Enterprises Should Harness the Power of Social Media to Better Know Their Markets, Says Capgemini

Transcript of a BriefingsDirect podcast on how businesses need to respond to a marketplace changed by social media mechanisms.

Listen to the podcast. Find it on iTunes/iPod. Download the transcript. Sponsor: Capgemini.

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

Today, we present a sponsored podcast discussion on the impact that social media is having on enterprises. We’ll specifically examine what steps businesses can take to manage social media as a market opportunity, rather than react to it as a hard-to-fathom threat.

Social media and the increased role that communities of users have on issues, discourse, and public opinion are changing the world in many ways, from how societies react such as in the Middle East turmoil, to how users flock to or avoid certain products and services.

The fact is that many people are now connected in new ways and they’re voicing opinions and influencing their peers perhaps more than ever before. Businesses cannot afford to simply ignore these global -- and what now appeared to be long-term -- social media trends.

We'll hear today from an executive at Capgemini on how social media matters and how services are being developed to help businesses to better understand and exploit the potential of social media far better. This is the first in the series of podcasts with Capgemini on social media issues and business process outsourcing. [Disclosure: Capgemini is a sponsor of BriefingsDirect podcasts.]

Please join me now in welcoming our guest, Paul Cole, Vice President of Customer Operations Management and Business Process Outsourcing at Capgemini. Welcome to the show, Paul.

Paul Cole: Thank you very much, Dana.

Gardner: Paul, it seems a bit of a twisted logic when we say that social media can be both a threat and an opportunity. Let’s start at a fairly high level. How could social media be both to your average business?

Cole: It's all in how you decide to respond. Social media, in and of itself, is a neutral topic. It could be viewed as a utensil or a platform, upon which you can do things. And depending on your intent, whether you’re an enterprise or a customer, those activities could be viewed favorably or negatively. And that's true as much in the sociopolitical world as in business.

The important thing is that social media is the platform, not the action itself, and it’s really what you decide to do over that platform that makes the difference in business and in the world at large.

Gardner: We’ve had this kicking around for a few years. Some people really expect this to be a fad, a flash in the pan. I think it’s now safe to say that that's not the case. Do you have any evidence, research, or findings of any sort that bolster this notion that social media is a sea change and not just a blip?

Game changer

Cole: Well, based on a survey we commissioned last winter, somewhat surprisingly, a bit more than one in 10 executives did characterize it as a fad relative to the business world.

However, you can look at it in the everyday world around us and the media as it relates to impact on society and in the sociopolitical spectrum, and there's very little doubt that it’s changing the game there. I believe it will have an equally profound impact on business over time.

Social media has become the bullhorn of the 21st century. It allows people to spread their message, to amplify that message, to mobilize the community, and also to monitor in real time the events as they unfold.

We are having to deal with it across the political, social, and cultural spectrums. Witness, unfortunately, the emergence of something that we’re now calling flash mobs, a case where the platform is being misapplied toward organizing a community of people who have damaging intentions.

So back to your question on threat or opportunity, significant or insignificant impact, it’s all based on the intent and actions of the individuals utilizing the utensil.

It’s all a matter of how you take that information and translate it into actionable insights, against which you can make some smarter business decisions.

Gardner: On one hand, we seem to see a lack of control or at least different aspects to how people behave. We don’t have the necessary tools. But on the other hand, we're seeing a lot more information generated, and information often is the lifeblood of how organizations react and adjust to markets.

So what is it about this information? Maybe it’s being used and applied wrongly in some instances, but the fact is that people are providing more data and information about what it is they do, what they want, who they are. That to me is I think something quite new.

Cole: Information overload is one potential consequence of this. It’s all a matter of how you take that information and translate it into actionable insights, against which you can make some smarter business decisions, and from our perspective, ultimately deliver a better customer experience which will help you grow.

What’s neat about what’s happening in the world of technology, on top of the social environment, is that there is a whole new generation of tools emerging that allow you to develop that insight.

There are four steps that a company can go through to generate social intelligence. First, is listening to what is going on out there. There has not been an earpiece for us to really take the pulse of the market, and what's happening in the virtual world or the internet world until the recent development of some of these social listening tools. So the ability just to know what's going on, who is saying what, who are the influencers, what are their sentiments is an important first step.

Monitoring change

The second step is the ability to monitor that over time and see how attitudes, perceptions, and most importantly, behaviors are changing and what are the impact and implication of that for your business, either from a marketing or a selling or customer service standpoint. In addition to monitoring that, you’re also now able, with text analytics tools to not simply track and describe what happening, but also isolate cause and effect.

So if I'm launching a Twitter campaign, putting a new product out there, running a contest, or engaging in some kind of social care activity, what is the impact it's having in terms of the customer’s behavior and what adjustments can I make to be more successful?

It's being able to get attribution and get to a root cause by applying these analytic tools. So you've listened, monitored, and analyzed. The killer app, if you will, is the last step of closing loop in terms of your ability to respond. So many companies today are putting their toe in the water in the social world by listening with these tools and trying to understand what's being said. It's new enough where not that many have actually industrialized their process for responding.

Ultimately, your ability to now go back into that community and influence the customer or attempt to influence the customer and their behavior is where there is a tremendous upside for companies in terms of generating higher growth and profit.

Gardner: We’ll discuss a bit more of how to do that, whether this is something that’s integrated into existing processes and functions in the business or it's something new. But, before we get into that, I’d like to hear about how Capgemini got involved?

How is Capgemini working toward some solutions on this? Maybe you could give us a little bit of background on the company as a whole, and we’d like to hear about how you got involved with the social media drive as well?

The question then becomes, as a provider of services, how to translate that into sets of offerings that add value for our clients.

