Transcript of BriefingsDirect Podcast on IT Consolidation Trends and Methods

Edited transcript of BriefingsDirect[TM] podcast on IT consolidation with host Dana Gardner, recorded Oct. 31, 2006. Podcast sponsor: Hewlett-Packard.

Listen to the podcast here.

Dana Gardner: Hi, this is Dana Gardner, principal analyst at Interarbor Solutions, and you’re listening to a sponsored BriefingsDirect podcast. Today, a discussion about IT Consolidation, taking a distributed, geographically dispersed set of datacenters or application infrastructures and bringing them into a more rational approach -- to get more for less, in less places, with less labor and less total cost. The goal is to eventually take this consolidation effort to a strategic level and move to a full-service infrastructure and allocate IT resources efficiently and with more flexibility.

We are joined today by two executives from Hewlett-Packard’s Consulting and Integration Group: Ewald Comhaire, director of the global practice for Infrastructure Services, as well as Peg Ofstead, worldwide solution lead for HP IT Shared Services and IT Consolidation Services. Welcome to the show, Ewald and Peg.

Ewald Comhaire: Thank you.

Gardner: Let’s address the rationales for IT Consolidation. Does this vary from site to site, from enterprise to enterprise? Is this a highly individualized approach? How do we implement IT Consolidation? Are there some uber trends driving this? Let’s start with you, Peg.

Peg Ofstead: The desire to consolidate differs from company to company. Our best practice is to first clearly discuss the objectives of the organization. Cost has been a driver for many years. There are other issues that drive people to consolidation. For example, some people run out of space in their datacenters; others have issues with power or cooling that cause them to replace their technologies.

For others, it’s a case of simplifying; they just have too many data centers, too many different kinds of technologies, too many redundant applications. They want to simplify their environment. Ewald, do you have some other thoughts?

Comhaire: Yes, there is definitely the cost element, and doing more with less is important to every customer. We have been doing this for 10 years. We see customers with more balance between these cost elements as well as improving the quality of the services they deliver and how fast can they turn around the request from the business.

Reducing risk by reducing issues with security, or improving business continuity and availability of the solution is a large objective we see across the industry. Each customer is unique, but we see these drivers most of the time.

Gardner: Obviously economics and cost issues are big drivers for this, but it wouldn’t be possible without a certain level of technology innovation and capability. You need to be able to consolidate by managing the complexity of the hardware and the networks. Can you give us some history of IT Consolidation and explain what it is technically that is allowing this to be accomplished now?

Comhaire: I’ll be happy to start. When we look back 10 years ago, most of it was driven by the capabilities of the infrastructure. As you consolidate you need better processes, you need to manage consolidated infrastructure, and that adds complexity. Do your tools, your systems, your software, your operating system have the capability to really consolidate on a technological level?

Fewer customers are worried about whether the technology can do it. Other factors are now driving the need for consolidation. Customers are looking at a functional level, consolidating not around the technology, but around functions being offered to the business, using that as a central element, with the technology following the service.

We have seen an evolution of what customers take as a primary centerpiece for consolidation. It has moved off technology and more to a functional type of consolidation. Peg, anything you would like to add?

Ofstead: Also, people are consolidating datacenters because telecommunications is so much cheaper and better now. In the past, they couldn’t because of latency and other issues. On the technology side, especially in the Microsoft Windows environment, the virtualization technology now allows people to be more aggressive in that space.

Gardner: The network is now able to support this consolidated effort. This also has to do with the shift that the Web has brought in terms of centralized applications and browser-based interfaces. Over the last 10 years there has been a significant shift to Web-type applications. Portal applications with browser interfaces have also been an accelerant to this move to IT Consolidation. Do you agree with that?

Comhaire: Absolutely. Where it has really helped is with datacenter consolidation. Because of the lightweight graphical user interface (GUI) that these Web-based applications provide, you no longer need to have all the servers -- or at least part of your application architecture -- located close to the end users.

With the latencies and improvement in networking, you can now do what HP, for example, is doing with its own datacenters: co-locate them in one location of the world and still have good response time for all their users. It would be much more difficult if you have a complex client/server architecture, and the need to move a large amount of data to different parts of the application. It would be very tough to do, and this definitely helps.

We also have "lights-out" management where management capabilities are done remotely, 24x7, in different parts of the world. There are countries in Eastern Europe, the Middle East, China, and India where you have some capable resources that can do remote management, but you would not typically put your datacenters in those physical locations. Datacenter consolidation enables you to utilize the capabilities in remote management areas when your datacenter could be in a place like the HP datacenter in Houston, Texas. Consolidation has helped with this management significantly.

Gardner: Your expertise, your people, can be in one location -- but the physical plant can be in another. You can look for a lower cost of real estate, energy, and safety, when the plant is away from high-risk areas. These all play into the IT decision making about IT consolidation?

Comhaire: Absolutely.

Ofstead: That is exactly what we’re seeing.

Gardner: Now that we have discussed how the Web has changed the nature of applications, and the technology from the network perspective has given us the freedom to decide location -- do we see anything on the horizon that will change this even more? Are there other factors that make the decision-process around consolidation change again? Are there convergence or virtualization issues?

Ofstead: We can assume technology will continue to improve. Look at the cost of storage today, for example. People forget it’s not just about technology.

One of the key factors to keep in mind when you’re consolidating is the human factor. We discussed being very clear in your objectives. It is important that your stake-holders buy-in on your objectives, and that includes your line-of-business partners. There could be issues like the line-of-business may own the datacenters, or may own the servers that you’re trying to consolidate. Their buy-in is crucial to your ability to successfully consolidate.

There is also a buy-in of your IT staff, many of whom can be impacted during consolidation. If you are eliminating legacy technologies, it may mean they need to be re-skilled, or if you are closing datacenters, it may mean a larger impact to their jobs. It is very important to consider the human factors and the governance issues related to consolidation that go beyond technology.

Gardner: Obviously this is not a trivial, fly-by-the-seat-of-your-pants decision process. We have issues around ownership and a culture of control and the cost of real estate in terms of applications, and around how to rationalize data itself within a data structure. How do companies begin to approach this "hairball" of interrelated dependencies and complexities once they have begun to take IT Consolidation seriously?

Ofstead: Ten years ago, we were seeing the consolidation of UNIX servers. The largest companies we worked with were telcos, and they often had hundreds or thousands of UNIX servers and were consolidating those. Companies in all industries have been basically doing server consolidation and storage consolidation for many years now.

In the past few years, they have tackled the harder things. Rationalizing the application and information portfolios is much harder work. We saw very little of that five years ago, but it is more prevalent today. We are seeing more datacenter consolidation and relocation of datacenters as people consider issues like Sarbanes-Oxley, which especially impacts the financial institutions.

Gardner: We have also seen waves of consolidation at higher business levels between mergers and acquisitions, particularly in telecom and a number of other industries. I think that would also bring into play massive infrastructure redundancy that needs to be addressed.

Ofstead: Absolutely. Companies that have already gone through a consolidation acquire a firm and suddenly they have twice as many datacenters as they need. They have an overlapping application portfolio, so this is an ongoing process for many firms.

Gardner: Ewald, can you give us a rundown of the methodological decision process? Large enterprises, regardless of their situation, are facing this complex proposition. What needs to be considered? How do you approach this from a professional services perspective?

Comhaire: The first thing we do is start with the strategy and analysis phase. In this phase, we conduct a workshop to clearly define the business goals with the customer. We bring in our 10 years of consolidation experience. We help customers to think broadly, not just in terms of servers, but about the number of workplaces they have, whether we can do workplace or remote office consolidations, their networks, and their higher-end services like data warehouses.

We provide a pretty broad view. We help to pin down the customer on key matrices around the success of the project. What is in scope, what is not in scope, and how this IT consolidation aligns with the business. We work with the IT parts as well as making a link with the business, and use it as a starting point for the project.

We then do a rapid opportunity analysis for the domains that are good candidates. We are looking for a good return on investment (ROI) for the customer on a high level without doing a detailed analysis.

We then do an inventory and discovery. Many customers have an idea of what they have, but not enough to do a real ROI or total cost of ownership (TCO) calculation. We provide some agentless discovery tools that show the workloads as well as the assets there -- how well the equipment is utilized, what workloads are compatible or can be consolidated with other workloads, and how many databases are there -- so we understand by function what is used today and what are some of the possible economies of scale. This is typically done in the first phase.

Gardner: It sounds like you need to step back and look at what you actually have, and then what you want to have, functionally, going forward, and then to try to reconcile the two.

Comhaire: Yes, that is important because these projects typically take quite some time, and a consolidation project is never done. We are always looking at the next thing we can improve on. At some point you need to have closure on a certain part of the project.

