Monday, April 5, 2010

Case study shows how HP Data Protector Notebook Extension provides constant backup for mobile workforces

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Access a Webcast with IDC's Laura DuBois on Avoiding Risk and Improving Productivity on PCs and Laptops.

Data protection has grown significantly more complex in recent years as workers have gravitated to notebook computers and the mobility they enable. The latest BriefingsDirect podcast discussion looks at protecting PC-based data in an increasingly mobile world.

We'll look at a use case -- at Roswell Park Cancer Institute in Buffalo, NY -- for HP Data Protector Notebook Extension (DPNE) software and examine how backup and recovery software has evolved to become more transparent, reliable, and fundamentally user-driven.

Using that continuous back-up principle, the latest notebook and PC backup software captures every saved version of a file, efficiently transfers it all in batches to a central storage location, and then makes it easily and safely accessible for recovery by user from anywhere. That's inside or outside of the corporate firewall.

We'll look at how DPNE slashes IT recovery chores, allows for managed policies and governance to reduce data risks systemically, while also downsizing backups, the use of bandwidth, and storage.

The economies are compelling. The cost of data lost can be more than $400,000 annually for an average-sized business with 5,000 users. Getting a handle on recovery cost, therefore, helps reduce the total cost of operating and supporting mobile PCs, both in terms of operations and in the cost of lost or poorly recovered assets.

To help us better understand the state of the art remote in mobile PC data protection, we're joined by an HP executive and a user of HP DPNE software, Shari Cravens, Product Marketing Manager for HP Data Protection, and a user of DPNE, John Ferguson, Network Systems Specialist at Roswell Park Cancer Institute in Buffalo, NY. The discussion is moderated by Dana Gardner, principal analyst at Interarbor Solutions.

Here are some excerpts:
Cravens: We started hearing from our customers a couple of years ago that PC backup was becoming increasingly important in their lives. Part of that's because the workforce is increasingly mobile and flexibility for the workforce is at an all-time high. In fact, we found that 25 percent of staff in some industries operates remotely and that number is growing pretty rapidly.

In fact, in 2008, shipments of laptops overtook desktops for the very first time. What that really means for the end user or for IT staff is that vast amounts of data now live outside the corporate network. We found that the average PC holds about 55,000 files. Of those 55,000, about 4,000 are unique to that user on that PC. And, those files are largely unprotected.

The economics of PC backup are really changing. We're finding that the average data loss incident costs about $2,900, and that's for both IT staff time and lost end user productivity. Take that $2,900 figure and extrapolate that for an average company of about 5,000 PCs. Then, look at hard drive failures alone. There will be about 150 incidents of hard drive failure for that company every year.

If you look at the cost to IT staff to recover that data and the loss in employee productivity, the annual cost to that organization will be over $440,000 a year.



If you look at the cost to IT staff to recover that data and the loss in employee productivity, the annual cost to that organization will be over $440,000 a year. If that data can't be recovered, then the user has to reconstruct it, and that means additional productivity loss for that employee. We also have legal compliance issues to consider now. So if that data is lost, that's an increased risk to the organization.

We all have very sensitive files on our laptops, whether it's competitive information or your personal annual review. One of the things that's been a suggestion in the past was, "Well, we'll just save it to the corporate network." The challenge with that is that people are really concerned about saving these very sensitive files to the corporate network.

What we really need is a solution that's going to encrypt those files, both in transit and at rest, so that people can feel secure that their data is protected.

Historical evolution

The concept behind HP Data Protector Notebook Extension is that we're trying to minimize the risk of that PC data loss, but we're also trying to minimize the burden to IT staff. The solution is to extend some of the robust backup policies from the enterprise to the client environment.

We’re protecting data no matter where the user is -- the home, the coffee shop, the airport.



DPNE does three things. One, it's always protecting data, and it's transparent to the user. It's happening continuously, not on a fixed schedule, so there is no backup window that's popping up.

We’re protecting data no matter where the user is -- the home, the coffee shop, the airport. Whether they are online or offline, their data is being protected, and it's happening immediately. The instant that files are created or changed, data is being protected.

