Quoting from E-Commerce Times:
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ECT: So looking ahead — and tying it into your title, which includes both virtualization and utility computing — where is HP going? How about the industry?
Vanderzweep: If you look at our virtualization strategy and think about a graph with an X-Y axis, in the bottom right-hand corner, I’d label that element virtualization, that is the first step in virtualization. The middle box would be integrated virtualization, and up in the top corner — nirvanah — would be something we call the complete IT utility.
Element virtualization is absolutely mainstream. It’s hard not to find a customer who hasn’t, on an Intel server, used DM ware to partition that server into two machines. It’s hard not to find a customer who hasn’t put in a storage array instead of dedicated storage on a server-by-server basis. What element virtualization is all about, though, is virtualizing only one thing, cutting a server in half into two logical servers.
The next step on that graph, integrated virtualization, is where the innovation in the industry is now and certainly where our focus is. That’s where Virtual Server Environment [fits]. It uses those virtualization pieces, but instead of saying, “I need to divide this server into two,” it gets a lot of that automation that’s required. You simply say, “I need sub-second response time for my Web retail system, and I need two-second average response time for my ERP system and I need 30 minute turnaround for batch jobs for my HR system for payroll run.”
You tell the control software, the Virtual Server Environment software, the service levels that you need, and then it will keep moving resources around, changing the size of partitions on the fly to meet those service levels. You can see the difference where we were in the past with element virtualization: [There] we cut a 10 CPU server into two CPUs for Oracle, four CPUs for PDA, for instance. With integrated virtualization, you don’t specify CPUs.
When you get to the Complete IT Utility, that’s where all your data centers, all its resources, are automatically flowed to the right application, at the right time; all the server resources, network resources, storage resources and the software is automatically reprovisioned and moved around in a heterogeneous environment — Windows, Linux, HP/UX, whatever kind of operating system. That’s a little bit more complex to do.
We start them with the basic elements of virtualization, move them towards integrated in some projects and get multiple projects together and then finally move them toward Complete IT Utility.
ECT: And this is something HP already is doing for some clients — moving them to Complete IT Utility?
Vanderzweep: Yes. Primarily where we do the Complete IT Utility for a customer that looks at our portfolio of element, integrated and complete, they usually say, “You know HP, I want to go straight to the top right-hand corner — to the Complete IT Utility,” They will also say, “Ed, HP, since you’re already doing this in your datacenter, why don’t you manage my datacenter or outsource my datacenter and give me all those benefits?”
We’ve done things like that and been public about things like that for many customers — DreamWorks, for example, where we manage their infrastructure and, as they produce a film like “Shrek” or “Shrek 2,” they need to render a film, we do that for them and we charge them based on the number of frames rendered in the film. We’ve really connected up to their business.
Amadeus — you’re probably familiar with Sabre in North America, the booking system — does the same kind of thing in Europe. They came to HP and fell in love with the Complete IT Utility. They said, “Ok, we’re in the airline booking industry. We write software to do that. You, HP, are good at infrastructure. We get paid by the likes of Lufthansa — say, 25 cents — every time we book a seat and a customer actually sits in it. HP, you provide us with infrastructure that grows and shrinks based on supply and demand, and we’ll pay you 5 cents every time a customer sits on an airline seat.”
The more business they get, the more we have to scale that infrastructure up. The less business they get, the more we have to scale it down. Predominantly, if people want to go straight to the upper right corner, we do that through our managed service offering. We have huge amounts of customers who are doing element virtualization. I’d be surprised if I could find an enterprise HP customer that isn’t using some kind of virtualization. It’s the integrated stuff that probably 10 percent of our customer base is kicking the tires with. The Complete IT Utility is a smaller amount, but we do have a tremendous amount of business with our managed services group — companies like DreamWorks, Amadeus, Procter & Gamble, Ericsson — where we implement these capabilities for customers using the 400 datacenters that we’ve implemented.
