Virtualisation and Automation | BTalk Australia
(16min 16) BMC Software is one of a number of businesses offering Business Service Management software. The company has been beating the recession in the US, with strong growth in 2008 and an optimistic outlook for 2009. What's the secret?
The answer might be how the company helps businesses focus their resources more effectively. BMC's own study of CIOs has shown that 77 percent consider optimising their use of labour as a critical priority. 42 percent believe that there is an increase in the proportion of their IT labour costs that are not directly related to business growth.
Their Vice President Steve O'Connor visited Australia this week. Here he talks to Phil Dobbie about how the emphasis for IT managers is on getting more from the hardware they already have, whilst automating labour-intensive tasks.
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- Today's Transcript
Every business is making cut-backs these days something to do with the economy, I suspect, although BMC Software seem to be doing pretty well they recently upgraded their forecast for 2009 and grew quite considerably in 2008. Steve O'Connor is their Vice President; he's in Australia this week. Steve, I guess the company's doing well because it's providing greater efficiencies for business who are having to make cut-backs so ironically you make more money by helping other people save money.
Steve O'Connor: Yes, Phil first of all thanks for having me today. We've been doing phenomenally well at BMC, actually we had an analyst in New York last week say that we're breaking all the barriers why is everybody else in a recession declaring bad earnings and laying off people where we at BMC are actually, we grew our revenues, grew our bookings, managed our cost-structures really well. And last week our CEO actually raised the guidance for the company so we're pretty excited right now about all the good things happening at BMC.
Dobbie: And it is because you are helping other businesses save money I guess.
O'Connor: Yes, the way I'd want you to think about it Phil is, most businesses today run on IT and most IT shops today are actually running on BMC software. So our whole strategy is to provide tools, technologies and best practice methodologies to help companies maximise the return from their IT investments, and we do that in a whole host of areas inside the company. But the essence of what we do is we really make your IT organisation more effective and efficient which in turn makes your business more effective and more efficient.
Dobbie: It's obvious isn't it to most people that IT is becoming more crucial in business, but it's also becoming a major cost. You've surveyed a number of businesses just to find out how big that concern on IT costs is becoming and it's not good news is it, there's a lot of money being spent in non-productive ways.
O'Connor: Well it's interesting that today we had a luncheon at the Hilton in downtown Sydney with 10 CIO's from here in Australia and all of them really raised two major issues, one they're under really tough cost pressure: how do we get more out of IT for a few less dollars that they'd like to give us this year? But the second thing that they all raised is the expectations of what they are needing and wanting from IT are expanding, so how do I actually reduce the overall cost-structure but deliver more value to the business is really on top of mind of everybody that was in the room. Whether they were a university CIO or whether it was a CIO from a bank they were all facing exactly the same dilemma.
Dobbie: I know a lot of businesses are just saying, hardware investment, forget it this year. Everything we're going to do is got to be driving efficiency out of the hardware that we've got. Is that a pretty accurate summation?
O'Connor: It is and where we're seeing the leverage actually come is from these virtualisation technologies and we at BMC we have a whole set of virtualisation solutions as well. How do I actually run all kinds of different applications and tools on the existing hardware and operating system platforms that I have, it's really through these virtualisation technologies. If you actually walk through a datacentre and look at the CPU meters they're usually down around 1 percent or 2 percent how do I get them up at 50 percent, 55 percent, 60 percent and really use the power that I've already bought instead of making new investments. Everybody's trying to get more from the investments they've already made.
Dobbie: So the software that BMC's providing is what's called Business Service Management software so this is basically a layer of software that sits across your entire infrastructure and makes more sense out of it, makes it easier to manage and provides more analytics back to the business or -- I'm sure I've only given about 25 percent of the description there what's the other three quarters.
