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HP’s Ambitious Cloud Computing Strategy: Can HP Emerge as a Power?

February 15, 2011 4 comments

To comprehend HP’s cloud computing strategy you have to first understand HP’s Matrix Blade System.  HP announced the Matrix system in April of 2009 as a prepackaged fabric-based system.  Because Matrix was designed as a packaged environment, it has become the lynch pin of HP’s cloud strategy.

So, what is Matrix?  Within this environment, HP has pre-integrated servers, networking, storage, and software (primarily orchestration to customize workflow). In essence, Matrix is a Unified Computing System so that it supports both physical blades as well as virtual configurations. It includes a graphical command center console to manage resource pools, physical and virtual servers and network connectivity. On the software side, Matrix provides an abstraction layer that supports workload provisioning and workflow based policy management that can determine where workloads will run. The environment supports the VMware hypervisor, open source KVM, and Microsoft’s Hyper-V.

HP’s strategy is to combine this Matrix system, which it has positioned as its private cloud, with a public compute cloud. In addition, HP is incorporating its lifecycle management software and its security acquisitions as part of its overall cloud strategy. It is leveraging the HP services (formerly EDS) to offer a hosted private cloud and traditional outsourcing as part of an overall plan. HP is hoping to leveraging its services expertise in running large enterprise packaged software

There are three components to the HP cloud strategy:

  • CloudSystem
  • Cloud Services Automation
  • Cloud Consulting Services

CloudSystem. What HP calls CloudSystem is, in fact, based on the Matrix blade system. The Matrix Blade System uses a common rack enclosure to support all the blades produced by HP. The Matrix is a packaging of is what HP calls an operating environment that includes provisioning software, virtualization, a self-service portal and management tools to manage resources pools. HP considers its public cloud services to be part of the CloudSystem.  To provide a hybrid cloud computing environment, HP will offer compute public cloud services similar to what is available from Amazon EC2.  When combined with the outsourcing services from HP Services, HP contends that it provides a common architectural framework across public, private, virtualized servers, and outsourcing.  It includes what HP is calling cloud maps. Cloud maps are configuration templates based on HP’s acquisition of Stratavia, a database and application automation software company.

Cloud Service Automation.  The CloudSystem is intended to make use of Services Automation software called Cloud Service Automation (CSA). The components of CSA include a self-service portal that manages a service catalog. The service catalog describes each service that is intended to be used as part of the cloud environment.  Within the catalog, the required service level is defined. In addition, the CSA can meter the use of services and can provide visibility to the performance of each service. A second capability is a cloud controller, based on the orchestration technology from HP’s Opsware acquisition. A third component, the resource manager provide provisioning and monitoring services.  The objective of CSA is to provide end-to-end lifecycle management of the CloudSystem.

Cloud Consulting Services. HP is taking advantage of EDS’s experience in managing computing infrastructure as the foundation for its cloud consulting services offerings. HP also leverages its consulting services that were traditionally part of HP as well as services from EDS.  Therefore, HP has deep experience in designing and running Cloud seminars and strategy engagements for customers.

From HP’s perspective, it is taking a hybrid approach to cloud computing. What does HP mean by Hybrid? Basically, HP’s hybrid strategy includes the combination of the CloudSystem – a hardware-based private cloud, its own public compute services, and traditional outsourcing.

The Bottom Line.  Making the transition to becoming a major cloud computing vendor is complicated.  The market is young and still in transition. HP has many interesting building blocks that have the potential to make it an important player.  Leveraging the Matrix Blade System is a pragmatic move since it is already an integrated and highly abstracted platform. However, it will have to provide more services that increase the ability of its customers to use the CloudSystem to create an elastic and flexible computing platform.  The Cloud Automation Services is a good start but still requires more evolution.  For example, it needs to add more capabilities into its service catalog.  Leveraging its Systinet registry/repository as part of its service catalog would be advisable.  I also think that HP needs to package its security offerings to be cloud specific. This includes both in the governance and compliance area as well as Identity Management.

Just how much will HP plan to compete in the public cloud space is uncertain.  Can HP be effective in both markets? Does it need to combine its offerings or create two different business models?

It is clear that HP wants to make cloud computing the cornerstone of its “Instant-On Enterprise” strategy announced last year. In essence, Instant-on Enterprise is intended to make it easier for customers to consume data center capabilities including infrastructure, applications, and services.  This is a good vision in keeping with what customers need.  And plainly cloud computing is an essential ingredient in achieving this ambitious strategy.

Predictions for 2011: getting ready to compete in real time

December 1, 2010 3 comments

2010 was a transition year for the tech sector. It was the year when cloud suddenly began to look realistic to the large companies that had scorned it. It was the year when social media suddenly became serious business. And it was the year when hardware and software were being united as a platform – something like in the old mainframe days – but different because of high-level interfaces and modularity. There were also important trends starting to emerge like the important of managing information across both the enterprise and among partners and suppliers. Competition for ownership of the enterprise software ecosystem headed up as did the leadership of the emerging cloud computing ecosystem.

