Well, hello everybody. Here we are at the Rational Software Conference 2009 in Orlando, Florida as always. And we've got another guest with ourselves. Would you like to introduce yourself? Sure. I'm Scott Hebner and I'm the marketing leader for Rational. I guess the first kind of fun thing to ask is, as I was very carefully making sure to say, this is RSC, not RSDC. That's right. So the question is, what happened to the D? Where'd that get off to? Yeah, well, it's been an evolution. This is actually our 12th conference. And it used to be called RUC, which was the Rational User Conference, and then it became the Rational Software Development Conference. And now what we've done is, we were going to call it the Rational Software Delivery Conference, because what's really happening here is the audience that's here is beyond just developers now. It used to be a very developer-oriented, developer-centric conference, and it's evolved to be really about software in general. How do you get value at a software? Whether you build it yourself, develop it yourself, whether you buy package applications like SAP or Oracle, or you're using services, applications in the cloud, or however you get the applications. Customers have a big portfolio of application investments. So what Rational has really become all about now is helping them get value out of it, make the right investments, execute with precision, be able to do things not only well, but do the right things. So we're starting to broaden it. And what's interesting about the show, the statistics that I saw in registrations, I don't know what the finals are, but only about 40% of the people here are actually developers. You've got IT executives, you've got security analysts, you've got product managers that build cars, or medical devices, you've got security analysts. So basically what you have is you have people that are responsible for using software in their company, in one form or the other. I don't mean using it in terms of, you know, the end users, but using it as a tool for the business. Using it as a tool for the business, right. And so it's a much broader conversation than
2:02it was many years ago. And we felt that we were losing attendance because the thought that it was about software developers. The other interesting dynamic here is that it's becoming more than just rational, right? Because you start to think about what's being discussed at the conference like Smart Products and Smarter Planet and the role that Tivoli plays and the role that WebSphere plays and it's becoming cross-brand. Yeah. I mean, for all the IBM events I go to, it was kind of weird and fun, on the other hand, to see Al Zoller up there from Tivoli talking, which is, there's not always a lot of cross-brand GM keynoting and things like that. And it was nice to see the sort of like software development side of everything Tivoli was talking about, hooking up with the rational side and vice versa. Right, right. So like we have IBM Pulse, we have IBM Impact, right? And so we've got to think hard about over time, you know, what do we do with the name of this conference? You've got to come up with a snappy name. We've got to come up with a snappy name and perhaps we shouldn't tie it to only rational and really broaden its values. Impact is all about business processes, right? And Pulse obviously is about service management and operational, both asset and, you know, physical or virtual services like applications. And so what's this conference about? This conference is about software investment management, delivery of software. Again, whether you source it from the external world or whether you build it yourself is a secondary thing. So just because we took D, development, out of the title, doesn't mean that there's not a boatload of developers here. It is still a developers conference, but it's more than that. I've been trying to kind of sort out in my head the, whether you want to call it the evolution or addition or whatever that, that, that rational is kind of going through. And it does seem like this year there is, to, to your point of what you're talking about, there's a lot more emphasis on, I guess, the management of, of software as an asset that a company. And I wonder with some of the things that you talked about this year at, at RSC this year, like, like what, like what are the tools and other things that you guys are providing now to help people? I mean, I guess at the end of the day, a lot of what we're talking about
4:02gets down to there's some person or team of people who are going to make some decision about software in the company, like, and allocating things like that. And so, I mean, what are some of the tools and stuff that you guys have been talking about this year that help with that? It's just so much about doing the right things, not just doing everything well, right? And I think if you kind of look at this, the evolution of all this, you know, it used to be about the individual, making the individual more productive, they can produce more code, it's higher quality. Then it was about the project teams, right? Things like clear quest, clear case. It was all about being effective with the teams. Then it became more of an organizational discussion. How do you share assets and skills? How do you, how do you have the flexibility to move things and share things across multiple projects? And now we're onto this discussion about the next tier, which is about the business. We have a bunch of studies that show that in general, the IT leaders and the business leaders aren't always seeing things the same way. And most business leaders, almost 80% of them, have a feeling that IT is not executing on their priorities. So there is a chasm between what the business feels it needs and what they think IT is actually executing against. So that's a big part of the new expansion now is, you know, I think we're making really good progress as a community in doing things well. Now the trick is, are we doing what's really needed for the business as the business priorities are always evolving and changing? Right, right, right. How do you keep everyone in sync, right? So that's what some of the newer products this week are, like rational insight. It's all about executive dashboards that can monitor in real time, right, a real data collection, you know, sense if you will. It's all instrumented. What projects you have underway, how they're performing, are they on budget, are they on target, you know, then you can say I'm putting this much money in this project and that much on that and that can be viewed by the business people saying, oh no, you should really do it the other way around because that one's a higher priority. And it creates that conversation not only on where the money's going and the investments are going, but how are they progressing, right? You know, who's behind and who's not and so forth. And then you can react and shift things. Another product would be rational focal point for project management, so this is a brand new product. And that's about the project managers making sure they're able to in real time, again,
