Monday, December 15, 2008

IT Systems Analytics Become Crucial as Move to Cloud and SaaS Raises Complexity Bar

Transcript of a BriefingsDirect podcast on the role of log management and analytics as enterprises move to cloud computing and software as a service.

Listen to the podcast. Download the podcast. Find it on iTunes/iPod. Learn more. More related podcasts. Sponsor: LogLogic.

Dana Gardner: Hi, this is Dana Gardner, principal analyst at Interarbor Solutions, and you're listening to BriefingsDirect. Today, we present a sponsored podcast discussion on the changing nature of IT systems' performance and the heightening expectations for applications delivery from those accessing application as services.

The requirements and expectations on software-as-a-service (SaaS) providers are often higher than for applications traditionally delivered by enterprises for their employees and customers. Always knowing what's going on under the IT hood, being proactive in detection, security, and remediation, and keeping an absolute adherence to service level agreements (SLAs), are the tougher standards a SaaS provider deals with.

Increasingly, this expected level of visibility, management, and performance will apply to those serving up applications as services regardless of their hosting origins or models.

Here to provide the full story on how SaaS is making all applications' performance expectations higher, and how to meet or exceed those expectations is Jian Zhen, senior director of product management at LogLogic. Welcome to the show Jian.

Jian Zhen: Thank you for having me.

Gardner: We're also joined by Phil Wainewright, an independent analyst, director of Procullux Ventures, and SaaS blogger at ZDNet and ebizQ. Welcome back to the show, Phil.

Phil Wainewright: Glad to be here, Dana.

Gardner: Phil, let’s start with you. The state of affairs in IT is shifting. Services are becoming available from a variety of different models and hosts. We're certainly hearing a lot about cloud and private cloud. I suppose the first part of this that caught the public's attention was this whole SaaS notion and some successes in the field for that.

Maybe you could help us understand how the world has changed around SaaS infrastructure, and what implications that has for the IT department?

Wainewright: One thing that's happening is that the SaaS infrastructure is getting more complicated, because more choice is emerging. In the past people might have gone to one or two SaaS vendors in very isolated environments or isolated use cases. What we're now finding is that people are aggregating different SaaS services.

They're maybe using cloud resources alongside of SaaS. We're actually looking at different layers of not just SaaS, but also platform as a service (PaaS), which are customizable applications, rather than the more packaged applications that we saw in the first generation of SaaS. We're seeing more utility and cloud platforms and a whole range of options in between.

That means people are really using different resources and having to keep tabs on all those different resources. Where in the past, all of an IT organizations' resources were under their own control, they now have to operate in this more open environment, where trust and visibility as to what's going on are major factors.

Gardner: Do you think that the type of application delivery that folks are getting from the Web will start to become more the norm in terms of what delivery mechanisms they encounter inside the firewall from their own data center or architecture?

Wainewright: If you're going to take advantage of SaaS properly, then you need to move to more of a service-oriented architecture (SOA) internally. That makes it easier to start to aggregate or integrate these different mashups, these different services. At the end of the day, the end users aren't going to be bothered whether the application is delivered from the enhanced data center or from a third-party provider outside the firewall, as long as it works and gives them the business results they're looking for.

Gardner: Let's go to Jian Zhen at LogLogic. How does this changing landscape in IT and in services delivery affect those who are responsible for keeping the servers running, both from the host as well as the receiving end in the network, and those who are renting or leasing those applications as services?

Zhen: Phil hit the nail on the head earlier when he mentioned that IT not only has to keep track of resources within their own environment, but now has to worry about all these resources and applications outside of their environment that they may or may not have control over.

That really is one of the fundamental changes and key issues for current IT organizations. You have to worry not only about who is accessing the information within your company firewall, but now you have all this data that's sitting outside of the firewall in another environment. That could be a PaaS, as Phil said, it could be a SaaS, an application that's sitting out there. How do you control that access? How do you monitor that access. That's one of the key issues that IT has to worry about.

Obviously, there are data governance issues and activity monitoring issues. Now, from a performance and operational perspective, you have to worry about, are my systems performing, are these applications that I am renting, or platforms or utilities I am renting, are they performing to my spec? How do I ensure that the service providers can give me the SLAs that I need.

