of the supply chain?

We're pretty much aware of that. In our discussions with GS1, the international standards body, is trusted by industry. This is their great strength. They are neutral. They are in 110 different countries. They have done a lot of work about getting uniform standards about how different systems can integrate, especially in this whole area of supply chain management.

We look to GS1 as the trusted advisor out there, with industry, with governments, around safety, around standards, and on traceability. They're not a solution provider, but they will go to best in class with their ideas.

They have asked the industry for ideas. They have gone to the industry and explained the process, for example, of how recall, as an example, should work and how traceability should work. So, we feel that to partner with somebody like GS1 is key to getting trust in the industry to apply these types of systems.

Gardner: Do you expect to see additional partnerships, and should standards bodies be thinking about moving towards partners in the cloud, so that they can extend their role as a trusted advisor, as a neutral third-party, but be able to execute on that now at a higher abstraction?

Win-win situation

Keyes: Absolutely. This is a win-win for everybody here. There are lots of really good partners out there who have, for example, point solutions that are in industry at the moment. We feel there are a lot of benefits to these partners through using GS1 standards.

Let's say that most of them do at the moment and they are all compliant, but they can work with our traceability hubs and to try and see whether they can help exchange information. In return, we'll be able to supply information and publish information through their systems back to industry as well.

GS1 is important in this also in getting together the industry, not just the actual manufacturers or the retailers, but also the technology people in the industry, so there will be uniform standards. We all know from developing traditional systems and tightly coupled systems in manufacturing and the supply chain that you need an easier matter of collaboration. GS1 has done an excellent job in the industry defining what these standards should look like.

Gardner: I know we've been focused on manufacturing, but not to go too far off the beaten track, there's also this need for greater cooperation between public and private sectors across regulatory issues. Have we seen anything moving along those lines, a trusted partnership between a manufacturing platform like HP has provided, where some sort of a public agency might then reach out to these private ecosystems?

Keyes: If you don't want to dwell on the food area, often what you find is that governments bring out laws and regulations, and they say industry must apply these laws. Often, you get a bit of a standoff, where industry would immediately say, "Okay. This is government telling us what to do, etc."

Industry is now looking at this type of model to take a preemptive step and to show that they are also active in the whole area of food safety.

In our journey of what we've been trying to do around this food industry, a lot of time we talk directly to industries themselves. Industry now also sees what the issues are and they agree with what the governments and the regulatory bodies are trying to do.

Industry is now looking at this type of model to take a preemptive step and to show that they are also active in the whole area of food safety. It's in their interests to do it, but now I think they have a mechanism, which industry, government, and regulatory bodies can actually use.

For example, if you look at the recall project that we've been involved in, we're taking data and accessing data in industry and in retailers also, but we're looking at a service that we can publish for industry. We call it visibility type services, where, at a glance, they can look at where all elements of the recall might be and what industries are actually being affected.

We're very keen to share services or offer services to different regulatory bodies, be it government, or be it directly with consumers, consumer bodies as well, we have been pretty active in discussing this with.

Gardner: Thank you, Mick. Chris, do you have any insights as well in terms of this public-private device?

Variety of clouds

Coughlan: Mick has said most of it there and Rebecca spoke earlier on about the ecosystem. As things begin to develop, you will be able to see public clouds, private clouds, and hybrid clouds. Then, you'll have a cloud portal accessing those under various circumstances, to solve various problems, or to get various pieces of information.

I see third-party point solutions feeding into those clouds. That's one of the areas that we offer -- third-party solutions -- be it in the food industry or other industries. They feed into our cloud, and that information can be either private information or collaborative information, where they define where they are going to do the collaboration, or it could be public information.

So, it would mean the private cloud, where some of the information could go into the public cloud, and other information could be a hybrid type of cloud.

Gardner: Rebecca, it seems like we could go on for hours about all these wonderful use-case scenarios and potential innovation improvements on process and the crossing of divides. But, the ecosystem is not just in the supply chain.

Right now, a lot of the industry is talking about cloud, and a lot of folks are focused on things like IaaS, virtual machines as a service, and things like that.

