The recently announced joint Hewlett-Packard/Microsoft Application-to-Infrastructure Model Partnership has intriguing possibilities for both companies and their respective and overlapping installed customer base. However, it remains to be seen how quickly and efficiently the two industry giants can deliver products and market the merits of the solution. Now $250 million is huge investment even for two high tech powerhouses like HP and Microsoft. So we know this is a serious committment.

To recap, HP and Microsoft said they will invest $250 million into their Frontline Partnership. The deal aims to deliver full, integrated stacks that support Microsoft’s Exchange Server and SQL Server, including management, virtualization and cloud implementations. The resulting product offerings will consist of pre-packaged application solution bundles that incorporate the aforementioned management and virtualization capabilities. The two companies said the pact calls for them to partner on engineering, R&D, marketing and channel sales.
Still, the announcement left many industry watchers with more questions than answers. As my colleagues Charles King and Merv Adrian noted in their Breaking News Review in the January 14 special edition of Charles King’s Pund-IT, HP and Microsoft “have worked closely for years, share tens of thousands of common customers and channel partners and have long supported each other’s interests.”
So what’s new about this announcement? That question should be answered during the coming months. A $250 million investment is considerable even for two high technology titans. It now remains for HP and Microsoft to execute on their promise to produce solutions that thoroughly integrate the two companies’ infrastructure and applications stacks to ship pre-configured and optimized solutions for Microsoft’s Exchange Server, and SQL Server, virtualization, cloud computing converged infrastructure and pre-packaged application tools.
But perhaps the most immediate and daunting challenge is for HP and Microsoft to deliver a product roadmap that also includes specific details about the pricing, training and services the two firms will commonly deliver. Above all, companies must market and sell this deal to the legions of skeptics. The high tech industry has witnessed numerous high profile partnership deals announced amidst much industry fanfare never to be heard from after the initial press releases.
Remember the Cisco Systems/Microsoft Directory Enabled Network (DEN) initiative of the late 1990s? No. Not many people do. Announced with great fanfare, this dream team was supposed to incorporate the functionality of Microsoft’s Active Directory into Cisco routers and provide network administrators with a more comprehensive means of managing various devices on their network. In reality, the Cisco/Microsoft DEN initiative was a partnership on paper only. There are dozens of similar examples. Hence, the skepticism that greets such announcements is understandable.
This is all the more reason for HP and Microsoft executives to follow up on last week’s announcement with quick, decisive action and not just more fodder for the PR Newswire. For example, when can we expect to see the first fruits of the so-called “deeply optimized machine environment” that will provide turn-key, pre-packaged and pre-integrated server, application, networking and storage solutions? Who are the specific target users and how will they benefit? How will Microsoft and HP license and service these products? Those are just a few of the questions that need to be answered.
Non-Exclusive Partnerships Sometimes Make Strange Bedfellows
The partnership also has especially intriguing implications for HP which now has pacts in place with all of the major virtualization providers, including Microsoft’s biggest rival, and VMware. The new HP/Microsoft Application-to-Infrastructure is a non-exclusive three year partnership. It’s worth noting that HP already has a deal in place with VMware, whose ESX Server is the market leader in server virtualization. Microsoft also gets a boost from this deal. Microsoft’s Hyper-V has been gaining ground, particularly among small and mid-sized corporations. However, it has a long way to go to catch up to ESX Server’s installed base, particularly among large enterprises, so this pact helps keep Microsoft competitive. Additionally, HP also delivers a full suite of management solutions that integrates VMware’s vCenter offering with HP’s Insight management product. HP and Microsoft intend to similarly integrate HP’s Insight and Microsoft’s Systems Center. So again, this helps Microsoft broaden the appeal of its virtualization appeal to its existing base and makes it a more attractive solution for prospective customers.
The partnership with Microsoft put’s HP in the proverbial cat-bird’s seat: it now has a full line of its own servers that runs all the VMware products and similar plans to support Microsoft’s SQL Server and Exchange Server. This gives HP the ability to offer a full line of integrated hardware and services customers their choice of virtualization vendors, while remaining agnostic.
From Microsoft’s perspective, the partnership with HP also has immediate value: it allows Microsoft – at least on paper – to keep pace with VMware, by working with HP, a top OEM hardware vendor and services provider, which is no mean feat. Former Microsoft executive Paul Maritz who now runs VMware is intent on rejuvenating that company and he knows that the way to solidify and expand VMware’s influence is to increase its stake in management and applications. Just last week, VMware purchased Zimbra, the open source Email and collaboration unit of Yahoo for a rumored $100 million. Not coincidentally, Zimbra describes its Collaboration suite as the “next generation” Microsoft Exchange server.
Microsoft clearly felt the need to respond in kind.
The plethora of technology and partnership deals such the HP/Microsoft Application-to-Infrastructure pact, serve as a reminder of the intensity of the IT industry’s competitive landscape – particularly in burgeoning markets like virtualization and by extension, nascent markets like cloud computing. No vendor can afford to rest on its laurels. They must continue to upgrade their product and services offerings to keep pace with the competition.
Microsoft and VMware will continue to try and top one another, and HP is the beneficiary of this ongoing rivalry. Let’s hope the end users are also winners, too.