Phase two is the architect and validate phase. Then you can think about a high-level architecture for the desired date. We now know the objective of the customer, we know the “as is” state through the discovery, and we can now do a high-level design for the desired state.

At the same time we are validating the ROI model. If there are cost-reduction objectives, and the customer wants to have those in hard numbers, we can do a full ROI analysis and be confident that we can get the ROI that the customer was expecting. That’s pretty much our second phase in the consolidation methodology.

Gardner: I have to assume that we’re starting to tinker with some mission-critical applications and there is some concern about the continuity and risk of disruption. On one hand the company would ask, "Are we going to have downtime? Are we going to have interruptions? Will this be seamless to our end users, both inside our organization and our customers outside?" How do you address the issue of confidence? How do you guarantee this is not going to be a disruptive activity?

Comhaire: Great question. Our third phase is the detail design and planning phase. Here we do the real planning of the implementation and all these things are addressed in the detailed level design. For example, if we have a datacenter relocation, what methodology are we using to move to data consolidation?

These design criteria have an impact on the downtime for the business, and this is where all the expertise comes in around migration of data and applications. We also make sure that the target environment -- as it’s being designed to handle multiple coherence and co-located workloads -- is bringing the availability up and not down, which is an inherent risk of consolidation.

We have to write a business continuity design so that the desired state has much more tolerance against disasters than the existing state. We know in phase number three that there is a positive business case. We are then allowed to go to a level of detail that is very much implementation-oriented.

In the second phase, we typically want to do the minimal design to guarantee that the project will have a good ROI, so we don’t go down to this level of detail. But in the third phase we do to make sure we get the trust and the minimum interruption for the business through the right choice of design methodology.

Gardner: Peg, on this notion of risk reduction, do you feel confident enough in doing this many times that you can almost, and perhaps actually, guarantee continuity? Do you go in and say, “As part of our contract we have our own agreement of certain levels of service,” and do you go to the bank with that and say, “We’re going to make sure your businesses continue?”

Ofstead: Absolutely. That is part of what we do with consolidations because we are working with mission-critical workloads. In every region, we’ve worked with clients that have been in those situations.

Comhaire: We also have a very strong mission-critical support that’s been highly rated by Gartner year after year. That is really a true differentiator for us in those large consolidation projects because we can give the customer the assurance that we can manage their consolidated workloads at the levels of availability required.

Gardner: This is an issue where failure is not an option.

Comhaire: Exactly.

Gardner: Also on this notion of business continuity, companies are dealing with a separate area of risk: Where to locate for disaster scenarios -- whether they’re weather-related, disruptions from energy problems, or perhaps even war and terrorism issues. It seems that companies need to take that into consideration as well now.

When they think about IT Consolidation, are they also thinking about the ability to maintain business continuity, regardless of external threats?

Ofstead: Absolutely.

Comhaire: Absolutely. Yes, Peg.

Ofstead: When we do datacenter consolidation, even if the company had a wonderful business continuity plan and could execute it well, you essentially break that when you change the datacenter. You have to start over and state the business continuity plan. That is very important. We’re seeing some institutions, especially financial ones, moving the datacenters to safer locations because of Sarbanes-Oxley implications.

Comhaire: It sometimes does trigger some finer discussions with the customer, because most would expect that with a consolidation, including cost reduction, that they can also get the whole business continuity and disaster recoverability free of charge as part of the consolidation project.

Sometimes we have to stress that this is really an added functionality. While the pure consolidation project will return a significant amount of savings, there may have to be some investments kicked in as well to address the business continuity element.

Gardner: Perhaps when you embark on this journey -- to kill two birds with one stone -- you look at your ROI/TCO issues from a consolidation perspective, but also look very carefully to your business continuity issues in terms of safety, reliability, and disaster-prevention or -recoveries?

Comhaire: Yes, if you look at eight out of 10 of our success stories, and you look at the advantages that the customers cited after HP helped them implement the consolidation project, almost everywhere you will find better performance, better availability, and better disaster recovery -- meaning that in eight out of 10 projects it is addressed effectively with the customers.

Gardner: We’ve mentioned regulatory issues a few times, particularly Sarbanes-Oxley in the United States. Help me understand the implications here. How does a regulatory imperative affect the decision making, and even perhaps spur on these IT consolidation activities?

Ofstead: Sarbanes-Oxley has some regulations that specify the availability requirements for financial institutions, and how quickly they must recover certain transactions. That happens when they are audited. That is why the financial institutions are looking for more secure datacenters and more robust disaster-recovery capabilities. Europe is in a similar situation with the Basel II regulations.

Gardner: Anything to add to that, Ewald?

Comhaire: We have software that helps customers meet regulations like compliance with standards, specifically on the IT side. We have tools in the HP OpenView portfolio with respect to software distribution. We can control exactly what needs to be running on servers and desktops.

There are some interesting offerings that we have on that phase, but they are second to the main objectives of a consolidation project. We have not seen many projects that are driven by regulations. It is typically an element of a consolidation project, rather than the main driver for it.

Gardner: We have looked at the business case and rationale for doing this, and at the history of why the technologies and network resources allow this to happen. We’ve looked at some of the tangential implications around people, process, and business recovery regulation.

Let’s talk about the payoffs. We have seen some publicized information around HP’s own multi-year approach to consolidation and significant reduction of total costs. Do you have any metrics or case studies or anecdotes that will give people a sense of the magnitude of the shift to benefits here?

Ofstead: Obviously the payoff is going to depend on how diverse your IT environment is to start with. If you had multiple acquisitions, as HP has, there are more payoffs because there is more to clean up. Large companies that have not yet consolidated their servers can probably get a 25 percent to 40 percent TCO savings around those server farms and their storage.

You get real savings in the applications phase. Far beyond TCO savings, you get business benefits. For example, HP is going to a single data warehouse, consolidating over 700 data marts. The business benefit of having a single source of data and consistent information about our customers and our orders is that we have huge ramifications that go way beyond just IT savings for a corporation.

Comhaire: Also, the cost model that we use is a simple one. It can be well understood by the customers as well as HP.

We use four primary dimensions. One is cost and what we can do on cost saving and cost avoidance. Avoidance is an increasingly important element. The second is the quality of service. Did we improve the quality of the services that were delivered to the business? That has some business value as well. The third, are we able to do things faster, turn around the request of the business in a faster way, deploy things faster, put changes into place faster.

The final one is have we reduced, in general, the risk position of the customer, whether it’s against security, or intrusion at the level of compliancy, or at the level of continuous operation and disaster recoverability. We’re putting value on whether we reduced the risk with the customer.

There are some great anecdotes. We have had some large-scale consolidations where, obviously, we go application-by-application and then find that these applications need to be recompiled, that the customer has lost the source code. This was a risk that the customer did not realize before they did the consolidation project.

Now we realize there are some applications where we are at risk because we no longer have the source code, and we were able to reverse and re-engineer that, and get back to a solid code base so they can move forward. We now better understand the risk, we measured it, and we are also able to handle some of the implications of that so that is no longer an issue. It’s an anecdote, but it happens more than you would think.

A customer has said they had 500 servers when they did the whole analysis. It turns out they had close to 1000, and they were surprised there was such a big difference between what they believed they had and what they really had. So the whole ROI model was actually changed overnight based on that discovery.

Gardner: I suppose that this process does unearth these various cans of worms, but in doing so, you’ve got a much more coordinated, managed, professional inventoried approach to your code and your assets. You can move forward with a strategic approach to IT rather than a piecemeal or ad hoc approach.

Comhaire: That is often underestimated as a benefit. It is difficult to say in a customer discussion that as part of the consolidation exercise we will clean up some of these legacy things that you may not realize have built up over the years. It is difficult to say up front, but often when customers look back, that is a major achievement in the project.

The nice benefit of it is they now have a good handle on their assets, the workload they have, the issues that were uncovered and are now clearly on the table and have been resolved. They have a much better foundation to build on for the future.

Gardner: Perhaps this is a difficult and cathartic process, but with recurring dividends over time. I suppose that IT Consolidation will now impact such trends as virtualization and service oriented architecture (SOA), where it will make tremendous economic sense to have a full-service infrastructure approach.

If you’re going to consolidate, you’re going to want this infrastructure to support legacy, distributed Web, and a variety of different types of application sets, depending on your vertical industry. Is it too much of a pie-in-the-sky notion that we can have a single -- or at least a significantly reduced -- number of infrastructure approaches to support a variety of business processes, business activities, and applications?

These days with the impact of virtualization, with increased use of open standards, with increased use of open source, are we finally at a point where we won’t have monolithic approaches to a variety of applications, but perhaps more of a horizontal, rationalized infrastructure to support more and more types of business activities?

