Gardner: Clearly one of the  requirements  in game development is the need to   ramp up a lot of servers to do the builds, but then they sit there essentially unproductive    between the builds. How did you flatten that out or manage the    requirements around the workload support?

Hart: Typically,  in the early stages of   development, there is a fair amount of testing  going on, and it tends   to be quite small -- the number of staff  involved in it and the number   of build iterations.

Going on,  when the game reaches to the end of its   product life-cycle, we’re  talking multiple game iterations a day and  the  game size has gotten  very large at that point. The number of people   involved in the testing  to meet the deadlines and get the game shipped   on date is into the  hundreds and hundreds of staff.

Gardner: How has virtualization and moving your workloads into different locations evolved over the years?

Hart: We work on the idea of having a central platform for a lot of these    systems. Using virtualization to do that allowed us to scale off at    certain times. Historically, we always had an on-premise VMware platform to do this. Very recently, we’ve been looking at ways to use that resource within a cloud to cut down from some of Capex loading but also remain a little bit more agile with some of the larger titles, especially online games that are coming around.

Gardner: We’re all very familiar with the amazing video games that are being  created nowadays. And SEGA of course is particularly well-known for the Sonic the Hedgehog franchise going back a number of years. What are some of the other critical requirements that   you have from a systems architecture perspective when developing these games?

Hart: We have a lot of development studios across the world. We're working on  multiple projects.   We need to ensure that we supply them with a  highly scalable and   reliable solution in order to test, develop, and  produce the game and   the code in time. ... We’re probably   looking at  thousands of individual developers across the world.

... The  first part was dealing with the end of the   process, and that was the  testing and the game release process. Now,   we’re going to be working  back from that. The next big area that we’re   actively involved in is  getting our developers to develop online games   within the hybrid  environment.

So they’re designing the game and   the game’s  back-end servers to be optimal within the VMware  environment.  And  then, also pushing from staging to live is a very  simple process  using  the Cloud Connector.

We're restructuring and   redesigning the  IT systems within SEGA to be more of a development   operations team to  provide a service to the developers and to the   company.

Gardner: How did you start approaching that from your  IT  environment, to build the right infrastructure?

Targeting testing

Hart: One of the first areas we targeted very early on was the last process    in those steps, the testing, arguably one of the most time-consuming    processes within the development cycle.    It happens pretty much all the way through as well to ensure that the    game itself behaves as it should, it’s tested, and the customer gets   the  end-user experience they require.

The biggest technical  goal   that we had for this is being able to move large amounts of data,    un-compiled code, from different testing offices around the world to  the   staff. Historically we had some major issues in securely moving  that   data around, and this is what we started looking into cloud  solutions   for this.

For very, very large game builds, and we're talking game builds above 10 gigabytes,  it ended up being couriered within the country and then overnight file  transfer outside of the country. So, very old school methods.

We    needed both to secure that up to make sure we understood where the   game  builds were, and also to understand exactly which version each of   the  testing offices was using. So it’s gaining control, but also   providing  more security.

Gardner: So we’re seeing a lot more of the role-play games (RPG) types of games, games themselves in the cloud. That must influence   what  you're doing in terms of thinking about your future direction.

Hart: Absolutely. We’ve been looking at things like the hybrid cloud model with VMware as a development platform for our developers. That's really what  we're   working on now. We've got a number of games in the pipeline that  have   been developed on the hybrid cloud platform. It gives the  developers a   platform that is exactly the same and mirrored to what it  would   eventually be in the online space through ISPs like Colt, which should be hosting the virtual cloud platform.

Gaining cost benefits

And one of the benefits we're seeing in the VMware offering is that regardless of what data center in the world is the standard platform, it also allows us to leverage    multiple ISPs, and hopefully gain some cost benefits from that.

Very   early on we were in discussions with Colt and also VMware to understand   what technology stack they were bringing into the cloud. We started   doing a proof of concept with VMware and a professional services company, and together we were    able to come over a proof of concept to distribute our game testing    code, which previously was a very old-school distribution system. So    anything better would improve the process.

There wasn't too much    risk to the company. So we saw the opportunity to have a hybrid cloud    set up to allow us to have an internal cloud system to distribute the    codes to the majority of UK game testers and to leverage high  bandwidth   between all of our sites.

For the game testing studios around Europe and the world, we could use a hosted version of the same service which was up on the Colt Virtual Cloud Director (VCD) platform to supply this to trusted testing studios.

Gardner: When you approach this hybrid cloud model, what about managing that?   What  about having a view into what’s going on so that you know what   aspects  of the activity and requirements are being met and where?

Hart: The virtual cloud environment of vCloud Director has a web portal that allows you to manage a lot of this configuration in a central way. We’re also using VMware Cloud Connector,    which is a product that allows you to move the apps between different    cloud data centers. And doing this allows us to manage it at one    location and simply clone the same system to another cloud data center.

In    that regard, the configuration very much was in a single place for us    in the way that we designed the proof of concept. It actually helped    things, and the previous process wasn’t ideal anyway. So it was a    dramatic improvement.

One of the immediate benefits was  around the design process. It's very   obvious that we were tightening  up security within our build delivery  to  the testing studios. Nothing  was with a courier on a bike anymore,  but  within a secured transaction  between the two offices.

Risk greatly reduced

Also    from a security perspective, we understood exactly what game assets   and  builds were in each location. So it really helped the product    development teams to understand what was where and who was using what,    and so from a risk point of view it’s greatly reduced.

In terms of stats and the amount of data throughput, it’s pretty large, and we’ve been moving terabytes pretty much weekly nowadays. Now we’re going completely live with the distribution network.

So    it’s been a massive success. All of the UK testing studios are using    the build delivery system day to day, and for the European ones we’ve    got about half the testing studios on board that build delivery system    now, and it’s transparent to them.

VMware was very  good at allowing us to understand  the technology and  that's one of the  benefits of working with a  professional services  reseller. In terms  of gotchas,  there weren't too  many. There were a lot  of good surprises that came  up and allowed us  to open the door to a lot  of other VMware  technologies.

Now, we're also looking at alternating a lot of processes within vCenter Orchestrator and other VMware products. They really gave us a good stepping stone into the VMware catalogue, rather than just vSphere, which we were using previously. That was very handy for us.

Gardner: I’d like to just pause here for a second. Your use of vSphere 4.1  must have been an important   stepping stone to be able to have the  dynamic ability to ramp up and   down your environments, your support  infrastructure, but also skills.

Hart: Absolutely. We already have a fair footprint in Amazon Web Services (AWS),    and it was a massive skill jump that we needed to train members of  the   staff in order to use that environment. With the VMware  environment,  as  you said, we already have a large amount of skill set  using vSphere.  We  have a large team that supports our corporate  infrastructure and  we've  actually got VMware in our co-located public  environment as well.  So it  was very, very assuring that the skills  were immediately  transferable.