Continuous file protection is number one. Backup policies are centralized and automated by the IT staff. That means that data is always protected, and the IT staff can configure those policies to support their organization's particular data protection goals.

Number two, no matter where they are, users can easily recover their own data. This is a really important point. Getting back to the concept of minimizing the burden to IT staff, DPNE has a simple, single-click menu. Users can recover multiple versions of a file without ever involving IT. They don't ever have to pick up the phone and call the Help Desk. That helps keep IT costs low.

Then, also by optimizing performance, we're eliminating that desire to opt out of your scheduled backup. The process is transparent to the user. It doesn’t impact their day, because DPNE saves and transmits only the changed data. So, the impact to performance is really minimized.

DPNE has a local repository on each client and we established that to store active files. Whether you're connected to the network or not, data is captured and backed up locally to this local repository. This is important for accidental deletions or changes or even managing multiple versions of a file. You're able to go to the menu, click, and restore a file from a previous version at any point in time, without ever having to call IT.

Each client is then assigned to a network repository or data vault inside the network. That holds the backup files that are transferred from the client, and that data vault uses essentially any Windows file share.

The third element is a policy server that allows IT staff to administer the overall system management from just a single web interface, and the centralized administration allows them to do file protection policies and set encryption policies, data vault policies, to their particular specifications.

Finding the cure

Ferguson: Roswell Park Cancer Institute is the oldest cancer research center in the United States. We're focused on understanding, preventing, and eventually finding the cure for cancer. We're located in downtown Buffalo, NY. We have research, scientific, and educational facilities, and we also have a 125-bed hospital here.

Our researchers and scientists are frequently published in major studies, reported globally, for various types of cancers, and with related research studies. A number of breakthroughs in cancer prevention and treatment have been developed here. For example, the PSA test, which is used for detecting prostate cancer, was invented here.

The real challenge is that data is moving around. When you are dealing with researchers and scientists, they work at different schedules than the rest of us. When they are working, they are focused and that might be here, off campus, at home, whatever.

They've got their notebook PCs, their data is with them and they're running around and doing their work and finding their answers. With that data moving around and not always being on the network, the potential for the data loss of something that could be the cure for cancer is something that we take very seriously and very important to deal with

One of the big things was transparency to the user and being simple to use if they do need to use it. We were already in the process of making a decision to replace our existing overall backup solution with HP's Data Protector. So, it was just a natural thing to look at DPNE and it really fits the need terrifically.

There's total transparency to the user. Users don't even have to do anything. They're just going along, doing their work, and everything is going on in the background. And, if they need to use it, it's very intuitive and simple to use.

When people are working on something, they don't think to “save it,” until they're actually done with it. And, DPNE provides us that versioning saving. You can get old versions of documents. You can keep track of them. That's the type of thing that's not really done, but it's really important, and they don't want to lose it.

In terms of the overall Data Protector implementation, we're probably about 40 percent complete. The DPNE implementation will immediately follow that.

A good test run

We anticipate initially just getting our IT staff using the application and giving it a good test run. Then we'll focus on key individuals throughout the organization, researchers, the scientists, the CEO, CIO, the people with all the nice initials after their name, and get them taken care of. We'll get a full roll-out after that.

When it comes to federal regulations, it always is a rising tide, but we've got a good solution that we are now implementing and I think it puts us ahead of the curve.

Cravens: Information is continuing to explode and that's not going to stop. In addition to that, the workforce is only going to get more mobile. This problem definitely isn’t going to go away, and we need solutions that can address the flexibility and mobility of the workforce and be able to manage, as John mentioned, the increase in regulations.

HP Data Protector is very simple to implement. It snaps into your existing infrastructure. You don’t need any specialized hardware. All you need is a Windows machine for the policy server and some disk space for the data vault. You can download a 60-day trial version from hp.com. It's a full-featured version, and you can work with that.