Ofstead: Certainly consolidation is the opportunity for folks to move to a real strategic platform view. While they’re cutting costs, they have the opportunity to really move to new technologies and virtualization. For example, we’re seeing a lot of people using Linux. One of the great things about that is not only are you able to clean up your environment, but you are actually able to move it forward to new strategies. Ewald?

Comhaire: Absolutely, Peg. The simplification of the environment is one of our key objectives, and typically we do that by standardizing on less different types of equipment. We also do that by bringing virtualization, which allows us to better share the same equipment between multiple workloads so we don’t need as many assets, which again is a simplification element -- but also significant to cost reduction.

We also simplify things like the IT management processes and tools, and we have a significant set of services around IT optimization and IT service management that can help simplify the environment. All these technologies like virtualization, automation, and optimized service deployment are significant enablers for consolidation.

Gardner: So we’re not just talking about consolidation in terms of physical consolidation, a location, and numbers of services -- we’re talking about a consolidated datacenter approach that functionally consolidates IT?

Comhaire: Absolutely. That’s how we’ve evolved the thinking on consolidation, and it is also why today we call it "IT" consolidation, not just "server" consolidation. We have evolved over time to a more holistic approach of people, process, and technology. As Peg was saying before, we are significantly looking at the roles of the people.

We’re looking at the processes that are being executed to see if they can be simplified, streamlined, and organized according to industry standards or best practices. Finally, we do the technology part of consolidation exercise, we look at standardization and virtualization of the infrastructure components, and make those work together with less things like configurations of applications. All of these are standardized and provide the value back to the business.

Gardner: This strikes me as not just a high economic impact, but as absolutely necessary ingredients as companies move toward total IT transformation. Because the payoff is a 25 percent to 40 percent reduction in total cost, you set yourself up for an agile multipurpose platform, and are reactive both to your legacy as well as to new types of application approaches, such as SOA.

This is really not an option. If your competitors are going about this and you are not, you will be at a significant disadvantage.

Ofstead: Absolutely. That is why so many companies are moving aggressively toward consolidation. Certainly after emerging acquisitions such as the one HP has had. The more we can do to clean up our applications and make ourselves more cost competitive, the better we will do.

Gardner: Great. Well, thanks very much. I think we’ll need to wrap it up now.

We have been talking about IT Consolidation, its strategic, economic, and future-proofing imperatives. Joining us for this sponsored BriefingsDirect podcast has been Ewald Comhaire, the director of the Global Practice for Infrastructure Services at HP, and Peg Ofstead, worldwide solution lead for HP’s IT Shared Services and IT Consolidation Services.

Thanks very much for joining us today. I think this has been an eye-opening discussion for me, and I hope for our listeners, too.

Ofstead: Thanks, Dana.

Comhaire: Thanks.

Gardner: Thanks for joining us. I would also like to point out to our listeners that if you’d like to learn more about BriefingsDirect B2B informational podcasts or to become a sponsor of this or other B2B podcasts, feel free to contact me, Dana Gardner, at 603-528-2435. This is Dana Gardner, principal analyst at Interarbor Solutions, and you’ve been listening to BriefingsDirect. Come back and listen next time.

Listen to the podcast here.

Podcast sponsor: Hewlett-Packard.

Transcript of Dana Gardner’s BriefingsDirect podcast on IT Consolidation. Copyright Interarbor Solutions, LLC, 2005-2006. All rights reserved.

Transcript of BriefingsDirect Podcast on Media Delivery Trends with Akamai CTO Mike Afergan

Edited transcript of BriefingsDirect[TM] podcast with Dana Gardner, recorded Nov. 7, 2006.

Podcast sponsor: Akamai Technologies.

Listen to the podcast here.

Dana Gardner: Hi, this is Dana Gardner, principal analyst at Interarbor Solutions and you're listening to BriefingsDirect. Today a discussion around the massive shift on the Internet to media delivery. There has been an explosion in user-generated content, in media and entertainment companies, as well as vendors of software and software services companies delivering client packages -- an increase in the entire software eco-system.

Mike Afergan is here to help us sort through some of the issues inherent in this avalanche of content -- data packets -- crossing the Internet. Mike is a chief technology officer at Akamai Technologies. Welcome to the show, Mike.

Mike Afergan: Thanks, Dana.

Gardner: We are seeing a different type of content distribution need. As a technology organization that is been working for a number of years at managing this -- both for end-user benefits as well as for those distributing content -- can you help us understand what is different now at the end of 2006 in terms of content, large files, and objects? What is different from just a few years ago?

Afergan: Sure, that is a great question. We’ve definitely seen a dramatic transformation over the past several years in terms of what our consumers -- you and I and, of course, businesses -- are doing daily online. Certainly, within the past year or two we had an inflection point in terms of adoption.

A number of different things are driving that. On one hand, you have a number of technology trends. Certainly one of the most significant is broadband adoption, both in the number of households and businesses that are connected online through broadband on a daily basis, as well as in terms of what broadband means to people today.

Business approaches to using this content has powerfully transformed sites from merely a Website to an online extension of their regular business -- if not an online business in itself. For example, in the media space we see several businesses formed around pay-per-content models, ad-supporting models, and syndication models. In the software space we see companies using the online channel as a primary way to deliver their content. The technology challenges get really exciting with the companies that have real online businesses and are enabling that business online.

Gardner: I suppose it was no surprise to forecast five or 10 years ago that we would be in the broadband world. People expected that you were going to give more broadband to more homes and businesses. But I guess what wasn’t anticipated were these new social phenomena in business models. I’m thinking about Web 2.0 companies, social networking, and people sharing massive files, their photos, and high-definition video clips.

Is this where we have caught the businesses by surprise?

Afergan: It caught some people by surprise. Obviously, a few years ago we saw broadband adoption happening at an accelerated rate. Nobody could predict the exact date we would hit that inflection point or exactly how fast it was going to happen. But certainly people saw that it was definitely happening over time, and the question was exactly which model, exactly which approach, exactly which pieces of new technology would really help it to hit that inflection point? Those certainly are the questions we are just beginning to uncover today.

There are many companies with successful online businesses today. For example, there are premium brand websites where you can get an online subscription. There is the CBS March Madness [basketball series], which has an ad-supported base model and had 400,000 simultaneous video streams. But truthfully many companies are still trying to figure out what the most profitable and successful model is going to be.

Take, for example, syndication, which is a very hot topic right now. This is an area where the business models and technologies are still sorting themselves out. So there are constant surprises and a constant evolution here. That is what keeps this exciting, and very interesting -- and explosive.

Gardner: We are seeing the page-view model with advertising being increasingly important. We’re seeing folks like Apple pioneering with a direct sales model with iTunes for music, where you just buy content via a download of a song -- and increasingly movies, video, and television.

We are expecting more of that from Microsoft with its XBox and Media Center. What are the technology requirements now that we are into these different content-delivery business models? I suppose what is common is that more bits are coming down the pipe. Is this an issue of scale? Is it an issue of measuring revenue? Is it an issue of cutting costs? Is there a need for better metrics? What are the technical requirements that are different now from what we forecast just a few years ago?

Afergan: Fortunately and unfortunately it is all of the above. There are many different challenges to realizing online businesses. I talked about pay-for content, for example, or ad-supported content or syndication. The business models themselves are complicated. Realizing them requires overcoming several technical obstacles.

Take, for example, a site like Major League Baseball. There are many challenges, as in any site that wants to have an online pay-per-content model where you are logging in to a subscription. The challenge is to make sure that only the people who pay for the content receive the content.

You need to worry about making sure that certain games are going to be blacked out in certain geographies. You are going to need to worry about controlling and having a rich interactive dynamic website. So there are many challenges around the business applications and logic, let alone the reporting and the monitoring and understanding your traffic, as well as the user events that happen at your site after the events.

Delivery is obviously a big challenge. Another is: How do you deliver the increasingly high-definition video streams, asynchronous transactions, and lots of small images on a user-generated site? How do you deliver all of this content in a reliable, scalable way?

These companies are evolving; they are facing many challenges, both fortunately and unfortunately, in a number of different areas. The real key theme is the logic and the tools it takes to enable that online business and the sophisticated business logic required to have such an online business.

A large part of that is making sure you have the rich interactive high-quality experience for your user because, ultimately, that is what makes it engaging, what makes people come back to your site and makes people click on more pages, more ads, more video, and more information. At the end of the day, that is what allows you to have your online business.

Doing that on the Internet has many challenges. How do you distribute that information through the Internet, which isn't designed fundamentally to handle the notion of a TV broadcast? You can’t show up at a data center and say, “Hi, I’d like to buy 50GB a second of traffic,” let alone thousands of gigabytes a second of traffic.