Gardner: Now that you've done this, any words   of wisdom, 20/20 hindsight, that  you might share with others who are   considering moving more  aggressively into private cloud, hybrid cloud,   and ultimately perhaps  the full PaaS value?

Hart: Just get some hands-on experience and play with the cloud stack from  VMware. It’s inexpensive to have a go and just get to know the  technology stack.

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Gardner: We have heard a lot about IT as a service. How have you at Southwest been able to  keep IT squarely in the role of enablement?

Young: As we are taking a look and trying to be what travelers want in an    airline, and we are constantly looking for ways to improve Southwest    Airlines and make it better for our customers, that's really where virtualization and IT as a service comes into play.

People want to be able to get on Southwest.com,   make a reservation, log on to their Rapid Rewards or our Loyalty   Program, and they  want to be able to do it when they want to do it, when   they need to  do it, from wherever they are. And it’s just great to be   able to  provide that service.

We provide that to them at any   point in  time that they want in a reliable manner. And that's really   what it  gets right down to -- to make the functions and the solutions   that we  provide ubiquitous so people don’t really need to think about   anything  other than, "I need to do this and I can do it now."

At your fingertips

Gardner: I travel quite a bit and it seems to me that things have changed a lot  in the last few years.   One of the nice things is that information  seems to be at your   fingertips more than ever. I never seem to be out  of the loop now as a   traveler. I can find out changes probably as  quickly as the folks at the   gate.

So how has this transfer of  information been possible?  How  have you been able to keep up with the  demands and the expectations  of  the travelers?

Young: If we talk about information and the  flow of  information through  applications and services, it really starts  to  segment the core  technical aspects of that so the customer and our   employees don’t  really need to think about it. When they want to get  the  flight at the  gates, the passenger is on a flight leg, etc., they  can  go ahead and  get that at any moment in time.

... The same is true   of how we provide IT as a  service. What we want to be able to do is   provide IT whenever they  want it, whenever they need it, at the right   cost point, and to meet  their needs. We've got some of the best   customers in the world and  they like to do things for themselves. We   want to allow them to do  that for themselves and be able to provide our   employees the same.

Gardner: How in  IT have you been able to create common infrastructures,  reduce   redundancy, and then yet still ramp up to meet all your  requirements?

Significant volume

Young: What   we've been able to do and how we have been able to meet some  of those   challenges is through a number of different VMware products.  One of the   core products is VMware itself, if we talk about vSphere, vMotion, etc., to be able to provide that virtualization. You can get a 1-to-10 virtualization depending on which type of servers and blades you're using, which helps us on the infrastructure side of the house   to  maintain that and have the storage, physical, and electrical   capacity  in our data centers.

But it also allows us, as we're moving, consolidating, and expanding these different data centers, to be able to move that virtual machine (VM) seamlessly between points. Then, it doesn’t matter where it’s running.

That    allows us the capacity. So if we have a fare sale and I need to add    capacity on some of our services, it gives our us and our team that run    the infrastructure the ability to bring up new services on new VMs    seamlessly. It plugs right into how we're doing things, so that internal    cloud allows us not to experience blips.

It's been a great add for us from a capacity management perspective and being able to get the right capacity, with the right    applications, at the right time. It allows us to manage that in such a    way that it’s transparent to our end-users so they don’t notice any  of   this is going on in the background, and the experience is not  different.

...  We started our virtualized   environments about 18 months ago. We went  from a very small amount of   virtualization to what we coined our  Server 2.0 strategy, which was   really the combination of  commodity-based hardware blades with VMware on   that.

And that  allowed us last year in the first and second   quarter to grow from  several hundred VMs to over several thousand, which   is where we're at  today in the production environment. If you talk   about production,  development, and test, production is just one of those   environments.

It  has allowed us to scale that very rapidly   without having to add a  thousand physical servers. And it has been a   tremendous benefit for us  in managing our power, space, and cooling in   the data center,    along with allowing our engineers who are doing the day-to-day work  to   have a single way to manage it, deploy, and move stuff around even   more  automatically. They don’t have to mess with that anymore, VMware   just  takes care of the different products that are part of the VMware   Suite.

Gardner: And your  confidence, has it risen to the  level where you're looking at  70, 80,  90, even more percent of  virtualization? How do you expect to  end that  journey?

Ready for the evolution

Young: I would love to be at 100 percent virtualized. That would be   fantastic.  I think unfortunately we still have some manufacturers and   software  vendors -- and we call them vendors, because typically we   don’t say  partners -- who decide they are not going to support their   software  running in the virtualized environment. That can create   problems,  especially when you need to keep some of those systems up 24 x   7, 365,  with 99.95 percent availability.

We're hoping that    changes, but the goal would be to move as much as we can, because if I    take a look at virtualization, we are kind of our internal private    cloud. What that’s really doing is getting us ready for the evolution    that’s going to happen over the next, 5, 7, or 10 years, where you may    have applications and data deployed out in a cloud, a virtual private cloud, public cloud if the security becomes good enough, where you've got to bring all that stuff together.

If you need to have huge amounts of capacity and two applications are not co-located that need to talk back and forth, you've got to be much more  efficient   on the calls and the communications and make that seamless  for the   customer.

This is giving us the platform to start  learning more   and start developing those solutions that don’t need to  be collocated in   a data center or in one or two data centers, but can  really be pushed   wherever it makes sense. That could be from wherever  the most efficient   data center is from a green technology perspective,  use the least   electricity and cooling power, to alternate energy, to  what makes sense   at the time of the year.

That is a huge add  and a huge win for  us  in the IT community to be able to start  utilizing some of that   virtualization and even across physical  locations.

Gardner: Is there a   centralization feature to this that also is paying dividends?

Young: That’s a huge cornerstone of the suite of tools that we've been able   to  get through VMware is being able to deploy custom solutions and  even   some of the off-the-shelf solutions on a standard platform,  standard   operating systems, standard configurations, standard  containers for the   web, etc. It allows us to deploy that stuff within  minutes, whereas it   used to take engineers manually going to configure  each thing   separately. That’s been a huge savings.

The other  thing is, once   you get the configuration right and you have it  automated, you don’t   have to worry about people taking some human  missteps. Those are going   to happen, and you've got to go back and  redo something. That   elimination of error and the speed at which we  can do that is helping.   As you expand your server footprints and the  number of VMs and servers   you have without having to add to your  staff, you can actually do more   with the same number of or fewer  staff.

Gardner: How you feel about desktop virtualization?

Young: What’s really driven us to take a look  at  it is that around our  environment we can control security on virtual   desktops, etc., very  clearly, very quickly and deliver that in a great   service.

New mobile devices

The    other thing that’s leading to this is, not just what we talked about   in  security, is the plethora of brand new mobile devices -- iPhones, iPads, Android devices, Galaxy. HP has a new device. RIM has a new device. We need to be able to deliver our services in a  more   ubiquitous manner. The virtual desktop allows us to go ahead and   deliver  some of those where I don’t need to control the hardware. I   just  control the interface, which can protect our systems virtually,   and it’s  really pretty neat.