Concerns about cloud computing security and how fast cloud providers will respond in the event technical troubles should arise is making companies hesitant to embrace cloud computing — at least within the next 12 months. An 85% majority of the IT Performance Trends survey subjects say they will not implement a public or private cloud between June 2009 and June 2010. However, of that 85%, 31% say they are studying the issue but have made no decision yet and another 7% are “Unsure.”

Security topped the list of concerns and guarantees that companies would demand from a cloud services provider, if their firms were to implement a cloud model. An overwhelming 83% of respondents said they would need specific guarantees to safeguard their sensitive mission critical data before committing to a cloud. Additionally, almost three-quarters or 73% of respondents would require guaranteed fast response time for technical service and support. Nearly two thirds (63%) of respondents want minimum acceptable latency/response times and a nearly equal number (62%) say they would need multiple access paths to and from the cloud infrastructure.

It was clear from the customer interviews and essay responses that IT managers, especially those companies with fewer than 1,000 end users, will keep their corporate data and applications firmly planted behind the corporate firewall until they have ironclad assurances regarding the security of their data and their ability to access it.

“The idea that I would trust my email, financial transactions, or other day to day business operations to cloud computing is just asking for trouble,” observed an IT manager at a midsized corporation with 500 employees in the Midwest. “I do not even want to imagine my all my users being dead in the water because my link to the Internet was down,” he adds. Another manager at a retail firm with 250 employees expressed reservations about the ability of a cloud services vendor to deliver top notch service and support should the need arise.

“Downtime is the bane of an IT professional’s life,” says the network administrator at a retail firm with 250 employees. He noted that when an onsite and locally managed system fails, he and his IT team can take immediate action to replace parts, rebuild the operating system, restore data from tape backup or perform any other action required to restore services and applications. “Compare that to a failure in a cloud computing scenario, when all you can do is report the problem and hurry up and wait,” he says. “Most IT people are action oriented and they won’t respond well to being at the mercy of a cloud provider while listening to complaints and queries from users and management of ‘When will the system be back up?’ or ‘When can I get access to my data?’”

The director of IT at another midsized company with 400 users opined that he does not yet have confidence in the still-emerging cloud computing model. “We own our data, not the cloud provider, and we need to know it is movable if we need to leave the provider.”

Finally, the survey respondents indicated during first person customer interviews that they will continue to chart a conservative course that includes a very low tolerance for risk until the economy recovers and their companies can once again bolster IT staffs and provide more resources.

Analysis

Cloud computing is still in its nascent stages. It’s common for the hype among vendors, the press and analyst community to outpace current realities in IT, especially in the small and midsized businesses who have smaller budgets and are generally more conservative and risk averse than their enterprise counterparts.

The survey results also showed that there was much more of willingness on the part of larger enterprises to explore, test and deploy a cloud infrastructure. Among corporations with over 3,000 end users, a more convincing 57% percentage said they will either deploy or are considering a public or private cloud implementation over the next 12 to 18 months. Even this group though, is rightfully concerned about the uncertainties of trusting their sensitive data to a public cloud whose provider may be located in a foreign country.

