September 2011 Archives

Comments by Bill Moran and Rich Ptak


A little 'off-topic' from BSM per se, put we think it's worth a look at what's happening as Larry Ellison and his Oracle team try to move from software giant to full system solution provider.

The recently announced 5% drop in Oracle's HW revenues (continuing a drop that began with the Sun acquisition) once again casts doubts on its future as a hardware vendor. Before acquiring Sun, Oracle claimed the hardware division would be profitable in a very short time. We're still waiting.

 

Oracle executives (Safra Catz and Mark Hurd) insist the drop is a result of efforts to increase the profitability and margin in hardware sales. To be honest, the margins did improve. And, Ellison continues to insist they will make no attempt to hang onto unprofitable business segments - hence, his comments about exiting the high-volume x86 server market. (Ellison's stated goal is the get operating margins to around 46% where it was before the Sun acquisition. This is up from the last reported 42 %.)

 

These comments are consistent with what you would expect from executives in the midst of trying to execute a turn-around in a very tough market. None of the statements are a surprise. None appear outrageous. Vendors unwilling to surrender a costly, barely profitable attachment to a hardware platform or even a software product - tend to end up at the side of the road. Turning away customers, deteriorating sales numbers are not obviously great strategies for the long term. Let's see how this might play out.

 

In our view, once customers begin to hold back on their purchases of hardware (as they tend to do when the platform future appears shaky); the downward trend is likely to continue and expand. At the very least, until the customer perception of the prospects for the hardware division turns positive. This holds doubly true when a company, like Oracle, is moving into a totally new market space. There's uncertainty in spades when a software company attempts to become a full service solution vendor, no matter what the quality of new executives or past performance. The problem is compounded when the acquired company seemed to be having problems prior to its purchase. No one wants to invest in dead-end hardware, which is why it is most companies avoid talking of 'end-of-life' until the replacement product is available and accepted.

 

In the case of Oracle/Sun such a change in perspective will take time. It's not good when customers start publicly raising questions about the future of SPARC/Solaris. The risk increases when the platform was positioned as THE critical technology for the division. Restoring confidence will take time and money.


Oracle will have to demonstrate its commitment and willingness to make the necessary investment to restore confidence in SPARC with a detailed roadmap of its future. In concert, Oracle has to execute a credible and successful campaign to increase SPARC penetration and position not simply as a place holder for Exadata-like appliances.

 

Yes, Exadata is x86-based running Linux. But, it is a clear winner for Oracle today, with a promising future. That makes Exadata a strategic platform. The question that follows is: can Oracle be a hardware powerhouse without SPARC? We believe they need SPARC, IF they are to deliver to Larry's vision of offering a system with a fully integrated stack. The question then becomes can Oracle afford a dual-platform strategy? And, will Oracle be able to convince customers of the validity of their commitment to a multi-platform solution as other vendors have done? Both questions are quite reasonable and must be convincingly answered by Oracle.

 

When customers are convinced of the commitment and the success at execution, then they will reevaluate SPARC as a solution. We expect this process will take some time and see no obvious way to short circuit or jump start the process. Oracle needs to make a major SPARC announcement this year. (Larry Ellison announced the intention to do that at Oracle Open World this fall.) It remains to be seen how its performance improvements compare to competitor products from IBM and others. Assuming ORACLE can pull all these things together, it is possible that some time in 2012, the prospects for Sun's success will begin a recognizable turn around.

Companies that pay attention to emerging trends and adapt quickly are most likely to succeed, while laggards suffer the consequences of latecomers and miss business opportunities. The DevOps movement is one of these emerging trends that companies should be taking seriously despite numerous failures by vendors to jump start this area in the past. However, in our opinion, DevOps appears to already be taking root this time and for several very good reasons.

Why is it different this time?

The impermeable wall between IT development and operations is legendary. Despite numerous past efforts to encourage development and operations organizations to work together, "the wall" still exists in most IT organizations today. With this historical record of failure, is the current DevOps movement also doomed to inevitable failure? As an industry watcher who witnessed the past failed attempts to breach the wall, we believe there is something very different about today's DevOps movement that sets it up for potential success.