So, what do I predict for this coming year? While at the outset it might look like 2011 will be a continuation of what has been happening this year, I think there will be some important changes that will impact the world of enterprise software for the rest of the decade.

First, I think it is going to be a very big year for acquisitions. Now I have said that before and I will say it again. The software market is consolidating around major players that need to fill out their software infrastructure in order to compete. It will come as no surprise if HP begins to purchase software companies if it intends to compete with IBM and Oracle on the software front.  But IBM, Oracle, SAP, and Microsoft will not sit still either.  All these companies will purchase the incremental technology companies they need to compete and expand their share of wallet with their customers.

This will be a transitional year for the up and coming players like Google, Amazon, Netflix, Salesforce.com, and others that haven’t hit the radar yet.  These companies are plotting their own strategies to gain leadership. These companies will continue to push the boundaries in search of dominance.  As they push up market as they grab market share, they will face the familiar problem of being able to support customers who will expect them to act like adults.

Customer support, in fact, will bubble to the top of the issues for emerging as well as established companies in the enterprise space – especially as cloud computing becomes a well-established distribution and delivery platform for computing.  All these companies, whether well established or startups will have to balance the requirements to provide sophisticated customer support with the need to make profit.  This will impact everything from license and maintenance revenue to how companies will charge for consulting and support services.

But what are customers be looking for in 2011? Customers are always looking to reduce their IT expenses – that is a given. However, the major change in 2011 will be the need to innovative based on customer facing initiatives.  Of course, the idea of focusing on customer facing software itself isn’t new there are some subtle changes.  The new initiatives are based on leveraging social networking from a secure perspective to both drive business traffic, anticipate customer needs and issues before they become issues.  Companies will spend money innovating on customer relationships.

Cloud Computing is the other issue in 2011. While it was clearly a major differentiator in 2010, the cloud will take an important leap forward in 2011.  While companies were testing the water this year, next year, companies will be looking at best practices in cloud computing.  2011 will be there year where customers are going to focus on three key issues: data integration across public, private, and data centers, manageability both in terms of workload optimization, security, and overall performance.  The vendors that can demonstrate that they can provide the right level of service across cloud-based services will win significant business. These vendors will increasingly focus on expanding their partner ecosystem as a way to lock in customers to their cloud platform.

Most importantly, 2011 will be the year of analytics.  The technology industry continues to provide data at an accelerated pace never seen before. But what can we do with this data? What does it mean in organizations’ ability to make better business decisions and to prepare for an unpredictable future?  The traditional warehouse simply is too slow to be effective. 2011 will be the year where predictive analytics and information management overall will emerge as among the hottest and most important initiatives.

Now I know that we all like lists, so I will take what I’ve just said and put them into my top ten predictions:

1. Both today’s market leaders and upstarts are going to continue to acquire assets to become more competitive.  Many emerging startups will be scooped up before they see the light of day. At the same time, there will be almost as many startups emerge as we saw in the dot-com era.

2. Hardware will continue to evolve in a new way. The market will move away from hardware as a commodity. The hardware platform in 2010 will be differentiated based on software and packaging. 2010 will be the year of smart hardware packaged with enterprise software, often as appliances.

3. Cloud computing models will put extreme pressure on everything from software license and maintenance pricing to customer support. Integration between different cloud computing models will be front and center. The cloud model is moving out of risk adverse pilots to serious deployments. Best practices will emerge as a major issue for customers that see the cloud as a way to boost innovation and the rate of change.

4. Managing highly distributed services in a compliant and predictable manner will take center stage. Service management and service level agreements across cloud and on-premises environments will become a prerequisite for buyers.

5. Security software will be redefined based on challenges of customer facing initiatives and the need to more aggressively open the corporate environment to support a constantly morphing relationship with customers, partners, and suppliers.

6. The fear of lock in will reach a fever pitch in 2011. SaaS vendors will increasingly add functionality to tighten their grip on customers.  Traditional vendors will purchase more of the components to support the lifecycle needs of customers.  How can everything be integrated from a business process and data integration standpoint and still allow for portability? Today, the answers are not there.

7. The definition of an application is changing. The traditional view that the packaged application is hermetically sealed is going away. More of the new packaged applications will be based on service orientation based on best practices. These applications will be parameter-driven so that they can be changed in real time. And yes, Service Oriented Architectures (SOA) didn’t die after all.

8. Social networking grows up and will be become business social networks. These initiatives will be driven by line of business executives as a way to engage with customers and employees, gain insights into trends, to fix problems before they become widespread. Companies will leverage social networking to enhance agility and new business models.