Therefore, it is imperative that cloud computing vendors provide customers and prospective customers with transparency and full accountability with respect to crucial issues like: security, technical service and support, equipment and capacity of their data centers; an overview of the technology used (e.g. specific server equipment, virtualization, management, etc.). The vendors should also provide specific SLA levels and guarantees in the event those levels are not met.

Corporations should also perform due diligence. Get informed. Thoroughly investigate and compare the services and options of the various cloud providers. Know where and how your data will be stored, secured and managed. Ask for customer references. Consult with your in-house attorneys or obtain outside counsel to review proposed contracts. Don’t be afraid to insert out clauses and penalties in the event your cloud provider fails to meet SLAs. Also, at this early stage of development, don’t be afraid to ask for discounts and caps on prices hikes for the duration of your contract.

An overwhelming 85% majority of corporate customers will not implement a private or public cloud computing infrastructure in 2009 because of fears that cloud providers may not be able to adequately secure sensitive corporate data. That is a key result of the latest ITIC survey which polled C-level executives and IT managers at 300 corporations worldwide on IT Performance Trends.

The survey yielded several other surprising results on pivotal issues that can have a direct impact on daily network operations as well as long term strategic goals like lowering total cost of ownership (TCO), managing risk and achieving tangible return on investment (ROI). For example, initial responses and subsequent first person customer interviews indicated that IT managers are finding it difficult and challenging to track basic IT performance metrics. Among the most stunning revelations was that 48% of IT departments – nearly half — do not track security performance metrics. Only 43% of businesses have SLA metrics with clients that are discussed and updated yearly and 51% of organizations are unable to quantify the cost of an hour of unplanned downtime.

ITIC partnered with Stratus Technologies in Maynard, MA, a vendor specializing in high availability and fault tolerant hardware and software solutions, to compose the Web-based survey. ITIC conducted this blind, non-vendor and non-product specific survey which polled businesses on a wide range of IT performance-related trends. Besides cloud computing deployment trends and timetables, the survey also queried users on such topics as IT accountability for network performance metrics; the frequency of moderate and severe network outages; SLA agreements; how IT tracks performance metrics; how well IT and upper management collaborate and whether or not IT departments are able to quantify the hourly cost of downtime.

The Web-based survey consisted of multiple choice and essay questions. ITIC analysts also conducted two dozen first person customer interviews to obtain detailed anecdotal data. Respondents ranged from SMBs with 100 users to very large enterprises with over 100,000 end users. Industries represented: academic, advertising, aerospace, banking, communications, consumer products, defense, energy, finance, government, healthcare, insurance, IT services, legal, manufacturing, media and entertainment, telecommunications, transportation, and utilities. The respondents hailed from 19 countries; 85% were based in North America. None of the survey respondents received any remuneration for their participation.

Survey Highlights

The responses across a wide range of survey topics indicate that IT departments are overwhelming pragmatic; their chief focus is on keeping their networks up and running in the face of budget cuts and diminished staff and resources.

Among the other survey highlights:

• Over four out of 10 organizations — 44% — indicate that management holds IT responsible for meeting defined performance metrics; 31% say that upper management only holds them accountable or voices displeasure when something goes awry and 19% of respondents say their companies do not have formally defined performance metrics.
• On the subject of how businesses track performance, 28% of respondents indicated they do so by the amount of planned and unplanned downtime experienced by IT; another 24% measure performance according to a specific subset of IT operations and systems; 11% are reactive and monitor performance by the time it takes to recover following a service outage; an additional 11% are proactive, monitoring performance in a continuous, programmed fashion throughout the enterprise. Most alarming however is that more than a fifth of the firms represented – 21% – revealed that they don’t keep track of performance.
• In another somewhat surprising disclosure, 46% of survey respondents do not have service level agreements (SLAs) in place compared to 43% who do; 11% of respondents were unsure. However, the ITIC survey responses showed that an overwhelming 84% majority of large enterprises with over 3,000 end users do have SLAs in place. However even in those businesses, collaboration and communication among C-level executives and IT departments is poor. Only 16% of survey respondents noted any regular, proactive communications between IT and upper management.