If you have a highly complex multi-site organization, then you might want to employ the services of HP’s Backup and Recovery Fast Track Services for Data Protector. They can help get a more complex solution up and running quickly and reduce the impact on your IT staff just that much sooner.
Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Read a full transcript or download the transcript. Sponsor: HP.

Gain more information on HP Data protection Notebook Extension. Follow on Twitter.
Access a Webcast with IDC's Laura DuBois on Avoiding Risk and Improving Productivity on PCs and Laptops.


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BriefingsDirect analysts pick winners and losers from cloud computing's economic disruption and impact

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The latest BriefingsDirect Analyst Insights Edition, Vol. 51, focuses on cloud computing and dollars and cents. Our panel dives into more than the technology, security, and viability issues that have dominated a lot of cloud discussions lately -- and move to the economics and the impact on buyers and sellers of cloud services.

When you ask any one person how cloud will affect their costs, you're bound to get a different answer each time. No one really knows, but the agreement comes when the questions move to, "Will cloud models impact how buyers and providers price their technology? And over the long-term what will buyers come to expect in terms of IT value?"

What comes when we move to a cloud based pay-per value pricing, buying, and budgeting for IT approach? How does the shift to high-volume, low-margin services and/or subscription models affect the IT vendor landscape? How does it affect the pure cloud and software-as-a-service (SaaS) providers, and perhaps most importantly, how do cloud models affect the buy side?

This periodic discussion and dissection of IT infrastructure related news and events, with a panel of industry analysts and guests, comes to you with the help of charter sponsor, Active Endpoints, maker of the ActiveVOS business process management system.

Join the panel of Dave Linthicum, CTO of Bick Group, a cloud computing and data-center consulting firm; Michael Krigsman, CEO of Asuret and a blogger on ZDNet on IT failures as well as writer of analyst reports for IDC, and Sandy Rogers, an independent industry analyst.

Here are some excerpts:
Linthicum: We've had a tendency to focus on reducing cost over the last few years, with the recession and all, and ultimately cloud computing and SOA are about bringing strategic value back into the business in the form of IT.

I was listening to your podcast with Salesforce.com's Peter Coffee, talking about service oriented architecture (SOA) and cloud computing, and he said something that was very profound.

The fact of the matter is that, if you're looking for cheap IT, we can give you cheap IT. However, you're not going to be able to keep up with the competitive value that IT needs to bring to your enterprise. To get that competitive value, you're going to have to spend additional money.

The ability to align your IT resources to the needs of the business quickly, get into markets fast, delight customers, sell more, and create supply chain integration systems that provide with frictionless commerce is really where the value is in this.

The myth is that cloud computing is always going to be less expensive. I think cloud computing typically is going to be a better, more strategic, more agile architecture, but it's also typically going to be more expensive, at least on the outcome.

We're probably going to have to spend more money initially. That's really what the takeaway is from the initial cloud-computing projects that I am involved in. At the end of the day, it's about strategic use of technology. Ultimately, cost reduction should be part of the result, but in getting there, we're going to have to spend additional dollars.

Rogers: A lot of the enterprises are going to learn from those organizations that have to act at web scale and understand which are the right use-cases to put out there and how to leverage it. ... A lot of the innovation that we see happening on the cloud is really other providers that are starting to build their businesses on the cloud.

They're learning that there is a web-scale business to be obtained out there, and that's really where we are seeing the biggest innovation.



They're learning that there is a web-scale business to be obtained out there. What is also really interesting is that it's more than just technology. It's really transitioning to engage with services and services providers. Those who are attempting to move out there onto the cloud are learning that that is a big piece of the puzzle. Many technology providers have to grow into the role of a service provider.

Krigsman: I ask the question ... Is cheap IT really the goal [of cloud computing]? To me, the real question, the longer-term strategic question, is "How does this new IT infrastructure map onto our business processes and our business requirements looking long-term?" There are some mismatches and mismatched expectations.

When you have one group that is expecting certain types of outcomes and results and you have another group that is capable of delivering results that don’t match the first, namely between buyers and sellers [of cloud services], then the end result is predictable failure or disappointment somewhere down the line.