It also needs, I suppose, to be pulled together in terms of the cloud infrastructure, and the players that need to come together in order to enable these higher level business benefits. It strikes me that there are not that many companies that can be in a position of pulling together the ecosystem on the delivery side of these services.

Lawson: That's true, and what's different about what we are doing is we're taking a top-down approach. Right now, a lot of the industry is talking about cloud, and a lot of folks are focused on things like IaaS, virtual machines as a service, and things like that.

But you can switch it around and say, "How can we apply technology in a new way and build out the platform to support the services that industries need?" Then, for those services you build out the right kind of infrastructure and scale out an infrastructure basis on which all of that can run very smoothly.

Working backward

Now, you have a really good organizing principle to say, "If we're going to solve this problem of traceability, food track and trace, and recall, how are we going to solve that problem? Everything really drives from there, as opposed to saying, "What's the cheapest platform on which we can run some kind of food traceability?" That's just coming at it backward.

In fact, a good analogy to what we are doing with these vertical ecosystems is a well-known use case around Salesforce.com and the Force.com platform that generated around it.

Most folks realize that salesforce.com started with a sales-force automation product. Then, it broadened into a customer relationship management (CRM) product, and then, before you knew it, they had a platform on which they built the community of service or application providers, their App Exchange. That community is enabled by their underlying platform. That community serves a horizontal function for sales and marketing oriented or adjacent types of services.

If you pull that analogy out into an industry like manufacturing, transportation, or financial services, it's the same sort of thing. You want that platform of commonality, so different contingents can come and leverage the adjacencies to whatever it is that they are doing.

We really see that this ecosystem approach is the way to think about it, and vertical is the way to think about it, although, obviously, different verticals will blend together. We're working on similar projects in the transportation arena, where manufacturing can cross over quite quickly into public transportation and add lots of new development. So we are pretty excited about all these new opportunities.

We really see that this ecosystem approach is the way to think about it, and vertical is the way to think about it, although, obviously, different verticals will blend together.

Gardner: So, we actually can start thinking about pulling together ecosystems of ecosystems?

Keyes: Absolutely. We look at what we're doing at the moment around food and how that might affect the whole healthcare area as well. There are a lot of new innovations coming out in the biomedical area as well, of how we can expand things like food, pharmaceutical, or drugs to the whole health system. As you said, Dana, we see that as a very important area of collaboration between different ecosystems.

Lawson: One more point is that the ecosystem implies that it's not just about the technology. It's about the people. So, different aspects of the ecosystem are going to be human. They may be machine. They may be bits of code. There are conditions and tons of events. The ecosystem is a more holistic approach, in which you have the infrastructure, development and runtime environments, and technology-enabled services.

Gardner: If I'm a member of an ecosystem -- be it in the manufacturing, vertical, health, food recall, regulatory, or public sector -- and these concepts resonate with me, how do I get started? If I'm in a standards body of some sort, where do I go to say, "What's the partnership potential for me?"

Lawson: The first thing you can do is call HP and take a look at what we have done in our Galway Center of Expertise around traceability -- track and trace -- and we would be happy to show you that. You can take a look under the covers and see how applicable it is to your situation.

Gardner: Very good. We've been taking a look at how the new productivity levels can be exploited vis-à-vis cloud computing -- not just at the technological level, but at the process level of finding partnerships and standards and approaches that pull together ecosystems of business, potentially across business and the public sector.

Helping us to understand better the potential for cloud computing as a business tool, and how HP, and most recently GS1 Canada have pulled together a Food Recall Platform based on the HP Cloud Product Recall Platform, we have been joined by Mick Keyes. He is the senior architect in the HP Office of the Chief Technology Officer. Thank you, Mick.

Keyes: Thank you.

Gardner: We've also been joined by Rebecca Lawson, director of Worldwide Cloud Marketing at HP. Thanks, Rebecca.

Lawson: Thank you very much.

Gardner: And also, Chris Coughlan, director of HP's Track, Trace, and Cloud Competency Center. Thank you so much, Chris.

Coughlan: Thank you.

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.

Free Offer: Get a complimentary copy of the new book Cloud Computing For Dummies courtesy of Hewlett-Packard at www.hp.com/go/cloudpodcastoffer.

