Case Study: How Fairchild Semiconductor Has Leveraged the Workday Integration Cloud

Edited transcript of a BriefingsDirect podcast on new forms of cloud-based integration and its use in enterprise business processes.

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

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 new forms of cloud-based integration are helping a major high-tech company build new relationships among and between extended enterprise business processes.

We'll examine how Fairchild Semiconductor has been an early adopter of integration platform as a service (iPaaS). The venerable Silicon Valley company has been using graphical tools to build integrations among and between far-flung applications and services but with those integration platforms housed in a newly unveiled Workday Integration Cloud. [Disclosure: Workday is a sponsor of BriefingsDirect podcasts.]

We’ll learn here from the chief technology officer at Workday on what the integration cloud approach can do and how it points to a future in which broad integration capabilities are increasingly built into software-as-a-service (SaaS) applications.

This cloud-based integration model will prove far less vulnerable to the complexity, fragility and cost that plagues traditional on-premises middleware integration methods. It should also spur the evolution of services ecosystems among multiple business service providers and application providers.

So here to dig into what makes integration as a service (IaaS) tick and what it means for the future is Paul Lones, Senior Vice President for Information Technology at Fairchild Semiconductor. Welcome, Paul.

Paul Lones: Thank you.

Gardner: We’re also here with Stan Swete, the Chief Technology Officer at Workday. Welcome back, Stan.

Stan Swete: Thanks, Dana.

Gardner: Let me start with you, Paul. What's the problem now with integration? Why is this different than a few years ago? Why is it that we need to adopt a different take on integration?

Lones: For companies like Fairchild that are really trying to take advantage of some of the new capabilities that SaaS providers are offering and put together a broader group of applications, integrations are a new challenge, a broader challenge than they have been traditionally.

Gardner: And what is it about what Workday is doing as an application provider that makes this interesting -- the human resource management, the human resource (HR), equation. We’ve seen integrations in some other service orientations, such as in the supply chain side of things. Why was this a challenge?

Custom integration

Lones: Traditionally, in the HR arena, there has been no such thing as a standard integration. Every benefit provider, every payroll service provider that you want to work with requires a custom integration. That’s always been true, and having the set of tools that we now have at our disposal makes that a lot easier.

Gardner: So, in a sense, the HR ecosystem challenge is a really good place to try to perfect or advance iPaaS. Do you agree with that?

Lones: Absolutely.

Gardner: Stan, let's go to you. What needed to change and when you looked at this issue of your ecosystem and how it tied things together, what sort of requirements did you have for integration that now you can pass along to your customers?

Swete: We still look at it as having the same requirements for enterprise integration. Especially for hub systems like human capital management, there are ton of other systems that you have to integrate with. So the requirements are daunting and are still there. It's been the same for a while at enterprise software.

What we see as being a cloud vendor, a SaaS vendor, is just new opportunities to leverage the SaaS model to do integration a little bit differently, have the application vendor take on more of the ownership of the integration issue and use the fact that we've got all of our customers running on a single version of the product to tie some integration logic to that and bring more control and stability to that integration for our customers and our partners.

Gardner: Why is it, Stan, that the traditional systems, platforms, and middleware that are in place are not up to this task? Why not just turn the switch on your on-premises integrations and start tying together these cloud and SaaS based services?

Swete: There's just a split today between the technologies and the platforms that are used to execute integration and convey data and then the application’s endpoints that are involved with and tied up in the logic of that integration.

It's not that no one is up to it, but it's just that that gap splits responsibilities where maybe they don’t have to be split. What we’re trying to do is marry it, use what we know about our applications to create integration logic, and then embed technology that hasn’t been embedded with applications before to help with the delivery of that.

That hasn't replaced every single kind of middleware technology that you need. You still need a middleware technology behind your firewall. You still need specialized middleware technology in the cloud to do things that it does best. But, for the application-centric part of integration, application vendors can do more.

Gardner: Paul, at Fairchild, you've adopted a number of SaaS system approaches or services approaches. One of them is Workday. You have mentioned a few others to me earlier. When you look at your ability to absorb and adopt and exploit more SaaS, how does integration fit into that? Is this something that needs to be solved in order for you to proceed?

