Utility visions

For utility computing to become a reality, resilient delivery infrastructure coupled with customer confidence in both outsourcing and storing data outside the organisation is required. The channel has a vital role to play.

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By  Stuart Wilson Published  March 31, 2004

Pushing the dream|~|ibmguy.jpg|~|Leo A. Steiner, vice president E-Business On Demand at IBM EMEA|~|The concept of true utility computing is a distant dream. Vendors can go out and evangelise their vision to large account customers, but this marketing message needs to be dissected and split into its constituent parts to create solutions and services that Middle East partners can sell to their customers. Utility computing is a destination but its foundations are built on various IT initiatives that can be sold today. Partners should be pushing the importance of storage projects, the savings from server consolidation and the benefits of integrating separate IT silos. These are the first steps on the road towards the dynamic allocation of IT resources within an organisation, a vital component of utility computing. In its purest form, the concept of utility computing envisages a situation where customers have access to unlimited IT resources whenever they need it; a resource that increases and decreases as demand changes. Like water and electricity, it is delivered through a network or grid and can be turned on and off as necessary. That is the end game that the industry foresees. For it to become a reality, resilient delivery infrastructure coupled with customer confidence in both outsourcing and storing data outside the organisation is required. The major infrastructure and software vendors all have concepts that tap into the vision of utility computing and offer customers a roadmap: IBM has On Demand computing, Oracle has the Grid, HP has its Adaptive Enterprise vision and Sun is pushing the benefits of N1 Grid, its vision, architecture, products and services for optimising network computing. “From an end-user point of view, if you’re calling it utility computing, it should not make any difference whether an IT resource is located internally or externally,” says Ayman Abousief, senior marketing director Middle East and Africa at Oracle. “It is just there when the customer needs it.” Mike Smith, general manager HP Services Middle East, spells out the company’s approach: “HP’s vision of the Adaptive Enterprise involves an IT infrastructure that can adapt and change itself dynamically to the needs of an organisation. What we are seeing in the Middle East is major organisations taking the first steps on the journey towards the end goal. This involves looking at areas such as IT consolidation projects.” “The end goal is a totally flexible IT environment,” he adds. “HP offers services to standardise and consolidate IT environments. The next step is to build in-house IT flexibility. In terms of total cost of ownership (TCO) and return on investment (ROI), we are finding our large customers very receptive to the consolidation story. Across the Middle East, we are approaching a couple of hundred customers with these concepts. Partners are a vital part of this strategy — especially VARs.” All the major vendors share the idea that current internal IT projects in the Middle East represent the first steps on the long road to utility computing. They also believe there is potential for channel partners to get involved — even at this early stage. “We see developments happening in the channel already around utility computing,” says Graham Porter, marketing director at Sun Middle East and North Africa. “We have a partner focused on the banking and telco sectors. It leads the sale with billing or banking applications and what comes behind it is infrastructure improvement and server consolidation. Worldwide, there are over 100 large organisations working with N1 and the whole concept of grid computing is a first step towards utility computing. Oracle is a close partner of Sun’s and both companies’ visions are looking at helping companies deal with latency in IT systems. At the moment it is probably more about selling point solutions in the Middle East.” “We did a seminar in Bahrain recently where we talked about N1, grid computing, blade servers, storage and software,” continues Porter. “We give the market the complete vision but ultimately it does come down to a point solution. But customers do want to hear the vision and feel like they are working with the right vendor long-term. The Middle East market is still very image and brand conscious.” There is some cohesion between the various vendor offerings. While Oracle’s Grid focuses on the application layer, putting in the foundation for load balancing and the dynamic allocation of IT resources, HP’s Adaptive Enterprise offers a strong focus on infrastructure management. For IBM, On Demand is now a concept that extends outside the IT world. “Utility computing is one of the elements that you have in an On Demand world,” says Leo Steiner, VP e-Business On demand at IBM EMEA. “But On Demand covers a much broader spectrum. At the end of the day, it is not just about IT, it is about horizontal integration of all the processes that exist within a company. It also means integration with the supply