Sun Services Chief Outlines Channel Evolution Toward Managed Services

With two months under his belt as executive vice president of Sun Microsystems' services unit, Don Grantham says he expects to build on the work of his predecessor, Marissa Peterson. A big part of that strategy is to deliver more pre-emptive services and expand Sun's footprint in the managed services space after its acquisition of SevenSpace, a managed service provider. In an interview with Editor In Chief Michael Vizard, Grantham outlined his approach to partnering with solution providers in managed services and said Sun is mulling a new approach in which hardware would be bundled with services.

CRN: Does your arrival in any way signal a change of strategy at Sun?

GRANTHAM: The strategy hasn't changed at all. We're still focusing on moving toward proactive and pre-emptive services.

CRN: How does that manifest itself?

GRANTHAM: We're focusing on how IT services can become transparent to businesses. We're moving to a model that drives out complexity for the customer. We're replacing the people that are needed to manage that complexity with technology. We believe we genuinely [have] a competitive edge against people like IBM who don't necessarily manage the complexity out. We're making good progress. We're making progress with our preventive service offerings. We're making good progress with managed services. We're confident that that model is going to give us a differentiator. And in the next release of Solaris, we've got automatic connection with every machine that ships with Solaris. So we have an ability to provide services over that connection. We're very confident over time that this business model is going to be the business model that's successful for us.

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CRN: Sun acquired SevenSpace, a managed service provider. So shouldn't partners be concerned that Sun will compete with them for this business?

GRANTHAM: We believe that the model is a journey in the sense that from time to time, a customer will come to us and want us to provide that remote data center support. The customer will decide what he wants. But, equally, there will be lots of times when we continue to partner because the right solution for the customer is a solution offered by us and partners together. From time to time, we partner strongly with integrators, and we work very tightly with them. But there will be, from time to time, instances where the customer requirements dictate that maybe we supply them directly. As long as you've got very open and strong relationships between companies, it's not a problem.

CRN: How will this scenario play out in the channel?

GRANTHAM: We've been talking to our partners about that. I think we'll see the world evolve to a point where IT is a utility that becomes a requirement. The challenge is, what are the business models coming forward in five years' time? I don't think anybody's going to get there in one step. I think there's going to be an evolution, maybe through hosting or managed services. I think there's a lot of money to be made for the channel on that journey.

Partners will start to build services around the utility provisional model. When you get to the end game, countless business models will have to evolve. I see the healthy partners, and the partners with vision making money out of this, both on the journey and at the end point. The question is, where do we play in that business model, and where does that channel play? And the one thing I can say is that the end game for us will be a model where we depend on partner leverage. I don't know whether that's going to be the case with IBM or others.

CRN: What does the Sun-AMD alliance mean in terms of service opportunities for the channel as Sun begins to play more in the volume server space?

GRANTHAM: The AMD business has gone up to the gangbusters in terms of volumes, and that creates some interesting attach models for services in the volume space. We're seeing our attach rates go up, and we're looking at our models now for the right offering to the market at the low end. We have not announced any of this yet; it's sort of a work in progress. We're thinking about it. But maybe it's sort of a subscription offering where the customer buys technology with support services attached as a subscription model that includes the refresh of the technology of the hardware over time. It's almost getting to the point where maybe when the customer does buy the box you're just buying the technical capability that comes out of it. We're looking at that very hard. The technology is evolving to help us to do that.

CRN: How far down the path is the industry toward a true utility computing model?

GRANTHAM: We've had a utility services business for a while, but primarily based around financial offerings rather than true, on-demand computing. It's built more around leases and interesting ways to manage the capital for the customer. We've seen growth in that area probably over the last two years. But the revenue numbers have not been huge. We're at an early stage, really, in the evolution as far as driving revenue. We're offering customers a dollar per CPU per hour, but right now we're running isolated pilots in isolated parts of their businesses. We're talking about highly intensive, batch-type processing. We think we're at a tipping point, but we just don't know how fast wave two will come. To put a time line on it is really difficult. It could be six months, it could be three years.

CRN: How will the ISV community adapt to that change?

GRANTHAM: We're working with them on that very challenge now. The successful ones need to get into the subscription space. The ISVs that we're working with really get it. They really understand that their business models need to evolve.