I was on one of my devices the   other day and  was able to go in via virtual desktop that was set up to   be able to use  some of the core systems without having all that stuff   loaded on my  machine, and that was via the Internet. So it worked out   phenomenally  well.

Now, there are some issues that you have to   do depending on  whether you're doing collocation and facility, but you   can easily get  through some of that with the right virtualization  setup  and networking.

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Gardner: Why virtualize mission-critical applications, things like police and fire support, first?

Sindicic: First of all, it’s always been challenging in disaster recovery and business continuity. Keeping those things in mind, our CAD/RMS systems for the police center and also our fire staffing   system were  high on the list for protecting. Those are Tier 1   applications that we  want to be able to recover very quickly.

We thought the best way to do that was to virtualize them and set us up for future business continuity and true failover and disaster recovery.

So    I put it to my CIO, and he okayed it. We went forward with VMware,    because we saw they had the best, most robust, and mature applications    to support us. Seeing that our back-end was SQL for those two systems, and seeing that we were just going to embark  on  a  brand-new upgrading of our CAD/RMS system, this was a prime time  to   jump on the bandwagon and do it.

Also, with our back-end storage being NetApp, and NetApp having such an intimate relationship with VMware, we decided to go with VMware.

Gardner: So you were able to accomplish your virtualization and also gain that disaster recovery and business continuity benefit, but you pointed out  the time was of the essence. How long did  it take you?.

Sindicic: Back in early fiscal year 2010, I started doing all the research. I    probably did a good nine months of research before even bringing this    option to my CIO. Once I brought the option up, I worked with my    vendors, VMware and NetApp, to obtain best pricing for the solution that    I wanted.

I started implementation in October and completed  the   process in March. So it took some time. Then we went live with our    CAD/RMS system on May 10, and it has been very robust and running    beautifully ever since.

Gardner: Tell me about your IT operations.

Sindicic: I have our finance system, an Oracle-based system, which consists of an Oracle database server and Apache applications server, and another reporting server that runs on a    different platform. Those will all be virtual OSs sitting in one of my    two clusters.

For the police systems, I have a separate cluster    just for police and fire. Then, in the regular day-to-day business,  like   finance and other applications that the city uses, I have a  campus   cluster to keep those things separated and to also relieve any  downtime   of maintenance. So everything doesn’t have to be affected if  I'm moving   virtual servers among systems and patching and doing  updates.

Other applications

We’re also going to be virtualizing several other applications, such as a citizen complaint application called Coplogic. We're going to be putting that in as well into the PD cluster.

The version of VMware that we’re using is 4.1, we’re using ESXi server. On the PD cluster, I have two ESXi servers and on my campus, I have three. I'm using vSphere 4, and it’s been really wonderful having a good handle on that control.

Also, within my vSphere, vCenter server,    I've installed a bunch of NetApp storage control solutions that allow    me to have centralized control over one level snapshotting and    replication. So I can control it all from there. Then vSphere gives me    that beautiful centralized view of all my VMs and resources being consumed.

It’s    been really wonderful to be able to have that level of view into my    infrastructure, whereas when the things were distributed, I hadn’t had    that view that I needed. I’d have to connect one by one to each one of    my systems to get that level.

Also, there are some things that we’ve learned during this whole thing. I went from two VLANs to four VLANs. When looking at your traffic and the type of traffic    that’s going to traverse the VLANs, you want segregate that out big  time   and you’ll see a huge increase in your performance.

The other thing is making sure that you have the correct type of drives in your storage. I knew that right off the bat that IOPS was going to be an issue and then, of course, connectivity. We’re using  Brocade switches to connect to the backend fiber channel drives for the  server VMs, and for lower-end storage, we’re using iSCSI.

Gardner: And how has the virtualization efforts within all of that worked out?

Sindicic: It’s been wonderful. We’ve had wonderful disaster recovery capabilities. We have snapshotting abilities. I'm snapshotting the primary database server and application server,    which allows for snapshots up to three weeks in primary storage and   six  months on secondary storage, which is really nice, and it has   served us  well.

We already had a fire drill, where one report   was  accidentally deleted out of a database due to someone doing   something --  and I'll leave it at that. Within 10 minutes, I was able   to bring up  the snapshot of the records management system of that   database.

The  user was able to go into the test database,   retrieve his document, and  then he was able to print it. I was able to   export that document and  then re-import it into the production system.   So there was no downtime.  It literally took 10 minutes, and everybody   was happy.

... We   are seeing cost benefits now. I don’t have  all the metrics, but we’ve   spun up six additional VMs. If you figure  out the cost of the Dells,    because we are a Dell shop, it would cost anywhere between $5,000 and    $11,000 per server. On top of that, you're talking about the cost of   the  Microsoft Software Assurance for that operating system. That has saved a lot of money right there   in  some of the projects that we’re currently embarking on, and for the    future.

We have several more systems that I know are going to  be   coming online and we're going to save in cost. We’re going to save  in   power. Power consumption, I'm projecting, will slowly go down over  time   as we add to our VM environment.

As it grows and it becomes more robust, and it will, I'm looking forward to a large cost savings over a 5- to 10-year period.

Better insight

Gardner: Was there anything that surprised you that you didn’t expect, when  you moved from the physical to the virtualized environment?

Sindicic: I was pleasantly surprised with the depth of reporting  that  I could  physically see, the graph, the actual metrics, as we were   ongoing. As  our CAD system came online into production, I could  actually  see  utilization go up and to what level.

I was  also pleasantly   surprised to be able to see to see when the backups would  occur, how it   would affect the system and the users that were on it.  Because of  that,  we were able to time them so that would be the  least-used hours  and what  those hours were. I could actually tell in  the system when it  was the  least used.

It was real time and it  was just really  wonderful to  be able to easily do that, without having  to manually  create all the  different tracking ends that you have to do  within Microsoft Monitor or anything like that. I could do that completely independently of the OS.

Gardner: We're hearing a lot here at VMworld about  desktop virtualization as well. I don’t know whether you’ve looked at  that, but it seems  like  you've set yourself up for moving in that  direction. Any thoughts   about mobile or virtualized desktops as a future  direction for you?

On the horizon

Sindicic: I see that most definitely on the horizon. Right now, the only thing    that's hindering us is cost and storage. But as storage goes down, and    as more robust technologies come out around storage, such as solid  state, and as the price comes down on that, I foresee that something  definitely coming into our environment.

Even here at the conference I'm taking a bunch of VDI and VMware View sessions, and I'm looking forward to hopefully starting a new project with virtualizing at the desktop level.