chain and the route-to-market for an organisation. This is where we position On Demand.” “There are three major areas where On Demand offerings come into play,” he adds. “It could be a business transformation process that involves high level advising from a player such as PwC Consulting. In this case it is a much wider consolidation project that goes beyond IT. The second area is getting the infrastructure in place to deliver the functionality. The third element is the model of delivery and this is where the utility idea comes into play. A customer decides whether he wants to outsource, run systems in-house, or a combination of both models.” ||**||Selling the on demand vision|~|oracleguy.jpg|~|“The main message is of consolidation, standardisation and automation,” says Ayman Abousief, senior marketing director Middle East and Africa at Oracle|~|IBM is pushing hard with the message that On Demand concepts are not just intended for large account customers. “Every customer has a different entry point into this,” adds Steiner. “Some will start on process integration and others will go in looking for a resilient infrastructure. This makes it a really interesting and open discussion for business partners to have with customers. We want the channel to work closely with us in developing the On Demand vision because it is not just restricted to large customers. This is a topic with relevance for all industries, all businesses. We’re bringing structure to business transformation for customers, offering them resilient infrastructure and flexible financing. We are developing distinct offerings and bringing it down to a roadmap — a clear step-by-step process that the business partner can work with the customer on and help them move towards On Demand business models.” Oracle is also striving to communicate the benefits of the Grid computing model and tailor its marketing communications towards the specific needs of end-user segments. “The main message is of consolidation, standardisation and automation,” says Abousief. “This means showing customers the benefits of joining servers together to help reduce their overall costs and IT needs. As this consolidation happens, these companies become ready to start running Grid software and take advantage of the benefits of applications moving freely across servers. Some European research revealed that 50% of CIOs did not actually know server utilisation levels in their organisation. The Grid makes this sort of data transparent to end-users and allows them to manage IT resources more efficiently.” “It is true that a small company with only two servers does not have an infrastructure complexity whereby massive benefits are achieved by linking them together,” explains Abousief. “So we concentrate on explaining to them some of the features in our latest 10g product that form the foundations of the Grid concept. For instance, with 10g, when Oracle release upgrades and patches, the software will check for them itself, tell the customer how it affects their applications and will actually install it as well. These roles are usually the preserve of the database administrator. In large organisations database administrators are able to specialise and build up specific skills. In SMBs with two servers, this sort of knowledge does not always exist. Oracle has put the knowledge of the database administrator in the software and automated processes.” Oracle’s Grid vision is also being presented to channel partners across the Middle East. For ISVs, this means getting them certified on Oracle's latest 10g database and application server software. “With systems integrators, Grid is an excellent concept because it allows them to forget about dependency on complex hardware infrastructures,” explains Abousief. “They can advise on simpler hardware infrastructure and this leaves more of the IT budget for consulting, business process re-engineering and security audit spend. Areas that offer strong margin potential for IT services companies. We understand that these companies want to build long-standing relationships with customers built around IT services provision.” The conceptualisation of flexible computing, adaptive computing, utility computing or whatever preferred term is used, also gives the channel a ‘hands-on’ opportunity to bolster their solution selling skills, move into IT services and reduce their dependence on low margin hardware resell activities. “For large accounts the vendor remains heavily involved,” says Porter at Sun. “We’re pushing the channel to sell more services in the region. It is more profitable and they are facing margins of just 5% on some big boxes of tin.” In Western Europe and the US, the long-term vision of utility computing has a head start in its development courtesy of large accounts propensity to — and comfort with — outsourcing vast swathes of their IT infrastructure to third parties. It allows large outsourcers to co-locate customers’ IT infrastructure in vast data centres and crank up IT capacity when necessary. In the Middle East, the market for IT outsourcing and business process outsourcing remains in its infancy. This represents a significant barrier to some of the more advanced concepts in the utility computing dream. Smith at HP explains the issues: “There is not a great deal of hosting in the Middle East