6:05understand the status of the project in a lot more granularity so they can see what's working and what's not working and they can then respond. And does that follow a similar sort of, I don't know, pattern or architecture or sort of interworking as insight where you're sort of each of the different steps or repositories or whatever. The different moving parts are somehow instrumented and there's reporting that goes through that. Exactly. It's just different, it's different tiers or different links of the same chain, right? So the JAZZ technology platform is what integrates it all together and allows you to create a process out of it. The measured capability improvement framework is this methodology that we're now talking about and helping customers with, which helps you establish your business goals, establish your operational goals to implement the business goals, and then what are the best practices in achieving the operational goals. You might want to, you know, you're realizing that competition keeps beating you to market. So you want to cut your new release of your product from 18 months to 12 months. That's your business objective. Then you set up a set of operational objectives that says, okay, in order to do that, you know, we need to stop rework because we do 40% of the rework because we seem to get the requirements wrong, right? So that's your operational objective. Then you say, okay, what are the best practices that we can put into, you know, into action that will help us improve our requirements management so that we're not reworking things all the time? And there's a set of best practices that then get created that can be implemented in JAZZ. Right. So what you have with Insight is the executive dashboards built on Cognos that allows you to monitor everything. The focal point tool is then the project, the actual project management tool with all the metrics and, you know, here's how many people are on this and you can shift things around depending on who's behind, who's not. And then you get into products like Rational Requirements Composer that not only helps you to derive a greater degree of precision in the requirements, so you're doing the right things, but it helps keep everyone in sync through collaboration technology so that if the business leaders are thinking there's a change or if you're an agile development project and you realize we can
8:06actually do things in a different way, you want to make sure the business people are okay and it helps facilitate that collaboration so that everyone's in sync and therefore ultimately you don't rework as much. And so really what JAZZ is doing in these three products I just mentioned that are new this week, they're helping to take the application life cycle management infrastructure that the teams use and putting a layer on top of it that allows them to now interact with the business leaders and the IT executives and the CIO and the CFO in a way that in the past was always manual and was always ad hoc. You've mentioned the business needs several times. I mean, obviously, it's always nice not to create software in a vacuum and hook up to that. And that always seems to have been a plagued problem of whatever you want to call it, application life cycle management or software development is somehow linking those two things together and making them mesh together more so than just the development folks saying like, we've got this iteration done or something or somehow assessing the value between the two. And I'm curious, a lot of the MCI or some of the MCIF stuff seems to address this, this, as we used to call it, business IT alignment or whatever in the operations area. And I wonder what, like what some of the things you've been talking about, how it sort of hooks up or sort of has the business hooked down into, if you will, the development process. I think there's a couple of macro things going on here. First of all, I think most businesses viewed their investments in software and IT as being an operational enabler. It was about getting a process built and deployed. So it was never viewed as a strategic business asset. It wasn't like the capital that you have or the buildings and all the physical assets. It wasn't like your fleet of delivery trucks where you really managed that very, very well. You knew where all the investments were, and how they were performing and how many miles were on this truck versus that truck and the services. Software was never managed that way because it was really in the back room thing to enable the process. Right. I mean, what's interesting is that it kind of implies that you can
10:08not care about it in a negative sort of way, sort of a black box of budget, if you will. And I think the truth of the matter is that everyone cared about it, but it was one of those things that was in the background. Most business leaders were saying, look, I need an application to do this, right? And someone would go off and build it, but they left it to a great degree of it was really up to the IT team on how to figure out how to do it. And then they come back and say, well, it doesn't quite do what I need to do. But now think about their use of software. It is so critically important to the business people, right? If you're going to be, if you're going to be a leading car, an automobile manufacturer or treadmills even, I remember reading an article a couple of years ago when I was buying a treadmill, the number one buying criteria is the programs. It's no longer the, you know, and so if you don't build, so that the product people, the business people care more and more about the software, right? You can't have an online website that's up to sell your product unless it's PCI compliant because you can't have credit card transactions. So there's a much greater degree of focus there and the business people are always coming up with new ways to create money and enter new markets and very fast moving, very dynamic. And it's the whole notion of manual connections, right? And the more you can automate them, the more you can, you know, facilitate, um, a collaborative environment where you can work together and keep, be kept in sync. And then the ability to really agree on what you're trying to achieve and then continuously understand and approve where you are. Um, and that's really what's happening here is the, the line is finally blurring between development, operations, and business. Right, right. We've always talked about it, but even though we've talked about it, it still was very mandatory. There's always been, um, communication between business, operations, and development. There's always been an attempt to try to align it all. Right. But that doesn't mean that they are aligned because they're, you know, you have different, a whole bunch of moving parts in each one of those three areas. Right. Right. And I think the magic sauce here, if you will, or the secret sauce here,
