Moving Up Requires Tech Savvy
To paraphrase political strategist James Carville, "It's the technology, stupid."
From top to bottom, the one thing VARBusiness 500 solution providers understand is the opportunity nestled in the enterprise's desire to leverage technology to lower costs, grow business and access growing amounts of data in shorter amounts of time. Technologies such as server and storage virtualization, VoIP, service-oriented architectures (SOAs), security and mobility--as well as applications (business intelligence, CRM and ERP)--are all driving sales and revenue.
Here is a look at some of the leading technologies and product sets that are racing off the shelves at VARBusiness 500 companies.
The Virtual Data Center
Virtualization is becoming a universal theme for successful VARs. While the technology has different definitions, simply put, virtualization lets storage devices and servers share capacity without interrupting production. Long the subject of unrealized hype, many enterprises are finally beginning to virtualize storage (notably SANs and NAS) and servers.
VMware has quickly become a key enabler of virtualization. Meanwhile, Microsoft is touting its own Virtual Server product set to be built into the Windows server and client (Vista) operating systems.
Jeff Wacker, futurist and a fellow at Electronic Data Systems (VARBusiness 500 No. 2), points out that, until recently, companies would engineer their server loads anywhere from one-and-a-half to two times their peak transactions. Now for many, it's at 10 times and rising, Wacker says.
"They know they can't continue to scale the servers beyond this 10x flex factor," he says.
This isn't the case in all organizations, but many that are transaction-oriented, such as retail and financial services, are feeling the pinch. The largest enterprises are looking at utility computing where they can acquire capacity on the fly and pay for it as needed. That is typically being done via a hybrid of in-house systems and hosted capacity.
Outside the mainframe world, virtualization remains in its early stages. Truly virtualized data centers at the industry-standard level, however, will be those that can predict changes in business conditions, as well as system capacity, and automatically react to those changes. Many vendors that have delivered pieces of this call it self-healing technology, or autonomic computing.
"A lot of the underlying technologies exist to add capacity in a virtualized environment," says Kris Domrich, a principal consultant at Dimension Data (No. 34). "What you are doing is choosing metrics to monitor and make decisions based on whether or not capacity should be added. But also, when things have slowed down to the point where capacity can be removed, it can be put back in the shared pool. It needs to work both ways."
NEXT: The rise of SOAs, plus open source's continued upward trend.
The Rise of SOAs
Just as virtualization is giving VARBusiness 500 companies an opportunity to provide customers with more flexible server architectures, SOAs are doing the same for software. As Web services have evolved into SOAs, software can now be broken down into pieces of code to be called on and updated as needed.
Many enterprises are finding the need to at least start thinking about the move to SOAs, EDS' Wacker says.
"You have applications in silos, and traditional languages just don't cut it anymore," Wacker says. "To go back and have to re-engineer those legacy applications in a very rapid-change environment, you can't do it. You just are taking too much time because the systems are not built for change. Architecting this [SOA schema] allows you to build for change."
When looking to add more dynamic business functionality and the ability to implement new processes, SOAs sometime come at the expense of ripping out legacy systems, though in many cases they allow solution providers and customers to overlay an application infrastructure that they can populate with the new business processes. The latter is most likely used with monolithic, vertically oriented systems.
Many VARBusiness 500 companies foresee a significant shift away from two-tier client/server applications and three-tier Web architectures into SOAs because of SOA's adaptability to other software and support for building of applications on the fly.
Indeed, many early ERP adopters will be looking to upgrade their systems. In many cases, these client-server systems are so monolithic that many will rip them out and look to avoid the customization that made updating the legacy systems too complex and costly.
"It's forcing some choices," says Andy Daecher, a partner with Deloitte Consulting (No. 23). "Most of the time they are staying with their incumbent vendors, but in many cases when they realize what it will cost, at least they are entertaining the idea of a switch."
Why not just leave the systems as they are? Because many of the applications are no longer supported, and companies rely on legacy systems to run their financials, HR and other critical functions of their businesses, experts say.
Open Source Continues Upward Trend
There is definitely a correlation between the growth of SOAs, blade centers and Linux. A growing number of customers are opting to deploy x86-based servers in their data centers powered by Linux, a trend sparked by the move away from proprietary RISC servers to the x86 platform.
Many enterprise customers are now trying to determine whether to go with Linux or Windows. If the application doesn't require Windows, many are going with Linux because it's less expensive and, in many cases, more scalable.
The problem is, there are hardly any margins for server hardware these days, while Microsoft and Red Hat don't have much to offer in terms of incentives to hardware providers, says Jeff Reed, CTO of Logicalis (No. 83).
That means more and more VARBusiness 500 companies--particularly those that have relied on product sales--are building better services offerings.
"If you want to do a server consolidation to x86 and you want to know whether to go with Microsoft or Linux, you have to pay for that consulting service," Reed says.