But Wait, There's More

Look for the Four Hundred 2006 Special Report on December 14

Gartner Survey Backs Server Consolidation Economics

Yes, a server consolidation project can demonstrate cost savings. That's the report from Gartner based on 400 companies that have undertaken this strategic planning endeavor. News of this Gartner report was released at last week's Gartner Data Center Conference in Las Vegas.

Depending on the size of the company and scope of the project, the savings derived from consolidations will vary. However, for the record, the average savings was pegged at 16 percent. Not surprisingly, a reduction of the total cost of ownership (TCO) is the primary motivation behind consolidation projects. Other motivators were needs to control server farms and service levels.

The survey results indicate more than half of the savings are the result of hardware reductions. Lower savings came with staff reductions (including reassignments), reduced space requirements based on eliminating hardware, and software changes.

The report also noted factors that provide obstacles to consolidation projects. These citations included internal politics, which 33 percent of the respondents picked as a leading issue. An even larger number, 45 percent, reported bandwidth as the chief issue, but analysts thought that was a reflection of the number of overseas respondents that participated in the survey.

Overall, this survey mirrored earlier Gartner reports that have shown server consolidation as a high-priority undertaking that is not necessarily driven by TCO concerns. Gartner has released other server consolidation tidbits over the past several months, including its assessment that 60 percent of enterprises have a server consolidation project underway, and another 28 percent are looking into consolidation. A Gartner study from several years ago, when the server consolidation idea began to take hold, showed that increasing the average number of users per server from 75 to 250 could save 37 percent of server costs.

Expensive SOX

According to a survey from AMR Research, compliance costs reached $6.1 billion during this soon-to-be completed year. And even though the deadlines for compliance have come and gone, the spending will be an ongoing investment. The return on this investment is arguable and unquantifiable. (What's the value to an executive who wants to stay out of jail or being able to put corrupt executives into jail?) Some organizations will benefit from more stringent controls that bring streamlined business processes, while others will be saddled with unnecessary regulatory burdens.

Looking to the year ahead, AMR predicts another $6 billion will be added to the cost of doing business for public companies. That's bad news for the organizations that are under the microscope, but good news for many software vendors and consultancy groups that have solutions targeted at easing the SOX burden. The AMR survey points out that SOX is the gift that keeps on giving. In order to better define where the 2006 money will be going, AMR split the cash-sucking compliance vacuum into three categories: $2.3 billion will be dedicated to internal labor/head count; $1.9 billion will go toward technology; and the remaining $1.8 billion will pour into external consulting. Compared to 2005, technology spending on SOX is expected to rise by 13 percent.

Vendors that specialize in "systems that establish the compliance framework for the entire company, along with the processes and responsibilities for how compliance will be executed on an ongoing basis" and "applications that scrutinize adherence to business policy and direct remediation of material gaps in control by detecting errors and alerting process owners to take action" are at the head of the line, AMR says. More than 80 percent of companies surveyed said they would add to or improve their SOX compliance procedures during 2006.

AMR plans to publish a comprehensive report of SOX and other compliance initiatives in January.

Disk Storage Market Continues to Grow Like Crazy, Says IDC

Sooner or later, virtualization technologies will have their way with disk storage arrays as they are beginning to with servers, and that will cause customers to start using their disk storage a lot more efficiently, and quite possibly, buy a lot less storage than they currently do. But if the third quarter of 2005 was any indication, then it looks like we are still pretty far away from that moment. According to market researcher IDC, the worldwide external disk array market grew by 12.5 percent in the third quarter to $3.9 billion, and total disk subsystems (including internal arrays on servers) grew by 13.3 percent to hit $5.7 billion in sales. This represents the third quarter that growth in storage sales has been higher than growth in server sales. And while IDC wants to say that is a great thing about storage, I happen to think that what is really going on is that the advent of virtual machine and logical partitioning on servers has put a damper on server sales, which would have kept pace with storage had it not been so widespread.

