Take a Deep Dive on How Enterprise App Stores Help Drive Productivity

Transcript of a sponsored podcast discussion on the growing importance of enterprise app stores in moving organizations to a self-service model that reduces both complexity and delays in getting applications to end users.

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

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 enterprise app stores are quickly creating productivity and speed-to-value benefits for PC users and IT departments alike.

We’ll specifically examine what steps businesses can take to build and develop their own enterprise app stores for mainstream use. We'll further see what rapid and easy access to self-service apps on PCs and notebook computers through such app stores is doing for businesses.

The popularity of mobile devices like smartphones and tablets, on one hand, has energized users, but on the other hand it’s caused IT and business leaders to scramble to adjust to new models of applications delivery.

We’ll explore here how app stores are part of the equation for improved work and process success on and off the job. We’ll see how Embarcadero’s AppWave solution brings the mobile apps experience to millions of PC users in their workplace in the enterprise.

We’ll also hear from the author of a recent Ovum white paper on why app stores are so important for enterprises, as they consider ways to better track, manage, and distribute all of their applications.

The popularity of mobile devices like smartphones and tablets, on one hand, has energized users, but on the other hand, it’s caused IT and business leaders to scramble to adjust to new models of applications delivery.

Please join me now in welcoming our panel. We're joined today by Tony Baer, Principal Analyst at Ovum. Welcome back to the show, Tony.

Tony Baer: Hey, Dana. Good to be here.

Gardner: We’re also here with Michael Swindell, Senior Vice President of Products and Marketing at Embarcadero Technologies. Welcome, Michael.

Michael Swindell: Hi. Thank you, Dana.

Gardner: And we’re also here with Richard Copland, Principal Innovation Consultant at Logica. Welcome, Richard. [Disclosure: Embarcadero is a sponsor of BriefingsDirect podcasts.]

Richard Copland: Hi, Dana.

Gardner: Tony, let me start with you. You've written a white paper in the recent past on app stores and why they’re important in enterprises. Were you surprised in any way at how broad this app store model can be used and is starting to be used for all sorts of applications?

Concept leap

Baer: I was a little bit surprised because there is certainly a concept leap from a $1.99 little applet that you pull down from the iPhone app store or from the Android marketplace to a full-blown enterprise desktop application.

That being said, it’s not surprising, given that there’s been a huge demand from the bottom-up, from the people in the workplace. So it’s a phenomenon that’s probably better known as the consumerization of IT -- "I have these sophisticated mobile devices and tablets. Why can’t I get that easy to use experience on my regular machine for my day job?"

Therefore, the demand for the comfort and convenience of that was inevitably bound to spread into the enterprise environment. You've seen that manifested in a number of ways. For example, companies have basically embraced more social collaboration. And you’re also starting to see some use of many of these new form factors.

So again, what Embarcadero has been starting to introduce is symbolic in a way that’s really not surprising.

Gardner: Richard Copland, any thoughts on this as well? Tell us a bit about your organization, Logica, and your role as a Principal Innovation Consultant.

Copland: My role as a Principal Innovation Consultant is effectively twofold. It's to find new things and introduce new things to our clients. Something innovative to me is something that's new to you and provides a benefit. This can be cash, people, or green ideas. I spend my day looking at cool new stuff, which means ways of working, technologies, partners, and even wacky research coming out of the various universities here in Europe.

I get involved in schedules of client discussions, and people look to me and my team to bring ideas to life, to help answer that question, which is a challenge where there must be a better way. An example of that is the enterprise app store being a better way for things. Then, it’s unpacking that and exploring how you might help create that vision of the answer and empower them to believe that these things are possible now.

A bit about Logica: We're a business and technology service company. We provide business consulting, system integration, and outsourcing to our clients around the world including many of Europe’s largest businesses.

Last year, we did just under £4 billion globally with 800 million of that being here in the UK. We create value by successfully integrating people, business, technology, and a key part of this is the innovation piece. Clients look to us to bring innovation and innovative things, and Embarcadero's AppWave and the concept of the business application certainly falls into that category.

In terms of those larger trends, which are driving or almost overseeing the consumerization of IT, I step it back, and say that it’s almost as we are as a service concept which is the fragmentation and segmentation of people looking to get more and more value being directed to them, specifically to their needs, and as a result of that, it’s the on-demand concept.

Generation Next

For me, it’s also the whole Generation Next piece which is about a whole new generation that is educated and tech-savvy. They're multitasking all the time. They work as consumers. They're purchasing products and customize them to their needs in terms of their lifestyles. So they’re regularly sharing insight and comment on things which are good for them.

That’s playing out in terms of lifestyle and that's being brought into the business scenario, whereby the formal and informal hierarchies of organizations are blurring.

Another trend that I see, and a lot of our clients in the conversations that we have see, is this whole global talent contest, by which clients are struggling to maintain, obtain, and keep satisfied Generation Next with the latest technology. Why should they legitimately step back in time in the tools that they will use in their role, if it doesn’t provide and support their last stop. It’s a real challenge for them.

Gardner: Michael Swindell, when we see longer term trends, and then new innovations, one of those trends has been the need to rationalize applications. Almost every enterprise I talk to rarely knows how many applications they have, rarely knows to what degree they’re being used, and has no clue as to how to sunset them or bring this sprawl under control. It seems that that’s a long-term trend trying to rationalize apps, but at the app store model, innovation brings some sanity to that and buy-ins from the users.

Is there a win-win possibility here with app stores helping organizations manage their apps better, and yet, getting the buy-in from the users to accelerate how that goes about by them voting and either installing and uninstalling these apps rather rapidly?

Swindell: There are really two sides to the benefit of using the app store methodology for those problems. There's an organizational side of understanding application usage, as you said maybe sunsetting applications, understanding how applications are used within their organization, so that they can make good decisions.

Then we have the user side, where users have a lot more information that they can provide that’s very useful for both the organization and other users.

The app store metaphor works very well in sharing that type of information. It gives the organization usage information and statistics, and the demand information that's valuable for the organization to plan and understand their application usage. It also provides information to other users on the applicability of applications for certain scenarios, whether applications are good or bad for a particular scenario.

This has worked well in the mobile space with public app stores, and we see that there's a lot of applicability inside the firewall, inside organizations, to be able to use this information and create more value out of their applications and to help users get more value and understanding about their applications.

Gardner: Tony, back to you. In your white paper, it seems that there's an economic value here, that we're just sort of scratching the surface of. It seems that we know that the consumers like app stores, based on how they vote with their dollars, whether it's $0.99 or more. It’s just a huge success for Apple and others are jumping on the bandwagon.

But it seems to me that getting the transparency, seeing the trends, and being able to sunset and better manage their apps has got a fairly significant economic value to it. Furthermore, users perhaps will only be using resources based on their needs. So there is sort of an efficiency aspect to this. Is that what you've found?

Traditional model

Baer: We've not done any scientific studies, but compare this model to the traditional application deployment model.

Number one, it's a much more of a long-fused process. There is elaborate planning of the rollout. You're trying to figure out all the different client targets that you're trying to address. Even if you do have locked-down machines, you're still going to have issues. Then, package the release,. Then, regression test it to death. Then distribution, and you actually get the thing installed. Hopefully, it's up during some off hour, let's say, at 3 a.m. Then, you prepare for all the support calls.