Cole: At one level, you could look at social media as a wave or a phenomenon. I’ve been in the professional services, technology services business for 30 years, and we’ve seen the waves come and go, whether that would be CRM or ERP through SAP or eCommerce, which I think this mirrors quite a bit, and Y2K. So there's always an emerging area that people will try to understand, chase, and then capitalize on.

As a global provider of consulting technology and outsourcing services, Capgemini attempts to keep its finger on the pulse of market. You have to be blind and deaf to not recognize that social media has quickly emerged on the scene. The question then becomes, as a provider of services, how to translate that into sets of offerings that add value for our clients.

My particular area of expertise is around customer management. So I look through the lens of how a company acquires, develops, and retains its customers and how can we manage some of that process for them in a faster, better, or cheaper manner. We do that today in traditional forms with managing their call centers or their customer service operations, helping them present stronger web content, providing them with insights through analytical services, and so forth.

What social media started to suggest to us was that there was a new opportunity to bring another service to the market that allowed clients to focus on the business problem that they’re trying to solve and provided us the opportunity to provide them with everything they needed to mobilize around that objective in the social world.

Gardner: Paul, we’ve recognized that having good conversations and communication from customers and markets into the company is important. It's how companies decide what new products and services they're going to undertake, and how to better market the services and products that they already have in production and delivery, and then also they need to communicate back out to the market in the form of helpdesk, service, support, marketing, and sales.

Existing channels

Social media seems to me to be just an amplification on existing channels. What we seem to be seeing is that organizations don't know quite how to execute on that. I think they recognize in many cases the opportunity, but they don't know who in the organization should be responsible, who runs herd on social media, how does it get integrated into these functions, or whether it's ingoing or outgoing communications outreach and support.

Do you have any sense of what's going on in those businesses, as they react to social media? What's the pattern if any in terms of who gets to run with this and what they're doing?

Cole: In and of itself, social media is not going to drive your business forward. As we've discussed, it's really a platform or a utility upon which you can engage customers for one or more activities based on a business objective. It does, at the end of the day, relate back to what you're trying to accomplish.

When I went to school, we were trained on the four Ps in marketing. You develop a product that the marketplace is interested in. You price that product at a level that the consumer or customer perceives value so they want to transact with you. You need to promote that in terms of distinguishing you against your competitors and bring that product to market with some form of distribution. We call that the four Ps.

Obviously you still need to do all those things, but in the social world now, there is a new twist. If you think about the product, we used to take a very linear approach to doing market research, testing concepts, via surveys and focus groups. In today’s social world, you can do that much more dynamically. There's a whole phenomenon around crowd sourcing with which you can solicit people's input and feedback and iterate on that massively, and closer to real time.

There's a whole phenomenon around crowd sourcing with which you can solicit people's input and feedback and iterate on that.

Your ability to get really close to the marketplace is enhanced tremendously by social media. In terms of promoting, it used to be broadcast media, but now you're able to do micro campaigns. You can do tweet campaigns. You can do campaigns through Facebook. Your ability to target the individual that you are trying to influence has gone up exponentially.

We've always talked about the segment of one, but it was very difficult to do. Now, you can get in there and really understand who is driving popular opinion, who are the big influencers, who do you need to convert to be an enthusiast or an advocate of your product, and launch very specific campaigns against them. It's a different form of promotion.

It's the same thing with pricing and distribution. While you still need to do many of the same activities, the way in which you will execute on those activities has evolved and become much more dynamic.

Gardner: How is this showing up in terms of ownership inside the organization?

Cole: Every function within the organization has a potential application in the social world. I don't think it's the kind of thing that any one executive or any one function is going to own per se.

It's a matter of looking at it through the lens of the process that you're responsible for, and trying to understand how to apply new thinking and activities to improve your efficiency or your effectiveness of that area. That could be public relations and the brand, marketing and developing effective positioning, product development and management, selling through more targeted campaigns or, at the end of the value chain, a better servicing of the customer to generate greater loyalty.

Different ways

Gardner: One of the things that concerns me about how organizations adapt and adopt to solving their social media problems and capitalizing on it is that different organizations within the company will go at this in different ways.

This can probably lead to redundancy, probably lead to mixtures of data with different formats and we probably we'll find ourselves back in that same problem we have had with many applications. That is manual processes, different approaches to how to solve problems, and different data approaches. So you have this big integration problem in a couple of years.

Does it make sense for these organizations to look at social media as a platform, as you've been describing, with a common standardized governance and/or data approach, and therefore make those available as services to marketing, to the analytics and business intelligence folks, to the helpdesk and service management? Are we going to repeat history and have a fragmented approach to this or is there a better way?

Cole: You’ve really put your finger on a core issue. It all depends. What is social media? That depends on who you are and what you're trying to accomplish. That’s going to be variable based on your area of responsibility within the enterprise.

There is something to be said for standardization and taking a platform-based approach to avoid the recurring tendency of investing in your own individual solutions and then lacking interoperability or having to face integration issues and so forth.

By buying into a managed service the company can avoid having to make capital investments in the technology, avoid the potential risk of different groups going off and doing their own thing.

While the application of what you do on top of the social platforms may vary, there is potential for the organization to operate as an enterprise on top of a single instance of a platform. That’s part of why we got into offering a managed service.

We allow the client to focus on what they are trying to do in the marketing, selling or customer service world. We provide them with the infrastructure, the technology, the process discipline, the data, and importantly, the social media advocates, the human intelligence layer that is ultimately conducting the monitoring and the analytics and the interpretation of what’s happening there.

By buying into a managed service the company can avoid having to make capital investments in the technology, avoid the potential risk of different groups going off and doing their own thing. They can remain current, because they don’t have to pay attention to this fast paced dynamic technology market and what is the state of the art. That would be our responsibility.

