The ongoing buzz surrounding cloud computing – particularly public clouds – is far outpacing actual deployments by mainstream users. To date only 14% of companies have deployed or plan to deploy a private cloud infrastructure within the next two calendar quarters.
Instead, as businesses slowly recover from the ongoing economic downturn, their most immediate priorities are to upgrades to legacy desktop and server hardware, outmoded applications and to expand their virtualization deployments. Those are the results of the latest ITIC 2010 Virtualization and High Availability survey which polled C-level executives and IT managers at 400 organizations worldwide.
ITIC partnered with Stratus Technologies and Sunbelt Software to conduct the Web-based survey of multiple choice questions and essay comments. ITIC also conducted first person interviews with over two dozen end to obtain anecdotal responses on the primary accelerators or impediments to virtualization, high availability and reliability, cloud computing. The survey also queried customers on whether or not their current network infrastructure and mission critical applications were adequate enough to handle new technologies and the increasing demands of the business.
The survey showed that for now at least, although, many midsized and large enterprises are contemplating a move to the cloud – especially a private cloud infrastructure – the technology and business model is still not essential for most businesses. Some 48% of survey participants said they have no plans to migrate to private cloud architecture within the next 12 months while another 33% said their companies are studying the issue but have no firm plans to deploy.

The study also indicates that Private Cloud deployments are outpacing Public Cloud Infrastructure deployments by a 2 to 1 margin. However before businesses can begin to consider a private cloud deployment they must first upgrade the “building block” components of their existing environments e.g., server and desktop hardware, WAN infrastructure; storage, security and applications. Only 11% of businesses described their server and desktop hardware as leading edge or state-of-the-art. And just 8% of respondents characterized their desktop and application environment as leading edge.

The largest proportion of the survey participants – 52% – described their desktop and server hardware working well, while 48% said their applications were up-to-date. However, 34% acknowledged that some of their server hardware needed to be updated. A higher percentage of users 41% admitted that their mission critical software applications were due to be refreshed. And a small 3% minority said that a significant portion of both their hardware and mission critical applications were outmoded and adversely impacting the performance and reliability of their networks.

Based on the survey data and customer interviews, ITIC anticipates that from now until October, companies’ primary focus will be on infrastructure improvements.

Reliability and Uptime Lag

The biggest surprise in this survey from the 2009 High Availability and Fault Tolerant survey, which ITIC & Stratus conducted nearly one year ago, was the decline in the number of survey participants who said their organizations required 99.99% uptime and reliability. In this latest survey, the largest portion of respondents – 38% — or nearly 4 out of 10 businesses said that 99.9% uptime — the equivalent of 8.76 hours of per server, per annum downtime was the minimum acceptable amount for their mission critical line of business (LOB) applications. This is more than three times the 12% of respondents who said that 99.9% uptime was acceptable in the prior 2009 survey. Overall, 62% or nearly two-thirds of survey participants indicated their organizations are willing to live with higher levels of downtime than were considered acceptable in previous years.
Some 39% of survey respondents – almost 4 out of 10 respondents indicated that their organizations demand high availability which ITIC defines as four nines of uptime or greater. Specifically, 27% said their organizations require 99.99% uptime; another 6% need 99.999% uptime and a 3% minority require the highest 99.999% level of availability.
The customer interviews found that the ongoing economic downturn, aged/aging network infrastructures (server and desktop hardware and older applications), layoffs, hiring freezes and the new standard operating procedure (SOP) “do more with less” has made 99.9% uptime more palatable than in previous years.
Those firms that do not keep track of the number and severity of their outages have no way of gauging the financial and data losses to the business. Even a cursory comparison indicates substantial cost disparities between 99% uptime and 99.99% uptime. The monetary costs, business impact and risks associated with downtime will vary by company as well as the duration and severity of individual outage incidents. However a small or midsize business, for example, which estimates the hourly cost of downtime to be a very conservative $10,000 per hour, would potentially incur losses of $876,000 per year at a data center with 99% application availability (87 hours downtime). By contrast, a company whose data center operations has 99.99% uptime, would incur losses of $87,600 or one-tenth that of a firm with conventional 99% availability.
Ironically, the need for rock-solid network reliability has never been greater. The rise of Web-based applications and new technologies like virtualization and Service Oriented Architecture (SOA), as well as the emergence of public or shared cloud computing models are designed to maximize productivity. But without the proper safeguards these new datacenter paradigms may raise the risk of downtime. The Association for Computer Operations Management/ Data Center Institute (AFCOM) forecasts that one-in-four data centers will experience a serious business disruption over the next five years.
At the same time, customer interviews revealed that over half of all businesses 56% lack the budget for high availability technology. Another ongoing challenge is that 78% of survey participants acknowledged that their companies either lack the skills or simply do not attempt to quantify the monetary and business costs associated with hourly downtime. The reasons for this are well documented. Some organizations don’t routinely do this and those that attempt to calculate costs and damages run into difficulties collecting data because the data resides with many individuals across the enterprise. Inter-departmental communication, cooperation and collaboration is sorely lacking at many firms. Only 22% of survey respondents were able assign a specific cost to one hour of downtime and most of them gave conservative estimates of $1,000 to $25,000 for a one hour network outage. Only 13% of the 22% of survey participants who were able to quantify the cost of downtime indicated that their hourly losses would top $175,000 or more.

Users Confident and Committed to Virtualization Technology
The news was more upbeat with respect to virtualization – especially server virtualization deployments. Organizations are both confident and comfortable with virtualization technology.
72% of respondents indicated the number of desktop and server-based applications demanding high availability has increased over the past two years. The survey also found that a 77% majority of participants run business critical applications on virtual machines. Not surprisingly, the survey data showed that virtualization usage will continue to expand over the next 12 months. A 79% majority – approximately eight-out-of-10 respondents — said the number of business critical applications running on virtual machines and virtual desktops will increase significantly over the next year. Server virtualization is very much a mainstream and accepted technology. The responses to this question indicate increased adoption as well as confidence. Nearly one-quarter of the respondents – 24% say that more than 75% of their production servers are VMs. Overall 44% of respondents say than over 50% of their servers are VMs. However, none of the survey participants indicate that 100% of their servers are virtualized. Additionally, only 6% of survey resp

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.