Linthicum: Cloud computing does require lots of changes. You're going to have to redo your infrastructure, as I write in my book, to leverage newer architectural patterns, such as SOA, and that's typically very expensive to get out and access the services that are available to you on demand, out of the cloud. So that's an expense onto itself.

You're going to have to retrain and re-skill your people within your data center, all the way up into your executive ranks, on what cloud is able to do and how to manage, govern, and secure cloud. You're going to have to pay for the cloud computing providers, which in many instances are going to be less expensive than on-premise systems, but in many other instances are going to be much more costly than on-premise systems.

Companies that think tactically, in quarter to quarter expenses, and consider IT kind of an expense that they rather not have to spend money on are going to fall by the wayside within cloud computing. They're just not going to get it.

It's very much like the Internet was in the mid-'90s. Suddenly, it's a big huge deal, and companies that got on board four or five years ago are leading the market, where companies that suddenly were trying to play catch-up football in 1999, 2000, found that the market left them behind. Many of those companies just went out of business, because they didn’t see the wave coming. Cloud computing is going to be very much like that.

Improvement model

I'm bullish on cloud computing being a catalyst for architectural change and typically for the better. So cloud is not great at security and governance as of yet, but in many instances it's much better than the current security and governance in lots of these existing enterprises, which is poorly defined or nonexistent.

Ultimately, as people revamp their architectures to leverage cloud, moving into SOA, looking at cloud as an architectural option for bit pieces of parts of their data and parts of their processes, they go through an improvement model.

They go through some architectural changes, create new governance models, and create new security models. They leverage identity management versus simple encryption. They learn to be more secure. If they didn't have a chief security officer, they may now have a one, if they are moving into cloud.

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The target systems that are using cloud computing, the target architectures that are leveraging cloud computing, are almost always more secure than the traditional systems from which they came. That doesn't mean they're completely secure and without issues, especially in the cloud computing side.

But people make logical choices about what pieces of information and what processes to run in the cloud and which ones to run on-premise based on security models, and typically, if they are revamping into a new architecture, they are always going to be more secure and better governed, if the architects know what they're doing.

The pay-as-you-go model of cloud computing, even though it can be more expensive in many instances, when you really kind of amortize the cost over many years, is something that's attractive to at least United States IT. It's not always to foreign corporations, but definitely in the United States.

We like the pay-as-you-go cable bill kind of thing that we get, and also the ability to turn the stuff off or move away from it, if we need to, without having a big footprint already in the data center and things we need to deinstall and millions of dollars of hardware that we have to sell on Craigslist if the thing doesn’t work out.

The selling point

That becomes a selling point and really is part and parcel of value of cloud computing. But, it also can be the Achilles' heel of cloud computing, because ultimately people are going to make decisions around financial metrics that may not be realistic. If you look at those financial metrics in light of the requirements of the business, in many instances people are buying cloud computing because of the cost model and not necessarily the strategic value it's going to have to the architecture and therefore have to the business.

Krigsman: Driving toward cloud changes the architecture and requires proper governance. The lack of governance that exists today across the industry is pretty startling. So as organizations move in this direction, there is simply no question that the cultural dimension of getting IT to work more effectively with the business side and so forth must drive with it.

If it doesn't, then, in the end, the solutions that are built with cloud will still have the same set of problems from a business standpoint that current IT solutions have today. This has nothing to do with technology. This is a matter of collaboration and communication across these various information silos.

Rogers: One thing that we're finding from those cloud service providers that had originally targeted the end business customer, is that they're working with the CIOs and the IT departments more. They're working through those issues of security and having backup contingency plans.

It's just a state of education that varying parties within the IT ecosystem have to come on board and understand how to leverage this.



One of the biggest points ... is it's still a mixture of different technologies that have to come together. That’s always been one of the biggest, complex roles that IT needs to serve.

Right now, there are a lot of dependencies on specific technologies internally. A lot of organizations do not want to make those same mistakes with external cloud providers. They're really looking to the IT group as an adviser to guide them and help them in the decisions moving forward.