9. Managing end points will be one of the key technology drivers in 2011. Smart phones, sensors, and tablet computers are refining what computing means. It will drive the requirement for a new approach to role and process based security.

10. Data management and predictive analytics will explode based on both the need to understand traditional information and the need to manage data coming from new sales and communications channels.

The bottom line is that 2011 will be the year where the seeds that have been planted over the last few years are now ready to become the drivers of a new generation of innovation and business change. Put together everything from the flexibility of service orientation, business process management innovation, the wide-spread impact of social and collaborative networks, the new delivery and deployment models of the cloud. Now apply tools to harness these environments like service management, new security platforms, and analytics. From my view, innovative companies are grabbing the threads of technology and focusing on outcomes. 2011 is going to be an important transition year. The corporations that get this right and transform themselves so that they are ready to change on a dime can win – even if they are smaller than their competitors.

Why we about to move from cloud computing to industrial computing?

April 5, 2010 7 comments

I spent the other week at a new conference called Cloud Connect. Being able to spend four days emerged in an industry discussion about cloud computing really allows you to step back and think about where we are with this emerging industry. While it would be possible to write endlessly about all the meeting and conversations I had, you probably wouldn’t have enough time to read all that. So, I’ll spare you and give you the top four things I learned at Cloud Connect. I recommend that you also take a look at Brenda Michelson’s blogs from the event for a lot more detail. I would also refer you to Joe McKendrick’s blog from the event.

1. Customers are still figuring out what Cloud Computing is all about.  For those of us who spend way too many hours on the topic of cloud computing, it is easy to make the assumption that everyone knows what it is all about.  The reality is that most customers do not understand what cloud computing is.  Marcia Kaufman and I conducted a full day workshop called Introduction to Cloud. The more than 60 people who dedicated a full day to a discussion of all aspects of the cloud made it clear to us that they are still figuring out the difference between infrastructure as a service and platform as a service. They are still trying to understand the issues around security and what cloud computing will mean to their jobs.

2. There is a parallel universe out there among people who have been living and breathing cloud computing for the last few years. In their view the questions are very different. The big issues discussed among the well-connected were focused on a few key issues: is there such a thing as a private cloud?; Is Software as a Service really cloud computing? Will we ever have a true segmentation of the cloud computing market?

3. From the vantage point of the market, it is becoming clear that we are about to enter one of those transitional times in this important evolution of computing. Cloud Connect reminded me a lot of the early days of the commercial Unix market. When I attended my first Unix conference in the mid-1980s it was a different experience than going to a conference like Comdex. It was small. I could go and have a conversation with every vendor exhibiting. I had great meetings with true innovators. There was a spirit of change and innovation in the halls. I had the same feeling about the Cloud Connect conference. There were a small number of exhibitors. The key innovators driving the future of the market were there to discuss and debate the future. There was electricity in the air.

4. I also anticipate a change in the direction of cloud computing now that it is about to pass that tipping point. I am a student of history so I look for patterns. When Unix reached the stage where the giants woke up and started seeing huge opportunity, they jumped in with a vengeance. The great but small Unix technology companies were either acquired, got big or went out of business. I think that we are on the cusp of the same situation with cloud computing. IBM, HP, Microsoft, and a vast array of others have seen the future and it is the cloud. This will mean that emerging companies with great technology will have to be both really luck and really smart.

The bottom line is that Cloud Connect represented a seminal moment in cloud computing. There is plenty of fear among customers who are trying to figure out what it will mean to their own data centers. What will the organizational structure of the future look like? They don’t know and they are afraid. The innovative companies are looking at the coming armies of large vendors and are wondering how to keep their differentiation so that they can become the next Google rather than the next company whose name we can’t remember. There was much debate about two important issues: cloud standards and private clouds. Are these issues related? Of course. Standards always become an issue when there is a power grab in a market. If a Google, Microsoft, Amazon, IBM, or an Oracle is able to set the terms for cloud computing, market control can shift over night. Will standard interfaces be able to save the customer? And how about private clouds? Are they real? My observation and contention is that yes, private clouds are real. If you deploy the same automation, provisioning software, and workload management inside a company rather than inside a public cloud it is still a cloud. Ironically, the debate over the private cloud is also about power and position in the market, not about ideology. If a company like Google, Amazon, or name whichever company is your favorite flavor… is able to debunk the private cloud — guess who gets all the money? If you are a large company where IT and the data center is core to how you conduct business — you can and should have a private cloud that you control and manage.

So, after taking a step back I believe that we are witnessing the next generation of computing — the industrialization of computing. It might not be as much fun as the wild west that we are in the midst of right now but it is coming and should be here before we realize that it has happened.

