I’m at EMC’s annual analyst event this week and I think we are seeing the emergence of the next generation of IT companies.
I think of it in a similar way to what happened on the PC side when Dell came to market. Before Dell, you spent a lot of time configuring a PC with different components and then waited weeks to have what you ordered delivered. Then you sweated about whether the result worked. After Dell, you spent moments going on the web to pick a machine, which was delivered in hours. Then Dell sweated whether the result worked. It was a very different experience.
Watching an executive from a large pharmaceutical company, Stephen Rayda, CTO, Purdue Pharma, talk about the company’s VCE deployment is much like looking at the difference between pre-Dell and post-Dell PCs. Rayda was outspoken in saying that his company just couldn’t do what it did with anyone else. It wasn’t until the end of his presentation that it became clear why he was so ecstatic about his VCE experience. I often think of CTOs as guys who missed a meeting when they took their jobs because they live on borrowed time. Thanks to VCE’s “black box” approach to IT, Rayda is one of the few exceptions.
The Black Box IT Approach
The benefits Rayda reported are significant: 75 percent reduced data center footprint, $9 million in data center savings, $2.5 million in energy savings alone, and a result that is vastly easier to manage, far more responsive, and has resulted in far greater end-user satisfaction than ever before at Purdue. One fascinating savings was on Oracle licensing costs. The pharma company, at the time of implementation, was losing an argument with Oracle, which wanted a $1 million increase based on calculated workloads. Using Vblocks, Purdue was able to demonstrate that it could operate on vastly lower sustained core loads, and its billing from Oracle dropped to 10 percent of what Oracle was originally pushing for, resulting in an additional huge unplanned savings.
This is the advantage of a black box approach. The solution is held to a set of required performance requirements and the vendor sweats the small stuff, not the buyer. This is a huge change in how you look at IT. It does require that you rethink staffing, though. You no longer really need specialists in storage or networking; you need specialists in the converged solution. Rather than being focused on how stuff works, you are instead focused on assuring that IT customer needs are met. Perceived complexity comes down sharply, responsibilities shift from the IT organization to the vendor, and the result is higher performance, lower operating costs (including apparently lower licensing fees), and based on the guy giving the talk, near giddy IT executives who are no longer fighting against their vendor of choice but fighting with them.
One of the fascinating discussions I had was during breakfast with one of the VCE executives. He spoke about the future of the ordering process, which would be backed up by analytics and expert systems. This will, over time, result in the ability to order an entire IT department (short of staff) in a web process, more similar to how you’d currently order a Tesla car. Much of the process will occur behind the scenes, as various databases are scanned for industry and company requirements, and then the purchasing executive will fill in the missing blanks in terms of existing plant, service and performance needs. The system will then output a configuration that will be delivered and in production faster than a Tesla car is currently delivered. Granted, part of the ability to do this is the expectation that the result will use significantly less footprint and energy than the existing system, but if that is different (like it would be for a brand-new site), site preparation would add to this ultra-fast configure to production scenario.
Staffing and Automation
One of the fascinating things about the presentation by VCE and the pharma company that deployed Vblocks was on staffing. Like a lot of IT organizations, the staff is under pressure to reduce costs and they have exceeded expectations in this regard. Often, there is a conflict between staffing and automation, but once VCE was in, VCE owned operations, so the conflict was inside VCE, not inside the pharma company. Automaton was basically an analytical process by the pharma company on return of investment, because the staffing changes happened in VCE.
I’ve noted a recurrent story on the conversion to a VCE solution. Early on, employees are identified who want to evolve with the change, along with those who don’t want to change. The latter are managed out of the company. The end result is that the IT organization is far better staffed for the future and has far fewer problems with people holding on to the past.
My personal view is that technology is always largely driven by change, and that folks who don’t like change shouldn’t create huge problems for the firms that employ them.
Wrapping Up: VCE’s Best Feature
The pharma IT exec closed with a story about when the company’s new CEO asked which department he didn’t have to worry about. Consensus across the entire company was that there was only one, the IT department. I’ve honestly never even heard of that happening before. This goes a long way toward explaining why the IT executive presenting loves VCE.
I think this showcases not only the emergence of a very different approach to IT but a very different kind of IT company in VCE, and the potential for a revolution like the one Dell drove in PCs. This is largely because every CIO wants to be able to tell a story like the pharma CIO did, and say that whatever problems exist in their company — they aren’t in IT. I don’t think they really needed to say anything else.
Rob Enderle is President and Principal Analyst of the Enderle Group, a forward-looking emerging technology advisory firm. With over 30 years’ experience in emerging technologies, he has provided regional and global companies with guidance in how to better target customer needs; create new business opportunities; anticipate technology changes; select vendors and products; and present their products in the best possible light. Rob covers the technology industry broadly. Before founding the Enderle Group, Rob was the Senior Research Fellow for Forrester Research and the Giga Information Group, and held senior positions at IBM and ROLM. Follow Rob on Twitter @enderle, on Facebook and on Google+