That does not work, and is not how the Internet was designed. A large part of what we do for our customers at Akamai is to not only give them the tools that enable sophisticated online business logic to do the targeting and the rights management, but also to provide the underlying platform that allows them to do scalable content distribution, which really is impossible using the bare metal of the Internet.

Gardner: One of the other associated trends here is that more and more types of organizations are becoming publishers. Companies and even individuals are becoming media distribution originators. We now have what is known as micromedia companies.

We now have everything from an individual to a Fortune 500 company getting into the act of creating content, distributing content, having a direct relationship either with their other businesses, ecology partners, or end users or other businesses as clients and customers. They do not want to get into the business of inventing the wheel once again for this sort of network services-level activity.

So it certainly sounds like a need for a de facto standard for a platform on the network for doing this?

Afergan: That is definitely a legitimate concern because the other problem that you did not mention is that while they are doing it, all of their competitors are also trying to do that and be more innovative. So our customers come to us to focus on what makes them innovative with their business model. They are looking for a platform that allows them to do that -- not building on the bare metal of the Internet but delivering more functionality with a platform that allows them to worry about enhancing business logic, new partnerships, and so on.

There are a couple of trends here. One is the disassembly of websites. We have many sites that are now syndicating their content out, allowing their videos to be delivered on other video sites, allowing their content to be incorporated in other sites. And to do that requires a couple of different pieces. One is the ability to deliver that content, and another is to have sophisticated business logic that allows you to determine who, what, where, and when your content is available. A lot of customers turn to Akamai for that increase in business logic and personalization that runs on top of our platform.

The other area you touched upon -- user-generated content -- is a massive concern for many customers. The customer needs to have rapid affinity to your site. We see that for the social networkers as well as the brands now trying to incorporate community aspects into their site.

In the past year Akamai has not just enabled the delivery of content from our storage to our servers and to the end users. More and more for our customers we are also handling the upload of end users' content through the Akamai end servers to our storage environment. That allows companies to build explosive, innovative, and interesting new business models without building any infrastructure. The customer wants us to worry not only about the content delivery and what is updated on their site. They also, frankly, want us to manage the content aggregation from the user-generated perspective.

Gardner: I see. So they not only need to worry about everyone simultaneously hitting on their servers to get a download, but as a media company they need to start attracting entertainment, as a social networking company, and so they need to think about everybody showing up at their door at the same time with a 5GB video file, right?

Afergan: Yes, so you need to worry about content heading in both directions. Frankly just the sheer scale of it -- the amount of people coming to you to deliver content, the size of your library and how that grows, and how much content you are going to need to worry about, manage, and control.

Gardner: You mentioned that we are not just talking about the movement or the management of these files; we are really talking about managing the relationships. We are talking about federating this content, aggregating it, deciding who can see it and under which circumstances, and what is freely available.

This involves a platform of some kind for gathering metrics, a billing or a transactional platform of some sort. And that becomes a logic issue, not just an infrastructure issue.

Afergan: Exactly. For more and more of our customers it is about enabling their online businesses. They are coming to Akamai to acquire those tools and logic. With our system any customer gains a configuration that basically specifies their requests, how we handle, how we process, and what logic we run for those various transactions.

Those are the tools that we built up over the years. We essentially provide applications for our customers to build on. It is not enough to simply have content in your site or to put content on other folks' sites. You need to worry about your authentication system, your advertising targeting system, as well as your reporting system. And that is what Akamai is doing for our customers.

An example is in the media space and the commerce space, where there is much more content going around -- but also much more business logic wrapping around that content.

Gardner: When we think about business logic, we usually think about developers. I suppose there is another trend afoot in the marketplace around accessing applications as services, something we call SOA and Web services, and also seeking out infrastructure as services, or services oriented infrastructure (SOI). There are a host of things going on there with virtualization and grid and utility.

Now, without going down that particular grid avenue at this time, what do we have here for developers? Should they be thinking about these issues or should they be going for services that they can access and integrate into their logic that provides a business model, an innovation, for their businesses or their hosting organization?

Afergan: Services are a powerful paradigm and tool that companies and developers can use to develop extensible applications. All the things that I spoke about before in terms of syndicating content and replacing functionality to other sites are generally available through an API-like interface, some sort of SOA.

These architectures are interesting and challenging because they typically flow over the Web, and small connections exchange these pieces of information when there is a request. That is a very challenging type of workload for a Web infrastructure -- where you have packet loss and increased latency, etc.

That information is exposed to different sites through APIs and various SOA or other XML-based or HTTP-type interfaces. So certainly the notion of exposing more of a service is something we are likely to see much more of over the coming years.

Of course, over the public Internet these services definitely have a lot of small HTTP connections, which means that they are chatty and do have to deal with the fragility that is exposed via TCP. There is a challenge from a quality of service perspective that needs to be overcome, but at the same time it does provide for a great deal of functional flexibility.

Gardner: So you need to build an attractive platform of services to address the new business models. And there is also an increasing set of developers using rich applications, AJAX front ends, or who are looking at SOA. Should we expect something from Akamai with a bit more interest to developers?

Afergan: We certainly hope that our service offerings today are very interesting to developers. Our approach has been, and will continue to be, to service the needs of our business customers. Akamai will not be offering developer software per se, but I think you will see us offering functionality that is important for the more sophisticated applications of our customers.

We will also be offering tools and ways for the developers within our customers to better interface with Akamai. At the same time, part of our approach is to be transparent, behind the scenes. We want to allow the customer to write Web services that are most natural for their business, and then allow it to run over the Internet without concern about the Internet quality-of-service, the vagaries of TCP, or what networks are now connected to.

Essentially all they do is make one small change in DNS, work with us to make sure they’re happy with their configuration, and then write the applications just the way they want to.

Gardner: When your customers come to you is there a different technical dialog now than a few years ago? Do you have another level of technical capability that you are bringing to them?

I know you had a lot of software vendors, for example, who are customers, who wanted to distribute their software products, their patches, and updates and so forth over the Internet. You have met those needs, but you are probably dealing with a different type of company now. Tell me a little bit about this sort of technical problem and solution set that the market is demanding right now.

Afergan: Sure. Clearly our customers, just like Akamai, have evolved significantly over the past several years. One of the exciting things for us is to work with these customers on their future projects. So often we’re in situations with our customers thinking about what they’re going to be doing a year or even five years out from the current timeframe. It is exciting for us to see these trends and to hopefully be out in front of these trends by the time they actually are relevant and required as we build up trusted relationships across the industry.

Online businesses are really the key that is driving what our customers are building -- not just putting content online, but putting sophisticated applications online. Our customers are asking us for the ability to have a high level of sophistication in their application, as well as high level of scale.

So not only are they coming to us asking us to move from 100K to 300K to 500K to 1.5MBit streams, but they want to make sure that when they do that, we are going to tie in with their J2EE applications, that in turn is tied into their user authentication system, which in turn is tied into their reporting system, which -- by the way, also has to work with two or three other third-party technologies that they want to support as part of their infrastructure.

It is generally a much more sophisticated application and developer that we’re working with. And what is great for both of us is that we are working with a more sophisticated business model.

Gardner: So you are much more of an ecology hub here, pulling a lot of different parts together to bring about a business solution.

Afergan: Often we won’t be the one pulling all the parties together in terms of a business perspective; that is not our business approach. But often our professional service organization working with the customers will be interacting with the other third parties, and some are already customers of Akamai.

So from the technology perspective, many of those technologies are running on the Akamai platform and working with each other, with us, and with the customer.

Gardner: Maybe you could give us a sense, Mike, of some of the return on investment (ROI) or some of the other metrics of success here. When we are dealing with such vast amounts of content, and people in the business are shifting as they evaluate different approaches to this, what would you tell them is in their best interest in terms of the cost and capability?

Afergan: Sure. We have been able to develop support across a variety of different business models, and have seen many different successes. For example, in the media a well-known Akamai customer such as Apple iTunes fundamentally changed the music landscape. It has over a billion downloads of music, similar to a pay-per-view content approach.

Another example is Major League Baseball. We support over 250 live games per month during the baseball season, with a variety of subscription-based approaches.

Another case is Akamai customer Friendster, in the social networking space. By coming onto the Akamai platform, not only do they save infrastructure cost but they were able to triple their market share in terms of page views -- which in the advertising space, in the social networking world, that immediately translates into revenue for them, with more and more page views.

A great high-tech example is Microsoft who, for their beta release of the Windows Vista software release, did more than 80GB per second of traffic -- one of the largest sustained volumes in the history of the Internet. They were able to run on the Akamai platform without thinking about building out new infrastructure, etc.