Can Informatica earn a place at the head table?

February 22, 2010 Leave a comment

Informatica might be thought of as the last independent data management company standing. In fact, that used to be Informatica’s main positioning in the market. That has begun to change over the last few years as Informatica can continued to make strategic acquisitions. Over the past two years Informatica has purchased five companies  — the most recent was Siperian, a significant player in Master Data Management solutions. These acquisitions have paid off. Today Informatica has past the $500 million revenue mark with about 4,000 customers. It has deepened its strategic partnerships with HP, Ascenture, Salesforce.com, and MicroStrategies,  In a nutshell, Informatica has made the transition from a focus on ETL (Extract, Transform, Load) tools to support data warehouses to a company focused broadly on managing information. Merv Adrian did a great job of providing context for Informatica’s strategy and acquisitions. To transition itself in the market, Informatica has set its sights on data service management — a culmination of data integration, master data management and data transformation, predictive analytics in a holistic manner across departments, divisions, and business partners.

In essence, Informatica is trying to position itself as a leading manager of data across its customers’ ecosystem. This requires a way to have consistent data definitions across silos (Master Data Management), ways to trust the integrity of that data (data cleansing), event processing, predictive analytics, integration tools to move and transform data, and the ability to prove that governance can be verified (data governance). Through its acquisitions, Informatica is working to put these pieces together. However, as a relatively small player living in a tough neighborhood (Oracle, IBM, SAS Institute,etc. it will be a difficult journey. This is one of the reasons that Informatica is putting so much emphasis on its new partner marketplace. A partner network can really help a smaller player appear and act bigger.

This Marketplace will include all of Informatica’s products. It will enable developers to develop within Informatica’s development cloud and deploy either in the cloud or on premise. Like its new partner marketplace, the cloud is offering another important opportunity for Informatica to compete. Informatica was an early partner with Salesforce.com. It has been offerings complementary information management products that can be used as options with Salesforce.com.  This has provided Informatica access to customers who might not have ever thought about Informatica in the past. In addition, it taught Informatica about the value of cloud computing as a platform for the future. Therefore, I expect that with Informatica’s strong cloud-based offerings will help the company maintain its industry position. In addition, I expect that the company’s newly strengthened partnership with HP will be very important in the company’s growth.

What is Informatica’s roadmap? It intends to continue to deliver new releases every six months including new data services and new data integration services. It will including develop these services with a self-service interfaces. In the end, its goal is to be a great data steward to its customers. This is an admirable goal. Informatica has made very good acquisitions that support its strategic goals. It is making the right bets on cloud and on a partner ecosystem. The question that remains is whether Informatica can truly scale to the size where it can sustain the competitive threats.  Companies like IBM, Oracle, Microsoft, SAP, and SAS Institute are not standing still.  Each of these companies have built and will continue to expand their information management strategies and portfolios of offerings. If Informatica can break the mold on ease of implementation on complex data service management it will have earned a place at the head table.

Why hardware still matters– at least for a couple of years

February 9, 2010 3 comments

It is easy to assume that with the excitement around cloud computing would put a damper on the hardware market. But I have news for you. I am predicting that over the next few years hardware will be front and center.  Why would I make such a wild prediction. Here are my three reasons.

1. Hardware is front and center in almost all aspects of the computer industry. It is no wonder that Oracle wants to become a hardware company. Hardware is tangible. It’s revenue hits the bottom line right away. Hardware can envelop software and keep customers pinned down for many, many years. New generation platforms in the form of hardware appliances are a convenient delivery platform that helps the sales cycle. It is no wonder that Oracle wants a hardware platform. It completes the equation and allows Oracle to position itself as a fully integrated computing company. Likewise, IBM and HP are focused on building up their war chest full of strong hardware platforms. If you believe that customers want to deal with one large brand..or two, then the winners want to control the entire computing ecosystem.

2. The cloud looms. Companies like Amazon.com and Google do not buy hardware from the big iron providers and never will. For economic reasons, these companies go directly to component providers and purchase custom designed chips, board, etc. This approach means that for a very low price, these cloud providers can reduce their power consumption by making sure that the components are optimize for massively scaled clouds.  These cloud vendors are focused on undercutting the opportunity and power of the big systems providers. Therefore, cloud providers care a lot about hardware — it is through optimization of the hardware that they can threaten the power equilibrium in the computer market.

3. The clash between cloud and on premise environments. It is clear that the computer marketplace is at a transition point. The cloud vendors are betting that they can get the costs based on optimization of everything so low that they win. The large Systems vendors are betting that their sophisticated systems combining hardware, software, and service will win because of their ability to better protect the integrity of the customer’s business. These vendors will all provide their own version of the public and private cloud to ensure that they maintain power.