Krigsman: This is a fundamental point -- the cloud computing winners are going to be those who combine architectural vision and discipline with superior governance and who are also capable of making the adaptive cultural and business transformation changes, such as you were just talking about, things like budgeting, for example. Success in the cloud will require a mixture of all of these things together.

Linthicum: If you are in the IT world today, you need to understand that if you are moving to a new architecture, you have to commit to a certain amount of value that comes back to the business. Typically, it's going to be a five-year horizon in the United States, perhaps a 10-year horizon in the Asia-Pacific. But, that value has to be shown and that has to be returned. If it's not returned, then ultimately it's going to be considered a failure.

Start now

You need to start committing to this stuff right now and putting some skin in the game, and I think a lot of people in these IT organizations are very politically savvy and want to protect their positions. There are a few of them who want to put that skin in the game right now.

I think we are going to see kind of an unfairness in business. People who are starting businesses these days and building it around cloud infrastructures are learning to accept the fact that a lot of their IT is going to reside out on the Internet and the cost effective nature of that. They're going to have a huge strategic advantage over legacy businesses, people who've been around for years and years and years.

There are going to be a lot of traditional companies out there that are going to be looking at these vendors and learning from them.



As they grow and they start to go public and they start to grow as a business, they get up to a half a billion mark, they are going to find that they are able to provide a much more higher cost and price advantage over their competitors and just eat their lunch ultimately.

We're going to see that, not necessarily now, because those guys are typically smaller and just up and coming, but in five years, as they start to grow up, their infrastructure is just going to be much more cost effective and they are just going to run circles around the competition.

... Ultimately, it would be about the ability to leverage technology that's pervasive around the world. What you're going to find is the biggest uptake of any kind of new technological shift is going to be in the United States or the North American marketplaces. We're seeing that in the U.S. right now.

We could find that the cloud computing advantage it has brought to the corporate U.S. infrastructure is going to be significant in the next four years, based on the European enterprises out there and some of the Asia-Pacific enterprises out there that will play catch-up toward the end.
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Friday, March 26, 2010

Including startups in your SOA infrastructure: A guide for enterprise architects

This guest post comes courtesy of Ronald Schmelzer, senior analyst at Zapthink.

By Ronald Schmelzer

In a previous ZapFlash, ZapThink opined that Open Source Software could play an important role in your Service-Oriented Architecture (SOA) Infrastructure. Certainly, there were no architectural reasons why it couldn’t.

As we explained in that article, the primary biases against OSS (if there are any) are from the people in the organization who have fear, uncertainty, or doubt about the risks or benefits of OSS.

But of course, that article spoke at a fairly general level. Individual implementations or products might be better than others, or more suited for specific problems than others. This is where Enterprise Architects should spend their time focused – on the specific solutions to specific problems, rather than engaging in religious battles about the merits of entire classes of solutions.

Unfortunately, in addition to the biases against OSS, many companies have developed aversions to solutions from startup companies. Yet, in an environment where we are left with just a handful of incumbent companies remaining in the SOA infrastructure landscape, and these vendors have confusing collections of often conflicting and competitive infrastructure products, it might be a good time to revisit utilizing solutions from niche, best-of-breed, and often startup, solutions in your SOA environment.

However, how do you do so without incurring substantial real or perceived risk? After all, it is the nature of a startup company to change, be acquired, or die. In this environment, EAs need to become wholeheartedly selfish: meet the requirements of the business in an agile manner by reducing the penalty for failure. In such an environment, startup solutions are not only feasible, but very appropriate.

Best of breed in an increasingly suite world

Through a combination of consolidation, maturation, and the pressures of a tough economic environment, the landscape of enterprise IT software players has dwindled to a handful of companies that control the infrastructure for a vast majority of companies.

Just like the auto industry experienced a period of rapid growth and diversity in the early part of the 20thcentury, only to consolidate down to the “Big three” in the United States and a similar number in countries around the world, we are now faced with the reality of a “Big Five” set of vendors in the enterprise IT marketplace, especially in the area of SOA infrastructure.