This    will give us much more granular control over not only what’s on the    user’s desktop, but patch management and malware and virus protection,    instead of at the PC level doing it the host level, which would be    wonderful. It would give us really great control and hopefully decreased    cost. We’d be using a different product than probably what we’re  using   right now.

If you're actually using virus protection at  the  host  level, you’re going to get a lot of bang for your buck and  you  won't  have any impact on the PC-over-IP. That’s probably the way we we'll go, with PC-over-IP.

Right    now, storage, VLANing all that has to happen, before we can even   embark  on something like that. So there's still a lot of research on my   part  going on, as well as finding a way to mitigate costs, maybe   trade-in,  something to gain something else. There are things that you   can do to  help make something like this happen.

... In city government, our IT  infrastructure   continues to grow as people are laid off and  departments want to   automate more and more processes, which is the  right way to go. The IT   staff remains the same, but the  infrastructure, the data, and the   support continues to grow. So I'm  trying to implement infrastructure   that grows smarter, so we don’t  have to work harder, but work smarter,  so that we can do a lot more with less.

VMware   sure does allow  that with centralized control in management, with   being able to  dynamically update virtual desktops, virtual servers, and   the patch  management and automation of that. You can take it to   whatever level of  automation you want or a little in between, so that   you can do a little  bit of check and balances with your own eyes,   before the system goes off  and does something itself.

Also, with   the high availability and  fault tolerance that VMware allows, it's   been invaluable. If one of my  systems goes down, my VMs automatically   will be migrated over, which is a  wonderful thing. We’re looking to   implement as much virtualization as  we can as budget will allow.

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Gardner: Why  has virtualization been good for your organization?

Ramirez: Back in 2007 when we first looked out at virtualization, we had a lot of issues. Our main   data center was located at our stadium in Saint Petersburg, Fla. We  were  actually  running out of space. Electricity was a huge problem. We  kept  hearing  from our operations department that our data centers and  our  equipment  were just consuming too much energy.

We had to come up with a new data center.    We needed to build something else, because we were just basically    outgrowing it. We needed a plan to say, "You know what, this is going to    be our new data center. We're going to be there 5 to 10 years,"   without  going back and requesting additional space or consuming more    electricity.

That's when everything started. We went from a    two-room data center room to basically just using half of that room with    virtualization. We started very small -- four hosts to manage our own infrastructure. Now we have 10 hosts in production and growing.

Another dilemma that we had was every time we needed to provision servers, or a new application needed to be introduced, it would have    taken weeks, if not a month, for us to procure the proper hardware and    software to make this available for different departments. So we  needed   to cut time on that and make things happen faster. It is a fast    business.

Gardner: To what degree have you actually embraced virtualization?

Without    VMware and the different products that we deploy, I think today  we'd    be in a lot of trouble if we wouldn’t have gone that route.

Ramirez: Currently, we're at 95 percent. We had certain goals to start --  about   50 percent -- and gradually every year just adding more and more    resources. At 95 percent, you can see that we really value this, and    this is the route that our business is going to.

Gardner: What  IT does it take to support a major league team?

Ramirez: First of all, coming from a small-market team, we don’t have the luxury  to have a large   IT department to support the 300 plus users that we  currently have. So   it’s very important for us to be very proactive and  be ahead of the   game.

It is a 24×7 operation, especially  during the season, which   as we all know, is one of the longest in  professional sports, with 162   games per year, not counting playoffs.  So it is challenging for us,  but I  believe that we have a great team.

We  also have great  resources  that we've implemented in the last five or  six years and  we're on top of  it. Without VMware and the different  products that we  deploy, I think  today we'd be in a lot of trouble if  we wouldn’t have  gone that route.

Gardner: Clearly it's working for you. Tell me about how many apps you're   supporting. What sort of workloads have you?

Ramirez: From the applications perspective, we have everything from our scanning application, which is homegrown SQL back-end, Windows application front-end, and web-based front-end to our finance departments, Great Plains, Microsoft Great Plains 2010.

We also have our customer relationship management (CRM) system, which runs on a proprietary application from Ticketmaster,    to homegrown application. Close to 10-30 applications are used on a    daily basis from every department and different aspect, which is    incredible.

Our email system, Microsoft Exchange 2010, is 100    percent virtualized. And every new application that comes up in our    pipeline is basically virtualized. Going forward, nothing resides in our    physical server, which is tremendous for us.

Products enrich the roster

When  we started, we wanted to go slow and to make sure that  everyone   throughout the organization had a good feel for it, a good  vibe. Once   we earned the trust from the different departments and other  department   heads, we introduced it, we showed them and we trained  them. It was a   no-brainer. Everyone was on board. Everyone loved the  technology.  Just  loved the fact that while it previously took weeks and  months for  them  to provision anything from our department, it's now  hours, at  the most,  which is great.

It also helps us big time  with  disaster recovery (DR). Our second  data center is located in our Port  Charlotte Spring  Training facility.  It's easier for us to move  workloads, depending on  where we're at in the  season and the time of  the year. We can move a  machine from the  production main data center  to the backup data center  and provide those  resources over to our  different departments.

When  we  started with DR, it was a  very tough decision because we wanted to do   everything automated, but  management did not see the need for it. So we   actually started with  manual processes. We started building a data   center down in Port  Charlotte. We did some migrations and that didn’t   work out too well.  So we came back to the drawing board and said, we   need a tool that can  help us automate this process. This has to be 100   percent automated.

We    came back to the drawing board and said, we need a tool that can help     us automate this process. This has to be 100 percent automated.

Our    recovery manager had just come out and we wanted to test it. We    actually beta tested it and received some evaluation licenses. We put  together   a quick product to show administration and management how  good the   product was and how important it was to us, especially in the  location   that we are at.

The rest is basically history. We  have pretty   much 100 percent coverage on everything that is  virtualized. We're able   to take periodic snaps and move them over to  the VR facility, where we   do a weekly test of each individual virtual machine (VM).

Gardner: So that must make you sleep a little better during hurricane season?

Ramirez: Absolutely. It used to be nightmare from June to the end of September around here, but not anymore.

Gardner: Let's move into this other innovative area you have been experimenting with, and it's the use VMware View 4.6. You've been involved with moving into thin   clients,  virtualized desktops, and I understand also using mobile apps   on  tablets. Tell me why that's been important for you and what you've    done.

250 remote users

Ramirez: Throughout the year, we've grown tremendously. We now have close to   250  remote users. All those remote users need to be equipped with very    expensive laptops. It's very expensive and very hard to manage.

We're    a small IT department. It's very hard to track down 250 users    throughout the year. It's very hard to keep older machines up-to-date.    When something goes wrong, it gets ugly pretty fast. We needed to get  an   alternative and come up with a plan where it would be easier to   manage,  where it would be easier for them to conduct their work.

We    started very basic by putting the in VMware View client. First of  all,   we set up a lab here and asked a few of our key guys to test and  give  us  some feedback. The feedback was overwhelming. We started with  five  or  six guys, and now we probably have close to 65 users using it  on a  daily  basis.