Past efforts were driven primarily by vendors who were trying to create a market for selling more software. Development, operations teams and their leaders were less than enthusiastic when vendors presented them with weak value propositions, telling them that development and operations teams "should" collaborate, and it was a good thing to do. It's no wonder that IT organizations chose to invest in other areas with more pressing needs, and left the wall between development and operations still standing.
 

So what's different about today's DevOps movement? One major difference is a combination of driving forces that reinforce the need for today's DevOps movement, which present strong and compelling reasons for both development and operations to work together. The main driving force comes from business leaders faced with the need to innovate and respond quickly to increasing competitive pressures. This, in turn, puts increased pressure on IT development and operations teams to deliver new services more quickly.

As a result of the changing business needs, development teams are feeling increasing pressure to create new, innovative solutions rapidly and to respond quickly to changing requirements. This is one of the reasons why development organizations are beginning to adopt Agile development methods, which increase the speed and velocity of software development and changes. It also shortens the development cycle. The velocity of software changes that must be deployed into production pose serious challenges for development and operational hand-off processes that are manual and ill-equipped to handle the frequency of new software releases. 

On the other side of "The Wall", businesses are also exerting pressure on IT operations teams to deploy new, innovative solutions and respond quickly to business needs. This is in addition to meeting existing high expectations that applications run smoothly, and are always available. This further challenges the delicate balancing act for Business Service Management, speeding innovation delivery while maintaining stability and minimizing risk to business services.

So operations and development teams are looking to cloud computing as one alternative for fast delivery of infrastructure and application deployment. Many IT operations teams are already in the process of doing the necessary leg work for cloud computing, which requires standardization, processes, and automation. This preparation work will also help move DevOps initiatives forward because manual deployment methods that worked for waterfall development schedules, with well-spaced periodic deployments, will fail to keep up with the constant and rapid arrival of agile software updates.

Telltale Cracks in "The Wall"

Cracks already appear in "The Wall", which may be a harbinger of success for the current DevOps' movement. Several IT organizations have deployed their first cloud initiatives in development test environment deployment. They have chosen the development test environment because it is a low risk, quick return project. But what is most significant about this choice is that it opens the dialog and collaboration between IT operations and development test teams. In my opinion, this demonstrates that "The Wall" is no longer impermeable.

Another indicator of significant cracks appearing in "The Wall" comes from cloud computing early adopters. The development organizations from several early adopter cloud customers saw the pressing need to streamline their service delivery processes in order to speed their time to market and to increase their efficiency.  As vendor integrations between the tools did not exist, they launched internal projects to re-engineer and integrate their service delivery processes. These efforts included integrating selected development and IT operational tools, as well as standardizing and employing automation. Through such initiatives, the companies managed to knock down substantial portions of "The Wall". What is significant about these examples is that development teams were the driving force behind the initiatives. This contrasts markedly with the past, where development teams were typically the ones resisting the change. The resulting payoff for these early adopter companies was faster, more efficient delivery of new business services.

And finally, development tool vendors and operations tool vendors are increasingly delivering capabilities to enable improved collaboration between development and operations teams. In addition, IBM is proposing the adoption of Open Services for Lifecycle Collaboration (OSLC) integration and data exchange standards to enable easier integration across disparate tools. If integration standards are adopted, paving the way for easier integration of disparate development and operations tools, the result would be a significant step forward for the potential success of DevOps' integration.   

The Final Word

There are early indications that DevOps may be taking root this time. Several market forces are at work that place collaboration between development and operations at a critical juncture. Today's DevOps value proposition is much stronger because of the importance to the business, which moves it from a "nice to do" to a "must do".

DevOps is not a power struggle to see who wins between development and IT operations. It should be a collaborative effort between development and operations to deliver what the business needs, as quickly and efficiently as possible, as it enables the company to beat its competition.

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