Agility is a key benefit of SOA, which means that properly designed architectures should not only be implementation-neutral, they should be fairly immune to infrastructural change.



However, consolidation is not always a friend of innovation. Many have argued that the consolidation of the auto industry in the US by the late 1970s resulted in products that were unable to compete with offerings from overseas.

Indeed, it’s in the period after the consolidation that the US manufacturers saw its most precipitous decline in worldwide share of automobiles. Why is this? Is it because large companies can’t innovate? Or is it that the large portfolio or products and services are confusing not only to customers but even to internal managers?

When one company owns Pontiac, Buick, Oldsmobile, Chevrolet, and a myriad of other brands, how can anyone really tell when one product is best suited for a problem or another? These brands compete for dollars not only among customers, but among their own budgets. Much hay has been made of Microsoft’s internal competition and struggles that have hindered its own ability to compete. Why should it be any different for the enterprise IT software companies that have grown primarily through acquisition?

Innovation is incredibly important in an area of continued maturation such as SOA. More importantly, agility is a key benefit of SOA, which means that properly designed architectures should not only be implementation-neutral, they should be fairly immune to infrastructural change.

In this light, vendor selection is less a matter of making sure your infrastructure works and more a matter of picking the right vendor for the job while balancing risk and economic factors. In this light, startup and niche companies offer just as much opportunity, if not more, to advance your architectural efforts than those of large vendors. The only things that differentiate the startups from the large vendors are three core issues: the scope of their offerings, the potential risk of company failure, and the ability to negotiate price to your benefit.

Mitigating the startup risk:
Enterprise software and cloud/SaaS concerns


The biggest risk that many cite in working with startup companies is the risk that they might simply no longer exist. This fear is especially pronounced for companies that must spend a considerable amount of time and money implementing the solutions.

If an enterprise is involved in a multi-year effort to implement a large-scale, highly visible, and important solution for the company, then in many cases startup solutions are ruled out very early in the vendor evaluation process. This is even if the startup company offers a better, more appropriate, and more innovative solution. The real issue here is whether the risk of company failure, real or perceived, should outweigh the loss of solution appropriateness and innovation. Or in other words, does it make sense for companies to implement less-optimal solutions based on what they know today because they fear an unknown event in the future?

Rather than rule out startup solutions out of hand, companies should mitigate vendor failure by incorporating such contingencies in their enterprise architecture. We would argue such vendor mitigation plans should be made for well-established vendors as well, since internal political or budgetary battles might result in the disappearance of even decades-old products.

Companies should require an escrow provision similar to what is provided by licensed enterprise software vendors.



There are two major areas of mitigation for enterprise IT vendor products: products that companies install, manage, and own in their own infrastructure (traditional enterprise software products sold by the license), and those solutions that are run and managed on the vendor’s infrastructure (such as Cloud or Software-as-a-Service [SaaS] offerings).

In the case of licensed enterprise software, it has long been a practice of end-user companies to require that the vendor’s software code be held in escrow such that if the vendor goes out of business, it is transferred to the ownership of the end-user customer. While this is a far from optimal solution (after all, the company has no knowledge or ability to do much with the code), it provides some level of comfort to the buyers that the code at the very least won’t disappear.

More complicated is a mitigation plan for Cloud/SaaS offerings. If a SaaS vendor disappears, what happens to the code? If a Cloud vendor goes under, what happens to the infrastructure? More importantly, what happens to your data? It’s not enough to simply require that the vendor hand over the code for their SaaS implementation; in the event of their failure, you have to also implement all the infrastructure that makes the Cloud work or keeps the SaaS solutions running.

This is because the economic benefit of Cloud computing and SaaS solutions is that you’re not paying the full cost of owning and managing the solution. It is easy to mitigate the data component of the Cloud/SaaS default risk – simply make sure that you maintain a “local” copy of all relevant data.