That's a pretty involved process. That consumes a lot of time both for the end user, who is waiting for the functionality that he or she may want -- or not. And it's also, of course, a considerable overhead in the IT organization.

If you take that all away into a more modular model, more like a radio broadcast model, essentially it becomes a lot more efficient. You lose all this lead time, and as Michael was talking about, you then get all the visibility for all these apps being consumed. End users have more sway. As long as they are authorized to use these apps, they have this choice.

So it's not that all of a sudden they have a whole number of apps that are loaded on their machine, whether they like it or not. We haven't done anything to quantify this, because trying to quantify productivity is like asking “what's the cost of downtime?” And in a lot of sectors that can be a very subjective number. But intuitively, this model, if it scales out, should basically provide a much lower cost of ownership and much greater satisfaction.

This model, if it scales out, should basically provide a much lower cost of ownership and much greater satisfaction.

Gardner: Richard, in your looking over the landscape for additional innovations, I can see how services orientation and cloud computing certainly dovetail with this, but it also seems to me that the need is for organizations to encourage users to change their habits. Maybe it's around the process level, instead of an application level or maybe simply adopting new applications quickly, rather than having to go through a long period of adjustment.

Is there something about the app store model that you think will encourage faster buy-in and perhaps a lot of organizations would incentivize or use social mechanisms to encourage users to adopt new technologies and new applications faster?

Copland: Undoubtedly. The whole socialization and the social trend which I see as probably the biggest driver behind this is for the way in which people use software and the way in which people comment on a software.

The organization will cluster around the toolkits for which the feedback from the users is positive. I can think of one large global financial organization here that has 5,000 apps within their world. They would look to simplify their landscape by over 60 percent, because they recognize that they've got so many kinds of individual pockets of activity going on in the organization.

And you need to support those individual pockets of activity that, in terms of your users in the tail effect, they’ll be the mainstream enterprise apps, such as Windows-based or Office-based, which the majority will use. But if you could tap into an environment, in which you are giving the people what they want, then the return on investment (ROI) from that is going to be a lot faster.

Cultural incentive

Gardner: We’ve certainly seen how the incentive is there from a cultural and popularity perspective, given what we’ve seen in the mobile space. There's a strong economic and productivity rationale for this in terms of both long-term IT trends, like rationalizing applications, and shorter-term trends, like incentivizing people to use the social mechanisms and adopt newer applications or processes or methods faster.

Now the question is: how do you do this? How do you take a legacy of hundreds, and in some cases thousands, of applications written for the PC, written across different platforms and different iterations over time and maturity levels of those platforms, and make them available through an app store?

Michael Swindell, tell me a little bit about AppWave and what it takes for an IT organization to make the transition from that long process that Tony outlined to a more streamlined app-store approach.

Swindell: The best way to describe AppWave is that it’s just a pretty simple three-step process. The first step is taking traditional software, which is traditionally complex for end users and for organizations to manage. This includes things like installations, un-installations, considerations about applications, of how they affect the users’ environment.

Then, converting those traditional software applications into the concept of apps where they are self-contained, don’t require installation, can be streamed and run to a user anywhere they are, and really delivering the mobile-like experience of mobile software to the more complex traditional desktop PC software.

AppWave has tooling that allows users to take their applications and convert them into apps. And that’s any type of application- commercial application or internally developed.

AppWave has tooling that allows users to take their applications and convert them into apps. And that’s any type of application -- commercial application or internally developed.

That's the first step. The second is to centralize those apps in an app store, where users can get to them, and where organizations can have visibility into their usage, manage access to them, etc. So the second step is simply centralizing those apps.

The third is the user experience. One of the key drivers behind the success of apps in the mobile space has been the visibility that users have into application availability. It’s very easy for users to search and find an app as they need it.

Think about how a user uses a mobile phone to come up with an app. Maybe they’re walking down the street, they see a business, and they have an idea, or they want directions to something. They can simply search in an app store on their mobile device and immediately get an app to solve that problem.

If you look in the business space and inside the workplace, when a user has a problem, they don’t really have a mechanism to sit down and search to solve a problem and then get an application to solve it immediately.

As we talked about earlier, and Tony really well-described that the process, once they identify an application to solve a problem, that can take weeks or months to roll out. so you don’t have that instant feedback.

Instantaneous experience

The user experience has to be instantaneous. An area that we focused on very heavily with AppWave is to provide the users an ability to search, find apps based on the problems that they’re trying to solve, and instantly run those apps, rather than having to go through a long process.

Gardner: Michael, I’d like to hear more about how you go about that. But before we do, let me check in with our other panelists.

Tony, this sounds like it’s something quite new. As you pointed out, in the past and for the most part, in the present, in an enterprise, a user might have a need, wish they had a tool, a utility, a macro, any kind of a helping hand. Rather than go to IT and wait in line, sign some sort of a requisition, or go through a PO process, they probably just said, "Oh, the heck with it. I'll make do with what I have."

But now, we're giving people the opportunity to self-serve, search in the moment of need, and then satisfy that need with the click of a button. It sounds to me that it’s going to really enhance user productivity, the user's ability to innovate themselves, rather than just sit back and go with the flow. Am I overstating it?

Baer: From the end-user standpoint, there certainly is quite a win to this. But we also have to look at the fact that this is going to change the way IT serves the organization. At least this aspect of it is really going to become more of a service provider. And there are a lot of implications for that.

From the end-user standpoint, there certainly is quite a win to this. But we also have to look at the fact that this is going to change the way IT serves the organization.

For one thing, IT has to be more responsive but they also have to work on more of a shorter fuse, almost like a just-in-time type of model.

That being said, there's no free lunch in all this, and it still requires management. For example, we still need to worry about dealing with security governance, managing consumption, and also making sure that you lock down, or secure the licensing issues. As I said, there’s no free lunch, but compare that to the overhead of the traditional application distribution and deployment process.

So again, from the end user standpoint, it should be a win-win, but from the IT standpoint, it's going to mean a number of changes. Also, this is breaking new ground with a number of the vendors. What they need to do is check on things such as licensing issues, because what you're really talking about is a more flexible deployment policy.

Long-term, it's definitely a win-win. Short-term, there are adjustments to be made by IT and also by the software industry.

Gardner: Just as a quick observation, managing licenses is so difficult. Many organizations will just pay a blanket fee, not even bother to audit, or do anything they can to avoid the vendor audit. With the app-store approach, they would have real data, know exactly who is using what, and pay only what they had to. So I think that there's a hurdle to adjust to on the licensing, but there might actually be a strong benefit.

Changing the dynamic

Back to Richard Copland. On this notion that users, when empowered to download and find apps based on search, based on the library, based on what other users are passing along as what’s worked for them as users in the organization, it strikes me as really changing the dynamic itself.

Do you follow my thread on this? Do you think I'm going too far, and can we perhaps make the association that app stores can fundamentally change the way workers behave in an innovation sense?

Copland: Absolutely. You’re on the money with regard the direction of travel. We talked a little bit about looking at the mobile aspects of it and moving to this on-demand usage and the challenges for the organization to do that.

