IDC's 44th annual Directions conference in San Jose this week may be the longest running IT conference in the world, but it didn't pull any punches on the economy. From John Gantz's opening keynote through every track session I attended, the analysts recounted what anyone running a data center knows all too well: IT spending is pulling way back. IDC wisely did a mid-year course-correction on their 2009 spending prediction at the end of last year, and they used some of these revisions at the conference to show how far -- and how fast -- things have headed down. As I was sitting in the audience, I started to wonder if even those revisions were deep enough. Only cloud computing escaped the dour forecast (more on that in a minute).
Here's a quick summary of the key points I took away from the conference, focusing on IDC's take on the macro-level IT environment, the impact of the economy on running a data center, and -- the lone bright spot -- how cloud computing figures into all this. On that last point, let's just say Frank Gens, the day's cloud presenter, was positively giddy to be the one guy who got to deliver good news. The highlights:
The economy has us in a dark, dark place -- but IT is needed now more than ever
John Gantz, IDC's chief research officer, summed up the effect of the economy at the start of the day: "I don't think we've been here before. We're in new territory. We're in the dark" because we don't have a very good handle on what the economy's going to do next. Gantz noted that IDC has ratcheted down IT spending predictions for this year to nearly flat over 2008 (up only 0.5%). That doesn't take into account any effect from the Obama stimulus package (or those from other governments elsewhere in the world). IDC told their analysts not to try to quantify stimulus package impact, said Gantz, but to assume they "won't make things worse." Let's hope. One positive note: 2010's growth rate looks positively robust, but of course that's because it's building on the catastrophe that 2009 is working out to be.
However, says Gantz, the bad economy is not slowing down the increase in mobile Internet users, the adoption of non-traditional computing devices, nor is it putting the brakes on the amount of data being gathered or user interactions per day (predicted to increase to 8.4 times its current rate in the next 4 years). And that's all something for IT to deal with.
So, said Gantz, amid this "extinction event," there are incredible new demands for management. "The economic crisis changes everything and it changes nothing. We have a new, new normal." The current situation merely forces the issue on seeing and doing things differently. "If everything is crashing down around you," said Gantz, "now is a good time to take a risk. Now is a period of opportunity." He noted companies like Hyatt, GE, RIM, FedEx, HP, and IBM had all been started in recessions (I've also written about great innovations during previous downturns).
What opportunities did he see in particular right now? Gantz noted enterprise social media, IT outsourcing, virtualization software, and Internet advertising (really). Of particular note: virtualization management software. Which has a big impact on IDC's view of what's happening in the data center...
The move to more modular, pay-as-you-go data centers -- with warnings about virtualization management
Michelle Bailey, presenting her content from IDC's Data Center Trends program, seemed very concerned about how hard and complex managing a data center had become, and believed that we're going to see customers making moves to simplify things out of necessity.
The recession, said Bailey, "changes the decision on where to hold the [data center] assets." Its main impact is to push data center managers to move "from a fixed price model to a variable pricing model," to move costs from cap ex to op ex.
Virtualization has had a huge impact so far, and will continue to do so, according to Matt Eastwood, IDC group vice president for enterprise platforms. In fact, there will be more VMs than physical servers deployed in 2009. "It will be the cross-over year," said Eastwood.
However, that drives big, big concerns on how data center managers are going to cope, said Bailey. "The thing I worry about the most with virtualization is the management consequences. There's no way to manage this with the processes and tools in place today." In fact, Bailey is so worried that she thinks this "virtualization management gap" might stall the virtualization market itself as users search for management solutions. "I’m worried that customers may have gone too far and may have to dial it back," she said. "The challenge in the server virtualization world is that people aren't used to spending a lot of money on systems management tools."
When we at Cassatt talk to customers about this, we've found that they know there is a virtual management problem and are actively trying to address it. The approach we talk to these customers about is having a coherent strategy for managing all of your data center components based upon the application service levels you need, regardless of whether the compute resources are physical or virtual. Having a separate management stack for each virtualization vendor and another one for their physical systems is not appealing, to say the least.
One of Bailey's other most important points was that there isn't just one type of data center -- there are actually three:
1. Enterprise-style data centers focus on SLAs, cost containment, and are dealing with space issues.
2. Hosting/outsourcer data centers focus on doing what's necessary to meet customer demand.
3. Web 2.0/telco-style data centers are all about cost efficiency and growth.
Trying to compare how you run your data center with one that has a different set of goals is not productive and will get you focused on the wrong things -- and result in more of a mess.
She did say, however, no matter what type of data center you are running, to look at doing things in a much more modular way, as a way to simplify. Bailey called "massively modular" the blueprint for the future data center. This helps break down big problems into smaller, more manageable ones, and ensures that you don't have to be absolutely correct in your 20-year vision for your data center. She sees things like containerized data centers becoming more standardized and less proprietary, making this modular approach more complimentary than disruptive to what data centers are already doing. And, with power and cooling still a huge problem for data centers, IT ops and facilities need help from both a more modular approach and the "pretty sophisticated" power management tools that exist. (I like to think that she was thinking of us at this point in her presentation.)
Cloud computing is on track to move to the mainstream -- and show actual growth despite the economy
Bailey had a healthy dose of cloud computing skepticism in her break-out presentation: "Anything that has money attached to it can’' be [in the cloud] for another 10 years," she said, clearly paving the way for big organizations with security, compliance, and lock-in concerns to give this cloud model a try, but to do so within their own data centers as an internal cloud.
In Frank Gens' keynote on cloud computing, he acknowledged a lot of the concerns that companies have been expressing about going to an external cloud, however, was very upbeat. "The idea of cloud is of very, very high interest to CIOs in the market right now," he said. Last year IDC predicted that 2009 would be "the year of moving from the sandbox to the mainstream," said Gens. "We are certainly on that path right now."
Why? Maybe not for the reasons you might think (cost). Gens corroborated comments from Gartner's Tom Bittman at their Data Center Conference back in December: the No. 1 reason that people want to move to the cloud is that "it's fast" to do so.
This new cloud model hasn't yet bulldozed the old model for IT, according to IDC, for reasons we've heard (and Michelle Bailey mentioned above): deficiencies in security, performance, availability, plus problems integrating with in-house IT. Gens sees cloud computing beginning the move across Geoffrey Moore's chasm toward mainstream adoption as a result of a couple things: performance-level assurances and being able to connect back to on-premise systems.
"Service level assurances are going to be critical for us to move this market [for cloud computing] to the mainstream," said Gens. And, customers want the ability to do hybrid public/private cloud computing: "They want a bridge and they want it to be a two-way bridge" between their public and private clouds.
And, despite all the economic negativity, IDC painted a pretty rosy picture for cloud computing, noting that it's where the new IT spending growth would be happening. Gens described it as the beginning of the move to a more dynamic deployment of IT infrastructure, and part of an expanding portfolio of options for the CIO.
"We’re right where we were when the PC came along or when the Internet first came out," said Gens. As far as directions go, that's pretty much "up."
Up next: comments on Nicholas Carr's closing keynote at IDC Directions San Jose. Slides from the IDC presentations noted above are available for IDC customers in PDF format in their event archives at www.IDC.com.