However, in order to mitigate the loss of application functionality and infrastructure, a company needs to have a backup plan. Enterprise architects need to discover or implement comparable Services run internally or on another Cloud/SaaS service. Or, companies should require an escrow provision similar to what is provided by licensed enterprise software vendors – if the SaaS / Cloud vendor goes belly up, they have to hand over not only the code and data that makes the application work, but also configured infrastructure on which to run it. While the hope is that these escrow provisions will never have to be enacted, they provide the security blanket necessary to give one at least a psychological sense of security.

Negotiation leverage:
It’s on your side with startups


Mitigation and product functionality issues aside, there is another good reason to work with startup vendors: it’s much easier to get your way with smaller companies hungry for your business. Smaller vendors have less layers of corporate infrastructure, and many times you are in direct communication with the individuals responsible for the functionality of your implementation. In this way, it’s easier to get your voice heard on features or bug fixes. Don’t like the way something works or want a new feature? Pick up the phone and talk directly to the product or development managers, or even the CTO. Perhaps you’ll get a fix the same day or within a very short timeframe. Try that with one of the super-vendors.

Smaller companies are more eager to negotiate, especially if you are a large enterprise that could be a marquee name for them.



It’s also easier to negotiate on price. While large vendors might be able to discount or cut the price on one of their offerings so they can make another one sweeter, the realities of large sales forces and commission structures requires them to keep their products at a certain (increasingly higher) price point. Smaller companies are more eager to negotiate, especially if you are a large enterprise that could be a marquee name for them.

Finally, it’s easier to get help with your specific implementation from startup companies. Many enterprise software startup companies know that their products are not plug-and-play and require some additional effort and expense to set them up. As a result, many startups have professional services arms whose goals are not to drive revenue for the company, but rather to support the products in customer installations.

Unless the startup vendor charges for this additional service (and we regularly counsel them not to), you should consider this to be free consulting and professional services help. Use as much of this as possible, and even negotiate more into your contract. It is in yours and the startup’s best interests to make sure you get the value you require from your investment.

The ZapThink take

As you can see from the past few ZapFlashes, ZapThink is very concerned that the rapid consolidation and maturation of the enterprise IT landscape will have a negative outcome on innovation in the marketplace. We believe that the consolidation is resulting in mammoth conglomerates of vendors that will be harder, more confusing, and more expensive to work with. We believe that there is just as much uncertainty around the future of the large vendor’s offerings as there are with startup offerings. In this light, we don’t believe that there’s anything more inherently risky about a startup solution than an established, incumbent vendor solution.

The only thing that has us concerned about the startup landscape is the shortage of new startups. We’ve seen a significant drop-off in new enterprise software venture creation. We are not entirely sure why this is. Is there simply less demand for new enterprise software solutions? Is there less opportunity for new enterprise software startups?

Has the venture capital and finance community lost interest with enterprise software? Or has the area of innovation moved away from enterprise software? We hope none of these things are true. The enterprise still has leagues to go to get closer to the vision of loosely-coupled, agile, heterogeneous systems that can meet the ever-changing needs of business with high governance and low risk. There’s plenty of opportunity here. Startups: do your part innovating in this space. Enterprises: do your part and implement startup companies’ offerings so that innovation does not come screeching to a halt.

This guest post comes courtesy of Ronald Schmelzer, senior analyst at Zapthink.


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Sunday, March 21, 2010

Essential reading on impact of Web and media shift on thinking, socializing, publishing

From today's NYT:
Instead of reading an entire news article, watching an entire television show or listening to an entire speech, growing numbers of people are happy to jump to the summary, the video clip, the sound bite — never mind if context and nuance are lost in the process; never mind if it’s our emotions, more than our sense of reason, that are engaged; never mind if statements haven’t been properly vetted and sourced.
A lot more goodies where this came from. This may be one of the most important topics and issues of our era.

Tuesday, March 16, 2010

Pegasystems doubles-down on winning streak with Chordiant buy

This guest post comes courtesy of Tony Baer’s OnStrategies blog. Tony is a senior analyst at Ovum.

