HP's Instant-On Enterprise Initiative Takes Aim at Shifting Needs of Business and Government

Transcript of a sponsored BriefingsDirect podcast on addressing users' and customers' expectations for an always-on environment.

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

Dana Gardner: Hi, this is Dana Gardner, Principal Analyst at Interarbor Solutions, and you're listening to BriefingsDirect. Thanks for joining this sponsored podcast discussion on the impact that rapidly evolving customer, citizen, and user expectations are having on the enterprise.

We’ll be looking at how technology advancements are making it possible to drive innovation to meet these new demands for instant gratification.

There are three megatrends shaping the next generation of successful businesses and governments. We're talking about pervasive mobile applications, highly responsive cloud-computing models, and knowledge-adept social collaboration.

Indeed, by the year 2020, The Economist newspaper predicts there will be two trillion devices connected to the Internet. And taking a look at where we are right now, McKinsey Quarterly reported in August that in 2010 some four billion people have cell phones, and 450 million have access to a full web experience.

Moreover, Jupiter Research reports that by 2014 there will be 130 million enterprise users involved with mobile cloud activities. Not only is access pervasive, but the amount of information available is also exploding. The Economist reports that in 2005 mankind created 150 exabytes of digital data … and in 2010 we will create fully eight times more data.

These changes are at a pace they’ve never seen before as they address them and try to drive these into their business or government environments.

As these trends literally rearrange business ecosystems, a gap will surely emerge between the companies that master change -- and exploit enabling technologies -- and those that fall ever further behind.

For those that do step up to the challenge -- expect a relentless emphasis on rapidly recurring innovation to meet dynamic customer and citizen demands.

We're here to explore these issues, and to better understand how HP is working to help customers make headway, so that the next few years bring about a generational opportunity -- and not a downward complexity spiral.

Here now to discuss HP’s vision and game plan for success on attaining and mastery of the Instant-On Enterprise is Dave Shirk, Senior Vice President of Worldwide Marketing at HP Enterprise Business.

Welcome, Dave.

Dave Shirk: Thank you, Dana. Happy to be here.

Gardner: I mentioned a few trends, and clearly we're into a stage here beyond business as usual. There are clearly some changes. How do you see these trends? Are there several that you're focusing on now that you think really represent an opportunity, or even something that needs to be managed in terms of risk?

Shift in the marketplace

Shirk: We're seeing a lot of shift going on in the marketplace right now. When we look at where consumers are driving business or where citizens are driving government, it's fundamentally changing the way they operate. We've seen three core things come out, similar to some of the pieces that you talked about.

One of those is just the business model. The business models are all starting to change the way in which people approach markets across the globe. That's having to really rethink the ways in which they've approached them versus traditional methods.

The second thing we see is this whole shift in mobile computing meeting cloud computing and the enterprise trying to figure out exactly how to take best advantage of that to create this competitive advantage. Then, the overall demographic piece weighs into that.

We've seen the rise of the millennials, as they're being referred to. All of these things are forcing business and government to stop and say, "You know what, if we're going to grow or we're going to create a service differentiation, we're really going to need to do things differently and we're going to have to do it way faster than we've ever done it before."

This is probably best represented in the words of Professor Gary Hamel, who is the foremost business visionary person out there in the marketplace. In his book, Future of Management, he described it as "whiplash change."

That's very much the case when I speak with our clients both on the business side and the government side. That's exactly what they're sitting there and thinking and working through right now. These changes are at a pace they’ve never seen before as they address them and try to drive these into their business or government environments.

Gardner: And, the role of IT in this needs to be more than simply a speed bump -- something that slows things down. IT needs to shift into more of a high-gear cooperative partnership, accelerating impact on the business. So, how does technology fit into this?

Shirk: We look at the technology piece of it and say that you really can't get there any other way -- the pace of it, the speed of it, and some of the complexity associated with it. For a long time, business has tried to use labor as an arbitrage to try to work their way through this and just throw bodies at it. That's quickly dissipating. The speed and the connectedness that we see, and the confidence level that all of these types of services require make it no longer possible to go through that.

What we see is IT completely embedded in the business. Over the next couple of years, that's going to continue to be the trend and the strategy that will play out in the way in which business and government work this. Ultimately, that's going to be the differentiator that drives an ability not only to serve these constituencies but to out-serve them, and that's going to be the name of the game.

Gardner: This gets us to that element of the workforce, younger folks and, in particular, folks in emerging markets, where they've always been more focused on mobile devices than perhaps a traditional PC. They're the ones that I suppose are driving this change, because to them it’s not changing, it's their norm.

Part of the workforce

Shirk: It's absolutely the case, if you look around the world at the quantity of graduates, for example. According to the Society for Engineers, you now have over 800,000 graduates in China, over 300,000 graduates in India, 100,000 some in Japan, etc. It's over the last 10 to 12 years that each of those graduation rates has occurred. They are part of the workforce now.

When they went through that process, they were always connected and they always were involved in a social network-based environment. They have a level of their lifestyle that is all tied to this always-connected environment. When you think about the ubiquitous computing that that has brought to them, as they enter the workforce, they are looking at things a lot differently than ever before.

They bring new ideas. They bring new ways to that. They're looking for businesses that will support that kind of methodology and structure. They're looking for ways in which technology is used in a whole slew of new avenues to innovate and drive new business models and to drive new products and offerings in the marketplace. They want to be a part of that. So, when we think about that Gen X group that's out there, we see them driving an enormous part of this change.

The last statistic I saw was that they are now over 50 percent of the workforce. The analogy that's always used is that, to them, being connected and always involved in some type of networking-based collaboration or information sharing of some sort is about the same as it is for you and me to pick up our remote controls and turn on our television sets. That's already having a very profound effect on how business and government are changing and the expectations that are out there in the marketplace.

Gardner: Right. It's the expectations of the younger folks, and we are not talking about kids, but basically people under 35. They’ve been developed through their careers with an always-on mentality, and so their expectations are for their governments and their providers of services and products, even their employers, to be much quicker and more direct. If they can't find it there, they know that they can go somewhere else. So, the expectation is for this always-on instant gratification. Is that part of what got you into this notion of an Instant-On Enterprise?

Shirk: Yeah, it's a big part of it. The always on is very important in the backdrop that’s there. As you pointed out, it's this immediate or instant gratification. If I can't get what I want in the following way, I’ll find the business or government environment where I can. While the government piece maybe a bit harder to change, the business piece isn't, and so the competitive pressure to serve this audience, both as the consumer and also as employees, is a big part of that shift.

We see technology as the cornerstone to being able to solve some of these trends and some of these challenges.

We call that the "Now Problem." They want this, they want it done now, and they want it to work a certain way. We see technology as the cornerstone to being able to solve some of these trends and some of these challenges.

Gardner: If you’re an enterprise or a government, you’re large, and a lot of what you have in place has been put there over a period of 20 or maybe 30 years, or more. There's a disconnect between the requirements that you had to rely on and these different expectations from your workforce, consumers, and a dynamic, changing business environment. How do we convert to Instant-On? How do we recognize that business as usual, IT as usual, isn't quite up to the task?

Shirk: First, it starts with a desire to change and to drive innovation in a different way. We sit and we think about the fundamental change in this. We talked for years that the business was focused on business processes and business process reengineering. While that’s still very important, it isn't going to go away any time soon.

It's becoming obvious that the bigger driver and the more significant trend is the information process, understanding the segments of business or government that need to be addressed. What their needs are, what they want, what they want to talk about, the ways in which they want to interact is all part of this change that’s taking place.

Closing the gap

So, as we start to pull back and step back from this, we look at that and we look at this vision that we have for the Instant-On Enterprise and how we’re enabling end-users to become a part of that, how we’re enabling businesses and governments to provide that type of capability. It really is about closing the gap between what IT can provide and what the business needs to be able to serve each of those audiences.

