Flipping The Switch: Solution Providers Consider Utility Model With Caution

Hewlett-Packard, Veritas Software, Computer Associates International, Microsoft and IBM all separately launched or bolstered their strategies for utility computing, a concept seen as one underpinning for the Holy Grail of on-demand computing. Utility computing is aimed at pooling IT resources,especially servers and storage,so they can be allocated and deallocated automatically as needed. The goal is to turn IT resources into a "utility," much like electricity or telephone service, so users can be charged for the amount of computing resources they actually use.

HP trumpeted its Adaptive Enterprise initiative last week with an appeal to a very specific enterprise concern,return on investment. "This does not require companies to throw everything out and start over," said HP Chairman and CEO Carly Fiorina. "This is a state of fitness that can be achieved in a step-by-step methodical way."

HP's strategy, of course, will compete head to head with similar game plans from its fiercest rivals. Sun Microsystems' approach is anchored by its N1 initiative, introduced earlier this year. IBM, meanwhile, has been testing capacity-on-demand with its pSeries servers. Last week, IBM introduced two new pricing options that build on that approach, which is just one part of its overarching e-business on-demand vision.

Microsoft's Dynamic Systems Initiative, discussed last week at its Windows Hardware Engineering Conference (WinHEC), is expected to be hardware-agnostic, but it is based on Windows.

Meanwhile, CA and Veritas,which do not have their own hardware platforms,are offering their experience working across multivendor platforms and operating systems as a point of differentiation when it comes to offering storage-on-demand functionality.

Although all of the strategies are heavy on hype and light on actual products, end users and solution providers say they are open to the concept.

Anthony Nguyen, director of network services at Pomona College, Claremont, Calif., said he has been keeping an eye open for tools to allow automatic provisioning of storage but has yet to find anything suitable. "I'm getting mixed signals," Nguyen said. "Some people say virtualization is still a lot of hype, while some say we are close to it becoming a reality. At least it's better than last year, when there was definitely a lot of hype."

Pomona College has pooled its storage into a SAN but manages it as if it was direct-attached storage, Nguyen said. "It's pooled, but there's no easy way to virtualize it or grow it easily or make it available to other servers," he said. "There's no way to partition the storage easily. Adding in a new server or array requires a lot of manual work."

Solution providers are approaching the model warily until more components actually become available.

Mike Mogavero, executive vice president of sales at Data Systems Worldwide, a Woodland Hills, Calif.-based solution provider that has a Network Operations Center and sells some software on a per-user basis, is excited about the utility computing concept. But he said there are a lot of sales issues that need to be worked out before it can take hold.

For one, Mogavero sees a disconnect between the on-demand strategies being driven at the CEO level and the sales compensation models at the account level.

"From a licensing standpoint, my customers like the idea of paying as you go in a utility model, but oftentimes vendor comp plans don't align with the goals behind the on-demand pricing models," he said. "There are a lot of accounting and comp-plan model issues that have to be taken care of before it can be successful."

Grady Crunk, executive vice president of Central Data, a Titusville, Fla.-based solution provider, said he expects products and services related to on-demand computing to account for single-digit revenue this year. But this could jump to as high as 30 percent of sales by late next year, he said.

"You can't afford not to do it when you look at the cost structure vs. the old-fashioned model," he said.

Crunk said, however, that most vendors interested in the on-demand model have failed to put together programs that encourage solution providers to represent their strategies. "You need solution providers to show businesses how this is going to make a difference, how it is going to increase their productivity and tie everything together with anytime, anywhere access," he said. "Vendors have to understand that it doesn't matter how much you talk about on-demand, you need solution providers to show businesses how it fits in with their business and to piece the whole thing together."

A source at one large systems integration and outsourcing firm said his firm is looking to build a service around utility-based computing to offer on-demand capacity to its clients.

"All of our clients are interested in it," the source said. "If I can automatically provision, flex and repurpose systems, my price should be lower to [customers] because my costs are lower. It will be a competitive advantage for us, a differentiator."

On-demand technology from vendors such as IBM, HP and Sun is still relatively immature, but early implementations are showing promise in areas such as automated system provisioning and repurposing, the source said.

The buzz about utility computing has been heard since the mid-1990s, especially from platform vendors including HP, IBM and Sun,all of which are concerned with finding ways to ensure their hardware and software remain at the heart of customers' IT infrastructures. But the push toward utility computing has taken a new twist in the past six weeks, with Microsoft, CA, Veritas and EDS all placing their visions on the table.

The existence of multiple utility initiatives may mean more choices, but customers' existing infrastructure is likely to dictate which approach they might use, solution providers said.

Hank Johnson, vice president of the Infrastructure Solutions Group at Stonebridge Technologies, a Dallas-based Sun and Veritas partner, said both vendors' offerings go far in terms of simplifying customers' infrastructure.

"The difference is that the Veritas pitch is based on middleware in the heterogeneous-compute world," he said. "With the N1 pitch, as you look at the Sun environment, you see many of the same things as in the Veritas pitch. But they're for the Sun environment."

Which vendor wins a deal will depend on the customer environment, said Rich Baldwin, president and CEO of Nth Generation Computing, a San Diego-based HP and Veritas partner. "Some customers run on the HP model, with HP and ProLiant servers, HP storage and so on, and HP's Adaptive Enterprise model makes sense," he said. "But if the customer has a mixed environment, such as HP for Oracle and [other] mission-critical applications, Microsoft Exchange and Sun for engineering, Veritas offers the advantage of vendor neutrality."

Some of the recent activity was sparked by acquisitions of smaller vendors specializing in virtualization of storage and server resources. Sun and Veritas have made two such acquisitions each since September 2002. And Microsoft got its server virtualization technology when it acquired Connectix in February.

The jockeying has not been limited to broad initiatives, and some vendors are testing the waters with point strategies. Oracle, for one, has introduced on-demand versions of some of its applications for the ASP market. And several vendors are testing grid computing solutions related to dynamic data center technology.

Jennifer Hagendorf Follett, Elizabeth Montalbano, Amy Rogers Nazorov, Barbara Darrow, Paula Rooney, Edward F. Moltzen and Steven Burke contributed to this story.