Hopefully, it's the best of both worlds. They can each, as user communities, decide what they want to get out of social media, but be able to leverage the fact that they're all investing in a common platform.

Gardner: Social media isn’t the only trend buffeting up against businesses nowadays. There's cloud computing, software as a service (SaaS), mobility, and increased devices, and these are global trends, not by any stretch relegated to one or two markets or regions.

Commonality with cloud and SaaS

Is there an opportunity here for recognizing that the social media and the cloud and the SaaS approaches have some commonality. Where I'm going with this is that a social media metadata about what users are thinking and doing, could be a cloud resource and better positioned there so that that same data can be delivered and updated and managed.

If you come from a data-management background, you might recognize that having a system of record in a good, clean copy that’s updated and then sharing it is a great thing. Do you have any thoughts about how cloud and social come together to help organizations capture the best data and provide the best services when it comes to social media and its offspring?

Cole: Again, it’s just part of the evaluation of technology. It is a different way of storing, distributing, and accessing the data. What it translates into for us is the ability to provide process as a service. That’s a fundamental shift in the marketplace that’s occurring as a result of the development of cloud capabilities.

Organizations can just tap into a service, and that makes it easier for them to get into a new area. It’s faster, it’s less expensive. We're trying to apply that same concept to social media. We can provide a faster, better, and/or cheaper approach. The client buys the process as a service on a subscription model.

We assure the integrity and security of the data. We provide the data management, the repository, the infrastructure, and the toolset. You're buying a service around a process, whether that be listening to your customers, wanting to launch marketing campaigns, providing social care or whatever.

The whole SaaS cloud phenomenon is just changing the distribution model and also facilitating an easier approach for companies to get up and running in this area.

The whole SaaS cloud phenomenon is just changing the distribution model and also facilitating an easier approach for companies to get up and running in this area.

Gardner: Paul, do we have any examples, use cases that you’re aware of on a named basis or anonymous, or perhaps even how Capgemini itself is using social media to its own effect. Do we have any actual examples of how this works and what it actually can accomplish?

Cole: While we're early in the evolution of social business and its potential impact on profitable growth, there are plenty of examples out there of early successes. We’ve probably done 20 programs. Where it’s proving to be most successful so far is in products and service areas where there is a high degree of passion or involvement.

If we look at hospitality, automobiles, or electronic games, we’re finding a high degree of engagement, involvement of customers, and a high degree of interest in sharing their perspective. We’ve done support for marketing campaigns for a new launch for an adult beverage, where we were able to help our clients tweak their campaign geographically and in terms of the market segment it’s gone after.

Reduce call volume

For another client that supplies gift cards to the big brands, we help them understand customer service in an attempt to reduce the call volume into their call center because we were able to isolate the problem quickly, fix it and broadcast the message.

For a global retailer of furnishings, we were able to isolate on a particular segment that they felt have been underserved and understanding their motivations for using the store, and helping them create a new positioning against that segment.

Gardner: It’s impressive to me that social media can have so many different impacts, that it can be used and/or perhaps come in with a disadvantage, but it’s impactful at so many levels.

It seems to me that this notion of social media management then is really important. It’s not just executing on any one of them, but really having that holistic approach. Maybe you could explain a bit more what you mean by social media management in addition to these ways in which it can be so useful.

Cole: First of all, in terms of its all-encompassing kind of influence, there are strong parallels to the early Internet days, in the '90s, where everyone knew that there was a sea change occurring in the nature of how we could interact and exchange values in business.

We’ve got to do it, but over time it will settle down and companies will interpret it as a platform that they could do all kinds of things on and actually add another channel.

But it wasn’t quite clear yet how that was going to reveal itself. So it was a bit of a fad or a shiny new object, but ultimately it became another channel. It found its equilibrium, and companies learned how to conduct business over the Internet, as opposed to the traditional face to face, over the phone, or whatever, or through the retail channel.

Similarly with social media, at the moment it’s a little bit of a "du-jour" phenomenon. We’ve got to do it, but over time it will settle down and companies will interpret it as a platform that they could do all kinds of things on and actually add another channel.

They need to manage the channel. It may sound somewhat antithetical to say social needs to be managed, because really what we’re talking about in the social world is influencing communities. I'm not sure that it is manageable, but we want to provide them with a service that helps them manage customers' perceptions and actions.

Gardner: Lastly, Paul, I'm interested in how organizations can get started. This seems to be one of those issues where it has so many implications It's rather complex. Getting started, knowing where to actually put a stake in the ground and get moving can be daunting.

Where do you suggest that folks get started on how they pursue social media management and perhaps then look to outsource it and find that platform benefit approach.

Trying to understand

Cole: As evidence of the fact that it is a new phenomenon, you can just notice the volume of conferences that are out there with social media in the title. It just reinforces that companies are trying to understand still what "good" looks like. They’re out there looking for best practices. They are still paying for "PowerPoint," for consultants to come in and help them understand the strategy, the power of social, what that translates into in terms of metrics and governance, and so forth.

The market is very much in its exploratory stage. I'm not sure you can over-architect what social media means to you at the moment. This is something that you have to get in and dip your toe in the water. Instead of "ready, aim, fire," it's probably "fire, fire, aim, ready, fire." This means that you need to iterate.

You don’t know what you don’t know….. until you get in to the market and you start to listen to what is happening out there, identify who the key influencers are, where they're talking about, who are the advocates for the brand, and who are the potential saboteurs who can represent a threat? What are some of the kinds of programs and activities that one can run?

