October 30, 2006
ISV Takes Road Less Traveled with Grid, On-Demand Solutions
Among the reasons often cited for enterprises not adopting Grid computing is a lack of Grid-enabled applications coming from the ISV community. However, this is not the case with Callidus, whose TrueComp software has for years been providing a Grid-enabled application to companies requiring the utmost performance from their Enterprise Incentive Management (EIM) solution.
For those not familiar with EIM, Callidus president and CEO Robert Youngjohns describes the business problem his company is trying to tackle as one where companies are spending huge amounts of money on incentive compensation -- to both internal payees and external distribution channels -- but rarely have tools that allow them to both make sure payments are accurate and understand the ROI (and other metrics) of these expenditures.
Just how "huge" are the amounts of money being spent? Youngjohns said many Callidus customers have incentive payments as their second biggest line items (after payroll), and he cites a telco customer and an insurance customer who are spending around $3 billion and $ 2 billion per year, respectively, on it. Yet, even with the financial significance of this area, Callidus isn't facing too much competition.
"It's sort of an oddity to us that more software hasn't been thrown at this problem," Youngjohns said. "If you were spending that amount of money in any other aspect ... you'd expect to have a very significant investment in tools to understand what the ROI was." However, this wasn't the case, he added, so Callidus stepped in.
Callidus sees a lot of business from telcos and insurance companies, who often spend between 10 to 15 percent of their revenues of incentive compensation, but has clients in other areas, as well.
As for the TrueComp solution, it does what you might expect in the first layer, meaning automating the payment process to ease that aspect of doing business. It's when you dig a little deeper, though, where Youngjohns believes the application really gets interesting. Once all the data is generated, he said, users have a huge scope of options in terms of analytics -- they can look at everything from which incentive plans worked best to the relationships between payment and performance. This where Grid computing comes in, as large insurance companies might have 200,000 payees, with millions of transactions going through each week -- all of which are processed through hundreds of compensation rules. As one might expect, this creates a rather compute- intensive situation.
Customers usually run this "pipeline" tool, as Youngjohns calls it, a few times per week, and TrueComp allows them to add elements to the grid as necessary, creating scalability on demand. "The way we've got it is very classic Grid architecture," he said. "We create a work element, we pass that work element to the grid processing element, it goes away and processes it asynchronously, and when it's ready it signals a result back into the main server." He noted, however, that even though the software was designed to run in a "classic" Grid environment, customers have experimented, with some physically partitioning large machines into separate grid elements.
But Callidus didn't stop with just offering Grid functionality into TrueComp - - it wanted to go one step further. Youngjohns sees an "on-demand" transition going on in IT right now, with end-users craving pricing models that reflect real usage, not huge upfront payments. In addition, he said, there are a lot companies that simply don't have the IT bandwidth to handle the various applications and infrastructure needs that exist. To meet this demand, Callidus decided to offer its EIM solution on demand on the Sun Grid, which Youngjohns helped develop before leaving Sun Microsystems for Callidus. TrueComp was already an ideal fit for transition to Sun's environment -- a rewrite wasn't even necessary -- and the solution went live in March.
One early customer of Callidus On-Demand was Business Process Management (BPM) provider Hyperion, who possessed the key trait Youngjohns sees in on-demand customers: "IT simply doesn't have the bandwidth to get it done, but the business needs it."
According to Hyperion CIO Dean Drougas, this definitely was the case. "I looked around at the priorities in my organization and where I was going to spend my precious capital dollars," he said, "and we made a decision after talking to Callidus that we wanted to be one of the first to go for it with their on- demand solution." He added that on-demand is a perfect because while EIM is a key part of Hyperion's infrastructure -- it is, after all, how they pay commissioned employees -- it is not a core competency in which he would want to invest his scarce resources.
Drougas also commented that although Hyperion did not previously utilize the Grid capabilities of it's in-house Callidus implementation, he has been very impressed with results since transitioning to Callidus On-Demand. Not only has he noticed a huge increase in throughout when running the pipeline application, but he also has heard from others on his staff that "This thing runs like it's never run before."
What's more, Drougas said, he is able to take advantage of both the Callidus solution and the Sun Grid without investing time or money in learning the inner workings of the software or running a Grid infrastructure. And While Hyperion won't likely be moving it's core applications to an on-demand approach, he said he would love to move more satellite applications there.
"My first choice for many things would be on-demand," Drougas said. "I'm a fan of on-demand, I think it makes sense."
Of course, noted Callidus' Youngjohns, Hyperion isn't alone in its skepticism about moving core applications to on-demand, hosted environments, so Callidus TrueComp is still available in the traditional model, as well. And for those who want to utilize its Grid functionalities, they need not worry about being gouged when it comes to pricing. Youngjohns said TrueComp's pricing is a "per payee" model, with no added fees for the number of CPUs or processors running the software. He believes the number of CPUs running the application is a technology issue, not a licensing issue, and he learned the pitfalls of such a model during his time at Sun.
Youngjohns said Callidus has seen a lot of traction for Callidus On-Demand, though, and he expects to see more as IT bandwidth constraints continue to grow. "People would like to believe [the transition to on-demand is] driven by philosophical requirements or religious requirements, but it's not. It's driven by that simple, pragmatic issue."