It's a big part of the solution capability and the path that we’ve been trying to go down in the marketplace. What we’ve launched with this vision is to put the foundations in place to make that possible and take a journey with our clients both from the business side and government side and help them move down that particular path, find ways to navigate these challenges and these trends, and to out-serve and to over-serve all the audiences that they need to meet the needs of.

Gardner: Dave, when I was looking into the Instant-On Enterprise, looking at some research for this discussion, I saw that you’re trying to do enablement around innovation, agility, optimization, and then managing risk. It struck me that this is very ambitious, especially if you try to do those all at once. Do we have any choice? Is this something that we have as a "nice to have" or is this really challenging and daunting, but inevitable?

Shirk: You're right. It is inevitable. Different businesses and governments will have, at different times, one of these four elements be more important or more significant to them at different points. All of them share the innovation requirement. We see that in all things.

A lot of folks confuse innovation with ideation. Our view is that the innovation has to take place throughout that information process. It doesn’t matter whether it happens back at the data center or at every touch point. Innovation has to take place throughout for the business to meet the needs of those segments I’ve referred to earlier -- how it services it, how it conducts itself, and ultimately how it meets our needs or exceeds the needs of the audiences.

Agility really is about instant expectations, and can we turn things on and off, instead of just setting them up for a rainy day and hoping that they will be used.

Agility, optimization, and risk all vary in and out with innovation in terms of their need and their level of importance. It's hard today to hide from risk. Fundamentally, we can't eliminate it, but are we in a position that we can manage it. Can we use it to our advantage to differentiate ourselves and understand how to navigate within security threats, the regulations, and the data and information sources that are coming through?

Agility really is about instant expectations, and can we turn things on and off, instead of just setting them up for a rainy day and hoping that they will be used. A big part of technology’s trouble in the past was that we created all of these things and we never had a plan for ending their lifecycle or turning them down slightly, so that we could turn up other activities or other possibilities in an instant-on environment and an instant-on enterprise. A core part of the vision that we see is being able to drive that agility to meet those changing business needs.

Gardner: It sounds very rational and necessary, but for those folks trying to really grasp this vision, are there some examples? Are there some poster-children organizations of which you can say, "They’re doing it. They’re gaining the results that we expect and now others can follow their lead." Do you have any bellwethers for us?

Shirk: There are a few examples. I’ve had interactions with a number of CIOs, CTOs, and CEOs. One of those that comes to mind very quickly is the insurance industry. There is a particular insurance company that’s been out there for years, and years, and years.

They have been a bedrock. It’s a household name. You’d look at them and say that they totally built the business and the business model on a dealer or agent network and that is the interaction point between the consumer and ultimately their products and services.

Competitive threat

They’ve been cranking along very successfully for years. All of a sudden, they met with a competitive threat, where another company has come along and has almost disintermediated the agent channel with an entire set of online and mobile-based applications that interacts right to the consumer, when the consumer wants and how they want.

So, this company finds itself in a situation as an insurance provider, where it literally is reinventing the way in which it plays in that industry by using technology to shift from that traditional model to a hybrid approach of both the agent being important and this whole set of self-service applications. That’s an example where the fundamental competitive threat is there.

Another example where we’ve had some very interesting success is a large company that provides warranty services. Again, it's another household name. They have an offering in which they traditionally provided warranty services as a third-party provider to a lot of other companies in the marketplace.

One of the things that they wanted to do was take that traditional process, which is very phone- and service-center based, and find a way to move the claims processing and that model to a whole new set of applications online and drive that environment forward. As a result, they watched the registrations that they had skyrocket by 500 percent. The online product registrations -- which is always the Holy Grail for up-sell and cross-sell for any company -- they watched that go from a 15 percent level to a 99 percent level.

As a result of those changes and using technology to meet the needs of the end-user community that they were trying to serve, they’ve put themselves in a situation now where a lot more business has come their way from a number of companies that use them to fulfill their warranty services.

HP looks at the Instant-On Enterprise, the enablement of that is really a journey, and we’ve got to figure out what pieces make the most sense.

It's another example where we’ve seen that kind of change take place pretty prolifically in the marketplace.

Gardner: Again, while I was researching your Instant-On Enterprise initiative, you expect that IT needs to become more flexible, secure with added speed to what they do, leveraging automation, and providing not just function but the insight to their constituents, to their business brethren.

But, at the same time, it also strikes me that IT is operating with millstones around their necks, as they try to adapt and take on these more fleet characteristics. There are aging applications. There are unknown threats within the existing infrastructure. They are looking at development and deployment strategies and processes that are dated, perhaps linear, perhaps sequential, and with this rigid infrastructure, not to mention the fact that many of them are fighting fires around data explosion and trying to manage helpdesk and other types of remedial activity.

So, how do we do this? How do we change the wings in the airplane while we're flying, without crashing?

Shirk: We're faced with this all the time. That's partially why I say that when HP looks at the Instant-On Enterprise, the enablement of that is really a journey, and we’ve got to figure out what pieces make the most sense. There are some things that are much easier to focus on first and then, over time, to gain more and more of an Instant-On nature.

Critical success factors

When you mentioned flexibility, security, speed, automation, and insight, those absolutely are attributes that we look for. We see them as the critical success factors in the way in which every part of the environment that IT leverages, drives, and embeds in the business has to come forward.

And yet, as you point out, everybody is stuck in this mode of an enormous legacy that they have to deal with, and that gets in the way of being able to provide some of these new capabilities.

The challenge in all of these, as I said, is where you start first. Our view is that we work with our clients and figure out ways that they can, as we say, shift that equation. How do you shift from 70 percent of that equation being focused on operational management, and 30 percent, if you are lucky, being spent on new and innovation-based capabilities to help or assist the business and its growth versus shifting it the other way? How do you get to 30 percent operational mode, and move forward with 70 percent focused on the business?

We help our clients work their way through that with a series of workshops that we do to get in and investigate. We ask a series of questions, do a series of exploratory-based activities that help prioritize where we think the quickest return on investment is, because all these require some level of return to feed the next one and then the next one.

We’ve spent a lot of time and gotten a lot of expertise over the years trying to figure out the best ways to do that and address these albatrosses that are keeping IT from being able to deal with the needs of the business. In the Instant-On Enterprise journey, that's a big part of the set of steps that we have to work through and work with our clients to make sure that they understand where to prioritize.

In the first few months that I have been here, one of the things that I've learned is that HP, as a company, has this incredible breath and depth of portfolio.

Gardner: This also strikes me as a rather fresh perspective, particularly for a technology provider like HP. Many times we hear, "Here's what the technology is capable of and here is what you can do with it." But, you seem to be coming from the perspective of, "Here’s what the customers need. Let's re-engineer and back up from that."

It's sort of a fresh perspective. You've been at HP since April and you’ve had a chance to look deeply into the company, back up, and rearrange some thinking. Perhaps you could walk me through that process. How did you get to this point of Instant-On Enterprise, vis-à-vis customer needs?

Shirk: A lot of this has to do with just spending time with our clients and understanding their viewpoint. In the first few months that I have been here, one of the things that I've learned is that HP, as a company, has this incredible breath and depth of portfolio.

We're in a unique position, because we're the only company in the marketplace that has a full suite of consumer products, and yet we stretch all the way back through to the data center. All the capability, all the offerings, that are in between, all the services that are necessary to address each of those pieces, are contained inside the portfolio capability that HP has of hardware, software, and services.

Changing business models

When I spend time with clients and listen to them, a big part of what they're asking for is, "We’ve got these pressures. We're seeing the business models change and we're experimenting with some things. We're seeing the mobile and the cloud computing pieces coming at us like a freight train. At the same time, we're seeing the demographic shift both on the end-user consumer side and on our employee side. We need strategic partners to help us with this. How do we navigate this? What is the way in which we should do that? HP, do you have a point of view?"

So, as we stepped back and looked at where we would want to go with this, we thought that a big part of this is coming to the marketplace and sharing a strategy and a vision for where we would like the clients that we work with to end up and what that destination looks like and how we're going to get them there.