In the external array market, EMC captured $786 million in sales, giving it 20.3 percent of the $3.9 billion pie. Hewlett-Packard followed close behind with $740 million in sales, with IBM coming in third at $499 million in external disk sales, ahead of Dell's $325 million and Hitachi's $321 million. Other vendors captured 31.1 percent of the external disk array market, for $1.21 billion in sales.

Across both internal and external disk arrays, HP was the number one supplier, with $1.35 billion in sales, IBM was just behind it with $1.19 billion. EMC doesn't sell internal disk arrays because it ditched the Unix server business it got by acquiring the former Data General. Dell sold $152 million in internal arrays for servers, and therefore had a total disk array sales of $477 million for the third quarter. Hitachi has a tiny server business, and sold $9 million in such products. Other vendors comprised $1.6 billion in worldwide disk sales, giving them 28.1 percent of the $5.7 billion storage array pie.

IBM Touts Self-Healing Server Technologies

If you are a system administrator, read this story carefully--but perhaps it is not a good idea to tell your CIO or data processing manager about what you learn. Since 2001, when IBM first started espousing the "self-healing" and "autonomic computing" technologies that are built into its various servers, systems software, and middleware, the company has been on a tear to develop yet more technologies to make systems better able to diagnose their own problems and fix them with as little human interaction as possible. IBM is now claiming that there are more than 475 self-managing and autonomic features in 75 separate products.

IBM only brought those figures up to help peddle some new Tivoli products. The first, called Tivoli Monitoring 6.1, watches online applications such as email systems or Web-based transaction processing systems and look for hung states in the applications and catch them before they crash and restart them. Tivoli Composite Application Manager is the second new tool, and it comes in three flavors--one for SOA-enabled software, one for the WebSphere stack, and one called Response Time Tracking that works with third party and homegrown applications. All three flavors share one thing in common: Composite Application Manager monitors the performance of applications and suggests what things system administrators need to do to improve the performance of applications. Finally, Tivoli System Automation for Multiplatforms can monitor applications running across multiple physical servers and distinct operating systems and reboot those hybrid applications and their servers in the right order to restart the applications in the event of an outage.

MKS Shows Progress in the Second Quarter

MKS, an application lifecycle management software vendor with strong ties to the OS/400 market, announced its financial results for the second quarter fiscal 2006 that ended October 31, 2005.

Comparing the recently completed quarter to the same quarter in fiscal 2005, MKS showed a 23 percent increase in total revenue, from $9.4 million to $11.5 million. The results also tracked an increase in net income from $ 200,000 to $ 900,000; an increase in application lifecycle management (ALM) revenues from $7.3 million to $9.6 million; and a $600,000 improvement in ALM profit that took it from a loss of $200,000 to a $400,000 million profit.

"We were pleased to deliver a quarter that was right on track with continued license growth, outstanding services performance and steady maintenance revenue gains," said Philip Deck, chairman and chief executive officer at MKS. "We were particularly gratified by the substantial increase in profitability and cash flow this quarter, delivered without the reliance on any large license transactions and given the company's continued significant investments in growth."

The company also reported customer wins that included Automatic Data Processing, Axalto, BearingPoint, Continental Automotive Systems, The Centers for Medicare & Medicaid, Lufthansa, the Federal Aviation Administration, NCR, The Neiman Marcus Group, Royal Bank Financial Group, Tele Atlas, Volkswagen, and Wincor Nixdorf International. MKS said it had 19 contracts worth greater than $100,000 in the quarter, compared to 17 in the same period last year.

MKS also announced management changes along with its improved financials. Michael Harris has been promoted to president. He has had a long-standing role as chief operating officer. Harris will continue to report to Deck, whose role and title remains unchanged. Douglas Sawatzky, vice president of finance, has been promoted to chief financial officer. Robert Dietrich, the former CFO, is leaving the company.