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

Transcript of a sponsored BriefingsDirect podcast examining how cloud computing methods promote innovative sharing and collaboration for industry-specific process efficiencies. Copyright Interarbor Solutions, LLC, 2005-2009. All rights reserved.

Cloud Computing Uniquely Enables Specific Business Solutions to Meet New Industry Needs

Transcript of a sponsored BriefingsDirect podcast on cloud computing and the new business opportunities it offers for specific industries.

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

Free Offer: Get a complimentary copy of the new book Cloud Computing For Dummies courtesy of Hewlett-Packard at www.hp.com/go/cloudpodcastoffer.

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 implications cloud computing has on companies in the manufacturing industry. We'll look at how to best define cloud options and how specific businesses can use these new means to add flexible sourcing to gain new business agility. The goal is not to define cloud by what it is, but rather by what it can do, and to explore what cloud solutions can provide to manufacturing industry companies.

Here to help us uncover the specifics of cloud-enabled business outcomes is Christian Verstraete, Chief Technology Officer for Manufacturing & Distribution Industries Worldwide at Hewlett-Packard (HP). Welcome, Christian.

Christian Verstraete: Welcome, Dana.

Gardner: We’re also joined by Bernd Roessler, marketing manager for Manufacturing Industries at HP. Welcome, Bernd.

Bernd Roessler: Thank you, Dana.

Gardner: And we're also joined by Mick Keyes, senior architect for Business Critical Systems at HP. Welcome to the show, Mick.

Mick Keyes: Many thanks.

Gardner: We want to look at this whole issue of cloud by first better understanding what we are talking about. The notion of how cloud is defined, of course, has been up in the air, pun intended. Let's first go to Christian. What has made the world different about cloud issues now? Why all the fuss?

Verstraete: Well Dana, I think there is a lot of fuss, because on the one side, there are a lot of promises that seem to be coming out of the cloud and, on the other, there are a lot of requests that are actually being asked of IT professionals. One of the major ones is to reduce cost in the current situation and circumstances that we are in.

So, with that in mind, cloud with its "promises" -- and I put promises between brackets -- of drastically reducing costs is obviously appealing to a lot of people. However, there are probably as many cloud definitions as there are people who are actually doing something in the cloud and talking about the cloud.

I don't want to go into any of those. I just want to highlight what we at HP want to do, and are doing, in that particular space, because we feel the company really has a role to play in three different areas.

The first area is that even if you, as a cloud user, don't use any infrastructure or anything, that infrastructure needs to exist somewhere in the cloud. The first thing is that we provide cloud-service providers with an appropriate infrastructure to be able to provide those services that we were talking about earlier.

Number two, many of our own customers don't really know what cloud is and how to get there. So, we help our customers address their needs and help them understand how they can transform their IT to embrace cloud.

Number three is that we, ourselves, as a company, are providing some cloud services.

Gardner: The idea, I think, is "faster, better, cheaper," "Everything as a Service," but with a variety of different approaches that are specifically tuned to the enterprise.

Everything as a service

Verstraete: Absolutely. Ultimately, and you pointed it out, it's going to be "Everything as a Service." Actually, the concept of "Everything as a Service" is nothing new. It goes back to a gentleman named Joel Birnbaum, who was heading up HP Labs around 1980-1982.

He spoke about compute appliances and compute utilities. The cloud is really that compute utility. He was actually foreseeing the beginning of the 21st Century, and he was pretty close.

Gardner: Well, that's very good. Let's go to Bernd, now. Tell me some examples of what we consider to be critical success factors. How do we know, when we look to cloud enablement, that we're going to be getting something for our money or that we are going to be doing something we couldn't do before?

Roessler: I'd like to start by highlighting the fact that cloud services to consumer are distinct, different things, compared to cloud services in the enterprise. I'm representing some thoughts from an industry vertical perspective and I think we need to have a particular look at what is different in providing cloud services for enterprises.

Number one is that everybody likes to live up to the promise of saving costs by introducing cloud services to enterprises and their value chains. Nevertheless, compared to consumer services like free e-mail, the situation in enterprises is dramatically different, because we have a different cost structure, as we need not only talk about the cost of transaction.