Users have come back and handed in their laptops. Now, they're strictly on iPad or Android tablet, which is tremendous for us. It's easier for my department to    manage. It's easier for them to go out there on the field and just use  a   lightweight device to connect and conduct business with it.

So    it's big for us right now. It should be a huge hit in the upcoming   year.  With our development department, everything that we are   projecting is  basically basing it on VMware View.

Users have come back and handed in their laptops. Now, they're strictly on iPad or Android tablet, which is tremendous for us.

Gardner: In addition to VMware View, you also seem to be using an iPad app, how  did that come about? How does that fit into the equation?

Ramirez: That came as we started adding more users and receiving feedback. I    started using it for my daily management show, introduced a few key    personnel to it, and they liked the idea. Now, everyone is basically    using that app to connect and do most of their work.

We decided    to introduce other departments and show them the capability and how  easy   it is to connect and get their business done without turning on  their   laptop -- waiting for it to boot, the VPN, the password, and all that stuff that sometimes gets in the way.

Gardner: I understand you have scouts, managers, you have lots of folks out in    the field. They're at ballparks. They're watching ballplayers.  They're   in the field, and can they just download an iPad app and then  sign into   VMware View. How do they actually connect in, and what are  the  logistics  for really linking your resources and apps out to that  field?

Everyone wants a tablet

Ramirez: Everyone in the organization wants a tablet. They come to  us,  which  helps us big time. Normally we do the procurement for them,  or if   they go out there and buy it, they will just bring it over to us,  and   by default our installation and process includes that application.  It's   the first application that they're introduced to.

My   department  is able to figure the necessary settings on the application   and just  leave it ready for them and let them know that right now you   can just  use your iPad application to connect into your resources and   conduct,  and use most of the applications that you will be using on a   daily  basis. It's a big plus for us and for the user. They just love   the fact  that they have a small application, a small tablet, and one   application  to deal with. Everything else is handled from our end.

Gardner: So this is productivity for you, because you're supporting more users    in the way that they want to work, probably with fewer resources when   it  all comes down to it, when you can consolidate. And then they're    getting that added productivity of access to the data and the apps    wherever they are, whenever they want to use it. So it's kind of a    win-win.

Ramirez: Absolutely. From a  management   perspective, it’s great, it's awesome, getting apps for a  better   application and a better system to have deployed.

We've  had   nightmares throughout the years, lost laptops with very sensitive    information. We have to protect users, and there are so many things  that   goes on on a daily basis. Now if there's an issue, it just takes    seconds to correct, and the users just go back in and continue doing    their work.

From    a management perspective, it’s great, it's awesome, getting apps  for  a   better application and a better system to have deployed.

Gardner: What’s  been the  return on investment (ROI) for you moving in these directions?

Ramirez: The ROI has been huge. We used to buy 10-15 servers on a yearly basis. Now, we just procure our servers every three or   four  years. We get hit from left and right with different departments.   They  have different needs -- we need 10 servers, we need 15 servers.  We  no  longer have to procure those and spend all that money right  away.  We  have resources allocated for it.

So the ROI has been  there.  As a  matter of fact, we did research two years ago and have  discovered  that  on our initial investment for both data centers the  return on  investment  was 24 months, which was probably more than we  thought. We  didn’t  realize how fast we were able to recoup our  investment and how  much  flexibility we had moving forward.

For  DR, we were coming  from a  situation where we had nothing. Everything  was in one data  center, and  if a storm came by, we would basically be  out of business.  Having a  fully automated system in place is huge for  us.

Very important

I don’t even know where to start and what number to tag this with, but   it  is very important to us. It has helped with insurance cost. It has    helped with just the ease of everyone knowing that if something  happens   near our stadium, we have our data and we can still conduct  business   moving forward.

We are buying fewer laptops.    We no longer need all the extra services that with 250 laptops can  get   very costly. Instead of ordering an $1,800 laptop for a user,  which   normally lives 12-24 months, now we can just buy an iPad or have  the   users use their own iPad, and connect. That makes a big saving  for us   going forward.

We have very big plans to move  ahead and try to be 99 percent   virtualized. Private cloud is very  important. It's high for us. We keep   growing, and our needs and  demands are huge. So we definitely have a  lot  of plans.

We have very big plans to move ahead and try to be 99 percent virtualized. Private cloud is very important.

Coming down the line, we're counting big on the upcoming vSphere 5 and SRM 5. That’s going to help us tremendously. It has some features there that are must-have for us.

Again,    moving forward, application development and everything will hopefully    be based on a thin app and ease of use and administration for our   users.  VMware View is another big component for us.

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Gardner: Is there a  reason for doing private cloud holistically, completely,  rather  than piecemeal? What’s  the benefit for doing it that way?

Giambruno: From   a technology standpoint, we look at ourselves as doing oneness. We  pick  one way and we get very good at. We own that technology, so we can   command it. It’s really  about the density of our skill sets and our   capability around that  order to execute for the business.

When   you look at that, it  drives a degree of simplicity of execution, because   at the end of the  day, what we're really focused on is delivering IT   capability back to  the business faster, cheaper, better. That’s   essentially what our  cloud was planned to do and has delivered.

Gardner: And this is no small undertaking. It's over 530 applications, 15,000    automated moves a month. Give us a sense of what you’ve done with this    singular approach to full competency at this particular data center and your approach to private cloud?

Giambruno: It’s not a data center. It’s the globe. That’s important for everyone    to understand. Revlon’s cloud covers all of Revlon’s presences   globally.  It’s not just a single data center. We have a core data   center and then  we have little data centers around the world that   everything replicates  between and things move between.

Entire ecosystem

We’ve  built this entire ecosystem to deliver our applications. We started  this about five years ago with this whole idea of oneness. We re-ITed  the planet. We have one DNS and DHCP structure. We have one global directory. We have one SAN globally. We have one desktop image. We have one server image. That    simplicity allowed us to use the cloud as a competitive advantage.

We've    saved or avoided $70 million in last two years. If you go by a simple    timeline, the first 18 months was laying that oneness foundation. We   did  that in 18 months. The second 18 months was the virtualization of   the  servers, the network, and the storage systems globally.

At   the  end of the 18 months, we were done. That was the first three  years.   We’ve been running this way for the last two years. We're not  in the  "I  think" mode. We're looking now at how we continually extend  the   capability of our cloud.

Gardner: Our listeners might be   familiar with Revlon, your brand, but tell us  more about the scope of   your operations and the extent to which IT is  supporting your business.

Giambruno: Revlon is a global cosmetics, hair color, beauty tools, fragrance,    skincare, anti-perspirant/deodorants, and beauty care company. The    vision of Revlon is to deliver glamor, excitement, and innovation    through high-quality products at affordable prices.