We looked at this and said, "How do we take the best combination of that breadth of portfolio and bring those together in a set of solutions to best address what we are hearing over-and-over from some of the research that we’ve done and listening that we’ve done with our clients?"

They need to figure out how to modernize their applications. We want to make sure that we are there and we’ve got a set of solutions for that. They’ve got huge data-center issues in terms of how they're going to transform their data centers and deal with more virtualization-based techniques and capabilities and bring networking and storage and compute power together in some fashion.

They’ve got this issue of enterprise security. They need to figure out how to secure the enterprise. I don’t mean desktops, but all points, all touch points of the enterprise -- how they build applications, how this information is accessed inside and outside of the organization, and then fundamentally optimizing that information, the ways in which you store it, the way in which you deliver it, the way in which you print it for that matter, all those pieces.

Hybrid delivery for us is our answer to the multiple ways in which a customer or client has to go through the process of building or delivering on these various technology services to their enterprise or their government.

Then, they need to underpin that by the best way to figure out how to deliver it. Do we do it for them? Do they build it themselves with our architecture, and our capability set, and our consulting expertise? What combination of ways makes the most sense to set that up?

I looked at all of that and listened to the clients. There are some really rich stories that were shared with me. As we pulled all the stuff together, this is the underpinning of that capability, trying to push HP’s leadership in the marketplace through all the work that it’s been doing and then set this vision and destination where we really want to try to take our clients.

Gardner: Let’s come back in more detail to some of the news that you’ve made around the Instant-On Enterprise. You’re talking about hybrid delivery benefits. I wonder if we could just briefly get into those. What does that bring to the table? How would that help an organization start moving and transitioning to gain the attributes that we’ve been describing today?

Shirk: Hybrid delivery for us is our answer to the multiple ways in which a customer or client has to go through the process of building or delivering on these various technology services to their enterprise or their government.

There’s an enormous amount of talk about cloud in the marketplace today. HP has been at the forefront of that, but we have a little different position. We think it’s unique and we think we're the only ones out there that are really positioned to do this, which is the concept of hybrid IT, where you’ve got a mix. You’ve got a mix of traditional on-premises-based capabilities, but then you figure out what private cloud or public cloud-based capabilities best serve your business on a global basis.

HP comes in and, unlike other companies that try to force you into a one-size-fits-all structure, we sit down with the client. Our unique IP in this area is that we have an incredible depth of intellectual capital in this particular area, which is helping the clients figure out the best balance or mix of the delivery methods.

We can help them build it. They can host it or we can host it for them. We can provide those services from our public cloud-based capabilities or from our private cloud based capabilities. We really don’t care, if that blend changes over time. That’s the beauty to the journey to this Instant-On Enterprise.

Starting small

Our data says that most customers still start with a small private cloud implementation to really understand the value of the cloud and demystify it. We’ve said that there is going to be something after cloud. We don’t know what that level or that style of computing is going to be, but our architecture is built such that we’ll be ready for that. For our clients, we’ll help navigate them through each of these pieces, and that’s the important thing for us.

Gardner: For those interested in pursuing more and understanding about Instant-On and the HP approach to these problems, is there an HP enablement process? Is there a way to get started with some resources?

Shirk: All of the above. There are a number of materials that we’ve made available to help begin the education process for folks who are interested in understanding a bit more about the Instant-On Enterprise and how to take or begin that journey. That’s one piece.

The other piece is that we have a whole series of workshops globally that our teams are set up to do, everything from a small couple-of-hour based interaction to a full suite of in-depth analysis and consulting engagements to work with a client. But, we usually recommend that one of our newly announced services would be the starting point.

We’ve got our new HP Hybrid Delivery Strategy Service, which is a place for a client to start, get a basic orientation, sit down and understand kind of where we think they might consider beginning that journey. So that, along with a number of other capabilities that we have to help them through these various workshops, I think is really the best place for them to start.

Gardner: Well, we’ve been talking about how some of the mega-trends of the day, cloud, mobile, social, Gen X have been buffeting organizations and how the speed of business is accelerating, and IT needs to play a bigger role in keeping up with the speed and isn't slowing the organization down. We’ve been talking about how HP has defined the Instant-On Enterprise as the means to start ameliorating these problems and setting up organizations for opportunity, rather than disappointment.

We’ve been discussing this here today with Dave Shirk. He is the Senior Vice President of Worldwide Marketing at HP Enterprise Business. Thanks for joining us, Dave.

Shirk: I appreciate it, Dana. Thank you for the time.

Gardner: This is Dana Gardner, Principal Analyst at Interarbor Solutions. You’ve been listening to a sponsored BriefingsDirect podcast. Thanks for listening, and come back next time.

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

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Transcript of a sponsored BriefingsDirect podcast on addressing users' and customers' expectations for an always-on environment. Copyright Interarbor Solutions, LLC, 2005-2010. All rights reserved.

Why HTML5 Enables More Businesses to Deliver More Apps to More Mobile Devices With Greater Ease

Transcript of a BriefingsDirect podcast on using the latest HTML standard to provide a richer user experience on smartphones.

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

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

Today, we present a sponsored podcast discussion on the rapidly changing and fast-growing opportunity for more businesses to reach their customers and deliver their services via mobile applications.

Over just the past two years, the demand for mobile applications on more capable classes of devices, such as smartphones and tablets, has skyrocketed. Now businesses of all sizes are seeing a step change in how they can get into the action.

The means to deliver low-cost applications to these newer devices via app stores and communities also makes the case for small and medium-size businesses (SMBs) to reevaluate their application development and end-user access strategies. This goes for reaching employees, as well as partners, users, and customers.

Perhaps the most impactful element of this shift is that the skills required to put these applications on these devices and distribute them widely is moving from hardcore coders with mastery of embedded platforms and tools to more mainstream graphical and scripting-skilled workers, more power-users than developers.

We're here to discuss how mobile application development and the market opportunity are shifting, and how more businesses can quickly get into the mobile applications game and build out new revenue, share more data, and provide better direct customer access in the process.

Please join me in welcoming our panel on discovering some new opportunities for mobile computing. We're here with Roger Entner, Senior Vice President and Head of Research and Insights in the Telecom Practice at the Nielsen Co. Welcome, Roger.

Roger Entner: Thank you, Dana.

Gardner: We are also here with Wayne Parrott, Vice President for Product Development at Genuitec. Welcome back to BriefingsDirect, Wayne.

Wayne Parrott: Great to be back.

Gardner: Roger, let's go to you first. What is a salient difference now with mobile applications than just a couple years ago? How has this really changed in your eyes, and in your practice?

More computing power

Entner: Well, the devices that we call now smartphones are little computers that today are as powerful as laptops a few years ago. I always say that this little thing you have in your hands, a smartphone, has far more computing power than was used by NASA to put men safely on the moon and bring them back alive.

So, it is the Internet and a computer in the palm of your hand. This really has opened up the whole universe for app development, because you have now all three components. You have the right devices with the ability to provide the right services on the right networks. You have lot of power on the device, a large screen, a good way to input it, and the programming capabilities to do something really neat with the networks to provide a really fast connection.

This is a very nice confluence of factors that have led to this explosion in the palm of your hand called the smartphone.

Gardner: I suppose the form factor here is also changing the very nature of the applications. We're not simply re-purposing desktop applications for these devices. We're actually creating new ways that people can relate to business processes, discovery of data and information, and then join that with such aspects as location services.

Entner: Absolutely. A few years ago, it was a stamp-size screen, and people were trying to pack a 16, 18-inch experience from the laptop or from the computer onto that. It just fell short. It was a recipe for disaster, and people were simply not using it, and you can't blame them for it.

One of the biggest innovations Apple brought was addressing the elasticity of demand.

Now, we have 3- and 4-inch screens that are actually readable. We're not just merely replicating a desktop experience, but actually tailoring it to the device and working with the strengths of the device rather than with the weaknesses.

