Eaton Mounts Cloud Computing Power Management Offensive

Herve Tardy

Herve Tardy, the vice president and general manager of the Distributed Power Quality Business Unit for $14 billion diversified power management provider Eaton, spoke with CRN Vice President and Editorial Director Kelley Damore and CRN Editor News Steven Burke about the company's new cloud computing power management monitoring tools and its drive to recruit transformative cloud computing providers. Below are excerpts from the interview.

Talk about Eaton's investment to help VARs move from the vintage model to the transformative cloud partners driving cloud computing monthly recurring revenue?

We are really focusing on the transformative and progressive VARs. Our focus is on those VARs moving to the next level.

We looked at the market from a technology standpoint with regard to what are these VARs in need of that they couldn't find from the traditional vendors. Typically anything that had to do with virtualization, the first step to the cloud. There were not a lot of solutions available for that.

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So we invested a lot of time and resources to develop those solutions that would connect into a VMware environment or Microsoft (Virtualization) environment, Citrix XenCenter and Red Hat KVM (Kernel Based Virtual Machine). Not only VMware but everything virtualization.

Step two, moving to the cloud. When we talk about the cloud I am not talking about the public cloud like Amazon or Google. Through the channel we are really focusing on private cloud or hybrid cloud.

We have got the tools, accessories and offerings (for private cloud deployments). We just released a line of racks that are optimized for high density environments making sure the cooling can be optimized.

What percentage of cloud solutions have power consumption monitoring and management?

We have not done a study, but I am pretty sure about the results. It is very low at this time.

Is it less than 10 percent?

I would say less than five percent.

How much can be saved by VARs going in with the Eaton cloud computing power management solutions?

There is a huge opportunity that is difficult to tap at this time for one simple reason: who is managing the power in the company. The power bill is paid by the facility guys. You get this internal struggle with all companies where you get facilities people complaining about IT utility bills going through the roof. And they just don't talk to each other.

The company that succeeds will need to address facilities and IT as part of the same department. I met a few months ago a data center manager who is in charge of the entire infrastructure. So he runs the data center. But he pays the utility bill as well. And this person is extremely concerned about his cost and was trying to reduce the cost tremendously.

This is the issue most companies are facing today. They know they have got a (a power management cost) issue, but they don't know how to address it because the way (internal) budgets are set up does not call for a quick fix.

Those companies that are successful (addressing this issue) will be those companies where facilities reports into the CIO. When you look at a facility, what is your number one cost center: it is the data center. If facilities reports into the CIO, they will be addressing the issue. There is a new concept called DCIM (Data Center Infrastructure Management). Gartner is predicting that by 2016, 60 percent of data centers will be using these type of software tools to manage energy in the data center. Currently they have come up with a market size of $2.5 to $4 billion opportunity.

2015 is around the corner. Software that can really manage the energy consumption in the data center is no more than $100 million (market) today. Last year it was maybe between $80 - $100 million. The opportunity is huge. These are very expensive pieces of software that can sell for hundreds of thousands of dollars. The cost is typically $500 per rack. You go into a very large data center and there are 10,000 - 20,000 racks.

Talk about how Eaton is addressing that with cost competitive software solutions?

We invest a lot in software to be able to sell more hardware.

We invest a lot of resources and R&D into software development. We have something that is more designed for small to medium businesses - up to I would say 100 racks. For 100 racks we sell a solution for $5,000.

The way we try to address the market is we don't want to make money out of software. It is a tool for resellers. Our resellers can take our software and then start to build services that they can charge the customer for.

What is that software called?

Eaton Intelligent Power Manager (IPM). It integrates into VMware VCenter 5.

IT managers are standardizing on few tools to manage their systems. If they get a VMware virtualization system they have standardized on Vcenter. We can simply integrate our software. That is to say our piece of software is just another tab on the dashboard of Vcenter.

How old is IPM?

The first version came out three years ago.

Next: Eaton's Investment In Next Generation Cloud Computing Power Management Tools

How big an investment are you making in next generation software that is going to allow cloud computing power consumption monitoring and management?

Software is one third of my engineering budget. When you talk about power you still need to invest in developing new technologies for UPS (Uninterruptible Power Supply) and PDUs (Power Distribution Units), but in the end what makes the difference, what sells is software. We do have a top notch offering when it comes to UPSes and PDUs, but as I keep on telling my salespeople - don't go to transformative cloud computing VARs and talk to them about product. They could care less about products. What they want to hear is: 'what are you providing to help me (and my customers) solve their business issues.'