Certainly, the components within the AppWave solution give you the opportunity to move to more of what I would describe as smart working or remote working, by which the user doesn't necessarily have to come into the office to access the tools, which are traditionally being provided to them at their desk in their environment.

If you start remote working or are given a broader range of remote access, then you can be operating a much stronger work-life balance. So if you're in a situation where you’ve got a young family and you need to take the kids to school, you can come on and go off the company network and use the tools which are provided to you in a much more user-friendly flexible environment. That would be certainly from the user's perspective.

If you start remote working or are given a broader range of remote access, then you can be operating a much stronger work-life balance.

From the business’s perspective, I start moving to a scenario where I don't necessarily need to maintain a real estate where if I’ve got 5,000 users, I need to have 5,000 desks. That certainly becomes quite empowering across the rest of the organization, and other stakeholders -- the facility’s officers, business managers -- start taking real notice of those types of savings and the nature of how work is achieved.

Gardner: Back to how this can work for organizations. Michael Swindell at Embarcadero, tell me about AppWave, and let's learn a bit about its heritage. It seems to me that this has been something that's not just a flash in the pan new for you. It's really an evolution of something you've been doing in the application development arena with tools. So perhaps it's time to learn a little bit about the legacy and history of how AppWave has evolved?

Swindell: This is the AppWave 2.0 platform, which is really the second generation of the platform. The original 1.0 platform was designed to help deliver Embarcadero's own products to its users. And the reason it was developed was that Embarcadero, as many ISVs have, has a portfolio of different products, over 20 tools in our portfolio. We wanted to provide those to customers so that they were much easier for the users to find and use the applications as they had a need.

As a problem arises, you didn't have to worry about whether or not software is already installed or whether or not you have it. You simply need to be able to search on the problem and then be able to pull up the Embarcadero application to solve that problem.

The first generation of this technology was designed specifically for those 20 products. We created app versions of our software. Then came the idea of the centralized app store and the user experience to search, find, and run those apps.

Gardner: This is fairly proven. How long this has been in use in terms of a technology and a platform itself?

Licensing core

Swindell: Two years for the platform. Then, the licensing core, which is really an important part. We talked a little bit about earlier about how license management is important in access control. The license core that provides both licensing and access control has actually been around for quite some time and managed the licenses. We've been developing the licensing technology for almost 10 years.

Gardner: So you're taking this and focusing it beyond that core 2.0 that you started with. Now we're looking at what custom apps, legacy apps, cross platform, what is it that an enterprise was interested in moving in an app store direction, and they are going to examine something like AppWave. How far and why can this be applicable in terms of their legacy, their installed base of apps?

Swindell: Our vision is any type of application in the organization will eventually be supported by AppWave. The initial support is for PC apps in organizations, which is the vast majority of productivity applications that end users need. It also is where the largest problem set is, both from an end-user perspective and from an organization's perspective.

So we're tackling the hardest problem first and then our plan is to roll in other type of apps, web apps, and applications that you might be using in an organization, using other types of delivery technologies.

But the idea is to take any type of these applications and present them as an app inside the AppWave ecosystem. So a user can have a centralized way to search for any type of app whether it’s a corporate HR, a web application, a hosted software as a service (SaaS ) application, or a PC application. Certainly, mobile would be an obvious direction as well.

The idea is to take any type of these applications and present them as an app inside the AppWave ecosystem.

Gardner: It seems that we’re also moving now to being able to manage our applications, not just in their entirety and in their traditional state, but perhaps even decomposing them and getting into more of a modular applications transformation benefit.

Tell me how the companies that you’re working with that are using AppWave are using this, not only to just repurpose existing apps, but to even transform those apps and present them in new and interesting ways.

Swindell: There's a variety of ways that organizations are delivering applications to users today. The wider variety of applications and different ways and repositories that they have for apps really makes it confusing for end users to be able to know where to find what applications are available.

When I talk to end users and to customers, if you ask them where they find their applications, you’ll get a different answer, depending on who you talk to in the organization or what type of application they’re thinking of.

One of the things that AppWave and the app store concept can do is to help create a centralized app view of the different types of applications and even the different types of services in your organization, and to be able to understand what’s available.

Common presentation

There are also opportunities for the same types of socialization and sharing of information and knowledge about services using the app store concept, as there is with apps.

The important thing is to take these different types of applications and present them in a common way in the same place, so that it really doesn’t matter whether the app is a web app or it’s a PC app. Users can find them, run them, and share information about them at the same place.

Gardner: Just to be clear, your technology allows for not only ISV-packaged apps, but also custom apps designed for your organization, by your organization. These can now also be brought into this corral more of a common denominator of all sorts of apps. Is that correct?

Swindell: Correct. And those apps can be comprised of a variety of different services, different types of technologies, but they’re presented to the end user in the same way as a Windows app or a Web app.

Gardner: Is there an additional technical benefit here in terms of sometimes what we see with SaaS and multitenancy in that the patching and the security and management of that application can be conducted centrally. Then, each time the user brings it down from the store, for example, he gets a fresh updated version. Is there a lifecycle benefit to how apps are managed as part and parcel with this?

Some applications or some data may be dependent on a particular version of an app or an application. By using apps and AppWave, you can roll back three versions and open that up without having to install it, find it, or anything.

Swindell: It makes it a lot easier for end users, because they don’t have to think about it. When they log into their app store environment, updates are automatic, and it’s also very visible. They can see what’s happening very similar to into a mobile device. You always know when there are updates available because you get an icon that tells you how many updates are available.

There's an additional benefit, especially with software modularization and compatibility between different versions, that AppWave can provide. By compartmentalizing applications, it allows apps to run side-by-side across multiple versions.

So some applications or some data may be dependent on a particular version of an app or an application. By using apps and AppWave, you can roll back three versions and open that up without having to install it, find it, or anything. So the isolation and the idea of apps can really help in that regard.

Gardner: Richard Copland, as someone who is out there hunting down innovations that they can bring to their user organization and their clients, was there anything about AppWave or app stores in general for enterprise use that was interesting and attractive to you that we perhaps haven’t hit on yet?

Copland: In AppWave and the Embarcadero team, we have a global innovation venture partner program. They were our recent winner. They went up against competition from around the world. We believe that the app store concept has got so much within it in terms of the user experience, the socialization aspects, and the collaboration aspects of it.

Bridging point

The area which we haven't touched on so much is that it's a bridging point between your legacy systems and your more visionary cloud-type solutions where you really are SaaS, on-demand and pay-per-click.

Gardner: I guess on-demand isn't so much concerned with where the app resides and how it's delivered across the wire, but really with the notion of organizations being able to allow their users to go into a process, find a solution, apply it, and even create new types of innovative work and workflows. It's really about choice, freedom and applicability rapidly, rather than over a long time that is the actual benefit around on-demand.

Copland: The thing that will kill innovation is just operating slowly. One of the biggest blockers that organizations face with regard to innovation is the nature of how that sets out and the speed at which they react to what are their internal ideas.

Swindell: You can look at this as being in a way -- and Dana and Richard you're hinting on that -- a cultural preparation for transition to the cloud, if indeed the cloud is suitable for specific parts of your application portfolio.