So many of our customers come to us and see significant cost savings and bottom line savings. But increasingly our customers are also seeing increased top-line revenue as well through better performance, reliability and scalability.

Gardner: I suppose in this changing landscape people are also interested in risk reduction. I might be in a pay-per-view model today, and I might want to move to a subscription model tomorrow. I probably want to continue advertising. And then there is this whole notion of syndication. How can I position myself to move among these different revenue models from the same sort of platform or infrastructure perspective?

Afergan: Exactly. I mean many of these customers want to have the flexibility and agility to expand really different business models, to be able to move and incorporate different types. Akamai takes that issue off the table in savings, which gives them the time and the money to invest elsewhere in their business.

With the tools and functionality in our platform, we allow them to shift between the models that you’ve mentioned. Their user model within their applications is supported by Akamai and can support authentication if they want to have a pay-per-view content model -- or targeting, if they decide later they want to do advertising. And, frankly, we have some customers who want to do free trials, too, so moving back and forth between the different models.

So flexibility and agility is fundamental to survival and success in the current exciting, rapidly changing marketplace. What it comes down to for our customers is to have a platform they can build on, both for their application logic and for their content delivery -- one that is not the bare-metal of the Internet. And that is why customers are using Akamai.

Gardner: Very good, thank you for explaining so much. This is clearly a changing landscape, so we will revisit some of these issues, I'm sure.

We have been talking today with Mike Afergan, the Akamai chief technology officer. And Akamai is the sponsor of our podcast today.

We’ve been discussing the explosion of content and media on the Internet, and how network services and shifting business models are requiring a richer set of capabilities from providers like Akamai. Thank you very much for joining us, Mike.

Afergan: Thank you, Dana.

Gardner: This is Dana Gardner, principal analyst at Interarbor Solutions, and you have been listening to a BriefingsDirect podcast. Thanks for listening.

Listen to the podcast here. Podcast sponsor: Akamai Technologies.

Transcript of Dana Gardner’s BriefingsDirect podcast on Internet media delivery platforms. Copyright Interarbor Solutions, LLC, 2005-2006. All rights reserved.

Transcript of BriefingsDirect SOA Insights Edition Vol. 5 Podcast on Microsoft and SOA

Edited transcript of weekly BriefingsDirect[TM] SOA Insights Edition, recorded Nov. 10, 2006.

Listen to the podcast here. If you'd like to learn more about BriefingsDirect B2B informational podcasts, or to become a sponsor of this or other B2B podcasts, contact Dana Gardner at 603-528-2435.

Dana Gardner: Hi, and welcome to the latest BriefingsDirect SOA Insights Edition, a weekly discussion and dissection of Services Oriented Architecture (SOA)-related news and events, with a panel of independent IT industry analysts, journalists and guests. I’m your host and moderator, Dana Gardner, principal analyst at Interarbor Solutions.

And this week, the week of Nov. 10, 2006, our panel consists of show regular Steve Garone. Steve’s an independent analyst, a former program vice president at IDC, and a founder of the Align IT Group. Welcome, Steve.

Steve Garone: Thank you, it’s great to be here.

Gardner: Also joining us again this week is Joe McKendrick. He’s an independent research consultant and columnist at Database Trends, as well as a blogger for ZDNet and ebizQ. Welcome back, Joe.

Joe McKendrick: Hi, Dana, it’s a pleasure to be here again.

Gardner: And making her debut on SOA Insights Edition is Mary Jo Foley. She’s a blogger for ZDNet’s All About Microsoft, a former Ziff Davis Media editor as well as a former eWEEK star reporter. Welcome to the show, Mary Jo.

Mary Jo Foley: Thanks, Dana.

Gardner: A return guest this week is Jeff Pendleton. He’s a former IT and marketing executive at HP and BEA. Welcome back, Jeff.

Jeff Pendleton: Thank you, great to be here.

Gardner: Our discussion this week will center on two topics, both, of course, SOA-related. The first is Microsoft, which just had its Developer Connection event in Las Vegas, and Mary Jo attended that. Recently, I’ve been seeing some different positioning from Microsoft around SOA. They seem to have avoided the term SOA for some time, although a number of things that they do are very much SOA-aligned.

Now, they’ve been coming out with more lingo, or marketing, around SOA -- if not in the actual technology approach, at least in terms of the business values and the rationale for embarking on SOA. I say that because of the recent article I read that quoted Charles Fitzgerald, who is, I assume, the SOA marketing maven at Microsoft. His title is .NET Platform Strategy Group General Manager.

So, he’s a pretty good indicator of where the momentum is, and the direction is, for Microsoft on these subjects. He was at an event, the Microsoft Architect Forum 2006 just last month in Seoul, South Korea. He said of SOA: “It’s not about a product or skill, but rather it’s about style -- how one comes up with the system and basic approaches -- replacing or rewriting, depending on a particular business situation.”

It really does sound like he’s coming at this from a composite, inter-related services, re-use perspective. He also says that getting time-to-value is key and starting a practical approach to SOA makes sense. So we’re seeing from Microsoft a lot of the same kind of terminology we’ve heard out of BEA, IBM, and number of the other SOA vendors.

I want go to you first, Mary Jo, and ask you about what sort of sense you got at the latest Developer Connection event. Is Microsoft talking the talk around SOA, as far as you can determine?

Foley: You’re right, Dana. They really aren’t using the term "SOA" at all. The whole time I was in Las Vegas this week at different sessions I never heard anybody from Microsoft even mention the term. But as you’re saying too they’re introducing the pieces, and they’re talking about the value of integration.

Their whole “better together” strategy also incorporates not just Windows and Office, but also the .NET framework and Visual Studio pieces too. So, yeah, they’re definitely talking the talk, without actually saying the word.

Gardner: Interesting. Now, let’s go to you, Joe. What do you think is going on here? Do you think that Microsoft is only going to go as far as Web services on interoperability? Do you think they see SOA as a threat? Or is it just “SOA the Microsoft way,” and they don’t care to use that terminology?

McKendrick: Microsoft’s secret to success -- actually I wish I knew a little more of it -- since the day Bill Gates set up his first shop down in New Mexico has been playing to a mass market. You never see Microsoft make a move unless a mass market already exists for their product or technology.

Microsoft, rightly or wrongly, continually gets accused of copying, stealing, or co-opting the ideas and technologies of others. But that’s because it’s not a pioneering vendor. They don’t take the lead in moving into a technology space. They wait until this critical mass, this mass market within the vital center, crops up. And this suggests that perhaps SOA has reached that stage.

SOA is no longer the sole domain of the large organizations, large corporations, large government organizations, but it’s something that’s moving down to the mid-market and the mass-market. Typically, you wouldn’t expect "Joe’s Machine Tool" factory down the street to be worrying about SOA at this point, but perhaps, we’re getting close to that point.

Gardner: What do you think, Steve? Is Microsoft so departmental-level-oriented that they’re not interested in SOA until it becomes a bigger deal in the enterprise?

Garone: It’s an interesting question, and just to tie into the last point, I think there’s a counter-argument to the notion that they wait until things reach critical-mass before they get on board. I think probably the best example of that was Web services. I think it’s fair to say that Microsoft was fairly early into that game.

Gardner: Yes, the WS.* stuff, right?

Garone: Right. And I think the reason for that ties in to our conversation today to some extent, which is that Microsoft really needs that sort of services-based interoperability-founded paradigm, if you will, to be able to play in the enterprise, because it’s a single platform company and it needs to get beyond that.

So it tries to raise the level of abstraction and say, “I can play with everybody and here’s how I’m going to do it in a standards-based way.” In the context of this conversation, Microsoft is grafting to some extent onto the SOA concept for that same reason. Interestingly, if you look at some of the talk around Microsoft’s approach, they started to use the term “real-world SOA,” and the rationale for that is that organizations should not take this enterprise-wide, global view of SOA right away, but should start incrementally, in terms of solving individual business problems.

That’s really the core message: “Focus on your business, not on technology.” The reason for that may be that, in fact, Microsoft really isn’t ready to do the IBM thing when it comes to SOA. So, they’re trying to talk people down. But I think in terms of your question – Is Microsoft really serious about SOA? -- I think they are. They’ve got a stack of software that, to some extent, looks very much like what other vendors have. And, I think they’re going to continue to drum home that message.

Gardner: Do you think there’s some risk if Microsoft positions themselves as interoperable through standards? In effect, “Do all your development deployment around our stack, and if there’s other integration to be done, we kind of leave you to your own devices.”

When it comes to that lower level -- messaging level -- integration, where SOA seems to say, “Hey, use whatever you’ve got, let’s exploit your legacy and be an abstraction above those stacks,” does Microsoft run the risk of missing out by not going to that abstraction above the stacks?