The software we develop is really designed for that. We can show the VAR that he can sell this piece of software for his customer's infrastructure and then he will be able to generate the reports to show them how much they are saving in energy power consumption on a monthly basis. And he can charge them five percent of the savings if he wants.

We provide the VARs with the tools to help them build their own value proposition. We are not like a typical cloud provider where this is the menu of the services that you as a reseller can buy and resell. We sell the infrastructure (power management products) to the VAR and then we provide tools for the VAR to build their own recurring revenue service model.

How big a competitive advantage is Eaton's software R&D investment?

It is the biggest differentiator that we have today. What happened is virtualization changed the rules of the game for the power industry. VMware comes in and says it is no longer about shutting down the servers in case of a power problem because I now have got my (VMware) ESX host on top of that.

When we looked at the opportunity we understood that virtualization can do something much better than shutting down gracefully the servers or the VMs or the host. You can enable a live migration of the VMs from Server A to Server B to avoid having to shut down, providing business continuity. That is a game changer. That is why I strongly believe that we can be number one in this industry. And I want Eaton to take the lead. We have been investing to develop these technologies around virtualization and moving to the cloud.

How big a difference will this make for solution providers trying to make the jump from progressive to transformative cloud computing providers?

It is enablement. What we are going to do is to provide our solution providers with the tools to make it prevalent.

Have we moved from a (power protection) marketing to (power management) technology paradigm shift where you will be able to grow market share dramatically?

This is what we are trying to build. We are bringing technology to transform the industry. Everybody today is looking for new solutions.

What this industry has been lacking for years is commitment from the vendors. I have seen in this industry so many vendors come in and invest for one fiscal quarter or two fiscal quarters, and when they don't get the success (they wanted), they back off.

It is going to take six months to onboard your reseller, your solution provider. Another three months for him to place his first PO (purchase order) and another three months for him to become an active solution provider buying on a regular basis. It is a one-year sales cycle (to recruit them) and it is a one year sales cycle to (get them up and running).

Our program has been running at Eaton for the last three years. At the end of the year we will have about 2,000 solution providers in the program. We had to recruit all of them on a one by one basis.

When you talked about the cultural challenges solution providers face with power consumption and monitoring, how is Eaton going to help partners cross the chasm and sell cloud computing solutions?

We need to go beyond I would say the default choice. In order to do that we need to be able to sell technology. We need to sell technology in a way that the solution provider can really adopt and make sense for the IT manager. They don't want to buy product. They want to buy something that addresses their business needs. So what we are putting together right now are quoting tools that solution providers can use to leverage the solutions they are selling.

We are currently developing specific tools for let's say storage virtualization. So they can simply cut and paste the power infrastructure section in their own quotations. I don't believe in big, fancy things because I have seen so many solution providers that have nothing or very few tools.

We need to make it as easy as possible for them. In order to resonate with everything we have discussed before like virtualization and storage, power must blend into the solution - not just a UPS at the bottom of the (technology purchase price) quote.

Next: New Eaton Tools To Help Customers Control Energy Costs

Is that a power consumption quoting tool and measurement solution?

The opportunity first of all is to convince the end user that he needs to buy the right technology that will enable saving energy over time. It is TCO (Total Cost of Ownership). We need to make sure the solution provider has the right tools. And that is where the solution provider has an opportunity to really bring his own value add, to sell his recurring services.

The PDU will be able to provide the power consumption at the outlet level. And the UPS will be able to do the same at the outlet grouping level. That is something Eaton can do that most of the other players cannot. By having this and with software that can generate reports that will be able to export the data in a format that solution providers will be able to use in their (price) quotation systems to sell the service. It is not Eaton that will be selling the service to the end user. The solution provider will take the Eaton tools to sell a recurring revenue service.

So solution providers will be selling a recurring revenue power consumption PDU , UPS outlet level monitoring for the customer much like a managed service. Will Eaton take a percentage of that recurring revenue?

We sell the hardware and then the solution provider can build his own recurring (revenue) model out of that. We will not charge them for anything.

