VMware Adds To IT Management Portfolio With Digital Fuel Buy


VMware on Monday said it has acquired Digital Fuel, an Israel-based SaaS vendor whose offerings help service providers keep tabs on IT services usage for billing and infrastructure planning purposes.

Digital Fuel was an early mover in what it calls IT financial management technology, which provides insight into the cost of IT services in shared virtual and cloud environments. Its technology tracks who's using services and whether the services are delivering the value that's expected of them. Digital Fuel's customer list includes Cisco, Dell, GE,IBM, Siemens, Sprint and Wipro, among other large firms.

Terms of the deal weren't disclosed, but the Israel-based news site Globes recently estimated the deal at between $80 and $90 million.

Digital Fuel has deep roots in the enterprise and service provider markets and is highly skilled at outsourcing financial billing and SLA management, according to Ramin Sayar, vice president of virtualization and cloud management products and strategy at VMware. Digital Fuel's ability to track discrete usage in data center environments is particularly appealing to VMware as it barrels headlong into cloud computing.

"Digital Fuel was also born and raised in the cloud," Sayar said in an interview. "They worked with early service providers and customers with outsourced applications, and this experience has helped them measure IT usage more effectively."

VMware has products with a similar multi-tenant focus, such as vCenter Chargeback Manager, which measures usage and provides showback reporting and visibility. With the Digital Fuel deal, VMware "is kicking it up a notch" and providing visibility into infrastructure-as-a-service, platform-as-a-service and end user computing-as-a-service, Sayar said.

Digital Fuel, an existing VMware partner, also brings "a who's who of Blue Chip customers that maps very well to VMware's own customer set," said Sayar, adding that VMware plans to take Digital Fuel's SaaS offerings down-market and extend them to smaller partners.

VMware has built a booming business around virtualization, and now it’s setting its sights on cloud infrastructure, application platform and end user computing, all of which require the kind of functionality that Digital Fuel offers, Sayar said.

"We believe you can't measure what you can't manage. Unless you collect the right level of KPIs that allow you to control and discover financial flexibility, you can't manage the business of the cloud effectively," he said.

VMware has been active on the M&A front in recent months, snapping up social collaboration startup Socialcast and IT managent vendor Shavlik last month, and business presentation startup SlideRocket in April.