In the enterprise space, due to legislation of the surroundings, which are critical for enterprises, we also need to think about, privacy, storage, and archiving information, because that is the context under which cloud services for enterprises live.

The second dimension, which is different, is the management of intellectual property and confidentiality in the enterprise environment. Here it is necessary that cloud services, which are designed for industry usage, are capturing data. At the moment, everybody is trying to make sure that critical enterprise information in IT is secured and stays where it should stay. That definitely imposes a critical functionality requirement to any cloud service, which might contradict the need for creating this, "everybody can access anywhere," vision of a cloud service.

Last but not least, it is important that we're able to scale those services according to the requirement of the function and the services this cloud environment should provide. This is imposing quite a few requirements on the technical infrastructure. You need to have compute power, which you can inject into the market, whenever you need it.

You need to be able to scale up very much on the dependencies, however. And, coming back to the promise of the cost savings, if you're not combining this technology infrastructure scalability with the dimension of automation, then cloud services for enterprises will not deliver the cost savings expected. These are the kinds of environments and dimensions any cloud provisioning, particularly in enterprises, need to work against.

Enterprise requirements

Gardner: Christian, it sounds like we are talking about the true enterprise requirements for doing cloud. As we're pointing out, they're different from a consumer perspective. Another important aspect of any business is the amount of trust and verification and the ability to measure and define expected outcomes and then present some sort of a cost benefit analysis.

These providers of cloud services are in a position now where they perhaps have to gain the trust of these enterprise users, based on what they have been expecting as business as usual for IT services. Could you explain what we mean when we go to the trust issues in how a secured, mature cloud environment might unfold?

Verstraete: Absolutely, Dana. There was one point that Bernd just made that is a very important one and it's often overlooked by people. The cloud, as it exists today -- think Amazon, Google, or some of the others -- is really being built around the consumer. You consume some cloud services. You pay with your credit card.

That’s a very simple example. This is the best shadow IT I have ever seen. IT departments should get absolutely red hot on that one, because now IT can be sourced completely outside of their control, outside of their environment, outside their processes, and outside their structures. With that in mind, how do you maintain Sarbanes-Oxley compliance?

How do you maintain all of the things that need to be done to ensure that enterprises remain within the boundaries of the law and remain within the boundaries of what they need to do? Cloud-service providers will have to rethink a number of things that they're doing and demonstrate to enterprises that yes, they are secure, that yes, they provide and they can avoid having anybody in the organization just tap services without anybody else's knowledge.

Let me give you a very simple example. I was talking to a customer about two months ago. One

There are still a number of things that need to happen and haven’t been put in place yet today to provide enterprises with all the bells and whistles they're used to in either their existing environments that they own or in the environments that they outsource.

of his people had tried hard to convince him to use a cloud service -- in this particular situation, Google Docs -- to share documentation between people who were working together, because it was very secure -- he was told. Everything worked fine. Then, one of the vice presidents did a search in Google and suddenly saw a secured document from that company appearing in his searches. Oops.

There are still some trials and other things going on. I don’t want to beat specifically on Google in this particular example, because the others are in the same situation. There are still a number of things that need to happen and haven’t been put in place yet today to provide enterprises with all the bells and whistles they're used to in either their existing environments that they own or in the environments that they outsource.

That's where the critical element is for an adoption of the cloud in large enterprises. It has to do with the protection of intellectual property. It has to do with trust and the limitation of the risks of the person that provides them the services, and so on. It’s really about that. That's core and central.

Gardner: In addition to having to make these services appealing to enterprises, based on what they have come to expect, in terms of these larger issues of trust and compliance and so forth, we also need to consider that perhaps one size doesn’t fit all, and that these industries, these companies will look for some specialization or customization. They have business processes that are unique.

Let’s go to Mick. Can you offer us some insight into how a specific business might look to cloud computing, not for just the most blunt services but perhaps something a bit more surgical?

Product traceability

Keyes: Sure. One of the major topical areas in this space is the area of product traceability in global supply chains. The more traditional "one step up, one step down" method, which is the norm today in addressing the tracing of any product, has its limitations in providing visibility into the product across its lifecycle. Hence, getting an accurate, single picture of the life story of a product is something the industry and the consumers have struggled with continuously.