O'Connor: You actually did a really good job there Phil. I'd put it in four major categories, the first is we have a set of service support applications and it really is the remedy products that help desk, change management, incident management, asset management, those kinds of solutions to help manage those problems. We also have a set of service assurance products that allow you to actually monitor your environment and quite frankly predict before a fault happens so that you can proactively solve a problem before it even happens, and manage capacity and those kinds of things following the service assurance space. We have a third category which is our fastest growing category which is all around service automation, so we have a set of tools that allow you to automate various practices of your sys admin workforce, your DBA workforce in the datacentre and these repetitive tasks that they do over and over again, we automate some of those activities. And a fourth area which is very exciting for us is all in the area of IT business management. We call it Service Resource Management, but it's things around managing the financial portfolio of IT, managing the supply chain for IT, compliance and governance for IT and your whole project portfolio and human capital portfolios. So we're in those four major areas very focused at helping our customers really drive and extract more value from the IT investments that are being made.
Dobbie: Application of your software's pretty widespread in the US, what's the situation in Australia?
O'Connor: In Australia and all over the Asia pack region we grew the business, I don't disclose the exact numbers but we grew the business here as well as we've done in any other part of the world. We see here in Australia the CIO's are very innovative types by nature, there's a lot of innovation that happens here in this particular geography and some of that innovation is actually coming from the use of our own technologies to help them go achieve that. So we're delighted with all the progress we're making in this geography as well as the whole Asia pack region.
Dobbie: There's a few claims which you made on the BMC website that I'd like to understand just so I understand more really about what the software can do. You say that you can deliver services 30 percent more effectively, how are you doing that?
O'Connor: Can I give you maybe a couple of examples?
Dobbie: Yes that would be great.
O'Connor: In the Service Assurance Space when you're actually utilising your assets at very low utilisation rates, how do we actually give you visibility to how I can put more applications and more services on existing platforms that you've already put in place, we're doing that by helping you see where you have those opportunities and then mapping out what some of our technologies, where those opportunities exist and how we would help you go do that. So we're having a huge advantage with our whole virtualisation set of technologies, that's one way. Another area is this whole area of predictive analysis of opportunities for failure. Today in the meeting with the CIO's, job one for everyone in the room is still operational stability and they are judged everyday on whether their environment's are up and running and are successful. And even an outage that takes out an application for five or 10 minutes if it's the wrong application at the wrong time it can have really serious consequences for the business. Some of our protective analysis tools for monitoring applications and predicting where they're going to be failures preventing those failures are actually helping our customers prevent outages that may at the end of the day cost them hundreds of millions of dollars. You can imagine in financial services where certain applications if they're down even minutes hundreds of thousands of dollars of transactions are impacted by that.
Dobbie: No, they'd just ask the government to bail them out and give them some more money to make up for their loss.
O'Connor: There's that too. And just one other area just to highlight this whole area of automating your datacentre. If you actually look at the productivity of your system's administrators in the datacentre, they're working long hours and really hard and we're not adding new people to that staff. If I can actually get them to be 50, 60, 70 percent more productive because I'm automating some of the repetitive tasks that they're executing, it not only makes your organisation more efficient, it not only makes your up-time of your systems better but the actual health and welfare of your employees goes up because they're not burdened with, doing work at 2 or 3 or 4 o'clock in the morning and they're doing that seven days a week and you're burning out your IT staff. So we're seeing multiple benefits in that space as well.
Dobbie: What about new services, you say you can deliver new services up to 50 percent faster, what are companies not doing now or what are they doing now that's slowing them down and how can a software help them?
O'Connor: Usually, again, I'm going to come back to this automation of the datacentre perspective. We do business with some companies, in particular, in the states that I'm familiar with where if I ask for a new server to be provisioned it may take them five to six months to get the hardware and operating environment up and available for me to go use that particular service. Through our virtualisation technology and through the use of our automation technologies enjoined together we can actually provision those services for a client in minutes as opposed to months by utilising components that are already within your environment that you're just not utilising effectively. And it not only means I'm getting the services up for the client faster which is solving a business problem, but the perception of IT being responsive to the business goes up and the client satisfaction of IT goes up as well.
