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Friday, December 17, 2004

Bill Coleman on Utility Computing -Part I

Bill Coleman, co-founder and former CEO of BEA Systems, is back in the game. Coleman was the original chairman and CEO of BEA, the company he co-founded in 1995 with Ed Scott and Alfred Chuang. Under his leadership, BEA became the fastest-growing software firm ever to exceed $1 billion in annual revenue. He has recently launched a new company called Cassatt, which promises to deliver next-generation systems management tools, and shall begin shipping tools for utility computing architectures built atop Windows and Linux servers. In an interview with CRN Editor In Chief Michael Vizard, Coleman says a new era of commodity-based computing means greater opportunity for business-savvy solution providers and doom for incumbent vendors such as IBM. Excerpts (with edits and my views added)

Background Note: High performance computing (HPC) has benefited greatly from Moore's Law and the commodity economics driving microprocessor development. Where HPC workloads once required expensive high-end proprietary systems, today organizations are building systems with hundreds or thousands of commodity processors that meet HPC demands and fit well within typical budgets.The commodity hardware trend has created a need for scalable system software to manage resources for HPC installations. The challenge: effectively configuring and managing hardware platforms, while scaling to hundreds or thousands of processors.Thats where Cassat fits in.

What is driving all the interest in utility computing: In the overall market, the big drivers are to rationalize operational expense and capital expense and generally figure out how to do better with what you have. This is driving the automation of IT operations, which is something that has never really been done.

The impact on the overall trend: This is about the commoditization of computing, period. We're starting with the commoditization of the hardware. But ultimately, probably in the next decade, we'll see the commoditization of software around Web services and not applications. On the software side, it will mean the disintegration of monolithic applications.

Impact on vendors: On the hardware side, only the commodity players win. When an infrastructure can be simple enough to use and powerful enough to scale, it eliminates all of the problems of high-scale management while providing guaranteed quality of services and business agility. That will eventually be provided by the most-commoditized players, which are the ISPs and the telco service providers. In doing it, they will drive out both the hardware costs and the operations costs. We'll be talking about buying the equivalent of a mainframe for $50 a month. And that basically will drive the large server guys out of the server business, and it will drive the large companies out of the IT operations outsourcing business. So it totally compromises IBM's business model. It destroys the server model. What it does is makes the business a price-driven battle among the service providers selling capacity on demand. There will be a huge consolidation and transition in the service provider side that will compromise most of the generic outsourcing business today. Most of what IBM does for its outsourcing business is that. It will also drive outsourcing to a much higher level because as CIOs feel more comfortable with it, they'll realize that in doing it in one fell swoop, they're not just outsourcing the running of IT at a lower cost, because they're outsourcing their operational expenses, which the provider is eliminating. What's left is the next higher-level services, which is how do you configure workflows in a vertical market? That's where the winning next-generation application guys go, and that's where the winning systems integrators go. Everybody has to move to a higher level on the value chain or get crushed.

On opportunity for solution providers creating managed services : In the next few years, the capital expenditure to actually provide these kinds of services is going to be really low. The real place to do it is in vertical markets, where you become the backbone ASP for a hospital and provide the whole thing. You provide the ability to help them to configure and customize the actual applications. There's a huge opportunity here because the capital expenditure is low and the value is going to be bringing the expertise.

On the role that Cassatt can play in all this : What we need for this is an operations system, something that automates IT operations, eliminates the cost of IT and enables the scaling of commodity computing, while providing guaranteed quality of service on an application and allowing business policies to dictate where the resource is employed. It has to attack all three at once:
- the scaling in operations costs,
- the quality of service and,
- the business agility.

Cassatt shall providing a software infrastructure that virtualizes the hardware world and allows a company to set policy against their applications. Then we'll use what we call 'dynamic provisioning' independently of hardware and software to change workflows based on the policy and what's happening in the real business world.

Very powerful Ideas.. Part II shall follow.
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