That’s part of an initiative in bringing what we call a "cloud traceability platform" to market. We at HP will be creating a number of specific services to address this area. One of the initial services we will target is in the area of product recall. We will be creating a unique product-recall service in conjunction with GS1 Canada, an international standards body.

This service will provide users with secure, real-time access to product information, which will facilitate industry efforts to ensure that recall products are fully traced and promptly removed from the supply chain.

This will enable more accurate targeting of recall products, while security enhancements will make sure that only authorized recalls are issued and only targeted retailers receive notifications. Our plan with this service is to then extend this to other sectors, such as the hospitality sector, and then consumers down the line.

Gardner: As I try to understand it better, now, we have a course in which you’ve got a product recall for some reason or another. You need to bring a product back or alert people of some change in the status of that product. This impacts a number of different players -- retailers, distributors, and manufacturers -- and country-by-country, it could be different organizations entirely. So you’re looking at a number of different players, and a cloud approach benefits that in some way.

Keyes: Absolutely. As I mentioned, the more traditional approach has always been one step up, one step down, and each entity in the supply chain had to be connected together.

What we're offering is a centralized offering, a hub, where any of the entities in the supply chain or nodes in the supply chain -- be they manufacturers, be they transportation networks, retailers, or consumers -- can use the cloud as a mechanism from which they will be able to gain information on whether our product is recalled or not.

Gardner: And, this has a very dramatic economic impact. If you can elevate this process to the cloud, more players can be quickly brought up to speed, and there's more opportunity to control the issue at hand. That can save boatloads of money, I would think.

Consumer confidence

Keyes: Absolutely, and it’s been a very topical area in the last few years with a large number of recalls across the world, which hit industry fairly heavily. But also, from a consumer point of view or visibility into where the food comes from, this can be extended to other product areas. It improves consumer confidence in products that they purchase.

Gardner: I want to go back to Christian. Did you have an example as well about something in the automotive industry that would benefit from a cloud perspective?

Verstraete: Yes. It’s something that already exists in an early cloud format, if I can put it that way, but that will actually evolve over time. It’s called IMDS. It’s basically a database or a central set of information that is providing most of the automotive manufacturers today information on their critical components and particularly on the substances that are comprised within the critical components.

They can get the appropriate reports to be in line with the legislation around sustainability and around hazardous materials in a number of those areas. What we’re doing is tying together the suppliers of parts who know what goes into the parts and the automotive OEM’s who will use those parts and will combine those parts with other parts.

They can figure out what the total hazardous materials are and what the total critical substances are in this particular car. What we are doing is tying together dispersed sources of information to provide consistent answers to the users.

Gardner: That's very interesting. I really like these business examples that show the ability to

You want to get things at your fingertips, even if the source of that data may rely in multiple spaces and from multiple sources. That’s an added value of the cloud in this type of a problem.

pull in multiple partners, which has always been a bit of a difficulty when only one partner’s application might be at use. Then, it became a middleware immigration problem. Now, we’re talking about simply a coordination process problem. Is that fair?

Verstraete: That's absolutely fair, and there's another element in there, Dana, which is critical and important to understand. It's one of the reasons GS1 Canada and HP decided to go to the cloud. In a cloud environment, you can keep your data distributed.

There are all sorts of regulations today that some data needs to remain in particular countries. But, what you want to do, when you start pulling all of that together is you want the countries being able to view a complete set of data. You want to get things at your fingertips, even if the source of that data may rely in multiple spaces and from multiple sources. That’s an added value of the cloud in this type of a problem.

Gardner: Very interesting. Just to go back to consumers for a moment, they're becoming accustomed to using so-called Web 2.0 technologies to be able to communicate and create communities on the fly, harness different viewpoints within ad hoc discussion, and then instantiate that into an application set of some kind. Now, we can take this into the business, but in a way with which enterprises are comfortable.

Let’s go to Bernd. Tell me about some examples that you’ve been working with..

Changing behavior

Roessler: A couple of examples might illustrate that. We've been talking about the requirements of trust, but let me discuss a couple of examples where we have been finding out that some dimensions of cloud are changing business behavior of companies. Let me start with the famous trust element.