Those are some of the key issues that IT has to face when they are going outside of this corporate firewall.

Gardner: I suppose if it were just one application that you knew you were getting as a service, if something would go wrong, you might have a pretty good sense of who is responsible and where, but we are very rapidly advancing toward mixtures, hybrids, multiple SaaS providers, different services that come together to form processes. Some of these might be on premises, and some of them might not be.

It strikes me that we're entering a time when finger pointing might become rampant if something goes wrong, who is ultimately responsible, and under whose SLA does it fall?

Phil, from your perspective, how important will it be to gain risk, compliance, and security comfort, by being able to quickly identify who is the source of any issue?

Wainewright: That's vitally important, and this is a new responsibility for IT. To be honest Dana, you're a little bit generous to the SaaS providers when you say that if you only dealt with one or two, and if something went down, you had a fair idea of what was going on. What SaaS providers have been learning is that they need to get better at giving more information to their customers about what is going wrong when the service is not up or the service is not performing as expected. The SaaS industry is still learning about that. So, there is that element on that side.

On the IT side, the IT people have spent too much time worrying about reasons why they didn't want to deal with SaaS or cloud providers. They've been dealing with issues like what if does go down, or how can I trust the security? Yes, it does go down sometimes, but it's up 99.7 percent of the time or 99.9 percent of the time, which is better than most organizations can afford to do with their own services.

Let's shift the emphasis from, "It's broken, so I won't use it," to a more mature attitude, which says, "It will be up most of the time, but when it does break, how do I make sure that I remain accountable, as the IT manager, the IT Director, or the CIO. How do I remain accountable for those services to my organization, and how do I make sure that I can pinpoint the cause of the problem, and get it rectified as quickly as possible?"

Gardner: Jian, this offers a pretty significant opportunity, if you, as a vendor and a provider of services and solutions, can bring visibility and help quickly decide where the blame lies, but I suppose more importantly, where the remediation lies. How do you view that opportunity, and what specifically is LogLogic doing?

Zhen: We talked to a lot of customers who were either considering or actually going into the cloud or using SaaS applications. One of the great quotes that we recently got from a customer is, "You can outsource responsibility, but not accountability." So, it fits right into what Phil what was saying about being accountable and about your own environment.

The requirement to comply with government regulations and industry mandates really doesn't change all that much, just because of SaaS or because a company is going into the cloud. What it means is that the end users are still responsible for complying with Sarbanes-Oxley (SOX), payment cared industry (PCI) standards, the Health Insurance Portability and Accountability Act (HIPAA), and other regulations. It also means that these customers will also expect the same type of reports that they get out of their own systems.

IT organizations are used to transparency in their own environment. If they want to know what's happening in their own environment, they can get access to it. They can at least figure out what's going on. As you go into the cloud and use some of the SaaS applications, you start to lose some of that transparency, as you move up the stack. Phil mentioned earlier, there's infrastructure as a service, PaaS, SaaS. As you go up the stack, you're going to lose more and more of that transparency.

From a service-provider perspective, we need these providers to provide more transparency and more information as to what's happening in their environment and who has access. Who did access the information? LogLogic's can help these service providers get that kind of information and potentially even provide the reports for their end users.

From a user's perspective, there is that expectation. They want to know what's going on and who is accessing the data. So, the service providers need to have the proper controls and processes in place, and need to continuously monitor their own infrastructure, and then provide some of these additional reports and information to their end customers as needed.

Gardner: LogLogic is in the business of collating and standardizing information from a vast array of different systems through the log files and other information and then offering reports and audit capabilities from that data. It strikes me that you are now getting closer to what some people call business intelligence (BI) for IT, in that you need to deal almost in real time with vast amounts of data, and that you might need to adjust across boundaries in order to gain the insights and inference.

Do you at LogLogic cotton to this notion of BI for IT, and if so, what might we expect in the future from that?

Zhen: BI for IT or IT intelligence, as I have used the term before, is really about getting more information out of the IT infrastructure; whether it's internal IT infrastructure or external IT infrastructure, such as the cloud.

Traditionally, administrators have always used logs as one of the tools to help them analyze and understand the infrastructure, both from a security and operational perspective. For example, one of the recent reports from Price Waterhouse, I believe, says that the number one method for identifying security incidents and operational problems is through logs.

