Uncovering Value and Opportunity with Utility Computing

These are exciting times. In today’s rapidly changing business climate and technology shifts, there are many new areas in which we can find value and opportunity. There are ways to change how we procure information technology, how we manage it, and how we consume it. If we were unable to change the features of our mobile phone service for the length of our contract, it probably wouldn’t work out particularly well for us. We want – and sometimes need – to change the features on our phone service – minutes, data, voice mail and more – to accommodate our needs which are constantly changing and in flux. Just like with cable or satellite TV where we might want to change the channels we subscribe to from month to month.

What if we could buy iPads in the same manner? Turning on and off fee-based features as we need them along with a built-in tech refresh (new iPad) every year or two? Better yet, what if we could buy IT services and components like this? Often times IT components are purchased in multi-year leases but we can’t easily change the properties of those components to accommodate what the business wants from IT and when they want it. As a result, the business has to wait, which seems a bit backwards. This is just one of the promises that utility computing holds for us – more flexibility in procurement; offering not just new financial flexibility, but allowing us to “dial up” what we need out of IT on-demand in order to support the mission of the business.

WHAT’S YOUR CORE COMPETENCY?

Chances are that electricity and phone service are not what your organization excels at – so you contract out these services to experts who can offer them for usually a much lower price than you could yourself. With the utility mode of computing, similar economic factors are at work.

Running a datacenter and getting all those networking, computing, and storage layers to work well together and then adding on disaster recovery and more is not inexpensive or easy. But when these elements of IT are contracted out to experts who can operate at scale, per-unit costs will often decrease. Perhaps more importantly, it allows you to increase your focus on what truly matters – your applications, your data, your processes, and of course your business.

THE NEW VALUE PARADIGM

VMware introduced a paradigm shift in IT when it made x86 virtualization an effective solution. Now instead of buying dedicated server hardware for each and every function, we can run multiple servers on the same hardware. The immediate impact of this server consolidation was a reduction in capital expense or CAPEX – there were fewer physical servers, less power and heat, and more ports and space in the datacenter.

But then something else started to happen. Because the servers were encapsulated in this software wrapper, IT departments found even more opportunities to save money in operational expenses, or OPEX. Servers could be provisioned in minutes and new opportunities appeared in everything from monitoring to backups and disaster recovery to significantly improve operations, administrative overhead and associated costs.

We believe that there are many new and emerging opportunities for OPEX improvement with utility and cloud computing models, where more IT elements can now be configured programmatically. This is what VMware refers to as the Software Defined Data Center (SDDC), in which more data center resources will be abstracted so that they can become programmable – even doing things such as provisioning a new multi-tier application with PCI compliance with just a few clicks.


 

However, things REALLY start to get interesting when you’ve built up operational efficiency to where you can begin to position the organization for agility. At this point, IT and the business are working together as strategic partners to get projects launched and completed in less time and with strategic focus and improved efficiency. Often times businesses know exactly what they want to do, but they fail in the execution as projects take too long and opportunities – and revenues — are lost. By evolving the IT organization beyond a cost center and positioning the business for agility, an entirely new level of value becomes available to be captured.

THE END OF THE IT DEPARTMENT?

3248041510_a75b10ebe9_bSome analysts like Forester are predicting that in the coming decade IT departments as we know them will effectively disappear — and the businesses will directly design, build and consume IT systems to support the business — which is the way it should be.  Information Technology should exist to enable the business — not a sub-bureaucracy within organizations which provides resources according to their internal budget and not business value.

VMware ushered in new opportunities for CAPEX and OPEX improvement and now new layers on top of that — including SDN — are ushering in the era of the Software Defined Data Center.  It’s time to stop getting bogged down in specific systems and adopting a vision in which resources can be consumed as a utility and also complement each other in synergy to return the best value.  It’s time to rethink operations, high availability, backups, disaster recovery, storage — and of course how we consume infrastructure.

 

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