In a lot of cases, we're finding constellations, where a market or a particular problem cannot be resolved, because the market participants are in a lock box. Very often, a trustee can come in, destroy that lockbox, and enable new agility and new services towards the market participants. I'll give you a couple of examples.

Point one could be incorporated and accelerated collaboration between automotive OEM’s and their dealerships. Nowadays, it’s still "who owns what data," particularly about the driver. The trustee can come in and provide a set of cloud services, thus enabling the automotive OEM to have a much better view of the real end user situation and demands, but without jeopardizing the requirements of the dealerships to keep the concrete individual data in their hand, because it's their customers.

A trustee can offer cloud services to both of these market participants and thus transform the overall quality of information serving the joint intent -- selling more cars and providing better services towards the automotive drivers.

The other example is this element of the print services. With today's digital printing technology,

This gives the publishers the possibility to address niche markets, which is very often called "addressing the long tail" of publication users at the end.

you have, in combination with cloud services of information generation and production, the possibility to build magazines and print them on demand in very niche areas..

One could think about producing a magazine, which is aimed for people who are interested in analog players the hi-fi market. It's not a very big crowd of people. So, with the cloud service, plus digital printing technology, you have the possibility to create a customized, very targeted type of magazine for those people. This gives the publishers the possibility to address niche markets, which is very often called "addressing the long tail" of publication users at the end.

Gardner: Christian, on this whole point of sharing and trust, we've heard quite a bit about "co-opetition" in recent years, where the competitors can cooperate at some level. It's easier said than done. Is there something about what we can do in the cloud that makes that level of cooperation even among competitors a bit more viable?

Verstraete: Yes, because in the example I was giving, where the data basically resides in multiple places, the data resides and remains with you, being one of the players, and you can identify at the data-item level what information you will share with whom and what access you will give to whom.

You can have within the same environment a series of data that you're prepared to share with your coopetitor, and some other data you definitely want to keep for you. That's not an issue. That's way easier than when the data has to reside in a central location, is outside of your control, and anything can happen.

Out of your control

That data that you don't want to share with your coopetitor you may have to share with somebody else in your supply chain. So, the data can get out of your control in the traditional approach. That's an example where the cloud can really make a number of things easier.

The second related element is that, in the traditional collaboration approach, somebody needs to set up the environment in which people are going to collaborate. Typically, that's the OEM in the supply chain, but that means that somebody needs to go and invest for that to happen.

Here, there are no needs for predefined investment upfront, or at least for very little investment upfront. You can use the cloud and the cloud environment to basically provide that. It facilitates the entry point in starting cross-enterprise collaboration.

Gardner: Now, Mick, this collaboration can take place not only among companies, but between the public and private sector, particularly in this food industry or recall tracking application approach that you mentioned. Tell me more about what might be offering us benefits in the future between public and private cooperation.

Keyes: Certainly. We see quite an extension into what we're doing here from our initial services.

We're looking at how next generation devices, edge of the network devices as well, will also feed information from anywhere in the world into the profile that you may have in the cloud itself.

We see how business and industry, especially in the food or pharma area, will buy into this concept, but we want to extend it directly to the general consumer in some way.

It's not just in the food area. We also see it expanding into areas such as healthcare and the whole pharmaceutical area as well. We're looking at the whole idea of how you profile people in the cloud itself. We're looking at how next generation devices, edge of the network devices as well, will also feed information from anywhere in the world into the profile that you may have in the cloud itself.

We're taking data from many disparate types of sources -- be it the food you actually eat, be it your health environment, be it your life cycle -- and be able to come with up cloud based offerings to offer a variety of different services to consumers. It's a real extension to what industry is doing and to how the consumers live their life.

Gardner: So, it's a sort of common denominator between the private sector, the governments, or public sector, and then also the consumers.

Value-add services

Keyes: Absolutely. For example, in the whole area of recall, we're looking at value-add services that we will offer to regulatory bodies, other industry groups, and governments, so they can have a visibility into what's happening in real-time. This is something that's been missing in the industry up to today.

Gardner: Now, Mick, as an architect, what is it about HP's approach that fosters more of this über perspective on business processes?