We    didn’t spend any additional money, other than our normal capital     refresh. The thing that we did was change the way we're spending our     money

We are arguably one of the strongest consumer    franchises in the world. Our brand is incredibly powerful. We've got    offices around the world. Our global headquarters are in New York. Our    flagship manufacturing facility is in Oxford, North Carolina, and our    consumers are women around the world. Our products are sold in more  than   100 countries.

So we are big, as far as our reach and our    capability. Essentially, our cloud delivers roughly 95 percent of all    Revlon IT services around the world. We've got a couple of systems  that   aren’t in there yet. They will be shortly, but for all intents  and   purposes, we operate everything off of our cloud.

Gardner: Let’s go back to how you got to this point and how you're able to   enjoy  such significant savings. You have a comprehensive virtualized   approach  of servers, network, applications, and services. Why is that   important?

Giambruno: Again, it’s that density of skill  sets. Through this whole   implementation, we only used about 10 percent  professional services. We   didn’t spend any additional money, other than  our normal capital   refresh. The thing that we did was change the way  we're spending our   money.

We took that leap to do things  differently, because at  the  end of the day -- I always say this just to  keep my and my team’s  frame  of reference -- we make cosmetics and  personal care products. We  have  lots of brands, but it’s the idea of  simplicity.

Faster, better, cheaper

We're    not a revenue-generating piece of Revlon. How we can add value back  to   the business is by doing things faster, better, cheaper? If we're  not   spending that money, we're avoiding spending money, or giving  money   back, that means it can go into new product development. It can  go into R&D. It can go into marketing. All activities focused on driving profitable growth.

Getting    technology to facilitate the business and do things faster and more    effectively is really important. To me, it’s the most material thing    we’ve done - if you look at your projects. We’ve increased the number of    projects we complete every year by 300 percent. When you talk about   the  business alignment, getting what they want done faster, cheaper,    better, to me, that’s it.

Gardner: And you're talking   about spanning the cycle from full development to  implementation. What’s   the role that the cloud has played in terms of  increasing the ease in   which you move from development to operations?

Giambruno: I have a couple of buckets. We have reliability. Currently, our cloud has been operating at north of six nines uptime, which has allowed me to take resources out of operations, put them into projects and working with the business.

That’s resulted in speed. If you want a server,    if there is a demand for new application or testing something, our    cycle time for getting a server up is anywhere from 15-20 minutes and    there isn’t the associated cost. For us, a server is just a file. If you    want one, great, here you go.

One    of the greatest things that we monitor is our ratio of physical to     logical servers. When we started this, our server ratio was 1:7. We are    now  1:34.

And we manage capacity on the top line. So we    essentially move that infrastructure barrier and cost. We’ve    disconnected it. One of the greatest things that we monitor is our ratio    of physical to logical servers. When we started this, when we first    went live three-and-a-half or four years ago, our server ratio was 1:7.    We are now 1:34. That’s essentially a 500 percent increase in  capacity   without the cost.

That makes a material difference in  the   business not having to pay for things. The speed at which we can  nail up   applications and the accuracy at which we can do it has made a   material  difference in our ability to deliver projects to the  business.

Gardner: In addition to improving this cycle for development flexibility and resources, you've also devoted significant improvements to disaster recovery (DR). Tell me a little bit about why the private cloud has helped you in DR.

Giambruno: One of the things that we’ve learned very quickly was rate of change.    When you're on a cloud, every time someone hits a keystroke on a    keyboard, that’s a change in your cloud. Our rate of change is anywhere    between 20-30 terabytes a week.

We made a conscious decision as    we don’t tier anything in DR; we literally copy everything. There are    two pieces of things. I'm most impressed with what my team has done.

Cheaper storage

One    is if you take that rate of change and attach it to storage growth,    you're roughly at $27 million a year. Through a series of technologies    that we employ, we turn that $27 million into $400,000 of storage that    we actually have to pay for. So, our shareholders get that benefit,    because I don’t think anybody else’s shareholders would have that    interest in place.

The second thing is that it does allow us to copy everything. Roughly a month ago, we lost our factory in Venezuela to a fire. Fortunately, no one was hurt, but from the time someone   made  a phone call, two hours and 40 minutes later -- and roughly two   hours  of the time of finding people, because it was a Sunday afternoon   -- we  moved the country of Venezuela up into our DR side, had   everything  running, and we're giving the users virtual desktops so they   could keep  working. That’s the power.

Gardner: Peace of mind and trust.

Giambruno: And it’s not fake. We’ve done it. Globally, we are minus-15 minutes    replication in their stuff. That’s a little longer or little shorter    depending where it is and time of the day, but it goes back to the    simplicity. We just copy everything so we don’t have to worry about it.

Gardner: All right. Let’s see metrics-wise what this gets for you in data reduction. What sort of volumes have you been able to improve?

We keep finding ways to squeak more out, because, again, the less money we can use, the better for the business.

Giambruno: We’ve run about 96 percent data reduction for everything from    compression and de-duplication. As we’ve gone through this, we've also    learned that with different storage protocols, block versus CIFS, you get better compression. Running at NFS you pick up 15 percent utilization over block.

Everybody    has different business cases for why they need either, but we keep    finding ways to squeak more out, because, again, the less money we can    use, the better for the business. The more efficient and effective we    are, the better for the business, and the less they have to spend on    this.

Conversely, we keep leveraging those capabilities in extending our cloud. So we can sling a Windows 7 desktop to an iPad,    or we're enabling our cloud so people can use resources wherever they    are, regardless of the device. That just makes their lives easier and    their ability to do business better, so we can support people growing    the company.

Gardner: It’s really  impressive to me, David   that the more value that you derive from you  architecture and approach,   the more it contributes to other things.  For example, what you’ve   described is great for DR, but you’re also  reducing your racks,   restructuring your server licensing, and also  getting to improve asset   utilization. So it’s sort of a snowball, but  in a virtuous way.

The asset is never cold

Giambruno: It’s interesting because in our DR site we run our test and dev. So   the  asset is never cold. We're actually using the virtual servers while    they are not being used for DR to run all our tests and dev. It just    contributes to the uptime. The data is already there.

We reuse    assets all the time, and as we go forward, we have plans to go    active-active. So now end-of-life servers that are coming out for    maintenance, we just throw them in DR, because they can just stay there    forever. It doesn’t matter to us if one dies a year. So what? It’s    really that ability to keep using those assets to extend capabilities.

Gardner: How about the stack? Can you describe some of your products and what    they’ve done for you? Are you venturing to some new areas around  either   management or governance to try to continue to tweak this to  get more   bang for the buck?

Giambruno: The bang for the buck for us is that we're working really hard on essentially creating an internal marketplace, like the Apple marketplace or the Android marketplace.

We’ve    got desktop virtualization, but we see huge value to the business in    creating this internal marketplace. We know a user. We know their    devices. We know the applications they're supposed to be using.    Depending on the device that they connect, we can format the application    they are using and its view to that device to deliver them in  context.