Garone: Part of my point was that I think that they’re attempting to go above that. The old issues of, “Are their products scalable enough to be able to deal with very large global implementations?” is still an issue.

But, in concept, they’re trying to go above that. Recently, I saw a press release that says they have incorporated adapters for System i and System Z from IBM into BizTalk 2006. So, they’re looking at doing as you said -- getting that legacy, if you want to call it that, integrated into their view of what SOA should be.

Gardner: Let’s go back to Mary Jo. Did you see or hear much about the Microsoft equivalent of an enterprise service bus (ESB), their Windows Communications Foundation (WCF), which used to be called Indigo? Did they discuss that in terms of what you use to tie together all your Microsoft stuff, including all your legacy Windows -- because there is quite a bit of heterogeneity just within the Windows environment over the years? Do they talk about using it a lot for wider integration?

Foley: Yes, they’ve talked a lot about it at the conference, because they were talking about the .NET Framework 3.0, of which Indigo is one main component. The way they were talking about it to the audience that attended this conference was more about how you can mix and match managed APIs and unmanaged APIs.

And they’re encouraging people who are thinking about developing all kinds of apps -- custom apps, shrink-wrap apps -- to look at WCF as just one element of the way you tie things together, when you’re building an app. So, that was more the context they were talking about it at this conference. They weren’t really talking about it as a bridge across different kinds of systems from multiple vendors. It was more, “If you’re developing in the Microsoft universe, this is how you should think about it.”

Gardner: It almost sounds as if they’re expecting you’re going to need another ESB in addition to theirs in order to get the full benefit of SOA, as we’re currently defining it. Jeff, you’ve been an observer of Microsoft for a number years, is Microsoft singing the same song or are they opening themselves up sufficiently to be considered an SOA vendor?

Pendleton: I think they’re definitely moving very aggressively toward SOA. They may not be marketing and promoting it yet, but I think that they’ve actually been thinking about SOA, without necessarily using that term, for quite some time.

So when you talk to folks up there, the "Metropolis Conversation" comes up quite often. I know that they’ve had a couple of SOA events for some of their premier customers. I don’t think that we should assume that they’re not part of the story, and that they don’t get it.

They’re partnering with folks that you do think of when you think of SOA. I can’t tell you what their strategy is because I’m not quiet clear on it. I’m not privy to it. But I think you’ll probably hear more and more from Microsoft around the SOA story in the coming weeks and months.

Gardner: And, of course, we’ve seen some new tone or style from Microsoft vis-à-vis partnering with folks like Zend with PHP; partnering with Novell for SUSE Linux interoperability and patent protection.

So perhaps the notion is: write in anything, use Common Language Runtime in .NET, and then deploy more broadly with choice -- recognizing that because of virtualization and because of grid/utility, that the instances of underpinnings for services is really not where the game is at any more. The game is how you associate, mash-up, and aggregate services to create valuable and agile business processes. They can’t miss this business. This is the new business, right?

Pendleton: I think there are two ways to look at SOA, and I think Microsoft is taking probably a broader view of the term.

You started to talk about mash-ups, for example. Well, right now that’s the claim to fame for Web 2.0. If you’re a CIO trying to make sense of all of this stuff -- whether it’s creating virtualization, and so on -- you can either use SOA as an organizing principle for all of that. Or you can look at it as somewhat distinct from all of these other interesting trends and ideas.

And I think what Microsoft and some of the other organizations are doing is sitting back a little bit, waiting to find out whether SOA is going to become its own pillar, or whether it’s actually going to become an encompassing umbrella. I think Microsoft’s view is that it’s really more of an umbrella, under which to organize a lot of these other terms that are quite honestly starting to confuse the IT community.

Gardner: Help me understand a little bit better these two distinctions, or directions for SOA: the organizing principle and the umbrella principle.

Pendleton: Well, I think that if I were a CIO right now I’d probably have a massive headache, because you have these camps forming around these different notions. Before it was Web 2.0 and Enterprise 2.0. Well, what’s that? Why are they different?

And then you had the whole grid, and then you had mobility, and center networks. What you have are all of these disparate, or what appear to be disparate, concepts. And if you’re sitting back there with a fairly limited exploration budget, what do you do?

Do you fall into the Web 2.0 camp? Is that really a camp? Right now, the market has so many buzzwords, or so many “platforms,” to consider that it’s again freezing the deer in the headlights.

With SOA you can either look at as a distinct camp, competing against other distinct camps, or you can look at it as a way -- as an umbrella under which all of these other things make sense. That comes back to Microsoft’s point, which is that SOA’s not really a technology. It’s more of a philosophy of how to approach IT going forward.

Gardner: According to Charles Fitzgerald at Microsoft, SOA is not about a skill; rather it’s about a style.

McKendrick: If I can interject here, it’s interesting, a fellow named Jack Greenfield, an enterprise architect over at Microsoft, a couple of years back published a paper, “Defining a Strategy,” which he called “Software Factories.”

And essentially what he said was that going forward software development at all levels will probably resemble the way industrialization changed the economy earlier in the century. He calls it “mass customization,” where you are actually going to have perhaps pre-built modular construction, kind of a move away from single-item customization and toward a mass production kind of model.

His paper kind of defines the direction Microsoft is looking at over the long term. It’s particularly a design-time development side, and Microsoft is strong in the developer community. That’s their natural constituency.

Gardner: Isn’t that another way of saying that software development is going from the equivalent of an “artisan, craftsman, renaissance-era, funded by the Medicis, money is no object” thing to more of a “Henry Ford assembly line, interchangeable parts” -- an Eli Whitney and the cotton gin -- kind of mentality, where it’s industrialized, with not so much of the handcrafting. If the handcrafting is going to happen, it’s going to be in the handcrafting of the first parts, but then those parts will be assembled on a standardized, highly repeatable process.

Garone: Exactly. That’s well-put, and Microsoft’s goal since day-one has always been to make computing easier for folks who don’t have a lot of technical background. You can pick up Visual Basic fairly quickly, even though you may not have a technical background. They see this as the vision going forward for enterprise applications, not that non-technical people will be put into enterprise applications development, but you won’t need to re-invent the wheel and have a degree in rocket science to master this.

Gardner: Steve, you and I have talked a lot about the complexity as a possible speed brake on SOA adoption, and in the understanding of it. Do you think that Microsoft, given it’s history of working diligently to simplify the development-deployment process -- albeit around a proprietary environment -- is what’s necessary to make SOA sell?

Garone: It is true that Microsoft really has a lot of strength in the developer community, and has been lauded for a number of years now on the quality and ease of use of its tools and its approach to software development.

There’s really is no doubt about that. And I think that the point that was just talked about, while not really a new idea, is all about reuse and ease of development and development efficiency and so on. That is definitely a strong component in making SOA successful, but it really isn’t SOA.

Creating modularized software is one thing. Bringing that to the next level of creating services, and creating the interoperability among services, that’s required to do SOA -- with all the infrastructure, governance, and security, and so on -- is a whole other level.

And again, I think Microsoft does appear to be telling that story more and more. They are telling it in their own context, which again has two components. One of which is: Start incrementally and solve this specific business problem. I think we’ll hear more from them, and I think it will become more and more part of what their message is going out to world.

Gardner: Mary Jo, I know you need to drop off, and I certainly appreciate you joining us, but one more questions for you. Did you get a sense from the latest that you’ve heard from Microsoft that they are focusing on the crafting of these services individually -- services that will play together well -- but that Microsoft is not necessarily yet focused on how to associate, choreograph, and manage services, regardless of where they came from?

Foley: Now, what do you mean when you’re saying “services?”

Gardner: Well, “services” would be an application or business function, let’s say an order or billing function, that would be something you could drop into any business process, where that same function would be required. And that service might be running on your own servers. It might be running on some department server ... or it could be outsourced, or even from a partner that you have in your supply chain.

Foley: It’s interesting that Microsoft had another conference in Europe – their Convergence EMEA Conference -- where [Microsoft Chairman] Bill Gates was keynoting. There, they were talking about business processes as services, and their vision there is really changing quite a bit, given the company’s move to making everything into a "Live" service by making it either ad-supported or subscription-based.

So they’re actually trying to talk about some of their products that have traditionally not been available as services now in the context of them being services -- things like their dynamic ERP products and dynamic CRM products. They are also encouraging third-party software vendors to think that way, too, and to introduce business processes as services. That would snap into the Microsoft Live Office context and framework.

Gardner: Now, another thing that Gates said in his address at that conference was that he thinks Microsoft is in the best position to tie together back-office and front-office applications. That kind of gives us a hint as to maybe what they’re thinking about SOA.