So, in my view there will be an incredible focus on hardware over the next two years. This will actually be good for customers because the level of sophistication, cost/performance metrics will be impressive. This hardware renaissance will not last. In the long run, hardware will be commoditized. The end game will be interesting because of the cloud. It will not a zero sum game. No, the data center doesn’t go away. But the difference is that purpose built hardware will be optimized for workloads to support the massively scaled environments that will be the heart of the future of computing. And then, it will be all about the software, the data, and the integration.

3.

The DNA of the Cloud Power Partnerships

January 15, 2010 2 comments

I have been thinking  alot about the new alliances forming around cloud computing over the past couple of months.  The most important of these moves are EMC,Cisco, and VMware, HP and Microsoft’s announced collaboration, and of course, Oracle’s planned acquisition of Sun.  Now, let’s add IBM’s cloud strategy into the mix which has a very different complexion from its competitors. And, of course, my discussion of the cloud power struggle wouldn’t be complete without adding in the insurgents — Google and Amazon.  While it is tempting to want to portray this power grab by all of the above as something brand new — it isn’t.  It is a replay of well-worn patterns that we have seen in the computer industry for the past several decades. Yes, I am old enough to have been around for all of these power shifts. So, I’d like to point out what the DNA of this power struggle looks like for the cloud and how we might see history repeating itself in the coming year.  So, here is a sample of how high profile partnerships have fared over the past few decades. While the past can never accurately predict the future, it does provide some interesting insights.

Partner realignment happens when the stakes change.  There was a time when Cisco was a very, very close partner with HP. In fact, I remember a time when HP got out of the customer service software market to collaborate with Cisco. That was back in 1997.

Here are the first couple of sentences from the press release:

SAN JOSE and PALO ALTO, Calif., Jan. 15, 1997 — Hewlett-Packard Company and Cisco Systems Inc. today announced an alliance to jointly develop Internet-ready networked-computing solutions to maximize the benefits of combining networking and computing. HP and Cisco will expand or begin collaboration in four areas: technology development, product integration, professional services and customer service and support.

If you are interested, here is a link to the full press release.  What’s my point? These type of partnerships are in both HP’s and Cisco’s DNA. Both companies have made significant and broad-reaching partnerships. For example, back in 2004, IBM and Cisco created a broad partnership focused on the data center. Here’s an excerpt from a CRN article:

From the April 29, 2004 issue of CRN Cisco Systems (NSDQ:CSCO) and IBM (NYSE:IBM) on Thursday expanded their long-standing strategic alliance to take aim at the data center market. Solution providers said the new integrated data center solutions, which include a Cisco Gigabit Ethernet Layer 2 switch module for IBM’s eServer Blade Center, will help speed deployment times and ease management of on-demand technology environments.
“This is a big win for IBM,” said Chris Swahn, president of sales at Amherst Technologies, a solution provider in Merrimack, N.H.
The partnership propels IBM past rival Hewlett-Packard, which has not been as quick to integrate its own ProCurve network equipment into its autonomic computing strategy, Swahn said.
Cisco and IBM said they are bringing together their server, storage, networking and management products to provide an integrated data center automation platform.

Here is a link to the rest of the article.

HP itself has had a long history of very interesting partnerships. A few that are most relevant include HP’s ill-fated partnership with BEA in the 1990s. At the time, HP invested $100 million in BEA to further the development of software to support HP’s software infrastructure and platform strategy.

HP Gives BEA $100m for Joint TP Development
Published:08-April-1999
By Computergram

Hewlett-Packard Co and BEA Systems Inc yesterday said they plan to develop new transaction processing software as well as integrate a raft of HP software with BEA’s WebLogic application server, OLTP and e-commerce software. In giving the nod to WebLogic as its choice of application server, HP stopped far short of an outright acquisition of the recently-troubled middleware company, a piece of Wall Street tittle tattle which has been doing the round for several weeks now. HP has agreed to put BEA products through all of its distribution channels and is committing $100m for integration and joint development.

Here’s a link to an article about the deal.

Oracle  probably has more partnerships and more entanglement with more companies than anyone else.  For example,  HP has a  longstanding partnership with Oracle on the data management front. HP partnered closely with Oracle and optimized its hardware for the Oracle database. Today, Oracle and HP have more than 100,000 joint customers. Likewise, Oracle has a strong partnership with IBM — especially around its solutions business. IBM Global Services operates a huge consulting practice based on implementing and running Oracle’s solutions.  Not to be outdone, EMC and Oracle have about 70,000 joint customers. Oracle supports EMC’s storage solutions for Oracle’s portfolio while EMC supports Oracle’s solutions portfolio.