ECT: Who do you generally encounter in competitive situations?
Vanderzweep: We definitely see IBM (NYSE: IBM) in there. Especially when you’re looking at heading off into integrated and the Complete IT Utility, it really requires you to coordinate and automate the provisioning of these resources — server, networking, storage, software — so the likes of HP and IBM are very well diversified in the IT industry, selling servers, storage, networking, etc. At HP, we have the ability to build things like the Virtual Server Environment, coordinate resources or go all the way up to the Complete IT Utility and manage a company’s environment.
We were out there talking about our vision for utility computing some years ago and we’ve brought a whole set of these products to market in the last two or three years, so we’ve got references after references after references. Execution is our biggest differentiator.
ECT: How about some smaller companies? Or companies like Sun?
Vanderzweep: Because this is a highly innovative space you’ll see lots of start-up companies out there that are making some big inroads. One start-up company was acquired by EMC (NYSE: EMC) a while ago — VMware — and they’re a good partner of ours versus a competitor. They provide the ability to virtualize an x86 Intel Opteron-type system and slice that up into smaller systems. They’re an interesting company.
We see a lot of other start-ups out there. I went to a venture capitalist conference a little ways back — this is a popular area for venture capitalists to invest in and for start-ups to design software and hardware around this area. If you look out, there are 50, 100 start-ups that have a unique piece of the puzzle here. Some of them, over the past few years have been bought up. We, ourselves, have acquired Talking Blocks, Consera, Novadigm and a few others to round out our portfolio of capabilities.
ECT: And I guess that underscores the growing mainstream nature of the market?
Vanderzweep: Oh yes, definitely. You’ve got a few other major players in the marketplace that are not as strong as HP or IBM because they’re not as diversified. You hear Sun talking a little bit, but they have a small portfolio of capabilities compared with the likes of HP. I don’t run into those guys very much. I go more head-to-head with IBM.
ECT: You mentioned heterogeneous environments and standardizing procedures and administration, but are there any technology standards issues that CIOs should be aware of when considering moving into or expanding their use of virtualization?
Vanderzweep: There are things like working groups like W3C and Oasis are working on, and we’re heavily invested into those standards organizations. Web services plays a big role in this because they make it much easier for applications to be compatible in this world, to move resources around. So we’ve been key to developing some of the Web services standards.
Grid services are now being built on top of Web services, and we’re very active in standardization of grid services as well. In fact, HP now holds the chair position in the Global Grid Forum. Standards are expensive initiatives, but they’re very fruitful as well, because HP likes to be able to build on top of standards, then add value to provide differentiation to the market place.
It’s the 80/20 rule: 80 percent of what the customer gets is standards-based infrastructure, then 20 percent is value-add on top of that, which really can differentiate them in the industry so they’re better than the company down the street. The more we standardize, the more we put into the 80 percent, allows us to innovate on top of that, and once it’s standardized, it reduces our cost and we can take our engineering efforts, our innovation efforts, and put them on top of that standard. It accelerates the industry. It differentiates us in the marketplace: It’s good for customers. It’s good for us.
ECT: I think every IT executive has a horror story about lack of standardization.
Vanderzweep: That’s always the case. The Virtual Server Environment; nobody else has got that kind of capability in the industry, but it’s built on top of standards. Where we’ve actually built it, we are working with other companies, standards organizations, etc., to try to take a chunk of our innovation and push it into standards organizations as well, so we can say, “Ok, we can now exit out of that area and move on to the next level of capability on top of the Virtual Server Environment.”
For us, our key areas in this space are storage — our storage grid innovations we’ve been talking about, in servers — our Virtual Server Environment, and we did some announcements just last month with virtualization and automation around our blade servers. We’ve worked with our own networking organization, with Cisco and others, on management of virtual networks, and then, of course, driving standards with Web services and grid services, especially through managing that through our OpenView software.