LogLogic's can provide the infrastructure and the tools to help customers gather the information and correlate different log sources. We can provide them that information, both from an internal and external perspective. We work with a lot of service providers, as you know, companies like SAVVIS, VeriSign, Verizon Business Services, to provide the tools for them to analyze service provider infrastructures as well.

A lot of that information can be gathered into a central location, correlated, and presented as business intelligence or business activity monitoring for the IT infrastructure.

Gardner: Phil, the amount of data that we can extract from these systems inside the service providers is vast. I suppose what people are looking for is the needle in the haystack. Also, as you mentioned, it probably behooves these providers to offer more insights into how well they did or didn't do.

What's your take on this notion of BI for IT, and does it offer the SaaS providers an opportunity to get a higher level of insight and detail about what is going on within their systems for the assurance and risk mediation for their customers?

Wainewright: Yes, it does. This is an area where we are going to see best practices emerge. We're in a very early stage. Talking about keeping logs reminds me of what happened in the early days of Web sites and Web analytics. When people started having Web sites, they used to create these log files, in which they accumulated all this data about the traffic coming to the site. Increasingly, it became more difficult to analyze that traffic and to get the pertinent information out.

Eventually, we saw the rise of specialist Web-traffic analytics vendors, most of them, incidentally, providing their services as SaaS focused on helping the Web-site managers understand what was going on with their traffic.

IT is going to have to do the same thing. Anyone can create a log file, dump all the data into a log, and say that they've got a record of what's been going on. But, that's the technically easy challenge. The difficult thing, as Jian said, is actually doing the business analytics and the BI to see what was going on, and to see what the information is.

Increasingly, it comes back to IT accountability. If your service provider does go down, and if the logs show that the performance was degrading gradually over a period of time, then you should have known that. You should have been doing the analysis over time, so that you were ahead of that curve and were able to challenge the provider before the system went down.

If it's a good provider, which comes back to the question you asked, then the provider should be on top of that before the customer finds out. Increasingly, we'll see the quality of reporting that providers are doing to customers go up dramatically. The best providers will understand that the more visibility and transparency they provide the customers about the quality of service they are delivering, the more confidence and trust their customers will have in that service.

Gardner: As we mentioned, the expectations are increasing. The folks who rent an application for a few dollars a month actually have higher expectations on performance than perhaps far more expensive applications inside a firewall and the traditional delivery mechanisms.

Wainewright: That's right, Dana. People get annoyed when Gmail goes down, and that's free. People do have these high expectations.

Gardner: Perhaps we can meet those expectations, even as they increase, but even more importantly for these providers is the cost at which they deliver their services. The utilization rates, the amount of energy that’s required per task or some metric like that, these log files, and this BI will decide their margins and how competitive they are in what we expect to be a fairly competitive field. In fact, we are starting to see the signs of marketplace and auctioning types of activities around who can put up a service for the least amount of money, which, of course, will put more downward pressure on margin.

I've got to go back to Jian on this one. We can certainly provide for user expectations and SLAs, but ultimately how well you run your data center as a service provider dictates your survival ability or viability as a business.

Zhen: You're absolutely right. One of the things that service providers, SaaS providers, or cloud providers have always talked about is the economy of scale. Essentially, that's doing more with less in order to understand your IT infrastructure and understand your customer base. This is what BI is all about, right? You're analyzing your business, your user base, the user access, and all that information in trying to come up with some competitive advantage to either reduce cost or increase efficiency.

All that information is in logs, whether logs that are spewed out by your IT infrastructure, logs that are instrumented using agents or application performance, monitoring type of tools. That information is there, and you need to be able to automate and enhance the ways things are done. So, you need to understand and see what's going on in the environment.

Analyzing all those logs gives you critical capability, not only managing hundreds or thousands of systems and making them more efficient, but bringing that BI throughout. Seeing how your users are accessing, reacting to, or changing your system makes it more efficient for the user, faster for the user, and, at the same time, reduces that cost to manage the infrastructure, as well as to do business.

So, the need to understand and see what's going on is really driving the need to have better tools to do system analysis.

Gardner: Well, how about that Phil? With apologies to Monty Python, every electron is important, right?