Critical enabler

Lones: It's a critical enabler to take advantage of some of the capabilities that we see are available to us and can help us in our business. We look for two things. One, we want to find a supplier that thinks of this in a more holistic ecosystem-like way, and that has a series of application-level partners, that we can add to our overall architecture and overall application capability.

In addition to that, we look for good integration tools, because even beyond those partnerships, we still have to do a lot of integration work.

Gardner: And how long has Fairchild been using Workday for their human capital management activities?

Lones: We've just recently gone live with Workday and several of their partners and have completely transformed our human capital management landscape with Fairchild.

Gardner: When you started to do this, I would think that that involved a number of integration points. Perhaps you could share how that works and then we would like to hear more from Workday about why their Workday Integration Cloud announcement has come to up to the bat to start swinging at this problem.

Lones: Sure. For the Workday partners who I was talking about earlier, those integrations are handled between Workday and their partner, which reduced our integration burden. We don't have to maintain those, as both of those applications continue to improve. In addition to that, we've built 28 application integrations ourselves, largely to benefit service providers and payroll service providers around the world.

Gardner: And you were using your tools or leveraging some of the investments you have made? How did you build those integrations?

Lones: We were fortunate enough that we were able to get some early access to the toolset that Workday is now making available to their broader customer and partner base.

I had a small team of IT staff that was completely unfamiliar with Workday when they first started, and we put them to work on these integrations. We were able to complete these 28 integrations in less than 120 days, which I think was pretty good performance.

Gardner: Just for comparison sake, how long would that perhaps taken in a traditional enterprise application integration (EAI) environment?

Lones: I wouldn't want to necessarily put a date on that. We do know that from an overall project implementation perspective that an on-premises application typically will take 2-3 times as long to execute, and I'd expect that the integration piece would have a similar scaling.

Gardner: Alright. Well, let's dig in a little bit more with the announcement recently that Workday made -- something called the Workday Integration Cloud. Stan, give us the top-down understanding of what this is about.

Important components

Swete: The Workday Integration Cloud is an extension of Workday's cloud that we use to host and process our on-demand applications and it has several really important components. One is a platform component. The tools that Paul mentioned that they used to build integrations, up until today, have been there for Workday developers. The announcement makes these tools fully available to Workday customers and to Workday partners.

In addition to the tools, there is a rich enterprise service bus (ESB) execution environment that runs the results of these developmental tools. We offer not only the tools to build integration systems but the execution environment for the integration systems. And then we've a set of scheduling and monitoring tools that our customers can use to directly schedule and monitor the execution of their integrations.

So those three things taken together form the platform, that's part of the integration cloud. The resulting integration systems we also consider a part of the cloud. Workday for some time has been building what we call Packaged Integrations and Connectors. We have a library of those that we can make available to our customers.

Fairchild has used some of these. These integrations are built with our tooling by us and for our customers. Packaged integrations really just look like another Workday product, but they handle both ends of the integration challenge.

We also have connectors that handle our end of it but build logic out. The main example is a payroll interface product that lets our customers, gives our customers a starting point for hooking up Workday human capital management to the variety of international payrolls many of our larger customers have.

This is very solid ESB technology, well thought of by the engineering talent that we now own.

Packaged integrations from Workday is another component of the Integration Cloud and the final one is just the body of integrations that our customers and partners create.

These are the intellectual property of our customers and our partners. Workday does facilitate sharing of those definitions if the customer and partners are interested, but there is that growing body of application as well. Those things taken together are the Workday Integration Cloud.

Gardner: And just to be clear, this is designed for your customers. This isn't just a general purpose integration service that you are opening up writ large. This is about your ecosystem and your customers, is that right?

Swete: The beauty of it is that it's based on middleware from a company formerly called Cape Clear that Workday acquired three years ago. I think that's very important to mention that. So it's not like we, an apps vendor, just did our take on an ESB. This is very solid ESB technology, well thought of by the engineering talent that we now own.