Rather than the grand strategies, the big-bang approach, this particular area is deserving of more experimentation, and iteration. Then, over time, we need the development of a broader strategy. But, you need to get in there, and listen, and learn, and act, and from that you'll figure out what works and what doesn’t work.

Gardner: I suppose it's the targeted pilot program approach and then iterating from that?

Cole: Exactly. Part of what we’re trying to offer our clients is the ability to do that faster than doing it themselves, where they have to go out, acquire the tools, hire the people, and put in place the processes.

In this case, they can say we want to launch a campaign and we’d like to understand how we can use the social world to solve customer service problems or whatever. We provide all the tools and capabilities to do that. They focus on learning and evolving their strategy of what to do in the social world.

Part of what we offer is the ability to bring to them the best of the tools that are out there, and it's an evolving world.

Gardner: It seems pretty clear that these tools and platforms aren’t necessarily themselves differentiators. It's what you do with the information that they provide that is the real business value.

Cole: That is true, but on the other hand, part of what we offer is the ability to bring to them the best of the tools that are out there, and it's an evolving world. We've worked with a myriad of software products in trying to understand what capabilities can be best applied to understanding the customer and engaging with them.

As part of that, in our Social Media Management Solution, we’ve built a joint solution with a company called Attensity, which really comes at the market initially from the text analytics world, but offers a nice suite of applications that enable your ability to listen, monitor, analyze what's being done, and then respond to the customer in terms of workflow and direct customer engagement. So it's what you decide to do, but it's also having the right toolset with which to do it.

Gardner: Are there any places to which we could direct our listeners and readers for additional information, perhaps whitepapers, other research, and/or more information on your services?

Cole: Certainly capgemini.com. We do have a featured social media section on the website. We've recently published a whitepaper called "Harvesting the Fruit from the Social Media Grapevine". We hope that clients will find that insightful. It's a bit of a point-of-view on where the market is today and where it's headed. That can be downloaded off of our website.

Gardner: You've been listening to a sponsored podcast discussion on how social media matters and how services are being developed to help businesses better manage and understand social media for their advantage, and move beyond the threat.

I want to thank our guest. We’ve been here with Paul Cole, Vice President of Customer Operations Management and Business Process Outsourcing at Capgemini. Thanks so much, Paul.

Cole: Thank you very much, Dana. I appreciate it.

Gardner: This is the first in a series of podcasts with Capgemini on social media and business process outsourcing. Look for additional podcasts on these topics across the BriefingsDirect network.

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

Listen to the podcast. Find it on iTunes/iPod. Download the transcript. Sponsor: Capgemini.

Transcript of a BriefingsDirect podcast on how businesses need to respond to a marketplace changed by social media mechanisms. Copyright Interarbor Solutions, LLC, 2005-2011. All rights reserved.

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Cloud and SaaS Force a Rethinking of Integration and Middleware as Services for Services

Transcript of a BriefingsDirect podcast of the role of cloud and SaaS in the changing landscape of application integration.

Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Download the transcript. 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 major trends around cloud, mobile, and software as a service (SaaS) are dramatically changing the requirements and benefits of application integration.

In many respects, the emphasis now on building hybrid business processes from a variety of far-flung sources forces a rethinking of integration and middleware. Integration capabilities themselves often need to be services in order to support a growing universe of internal and external constituent business process component services.

Here to explore the new era of integration-as-a-service and what it means for the future is David Clarke, Director of Integration at SaaS ERP provider Workday, and who is based in Dublin. Welcome, David. [Disclosure: Workday is a sponsor of BriefingsDirect podcasts.]

David Clarke: Hi, Dana. Good to be here.

Gardner: As I said, the past is necessarily prologue when it comes to integration. Why have the platforms, applications, and data of the past forced a certain approach to integration, and why is that ill-suited to what we are expecting and seeing more of every day with cloud and SaaS?

Clarke: One thing is that historically applications were built, structured, and architected in very different ways. When you tried to knit those things together, there was quite a diverse set of requirements, which needed to be addressed. And, there was a very wide variation in their architectures. So that implied a very general-purpose middleware that had to cope with many different and very diverse scenarios. That was one factor.

A second factor was that the middleware and the integration tended to come as an afterthought. So, it couldn't really influence or inform the way that the application platforms themselves were designed.

Those two things together made it more difficult than it needed to be. Then, what we're starting to see -- and what we are certainly hopeful of seeing in this generation built around cloud -- is that those two things aren’t necessarily the case. So, we can benefit more from having integration designed in upfront, and having a more consistent overall architecture, so that it’s essentially easier for it to plug into.

One third variable might be that customers historically also discounted or underestimated the likely impact or complexity of doing integration. They tended to come to them as an afterthought and then struggled with them. This time around, to some extent, they've been burned by previous generations. So they're more wary, and are additionally including integration more in their upfront planning.

Gardner: We're not necessarily talking about throwing the baby out with the bath water here. We're still going to be doing integrations in the traditional way. It's just that we need to add another category, and it seems that there is a benefit in that. We can use many of the tools, many of the underlying technologies that supported traditional middleware, and extend that into this services environment.

Clarke: Correct. There’s nothing fundamentally new, in some sense. I've worked in several generations of integration and middleware technology, and each one is a refinement of the past, and you're standing on the shoulders of giants, to badly paraphrase Newton.

Packaged and presented

A lot of the underlying technology you're using for integration, a lot of the underlying concepts, are not that new. It's just the way that they're being packaged and presented. In some cases, it's the protocols that we're using, and certainly some of the use models. But the ways you're accessing them and consuming them are different. So, it is in that sense [this is] evolutionary.

Gardner: What has probably changed the most are the requirements. The problem set that we're addressing has changed. How has it changed? Perhaps this would be an opportunity for you as well to explain what Workday is, what it does, and how you came to be a part of the Workday team.