Wainewright: Well, it certainly can be. I think the other benefits of providers monitoring this information is that, if they can build out a track record and demonstrate that they all providing better service, then maybe that's the way of defending themselves, of being able to justify asking higher prices than they might otherwise have done.

If the pricing is going to go down because of competitive pressures, there will be differential pricing according to the quality that providers can show they have a track record for delivering.

Zhen: I definitely agree with that. Being able to provide better SLAs, being able to provide more transparency, audit transparency, are things that enterprises care about. As many reports have mentioned, it's one of the biggest issues that's preventing enterprises from adopting the cloud or some of these SaaS applications. Not that the enterprises are not adopting, but the movement is still very slow.

The main reasons are security and transparency. As SaaS providers or service providers start providing a lot more information based on the data that they analyze, they can provide better SLAs, both from an uptime and performance perspective, not just uptime. A lot of the SLAs today just talk about uptime. If they can provide a lot of that information by analyzing the information that they already have -- the log data, access data, and what not -- that’s a competitive advantage for the providers. They can charge a higher price, and often, enterprises are willing to pay for that.

Wainewright: I've been speaking to enterprise customers, and they are looking for better information from the providers about those performance metrics, because they want to know what the quality of service is. They want to know that they're getting value for money.

Gardner: Well, we seem to have quite a set of pressures. One, to uphold performance, provide visibility, reduce risk, and offer compliance and auditing benefits. On the other side, it's pure economics. The more insight and utilization you have, and the more efficiently you can run your data centers, the more you can increase your margin and scale out to offer yet more services to more types of customers. It seems pretty clear that there's a problem set and a solution set.

Jian, you mentioned that you had several large service providers as customers. I don’t suppose they want all the details about what happens inside their organizations to come out, but perhaps you have some use case scenarios. Do you have examples of how analytics from a system’s performance, vis-à-vis log data, helps them on either score, either qualitatively in terms of performance and trust, and more importantly, over time, their ability to reap the most efficiency out of their system?

Zhen: These are actually partners of LogLogic. We've worked with these service-provider partners to provide managed services or cloud services for log management to the end customers. They're using it both working with the customers themselves, as well as using it internally.

Often, the use cases are really around compliance and security. That’s where the budget is coming from. Compliance is the biggest driver for some of these tools today.

However, some of the reports I mentioned, especially from Enterprise Strategy Group (ESG), one of the fastest-growing use cases for log management is operational use. This means troubleshooting, forensic analysis, and being able to analyze what's going on in the environment. But, the biggest driver today for purchasing that type of log-management solution is still compliance -- being able to comply with SOX, PCI, HIPAA, and other regulations.

Gardner: Let’s wrap up with some crystal-ball gazing. First, from Phil. How do you see this market shaking out? I know we're under more economic pressure these days, given the pending or imminent global recession, but it seems to me that it could be a transformative pressure, a catalyst, toward more adoption of services, and keeping application performance at lowest possible cost. What's your sense of where the market is going.

Wainewright: It’s a terrible cliché, but it’s about doing more with less. It may be a cliché, but it’s what people are trying to do. They've got to cut costs as organizations, and, at the same time, they have to actually be more agile, more flexible, and more competitive.

That means a lot of IT organizations are looking to SaaS and they're looking to cloud computing, because this is the way of getting resources without a massive outlay and starting to do things with a relatively low risk of failure.

They're finding that budgets are tight. They need to get things done quickly. Cloud or SaaS allows them to do that, and therefore there's a rosy future, even in bleak economic conditions, for this type of offering.

There are still a lot of worries among IT people as to the reliability and security and privacy compliance and all the other factors around SaaS. Therefore, the SaaS providers have to make sure that they're monitoring that, and that they're reporting. Likewise, the IT people, for their own peace of mind, need to make their own arrangement, so that they can also be keeping an eye on their side. I think everyone is going to be tracking and monitoring each other.

The upside of is that we're going to get more enterprise-class performance and enterprise-class infrastructure being built around the cloud services and the SaaS providers, so that enterprises will be able to have more confidence. So, at the end of the economic cycle, once people start investing again, I think we'll see people continue to invest in cloud services and SaaS, not because it's the low-cost option, but because it's the proven option that they have confidence in.

Gardner: Jian Zhen, how do you and LogLogic see the market unfolding? Where do you think the opportunities lie?