Built-in integration

We're taking this technology and integrating it into our applications, building integration into our applications as the way we refer to it, and then making the combined product available to both our customers and our partners. The partners are the equally important point. Systems integration partners from Workday can get access to these tools and this platform.

Gardner: And how about the pricing. Is this something that you would just check a box off and get a different bill for? How does this relate to the existing suite of application services you providing?

Swete: The Workday Integration Cloud platform is being made available at no additional cost to Workday customers and Workday partners. We make our money selling our application services.

Gardner: I'm intrigued by this notion of making integration part of the application. I think the history of this, Paul, has been that over the years, new applications and platforms, and even models of computing would come along. You would get great productivity from the application, you would buy and install and master the platform, and then you would be faced with an integration problem.

This is happened over and over again. We've seen it with mainframes to client-server and then into multi-tier and distributing computing and then ultimately with web and now cloud computing.

Companies like ours and many companies working on this are moving from a monolithic internal application orientation to one that's more of a hybrid model.

Given that integration has been a bolt-on, something that's been delivered after they shift in an application model, why now change? Why is integration and the application coming together now?

Lones: Part of it is that our approach to overall enterprise architecture is changing. Companies like ours and many companies working on this are moving from a monolithic internal application orientation to one that's more of a hybrid model, where we want to really take advantage of the new capabilities and the quicker pace of development and deployment of improvements that SaaS providers offer.

Therefore, integrations naturally become a critical part of that, because the number of applications that we use in our business increases somewhat with this sort of approach.

Gardner: Same question to you, Stan. Why this need to bring an application and its integration features together?

Swete: The challenge here is that the requirements in the large problem of integration haven't changed, and there have been a lot of tools developed to address the issue. Some results have been achieved, but I don't think anyone is satisfied with how maintainable enterprise integration is. And, we happened to think the answer is to build more robust integration where the integration definitions themselves are more informed by what exists and what's changing in the application.

Hub system

That's the opportunity that we were seeing. We came on to it by just being the provider of an application that is going to be the hub system and be hooked up to a lot of different systems.

We knew that integration was going to be front and center for us as a brand new SaaS vendor six years ago. One of the differences we wanted to make was to do more about the problem. So, we started with an investment of technology.

Where that has led us is really tying what can get done with integration technology to what applications know about, everything from their security model to, in our case, we leverage a lot the fact that we know about people and how they are organized. So, we're able to have integration definitions that can get routed around for the appropriate approvals before certain steps happen.

That’s unique, but it's breaking down the separation between integration that would be built by one side of the company and tying it back to who it's really serving, the other side of the company.

For payroll integration, the payroll admin can be hooked into the fact that a major feed of HR data is going out to a payroll system and they can get a check on that before it happens. That’s something we’ve built in and we’ll continue to look for those opportunities. I still think it's actually early days for what our integration tools can leverage inside the application.

You still have to have experts on integration middleware and we have that, but the real benefit we think comes from blurring the distinction and marrying these things together.

Gardner: So, the system of record for HR and the governance and policies about employees and their roles in the organization can now be applied pretty seamlessly to who gets to do integrations and/or how integrations as part of a business process would work. Am I reading that right?

Swete: Yeah, how they get executed, how they get approved is all built in to the same sort of system that you use to schedule a report or any other thing you’d do in your application. For us, it's just an extension of the application, rather than a hard line and then some integration technology that no one on the app side understands.

There still are differences. You still have to have experts on integration middleware and we have that, but the real benefit we think comes from blurring the distinction and marrying these things together.

Gardner: So you mentioned some tools and Paul mentioned very compelling timeframe for creating 28 integrations. Who are the people who use these tools typically and are they same old software engineers that were building EAI connections, or is this a wider group of people? Who can take advantage of this tool capability?

Swete: We’ve taken the approach of splitting the development tools into a framework that is more geared for developing simple integrations, as we call them. This is one-way data in or one-way data out of Workday to third-party systems, and we have a tool called the Enterprise Interface Builder (EIB) that is a non-programmer could use. You still need to know that you are sending something to a secure FTP location, but you don’t have to be a developer.