Gardner: I'm also impressed too with how the business model has shifted so rapidly. People used to want to make money off the application. Now, we're seeing through app stores with Apple devices and Android devices, as well as Microsoft upgrades to their new operating system on the mobile device, a premium model, where [enterprises and smaller businesses] either give-away the app or charge quite a low amount. So, that’s sort of increased this viral uptake of these apps.

Entner: One of the biggest innovations Apple brought was addressing the elasticity of demand. On feature phones today you're still paying $3, $4, $5, $6, $7 for an application, and it has an inferior experience than the one that companies are selling on the iPhone. To no surprise, they actually make a lot more money through the iPhone, because of a lower price point and better experience. A lot more people are buying it than those with an inferior experience.

Gardner: Do you have any studies at your fingertips? We've seen a lot going around recently around these projections of growth for mobile. In many cases, it's really a shift away from PC. A lot of developers are saying, "Wow, I can make a better living making these mobile devices and having that high volume opportunities." Are there any numbers, any projections?

Entner: We're quite active in the mobile applications arena. We just launched our second edition of our Mobile Apps Playbook. But to quote numbers from there, year-over-year second quarter '09 to second quarter '10, smartphone penetration in the US went from 16 percent to 25 percent.

About 50 percent of all devices being sold in the US right now are smartphones. We expect smartphone penetration to be at about 50 percent by the end of next year. Almost 60 percent of smartphone owners are actually using applications. That’s a huge percentage.

At the sweet spot

We're now at that sweet spot, where it makes a lot of sense for businesses to have applications both for their consumers and their employees alike, because there is enough of an addressable base there.

Gardner: The interesting part too for me is that this can scale down as well as up. That is to say, individuals, small businesses, maybe even departments within large companies can start thinking about making their own apps for their own services, because the economics have shifted so dramatically.

Entner: Absolutely. Apple, Google, Microsoft, and the others, have software development kits (SDKs) out there that make app development a lot easier than it has ever been.

If you have a talented developer or a talented person in your department, he might be able to build that internally. Or, there are now myriad development shops out there that have the capabilities to build applications and charge only a few thousand dollars -- and that's single digit thousand dollars -- to have a capable usable application.

There are a lot more people who know how to program these things, and have good ideas of applications. There is a really good market out there to put the two together.

Gardner: Wayne, Genuitec has been focused on development and the developer community for a number of years. Is there anything from what Roger has been telling us that you don’t see? How are you at Genuitec seeing this shift in developer community and interest around mobile apps?

Parrott: We’re seeing a big move toward interest in mobile at the development side. Back to your original question of what are the factors that’s really led to the explosion of mobile apps, is not only the smartphones and their capabilities, but we also look at the social changes in terms of behavior.

People more and more have a higher reliance on their smartphone and how they run their lives, whether they are at work or on the move. The idea is that they are always connected. They can always get to the data that they need.

Basically, we're taking their lifestyle away from their desktop and putting it in their pocket as they move around. More and more, we see companies wanting to reach out and provide a mobile presence for their own workforce and for their customers.

The question they ask is, "How do we do that? We already have a web presence. People have learned about our brand, but they can't access this through their smartphones, or the experience is inferior to what they’ve come to expect on the smartphone."

We're seeing a big growth of interest in terms of just getting on to the mobile -- having a mobile presence for the SMBs.

Gardner: I forgot to consider that if you could become adept with consumer and entertainment applications, they'd want to start seeing that same opportunity for mobility in their business applications. It's almost as if business needs to rapidly catch up to where the entertainment side or even gaming side is. Let's talk a little bit about some of the technologies that support these user interfaces (UIs).

Roger, any sense of any game changing technology shifts? We're certainly talking about the skills moving. I am aware of HTML5 and some other SDK activities. What strikes you as sort of in an important technology shift that is now going to help bring together these communities and this interest?

Trend on both sides

Entner: Well, you have a trend on both sides. One is HTML5, which is slowly but surely approaching. There has been no finalized HTML5 standard [from the W3C], but a lot of web browsers, and even mobile web browsers, have now some HTML5 capabilities. And, it will really help in the development cycle for basic applications.

If we take one little step back, one of the genius things that Apple has done is turn the bookmarks into an application. About 60-70 percent of all applications on the iPhone or an Android are actually glorified HTML ports. So, it's not that difficult or that demanding on the application side.

Where HTML5 will not to be able to help us, at least right now, is when we try to take advantage of location-based services because there is no standard yet. They're still arguing about this one, and especially high performance graphics. But, on the standard application, HTML5 will take us miles forward and diminish the difference between the desktop and the mobile environment.

Then, we have a multi-platform development environments. Adobe Flash is probably the most well-known, and that helps to reduce development time as well. At the same time, all of the SDKs are getting more powerful and more user-friendly. So, it's moving toward a more harmonized and more rapid development environment.

Gardner: Wayne, how about that harmonization process? It doesn’t seem that long ago that mobile development was really hard. It was highly fractured, with many different platforms, many different toolsets, and concerns about network compatibility. The problem was that you had to target specific OSes, and therefore one app wouldn't run somewhere else, or the graphics wouldn't quite fit. So this harmonization and standardization seems to me a fairly big deal?

You still see a strong fragmented programming model base, different operating systems, and different hardware capability. It's still a mess.

Parrott: Absolutely. If you take a look at the current state of native mobile app development, it's really not much better than it was five years ago. You still see a strong fragmented programming model base, different operating systems, and different hardware capability. It's still a mess. You pretty much have to pick a subset of devices that you want to focus on.

What's much more viable now, as Roger was talking about, is the HTML5 standard, which is still in development and emerging. There is enough core already emerging that we could start to program to a subset of that spec and treat it as kind of a common run-time that you would program across pretty much all of the new emerging smartphones as we look forward.

Gardner: Maybe we should back up a sec for our listeners who are in SMBs and who aren't coders or developers. HTML5 is a web-type mark-up language, something that they would be familiar with looking at through their browser. What's changed? What does this mean now for going to a hand-held tablet mobile device of some sort? Wayne, maybe you could take a first stab at that.

Parrott: Prior to HTML5 talking about mobile web was pretty much a joke. Mobile web was an afterthought in the phone market. You had these small, dinky displays. Most of them couldn't even render most standard HTML.

With the advent of the smartphone what you really saw was pretty much the Internet, as you experience it on your desktop, now on to your smartphone, but with even more capability.

Part of it is because HTML5 has stepped back and looked at what the future needed to be for a web programming model. To become more of a common run-time, they had to address some of the key gaps between native hardware, APIs, and web. Much of those have really centered on one of the biggest digs that mobile web had in the old days, when you were doing something, were connected, and then you lost your connectivity.

Out of the box

HTML5, right out of the box, has a specification for how to operate in an online, offline, or disconnected type mode. Another thing was a rendering model, beyond just what you see on your desktop, that actually provides a high-end graphics type capability -- 2D, 3D types of programming. These are things that more advanced programs can take advantage of, but you can build very rich desktop type of experiences on the laptop.

Then, they went beyond what you're used to seeing on your desktop and took advantage of some of the sensors that these phones have now -- accelerometers, location capability, or geolocation. APIs are now emerging as a companion to HTML5, which is a spec that will span across your desktop to the mobile phone. It's a very capable specification.

In addition, there is the movement in terms of the standards body, especially the W3C, to address mobile device API. You will eventually program in a standard way and talk to your contacts list, your cameras, video, recording devices, and things like that. That will soon be available to us in a web programming model.

What used to be exclusively the demand of the hardware API guys to do really low level, high performance bit twiddling is now going to be available to the general web programming masses. That opens up the future for a lot more innovation than what we’ve seen in past.

Gardner: Roger, you pointed out that this HTML5 is not fully baked, but there are some very powerful big players involved who are supporting it. That would include Apple and Google. Is this a question of if HTML5 becomes dominant or pervasive, or is it a matter of when?

HTML5 will come, and the excitement that you see is expressed by so many companies.