Gardner: Michael Swindell, for those organizations that are looking at cloud but are bit nervous and see some risk and lack of governance security control, is there something about app store that makes that bridging effect that Richard was alluding to, but in a way that is more enterprise ready. That is, something that gives command and control in terms of access, privilege, governance and management but also fosters that innovation and freedom.

You can look at this as being a cultural preparation for transition to the cloud, if indeed the cloud is suitable for specific parts of your application portfolio.

Swindell: It certainly is a way of operating that's very attractive, that there's a lot of interest in, and has a lot of obvious benefits. But there's also concern around the areas that you bring up. Having an on-premise private app store that runs within your organization that is on site really addresses a lot of those concerns and uses the cloud simply to deliver new applications and apps from ISVs and from other vendors.

Once they are inside your organization, they're operating within your security and governance environment. So you don't really have to worry about those concerns, but it still delivers a lot of the benefits of the user experience of cloud and the on-demand nature.

Gardner: I know this is going a little bit out further into the future and perhaps into the hypothetical. It sounds as if you can effectively use this app store model and technology and approach like AppWave to be a gateway for your internal PC apps, but that same gateway might then be applicable for all these other services.

But if the gateway app store model works for a class of apps, it might work for all apps. It really could be a governance and management capability well beyond just the ability to package and deliver apps in this fashion. What are your thoughts on that, Michael?

Driven by demand

Swindell: The foundation is there, and I think it will be demand driven by users. Every time we talk to a customer with AppWave, the list of possibilities and where customers want to use and take the environment is exciting, and the list continues to grow on how they can use it in the long-term.

So we're building facilities today to connect the private AppWaves into our cloud infrastructure, so that we can deliver certainly apps but there could be other types of services that connect into that as well.

Gardner: Okay, and just to be clear. AppWave is available now. I believe we have a 30-day free trial, is that correct?

Swindell: Yes, there is a free trial, and we also offer free version of AppWave that organizations can download and use today with free apps. There's an entire catalog of free apps that are included and are streamed down from our cloud.

So you can get set up and started with AppWave, using free apps in your organization. What can be added then is your own internal custom apps or commercial licenses that organizations have. So if you've hundreds of commercial licenses, you can add those in or add your own internally developed apps.

Once they are inside your organization, they're operating within your security and governance environment. So you don't really have to worry about those concerns.

Gardner: Very good, and where would one go to find out more about this?

Swindell: You can go to www.embarcadero.com/appwave and try it for free.

Gardner: Very good. I'm afraid we're out of time. You've been listening to a sponsored podcast discussion on how enterprise app stores are quickly creating productivity and speed-to-value benefits for PC users and IT departments of like. I’d like to thank our guests: Tony Baer, Principal Analyst at Ovum. Thank you so much, Tony.

Baer: Thanks, Dana.

Gardner: We've also been here with Michael Swindell, Senior Vice President of Products and Marketing for Embarcadero Technologies. Thank you, Michael.

Swindell: Thanks, Dana. It was a pleasure.

Gardner: And Richard Copland, Principal Innovation Consultant at Logica. Thanks so much, Richard.

Copland: Cheers, Dana. Cheers, guys.

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

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

Transcript of a sponsored podcast discussion on the growing importance of enterprise app stores in moving organizations to a self-service model that reduces both complexity and delays in getting applications to end users. Copyright Interarbor Solutions, LLC, 2005-2011. All rights reserved.

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BriefingsDirect Analysts Discuss Business Commerce Clouds: Wave of the Future or Old Wine in a New Bottle?

Edited transcript of BriefingDirect Analyst Insights Edition podcast, Vol. 46 on "business commerce clouds."

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

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

Dana Gardner: Hello, and welcome to the latest BriefingsDirect Analyst Insights Edition, Vol. 46. I'm your host and moderator Dana Gardner, principal analyst at Interarbor Solutions.

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

Our topic this week on BriefingsDirect Analyst Insights Edition, and it is the week of Oct. 26, 2009, centers on "business commerce clouds." As the general notion of cloud computing continues to permeate the collective IT imagination, an offshoot vision holds that multiple business-to-business (B2B) players could use the cloud approach to build extended business process ecosystems.

Under this notion, a gaggle of cloud-enabled partners could effect multiple-party services and complex processes -- all from the Internet. Business commerce clouds could produce efficiencies over traditional e-commerce processes and partnerships, and even do things -- in terms of reach, complexity, numbers of partners, and cost savings -- that had not been possible before.

It's sort of like a marketplace in the cloud on steroids, on someone else's servers, perhaps to engage on someone's business objectives, and maybe even satisfy some customers along the way.

I, for one, can imagine a dynamic, elastic, self-defining, and self-directing business-services environment that wells up around the needs of a business group or niche, and then subsides when lack of demand dictates. It's really a way to make fluid markets adapt at Internet speed, at low cost, to business requirements, as they come and go.

The concept of this business commerce cloud was solidified for me just a few weeks ago, when I spoke to Tim Minahan, chief marketing officer at Ariba. Tim and I were analysts together way back in the '90s. It seems like yesterday on some levels, and then many years ago at another.

So, I've invited Tim to join us to delve into the concept, and the possible attractions, of business commerce clouds. Welcome to the show, Tim.

Tim Minahan: Thank you, Dana. I'm pleased to be here.

Gardner: Please also join me in welcoming our IT industry analyst guests this week. We're joined by Tony Baer, senior analyst at Ovum. Hey, Tony.

Tony Baer: Hey, Dana. I'm here, and Happy Halloween everybody. Please don't make this conversation too scary.

Gardner: Alright. Brad Shimmin, principal analyst at Current Analysis is here. Hey, Brad.

Brad Shimmin: Hi, Dana.

Gardner: Also, Jason Bloomberg, managing partner at ZapThink. Howdy, Jason.

Jason Bloomberg: Hi, how is it going?

Gardner: Good. JP Morgenthal, independent analyst and IT consultant is here. Hey, JP. And making her debut, Sandy Kemsley, independent IT analyst and architect.

Sandy Kemsley: Hi, Dana. It's great to be here.

Gardner: Very good. Nice to hear from you. Let's go back to Tim. What are we really talking about here? I tried to do a setup, but it was obviously vague. "Business commerce clouds" -- what's the concept?

Leveraging cloud

Minahan: You said it nicely. When we talk about business commerce clouds, what we're talking about is leveraging the cloud architecture to go to the next level. When folks traditionally think of the cloud or technology, they think of managing their own business processes. But, as we know, if we are going to buy, sell, or manage cash, you need to do that with at least one, if not more, third parties.

The business commerce cloud leverages cloud computing to deliver three things. It delivers the business process application itself as a cloud-based or a software-as-a-service (SaaS)-based service. It delivers a community of enabled trading partners that can quickly be discovered, connected to, and enable collaboration with them.

And, the third part is around capabilities --the ability to dial up or dial down, whether it be expertise, resources, or other predefined best practice business processes -- all through the cloud.

Gardner: Tell me why Ariba is interested in this. How does this extend what they have done? And, for those of our listeners that don't know about Ariba, maybe you could give us the quick elevator pitch on it.

Minahan: Certainly. Ariba started out back in 1996 with a common mission in mind to help companies manage spend more effectively. It has since transitioned to deliver those results more efficiently by becoming a SaaS-based provider.

We realized we weren't just creating value for the buyers, but we were creating value for the sellers.