To some degree, it’s like going from a LAN to a trusted WAN, where we know the device that’s registered to you.   We  know you as a user so we can deliver very securely your  information,   and that information never leaves my data center. So you  are only ever   viewing the information they are working with.

When    that device comes out, our cloud will understand context. We'll be     able to deliver that application in the context of the person.

Gardner: You're also now creating an  application  marketplace. How does that benefit from your cloud  infrastructure?

Giambruno: Our cloud can send them  anything. The applications are already  running  on the cloud.  Essentially, when that device comes out, our  cloud will  understand  context. We'll be able to deliver that  application in the  context of  the person. You've got a highly secure  environment. We're not  moving  data anywhere. We’ve got control of the  device. We understand  who the  person is, and so we can deliver in  context what they are  supposed to  have access to, regardless of where  they are.

If you  have an  iPad or anything like that, you have  an icon on the front.  You’ll have a  Revlon marketplace. You open that  up, and there will be a  list of  applications that you have access to  that are already authorized  for  you to have access to, and we will  start sending you those   applications.

Gardner: What’s your advice for folks getting  started?

Giambruno: I tend to live by "isms" to make very  clear pictures, because I had  to  move own organization through them.  Two things: trust or verify,  which  maps into the second, which is just  try. They are very  symbiotic.

Trust and verify that you’re delivering the capabilities that the business needs and that you know they need.

As    you look at this, just try, and as you go through that, trust and    verify that you’re delivering the capabilities that the business needs    and that you know they need. As you go along that path, you can build    trust and confidence in yourself and your capabilities, your team can    build trust and confidence, and you can show that to your business    units.

That's like that snowball that you get rolling. Once    everybody realizes that it can be done, it’s more of a human experience    thing than it is the technology. The technology works, and we’ve been    doing this for a couple of years. I couldn’t imagine operating any  other   way any longer until the next big geometry train comes, but  that’s   probably another 10 or 15 years.

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Kurtz: We've certainly seen several big changes. One is in the  resource-constrained world. There are bandwidth constraints to support  business innovations.

When    I talk to CIOs, one of the biggest issues on their minds is, how do I    make sure I am allocating more of my time and efforts in technology   that  supports business growth and innovation, versus the maintenance of    existing systems? That's very different than the focus that you would    have had in years past in terms of driving internal automation.  That's   one big change we've seen.

Two is clearly the adoption  of SaaS   technologies and the impact that's having on IT organizations.  We see it   completely changing the way companies think about IT  investment, not   just capital expenditures versus operating expenditures,    but the roles and responsibilities that an IT organization has and  how   it interacts with its internal customers within the functional  parts  of  the organization.

Three, I think you referenced it a  little  bit  earlier, is not just a maniacal focus on managing costs,  but also  the  adoption and return on investment (ROI) that is generated from IT investments. There's always been a focus on    getting a good ROI, but I think it’s a much more significant focus    across the organization on doing that, and particularly from an IT    organization in terms of making sure that they have the ability to  measure that.

Inter-enterprise collaboration

Four was just a focus on inter-enterprise collaboration. Rather than focusing on the internal process    efficiency and effectiveness within the four walls of a company, CIOs    are starting to realize that the next wave of productivity will be  outside their four walls, what some refer to as inter-enterprise  collaboration, meaning how an enterprise automates the processes and the  way it collaborates with its customers and suppliers throughout the supply chain.

...  About 50-60 percent of companies who are moving to a SaaS   environment  or the cloud are doing it because of the cost reduction   opportunities  inherent in not having to deploy, manage, and support   applications.

Not  only do they get the cost benefits of that, but   they typically have  time-to-deployment benefits and less   time-to-realize-value and  flexibility benefits that they didn’t have due   to resource constraints  within an organization. That's a very common   trend in the market, and  specifically within Ariba’s customers, and we   expect to see that  trend continue.

Gardner: I'm  really interested about this notion about how IT needs to operate   more  like a business. What is it that IT needs to do in  terms of becoming  more like  some of the other business units or functions?

Kurtz: It starts with a really well-defined  set of goals and objectives. Why   are we going to undertake something,  what are we hoping to accomplish   with that, and how are we going to  measure that? What are the key performance indicators (KPIs) that we'll be able  to track success with.

To   your point, there were certainly times  in the past when everyone was   buying into the latest and greatest  technology, or something that was   new and cutting edge, and wanted to  try and experiment with it. Given   the economic times over the last  several years, the willingness of   companies to just experiment and see  what happens is dramatically less,   and you see IT organizations taking  on a much more ROI-driven   approach.

Given    the economic times over the last several years, the willingness of     companies to just experiment and see what happens is dramatically less.

So    it's having a very well-defined business case for investments or    initiatives that they're taking on, and making sure not only they    understand what that business case is, but their internal stakeholders    understand what that business case is and are committed to signing off    on delivering those resources.

And it's not just an IT approval,  but it's a CFO approval in many cases, and they're really holding their  internal   customers and stakeholders' feet to the fire and measuring on a  regular   basis what the ROI is for that specific initiative. We've seen a    dramatic shift in the governance around that kind of ROI and adoption    process with all of the initiatives that we see our customers    undertaking, much more so than we would have seen two, three, or five    years ago.

Gardner: I've seen where  the way that IT is   able to cut cost, but also actually increase their  influence and impact   within the organization, is to identify core-versus-context types  of IT activities, and for those non-core ones, look to increasingly  outsource or partner.

Non-core activities

Kurtz: Again, a trend that fits exactly in line with that is that we see    customers taking advantage of the cloud or SaaS, particularly for    non-core activities.

Take, for example, integration. Integration is required in today's world,   whether you're integrating within your  four walls or outside your  four  walls, but is that really a core  competence that you want to have  as  an organization. Or, do you want to  rely on third-party  integration as  the service solution providers who  can usually do the  integration work  faster, cheaper, and more flexibly?  We're seeing  that's just one  example of ways customers are taking  advantage of  that.

Also, of course, the solutions that Ariba  provides in the spend management space, we're seeing where customers  want to focus on the core enterprise resource planning (ERP) capabilities around finance and operations and leverage tools like  Ariba's Spend Management Suite to help their organizations buy better  and connect with their ERP, but do it in a cloud-type of way.

Gardner: One of the things that I keep coming up against when I talk to folks in IT is that there’s still the manual paperwork at the spreadsheet level, when it comes to managing contracts and licenses and keeping    track of use-pattern licensing, and how to charge back for that. It’s a    nightmare for them.

Kurtz: We have many customers who use our spend management solutions to manage  their IT spend,  whether  that’s the  sourcing and negotiating of hardware or  infrastructure or  contract  labor or software licenses, managing the  contracting process  and the  ongoing contracting lifecycle of that, all  the way through the   procurement of it and then the relationship  management aspects of it. We   absolutely support those processes that  IT organizations need to  manage  their cost within their organization.