Keyes: Our traditional strengths are in certain key areas, particularly in the whole area of transaction processing and next-generation transaction processing. Also, we've been very strong in providing more traditional services to stock exchanges, to telcos, and to a variety of different environments across manufacturing and healthcare.

We're taking the concepts of derived features -- the reliability, the availability, and the service availability of environments that we've implemented in the past. We're looking at the same blueprints of concepts to bring into consideration from defining the actual architectural blueprint of what we offer.

The most important thing here also is scale. So, from our own Business Critical Systems (BCS)

That's one area, working with the provider himself, to help him develop an extremely robust, high-performance environment that can really address the changing demands that are coming up to him.

concept within HP, offering scalability and environments that will host cloud type environments, we'll be able to offer that to industry and consumers.

Gardner: Christian, as we mentioned earlier, we need to make these processes and benefits of going to the cloud enterprise-ready and mission-critical. Perhaps you could fill us in a little bit on how HP has used this services enablement blocking and tackling, if you will, around SOA governance, the ability to exercise a variety of hosting options, and, of course, management software.

Verstraete: Well, let me come back to what I pointed out earlier. We're basically working on three fronts. Mick alluded to the first one, which is working with service providers to make sure that they have data centers that are really optimized from a performance point of view and that are very much capable of ramping up and ramping down services extremely fast.

For example, not long ago, we came out with a new product that we call Matrix that allows a very quick reprogramming of blade servers and storage, so that you can start adapting your environment as and when your needs require. You can provide the uptime and the service levels that consumers and customers expect from you.

That's one area, working with the provider himself, to help him develop an extremely robust, high-performance environment that can really address the changing demands that are coming up to him.

Appropriate security

The second element is looking at it from the other end. We talked about trust earlier -- how we can reassure the enterprise customer that the service that he will use in the cloud has an appropriate level of security and performance, has service level agreements, and so on.

Here we're building on our experience and expertise in our management software in general, and particularly in our own experience with offering these management tools on a software-as-a-service (SaaS) basis to help them using those tools, to understand and assess what level “pipe” they have in the cloud, and how good that one is at any given moment in time.

Gardner: You know what's really interesting to me about this conversation is that many times nowadays we hear cloud discussed strictly in terms of return on investment (ROI), reduced costs, or the savings from getting on-premise systems off of the company's budget and on to a per monthly payment schedule of some sort. But, what we're talking about is being able to do things that couldn't be done before across these businesses that are unique and specific to these industries.

I wonder if we have some sort of a metric of success from some of the examples that we’ve talked

. . . we're able to offer a lot more visibility to every element in the supply chain about the different stages of how the product is actually used.

about so far. We’ve talked about automotive and food and retail recalls. What do these new and interesting processes actually get for us as a business?

Keyes: One example I would like to highlight here especially is in the traceability area around product. If you look at some of the more difficult supply chains, food is one of the more difficult supply chains out there. There can be anywhere up to 20 different nodes or elements from "farm to fork," as they like to say in the industry. Industry or entities near the start of the supply chain would like to get more information on how the product might be used.

In the more traditional way of what we like to call the "one step up, one step down," when a product is bought by a consumer, the actual entity of the grower -- be it the farmer, the producer, or whatever -- may not have information to how that product is actually used.

Now, with this mechanism, this cloud-based service, because each entity is subscribing to the whole cloud hub -- or exchange, as we like to call it -- we're able to offer a lot more visibility to every element in the supply chain about the different stages of how the product is actually used. That becomes something that can be turned into quite a competitive nature also.

Gardner: Does, anyone else out there have some metrics of success of how businesses have already been able to use this to their advantage?

Cost saving potential

Roessler: I'd like to build on some of the thoughts we were discussing earlier. One of the dimensions clearly has cost-saving potential. The cloud is pushing a critical enabling technology into the IT departments, and whether they're sourcing the cloud from outside or they are building cloud services within the enterprise doesn’t matter. In order to be successful and capitalize on the technology, you need to automate a significant portion of your services as an IT company. That will then ultimately deliver the cost savings everybody is waiting for.

A lot of IT departments are still spending the majority of their budgets on operations, and so cloud is pushing even further the need for automation. It subsequently will be measured and judged on the deliverables towards cost savings.