And, of course, they had to shift gears as a company pretty dramatically only in the last year-and-half by elevating [Microsoft Chief Architect] Ray Ozzie to his position and creating this whole Live Office approach. And so the notion is that perhaps they have to compete with both SOA, in terms of a BEA and IBM definition of SOA -- but they also have to compete with Google and the Web 2.0-type of functions that are a direct threat to their desktop revenue stream.

So it’s a difficult maneuver for them to do a trajectory toward SOA, but also covering their behinds when it comes to Web 2.0.

Foley: I was actually going to ask you guys -- because I am really curious whether the whole notions and concepts around SOA can fit in with the kind of "Live" vision that Microsoft is talking about. Or are they opposites in a way?

Gardner: I think they’re actually complementary. We’ve heard a lot of of rich Internet applications as UIs and GUIs, but that represents services on the back-end in most places. What’s your take on that, Joe?

McKendrick: Agreed. Also, despite all the talk of Linux and the move to rich Internet applications, Microsoft still owns the desktop. Surveys I’ve done, surveys I’ve seen, confirm just that.

The desktop and the Office worker, the information knowledge worker, still rely on Windows at the front end. This is at least a third of Microsoft’s revenue, and it really shows no sign of abating. Novell has been aggressively promoting the notion of a Linux desktop, but it’s still got a long way to go. The notion of connecting the front end with the back end is natural for Microsoft, because that’s their home turf -- the front-end desktop.

Gardner: Indeed. Before they had this change on the Windows Vista time-table, where [Microsoft Platforms and Services Division Co-President Jim] Allchin and others had to come in and say, “Well, we have to postpone this,” they were really talking up this notion of using Office applications as the front-ends for back-end services, rather than have the Web continue on its trajectory. the had decided to double-down on Office applications as the new best front ends.

Of course that was also in evidence when they had the Mendocino project in cooperation with SAP, around using Office applications as a front-end to SAP processes in the back-end.

Now, let’s go back to you, Jeff. Is that what we are seeing here -- that Microsoft is in a very difficult ju-jitsu position of trying to embrace and extend toward SOA -- but at the same time needing to have a defensive posture vis-à-vis these Live services, such as what Google does, and to be able to monetize those around advertising, while also trying to craft a new future for the Office applications?

Pendleton: Good question. I don’t know that I have keen insight into what’s keeping Microsoft awake at night. I do think that they are very well positioned, given where we’re going right now with SOA and other things.

I can’t venture a guess on what's going on at Microsoft in that regard, other than to say they really are partnering very aggressively with folks that have in the past been their competitors. And maybe they’ve always done that.

But around the notion of SOA I get a distinct impression that they understand that their vision of SOA isn’t that much different than what others have. Yet they come from a unique position in terms of how to connect and collect these services and begin over time to play a syndication role.

So they’re actually in a very good position, but there are so many things going on right now that it’s hard to predict what's ultimately going to take root and really drive SOA forward.

Gardner: All right, back to you, Steve. It also seems that Microsoft is in between these trends: SOA, let’s call it a major trend, and then Web 2.0 with perhaps an assault on the Office franchise.

There’s also a shift in business models. That is to say, more people are expecting the business to shift from an up-front licensing, client-access-license-model to more of an advertising-based or subscription-based model, or both.

Microsoft obviously needs to make this transition, as do as other vendors. What makes this more complicated -- even though Microsoft is in a good position given its penetration in the market – is that it also has to manage it’s own internal politics. There are different elements within Microsoft, and they’re in charge of these different product sets in these different domains.

So they have to also manage this transition in the business model internally. My question to you, Steve, is: Yes, Microsoft is well-positioned, but don’t they also have a quite a bit to chew here? And isn’t this really a very thorny issue for them?

Garone: I’m not sure that the issue is as thorny as it is unique to Microsoft. Being the size they are and having the variety of products and services that they provide -- the political and organizational thorniness goes up exponentially with that level of diversity.

So I think it’s definitely a big problem, and I’m not sure I’m in a position to give a lot of insight on internal Microsoft politics. But it’s serious enough that if it’s not handled well, it could have a major impact on the company’s future.

I've seen it happen in other places. I was an employee for number of years with Digital Equipment Corp., and saw new business models literally bring the company down in a lot of areas because of this kind of internal friction. So, it does happen.

On the brighter side for Microsoft, I think that you know I would like to think that Microsoft has a more of a new-age view of the world in that it understands it has to be agile, and it was built on the notion that new business models are what's going to drive their growth.

Hopefully they’ll take that religion to heart. But I don’t have a lot of visibility, unfortunately, into what's going on internally at Microsoft. I can’t say with any certainty that they’re going to be able to deal with that well. But, again, a lot of their competitors are going to have the same problem.

Gardner: I guess Microsoft, given its position and its balance sheet, has the ability to tolerate a very large margin of error if they need to. Right?

Garone: Right! But also the discussion a little bit earlier centered on their ownership of the desktop. Ultimately, if you put the word desktop in quotes, then that is really what’s going to drive them. I put it in quotes because, in fact, the desktop may look a lot different in 10 years than it does today.

Gardner: Isn’t the whole notion of the desktop being itself virtualized?

Garone: Absolutely. So when you dream into the future -- not necessarily with what exists today, but what it might be -- and you think about the notion of virtualizing computing resources and making everything you can a service, and having all that interoperability, the notion of a desktop may change to something that isn’t even on your desktop when you turn on your machine. But when you access a service, that will define what's on your desktop -- even including the runtime and operating environment.

Gardner: I would argue that the concept of desktop is outmoded and obsolete, and we really should focus on the processes, applications, and productivity. Perhaps you’ll keep your address book, but your files will probably just be another point in some cloud or element within the general cloud that you don’t need to be concerned about. What you really are going to focus on is productivity and process.

Garone: Nobody has a crystal ball at this point around this forum they we’re having right now. I think it’s important to remember that context when you think about where Microsoft is going to go and how it’s going to adapt.

Gardner: Let’s move on to our second topic of the day, and that is to pick up where we left off last week in trying to figure out the best way of conceptualizing SOA’s business value, and to then be able to take it out to the market.

In our past discussion, we said, “Hey, let's bring [Apple Chairman] Steve Jobs in on this," because he is really good at bringing technology into a passionate -- almost zealous -- direction for people, and they follow him in that regard. But then we also figured that if Steve Jobs were trying to market SOA, he wouldn’t even mention SOA.

Then, we got into this notion that SOA really should be something that is like a sound stage, or an architectural blueprint -- a way of being able to construct and then deconstruct and to be agile with business, rather than technology. Has anyone given additional thought to that, and where should we take this discussion next in terms of emphasizing the rationale of why people should go to SOA now rather than just sit back and wait and watch?

Garone: I’ve been doing a lot of talking with both vendors and end-users recently and I think where the discussion needs to go is around is that the vendors seem to be caught up in a contradiction in terms. When they go out and talk to their prospects and customers about SOA, they try their best to create a message around business value, business agility and bringing real value to a line-of-business manager.

But then they immediately switch to tell you how valuable and how of high-quality their ESB is, and why you should use it. I think that’s a real issue today, because it really confuses customers.

On the one hand, they are being evangelized to about why they should be going in this direction, and on the other hand they are being pushed into a specific implementation that may not be right for them. So, the vendors face the real challenge in terms of being able to evangelize why people should do SOA and educating people about SOA in terms of how it impacts the business, and on the other hand to be able to go ahead and sell their products and bring their own revenue levels to where they want them to be.

Resolving that issue in a way that will help both vendors and end-users understand better, and be able to be more successful, is really the conversation that needs to be had.

Gardner: Jeff, what's your reaction to that?

Pendleton: That’s right on the mark. SOA is a great conversation to have, but at the end of the day, with the marketing community and the sales community, they need to sell something. Right now, given how amorphous SOA is and how it can be just about anything, it is complicated from a vendor perspective to walk away with an order.

What really needs to happen is that there needs to be a compelling story around the 21st Century enterprise, what that really means, and what some of the attributes are. We need to talk about SOA as an enabler and a cornerstone for that 21st Century, but there are other cornerstones. And we are not really talking about that so much.

How do you need to view your people? Are these folks that are tied to a desk almost automatons doing a routine process, or are they really plugged into the external environment? How are you organized?

Gardner: I would think optimally that your people would not be doing rote process, but they would be defining what the new next process is.

Pendleton: Exactly. But I think that for SOA to really capture the imagination of the business community -- which ultimately is going to have to fund this thing through some sort of a capital expense increase -- we are going to need to create something more compelling and inspiring, than just the “agile” or “adaptive,” or "whatever" enterprise.