Clarke: Historically, integration technology was sold as a stand-alone and on-premise offering. Companies would buy or build applications, and then, as their business processes evolved, they found a need to integrate them and connect them together. So, they would license middleware and use that to achieve that.

There have been a couple of generations of middleware technology companies that have helped customers do this. They shared some of the characteristics around certain generations of technology.

So you had companies like TIBCO Software in the early days, folks from the financial sectors. Then you had companies like BEA Systems focused on the Java generation of middleware and application servers. And then, you had more XML and web services-centric companies.

As a middleware vendor, you're trying to solve essentially any and every problem.

You had those three generations, but what was common to them all was that they were quite divorced from the application experience. And that was my background in pure middleware, building and selling that technology.

A strength and a weakness of that was that it was very general purpose. As a middleware vendor, you're trying to solve essentially any and every problem. To draw on the Eclipse Foundation's motto: middleware is a general-purpose platform that can do everything or nothing. In many cases, people ended up spending a lot of money on this general-purpose middleware and essentially achieving nothing, which was frustrating.

Workday is an applications company. We're an on-demand apps company and we build and serve human capital management (HCM), financials, and enterprise resource planning (ERP) application suites.

Cape Clear, which was my former company, was acquired by Workday about three years ago. We were partners, but as Workday’s business expanded significantly, they saw that providing a compelling and a differentiated integration experience in the context of this new cloud architecture was going to be something that was very important to them. So they acquired Cape Clear and we became part of the overall Workday organization.

The first surprise to me was that I had always worked for companies where it was difficult essentially to explain what we did. You couldn't really go to your grandmother and describe middleware technology, whereas you could at least go and explain financial systems or HCM systems.

Overarching context

That then flowed all the way down through to how we positioned, thought about, described, and marketed the technology. It has certainly been my experience that it's a lot easier to describe, position, plan, and explain integration technology when you have this overarching context of an application domain.

That's been very instructive and has interesting implications in the future for the nature, or indeed the existence, of a stand-alone in the middleware market. That might be an interesting topic we could talk about later.

The other observation is that the consistency of these use cases make our jobs somewhat easier. What's also been interesting is the nature of the load and the scale profiles that we're seeing.

A lot of middleware applications that we used to see were technically complex to achieve, but were often relatively low volume or relatively low scale. But, in large-scale companies, when you're dealing with their core systems of record around financials and HCM, you're looking at very large data sets, with very significant scalability requirements, and very significant performance constraints. That has interesting implications for how you think about and implement your middleware solutions.

Gardner: So there seem to be two fundamental things going on here. One, is taking integration to the on-demand or SaaS domain, but second, there is also this embedding integration functionality into the application.

One of the perpetual holy grails of the middleware industry, when it was a stand-alone undertaking was to find a way to express and expose middleware and integration concepts in a way that they could be used by mere mortals.

People, when they use Workday -- whether they are human resources professionals or employees in these organizations, whether they're partners or suppliers to these enterprises that are using Workday -- they're not thinking about integration. They're thinking about human resources, benefits, payroll, and insurance.

Tell me how this shift to on-demand, as well as embedding into the application, changes the requirements. How does someone like yourself who is crafting the middleware integration capabilities need to shift their thinking in order to go “to the cloud,” but also become part-and-parcel with the application?

Clarke: One of the perpetual holy grails of the middleware industry, when it was a stand-alone undertaking, was to find a way to express and expose middleware and integration concepts in a way that they could be used by mere mortals, by business analysts, by people who weren't necessarily very deep technologists with deep technology expertise.

In my experience, the middleware industry never achieved that. So, they didn't really ever find a metaphor or a use model that enabled less skilled, but nonetheless technically savvy, people to use their products.

As you observe in the applications game, you absolutely have to get there, because fundamentally what you're doing here is you are enabling companies and individuals to solve business problems and application problems. The integration arises as a necessity of that or as a consequence of that. In and of itself, it isn't useful.

Designing applications

The most specific thing that we've seen is how we build, manipulate, and use extremely sophisticated integration technology. We spend a lot of our time thinking about how to design that into the application, so that it can be experienced and consumed by users of the application who don’t know anything about XML, Java, web protocols, or anything like that.

To give you one very simple example, the most common use case of all probably is people getting data, perhaps from our system, doing something with it -- a simple transformation -- and then delivering it or putting it somewhere else, perhaps into our system.

That model of "get, transform, and put" is intuitively straightforward, but historically that has always been realized in a complicated way in the middleware stack. We've built a very simple tool inside of our application, and it's now the most heavily used integration component in our system.

Business analysts can very easily and visually define what they are getting and putting it in terms of the business concepts and the business objects they understand. They can define very simple transformations, for example, going from a payroll input to a check, or going from a report of absences by departments to a payroll input.

They're consuming and using integration technologies in a very natural way in the context of their day-to-day working in the web layer in these systems. They're not programmers. They're not developers. They're not thinking about it that way.

It's quite empowering for the teams that we have had working on this technology to see if it's usable in that way by the business analysts here. It's the closest I've seen people get to capturing this unicorn of enabling integration technology to be actually used by business people.

It's the closest I've seen people get to capturing this unicorn of enabling integration technology to be actually used by business people.

Gardner: While you have put quite a bit of emphasis on the tool side in order to make this something that mere mortals can adjust and operate, you've also done a lot of heavy lifting on the connections side. You recognized that in order to be successful with an integration platform, you had to find the means in which to integrate to a vast variety of different types of technologies, services, data, and so forth. Tell me what you've done, not only on the usability, but on the applicability across a growing universe of connection points.