We are leveraging a lot of open source technology and we are a big proponent of open source. We provide our own set of tools to manage Eaton products. If they have APC or other branded tools, we can integrate them into our solutions. If we have not designed the device to really manage it the solution provider can do it themselves if they want to.

Is this an update to Intelligent Power Manager?

It is Intelligent Power Manager. We are doing quarterly updates and we keep on adding new features. In the last round of improvements we added tools to calculate PUE (Power Utilization Effectiveness). The big thing currently is to measure how much power do I bring inside my data center and how much do I waste through the power consumption of servers, storage, UPS. The PUE support gives you all the tools to calculate PUE within the data center.

When will solution provider partners be able to get this new capability?

I think they will have a fairly comprehensive set of tools available in the upcoming release of the Intelligent Power Manager in April. You will have the ability to do these things plus a few other things that are still totally confidential that will enable a key data center issue which is to be able to associate power with IT devices. To be able to track these IT devices.

Virtualization is raising the level of complexity in the data center where IT managers no longer know where their systems are physically located. That SQL database is running somewhere but is it in this rack or that rack. Yesterday it was here, but where is it today? We are developing technologies that will enable the tracking of this, to know real time where is what.

Is that Physical outlet layering monitoring you will be doing?

It is going to be software and firmware based. We don't want to add additional cabling or sensors to be able to track and measure.

Where is the technology going to sit inside Intelligent Power Manager?

Intelligent Power Manager will collect the data. But the data will be tracked and measured at the PDU level. The PDU is the power device that is the closest to the IT system. You can track power consumption on each outlet and know they dynamically get reallocated.

How much would that solution cost an enterprise customer today?

Six figures or more. But that is not what we are thinking about.

Isn't the breakthrough providing power consumption management monitoring at a price performance level that customers and solution providers have never seen before?

Yes. People are aware they have an issue because the data center is running out of power which is happening more often than we believe. We need to fix it and if we can come up with something that is at a price point where it becomes a no brainer I think the adoption will explode.

What is the biggest problem in the data center with regard to power?

It is providing the information. That is the monitoring aspect of it. As long as people don't realize the utility bill costs (this will not change).

Most customers do not realize that in order to run their data center they are consuming three times more energy than what they need to run their manufacturing line. When they realize this they see it's an issue that needs to be addressed. That is how much it costs to run a data center. Eaton has solutions to help them reduce these costs.

Next: The Return On Investment For Eaton's Cloud Computing Power Management

When do customers get a return on the investment for the Eaton technology?

Typically the amount of waste in a data center today is 15-20 percent easily. Once you start to measure and track it, you can easily reduce your operating cost in the data center by 15-20 percent.

In enterprise data centers the operating costs are in the millions of dollars per year. So at 10-15 percent you are talking six figures and the return on investment is immediate.

How much waste is out there on servers in the market born out of the client server revolution?

Do you know what the biggest waste is from an energy standpoint in the data center? It is what we call these orphan servers. Servers that have been put into production three years ago and then for whatever reason the line of business decided to no longer use that server. Because the IT manager has all these servers and does not know what is running on what he keeps the server running and this server is running "empty."

How often does that happen?

Everyday everywhere. Everybody has that. The difficulty is to know as an IT manager if you switch off a server that you are sure you will not affect another line of business.

Eaton will be providing the tools that will help you say- ' I can go press the off button on this server and nobody will be complaining 'This is how you will be saving money.'

You have made deep investments in all virtualization platforms. How important is Eucalyptus?

Cloud computing is the big push for 2012. W have initial solutions for Ubuntu and Eucalyptus. We will be expanding to VCloud for VMware and other platforms to be able to provide a wide spectrum of solutions. We don’t want to be tied with only one cloud platform.

The cloud is evolving. Nobody knows who will be the winner tomorrow so we better spread our investment across the various platforms. We want to pick those platforms that will be adopted en masse by the solution providers.

We are putting a bet on Eucalyptus because they seem to be a partner many people are looking at because it is fairly easy to deploy and inexpensive to operate.

From what you have seen is Eucalyptus getting broad and deep adoption?

The claim is there are 25,000 cloud systems running on that platform. I don't think there are that many private cloud platforms running. The question is 'How did we find out about this platform opportunity?' It is just because we have got an outstanding engineering development team. Most of them are really open-source geeks.