region. Outsourcing has not been an outstanding success so far in the region. The perception among many clients is of a need to manage their own IT assets directly. But HP’s Adaptive Enterprise model allows clients to maintain control of their own data centre. If customers want to flex IT capacity, they need some source of external supply. We’re not at the stage yet where we can do true utility computing in the Middle East although large customers do want to go there eventually. The benefits of HP’s approach are that customers can get immediate ROI through consolidation projects. These projects can be followed by the introduction of the utility data centre concept and the allocation of IT resources dynamically.” ||**||Embryonic hosting market|~|sunguy.jpg|~|“We see developments happening in the channel already around utility computing,” says Graham Porter, marketing director at Sun Middle East and North Africa|~|“Hosting will eventually become much more commonplace in the Middle East,” says Abousief at Oracle. “When it does this will make the Grid more important. Then customers will really be taking advantage of flexible access to IT capacity able to increase or decrease dependent on their needs. Oracle Outsourcing is available in the region and the general feeling is that it will pick up faster in some markets than others. We do not have thousands of companies wanting to outsource today in the region but do include it as an option in customer proposals. Some companies are evaluating hosting for the Oracle Collaboration Suite —especially in the midmarket.” The danger associated with having so many similar, but competing visions, fighting each other for recognition in the market, is that the customer can become confused. It is a problem that the major vendors are well aware of. “If customers are confused by all the various concepts in the market, they can come and talk to me,” declares Smith at HP Services. Oracle’s close global partnership with HP has resulted in a structured explanation of how the Grid and Adaptive Enterprise visions fit together. “Oracle’s Grid concept has significant alignment with HP’s Adaptive Enterprise vision,” says Abousief. “We have worked with HP on a number of customer presentations where we jointly show how Grid and Adaptive Enterprise concepts work well together. IBM has started using the term grid too in its marketing literature. But it is offering to give customers a massive server and charge them more as the number of processors they use rises. It is a ‘pay-as-you-use’ scheme but is more of a financing option as opposed to a true grid system.” “IBM’s On Demand scheme is kind of conceptual,” says Porter at Sun. “But IBM has put together a very strong marketing campaign around On Demand... the concept behind IBM’s instant capacity on demand was to supply servers with more processors than the customer needs,” he continues. “There were legal issues in terms of shipping in the Middle East regarding who pays for the processors and the import tax.” If these obstacles are overcome, IBM’s capacity on demand model can be a compelling proposition for customers. “It offers clear, crisp and defined functionality benefits for the customer. If he needs a 16-bit machine, we put in a 32-bit machine and can switch the capacity on as the customer requires it,” says Steiner. “Whenever you have new concepts like On Demand entering the market, there is always a phase of clarification and mindshare building,” he continues. Once internal IT systems and services are streamlined, consolidated and used as an enabler of core business processes, outsourcing concepts can be aimed at the Middle East market. Only then can external IT suppliers start talking about their ability to raise and lower IT capacity as customers’ demands change — the utility vision. The one aspect of utility computing that should be rolled out internally is the deployment of a grid system that eliminates silos, introduces load balancing and allows organisations to reduce capacity needs through improved IT management. Pushing these concepts require a business-focused sales approach as opposed to a technology-led sales to the in-house IT department. Vendors and partners need to take end-users on a step-by-step journey toward the utopian vision of utility computing. Middle East marketing messages are being adapted accordingly. “The old adage of think global act local applies more than ever,” says Steiner at IBM. “There is some autonomy for the sales and marketing message to reflect the specific needs of customers in a region. We make sure On Demand offerings suit the local channel.” Utility computing will become a worldwide reality, but it remains some years off. In the Middle East, partners need to communicate the vision but concentrate on the practical: projects that can be rolled out today; projects that form the foundations for long-term evolution towards utility computing and offer a compelling TCO and ROI proposition. The utility dream encompasses everything from outsourcing, systems integration, IT consolidation projects and IT management software sales through to high-end business consulting. Partners can paint a picture to the customer but need to sell them products. Show the up-front savings first, then the vision. ||**||

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