Verstraete: If you'll allow me to give out one additional example, Bernd talked a little bit earlier about this whole concept of MagCloud, and he was pointing out the long tail of magazine printing. Fundamentally, the other element in MagCloud is that it becomes a print on demand, which means you only print the magazine when someone actually buys it.

I don't know whether you realize that 60 percent of the magazines that are printed in the US are

By using cloud services and by changing the approach that is provided to the customer, at the same time you do a very good thing from an environmental perspective.

not sold to customers and are going back for recycling. It’s fascinating when you think about it.

By using cloud services and by changing the approach that is provided to the customer, at the same time you do a very good thing from an environmental perspective. You suddenly start seeing that cloud is adding value in different ways, depending on how you use it. As you said earlier, it allows you to do things that you could not do before, and that's an important point.

Gardner: So, this visibility across multiple partners, including the end consumer, could reduce waste significantly, which of course reduces energy use and the carbon footprint. So, we should think about overall resource efficiency as an aspect of this as well.

Verstraete: Absolutely.

Gardner: Now, for those listeners who are getting some ideas about how they could use cloud and how it could enhance their business specifically, how does one get started? How does one start on this journey, where these cost reductions are in the offing, as well as efficiencies and these innovative new business processes?

Cloud over-hyped

Verstraete: I would suggest they first ask themselves one question, and you alluded to it earlier, Dana. Cloud is very much over hyped. So if we all think about the Gartner Hype Curve, what’s going to happen is we’re going to go through a trough of disillusionment?

Companies that are able at this point in time to invest in cloud are companies that understand that we’re going through that disillusion. We will start hearing bad noise and bad news about cloud. Despite that they continue investing and continue learning where and how the cloud could actually serve in their environment. If they're not, it’s probably not a good time to invest right now. I want to say that first.

The second element is to gain a good understanding of what the cloud is and then really start thinking about where the cloud could really add value to their enterprise. One of the things that we announced last week is a workshop that helps them to do that – The HP Cloud Discovery Workshop -- that involves sitting down with our customers and working with them, trying to first explain cloud to them, having them gain a good understanding of what a cloud really is, and then looking with them at where it can really start adding value to them.

Once they’ve done that, they can then start building a roadmap of how they will start experimenting with the cloud, how they will learn from implementing the cloud. They can then move and grow their capabilities in that space, as they grow those new services, as they grow those new capabilities, as they build a trust that we talked about earlier.

Gardner: Does anyone else have some thoughts on how to get started?

Roessler: I'd like to build on what Christian was saying. I think that we are, particularly in the

What we’re offering to our clients is to capitalize on some of the research, some of the findings, and also some of our own insights . . .

enterprise space, seeing that a lot of companies that are at the very beginning of the learning curve. I think it’s a joint requirement to work on that learning.

What we’re offering to our clients is to capitalize on some of the research, some of the findings, and also some of our own insights, because we shouldn't forget that HP is not only building the computer, we’re also in the consumer environment. So we're in the unique position to capitalize on what we would call the cloud to the business, as well as the cloud for consumer environments, and we are inviting our clients to basically capitalize on that.

Gardner: We've been discussing how the cloud can help uncover new technology-enabled business opportunities. The cloud is more than just a blunt instrument that cuts cost for consumer services, but increasingly is now being used in the enterprise, and we expect that to pick up over the coming years.

Helping us to understand these issues we've been joined by Christian Verstraete. He is the Chief Technology Officer for Manufacturing and Distribution Industries Worldwide at HP. You've been joining us from Brussels, is that right Christian?

Verstraete: Absolutely.

Gardner: Very good. I appreciate your input.

Verstraete: You're welcome.

Gardner: We’ve also been joined by Bernd Roessler, marketing manager for Manufacturing Industries at HP. Where are you joining us from today, Bernd?

Roessler: Frankfurt, Germany.

Gardner: Very good, I appreciate your input as well. Then lastly, we've been joined by Mick Keyes, senior architect for Business Critical Systems at HP, and I believe you're in Dublin today, is that right Mick?

Keyes: Yes indeed. I'm here from sunny Dublin for a change.

Gardner: Well, thanks again. 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.

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