Quite simply, spend management is the holistic approach of helping you control your supply chain cost, minimize risk, and then optimize cash. Along the way, what we found was that we were connecting all these parties through a shared network that we call the Ariba Supplier Network.

We realized we weren't just creating value for the buyers, but we were creating value for the sellers. They were pushing us to develop new ways for them to create new business processes on the shared infrastructure -- things like supply chain financing, working capital management, and a simple way to discover each other and assess who their next trading partners may be.

Gardner: Tony Baer, we've talked a lot about cloud. We've heard a lot about it, often as an abstraction, often about infrastructure and development, test and dev, and storage of data. But, businesses are motivated by applications, processes -- things that get things done. Does this notion of a business commerce cloud work for you, and is it something that might be a catalyst to the whole cloud concept?

History repeats

Baer: Well, this is interesting. History really does go around in cycles. I'd like to direct a question back at Tim. I think there are some very interesting possibilities, and in certain ways this is very much an evolutionary development that began with the introduction of EDI 40 or 45 years ago, or something like that, I forget the exact date.

Actually, if you take a took at supply-chain practices among some of the more innovative sectors, especially consumer electronics, where you deal with an industry that's very volatile both by technology and consumer taste, this whole idea of virtualizing the supply chain, where different partners take on greater and greater roles in enabling each other, is very much a direct follow on to all that.

Roughly 10 years ago, when we were going though the Internet 1.0 or the dot-com revolution, we started getting into these B2B online trading hubs with the idea that we could use the Internet to dynamically connect with business partners and discover them. Part of this really seemed to go against the trend of supply-chain practice over the previous 20 years, which was really more to consolidate on a known group of partners as opposed to spontaneously connecting with them.

I'm obviously exaggerating there, but, Tim, how does this really differ, in terms of the discovery functions that you were talking about before, from these B2B clouds -- we weren't calling them clouds back then -- but these B2B trading hubs that we were talking about almost 10 years ago?

Part of this really seemed to go against the trend of supply-chain practice over the previous 20 years . . .

Minahan: That's a very good question. There are certainly similarities, but the major difference is that back then it was, "If you build it, they will come." The reality today is that they are here and they are looking for more ways to collaborate.

If you look at the Ariba Network that I mentioned before, in the past year, companies have processed $120 billion worth of purchased transactions and invoices over this network. Now, they're looking at new ways to find new trading partners -- particularly as the incidence of business bankruptcies are up -- as well as extend to new collaborations, whether it be sharing inventory or helping to manage their cash flow.

Gardner: Brad Shimmin, remaining with this "back to the future" notion, there are lots of different commerce environments out there. There has been a platform approach to it. Sometimes that's worked. When we got to the need of integration, we needed to open that up and create standards.

But now the cloud accelerates, or even heightens, this neutrality or standards requirement. Do you think that the cloud is perhaps a catalyst to moving to these ecosystems of business processes and services that will do what we couldn't do with EDI or even standards?

An enabler

Shimmin: That's a great point. I don't look at it as a catalyst, I look at it as an enabler, in a positive way. What the cloud does is allow what Tim was hinting, with more spontaneity, self-assembly, and visibility into supply chains in particular that you didn't really get before with the kind of locked down approach we had with EDI.

That's why I think you see so many of those pure-play EDI vendors like GXS, Sterling, SEEBURGER, Inovis, etc. not just opening up to the Internet, but opening up to some of the more cloudy standards like cXML and the like, and really doing a better job of behaving like we in the 2009-2010 realm expect a supply chain to behave, which is something that is much more open and much more visible.

Gardner: Sandy Kemsley, again, welcome to the show. How does this strike you as an enterprise IT architect? Is this something that appears like pie in the sky, a little too daunting, or is this something that makes you very interested?

Is it, "I would love to get some business services I can get my hands on and start crafting business processes beyond what's available for my service-oriented architecture (SOA) internally, or what I have used in terms of regular old enterprise software?"

Kemsley: I think it has huge potential, but one of the issues that I see is that so many companies are afraid to start to open up, to use external services as part of their mission-critical businesses, even though there is no evidence that a cloud-based service is any less reliable than their internal services. It's just that the failures that happen in the cloud are so much more publicized than their internal failures that there is this illusion that things in the cloud are not as stable.

There are also security concerns as well. I have been at a number of business process management (BPM) conferences in the last month, since this is conference season, and that is a recurring theme. Some of the BPM vendors are putting their products in the cloud so that you can run your external business processes purely in the cloud, and obviously connect to cloud-based services from those.

A lot of companies still have many, many problems with that from a security standpoint, even though there is no evidence that that's any less secure than what they have internally. So, although I think there is a lot of potential there, there are still some significant cultural barriers to adopting this.

Gardner: Let's go to Tim Minahan on that. Tim, what's the answer to these cultural and other inhibitors? Is there low-lying fruit -- people who would love to get out and do B2B activities? Even if there is the perception of risk, they are going to do it anyway, because it's so attractive?

Security always an issue

Minahan: First, on the security note, security has always been an issue. That was the rubric, even back to original EDI days on, "Am I going to exchange this? It's much more secure when I mail it to them."

Ultimately, when you look at the scale that a cloud or SaaS vendor has -- in many cases those that are processing large transactions right now -- the level of investment they should make around security is quite significant, more significant than not all, but most of the participants in that community.

So, that's something that continues to come up. Increasingly, and probably because of the current economic situation, more and more companies are looking to what business processes they can put in the cloud, whether it be a commerce process or talent management.

. . . The cloud provider, because of the economies of scale they have, oftentimes provides better security and can invest more in security, partitioning, and the like than many enterprises can deliver themselves.

Gardner: Tim, I think I heard you say that basically you get what you pay for. When it comes to security, if you are willing to invest, then you can get the level of security you need to do whatever it is that you need to do.

Minahan: What I'm saying is that the cloud provider, because of the economies of scale they have, oftentimes provides better security and can invest more in security, partitioning, and the like than many enterprises can deliver themselves. It's not just security. It's the other aspects of your architectural performance.

Gardner: I see. So, the cloud provider being centralized and having a methodological approach can look at the whole security picture and actually implement on it. Enterprises that are distributed, scattered, and have been working toward security from a variety of perspectives for 10, 15, or 20 years, don’t always get that opportunity to get the top-down approach?

Minahan: Exactly.

Gardner: Jason Bloomberg, what do you think about this notion of business commerce clouds, and is this something that's going to happen in the near term?

Bloomberg: I must say that I am coming at it from a skeptic's perspective. It doesn’t sound like there's anything new here. As Tony was pointing out, we were talking about this 10 years ago. There just doesn’t seem to be that much that is particularly new or different.

We're using the word "cloud" now, and we were talking about "business webs." I remember business webs were all the rage back when Ariba had their first generation of offerings, as well as Commerce One and some of the other players in that space.

Age-old challenges

The challenges then are still the challenges now. Companies don't necessarily like doing business with other organizations that they don't have established relationships with. The value proposition of the central marketplaces has been hammered out now. If you want to use one, they're already out there and they're already matured. If you don't want to use one, putting the word "cloud" on it is not going to make it any more appealing.

