Edward Abbo of Oracle discusses how abstracting above applications provides agility for enterprises.
Interview conducted by Vinod Baya
Edward Abbo is senior vice president of application development at Oracle, responsible for the strategic direction and development of Oracle applications, including the Oracle E-Business Suite, PeopleSoft Enterprise, Siebel CRM, and JD Edwards application product families, as well as Oracle’s Application Integration Architecture and SaaS.
Prior to joining Oracle in 2006, he was senior vice president of technology and chief technology officer for Siebel Systems, responsible for technology strategy in software design and development, as well as technology product marketing. He also held management roles in industry applications and sales consulting at Siebel Systems.
In this interview, Abbo discusses the evolution of networked enterprises as well as the abstractions and semantic bridges that allow enterprise applications to be responsive to business needs.
PwC: Enterprise applications now have many decades of history. What are some of the new areas of opportunity you see in the near and distant future?
EA: I think the opportunities, broadly, are in three areas. First, business models are evolving in a networked world where companies themselves no longer control end-to-end business processes. This provides an opportunity for IT to support processes that expand outside the company.
The second opportunity is leveraging information and transaction systems, allowing companies to make better-informed decisions. This opportunity involves the use of predictive engines and technologies.
The third opportunity is in the dramatic improvements in computing power, which enable capabilities such as Software as a Service [SaaS] to be used in conjunction with software within an enterprise. Coupled with that is the enablement of specific applications for mobile devices such as the iPhone, and we’re doing some fascinating things that take advantage of location services.
PwC: In the current business environment of accelerating changes, agility has become a corporate imperative. How do you define agility for your customers?
EA: Agility is the ability to quickly respond to changing business conditions. When a company wants to change its business model, whether it’s reacting to customer demand or consumer or competitive trends, information technology has been one of the long-lead items that slow the company’s ability to react. Oracle has put a lot of work into improving IT’s ability to quickly adapt to changing business needs.
PwC: What are some of the things Oracle is doing to help its customers be more agile?
EA: In the past, information technology products have been built with some assumptions about the process running within the organization and data residency. However, now as processes have extended beyond enterprises, many of these assumptions are no longer true. So applications and associated architectures must evolve to be more flexible.
Oracle introduced the Application Integration Architecture [AIA] to enable organizations to be flexible by not making assumptions about which parts of the process Oracle applications execute and which parts of the process occur outside of Oracle applications. AIA gives companies the ability to quickly implement and change a business process that spans
PwC: Do you think SOA [service-oriented architecture] and its promises are adequate for all the flexibility that is needed? Are there other sources of flexibility for enterprise applications?
EA: SOA provides the right architecture to enable the adaptive enterprise. And to achieve the agility that SOA promises, applications not only need to be service enabled, but they need to be modular.
Oracle is delivering capabilities in a modular fashion so customers don’t need the entire platform to take advantage of new functionality. Some examples of this are demand planning, transportation management, or product lifecycle management. These modular applications allow customers to get valuable functionality without having to upgrade their existing ERP [enterprise resource planning] or CRM [customer relationship management] backbones.
Modular applications are just one requirement to achieve enterprise agility. The applications must be able to work together in a cohesive manner despite having different semantics. Oracle has solved this problem with the Application Integration Architecture. What AIA provides is an abstraction layer above the individual applications, which allows companies to quickly develop processes that go across disparate applications and, more importantly, to change processes very quickly.
Let me give you an analogy from the telephony world. Web services provide the dial tone, but once two people or two applications are connected, the challenge is that they may speak different languages. If someone in Germany is talking to someone in China, they may not understand each other because they’re speaking German and Chinese. The semantic definitions we have come up with allow you to translate what one person is saying, so that the other can understand it.
Returning to applications, the abstraction layer allows companies to quickly define processes built on top of the underlying applications and to change those processes without tinkering with the individual applications that are below the abstraction.
PwC: So this abstraction layer is actually mediating between your operational applications—the ERP and other systems of record—and the modular edge applications you just talked about?
EA: That’s right. But it really extends to any application. This abstraction layer is built on open standards and allows you to integrate not only Oracle applications but also non-Oracle applications, such as legacy systems or third-party applications.
PwC: In our research, we have found that a key barrier to agility is the gap that exists between strategy and operations. While strategy stays flexible to respond to changes, operations are standardized for efficiency and harder to change. Does the abstraction layer as you have defined it play a role in bridging the gap between strategy and operations and, if so, how?