Entner: It's only a matter of when and a little bit around the edges of how. HTML5 will come, and the excitement that you see is expressed by so many companies. Apple and Google are at the forefront and are already launching websites and services in it. You can get HTML5 YouTube, HTML5 Google, and even Yahoo mail access. You can have the Apple website in HTML5. It just depends on what is fully supported right now.

Some browsers support it, and some don't yet. On the mobile side, it also fully depends on what is supported. If you have the WebKit engine at the core of the browser that your device is using, HTML5 is pretty widely supported. If your browser uses another engine, it's a little bit more difficult.

We're at the moment of emergence of this, and so the implementation is not fully baked, but there is so much excitement that people want to get going rather than wait for the standards to be finalized.

Gardner: I think it's important with these devices and their interfaces, especially the tablet. People are looking to video and full media as a way of doing more than simply watching the news. This is really becoming part of our culture, the way people relate, taking steps from social media. The thing with HTML5 is that it supports that video without the plug-ins, without worrying about compatibility. This kind of levels the playing field on the full media. Is that your take as well, Wayne?

Parrott: Absolutely. Definitely.

Innovative model

Gardner: So, the goal here is to make this available to more people and more companies. There is a very interesting, innovative model potential here for small companies or, as I said, divisions within companies, branch offices, perhaps by geography. You don't have to go through IT and get into a long line waiting for development of an application. The office, perhaps in another geography or language environment could go out, create their own mobile app, and reach their customers very quickly that way.

Let's get back to this notion of simplified creation, design, and deployment. Wayne, what have you been doing with MobiOne in Genuitec, in particular, to try to hasten this to take advantage of this need in the market?

Parrott: We've been watching HTML5 and the whole movement -- the social desire across a number of small businesses to be on the mobile web, to have a web presence out there. As we've talked to more-and-more of our SMBs, one thing that stands out is that they don't have a lot of resources. They don't have a huge web department. Their personnel wear a number of hats. Web development is just one of n things that one of the individuals may do in one of these organizations.

At Genuitec, we developed a product called MobiOne Studio. The target user is anyone who has an idea or an vision for a mobile web application or website. MobiOne is geared to provide a whole new intuitive type of experience, in which you just draw what you want. If you can develop PowerPoint presentations, you can create a mobile web application using MobiOne.

You lay out your screens, you pane them all up, and then you wire them together with different types of transitions. From there, you can then immediately generate mobile web code and begin to test it either in the MobiOne test environment, that's an emulated type of HTML5 environment, or you can immediately deploy it through MobiOne to your phone and test it directly on a real device.

One of the challenges you have right now with HTML5 and the mobile web programming model is that it is typically not accepted in most of the app stores.

Gardner: And, Wayne, how would that then work toward some of these app stores and particular devices? How do you take that added step particularly, as you point out, these organizations are without a lot of resources? How would they get this out into the mainstream? What's the distribution and deployment next step?

Parrott: Well one of the challenges you have right now with HTML5 and the mobile web programming model is that it is typically not accepted in most of the app stores. Let's just talk about the Apple's App Store as an example. Mobile web applications in their straight HTML5 form are not accepted yet in the app store.

We expect to see that relaxed in the future, but at this point in time, you really are restricted. So, the iPhone App Store is not available to you. It's really restricted, so that you have to jump through some hoops that Apple has set up in the past.

With HTML5, you can go directly to your customers. You can market to them directly. It depends on your way of interacting with your customers, but we have seen a number of novel approaches already from some of our customers. When any customer is in your store, you make it very easy for them to access your site, to make them aware of your mobile capabilities, lure them in, and get them connected that way.

But looking beyond the restrictions you have right now, with MobiOne Studio we recognized that the first thing that most companies want to do is just mobilize, just get a mobile presence, mobilize their websites, and have that capability. As Roger said a while ago, a lot of the apps you see out there are really glorified mobile websites and are packaged up in a binary format.

Second phase

In MobiOne Studio's second phase, once you design and you like what you have, you have a progressive step that you can go from a very portable form to compile it down -- or cross-compile -- from HTML5 to whatever the native requirements are of that particular target app store. So, Google will have their app store, and Apple and RIM each has their own model. They are all fairly different models.

One last thing that we are keeping a really close eye on is the mobile widget standard. It basically specifies what a mobile web app looks like and what the packaging model is. That's already respected by RIM and some of the other smartphones out there. Apple doesn't support it yet, but, fingers-crossed, they'll join the masses at some point, and we'll have a standard packaging deployment model in the future for the iPhones as well.

We're keeping an eye on it and we're filling those gaps based on what your target app store is.

Gardner: We’ve already discussed how we've come a long way in reducing the fractionalization within the mobile side, but it sounds as if we're looking to join a bit more of what happens in the web experience on a full-fledged PC with what happens in the web experience on a mobile device.

Back to you, Roger. Do you see this actually merging in some way? One of the guesses out there at this point is that iOS is going to be a bit more compatible, that is to say, your experience on the desktop and the mobile device become more common. Is it your future outlook that these things are going to start not only to consolidate in the mobile space, but consolidate across all types of devices connected to the web?

Entner: Yes, because when we look at fourth generation networks, LTE or WiMAX, they are flat IP networks. When you look at that, it basically allows you to have the same service. Your user experience only changes with the terminal you added at the end and the speed of the connection.

With mobile it's mobility and location awareness, whereas with the PC, it will always be raw speed through fiber and storage capability and screen size.

What we're seeing now is this increasing trend of a harmonization or at least integration capability of different OSes with their mobile counterparts. Then you can have everything from the Internet -- and we've seen it already today -- to applications, even like IPTV, streamed to your device. Only the speed changes or impacts how quickly you get it and what kind of resolution there is. If you look at Uber’s mobile from AT&T, it is already providing that.

We're seeing this congruence that’s happening. You try to play to the strength of the device that you have. With mobile it's mobility and location awareness, whereas with the PC, it will always be raw speed through fiber and storage capability and screen size. You're going to increasingly tailor to the strengths of the devices, rather than do one size fits all.

Gardner: Back to you Wayne. This is an interesting outlook for the future, because as we have that congruence and harmonization between web experience across multiple devices, this really also simplifies what can be done by developers and designers in terms of exploring new innovative business models, intercepting business processes and data based on that, the optimum part of a process timeline or more milestones, rather than where you happen to be, where you have to be at certain device or to intercept.

That’s a long-winded way of saying, can we start to see designers and UI-focused developers or scripters now having much more of a role in how business applications and processes can be designed and even improve iteratively over time?

Back to the desktop

Parrott: Yes. The influence that we are seeing already from the smartphones back to the desktop. The expectation, the experience, in the past has been a desire to have kind of that rich feel user type of experience moved back over to the desktop. So, we're seeing some influence there already.

Also, if you look at what HTML5 presents, not only is it becoming a common runtime on the smartphones, but it also represents a very viable development model on the desktop as well.

It's a portable standard. It wasn't originally designed for smartphones -- smartphones just embraced it first. We're definitely expecting to see a lot more influence by parties in the past that were really more kind of downstream, when they were being brought in upfront to talk about what's possible, when you start looking at the flow and the interaction with users, because things are becoming much more about the user experience.

To keep users engaged on the desktop in the past, you could take your workforce, lock them down, and give them some kind of boring app. But, we're seeing the temperament change now, as people have learned what’s possible. We’re asking what’s possible on the business side as well.

Gardner: I can see where this could really flip the development market altogether, because I might want to primarily design and develop and target mobile classes of devices, and then make it easier for me to then support the full-fledged PC through an HTML5 browser.

We think HTML5 is really the entry point to changing and moving everybody over to pretty much a web ubiquity.

I also might start developing on the server as a more sophisticated, say Eclipse-level Java developer, and start making sure that I output in HTML5, almost primarily. Then, I can cut across these different environments, reduce complexity significantly, and start to maybe get more agile, more swift, in how I do my server-side development as well. Any thoughts on that, Wayne?