Clarke: That’s another interesting area. As you say, there are thousands or millions of different types of endpoints out there. This being software, it can map any data format to any other data format, but that’s a trivial and uninformative statement, because it doesn’t help you get a specific job done.

Essentially what we've been trying to do is identify categories of target systems and target processes that we need to integrate with and try to optimize and focus our efforts on that.

For example, pretty much the majority of our customers have a need to integrate to and from benefit systems for 401(k), healthcare, dental, visual plans, and so forth. It's an extremely common use case. But, there is still a wide diversity of benefits providers and a wide variety of formats that they use.

We've studied the multiple hundreds of those benefits providers that we've experienced by working with our customers and we've abstracted out the most common format scenarios, data structures, and so forth, and we have built that into our integration layer.

Configure your data set

You can very easily and rapidly and without programming configure your specific data set, so that it can be mapped into and out of your specific set of benefits providers, without needing to write any code or build a custom integration.

We've done that domain analysis in a variety of areas, including but not limited to benefits. We've done it for payroll and for certain kinds of financial categories as well. That's what's enabling us to do this in a scalable and repeatable way, because we don’t want to just give people a raw set of tools and say, "Here, use these to map anything to anything else." It's just not a good experience for the users.

Gardner: David, you mentioned that Cape Clear was acquired by Workday about three years ago, and Workday has been growing very rapidly. Have you been surprised by the adoption rate and pattern around SaaS, and now we're talking about cloud and hybrid cloud? Did this happen faster than you were expecting, because it certainly caught me by surprise.

Clarke: Totally. I remember when we originally became part of Workday several years ago, we were doing some sort of product planning and strategic thinking about how we were going to integrate the product lines and position them going forward. One of the things we had in our roadmap at the time was this idea of an appliance. So we said, "Look, we can envision the future, where all the integration is done in the cloud, but we frankly think it's like a long way off. We think that it's some years off."

For that reason, we articulated and embarked on a path of offering what we were calling an appliance, which essentially would have been an on-premise component to the integration stack or of the integration stack that would be deployed at customer sites. We thought the world wasn’t going to be ready soon enough to put the integration technology and stack in the cloud as well.

It just became clearer and clearer to us that there was an appetite and a willingness in our customer and prospect base to use this technology in the cloud.

Happily that turned out to have been incorrect. Over the course of the ensuing 12 months, it just became clearer and clearer to us that there was an appetite and a willingness in our customer and prospect base to use this technology in the cloud.

We never really went ahead with that appliance concept, it didn’t get productized. We never used it. We don’t need to use it. And now, as I have conversations with customers and with prospects, it just is not an issue.

In terms of it being any kind of philosophical or in principle difficulty or challenge, it has just gone away. It totally surprised me, as well, because I expected it to happen, but thought it would take a lot longer to get to where it has got to already.

Gardner: There is a certain irony, because we were all involved with service-oriented architecture (SOA) and kept waiting for that to get traction, and were a little bit distressed that it wasn’t catching on. Then, lo and behold, this concept of SaaS and cloud leapfrogs and catches on much faster than we thought. So, it is an interesting time.

When we go back to enterprises, we recognize that this “consumerization” of IT is taking place, where the end-users, the zeitgeist of expectations, is now at the point where they want IT in the enterprise to work as well and in the same manner as it does for their personal lives. How does that shift the thinking of an enterprise architect?

Clarke: Superficially, enterprise architects are under a lot of pressure to, as you say, to present technologies in ways that are more familiar to customers from their personal lives. The most specific example of that is the embrace of mobile technologies. This isn't a huge surprise. It's been a pretty consistent pattern over a number of years that workforce mobility is a major influence on product requirements.

Mobile devices

We've seen that very significant proportions of access to our system is via mobile devices. That informs our planning and our system architecture. We're invested heavily in mobile technologies -- iPad, Android, BlackBerry, and other clients. In my experience, that’s something that's new, with the customer enterprise architects. This is something they have to articulate, defend, and embrace.

Historically, they would have been more concerned with the core issues of scalability, reliability, and availability. Now, they've got more time to think about these things, because we as SaaS vendors have taken a lot of things that they used to do off of their plates.

Historically, a lot of time was spent by enterprise architects worrying about the scalability and reliability of the enterprise application deployments that they had, and now that’s gone away. They get a much higher service level agreement (SLA) than they ever managed to operate by themselves when they run their own systems.

So, while they have different and new things to think about because of the cloud and mobility, they also have more head space or latitude to do that, because we have taken some of the pain that they used to have away.

Gardner: I suppose that as implications pan out around these issues, there will be a shift in economics as well, whereby you would pay separately and perhaps on a capital and then operating basis for integration.

They also have more headspace or latitude to do that, because we have taken some of the pain that they used to have away from them.

If integration by companies like Workday becomes part-and-parcel of the application services -- and you pay for it on an operating basis only -- how do traditional business models and economics around middleware and integration survive? How do you see this transition working, not only for the functionality and the architecture, but in dollars and cents?

Clarke: I'd certainly hate to be out there trying to sell middleware offerings stand-alone right now, and clearly there have been visible consolidations in this space. I mentioned BEA earlier as being the standard bearer of the enterprise Java generation of middleware that’s been acquired by Oracle.

They are essentially part of the application stack, and I'm sure they still sell and license stand-alone middleware. Obviously, the Oracle solutions are all on-premise, so they're still doing on-premise stuff at that level. But, I would imagine that the economics of the BEA offering is folded very much into the economics of the Oracle application offering.

In the web services generation of middleware and integration, which essentially came after the enterprise Java tier, and then before the SOA tier, there was a pretty rapid commoditization. So, this phenomenon was already starting to happen, even before the cloud economics were fully in play.