Sets of choices

We give you a graphical user interface, we give you a selected set of choices for how you can source data, a selected set of choices for how you can transform it, and a select set of choices for how you can deliver it. You can save that, and then you have a definition that you can then schedule on a recurring basis. That’s built for non-developers.

The other tool that we have has a completely different personality. It's what we call Workday Studio. This is the developer tool that we have used to build our integrations, and it is now available for our customers. But, on this one, you want to be a developer. You're not doing programming, but you are working in an Eclipse-based framework with detailed control over integration components and orchestration of how data flows. So, this is a technical development tool.

The thing it creates is the same thing that the EIB creates, an integration system that can then be executed in Workday, but the creation of it is much more technical.

Lones: Along those lines, this is really a marriage between having a strong, skilled team of developers with a great tool set. So, it's not a substitute for having well-skilled staff in the IT organization.

Gardner: What about the idea here that integration can be better and newly leveraged because we’ve solved with a SaaS provider’s multitenancy architecture some of these thorny and complex issues about version heterogeneity within the organization?

A lot of times companies might want to update an application, but fear breaking or disrupting integrations. That integration in the traditional sense can become an impediment to the advancement of features and functions in applications.

A lot of times companies might want to update an application, but fear breaking or disrupting integrations. That integration in the traditional sense can become an impediment to the advancement of features and functions in applications.

Paul, did it occur to you that the multitenancy, the fact that everyone is on the same version of this app and that all the integrations follow through by virtue of the responsibility of the vendor, not the user, that that’s sort of added bonus. How have you recognized that and what does it mean to you?

Lones: It's an important part of thinking about the use of SaaS applications in a company like Fairchild. To the extent that it's easy to maintain those integrations through the improvement cycle, we are going to be much more willing to follow a SaaS model, because upgrades come every three or four months, depending on who the supplier is.

We like that model. We'd much rather have a small incremental improvement every three or four months than have this huge disruptive step function upgrade. Really, it typically is more like a reinstallation that occurs for large monolithic installed applications every two or three years. You need to have your integrations keep up, and that's an important consideration.

Gardner: So it's interesting, Stan. You have a user like Fairchild, using these tools, building these integrations, moving more towards a multiparty ecosystem process-oriented benefit, but the responsibility on those integrations is with you.

It seems as if you're really giving an awful lot here. How can you do that with a strong sense of confidence? Isn't there a risk that if these integrations start breaking that you are in the catbird seat?

Levels of the game

Swete: Yeah, well, there are levels of the game for how you can leverage the support you get out of the core application that we keep moving forward. One level of the game is for us that's very important in the integrations we build and sell are ones that can just share the application definitions. So, we support those across all the updates and verify that the logic of those is going to work.

For the integrations tools, we can put smarts into the tools that share how the applications are constructed in that. It gives our customers a leg-up that they can start with these components. Then they can create integrations that are a little bit more impervious to being broken by changes in the applications, because they're sharing metadata back into the applications.

Lots of integrations are built on our application programming interface (API) and so we've got to be rigorous about versioning the API and having a contract to support back versions that gives us a certain amount of insurance. It's not like that with some of these opened in the tools that there couldn't be logic and coding errors that are put in and those are the ones that we would have to encounter together with our customers and we're not going to debug every single one of those.

So, for different levels of the game, more packaged, complete support, on up to the more open-ended integrations, you do what you can to try to make it so the integrations are a little bit more robust than what would have been built with a separate tool set.

Gardner: Paul, it sounds less like a buyer-seller relationship than a partnership. Do you view it that way?

Our experience to date is that companies like ours have more of a voice in the feature improvements of the application.

Lones: We do. Our experience to date, working with providers like Workday and some of the other SaaS providers that we are fortunate enough to do business with, is that companies like ours have more of a voice in the feature improvements of the application.

There tends to be, and certainly it's the case with Workday, a much more active community of clients, users, that are sharing information about everything from somewhat technical to very business process-oriented experiences that all of us have had. That's a very different experience.

In some ways, it's sort of ironic to me that we view it quite a bit more as a partnership. A lot of people perhaps think that it's a SaaS application and, if things don't work out, then when your contract is up, you just go find another SaaS provider.