Parrott: Definitely. That’s one thing we expect to see down the road. Again, it’s going to take a while for it to run it's course, because there are so many other competing technologies that have the incumbent technologies, Java or Microsoft’s desktop technologies, but companies for a long time have wanted to see a more capable portable web type model. It’s just got so many more benefits and we think HTML5 is really the entry point to changing and moving everybody over to pretty much a web ubiquity.

It’s going to be all by HTML5 in the future, at least when you talk about the client side, the UI that users are going to interact with as we move forward.

Gardner: I am afraid, we have to wrap it up. This brings this full circle back to how dynamic this marketplace is. Last word to you, Roger Entner. Thinking about the opportunity here, is now the time for these small businesses, almost any kind of business, to rethink how they relate to their environment, their end users, and perhaps get a bit more aggressive in thinking about mobile as a real important part of their business.

Entner: Yes. Now, 25 percent of wireless users have smartphones in their hand, and that’s basically increasing to 50 percent by the end of 2011. Now we have that critical mass that allows companies still to have an early move or advantage. If the companies wait another year or two, they will be laggards in the market and their competition will probably have put something out already and gained a valuable lead over that. So, it’s now where they still can show that they are leaders in their segment, if they haven’t done anything yet.

Gardner: Wayne, if folks were interested in trying to learn more about HTML5, the difference between different devices and web development to ameliorate the complexity, MobiOne Studio, and some other technologies Genuitec is working on, what would you suggest they’re doing to get started?

Parrott: Yeah, I would suggest, visit the Genuitec.com site, you can find all about MobiOne, download it, try it out, it’s very intuitive, you just install it to spin it up. You immediately are in the process of building HTML5 mobile app that you can then test and deploy, send it to your friends.

Gardner: What’s your pricing model, do you have a premium model on that? How does that work?

Parrott: Right now it’s priced right at $99 per user.

Gardner: Very good. Well, we’ve been talking about mobile application development and the market opportunity and how that’s all shifting, and how more businesses can quickly get into mobile applications and start building out new revenue, data sharing, and business process values to just about any user, just about any place nowadays.

I want to thank our guests. We’ve been here with Roger Entner, Senior Vice President and Head of Research and Insights in the Telecom Practice at the Nielsen Co. Thanks so much, Roger.

Entner: Thank you for having me.

Gardner: We’ve also been joined by Wayne Parrott, Vice President for Product Development at Genuitec. Thanks, Wayne.

Parrott: Great being here today. Thank you.

Gardner: This is Dana Gardner, Principal Analyst at Interarbor Solutions. You've been listening to a sponsored BriefingsDirect podcast. Thanks for listening, and come back next time.

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

Transcript of a BriefingsDirect podcast on using the latest HTML standard to provide a richer user experience on smartphones. Copyright Interarbor Solutions, LLC, 2005-2010. All rights reserved.

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Architecture is Destiny: Why the Revolution in Business Interactions Can't Work on Conventional Databases

Transcript of a sponsored BriefingsDirect podcast on moving beyond relational databases and relying on services-based architectures.

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

Additional resources:

The Real SaaS Manifesto (whitepaper)
Things Large Enterprises Need to Know About SaaS
Strength from the Core: Why Bolted-On BI Doesn't Work for HR
Built-In Business Intelligence
Real Saas
Notes from Workday's Technology Summit

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

Thanks for joining this sponsored podcast discussion on how IT architectures at software-as-a-service (SaaS) providers provide significant advantages over traditional enterprise IT architectures.

We will look at how one human resources management (HRM), financial management and payroll SaaS provider, Workday, has from the very beginning moved beyond relational databases and distributed architectures that date to the mid-1990s. Instead, Workday has designed its architecture to provide secure transactions, wider integrations, and deep analysis off of the same data source -- all to better serve business needs.

The advantages of these modern services-based architecture can be passed on to the end users -- and across the ecosystem of business process partners -- at significantly lower cost than conventional IT.

I'm here now with a technology executive from Workday to explore how architecting properly provides the means to adapt and extend how businesses need to operate, and not be limited by how IT has operated.

So please join me now in welcoming Petros Dermetzis, Vice President of Development at Workday. Welcome to BriefingsDirect, Petros.

Petros Dermetzis: Hello, Dana. How are you?

Gardner: Very good. What is it that is different about a Workday stack versus a traditional enterprise IT stack?

Dermetzis: The luxury that Workday had at the very beginning was to start with an absolutely clean slate. Enterprise resource planning (ERP) solutions evolved over time and started adding technology solutions as problems occurred.

We have a unique opportunity to stand back and see what history and evolution provided over the past 20 years and say, "Okay, how can we provide one technology stack that starts addressing all those individual problems that started appearing over time?"

Gardner: It sounds as if a SaaS provider like Workday almost has the luxury of working the main architecture problem, rather than working many problems from what was already in place. Tell me about this clean slate. How important is that? How big of an advantage is that?

Climbing a ladder

Dermetzis: It’s a huge advantage. Look at most ERP vendors, for example. They started with a need to report data and very quickly realized it was like climbing a ladder of hierarchic needs. When you get your basic reporting right, you need to start analyzing data.

The technologies at the time, around the relational models, don’t actually address that very well. Then, you find other industries, like business intelligence (BI) vendors, appeared who tried to solve those problems.

What we try to do at Workday is understand holistically what the current problems are today, and say, "This is a golden opportunity." This is opposed to finding all existing technologies, cobbling them all together, and trying to solve the problems exactly the same way.

Is there a totally different innovative approach to addressing those problems?

Gardner: I have to imagine too that the requirements are different. Back when ERP was just coming into the mainstream, it was about just getting a handle on processes. Now, we're at the point of refining and extending processes. It’s a different set of requirements.

Dermetzis: If you go back in time to when mainframes started appearing, it was about transactions, capturing transactions, and safeguarding those transactions. IT was the center of the universe and they called the shots. As it evolved over time, IT began to realize that departments wanted their own solutions. They try to extract the data and take them into areas, such as spreadsheets and what have you, for further analysis.

We want to take it more to an area which is business interactions, and interactions can happen from humans or machines.

Obviously, they were solving the problem incrementally, as they were going along. What we tried to do was address it all in the same place. Where we are right now is what I would describe as very business transaction-centric in what I define as legacy applications. Then, we want to take it more to an area which is business interactions, and interactions can happen from humans or machines.

Gardner: Just for the edification of our listeners, Workday is focused on human resources management (HRM) and other employment-related issues, but also increasingly moving into a larger ERP and the business applications set. The important fact here is that in human resources you need to relate to outside entities. Maybe it’s payroll, maybe it’s insurance or healthcare. This puts you in an interesting position of mastering the integrations, something that’s probably going to become more important with cloud computing and other aspects of business over the coming years.

Dermetzis: That’s correct. If you think of the majority of the systems out there, the way we describe them is that they were built from the ground up as islands. It was really very data centric. The whole idea was that the ERP system gave all the solutions, which in reality isn't true.

If you're managing any system with HRM systems, you need to communicate with other systems, be it for background checks, for providing information to benefit providers, connecting to third-party payrolls, or what have you.

Adopting new standards

Right now, the state of the art is hardwiring most of these central solutions to these third-party solutions, and that basically doesn't scale. That’s where technology kicks in and you have to adopt new open standard and web services standards.

Gardner: Let's drill down a bit into existing legacy architecture. It was the right architecture for the job, but the job has changed. What can be done? As you mentioned earlier, people have incrementally added on over the years more and more. They have a sort of bolt-on mentality. What's wrong with that, and what can be done to move in a new direction?

Dermetzis: I would describe it more like an onion. We keep on adding more and more and more layers of vendors, and the more the poor enterprise IT customers are trying to peel it, the more they start crying -- crying in terms of maintenance and maintenance dollars.

Just to introduce the basic concept of how applications are being built, they are being built with the idea of storing, managing, and safeguarding the transactions.