Then, there was essentially an increased dependence or relevance of open source technologies -- Spring, JackBe, free stacks -- that enabled integration to happen. That commoditization was already starting to happen.

Open source pressure

So even before the advent of the cloud and the clear economic pressure that put on stand-alone integration, there was already a separate pressure that was originating from open source. Those two things together have, in my view, made it pretty difficult to sustain or to conceive a sustainable integration model.

A lot of the investment dollars that have gone into something like integration market are now going elsewhere in infrastructure. They're going into storage. They're going into availability. They're going certainly to cloud platforms. It would need to be a brave venture capitalist now who would write a check to a company coming in with a bright idea for a new on-premise middleware stack. So that business is gone.

Gardner: We're also seeing some investment around taking open source middleware and integration capabilities and extending them to the cloud. It's not as difficult for an open source company, because their monetization has been around maintenance and support, more of an operating expense. We certainly haven’t seen too much in the way of a general-purpose integration cloud from any of the traditional on-premises middleware vendors.

Do you think in 10 years, or maybe 5, we won’t even be thinking about integration? It will really be a service, a cloud service, and perhaps it will evolve to be a community approach. Those people who need to be connected to one another will either structurally move toward some standardization or, perhaps in a more ad hoc or organic way, provide the means by which they could more easily play well together?

Clarke: There are a couple of things that we see happening here. I'll make two main observations in this area.

There is an important difference between a general-purpose platform or integration platform and then a more specific one, which is centered around a particular application domain. Workday is about the latter.

First, at the risk of losing half our audience with the jargon, there is an important difference between a general-purpose platform or integration platform and then a more specific one, which is centered around a particular application domain. Workday is about the latter.

We're building a very powerful set of cloud technologies, including an integration cloud or an integration platform in the cloud, but it’s very focused on connecting essentially to and from Workday, and making that very easy from a variety of places and to a variety of places.

What we're not trying to create is a general-purpose platform, an associated marketplace, in the way that maybe somebody like Salesforce.com is doing with AppExchange or Google with App Engine for app development. In a sense, our scope is narrower in that way, and that’s just how we're choosing to prosecute the opportunity, because it’s harder to establish a very horizontal platform and it’s just difficult to do.

I referred earlier to the problem that middleware companies traditionally have of doing everything and nothing. When you have a purely horizontal platform that can offer any integration or any application, it’s difficult to see exactly which ones are going to be the ones that get it going.

The way we're doing this is therefore more specific. We have a similar set of technologies and so on, but we're really basing it very much around the use case that we see for Workday. It’s very grounded in benefits integrations, payroll integrations, financial integrations, payment integrations. And every one of our deployments has tens, dozens, hundreds of these integrations. We're constantly building very significant volume, very significant usage, and very significant experience.

Developing marketplace

I can see that developing into a marketplace in a limited way around some of those key areas and possibly broadening from there.

That's one of the interesting areas of distinction between the strategies of the platform vendors as to how expansive their vision is. Obviously expansive visions are interesting and creating horizontal platforms is interesting, but it’s more speculative, it’s riskier, and it takes a long time. We are more on the specific side of that.

You mentioned collaborating and how this area of business processes and people collaborating in the community. I referred earlier to this idea that we're focusing on these key use cases. What’s arising from those key use cases is a relatively small set of documents and document formats that are common to these problem areas.

Lately, I've been reading, or rereading, some of the RosettaNet stuff. RosettaNet has been around forever. It was originally created in the early '80s. As you know, it was essentially a set of documents, standard documents, interchange formats for the semiconductor or the technology manufacturing industry, and it has been very successful, not very prominent or popular, but very successful.

What we see is something similar to RosettaNet starting to happen in the application domain where, when you are dealing with payroll providers, there is a certain core set of data that gets sent around. We have integrated to many dozens of them and we have abstracted that into a core documentary that reflects the set of information and how it needs to be formatted and how it needs to be processed.

These are very good vectors for cooperation and for collaboration around integrations, and they're a good locus around which communities can develop standardized documents.

In fact, we now have a couple of payroll partners who are directly consuming that payroll format from us. So, in the same way that there are certain HR XML standards for benefits data, we can see other ones emerging in other areas of the application space.

These are very good vectors for cooperation and for collaboration around integrations, and they're a good locus around which communities can develop standardized documents, which is the basis for integration. That’s intriguing to me, because it all derives from that very specific set of use cases that I just never really saw as a general-purpose integration vendor.

Gardner: Getting back to adoption patterns and economics, it seems as if what you are proposing, and what Workday is supporting, is this application-level benefit. A business process, like a network, is perhaps more valuable as the number of participants in the process increases, and become able to participate with a fairly low level of complexity and friction.

It's sort of a derivative of Metcalfe's Law, but at the business process level, which is quite different than trying to corral an integration community around a specific platform with the intent of getting more people on that platform and having a long-term flow of license revenue as a result.

So, if we make this shift to a Metcalfe's law-type of "the more participants, the more valuable it is to all of those participants," shouldn’t we expect a little bit of a different world around integration in the next few years?

Business process

Clarke: That’s right, because of the distinction you mentioned. We don’t really see or envisage this very transactional marketplace, where you just have people buying a round of maps or integrations and installing them. We see it happening in the context of a business process.

For example, hiring. As somebody hires somebody into Workday, there are typically many integration points in that business process -- background checking, provisioning of security cards, and creation of email accounts. There is a whole set of integration points. We're increasingly looking to enable third parties to easily plug-in into those integration points in a small way, for provisioning an email account, or in a big way, like managing a whole payroll process.

It’s that idea of these integrations as being just touch points and jumping-off points from an overall business process, which is quite a different vision from writing cool, stand-alone apps that you can then find and store from inside of our platform marketplace.