Microsoft, like Oracle, has entanglements with most of the market leaders. Microsoft has partnered very closely with HP for the last couple of decades both on the PC front and on the software front. Clearly, the partnership between HP and Microsoft has evolved for many years so this latest partnership is a continuation of a long-standing relationship. Microsoft has long-standing relationships with EMC, Sun, and Oracle — to name a few.

And what about Amazon and Google? Because both companies were early innovators in cloud computing, they were able to gain credibility in a market that had not yet emerged as the center of power. Therefore, both companies were well positioned to create partnerships with every established vendors that needed to do something with the cloud.  Every company from IBM to Oracle to EMC and Microsoft — to name but a few — established partnerships with these companies. Amazon and Google were small, convenient and non-threatening. But as the power of both companies continues to –grow,  so will their ability to partner in the traditional way. I am reminded of the way IBM partnered with two small companies — Intel and Microsoft when it needed a processor and an operating system to help bring the IBM PC to market in the early 1980s.

The bottom line is that cloud computing is becoming more than a passing fad — it is the future of how computing will change in the coming decades. Because of this reality, partnerships are changing and will continue to change. So, I suspect that the pronouncements of strategic, critical and sustainable partnerships may or may not be worth the paper or compute cycles that created them. But the reality is that the power struggle for cloud dominance is on. It will not leave anything untouched. It will envelop hardware, software, networking, and services. No one can predict exactly what will happen, but the way these companies have acted in the past and the present give us clues to a chaotic and predictable future.

Predictions for 2010: clouds, mergers, social networks and analytics

December 15, 2009 7 comments

Yes, it is predictions time. Let me start by saying that no market change happens in a single year. Therefore, what is important is to look at the nuance of a market or a technology change in the context of its evolution. So, it is in this spirit that I will make a few predictions. I’ve decided to just list my top six predictions (I don’t like odd numbers). Next week I will add another five or six predictions.

  1. Cloud computing will move out of the fear, uncertainty and doubt phase to the reality phase for many customers. This means that large corporations will begin to move segments of their infrastructure and applications to the cloud. It will be a slow but steady movement. The biggest impact on the market is that customers will begin putting pressure on vendors to guarantee predictability and reliability and portability.
  2. Service Management will become mainstream. Over the past five years the focus of service management has been around ITIL (Information Technology Infrastructure Library) processes and certification. There is a subtle change happening as corporations are starting to take a more holistic view of how they can effectively manage how everything that has a sensor, an actuator, or a computer interface is managed. Cloud computing will have a major impact on the growing importance of service management.
  3. Cloud service providers will begin to drop their prices dramatically as competition intensifies. This will be one of the primary drivers of growth of the use of cloud services. It will put a lot of pressure on smaller niche cloud providers as the larger companies try to gain control of this emerging market.
  4. It is not a stretch to state that the pace of technology acquisitions will accelerate in 2010.  I expect that HP, IBM, Cisco, Oracle, Microsoft, Google, and CA will be extremely active. While it would be foolhardy to pick a single area, I’ll go out on a limb and suggest that security, data center management, service management, and information management will be the focus of many of the acquisitions.
  5. Social Networking will become much more mainstream than it was in 2009. Marketers will finally realize that blatant sales pitches on Twitter or Facebook just won’t cut it.  We will begin to see markets learn how to integrate social networking into the fabric of marketing programs. As this happens there will be hundreds of new start ups focused on analyzing the effectiveness of these marketing efforts.
  6. Information management is at the cusp of a major change. While the individual database remains important, the issue for customers is focus on the need to manage information holistically so that they can anticipate change. As markets grow increasingly complex and competitive, the hottest products in 2010 will those that help companies anticipate what will happen next.  So expect that anything with the term predictive analytics to be hot, hot, hot.

Predicting the future of computing by understanding the past

December 1, 2009 1 comment

Now that Thanksgiving is over I am ready to prepare to come up with predictions for 2010. This year, I decided to start by looking backwards. I first entered the computer industry in the late 1970s when mainframes roamed the earth and timesharing was king. Clearly, a lot has changed. But what I was thinking about was the assumptions that people had about the future of computing at that time and over the next several decades. So, I thought it would be instructive to mention a few interesting assumptions that I heard over the years. So, in preparation for my predictions in a couple of week, here are a few noteworthy predictions from past eras:

1. Late 1970s – The mainframe will always be the prevalent computing platform. The minicomputer is a toy.

2. Early 1980s – The PC will never be successful. It is for hobbyists. Who would ever want a personal computer in their home? And if they got one, what would they ever do with it — keep track of recipes?

3. Mid-1980s – The minicomputer will prevail. The personal computer and the networked based servers are just toys.

4. Mid-1980s – The leaders of the computer industry — IBM, Digital Equipment Corporation, and Wang Laboratories will prevail.

5. Early 1990s – The Internet has no real future as a computing platform. It is unreliable and too hard to use. How could it possibly scale enough to support millions of customers?