Applications are built on top of relational databases today, and then they are being designed thinking about the end-user, sitting in front of a browser, interacting with the system. But, really they were designed around capturing the transaction and being able to report straight-off that transaction.

However, all the business logic, all the security, and the whole data structure that hangs together, is known by the application and not by the database.

The idea of integrating with third parties was an afterthought. Being an afterthought, what happened was that you find this new industry emerging, which is around extract, transform and load (ETL) tools and integration tools. It was a realization that we have to coexist within the many systems.

What happened was that they bolted on these integration third-party systems straight onto the database. That sounds very good. However, all the business logic, all the security, and the whole data structure that hangs together is known by the application -- and not by the database. When you bolt-on an integration technology on the side, you lose all that. You have to recreate it in the third-party technology.

Similarly, when it comes to reporting, relational technology does a phenomenal job with the use of SQL and producing reports, which I will define as two-dimensional reports, for producing lists, matrix reports, and summary reports. But, eventually, as business evolves, you need to analyze data and you have to create this idea of dimensionality. Well, yet another industry was created -- and it was bolted back onto the database level, which is the [BI] analytics, and this created cubes.

In fact, what they used were object-oriented technologies and in-memory solutions for reasons of performance to be able to analyze data. This is currently the state of the art.

Gardner: And this is fairly expensive. When you have to buy the bolt-on, you have to manage the integrations yourselves. You have to troubleshoot where it's going to break and where it's brittle. Then, of course, you have to add what you can for security and maintenance over time to keep up that needed level of security. We're talking about some significant cost.

Why don't we address that? Why is this bolt-on approach not just problematic technologically, but also very expensive?

Things are never stable

Dermetzis: That’s absolutely true. In fact, if you think about it, you can actually buy something. You can buy an older application, a legacy application and you can bolt-these integrations and analytics components onto it. You can get it up and running, and everyone is happy.

But then, things are never stable. Vendors update things, change things. They upgrade, they apply fixes and patches, change their data models. And what you have done is, in effect, you have alienated and broken these third-party bolt-ons.

IT shops have hundreds and hundreds of integrations hanging over this all. And, the times comes when they don't want to accept anything, not even a bug fix from a vendor, because they know they're going to break their integrations. That’s just maintainability, and that’s just dollars and dollars and dollars that you need to spend to maintain things.

And you can't get new functionality, new innovative solutions, because as soon as you go back and start changing things downstream, well ... the costs are huge.

Gardner: So, with Workday, or any SaaS provider that’s architecting for the future, you're able to address some of these issues for your architecture, but you're also able to add new technology based on the architecture, not as an adjunct or an additional bolt-on product.

The reality around ERP systems is actually making all this work together.

This is happening behind the scenes. You're able to improve your security, keep up any patches that you need to do, while at the same time increasing the frequency through which these end users can enjoy these improvements.

So, we've got, I think, two benefits here. One is the initial architecture, and two is the fact that you're managing all that maintenance. Please tell me why these two aspects are important and what you did to make it improved over the past systems.

Dermetzis: The way things evolved, you started with an application, and integrations were an afterthought; they got bolted on. Analytics was an afterthought, and that got bolted on.

What we tried to do at Workday was start from a complete white sheet of paper. The reality around ERP systems is actually making all this work together. You want your transactions, you want your validations, you want to secure your data, and at the same time you want access to that data and to be able to analyze it. So, that’s the problem we set out to do.

What drove our technology architecture was first, we have a very simple mentality. You have a central system that stores transactions, and you make sure that it's safe, secure, encrypted, and all these great words. At the same time, we appreciate that systems, as well as humans, interact with this central transactional system. So we treat them not as an afterthought, but as equal citizens.

Additional resources:

The Real SaaS Manifesto (whitepaper)
Things Large Enterprises Need to Know About SaaS
Strength from the Core: Why Bolted-On BI Doesn't Work for HR
Built-In Business Intelligence
Real Saas
Notes from Workday's Technology Summit

The same treatment

Any request that comes into our system, be it from a UI or from a third-party system by integrations, we treat exactly the same way. They go through exactly the same functional application security. It knows exactly what the structure of your object model is. It gets evaluated exactly the same way and then it serves back the answer. So that fundamental principle solves most of our integration problems.

On the integration side, we just work off open standards. The only way that you can talk with a third-party system with Workday is through web services, and those services are contracts that we spec to the outside world. We may change things internally, but that’s our problem.

We're a SaaS vendor, and we do modify things and we add things, but those external contracts, which are the Web services talking to third-party systems, we respect and we don’t change. So, in effect, we do not break the integrations.

The next one is about analyzing data. As I said, there are a lot of technologies out there that do a very good job at lists and matrix reporting. Eventually, most of these things end up in spreadsheets, where people do further analysis.

But the dream that we are aiming for continuously is: when you are looking at a screen, you see a number. That number could be an accumulation of counts that you'd be really interested in clicking on and finding out what those counts are -- name of applicants, name of positions, number of assets that you have. Or, it's an accumulation. You look at the balance sheet. You look at the big number. You want to click and figure out what comprises that number.

To do that, you have to have that analytical component and your transactional component all in the same place. You can't afford what I call I/Os. It's a huge penalty to go back and forth through a relational database on a disk. So, that forces you to bring everything into memory, because people expect to click something and within earth time get a response.

The technology solutions that we opted for was this totally in-memory object model that allows us to do the basic embedded analytics, taking action on everything you see on the screen.

When you are traversing, you come to a number in a balance sheet, and as you're drilling around, what you are really doing in effect is traversing an object model underneath, and you should be able to get that for nothing.

The technology solutions that we opted for was this totally in-memory object model that allows us to do the basic embedded analytics, taking action on everything you see on the screen.

Gardner: And that common approach with the juxtaposition of the logic and the data also allows you to update your system without worrying about all of those bolted-on aspects breaking, which gets us back to that ability to update, refresh, and deliver new benefits fairly rapidly.

One code line

Dermetzis: That’s absolutely true as well. As soon as you can have the luxury of maintaining one system, let's call it one code line, and you're hanging our customers, our tenants, off that one single code line, it allows you to do very, very frequent upgrades or updates or new releases, if you wish, to that central code line, because you only have to maintain one thing.

And, there is another bit of technology that you add to that. We're a totally metadata-driven technology stack. Right now, we put out what we describe as updates three times a year. You put new applications, new features, and new innovations into the hands of your customers, and being in only one central place, we get immediate feedback on the usage, which we can enhance. And, we just keep on going on and keep on adding and adding more and more and more.

This is something that was an absolute luxury in your legacy stack, to take a complete release. You have to live through all the breakages that we mentioned before around integrations and the analytical component.

Gardner: Could you explain about that persistence layer? You started to get into it a bit with the metadata. Explain that a bit more in more detail if you would.

Dermetzis: The persistence layer is really forced by the analytical components. When you're analyzing information, it has to perform extremely fast. You only have one option, and that is memory. So, you have to bring everything up in-memory.

What you used to use in legacy system was putting things on tape for safety and archiving reasons. We use disk, and we actually believe, if you look at the future, that nearly everything will be done exclusively in-memory.

We do use a relational component, but not as a relational database. We use a relational database, which is what it’s really good at securing your data, encrypting your data, backing up your data, restoring it, replicating it, and all these great utilities the database gives you, but we don’t use a relational model. We use an object model, which is all in-memory.

But, you need to store things somewhere. In fact, we have a belief at Workday that the disk, which is more the relational component, is the future tape. What you used to use in legacy system was putting things on tape for safety and archiving reasons. We use disk, and we actually believe, if you look at the future, that nearly everything will be done exclusively in-memory.

Gardner: So, the architecture is destiny and we can see the architecture is shifting. I wonder about if I'm an enterprise IT individual. I really understand the architecture, and I enjoy your position of being able to do it the right way from your vantage point. But I can’t, as this IT leader. I have other restrictions. I have this large installed base that I need to maintain. How is it that these can coexist? How is it that a SaaS provider like Workday integrates to enterprise XYZ with a lot of legacy ERP? What’s the connection point there?

