2005 Server Market Reflects IT Interest in Both Value Capture and Value Creation

Enterprise Networks & Servers, Jan 2005 by Shacklett, Mary

After Year 2000 upgrades, many IT departments focused on wringing as much value as possible out of existing and newly acquired network resources like servers. IT budgets after major turn-of-the-century upgrades have been lean, but in many corners the trend is now changing to where IT decision-makers are looking to create (and not just capture) value for their businesses with new server and network technology.

"In mid-2004, we began to see this trend, which is continuing in 2005," said Paul Miller, HP's vice president of Marketing for ProLiant Servers. "IT had been focused on value capture for several years after Y2K, reducing costs and consolidating technology assets. However, we now see people looking to new server technology to create value in the form of new business applications that these servers and technologies can support."

2005's corporate acquisition model for servers and other network technology appears to be a combination of both "bottom line" and "top line" goals. The bottom line goals continue to emphasize cost efficiency. New top line goals relate to the ability to deploy business-critical applications quickly on server platforms that offer the kind of flexibility that allows IT to change the IT footprint rapidly and effortlessly whenever business demands change.

"One area where we see this approach is in the financial sector," said Miller. "As an example, you can have high-performance clustering for determining who's going to get the best stock price. Another example is in the pharmaceutical industry, where servers are being utilized for decision support applications that support drug research. Regardless of industry sector, you have both management and IT wanting to realize bottom line value capture and top line value creation benefits right away a often within one quarter of implementation."

New Server Technology in 2005

To meet the dual needs of value capture and value creation, HP has several server technology initiatives that will begin to appear in 2005. The first is the delivery of dual core processor capability.

"We will be delivering dual core processor capability in 2005, on both the AMD and Intel platforms," said Miller. "Dual core processor technology will change server price/performance. To illustrate, sites will have 8-way performance for the MP4X processor space and above, but they will be obtaining this 8-way performance at the 4-way price. This technology can then be married with virtual technology like Microsoft's virtual server. The combination of dual core processing and virtual technology will bring significant cost savings to IT, because it will allow for IT server consolidation at the same time that it creates high availability on MP systems."

Miller also sees a significant takeoff for blade servers in the 2005 marketplace.

"Blade servers were initially launched about five years ago," said Miller. "However, blade servers still represent a relatively small portion of the marketplace, with research firms like IDC citing roughly a 5-6 percent range of market penetration. We believe that blade server deployment will heighten in 2005 because blade servers are the optimal environment for scaling IT network assets, and for quickly adapting a network to business changes."

Some of the increase in blade server deployment is a natural result of the experience that corporate IT has now gained with blade servers.

In the past, IT has deployed blade servers incrementally and for the handling of particular workloads in relatively homogeneous processing environments. Since a blade server is a meld of server, network and storage technology, part of the puzzle for IT was to determine who internally would be responsible for what from both the implementation and daily support perspectives.

"Most of our customers seem to have addressed implementation and support responsibilities for blade servers at this point," said Miller. "This has progressed to the point where we are now beginning to see blade server orders that span entire enterprise architectures. Given that blade servers offer so much hardware and software portability in deployment and redeployment, we feel we can reasonably predict that blade server market demand will grow in 2005."

Sites that have been successful in blade server adoption have involved all groups within IT at the beginning of the process from planning, through implementation and ongoing support. Key operational areas for blade servers include storage, server and network staff and facilities personnel. Involving facilities is important because blade servers require significantly less square footage, power, cabling and cooling than traditional servers. Engaging the facilities team in upfront planning can significantly speed the rollout of blade servers.

There are two IT "best practices" for blade servers that HP recommends.

* Incorporate the blade server network into the current network environment to where the network administrator can administer the blade server network like it was a part of the overall network. In this way, you don't have separate management and maintenance functions.