Dobbie: Now you're not alone in this space, IBM are there as well they've got their Tivoli software which I think is a similar concept, what's your relationship with them, are they a competitor?
O'Connor: Yes the two biggest competitors we have on the marketplace would be, actually there are three, IBM, HP and Computer Associates.
O'Connor: And they have made their product sets through acquisition and we here at BMC have made some of our product advancements through acquisitions as well. The differentiator for us is really around the fact that we're integrating all these products into a common model, which is based around a database called a CMDB. And the fact that we not only have these independent tools that solve a problem but they are all integrated together and work together really gives us a competitive advantage in the marketplace that's served us really well and quite frankly is what's helping us drive those earnings results that I talked about earlier.
Dobbie: So people like IBM they just haven't got the integration plot that you're talking about right?
O'Connor: The other thing is BMC, we are very customer centred and very customer focused. I eat, sleep and breathe meetings with CIO's and the IT workforce as does all of our product managers. We are a company that really believes understand its customer better than anybody else in the world and build product and technologies that they're asking for and they will come as opposed to others who build great technologies and then hope somebody will come. We're very market and customer driven and customer focused. We have very high customer satisfaction rates, our customers are very reference-able and when we do make a mistake, we admit it and we go make those customers make it right for those customers.
Dobbie: It all sounds like a major investment to me, anything in IT, particularly -- it seems to be at the heart of every system. You're talking about changing processors, perhaps changing jobs, it seems to touch many parts of the business not just IT so that sounds expensive and actually more to the point it sounds very time consuming to implement.
O'Connor: It's interesting, it sounds that way but in practice our whole approach is very fast ROI's for our customers, so even though we solve a very large number of different problems our whole approach is to go in and identify one or two or three really big pain points and we're going to come in and build a value proposition with you to go make sure we understand where the value really is and then we go execute in these very small short increments and we go drive that value. And in every case we deliver that value and our customer then wants to buy the next thing or solve the next problem.
O'Connor: Over time you could spend a bit of money on it, but at the beginning it's not huge investments and the payback is generally been very, very good for our clients.
Dobbie: Yes that was going to be my next question, typically what sort of payback period would you be looking at?
O'Connor: For some of our products, like these automation products, they pay for themselves within the first 90 days. If you can automate certain functions in the datacentre or predict certain failures are going to happen and prevent them from happening the payback is virtually immediate. We have one client, a very large healthcare provider in the US, who we deploy a whole set of our products to and there was a 20X return on their investment within the first nine months. So very quick payback, it was so large of a return it actually paid for six or seven other IT initiatives that they didn't think they were going to be able to afford during the year. So it's pretty good story.
Dobbie: There's a tendency right now for people across the board in business to say we need to make cuts; we've got to keep our cash flowing so we're going to have to get rid of some of our outgoings and that tends to mean staff. So what you're saying is, well there might be another alternative that could be implemented fast enough for you to be able to not have to make that decision.
O'Connor: That's exactly the discussion that we had today at lunch with the CIO's here in Sydney. None of them really want to reduce their staff because the demand for what they're doing far exceeds their capacity. So anything that they can deploy that will allow that staff to be more productive and get more throughput done they're all looking to make investments in those space. So it sounds more dire the way the media is writing about it like cut, cut, cut and I do think there's some amount of staff that is going to be cut over time depending upon what happens in the economy, but most shops are realising that their competitive advantage is coming from the use of technologies and when I'm cutting into that piece of the business I'm really hurting myself down the road. So everybody today was focused on not what it would take for me to go cut cause none of them are actually in the business of cutting they're all trying to figure out how do I extract more value from my existing workforce to drive better results for the company.
Dobbie: That's good to hear. Enjoy the rest of your stay and thanks so much for talking to us today Steve.
O'Connor: OK Phil, thank you very much I really appreciate your time and good luck with your business.
Dobbie: Thank you.
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