6. Early 1990s – Electronic Commerce is a pipe dream. It is too complicated to work in the real world.

7. Mid-1990s – If you give away software to gain “eyeballs” (the popular term in the era) and market share you will fail.

I could mention hundreds of other assumptions that I have come across that defied the conventional wisdom of the day. The reality is that these type of proof points are not without nuance.  For example, the mainframe remains an important platform today because of its ability to process high volume transactions and for its reliability and predictability. However, it is no longer the primary platform for computing. The minicomputer still exists but has morphed into more flexible server-based appliances. The PC would never have gotten off the ground without the pioneering work of done by Dan Bricklin and Bob Frankston who created the first PC-based spreadsheet. Also, if the mainframe and minicomputers had adopted a flexible computing model, corporations would never have brought millions of unmanageable PCs into their departments. Of the three computing giants of the late 80s, only IBM is still standing. Digital Equipment was swallowed by HP and Wang was bought by Getronics.  The lesson? Leaders come and go. Only the humble or paranoid survive. Who could have predicted the emergence of Google or Amazon.com? In the early days of online commerce it was unclear if it would really work. How could a vendor possible construct a system that could transmit transactions between partners and customers across the globe? It took time and lots of failures before it became the norm.

My final observation is actually the most complicated. In the mid-1990s during the dotcom era I worked with many companies that thought they could give away their software for a few dollars, gain a huge installed base and make money by monetizing those customers. I admit that I was skeptical. I would tell these companies, how can you make money and sustain your company? If you sell a few million copies of your software revenue will still be under $20 million — before expenses which would be huge. The reality is that none of these companies are around today. They simply couldn’t survive because there was no viable revenue model for the future. Fast forward almost 20 years. Google was built on top of the failures of these pioneers who understood that you could use an installed base to build something significant.

So, as I start to plan to predict 2010 I will try to keep in mind the assumptions, conventional wisdom, successes and failures of earlier times.

Can IBM become a business leader and a software leader?

November 23, 2009 3 comments

When I first started as an industry analyst in the 1980s IBM software was in dire straits. It was the era where IBM was making the transition from the mainframe to a new generation of distributed computing. It didn’t go really well. Even with thousands of smart developers working their hearts out the first three foresees into a new generation of software were an abysmal failure. IBM’s new architectural framework called SAA(Systems Application Architecture) didn’t work; neither did the first application built on top of that called OfficeVision. It’s first development framework called Application Development  Cycle (AD/Cycle) also ended up on the cutting room floor.  Now fast forward 20 years and a lot has changed for IBM and its software strategy.  While it is easy to sit back and laugh at these failures, it was also a signal to the market that things were changing faster than anyone could have expected. In the 1980s, the world looked very different — programming was procedural, architectures were rigid, and there were no standards except in basic networking.

My perspective on business is that embracing failure and learning from them is the only way to really have success for the future. Plenty of companies that I have worked with over my decades in the industry have made incredible mistakes in trying to lead the world. Most of them make those mistakes and keep making them until they crawl into a hole and die quietly.  The companies I admire of the ones that make the mistakes, learn from them and keep pushing. I’d put both IBM, Microsoft, and Oracle in that space.

But I promised that this piece would be about IBM. I won’t bore you with more IBM history. Let’s just say that over the next 20 years IBM did not give up on distributed computing. So, where is IBM Software today? Since it isn’t time to write the book yet, I will tease you with the five most important observations that I have on where IBM is in its software journey:

1. Common components. If you look under the covers of the technology that is embedded in everything from Tivoli to Information Management and software development you will see common software components. There is one database engine; there is a single development framework, and a single analytics backbone.  There are common interfaces between elements across a very big software portfolio. So, any management capabilities needed to manage an analytics engine will use Tivoli components, etc.

2. Analytics rules. No matter what you are doing, being able to analyze the information inside a management environment or a packaged application can make the difference between success and failure.  IBM has pushed information management to the top of stack across its software portfolio. Since we are seeing increasing levels of automation in everything from cars to factory floors to healthcare equipment, collecting and analyzing this data is becoming the norm. This is where Information Management and Service Management come together.

3. Solutions don’t have to be packaged software. More than 10 years ago IBM made the decision that it would not be in the packaged software business. Even as SAP and Oracle continued to build their empires, IBM took a different path. IBM (like HP) is building solution frameworks that over time incorporate more and more best practices and software patterns. These frameworks are intended to work in partnership with packaged software. What’s the difference? Treat the packages like ERP as the underlying commodity engine and focus on the business value add.

