Three months ago I joined VCE after working as a research director and industry analyst at IDC, leading IDC Australia’s research teams. For six years as an IDC analyst, I had the opportunity to peer inside leading tech vendors (including VCE), listen to their strategic direction and challenge their rationale behind various go-to-market strategies. After several years of research it became clear that the IT industry is set for what I termed ‘multidimentional transformation,’ where change occurs beyond the technology sphere and into the business itself.
Each year at IDC I would conduct research into the C-suite including the function of the CIO and noticed that over the past few years, the importance of the infrastructure stack became more critical. Prior to the global financial crisis, improving or modernizing IT infrastructure wasn’t in their top 10 priorities. However, as the financial crisis expanded, CIOs appeared to sweat their assets for longer. This was validated by corroborating research that showed prolonged PC and server lifecycles. The significance of this is that as infrastructure ages, it becomes less reliable and more expensive to run so it made sense that infrastructure became a higher priority. However, as the financial crisis passed, the CIO’s focus on infrastructure continued to increase – and fast-forwarding to today, improving or modernizing IT infrastructure is now a CIO’s No. 1 priority. If the financial crisis didn’t explain the increase, what did?
One correlation is the influence of the line of business in IT decisions, which rose with the importance of IT infrastructure. It seems that the line of business was making ever increasingly stringent demands to IT and the CIO, which in turn exerted more pressure on the infrastructure layer.
Wrapped around all these new demands from the line of business came the new watchword: velocity. The market demanded rapid application implementation and streamlined automation. Current infrastructure constrained velocity, so CIOs began to focus on the infrastructure layer to quickly provide new business solutions.
Looking at IT today, it’s fair to say that at a macro level, infrastructure has gone to hell in a handbasket. To grasp how this has occurred, it’s helpful to look to the past to see how we managed infrastructure in the mid-90s.
In the 90s, the cost of management (including staffing) was a percentage of what we spent on our server hardware. Fast-forward to today, the scenario has flipped. Management of the server fleet now costs a multiple of what we spend on acquiring it – management costs are rampant and spiraling out of control.
So what happened? We need to look beyond the physical installed base of servers towards the logical. It’s ironic that the technology that was meant to reduce costs and simplify infrastructure, was actually one of the catalysts behind the crush we are now experiencing: server virtualization.
The impact of virtualisation was that we started to buy fewer servers. This fundamental shift saw a tapering of overall server unit shipments, but this was off-set by a rapidly growing number of logical servers. As we deployed more logical servers, the cost of management soared and the problem was that we continued to manage our logical servers the same way the managed physical servers; we didn’t change our IT operations to match the new capability.
Today we spend $8 on management for every $1 we spend on the server hardware itself1. What’s even more disturbing is that the data for the server market can be replicated for the storage and networking markets too. Something needs to change.
It should be little wonder then that the market for true converged infrastructure (CI) is booming as CI solves many critical management issues that reference architectures and traditional approaches do not. While the general server market remains flat, IDC market research showed integrated infrastructure and platforms sales increased 50% year over year 2. And within this growing market segment, it’s VCE that leads (according to both Gartner and IDC), with Gartner’s latest report showing VCE as leading with over 50% market share.3
The strategy for most IT converged infrastructure vendors is to try and save their clients 10c or even 15c from the $1 they spend on acquiring hardware. VCE on the other hand targets the other side of the equation (where the meaningful savings are made) and aims to save clients $4 instead of 10 or 15 cents. In fact the saving is 68% according to an IDC study into VCE customers, which is actually $5.44 saved from the $8 spent.4
The benefits to the business don’t start and stop with increased efficiency and decreased costs – two of the CFO’s favorite things. The lack of velocity is one of the leading reasons that the lines of business bypass IT altogether. Research into VCE deployments by IDC has shown measurable reductions in the time to stand up infrastructure, from 160 days to 45 days. Additionally, research has shown a 79% reduction in the internal IT staff time to configure, test and deploy the infrastructure.4
As an IT analyst, it was clear that converged infrastructure is the future and VCE is leading the expanding market. But it is the way that VCE approaches the market that truly impressed me. VCE simultaneously solves critical technical and business challenges in such a different way from competitors that the value proposition is unique.
It’s not often that a company strategy and offering intersects so perfectly with an expanding marketplace. Joining VCE and being part of the transformation wave that is sweeping the industry was enough to lure me away from the world of the industry analysis.
1: IDC, Virtualization And Multicore Innovations Disrupt The Worldwide Server Market, Doc #206035, March 2007
2: IDC Worldwide Integrated Infrastructure & Platforms Tracker, October 2, 2013
3: Gartner, Market Share Analysis: Data Center Hardware Integrated Systems, December 12, 2013
4: IDC Whitepaper: Converging the Datacenter Infrastructure: Why, How, So What?, DOC #234553 May 2012