That’s why we came back to the Steve Jobs notion. We need folks out there, we need inspiration right now in the business community, to say, “Here is what you should be shooting for, and if you don’t shoot for this you may not be relevant here in the next little while. And one of the enablers of this is this thing called SOA. So, let's go talk to your IT guys about this SOA thing.”

Gardner: Yes, I guess on a higher level we’re really talking about IT transformation, and not on its own -- but IT transformation as an essential ingredient to business transformation.

Pendleton: We lead with business transformation and how you do that transformation. One of the things is how you manage your people going forward, and the other is how do you manage your IT going forward.

Gardner: You mentioned "agile" and "adaptive." Just recently I’ve noticed that HP is now doing some different advertising, at least to the financial community. In the Wall Street Journal you have these pictures of people upside down. They are the IT people and they are saying turn your IT upside down, which to me sounds like IT transformation.

But instead of adaptive enterprise, they are now taking the marketing positioning that their Mercury acquisition had around BTO, Business Technology Optimization, which is a broad, but pretty direct, definition of what we are really trying to accomplish.

Pendleton: Right now IT is still this monolithic, fragile, complex -- take all the negative, skeptical terms – entity. Most line-of-business executives really don’t like to go into the IT space. I don't think that IT is being positioned around the strategy table as something that's really going to help move the organization.

A lot of the fault lies within the IT community itself. Over the years, we’ve tried to dazzle and use rocket science as a way to define IT. The reality is that IT needs to be part of the day-to-day thinking -- not the day-to-day excuse -- of business.

Gardner: IT has perhaps over-promised and under-delivered over-budget, which has tended to pigeon-hole it into being a cost-center and an inhibitor of agility. That's what really needs to be adjusted. Do you agree with that, Joe?

Mckendrick: I agree with that, but I think we have come a long way. If you look at the world as it was even 10 years ago there was this chasm between IT and the rest of the business. Nowadays, folks on the business side are much more savvy about computers. Everybody has a laptop and a home computer, and the world has really changed in that regard. You have a generation of employees coming on the scene in their 20s and 30s, who grew up with computers. They know to a large degree how computers work, the logic of computers, and what computers can do for a business.

Gardner: You can pull their PC out of their cold, dead hands -- right?

McKendrick: Exactly. So, on the business side there is a greater understanding of computer technology and what and how technology can deliver services. It’s a much greater understanding than it’s ever been in corporate history. On the other side, you are seeing and hearing about this tremendous push to get IT folks to understand the business and work closer with the business.

I have spoken with folks at university programs, training both technical and business people, and the courses that get the greatest attendance are those that talk about the convergence of business and IT -- IT folks taking business classes, for example, to understand the business.

Gardner: Another event this week was the Web 2.0 Summit, the O’Reilly show in San Francisco, where Intel came out with a Web 2.0 suite -- I think they are calling it SuiteTwo -- which is a series of independent, largely open-source-backed and -based features and functions, if you will, of Web 2.0.

They are directing it at the enterprise, to say, "Do your blogging, your wiki’s, and your podcasts. Do collaboration, communication, and social networking -- not just leaving it out in the ether for people to do for their personal life issues and their entertainment media issues. But bring it into the environment of the enterprise. We can use these tools for building consensus around a process or doing exception management through a wiki-based approach."

That’s an interesting ingredient here that I don’t think we can divorce from SOA. It is part of taking advantage of these younger folks who would like to do things this way, but then bring that into the enterprise in some controlled fashion, so that the older IT people will not be threatened, but actually embrace it.

Steve, what do you think about Web 2.0 vis-a-vis SOA?

Garone: There is a lot of discussion about it, and I think to some extent it's happening. But when I go out and talk to those communities, what I see is that the business folks most of the time really just draw a picture, bring it over to the IT managers, and say, "Do this for me."

They are not quite there yet, and they don’t believe that the IT folks are really where they need to be in terms of not just talking with them about business, but actually thinking business when they do their work. I am not really sure what that means, but I keep getting that feedback that they are not thinking in the right way in the eyes of business mangers.

The bottom line is that there is a ways to go, and we are not quite there yet. It’s important to recognize, in terms of just how quickly and with how much energy, this new world that SOA is a part of will move forward and be adopted. What you just described in terms of Web 2.0 sounds fascinating to me. I wasn’t privy to the information that you’ve just told us about in terms of Intel, but doesn’t that sound exciting when you think about it?

Gardner: Perhaps, if we are talking about the inhibitor here being people in the way they think, in the way they conceptualize their job -- what it is that they are expected to do -- then perhaps it’s going to be fear of competition that ultimately drives this. If your competitors think differently, embrace some of these new concepts -- SOA, Enterprise 2.0, Web 2.0 -- become fleet and agile at a lower cost over time, then you really don’t have a choice, right?

Garone: Another element to talk about is the fact that I have been hearing a lot of people talk about SOA and presenting case studies on SOA recently. One the things that really comes through to me is that, despite vendor’s efforts to evangelize around the benefits of SOA in terms of business agility, and be more competitive and so on, virtually all the case studies I see focus on the benefit of saving money, saving resources, and being able to run lean operationally, and being able to develop applications more efficiently. It's really all about cost to these people at this point.

Gardner: Another accelerant in the movement toward SOA, whether you call it SOA or not, whether you are Microsoft or not, is the emergence of software-as-a-service companies that themselves are starting from a green-field position using SOA to create business applications.

So, another development this week that has a big bearing on this is Dave Duffield, the man behind PeopleSoft, coming out with something called WorkDay. They took a look at the business applications environment and then built his offerings on an ESB -- it happens to be a Cape Clear ESB -- to create services swiftly and agilely, and at probably significantly lower cost.

This could have been done in the past -- because he has done it in the past -- but the new offer is a set of business applications as services. They might be very attractive, if not to the large enterprises, then to the small or medium business. If WorkDay can make their business work through SOA, doesn’t that in a sense spur on others?

Pendleton: Exactly. There is another company, Reardon Commerce, which also has built its infrastructure on reusable components, SOA-enabled components, and Web services. The company started offering a travel service and so forth to corporate clients through this framework, and they have expanded -- again reusing the components they have in place -- to also offer additional business services such as inventory tracking.

Gardner: Jeff, let's give you the last word before we start wrapping up. And that would be: Do you see software and service organizations like WorkDay and Reardon as a primary accelerant to the adoption of SOA? Or do you think that a competitive issue -- that if your competitor does SOA better than you do, then you are going to be at a significant disadvantage -- is the driver? Or is it both?

Pendleton: There's quite a bit of debate in the industry right now about software services -- being able to buy components of your process and being able to plug it in. Software services is a natural fit within our definition of SOA, and I think it's going to become more and more apparent over time.

So, I would say both. I do believe, though, that we’ve still not come up with the compelling picture, tag line, whatever you want, for SOA for business people like we have had in the previous waves. We don’t yet have an "e-commerce" equivalent right now.

Gardner: Wasn’t IBM kind of the force behind e-commerce as the definition, and then taking and spending a significant amount of money in marketing that?

Pendleton: Yes, E-Business.

Gardner: I guess we will be looking for that.

So, to sum up a little bit, some interesting things out of Microsoft. We’re going to expect them to get into SOA more. Perhaps they are taking a little bit of a wait-and-see approach. They’ve got a full plate, given the multi-faceted challenge before them.

And we’re also looking at SOA perhaps creeping in as a competitive issue as well, spurred on by software as a service in terms of cost, with small- to medium-sized businesses perhaps adapting first, rather than the larger enterprises.

With us to discuss this have been a distinguished and interesting panel, and I thank you all: Steve Garone, Joe McKendrick, Mary Jo Foley, and Jeff Pendleton.

I wonder if we could all do our due diligence for disclosure exercise now. I’ll start. The companies that were mentioned that I do business with and are sponsors of my podcasts include Cape Clear and Hewlett-Packard. I think that’s it. Why don’t you go next, Steve.

Garone: Based on the companies that were mentioned here really right now, it's just IBM.

McKendrick: Likewise, it's IBM.

Gardner: And, Jeff, you don’t have any corporate affiliation at this time, so you’re clean. Mary Jo, I believe, is a blogger alone and doesn't have sponsorships or consulting arrangements with vendors.

Great, so I’d also like to alert our listeners if they’re interested in learning more about BriefingsDirect, B2B informational podcasts or to become a sponsor of this or other B2B podcasts to please contact me directly, Dana Gardner, principal analyst at Interarbor Solutions at 603-528-2435.

Thanks for joining us and come back next week for another edition of BriefingsDirect SOA Insights Edition. Thanks everyone.

Listen to the podcast here.

Transcript of Dana Gardner’s BriefingsDirect SOA Insights Edition, Vol. 5. Copyright Interarbor Solutions, LLC, 2005-2006. All rights reserved.