It is true that there might be a little bit more flexibility, but what we’re finding so far in our experience, and it is early, is that the receptivity and the sense of making improvements together, I think it will actually stick longer than maybe some of the traditional software applications.

Gardner: And just to help our listeners understand the extent of your project with Workday, how many employees were involved? Tell us a little bit about your organization, Fairchild Semiconductor, and your global footprint.

Global base

Lones: Fairchild Semiconductor has roughly 10,000 employees worldwide. We're a semiconductor manufacturing company. We have manufacturing facilities in the United States and throughout Asia. Our customer base is global, our employee base is global. Over 70 percent of our business is in Asia and 70 percent of our employees are in Asia. Having the capability to provide a core HR platform like this to that broad a set of colleagues around the world is really exciting for us, and to be able to support our internal customers and the HR group.

Gardner: And have you brought all of those 10,000 employees up on Workday or has it been a staggered rollout? How has that worked?

Lones: We’re at the very end of our go-live process and we introduced this to our colleagues around the world on April 4.

Gardner: One thing that’s interesting is the degree of integration complexity when you’re dealing with multiple markets. So if you’ve brought all of these employees around the world up on this system -- different payroll, different benefits, different government, different cultures -- how is that issue something you can tackle, given that Workday’s integration was a service to you?

Now, we’re looking forward to doing some additional integrations with some of our local payroll systems.

Lones: Well, we had a lot of payroll integrations. I don’t think we would have gotten those all done in the time frame we did without having that capability that Stan mentioned. In fact, with our legacy system, we actually stopped doing payroll integrations, because they were too hard.

Now, we’re looking forward to doing some additional integrations with some of our local payroll systems to improve that connectivity between our system of record for HR and the payroll service providers that we didn’t build integrations to in the past.

Traditionally, we built integrations only for our large-sized locations. There are smaller-sized locations where we have sales offices, and the like and we typically didn’t build those integrations. We’re going to go back and look at doing that now.

Gardner: Well great. Stan, let's take a look to the future. Where can this go? It seems if this is a proving ground given the number of different integration points, a global organization like Fairchild. I know you’re pointing this at your ecosystem and your customers, but if IaaS works here, couldn’t it potentially work anywhere?

Swete: It could work anywhere but we’ve got a lot to do here. I think that when we look toward the future, there are just several different dimensions where we have to build this up. One is something that Paul has been mentioning -- just the value of the ecosystem and I think we've got a good start, but there is a lot of building we can do there.

That is, we can use the fact that this platform is out there and available and proven to attract more and more partners to it both development partners as well as application partners who can be the other endpoint in integrations that we can support.

So, building out packaged integrations for us to enhance the ecosystem is one aspect. Deepening what the tools are doing is going to be a never-ending task. We’re just starting to have ideas about how to share application’s functionality, and embed that inside the tools to make them more powerful integration tools. I very much look forward to continuing to enhance our toolset and that will benefit the integrations our customers and partners build.

The final aspect is the one you hit on, community. We have to encourage people to want to share these integrations. We didn’t need to do more to automatically support that because our partners are going to be generating these things, as our customers, and in the SaaS community, there is just this great notion about sharing the things you do. So, we see supporting that and we can ultimately see that even leading to selling some of the things you do. All of those are potential features for this space.

Gardner: It seems to me a very extensible model.

Swete: Well, let's hope so. We think we’re just starting.

Gardner: Well great. You’ve been listening to a sponsored BriefingsDirect podcast discussion on how new forms of cloud-based integration are helping Fairchild Semiconductor build new relationships among and between extended enterprise business processes. They're doing that using the Workday Integration Cloud.

I’d like to thank our guests, Paul Lones, Senior Vice President for Information Technology at Fairchild Semiconductor. Thanks, Paul.

Lones: Thank you.

Gardner: And Stan Swete, Chief Technology Officer at Workday. Thanks, Stan.

Swete: Thank you, Dana.

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

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

Edited transcript of a BriefingsDirect podcast on new forms of cloud-based integration and its use in enterprise business processes. Copyright Interarbor Solutions, LLC, 2005-2011. All rights reserved.

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