So, really, I'm looking for anything new or different here. It really sounds more like just old wine in new bottles. Vendors are just saying, "Let's do cloud," but, if anything, cloud is introducing more problems than solutions.

Talking about security is a bit of a red herring, because some of the cloud issues are really more broad governance issues than security issues. Two events in the last few weeks have highlighted this fact. One is the Microsoft Sidekick data loss problem, where the Sidekick mobile devices stored their data in the cloud instead of locally on their device. Microsoft dropped the ball, and the data were lost for a while. While that wasn't strictly speaking a security issue, it was a more subtle issue.

The second was where a spammer got into Amazon's EC2, and put the entire EC2 cloud environment on a spam blacklist. So one bad apple basically got all of the IP addresses for the EC2 environment on the blacklist. Again, not strictly speaking security. It's security related, but it's really more of a complex issue than that.

I predict we will have a number of other issues like that, unexpected cloud-based problems that aren't along the lines of traditional issues that we have seen, web-based security issues.

I predict we will have a number of other issues like that, unexpected cloud-based problems that aren't along the lines of traditional issues that we have seen, web-based security issues.

Everybody is familiar with denial of service (DOS) attacks and other issues like that, but we are going to have new and different kinds of issues that are going to slow down adoption of cloud, on the one hand. Then, you will also have the issue that a lot of these marketplaces are nothing new. They are already out there. They are already established, and there isn't necessarily a lot of additional advantage to be gained by buying new gear or moving to a cloud provider.

Gardner: Tim, how about that? Other than injecting the word "cloud" in here, putting some lipstick on something that already exists, what's new?

Minahan: First, I want to address the bastardization of the term "cloud." The Microsoft Sidekick example is a good one, where the cloud bigots rushed to use that as just another example of how cloud is dangerous.

Just because you store your data in a central repository that's hosted, it doesn't necessarily make it a cloud. So, I think there is some misgiving there that folks are lining up on one side of the aisle to try to dispel that.

Creating efficiencies

Second, as it applies to the cloud and the commerce cloud, what's interesting here is the new services that can be available. It's different. It's not just about discovering new trading partners. It's about creating efficiencies and more effective commerce processes with those trading partners.

I'll give you a good example. I mentioned before about the Ariba Network with $111 billion worth of transactions and invoices being transferred over this every year for the past 10 years. That gives us a lot of intelligence that new companies are coming on board.

An example would be The Receivables Exchange. Traditionally sellers, if they wanted to get their cash fast, could factor the receivables at $0.25 on the dollar. This organization recognized the value of the information that was being transacted over this network and was able to create an entirely new service.

They were able to mitigate the risk, and provide supply chain financing at a much lower basis -- somewhere between two to four percent by using the historical information on those trading relationships, as well as understanding the stability of the buyer.

What we're seeing with our customers is that the real benefits of the cloud come in three areas: productivity, agility, and innovation.

Because folks are in a shared infrastructure here that can be continually introduced, new services can be dialed up and dialed down. It's a lot different than a rigid EDI environment or just a discovery marketplace.

Gardner: Tim, isn't there also somewhat of a business model shift here? If those costs come down, as you're projecting, because of the efficiencies of cloud, then the savings can be passed along. Isn't it possible we could see something along the lines of the Apple App Store, where, all of a sudden, volume and participation go up, some sort of a network effect, due to the fact that the cost of the applications has come down quite a bit. Is there something like that going on?

Minahan: Yeah. Cost is one aspect of it. When most people talk about the benefits of the cloud, they talk about the cost discussion. What we're seeing with our customers is that the real benefits of the cloud come in three areas: productivity, agility, and innovation. I'll spend a moment on each.

When you talk about productivity, we have talked to CFOs and CIOs today who just took a lot of cost and headcount out of their operations, thanks to the downturn. All indications are that they're not going to hire them back, even when the economy rebounds. The cloud gives them an opportunity to drive efficiencies and productivity, really without adding infrastructure.

Core competence

The second area is agility, which has become a core competence for a successful business. Many companies got caught flatfooted with the downturn, and they are just gun shy to make that same mistake again. So, the cloud gives them a new way to dial up infrastructure and resources, as needed, and the flexibility to dial them down, when they don't need them.

But the last part is that the greatest benefit of all here is innovation. That's the greatest benefit of the cloud in general, but in the commerce cloud in particular, because companies are sharing their business applications, processes, and infrastructure with their trading partners. They can benefit from the innovation of the entire community.

Your analogy to iTunes is perfect. It's the ability to have the community actually develop or offer best practice process services that can be utilized by other members of the community. That's the type of thing we are beginning to see: New business processes that are built on top of the cloud, because you already have the technology, the community, and the capabilities built in.

Gardner: JP Morgenthal, you're not a cloud bigot, are you?

Morgenthal: A cloud bigot? No. My vision for the cloud is far beyond the basic economic principles, and has yet to be realized. Economic factors are just the start of the groundswell that will bring people there, but the real value won't be seen unless the community comes. Once the community comes, I think we will see some really interesting things occur.

Web services, cloud, nothing really has moved the ball forward from the real problem of two partners coming together, establishing an agreement, and doing work together.

But what I want to address with regard to this is that from 2004 through 2008, I basically had developed a platform as a service around supply chain management and warehouse management for enterprise manufacturing and retail. So, I got some inside view into how this community really works, and a lot of their needs for communicating with each other.

I'm skeptical. I was at XML Solutions as their CTO when we first started doing B2B and building up the first exchanges, and the same problems are still there. They haven’t gone away. Emerging technologies haven’t differentiated that. Web services, cloud, nothing really has moved the ball forward from the real problem of two partners coming together, establishing an agreement, and doing work together.

Putting additional information in the cloud and making value out of that add some overall value to the cost of the information or the cost of running the system, so you can derive a few things. But, ultimately, the same problems that are needed to drive a community working together, doing business together, exchanging product through an exchange are still there.

Gardner: JP, aren’t you describing a great opportunity, though, for some organization to come in and perhaps be neutral enough, where they could play the role that Apple is playing with the App Store, and attract a community of developers, participants, contributors, but also bring together the audience that can consume? It seems to me that Ariba, as well as others, have this in mind. The cloud might be a way in which that opportunity can finally be realized. Is that possible?

Not for the cloud

Morgenthal: I don't see the cloud as being the thing to realize this. This has been a vision, dream, and goal of many of these exchange environments -- WorldWide Retail Exchange, the 1.4 Exodus I believe is the one now. We've had these environments. They exist. It's not a matter of getting developers to come build anything for it.

What's being done through these environments is the exchange of money and goods. And, it's the overhead related to doing that, that makes this complex. RollStream is another startup in the area that's trying to make waves by simplifying the complexities around exchanging the partner agreements and doing the trading partner management using collaborative capabilities. Again, the real complexity is the business itself. It's not even the business processes. The data is there.

I was working with a automotive retail group that contributed their parts and excess inventory into an exchange. Everybody did that. The thing they were contributing to was about exchanging and the other groups within that same community were looking for those excess inventories and being able to purchase them.

Even that, which sort of sounds like it should have been fairly simple, was overly complex, because of the underlying business requirements around it and exchanging funds and getting paid. Technology is a means to an end. The end that's got to get fixed here isn't an app fix. It's a community fix. It's a "how business gets done" fix. Those processes are not automated. Those are human tasks.