We    see 80 percent of business-to-business  transaction still completed    completely manually. We see 85 plus percent  of invoices and payments    still being paper based or people cutting  checks.

Gardner: Is IT really a laggard  when it comes to  automation at this level?

Kurtz: You  would be really  surprised how much we see in terms of the world   continuing to be a very  manual set of processes and capabilities. If   you look at it not just  within IT, but if you take a step back and look   at it on a broader  basis, across the market, we see 80 percent of business-to-business transactions still completed completely manually. We see 85-plus   percent  of invoices and payments still being paper based or people   cutting  checks.

We see the vast majority of early payment   discounts are  completely missed. Some estimates indicate that 70-plus   percent of all  early payment discount opportunities, which procurement   and other  organizations work so hard to negotiate, get missed. The   estimate on  what this cost companies around the world is $650 billion   in economic  impact annually.

The very core of this problem is   how an IT  organization connects their internal systems, most likely   ERP, within an  organization to the systems and ERPs of their customers   and suppliers  to automate that supply chain. That’s where the big   automation  opportunity, efficiency, and effective gains are, or will   be, next is  just because the proliferation of all the combinations of   systems within  your organization, your suppliers, your customers.

Just   think  about the number of combinations that can be and how it can be   very,  very challenging and difficult to connect those systems into the   optimal  or most efficient supply chain.

Gardner: For   the benefit of our IT audience, tell us about Ariba. How does Ariba take what it does and then  apply to IT?

That    community includes our network that connect buyers and sellers,     whether they're collaborating with suppliers, looking for new business     opportunities, or helping to manage their working capital.

Kurtz: Ariba, at the highest level,  helps companies buy better, sell better,  and manage their cash better, and we do that in a couple of ways.

One,    by providing technology or applications that have capabilities across    each of those functions around buying, selling, and managing cash.   Then,  we have a community that is part of our Commerce Cloud,    as we refer to it. That community includes our network that connect    buyers and sellers, whether they're collaborating with suppliers,    looking for new business opportunities, or helping to manage their working capital. It's a network that facilitates documents, information, and financial supply chains.

Then,    we have a variety of capabilities to help our customers adopt and be    successful. Some of that’s delivered by us and some of it by partners    who plug into the cloud. At the highest level, that’s a little bit of    what we do.

How our IT organization is taking advantage of that  I   think was your next question. We see a proliferation of  organizations   taking advantage of the ability to plug into the Ariba  Commerce Cloud  in  different areas.

Some organizations start with our legacy, which is spend management and helping customers buy better, whether that’s identifying savings    opportunities, identifying new sources of supply, negotiating better    agreements, managing the contracting process, all the way through,    procuring solutions, collaborating with your suppliers and receiving    invoices back from your suppliers to managing cash, including payment    term optimization, invoice reconciliation, and even working-capital    management solutions.

Finally, for sellers, it helps create a    marketing channel, new business opportunities, improved efficiencies,    and collaborating with and transacting with your customers and    prospects.

Modular basis

The    nice thing about the way Ariba works is that you can plug in and use    any of those pieces on a very modular basis as you need them. That’s    been particularly attractive to IT organizations for the exact reasons  we talked about before, which is looking for   very specific ROI and very  specific initiatives around their pain and   needs within an organization.  We've got the flexibility to help solve   those on an individual or  holistic need.

And 100 percent of what we do is offered through the cloud.

Supply chain activity

Gardner: We've been describing IT and its relationship to a provider like  Ariba   through primarily a consumption framework. But it seems to me  that  there  is also the opportunity for IT to take something like the   services you  offer with your Ariba Discovery and your ability to use the cloud and ecosystem  of providers to   initiate a process, and then to manage it as a  procurement or a supply   chain activity.

Kurtz: This is  really  the next evolution of where companies are going for  automation   benefits. It's what we think about as extending the ERP into    inter-enterprise collaboration. That’s where companies like Ariba can  really help IT organizations.

There   are some great examples of  customers out there who are doing that. If   you think about it on the  buying side of the world, take a company  like  Nalco,    which is the largest sustainability company in the world. They had    really struggled with lack of automation around purchase orders with    their customers and then the purchase orders being delivered to their    suppliers from Nalco.

They were literally losing five percent of    their orders that they just couldn’t track being delivered from their    organizations to their suppliers. These lost and delayed orders meant    that they couldn’t bill customers in a timely manner. It meant lost    sales. It meant extending "days sales outstanding" and significant    customer satisfaction issues.

By    leveraging Ariba Solution and the Ariba Network they were able to     collaborate with suppliers and customers to significantly improve their     customer satisfaction.

A team of people were having to  call   and check on order status and invoice processing payments and  payment   status, a completely inefficient processes between Nalco's  customers,   and its supplier partners.

By leveraging Ariba Solution and the  Ariba Network they were able to collaborate with suppliers and customers  to   significantly improve their customer satisfaction, reduce "days  sales   outstanding," and cut headcount that were very involved in working  on   things that could be easily automated.

Let’s take another  example from the side of the business everyone gets most   excited  about, the revenue growth or sell side of the house. Fastenal is a great example, where an IT organization helps extend the  services   it provides internally to its customers externally to  Fastenal’s   customers by leveraging eCommerce and the Ariba Network to connect and collaborate with its customers.

Real-time acknowledgments

One    of the benefits of the extension that Fastenal has done is the  ability   to collaborate with its customers to provide real-time  purchase order   and delivery acknowledgements, which have greatly  improved customer   satisfaction. It has reduced their purchase order  error rates by over 80   percent, and it reduced "days sales  outstanding" by over 70 percent, a   significant working capital  improvement.

Other companies are   doing the same kind of thing  as Fastenal and receiving really good   revenue growth or new business  opportunities as well. It is not uncommon   to see companies like  Fastenal finding 50 percent-plus increases in   product line cross-sells  and up-sells, and seeing even 20 percent plus   year-over-year sales  growth within existing customers. Then, we have   solutions like Ariba Discovery even finding new business in customers that they have never done any business with before.

That’s    just an example on the sell side of the house of how IT organizations    are extending and can extend the service that they are providing.

One  of the most important things to keep in mind is that at   Ariba our  mission in life is to help extend or   complement the ERP investments  that many IT organizations have made.  We  help extend those outside the  enterprise and the enterprise   collaboration, whether that’s buying,  selling, or managing their cash.

You   mentioned a few examples  of spend management, but also it’s about   helping companies sell  better, drive revenue growth, and manage their   cash better by  automating functions like accounts payable and providing   benefits to  accounts receivable on the sell side.

If you look at   it in  those terms, we help companies free up their limited IT  resources  to  focus on innovation, not supporting applications or  integration or   customization, and focus on driving business adoption  and leveraging  the  core internal capabilities of ERP.

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