Dermetzis: The main connections that you have with systems are when you want to start creating applications or sharing information from other systems. As I mentioned before, when it comes to integrations, the only way you talk to Workday is via web services.

We still have systems that require a flat file, a comma-delimited file, that we need to send to them. That’s the point where we have a technology around our enterprise service plus our integration server that actually talks the language that we do, standards web service based. At the same time, it's able to transform any bit of that information to whatever the receiving component wants, whether it’s banking, the various formats, or whatever is out there.

We put the technology into the hands of our customers to be able to ratchet down the latest technology to whatever other files structures that they currently have. We provide that to our customers, so they can connect them to the card-scanning systems, security systems, badging systems, or even their own financial systems that they may have in house.

Gardner: I suppose the point there is that you're forward-compatible, based on our earlier discussion points about being able to move to the future, bring in new technologies, and keep up-to-date with security and other best practices, but you are also backward-compatible, based on your architecture for integration.

Straightforward approach

Dermetzis: That’s correct. In fact, it's the beauty of working with forward-thinking companies. I'll use an example of Salesforce.com. Our integration with Salesforce is totally web services talking to web services -- straightforward. We have a contract called web service. They have a similar contract. It just works, whatever we do or whatever they do. We don’t break each other.

It’s a whole different conversation, when you are trying to integrate some of our payroll output into one of our customers who has an SAP financial system. So, we are going to have to ratchet that down all the way to whatever file format that party vendor has. But we can do it, and we have the technology to put it in the hands of our customers.

Gardner: The architecture you've been describing at Workday not only benefits the end users, not only provides the forward- and backward-compatibility, but you have also architected for your own business model, I assume, which involves the need for multi-tenancy. You want to provide the lowest cost services for your own business model, but that I suppose also has architectural benefits. Tell me how the architecture relates to multi-tenancy and why that’s important for you as an organization.

Dermetzis: Multi-tenancy is one of the core ingredients, if you want to become a SaaS vendor. Now, I'm not an advocate of saying multi-tenancy A is better than multi-tenancy B. There are different ways you can solve the multi-tenancy problems. You can do it at the database level, the application level, or the hardware level. There’s no right or wrong one. The main difference is, what does it cost?

All we're looking at is one single code line that we have to maintain and secure continuously.

We believe in one single code line, and multiple tenants are sharing that single code line. That reduces all our efforts around revving it and updating it. That does result in cost savings for the vendor, in other words, ourselves.

And as far back as I can remember, when humans realized that you take time and material, package that for a profit, and send it to your end-market, as soon as you can reduce your cost of the time or the material, you can either pocket the difference, or move that cost saving onto your customers.

We believe that multi-tenancy is one of the key ingredients of reducing the cost of maintenance that we have internally. At the same time, it allows us to rev new innovative applications out to the market very quickly, get feedback for it, and pass that cost savings on to our customers, which then they can take that and invest in whatever they do -- making carpets, yogurt, or electric motors.

Gardner: This architectural approach, with its benefits around analytics, integration, the single source code, and the multi-tenancy values, the ability to adapt quickly and pass those updates along without disruption, all points to almost a revolution in how IT is conducted.

What does that mean for organizations that don’t take the plunge, whether they do this on their own architectures or they start to use more of the outside providers? It almost sounds like there is going to be a sort of a haves or have-nots split in the market in terms of how people adapt to these new IT economics?

Dermetzis: We're living through, or we're creating a revolution in the ERP industry. As always, you have early adopters. At the other end of the bell-shaped curve, you've got the laggards. When you're talking to forward thinking, modern thinking, profit-oriented, innovative companies, they very quickly appreciate that the way to go is SaaS.

Security questions

Now, they've got a bunch of questions, and most of the questions are around security -- "Is my data safe?" We have a huge variety of ways of assuring our customers that these are actually probably safer in our environment than on premise.

Some customers wait, and some will just jump in the pool with everyone else. We are in our fifth year of existence, and it’s very interesting to see how our customers are scaling from the small, lower end, to huge companies and corporations that are running on Workday.

Gardner: What can we look to in the future? If we go back to that future-proofing benefit, the architecture that you are using, the benefits and value that you are able to pass along in terms of functional improvements, more rapidly adopted, and these economic benefits, what’s next?

Is there a benefit to going into the mobile tier? Are there benefits of adopting other source applications, cloud computing or third-party ecosystems? By doing this architecture properly, what can we expect as new trends in IT and business unfold?

Dermetzis: The thing that moves incredibly fast in the market is where humans interact. If you think way back when, there were green screens, and then we moved to client server, where everything was based on a Windows-based machine. Then, you move into the Internet, so you are actually touching more and more and more users. Right now, I think the next revolution is around mobile devices.

The trick here is how you can provide similar functionality that you have on a browser-based system onto the devices very simply and quickly.

There are two types of users normally in an enterprise. First, are the users who are the administrative users, the HR partners, the procurement clerks, everyone who actually needs the back-end system, and there’s one way to address that. They normally sit in front of their computers and browsers most of the day.

Then, you have the other population, the real population of a company, which is the operational side. They don’t even care if they have a back-end ERP system. Where the future there is that they will interact with the back-end, without even knowing it’s there, via mobile devices.

The trick here is how you can provide similar functionality that you have on a browser-based system onto the devices very simply and quickly. By the way, the device world is changing continuously. The interaction that you get from an iPhone is very different than what you will get from an Android, or what you will get from a BlackBerry. So that comes back to the vendor. The way you should be architecting your product should be end-user or end-device agnostic, as much as possible.

That’s where the future is. For devices that come out of Apple, you have to go native, because people expect a certain user behavior. The better job we do there, they don’t even have to care if Workday is on the back-end. They can do their expenses, their time reporting, and their approvals.

The other devices, which are more browser-based, require something more like an HTML technology to be able to provide the solutions for those devices. So, your back-end technology must be able to be versatile enough to keep up with that growing device evolution that’s going on right now.

Gardner: So it sounds like we are back to that conundrum of the onion, where we have got yet another layer now, managing how the mobile tier and various devices within that mobile environment relate back to the logic and the data. For IT, this is not a minor, trivial issue, but a SaaS provider is going to work this through. They have to, and they probably are well on their way to doing it.

Back to technology

Dermetzis: That’s exactly right. It comes back to technology, again. What we have on the back-end, the way we build our business logic, the business logic is agnostic. If the request comes in from a user or a system, the people who actually build the business logic themselves have got no control over what it looks like.

Now, what does that mean? From a technology point of view, they focus on the business logic and the validation in that behavior, and the tool will take care of rendering it on a browser or on a mobile device.

So, today, we're an Adobe Flex-based front end browser. Tomorrow it’s Silverlight, HTML5, whatever it is. The way you architect your product, you should be able to always be on the latest and greatest technology out there, without having to rewrite your application.

Gardner: Well, great. I am afraid we will have to leave it there. We've been discussing the advantages of modern services architecture and how those benefits can be passed on to users and extend both in terms of forwards compatibility and also legacy or backwards compatibility. We've been comparing and contrasting this to what a lot of enterprises have as a vestige of the 1990s in terms of their IT.

I want to thank our guest. We've been talking about this with Petros Dermetzis, Vice President of Development at Workday. Thank you, Petros.

Dermetzis: Dana, thank you for your time.

Gardner: This is Dana Gardner, Principal Analyst at Interarbor Solutions. You've been listening to a sponsored BriefingsDirect podcast. Thanks for listening, and come back next time.

Additional resources:

The Real SaaS Manifesto (whitepaper)
Things Large Enterprises Need to Know About SaaS
Strength from the Core: Why Bolted-On BI Doesn't Work for HR
Built-In Business Intelligence
Real Saas
Notes from Workday's Technology Summit

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

Transcript of a sponsored BriefingsDirect podcast on moving beyond relational databases and relying on services-based architectures. Copyright Interarbor Solutions, LLC, 2005-2010. All rights reserved.

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