When folks talk about cloud, they really think about the infrastructure, and what we are talking about here is a business service cloud.

Gardner: Tim, the issue here seems to be that business is tough. There has to be trust. There have to be contracts. There has got to be the exchange of funds, basically a handshake in the sky. But, that's only as good as the handshake would have been in real physical terms. What's your response to that? Are there other areas that can be automated, where those business trust issues aren’t quite as prominent?

Minahan: I totally agree. If you go back to my original statement as to what's in the cloud, I think there is some mistaking here. When folks talk about cloud, they really think about the infrastructure, and what we are talking about here is a business service cloud.

Gartner calls it the business process utility, which ultimately is a form of technology-enabled business process outsourcing. It's not just the technology. The technology or the workflow is delivered in the cloud or as a web-based service, so there is no software, hardware, etc. for the trading partners to integrate, to deploy or maintain. That was the bane of EDI private VANs.

The second component is the community. Already having an established community of trading partners who are actually conducting business and transactions is key. I agree with the statement that it comes down to the humans and the companies having established agreements. But the point is that it can be built upon a large trading network that already exists.

The last part, which I think is missing here, and that's so interesting about the business service cloud, or in this case the business commerce cloud, are the capabilities. It's the ability for either the solution provider or other third parties to deliver skills, expertise, and resources into the cloud as well as a web-based service.

It's also the information that can be garnered off the community to create new web-based services and capabilities that folks either don't have within their organization or don't have the ability or wherewithal to go out and develop and hire on their own. There is a big difference between cloud computing and these business service clouds that are growing.

Gardner: Tony Baer, it seems that our discussion today automatically went to the enterprise level, the big global 2000 type companies. What about a small to medium-sized business (SMB), an organization that perhaps didn't have the wherewithal, either through technology or budget to engage in an EDI way back when, EAI later on, or business exchanges? Is there an opportunity for the cloud to open up the addressable market for these e-commerce activities, B2B activities, to that smaller kind of company?

Same promises

Baer: It's kind of interesting. I was chuckling as you were mentioning that, because I remember that the same promises were made when the idea of Internet-based EDI came up. "Gee, this is a way to avoid the costs and overhead of proprietary value added VANs. Now, we can reduce the handshaking process, so we can get all those tier three and tier fours into electronic commerce," which at that time was defined as EDI.

I agree with you that EDI itself is several generations behind what we are talking about here. There's no question about that. There are certainly possibilities, because obviously, as you go further back up the supply chain, going toward the smaller companies, the security requirements are not always going to be as severe.

On the other hand, if they are part of a trading-hub type network -- in other words, that they are hooked into or tapped into a Toyota or something like that -- the fact they are a small company doesn't mean that they're not going to be subject to Toyota’s requirements, especially when it comes to security and other types of contractual obligations. I'll give you a mixed yes and no answer there.

For small businesses trading amongst themselves, there probably is going to be some modest upswing there, especially in terms of being able to expand themselves to address a wider market. But, there are still some real limits there, especially if they are dealing with large, let's say, tier one trading partners.

That's where I think you will see the most success with these commerce clouds -- a very specific community of like-minded suppliers and purchasers that want to get together and open their businesses up to one another.

Gardner: Brad Shimmin, you've been dealing with both SOA and collaboration issues. Is there an opportunity for these smaller companies, larger companies, or divisions within larger companies to go find themselves some workflow application in the sky? Maybe even something like Google Wave, which is now getting lots of invites. People are now starting to play around with this thing, maybe an ecosystem of contributors, developers.

Is there an opportunity for the point on the arrow to this business commerce cloud to come in the form of workflow and collaboration? Then, when you reach a point within that workflow or collaborative activity where you need some kind of a service, or product, or business partners, this cloud can be there as a resource. Maybe it can be a marketplace, auction, or exchange, where you look for the best price and the best service. What do you think about that?

Shimmin: That's a really great idea. I have a two-part answer for you. The first goes back to what Tim was saying about how this should look like Apple App Store. I agree, but that's not the full picture. The fuller picture is to look at it as a combination of that and the Amazon marketplace. That's where I think you will see the most success with these commerce clouds -- a very specific community of like-minded suppliers and purchasers that want to get together and open their businesses up to one another.

And what Tim was getting at, which is the great part of this is, is that it's unlike the Amazon-only model. I'm not talking about EC2, by the way. I'm just talking about the Amazon store itself.

Gardner: That's right. They are the front-end retail part, where you then can exchange dollars and buy from a variety of other players. So it's a B2B description of an e-commerce cloud, right?

Cost of entry

Shimmin: Right. I wanted to stay away from the whole Amazon Web Services (AWS) side of this back to the generic cloud, just talking about a like-minded group of community or a community of companies. They want to be able to come together affordably, so that the SMB can on board an exchange at an affordable rate. That's really been the problem with most of these large-scale EDI solutions in the past. It's so expensive to bring on the smaller players that they can't play.

Amazon has really solved that problem, if you look at how they run their fulfillment procedures. I see that with a combination of the iTunes idea -- those suppliers themselves contributing to that environment, that ecosystem, by building a business process that does something that's maybe specific to them. Or, maybe it's something that's generalized enough that everyone can make use of it.

That's the widgetized rendition of, "Hey, I want to on board, and I see that I've got a widget that lets me open up a certain business process and make use of it." That's the key to bringing on these smaller players and letting them actually make money more affordably than before.

The second part of that answer was about the social side of this thing. That's where I think that you really don't want to see a generic über e-commerce, cloud commerce computing site, that's supposed to be everything to all things. It's why you don't see a forum on all topics in the world. You see forums on very specific topics.

Gardner: We don't see a Wal-Mart equivalent in the B2B space, right?

Shimmin: Right. When you have that sort of like-mindedness, you have the wherewithal to collaborate. But, the problem has always been finding the right people, getting to that knowledge that people have, and getting them to open it up. That's where the social networking side of this comes in. That's where I see the big EDI guns I was talking about and the more modernized renditions opening up to this whole Google Wave notion of what collaboration means in a social networking context.

That's one key area -- being able to have the collaboration and social networking during the modeling of the processes.

What you are getting at with that kind of solution is this expertise of, "It's midnight, and I am sorry, but I do need to get this widget. Who out here has that? Let me on board you quickly, and let's fulfill my supply chain needs." Boom, presto, we are connected, and we are making money.

Gardner: Sandy Kemsley, we've been fishing around for why a cloud environment will spur on this business commerce activity. Maybe we should be looking at the social networking aspects as well. What, from your perspective, in a social networking environment for business purposes might spur on this sort of exchange-in-the cloud activity?

Kemsley: Well, Dana, I think there are two interesting sides to that. This is where I see collaboration and social networking coming to play on BPM. One is on the process discovery and modeling side, being able to collaborate with people, usually in different organizations, on what your processes are.

When you're looking at processes that include commerce aspects, if you are doing B2B between two businesses, then definitely you want to get everybody involved in modeling those processes. That's one key area -- being able to have the collaboration and social networking during the modeling of the processes.

