The chance viewing of posts and tweets led me to an analyst report that suggested hardware vendors were going to shift their business model. What could this mean for the HPE and the NonStop community?
Reading posts and commentaries on social media channels
has become routine for Margo and me. For the better part of a decade, we have
spent time checking out the popular sites like LinkedIn and Twitter. However,
one post to LinkedIn we missed until we saw promotion of it elsewhere but after
reading the post, it made us think more on where NonStop may be headed. The
post was by T.C. Janes and it promoted a McKinsey & Company report, Hardware’s
business-model shift: Finding a new path forward.
Janes was Client Chief Technologist where, according to
his LinkedIn profile he was “Responsible for understanding and quantifying my
client's technology portfolio, strategizing across all HPE Centers of
Excellence to address their business/technology challenges, aligning
current/future HPE solutions to my client's strategies, and advocating for
their needs/interests within HPE.” So, as you would expect, when Janes promotes
a paper, particularly one by McKinsey & Company, we should all take the ten
minutes or so to check it out.
On the other hand if you, like me, put it off and still
haven’t returned to the link, then perhaps my own views on this topic may be
enough encouragement to do so. The catalyst for me to return to this
promotional post by Janes was the couple of hours I spent in a no names town
somewhere in the Deep South as Margo and I ventured back on the road to visit
clients and colleagues in Florida. Television channel selection being limited,
what better way to pass the time, right, than to catch up on our reading?
Central to the report was the idea that perhaps the
future for hardware vendors – all hardware vendors – is to reimagine themselves
as software purveyors. To take the relationships that they have created with
some of the biggest enterprises on the planet together with decades of
experience with providing the most basic of technologies, the computer, and to
move on to what enterprises prize above all else. Solutions! Is it possible
that the concept of “best of breed” is so, well so, twentieth century? Or is it
yet another case of going deeper into a never-ending tunnel? As our business
requirements have expanded, who wants to sign forty contracts to just get the
basics covered?
It is time for these huge technology purveyors to pivot and focus on software and in so doing, completely overhaul their business model. The arrival of the cloud has proved to be instrumental to hardware vendors rethinking priorities. The arrival too of a desire by many enterprises to just pay for what they use, when they use it – again, something that experience gained from exposure to clouds – and it’s not just an issue of OpEx versus CapEx. The “Cloud Experience” is a reality as is the growing realization that with private clouds likely making further inroads into the data center, pressure on traditional hardware vendors to provide more of the infrastructure will only increase.
For some time now we have all been a witness to the
significant transformation of NonStop. For four plus decades it’s been all
about the hardware working in combination with the integrated software stack
from the OS to the database to the transactional support. However, even as
there are numerous papers discussing how the true cost of hardware is heading
to zero, major hardware vendors, including HPE, have had to take seriously
where future revenues will come from. Not for them will it be to simply walk
away from the hardware business but rather to acknowledge that future
development will need them to travel down two distinct paths.
The kicker here however is that while travelling down
these two paths, momentum will have shifted to the software side whereby
software will be leading the way. No more looking at the hardware as it is
developed and seeking to optimize the software to best support whatever
hardware the hardware team comes up with, but rather, the software team
dictating what they need. The world of plug and play hardware has arrived and
for those vendors traditionally considered as hardware-focused, it will take
some time to unwind previously unchallenged positions. Feeds and speeds will be
a thing of the past as new functionality appears rapidly and retaining a
position of leadership will entail much larger funding for those cutting
code.
Above all else, according to McKinsey, it will be the
push to bring the cloud experience to every corner of the data center and this
will only be achieved through software -
“IT-infrastructure providers face an
unenviable challenge. Technological change has led their customers to view
hardware appliances as commoditized. At the same time, cloud-based vendors and
hyperscalers have set new norms for simplifying customers’ experiences of
purchasing IT infrastructure. As a result, savvy chief information officers
(CIOs) and IT buyers now demand a cloud-like experience even when buying
on-premises IT infrastructure, such as pay-per-use models for on-site
equipment to help them manage the complexity of their hybrid deployments and IT
needs.”
When it comes to reinventing their business model,
McKinsey doesn’t hold its punches. And if you may still be wondering about
NonStop then think of how in recent times, NonStop development has shifted its
focus to support NonStop as software. With the arrival of virtualized NonStop,
development proved that the umbilical cord that tethered NonStop to specific
hardware could be broken. And this is where McKinsey agrees -
“In
our experience, companies that successfully restructure their solutions to be
software-led follow three steps.
“First,
they disaggregate the hardware appliance down to its granular features and
performance attributes (throughput, input/output operations per second, and
latency, for example) and match them to their users’ performance needs.
“Second,
they create a wholly new solution entirely of software, operable on any
hardware appliance featuring an integrated control center to manage
hardware-performance attributes and adjust underlying hardware or virtual
resources as needed.
“Finally,
they offer several value-added software features (performance monitoring and
administration, advanced analytics on usage, and proactive maintenance of
underlying hardware, for example). Only with these changes do customers view
the software form-factor product as a viable stand-alone offer independent from
the underlying hardware appliance.”
But what of HPE? What of its key strategic moves? From
edge to cloud with everything available as a service, HPE has clearly shown a
deep interest in ensuring that it is making all the right moves. This has to be
put down to HPE maintaining a close relationship with its customers and
following through with real programs. It is encouraging then to read McKinsey
acknowledge this move of HPE as well -
“Even
for traditional hardware products, IT-infrastructure providers are innovating
on pricing models by offering hardware with turnkey on-site deployment,
flexibility to scale on demand, and seamless periodic upgrades. Also, they can
offer customers the option to pay on a per-use or consumption model. HPE
Greenlake, for instance, is a leading example of such a cloud-like subscription
model for hardware.”
There is a lot of work still to be done. For HPE and
the NonStop team, there are “waves” of updates forecast that will ensure
NonStop has a role to play within Greenlake. However, that is only part of the
story as the bigger picture suggests that a re-envisioning of a future for HPE
that is hardware-less may be a consideration. Hard to imagine, but then again,
it was just as hard to imagine NonStop not needing its own hardware or that
renewed focus on NonStop SQL would see a Cloud Edition (of NS SQL) become
available.
Hardware costs might never reach zero. However,
disaggregating the hardware appliance down to its granular features may indeed
take place – HPE utilization of ProLiant servers being just the start –
extending the reach of NonStop in doing so. We have always been asking where
will NonStop run in the future? Will it even be around? The simply answer may
be that yes, it will be around and yes, look for NonStop to run everywhere.
From edge to core, you will find NonStop and isn’t that the answer we all saw
coming?
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