Utility or futility?
Utility or futility?
Stuart Finlayson recently caught up with Jeremy Burton, Worldwide Chief Marketing Officer for Veritas, in New York, to get his views on the most hyped development of the last year-utility computing, and to find out how long he thinks it will take users to reach this IT utopia and who will help them get there.
Utility computing'-closely challenged by 'Information Lifecycle Management'-has been the most touted phrase in the IT industry in recent months. Veritas has been no different to other leading storage vendors in that regard, espousing the latest trend with some gusto.
As Worldwide Chief Marketing Officer for Veritas, much of Jeremy Burton's last few months have been spent telling customers and the media alike that utility computing is the way ahead.
"Just like you had mainframe, client server and Internet, I think utility is a computing model that IT departments are going to drive towards," says Burton.
But isn't it fair to argue that a clear definition of what utility computing will deliver, and more importantly, when it will deliver, has been somewhat lost in the scramble to declare it as the next big thing?
"There's a lot of confusion around utility computing-what it is and what it isn't. We have a fairly simplistic view of it. We think that, by and large, the CIO will own the utility, so it will be in-house and it's going to change the way the CIO delivers applications to the business units."
So despite all the trumpeting about utility computing from the direction of the vendors, it won't necessarily be a vendor driven phenomenon?
"The key thing is that it is ultimately the CIO that is going to decide how and when they make this leap to utility computing, rather than the vendors. Certainly, there is a lot of hype in the marketplace and a lot of learning and understanding going on, but they (CIO's) have got an existing infrastructure in place today."
Much has been made of vendor consolidation in terms of how it will drive utility computing, as well as the detrimental effect that having a choice of fewer market players to choose from will have on the user. While acknowledging that vendor consolidation is very much evident, Burton suggests that the extent of consolidation is such that the user is still left with an abundance of choice.
"Looking at the bigger companies, they have at least two or three providers of servers, operating systems, storage and the like. Although it is true to say the supplier list is consolidating, it is consolidating from 100 to around 20 or 15, and they are still going to need vendors that can maximise the availability and performance of a system from top to bottom and improve the utilisation of the storage devices."
Perhaps unsurprisingly, given Veritas' position as an out-and-out software developer and provider, Burton is somewhat dismissive of hardware vendors that are increasingly trying to muscle in on their patch and sell software too in the face of diminishing returns on hardware, arguing that the success-or lack of it-of previous attempts by hardware vendors to do likewise is there for all to see.
"Very few people buy software from the same company they buy their hardware from. Hardware companies over the years that have tried to become software companies as well have generally failed. Sun has been on about this for a long time and HP has had a couple of tries at it.
"The only company that has made that transition is IBM, but they went much more from hardware to services and their big push is services in order to own that relationship with the customer and hopefully for them that drags a bit of the software and hardware sales behind it. IBM is a unique beast in many ways though as it is essentially eight companies in one. For instance, IBM Global Services probably resells as much Veritas software as any of our other partners, so they are a competitor but they are also a channel to market for us.
"Storage hardware margins are being killed. I have a chart that shows if you follow the curve down that the cost of storage gets to zero dollars per megabyte by 2011, which is not that far away, so the margins in hardware are under severe pressure. Because you don't manufacture anything or hold inventory, the margins on software are typically a whole lot better than hardware."
Burton says that, for the most part, CIO's have got a very mixed environment right now, and they are looking to vendors to help them go from where they are today on this road towards utility computing. "It is definitely a model for computing that they want to head towards." But why?
"Customers want to move towards this model because it allows them to give more accountability for the services they provide and allows them to charge back business units for usage, and that's what they want."
That is not to say that companies are about to throw the baby out with the bathwater."I think that enterprises are going to take a very pragmatic approach towards this, rather than rip out stuff and replace it."
Regulatory compliance is set to cast a large shadow over the IT budgetary plans of CIOs in the coming months, owing to the fact that it was virtually impossible to predict years in advance and has as such not been factored into the overall IT spend of corporates.
"Most of the world's large corporations are multi-nationals, so this is where laws that are enforced rigidly in one country tend to have a huge impact in other countries.
"This has been a total curve ball that came out of nowhere. The compliance angle was not budgeted for, and CIOs by and large are being asked to put strategies in place with little or no incremental budget. It's not even as if it's something that's nice to have-as we hear more and more stories of executives getting locked up, it is a must have."
Having had the opportunity to work closely with people involved in advising enterprises on what steps they should take to meet the regulatory requirements, what does Burton think of the current state of backup systems in the average enterprise?
"Typical systems today are very fragmented. The response is typically very uncoordinated and piecemeal. You will get the legal department on the phone looking for all the information on something and when they need it by is never six months time - it's more likely to be by the end of the week."
Obviously, this can prove very problematic, if not catastrophic, if your enterprise happens to get the dreaded knock on the door.
"When the government comes looking for information, they tend to do so at the drop of a hat and they tend to expect a response very quickly, which wreaks havoc, not just in IT, but across the business.
"Therefore, what we are starting to see is organisations saying that this is clearly a big issue, as people are getting locked up, and if they keep going the way they're going then it will cost them a fortune which is then going to disrupt the core business. Right now it is a mess. Companies are scrambling and there is little to no incremental budget. It is being driven by the boardroom."
And so to Veritas, and where it envisions its areas of growth to be. Again, that word 'compliance' crops up.
"Compliance is a new business driver in what is a mature market of data protection. Secondly, it's very closely related to backup and recovery.
"We have half the backup market and if we could index those backup tapes and build an archive for future retrieval that would be a natural extension to our existing business. The fact that it is so closely related to our core business means it is a great growth opportunity. We are not really dependant on it today though, as it wasn't that big a deal six months ago. It's more of an incremental upside for us."
So what about diversification? After all, it rarely pays to put all your eggs in one basket. "We already have a strategy to diversify our portfolio. We are now into server automation and application performance, through the acquisitions of Jareva Technologies and Precise Software respectively.
"I think what you want to do with a company our size is to place a number of bets. We definitely have a stack of chips on the compliance area. We also think application performance and server management are good bets as well. We don't necessarily need them all to come in, but would be nice if one or two of them came in because that's how we will get Veritas from where we are today, which is a nigh-on US$2 billion company to a three, four or five billion dollar company."
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