EA: Historically, you’re right, and that’s the issue I touched on earlier: a business would want to change its business model, but IT couldn’t react quickly enough. Oracle’s Application Integration Architecture includes process modeling so that a business can model its process and then enact it in the software. When a change needs to be made, the model is changed and that change is then replicated in the software.
PwC: Many enterprises are using performance management applications to track strategy. Can you provide some examples where input from performance management applications drives change in the operational environment?
EA: Performance is incredibly important in today’s economy. Wherever possible, companies need to improve results, and we’re building applications that help them do just that.
For example, we recently delivered two productivity applications called Sales Prospector and Deal Management. These applications make sales reps more effective by proactively pitching products a customer is likely to purchase at the price that brings in the most revenue. Leveraging data mining and analytics, we can predict what one customer would buy at what price, based on purchases made by similar customers.
We use the transaction information that’s already captured in the application system, and the analytics provide the basis for driving changes in operational behavior.
PwC: For the most part, operational applications deal with structured data. How important is it for applications to handle semi-structured or unstructured data or information? And how good do you think it needs to get?
EA: I think it’s a very important area, and I would broaden it. Applications historically have done a very good job in terms of structured process—but what we’re doing now is focusing on unstructured interactions as well as unstructured data. For example, we’ve deployed a technology that we call Secure Enterprise Search—if you think of Google for searching the Internet, Oracle has the equivalent for the enterprise. Through a Google-like interface, you can search for a customer agreement and the system will search the transactional structured data and your unstructured data, irrespective of whether that’s an e-mail or in a document management system or in third-party systems. It will crawl the enterprise—securely—and provide you the data. Security is critical because you don’t want anyone within the enterprise to be able to access any information. That’s just one step we’ve already tackled.
The other step is around unstructured interactions, and here we are borrowing a page from Internet innovations. We’re using the concept of social networking to bring a group of people together in an ad hoc fashion rather than in a hierarchy or in a formal organization. A group could be working on designing a product across different organizations within a company but also actively including customers as well as suppliers.
This approach also brings the equivalent wisdom of the crowd to assessing information—structured and unstructured. Some of the products we’ve released include tools for salespeople that allow them to look at the best presentations for closing business. Another product helps identify the best talent to fill a particular position, whether that person has been recommended by people internally or is a referral that comes from outside of a network. But the point is that it’s similar in the sense that we’re bringing unstructured groups together to bubble their collective wisdom to the top. All of these concepts are very useful for the consumer-focused services on the Internet, and they now apply internally to the enterprise applications that we’re delivering.
PwC: Software as a Service has emerged as a new delivery model for enterprise software. What role does this delivery model have from an agility perspective?
EA: Software as a Service provides agility because it gives enterprises the ability to take advantage of functionality very quickly. Having said that, we believe companies will continue to rely on a combination of Software as a Service and on-premises software for the more complex and tightly integrated business processes, so I really see this as a hybrid approach. And that is where Oracle has an advantage—through AIA we deliver supported integration between on-premises and on-demand software.
PwC: Often the semantics of information is tied to a particular use. Data models or schemas are defined for a particular report and transactions that feed the data model are captured. When the same information is to be used in a new application, new data mapping or transformation is usually necessary. For the sake of agility, do you think it’s important to separate the semantics of the information from its use, so that unintended uses are possible in the future?
EA: I think that’s essentially what we are delivering with the Application Integration Architecture. The attributes we are exposing can be either transaction attributes or analytic attributes. So the end usage, whether it’s a report or a Web service, doesn’t need to worry about where the data is coming from or the access method.
We can do this today for two reasons. First, standards have evolved so that there is enough agreement to drive a quorum for horizontal definitions. Second, and what makes us uniquely able to do this, is our acquisition strategy. We have an unmatched breadth of applications that are not just ERP applications but also CRM and supply chain applications and industry applications, such as telco billing systems, utilities billing systems, activation and provisioning systems, banking deposits, mortgage loan systems, insurance policy administration systems, and on and on in each of these industries. And that means the object definitions we have are very pragmatic and can be considered de facto standards. So it’s really the combination of standards evolving and our unique position with a plethora of applications that means we can define these objects, services, and standards and allow them to be consumed or plugged into other third-party and legacy applications.
The other thing we’re doing is tackling the key processes by industry. I haven’t talked about industries. But generically, for example, processes include order to cash, accelerating the new product introductions, and then customer service and customer resolution. We’re defining those for the telecommunications, utilities, high-technology, and manufacturing industries.
We are being very, very specific, and there’s enormous value to not just the processes but also the semantic layer that we are delivering in what we call a foundation pack. This foundation has the CIOs of many companies across these industries very excited about leveraging this abstraction layer to deliver agility in their companies.