It’s that idea of an extended business process where the partners and partner ISVs and customers can collaborate very easily, and not just at install time or provisioning time, but also when these processes are running and things go wrong, if things fail or errors arise.

You also need a very integrated exception handling process, so that customers can rapidly diagnose and correct these errors when they arise. Then, they have a feeling of being in a consistent environment and not like a feeling of having 20 or 30 totally unrelated applications executing that don’t collaborate and don’t know about each other and aren’t executing the context within the same business process. We're keen to make that experience seamless.

You also need a very integrated exception handling process, so that customers can rapidly diagnose and correct these errors when they arise.

Gardner: I can also see where there is a high incentive for the participants in a supply chain or a value chain of some sort to make integration work. So perhaps there is an incentive toward cooperation in ways that we hadn’t seen before. I am thinking of, at least in the human resources field, where it’s in my best interest as an insurance company or as a payroll benefits provider, for example, to work with the SaaS or cloud provider in this regard -- to the betterment of our mutual end users.

Do you already see that the perception of cooperation for integration is at a different plane? Where do you expect that to go?

Clarke: Totally, already. Increasingly -- pick an area, but let's say for learning management or something -- if we integrate, or if multiple people integrate to us or from us, then customers already are starting to expect that those integrations exist.

Now they're starting to ask about how good they are, what's the nature of them, what SLAs can they expect here? The customers are presuming that an integration, certainly between Workday and some other cloud-based service, either exists already or is very easy and doable.

But they're looking through that, because they're taking the integration technology level questions for granted. They're saying, "Given that I can make such an integration work, how is it really going to work, what's the SLA, what happens if things go wrong, what happens when things fail?"

What's really interesting to me is that customers are increasingly sophisticated about exploring the edge cases, which they have seen happen before and have heard about them before. They're coming to us upfront and saying, "What happens if I have issues when my payroll runs? Who do I go to? How do you manage that? How do you guys work with each other?"

Consistent information

We, therefore, are learning from our customers and we're going to our ISV and services partners, like our payroll partners, our learning management partners, our background checking partners and saying, "Here is the contract that our customers expect. Here is the service that they expect." They're going to ask us and we want to be able to say that this partner tests against every single update and every single revision of the Workday software. They will handle a seamless support process where you call one number and you get a consistent set of information.

Customers are really looking through the mere fact of a technical integration existing and asking about what is my experience going to be and actually using this day-to-day across 50 geographies and across population of 20,000 employees. I want that to be easy.

It’s a testament to the increasing sophistication of the integration technology that people can take that for granted. But as I say, it’s having these increasingly interesting and downstream effects in terms of what people are expecting from the business experience of using these integration systems in the context of a composite business process that extend beyond just one company.

Gardner: Moving toward closing up our conversation, David, you have raised the issue here about that one throat to choke, if you will. When you have a massive, complex, integration landscape, does it makes sense to focus on the application provider as that point of responsibility and authority? Or does it have to be federated?

Have you seen any models emerge, something that we probably could not have predicted but needs to happen on its own, in a real world setting that indicates how that issue of trust and authority might pan out?

Clarke: What we are gradually feeling our way toward here is that for us that’s the central concept of this federation of companies. We think obviously of Workday being in the middle of that. It depends on what your perspective is, but you have this federation of companies collaborating to provide the service ultimately, and the question is, where do they choke?

And it's not realistic to say that you can always come to Workday, because if we are integrating to a payroll system on behalf of somebody else, and we correctly start off and run the payroll or send the payroll requests, and then there is an error at the other end, the error is happening ultimately in the other payroll engine. We can't debug that. We can't look at what happened. We don't necessarily even know what the data is.

As we run any integration in our cloud, there is a very consistent set of diagnostics, reporting, metrics, error handling, error tracking that is generated and that's consistent.

We need a consistent experience for the customer and how that gets supported and diagnosed. Specifically, what it means for us today is that, as we run any integration in our cloud, there is a very consistent set of diagnostics, reporting, metrics, error handling, error tracking that is generated and that's consistent across the many types of integrations that we run.

Again, as our partners become more savvy at working with us, and they know more about that, they can then more consistently offer resolution and support to the customers in the context of the overall Workday support process.

For us, it’s really a way of building this extended and consistent network of support capability and of trust. Where customers have consistent experiences, they have consistent expectations around how and when they get support.

The most frustrating thing is when you are calling one company and they're telling you to call the other company, and there isn’t any consistency or it’s hard to get to the bottom of that. We're hopeful that enlightened integrations around business processes, between collaborating companies, as I have described, will help me to get some of that.

Gardner: It certainly sounds like in the coming years the determining factors of who will be the winner in cloud integration won't be necessarily the one with the biggest, baddest platform -- although that's certainly important. But the one that demonstrates the trust, the SLA response, and maintenance, and generally who becomes a good partner in a diverse and expanding ecosystem will win.

Clarke: That's right. The technology is important, but it's not enough. People just don't just want technology. They want well-intentioned and an honest collaboration between their vendors to help them do the stuff efficiently.

Gardner: Very good. Thanks. You've been listening to a sponsored BriefingsDirect podcast on how major trends around cloud, mobile, and SaaS are dramatically changing requirements and benefits of integration. For more information on Workday's integration as a service, go to http://www.workday.com/solutions/technology/integration_cloud.php.

I would like to thank our guest. We have been here with David Clarke, Director of Integration at Workday. Thanks so much, David.

Clarke: Thanks, Dana.

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

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

Transcript of a BriefingsDirect podcast of the role of cloud and SaaS in the changing landscape of application integration. Copyright Interarbor Solutions, LLC, 2005-2011. All rights reserved.

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