4. Going cloud. Over the past few years, IBM has been making a major investment in cloud computing and has begun to release some public cloud offerings for software testing and development as a starting point. IBM is investing a lot in security and overall cloud management.  It’s Cloud Burst appliance and packaged offerings are intended to be the opening salvo.   In addition, and probably even more important are the private clouds that IBM is building for its largest customers. Ironically, the growing importance of the cloud may actually be the salvation of the Lotus brand.

5. The appliance lives. Even as we look towards the cloud to wean us off of hardware, IBM is putting big bets on hardware appliances. It is actually a good strategy. Packaging all the piece parts onto an appliance that can be remotely upgraded and managed is a good sales strategy for companies cutting back on staff but still requiring capabilities.

There is a lot more that is important about this stage in IBM’s evolution as a company. If I had to sum up what I took away from this annual analyst software event is that IBM is focused at winning the hearts, minds, and dollars of the business leader looking for ways to innovate. That’s what Smarter Planet is about. Will IBM be able to juggle its place as a software leader with its push into business leadership? It is a complicated task that will take years to accomplish and even longer to assess its success.

Tectonic shifts: HP Plus 3Com versus Cisco Plus EMC

November 18, 2009 4 comments

Just when it looked clear where the markets were lining up around data center automation and cloud computing, things change. I guess that is what makes this industry so very interesting.  The proposed acquisition by HP of 3Com is a direct challenge to Cisco’s network management franchise. However, the implications of this move go further than what meets the eye.  It also pits HP in a direct path against EMC with its Cisco partnership. And to make things even more interesting, it also puts these two companies in a competitive three way race against IBM and its cloud/data center automation strategy. And of course, it doesn’t stop there. A myriad of emerging companies like Google and Amazon want a larger share of the enterprise market for cloud services. Companies like Unisys and CSC that has focused on the outsourced secure data centers are getting into the act.

I don’t think that we will see a single winner — no matter what any one of these companies will tell you.  The winners in this market shift will be those companies can build a compelling platform and a compelling value proposition for a partner ecosystem.  The truth about the cloud is that it is not simply a network or a data center. It is a new way of providing services of all sorts that can support changing customer workloads in a secure and predictable manner.

In light of this, what does this say for HP’s plans to acquire 3Com? If we assume that the network infrastructure is a key component of an emerging cloud and data center strategy, HP is making a calculated risk in acquiring more assets in this market.  The company that has found that its ProCurve networking division has begun gaining traction. HP ProCurve Networking is the networking division of HP.  The division includes network switches, wireless access points, WAN routers, and Access Control servers and software.   ProCurve competes directly with Cisco in the networking switch market. When HP had a tight partnership with Cisco, the company de-emphasized the networking. However, once Cisco started to move into the server market, the handcuffs came off. The 3Com acquisition takes the competitive play to a new level. 3Com has a variety of good pieces of technology that HP could leverage within ProCurve. Even more significantly, it picks up a strong security product called TippingPoint, a 3Com acquisition. TippingPoint fills a critical hole in HP’s security offering. TippingPoint, offers network security offerings including intrusion prevention and a product that inspects network packets.  The former 3Com subsidiary has also established a database of security threats based a network of external researchers.

But I think that one of the most important reasons that HP bought 3Com is its strong relationships in the Chinese market. In fiscal year 2008 half of 3Com’s revenue came from its H3C joint venture with Chinese vendor, Huawei Technology. Therefore, it is not surprising that HP would have paid a premium to gain a foothold in this lucrative market. If HP is smart, it will do a good job leveraging the many software assets to build out both its networking assets as well as beefing up its software organization. In reality, HP is much more comfortable in the hardware market. Therefore, adding networking as a core competency makes sense. It will also bolster its position as a player in the high end data center market and in the private cloud space.

Cisco, on the other hand, is coming from the network and moving agressively into the cloud and the data center market.  The company has purchased a position with VMWare and has established a tight partnership with EMC as a go to market strategy.  For Cisco, it gives the company credibility and access to customers outside of its traditional markets. For EMC, the Cisco relationship strengthens its networking play.  But an even bigger value for the relationship is to present a bigger footprint to customers as they move to take on HP, IBM, and the assortment of other players who all want to win.  The Cisco/EMC/VMware play is to focus on the private cloud.  In their view a private cloud is very similar to a private, preconfigured data center.  It can be a compelling value proposition to a customer that needs a data center fast without having to deal with a lot of moving parts.  The real question from a cloud computing perspective is the key question: is this really a cloud?

It was inevitable that this quiet market dominated by Google and Amazon would heat up as the cloud becomes a real market force.  But I don’t expect that HP or Cisco/EMC will have a free run. They are being joined by IBM and Microsoft — among others. The impact could be better options for customers and prices that invariably will fall. The key to success for all of these players will be how well they manage what will be an increasingly heterogeneous, federated, and highly distributed hardware and software world. Management comes in many flavors: management of these highly distributed services and management of the workloads.