The second is during execution. When you are executing a process, whether it's an internal process, or one that's reaching out to other companies as well. It's being able to collaborate out of step in the process in order to accomplish whatever task it is that's being assigned to you at that step. That might include calling out to people who are inside or outside your organization. Having your business processes executing in the cloud usually gives you more latitude to be able to call on people outside your own organization and to collaborate at a point in the business process.

Those are the two main areas that I see social networking coming to play with BPM.

Gardner: Let's bounce it back to Tim Minahan at Ariba. We've mentioned SMBs. Is this something for them? We've mentioned collaboration and workflow. Will those be points in the arrow to adoption? Then, we've addressed the social networking aspect. Maybe, you have some feedback on those three issues?

The community is key

Minahan: I'll start with the last here -- the core component, the commuity. What Gartner calls the business-service clouds or business process utilities, the core component of that, particularly when you are talking about inter-enterprise collaboration, is indeed the community.

We use the term "community" and not just network or VAN or something like that, because it's not just about the transaction. It's about the exchange of expertise. It's about the ability to develop affinity groups, and the ability to either resell or share best practice business processes.

We're seeing that already through the exchange that we have amongst our customers or around our solutions. We're also seeing that in a lot of the social networking communities that we participate in around the exchange of best practices. The ability to instantiate that into reusable workflows is something that's certainly coming.

Folks are always asking these days, "We hear a lot about this cloud. What business processes or technologies should we put in the cloud?" When you talk about that, the most likely ones are inter-enterprise, whether they be around commerce, talent management, or customer management, it's what happens between enterprises where a shared infrastructure makes the most sense.

Every downturn spawns the next area of innovation.

Gardner: How about those SMBs? Is this something that's right for them?

Minahan: Absolutely. Every downturn spawns the next area of innovation. In the downturn that we have gone through, look at the advantages SMBs have right now -- not to have to develop information or workflows.

If they can borrow best practices from the commerce cloud, from other large companies, get on board very, very quickly and at a much lower cost, and get engaged at a much lower cost, that's an advantage for them. They can focus on how they create the competitive differentiation instead of managing infrastructure.

Gardner: So, borrowing on a lot of cloud activities, you give away a part of the process in order to then capitalize or monetize on something else, maybe a little further down the process?

Minahan: Exactly.

Gardner: That might be of interest to the small businesses. Jason Bloomberg, going back to you, have you heard anything along the lines of the collaboration in social networking that strikes you as new? We didn't really have this social networking phenomenon 10 years ago or even five years ago. Has that changed the game at all, when it comes to these business process exchange activities?

Social networking

Bloomberg: Clearly, social networking is an important part of the story. It was one of the things that was still too immature back in the late '90s, that we saw in early part of this decade really coming to the fore. That's the key part of the story, but I wouldn't say that it's necessarily a cloud thing. Social networking is one thing, and cloud is something else.

What I hear happening on this conversation is the word "cloud" just being spread so thin that it's becoming less and less meaningful. It's easy to say, "Oh, well, a hosted-provider model like Sidekick isn't cloud computing," but most people would consider that's to be cloud computing.

Now, we were talking about business service clouds and business process clouds, and the word "cloud" is becoming so general. It's like anything that is external to enterprise is now a cloud. Oh, by the way, some internal enterprise is also a cloud. And, oh, it could be a software, and maybe it's not software. Maybe it's business process, or maybe it's something you do. Maybe it's social networking.

It's becoming such a very broad term that I think we're risking watering it down to the point that it's nothing but a cliché. I would recommend that if you're going to use the term "cloud computing," come up with a clear definition, where there is certain distinction between what is cloud computing and what is not.

The audience for this particular type of requirement is certainly looking for economies of scale, and is very good at it.

There's nothing wrong with the business marketplaces and the business web idea from the 90s, but it isn't necessarily the same thing as cloud computing, and extending the word "cloud" just waters it down to the point that it doesn't have any meaning anymore.

Gardner: I think "business commerce cliché" has quite a nice ring to it. JP Morgenthal, is this really Internet or is it not even worth bringing Internet into it? We just want to find better, faster, and cheaper ways to do commerce.

Morgenthal: You know that everybody is looking for efficiencies, and economies of scale. The audience for this particular type of requirement is certainly looking for economies of scale, and is very good at it. One of their issues to date, has been trust and not some reliance on the technologies. You've mentioned social networking. Back at Ikimbo, we had tried to introduce social networking around supply-chain management. We were starting to see some uptake before 9/11.

There probably is some merit to building secure communities of interest that allow people to communicate with their partners more effectively about what's going on in their business and their business needs and to move to a more just-in-time operation. Layout less capital expenditure. Have less inventory. Do more vendor ownership of the products and goods until they're sold.

Those are definitely areas of interest, and that can be driven by some technological change around these communities. Aa I said, we try to innovate perhaps too early. Maybe now the popularity around Enterprise 2.0 will mesh with that and business leaders will start to better understand how the two come together, versus trying to educate them. Any time you enter into a market that you need to educate, you find resistance.

Frivolous activity

By the same token, social networking also has a downside from the perspective that it's been introduced as a very frivolous activity versus a good solid business practice. Some of that may have to be undone now. You've got to do some reverse education, so to speak, to remove that frivolity from business leader's heads, around things like Facebook and Twitter, and how they impact business.

I know people who are out there helping business leaders understand and use social networking in their organizations, are going through a lot of those frustrations.

Gardner: Tim Minahan, you're our guest this week, so we'll give the last word to you. For those organizations and folks listening to the show, what should they be keeping in mind as they consider what business services and processes for pure B2B commerce activities belong in the cloud? What should they keep their eye on and how might they even get started in participating?

Minahan: When you think about the cloud, it's about the shared application instance or infrastructure that's ultimately shared among, in this case, multiple trading partners. As you mentioned before, it goes back to its primordial ooze stage. They probably backed out object-oriented architectures that became component-based architectures and SOA and are now moving toward the cloud.

When you get right down to it, it's about assembling the best business practice for your company. CIO's become much more relevant. They become business process architects.

In this case, good business processes to consider are those that go between enterprises. Go back to Willie Sutton, the bank robber. Why did he rob banks? Well, that's where the money was. Well, why do you want to focus on improving your commerce efficiencies and effectiveness. It's because that's what's required to grow your business.

Gardner: Alright. We've been joined by Tim Minahan, the CMO at Ariba. Thank you very much for joining.

Minahan: Thank you for having me.

Gardner: And, we've had our panel of IT analysts this week. Sandy Kemsley, independent IT analyst and architect. Thanks so much for joining.

Kemsley: Thanks, it was a great time.

Gardner: JP Morgenthal, independent analyst and IT consultant. Thank you, sir. Jason Bloomberg, managing partner at ZapThink. I always appreciate your input.

Bloomberg: It's been a pleasure.

Gardner: Brad Shimmin, principal analyst at Current Analysis. Thank you for joining again.

Shimmin: Thank you, Dana, and Happy Halloween everyone.

Gardner: And I hope it wasn't too spooky for you, Tony Baer, senior analyst at Ovum.

Baer: I wasn't too scared, but it was a very fascinating conversation. Thanks, Dana.

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

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

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

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Edited transcript of BriefingDirect Analyst Insights Edition podcast, Vol. 46 on "business commerce clouds." Copyright Interarbor Solutions, LLC, 2005-2009. All rights reserved.