12:08is that if you can automate how you interact with each other, that's based on real-time information, right, in a clear set of objectives, and you can facilitate the collaboration, again, in real time, right, in an easy-to-use fashion that people can really collaborate on priorities and status, and everyone can see the view that they want to see. Right. And then you're able to, you know, agree, again, not only on the metrics, but you're able to monitor them, and improve them, and it's really all about the automation, and the collaboration, and the ability to report against how you're progressing. Right. And what's interesting with this whole conversation is that those are the three pillars of a business process. Even if you're doing an insurance process for an insurance process to process a claim, right, you need the right people collaborating in the business, you want to automate its use, productive, and you want to know how many claims you're able to process and whether you can improve the number and the quality of them. And so you measure it, and then you learn what's not working, you improve it. So it's the same kind of things needed here is the way to get these teams working together is to put a business process in place for how you go about investing in and delivering software. It's almost as if it's sort of the maturation of software used in business to be a little bit more professional, if you will. I think software is one of the most exciting areas to be in, I think, and it's come a long way. Just think about the last 10, 15 years. I mean, it's just amazing. I mean, it wasn't long ago that I remember with OpenDoc, I think it was like in 1995 or 1996 or something like that, say 10 years ago, we were amazed that we had two clocks running at the same time on Windows. Remember that? Yeah. That was not that long ago. You look at other industries, like if you're a producer of mechanical products or electronics products, they've got that down to an art form. You've got these big machines, they can crank these things out, right? Very well designed in terms of process and all that. And software, just because it's much newer, you know, it hasn't gotten to that level yet of science. Of stability. Of stability and science. But now it has to be because now it's affecting, you know, if you're a producer of a product, whether it be a physical product like a car,
14:10or whether it be a virtual product like advice, right? Or whether it be like, you know, like AIG, you know, the financial products division, right? It's all about the financial stuff. So an application could be a product. It's affecting your product safety, your product reliability, your brand image, your customer satisfaction. You could potentially get into lawsuits where you get sued. There's a lot of, you know, recalls, you know, cars are getting recalled, medical devices and, you know, almost invariably, it comes down to, man, there was a software. In this world that, I mean, it used to be that you deploy an application, if something wasn't working, we've all gone through this, right? Where some things doesn't quite work right, or there's an error, and then it's fixing the next release, right? If your Blackberry or iPhone software doesn't work, you know, it's okay, you get another release of it. Or, you know, everyone has either cable or satellite dishes, right? And, you know, there's always downloading of new software and firmware updates. And so we sort of live in that world. But you start thinking about these broader uses now of software, you've got to get it right the first time. You can't have your analog brakes or your exhaust system in your car or your sensor windshield wipers not. So the competency of a product manufacturer, now that they have, you know, is becoming a software competency because that's what differentiates all these products. And so software has become more than just an IT and a business enabler from a business process perspective. It's becoming the key ingredient in all these different products. Right. And therefore, it is more than doubled in importance just by the nature that it's being used so much more pervasively. And I think business leaders around the world are starting to say, you know, I got to stop ignoring it. I mean, to me, it was a technical thing. I know it was important. I know that it was enabling a lot of business capability. But it's such an important thing now, right, that we need to really start to understand, you know, if we're putting this much money into software that's accumulated this much over the last many years, you know, are we really sure we're getting the value out of it? Well, great. Well, thanks for spending all this time to talk with us. I think that sort of added some nice dimension to the announcements that I've been looking over. Yeah, you bet. I look forward to our next conversation.
16:10We'll see you at what level we're at. We'll see you in six or 12 months, depending on what happens. I think last time, it was about six months ago that we talked last, right? Yeah. I think our next conversation, I bet you we'll start getting into this notion of dynamic infrastructure and agility at scale and cloud and, you know, because I think the next major step here is, okay, how do I start to really free up more capital and more money to invest in new innovative projects? More efficient as a community and how we produce software. Now we're worried about making sure we're aligning that with the business needs in terms of the investments that the business is making in us as a community. I think the next step is now, how do we help to free up money and capital so that we can reinvest in doing more and more projects that are going to help the business, right? Right. And I think that's when you start getting into these discussions of cloud and software as a service. You're not only building applications for that, but software delivery and collaborative life cycle management services that are on the cloud. Right, right. You know, I want to onboard you real quick to do a project in the next week for me. I don't want to have to go buy you tools and get you, you know, all these things. You can just dynamically provision a set of, you know, client services and boom, you get it done. And then a week later, you're doing something else. Then I deep provision it and I only have to pay for it for a week. Well, great. Well, okay. Thanks for sending all this time to talk with us. You bet.