By Tony Baer

We’d be the first to admit our surprise that Pegasystems has thrived as well as it has. Our initial impression of the company about four to five years ago was of an interesting, rather eccentric bunch whose absent-minded professors had great ideas but little business savvy. At the time, the company was marginally profitable

Maybe their professors weren’t that absent-minded and their approach not so pedantic after all, as the company has been on a winning streak for the past 10 quarters, scoring 25 percent growth last year as the rest of the economy (and software industry) tanked.

Tilting against windmills, the company scored big gains among established clients across financial services industries, who used Pega’s process “solution frameworks” covering areas such as loan origination and underwriting, wholesale banking, and retail bank account opening

Pegasystems is on the right side of history, having embraced vertical frameworks. That’s an approach that you also find IBM taking. In business for roughly 25 years, Pega’s sales didn’t take off until it began rolling out a series of templates or frameworks that provided a 60 percent solution, eliminating the need to model commodity processes from scratch.

Either way, Pega’s success belies our observation that vertical templates are the future of enterprise applications — using the framework as a raw template, they will be composed from existing applications and data sources rather than written or implemented as a packaged application from scratch.

Growth last year added $35 million to the company’s cash cushion, leaving it with a nice healthy $200 million in the bank. But cash in a consolidating industry is trash when your rivals are either acquiring or getting acquired left and right. As so the question was, What would Pega do with its cash?

We have the answer


W
e now have the answer: Pega announced yesterday its intent to acquire Chordiant, whose specialty is dissecting, analyzing, and optimizing a company’s experiences with its customers. The deal, at $167 million in cash, actually nets out to about $116 million when you factor Cordiant’s $51 million cash position.

Pega’s solicited offer trumped an abortive unsolicited $105 million offer back in January from CDC, an aspiring Hong Kong-based enterprise applications provider. Chordiant has come down a few notches over time, with business flattening to $75 million last year, down from $115 million a couple years ago. Pega’s $5 per share bid is about 10 percent of the company’s 2000 dot com peak, but a 30 percent premium over its current valuation.

Pega got a good deal, and Wall St. agreed, as shares of both companies rose on the heels of the announcement. It reflects the fact that Chordiant provides Pega two opportunities: 1) Deepen its presence in financial services accounts by going into the front office, and 2) gain a new beachhead in telecom where it currently has bit a single critical mass client. Although telco could broaden Pega’s addressable market the deal wouldn’t work if the solutions weren’t complementary.

Pegasystems offers a highly sophisticated, rules-driven approach to defining, modeling, and executing business processes. It offers roughly 30 industry specific templates, and well over a dozen cross-industry frameworks such as customer process management, control and compliance, procurement and so on.

On paper, it looks like yin and yan. But there are basic architectural differences between the products.

By contrast Chordiant covers what it calls “customer experience management,” which tracks customer interactions and offers predictive analytics for optimizing cross-selling, upselling, or customer retention strategies, or for predicting risk or churn. It also offers vertical templates for financial services, healthcare, and telecom. Chordiant’s predictive analytics have adaptive capabilities where the rules can change based on trends in customer response; if a promotion offer proves not as attractive as initially forecast, the rules can adjust the algorithm to reflect reality

The potential synergy is where Chordiant optimizes customer-facing front office processes while Pega’s BPM frameworks optimize the corresponding back office processes such as loan origination.

On paper, it looks like yin and yan. But there are basic architectural differences between the products, as decision management consultant and author James Taylor has pointed out. Keep in mind that Taylor has traditionally been skeptical of Pega’s approach to embedding rules inside its process engine, rather than loosely coupling the two.

But he makes valid points that Chordiant handles rules differently from Pega, that the potential synergy between the two is great, but that the company need to take care that technical differences do not “derail the technical integration or cause the merged company to merge its operations without merging its products.”

So on paper, Pega has made a sound deal. As the company is not yet experienced in digesting acquisitions of this size, its success in consummating the Chordiant acquisition will become a predictive indicator of the company’s ability to survive and grow in a consolidating market where it will be expected to make more such deals.
This guest post comes courtesy of Tony Baer’s OnStrategies blog. Tony is a senior analyst at Ovum.
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