Zhen: I definitely agree with Phil. With the current economic environment, a lot of enterprises will start looking at SaaS and cloud services seriously and consider them.

However, enterprises are still required to be compliant with government regulations and industry mandate, so that's not going to go away. For the service providers and the SaaS providers, what they can do to attract these customers really is to make themselves more attractive, and make themselves be compliant with some of these regulations, and provide more transparency, giving people a view into who is accessing the data, and how they protect the data.

Amazon did a great thing, which was to release a white paper on some of their security practices. It's a very high level, but it’s a good start. Service providers need to start thinking more along the lines of, how to attract these enterprise customers, because the enterprise customers are willing and seriously considering SaaS services.

Phil had an article a while back, calling for a SaaS code of conduct. Phil, one of the things that you should definitely add there is a code to have the service providers provide all the transparency. That’s a thing that service providers can use to offer essentially a competitive advantage for their enterprise customers.

Gardner: Now, you sit at a fairly advantageous point, or a catbird's seat, if you will, on this regulatory issue. As enterprises seek more SaaS and cloud services for economic and perhaps longer-term strategic reasons, do we need to rethink some of our compliance and regulatory approaches?

We have a transition in the United States in terms of the government. So, now is a good time, I suppose, to look at those sorts of things. What, from your perspective, should change in order to allow companies to more freely embrace and use cloud and SaaS services, when it comes to regulation and compliance?

Zhen: As far as changing the regulations, I'm not sure there are a lot of things. We've seen SOX become a very high level and very costly regulation to be compliant with. However, we've also have seen PCI. That’s much more specific, and companies and even service providers can adopt and use some of these requirements.

Gardner: That's the payment card issue, right?

Zhen: Correct. The PCI data-security standard is a lot more specific as to what a company has to do in order to be compliant with it. Actually, one of the appendixes is really for service providers. A lot of service providers have used, for example, the Statement on Auditing Standards (SAS) 70 Type II kind of a report as one of the things they show the customer that they are compliant with. However, I don’t think the SAS 70 Type II is sufficient, mainly because the controls are described by the service providers themselves.

Essentially, they set their own requirements and they say, "Hey, we meet these requirements." I don’t think that’s sufficient. It needs to be something that’s more industry standard, like PCI, but maybe a little bit different, definitely more specific as to what the service providers needs to do.

On top of that, we need some kind of information on when security incidents happen with service providers. One of the things that 44 states have today is data-breach notification laws. That law obviously doesn’t apply to SaaS providers, but in order to provide more transparency there may need to be some standard or some processes in how breaches are reported and handled.

Some of these things certainly will help enterprises be more comfortable in adopting the services.

Gardner: Well, there are some topics Phil for about 150 blog entries, this whole notion of how to shift regulation and compliance in order to suit a cloud economy.

Wainewright: Yeah, it's going to be a difficult issue for the cloud providers to adapt to, but a very important one. This whole issue of SAS 70 Type II compliance, for example. If you're relying on a service provider for part of the services that you provide, then your SAS 70 Type II needs to dovetail with their SAS 70 Type II processes.

That’s the kind of issue that Jian was alluding to. It's no good just having SAS 70 Type II, if the processes that you've got are somehow in conflict with or don't work in collaboration with the service providers that you are depending on. We have to get a lot smarter within the industry about how we coordinate services and provide accountability and audit visibility and trackability between the different service providers.

Gardner: Very good. We've been discussing requirements and expectations around SaaS providers, looking at expected increases and demands for visibility, and management and performance metrics. Helping us to better understand these topics -- and I'm very happy that they joined us -- are Jian Zhen, senior director of product management at LogLogic. Thanks for your input, Jian.

Zhen: Thank you, Dana.

Gardner: Also Phil Wainewright, independent analyst, director of Procullux Ventures, and SaaS blogger at ZDNet and ebizQ. Always good to have you here Phil, thank you.

Wainewright: Thanks, Dana.

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

Listen to the podcast. Download the podcast. Find it on iTunes/iPod. Learn more. More related podcasts. Sponsor: LogLogic.

Transcript of a BriefingsDirect podcast on the role of log management and analytics as enterprises move to cloud computing and SaaS. Copyright Interarbor Solutions, LLC, 2005-2008. All rights reserved.
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