In The IBM i Trenches With: Maxava
September 20, 2023 Timothy Prickett Morgan
The IBM i market is a big animal, even here in 2023 more than three and a half decades after the launch of the AS/400, and that means you have to take a lot of pulses to get a sense of what that animal is doing and how it is doing.
This week, we are talking with John Dominic, who is global vice president at high availability and system monitoring software maker Maxava. Dominic has spent his life in the greater Philadelphia metropolitan area, and, like many people in the IBM midrange, was cultivated very locally even though he works globally.
Dominic got his bachelor’s in technical arts at Bloomsburg University back in the 1990s and has been working in the IBM midrange for more than two decades. He got his start as U.S. regional sales manager at security software maker Safestone Technologies, which was located in the United Kingdom, back in early 2002, and spent nearly seven years building a US sales force that eventually accounted for half the company’s revenues and managed its key accounts like CVS Pharmacy, Nike, and Royal Bank of Scotland. In October 2008, Dominic became vice president of sales for Halcyon Software, a supplier of IBM i monitoring and security software also located in the UK, taking down big IBM i accounts such as USA Today, Sunkist, and TD Bank. A decade ago, Dominic became US sales manager for Maxava and more recently has completed his MBA at Delaware Valley University and risen to become global vice president for Maxava.
In that vice president role at Maxava, Dominic runs the global sales and marketing operations for the company and is also involved in business development and in maintaining the partnerships that Maxava has with service providers and other distributors for its software across the North America, Europe, and Asia regions.
Timothy Prickett Morgan: Let’s start with how the IBM i market has shifted over time. Back in the day, if you looked at the AS/400 and iSeries base by accounts, it was heavily weighted to Europe, and then the United States was second, but when you looked at the money, the United States had a lot more larger customers and the revenue stream there was larger than in Europe. And I suspect that the markets for security software, monitoring software, and high availability clustering software reflect this distribution. I also suspect that the market in the United States is more dominate than it was a decade and two ago.
John Dominic: The United States is absolutely dominant now. I carve the world up into three different areas. The United States continues to build, and that stands to reason because so much of what we do here at Maxava – and quite honestly, what we did at Safestone and Halcyon – is about risk because risk management really drives disaster recovery and high availability now. In the US, financial and insurance companies are way ahead of the game. They’re trying to reduce their premiums, get better coverage, all these risk management things first and then they turn to the practicalities of technology. I think European companies tend to be a little more gearhead –they like to take things apart and they also don’t have the impact of natural disasters like we might have here in the States.
TPM: Well, their countries would be states here, so their national scale and therefore their business scale and geographical span tends to be a lot smaller. Being smaller helps mitigate against disaster to a certain extent.
John Dominic: It helps. And I think a lot of companies in the Power Systems space in Europe have moved around quite a bit. SAP is very predominant over there. So, a lot of people have changed from our platform over time. Meanwhile, in Asia, Japan, Malaysia, Singapore, even Australia and New Zealand, the customers tend to be more traditional and there is a lot of brick and mortar companies. So, they haven’t really moved to the cloud – they’re on premises with their IT. And they probably took the longest to recover from COVID. So, now we’re seeing kind of a tidal wave of activity there. But the U.S. activity through COVID never stopped, unlike the other two regions, Europe and Asia. The companies in the U.S. were doubling down, trying to get things in order, work remotely, all these things, and we were a good fit for that.
TPM: I have heard from more than a few people that when selling security software and disaster recovery and HA software or services that scare tactics don’t work. From personal experience, fear is definitely a good motivator but only after something bad has happened. But it is clear that a vague fear is not as good as a real problem. And yet, companies like Maxava are selling something that is meant to prevent bad things from happening, and the only way to get people to spend money is to have them imagine the effect of bad things on their business.
John Dominic: I agree, and I do think scare tactics really don’t work for these markets. Let me give you an example. Everyone in business buys insurance so it has protection in case there’s a problem because ultimately business is all about how much risk we can bear.
I think the old school scare tactics – if you don’t buy this software, the Sarbanes Oxley auditors are going to come along and put you in handcuffs – from two decades ago did a bit of damage because it became a scare fest, a fake scare fest. And the reality is that there are real threats that you have to deal with for both security and disaster recovery – interruption to the business, ransomware, hacking, and so forth.
TPM: What is a successful tactic if fear doesn’t work? Here’s my point: It’s time for companies to be grown up and realize this necessary stuff costs money. Considering that almost every AS/400, iSeries, System I, and IBM i platform ever sold is running mission critical applications, I don’t understand why HA/DR isn’t just on every single machine. Maxava entered the market more than two decades ago and drove the price of HA software way down, and Moore’s Law improvements have driven the cost of a backup machine way down, too. And with cloud HA and DR being available, there’s no excuse. And on top of that, there is an increasing level of disaster, whether it comes from weather, power outages, hacking, software crapping out, or human error managing systems. Add all of these factors together, and I don’t understand why HA/DR is not ubiquitous.
John Dominic: All great points. And I want to take a step back and point out that part of the reason Maxava has been so successful, particularly over the last five years where we’ve really boomed, is because we decided back in 2013 to become more hosting centric. It wasn’t even called cloud yet. We remodeled a lot of our pricing and licensing for what ultimately became hybrid cloud and infrastructure as a service. So, we were in a really unique position as far as I’m concerned to work with partners – particularly MSPs.
And I think there has been a dramatic shift in the last five years where the administrators are graying and there’s not an easy replacement. So businesses are tending to move some of those Power Systems workloads, to the cloud, particularly in the United States where companies are the leading edge of cloud adoption. Cloud is not there in Asia. It is there to an extent in Europe, but it is way ahead in America. And that’s why I think Maxava has transformed so much, because we were ahead of that game. And so today, we do more hosting business than we do on premises license and maintenance by far.
TPM: I assume a lot of these managed services providers have a hundred, or several hundred, customers?
John Dominic: Exactly. And we kind of look at the MSP, not at the individual customers.
TPM: What do you think of HA/DR in the market today? And how much of its cloud or hosted DR and how much of it is on premises?
John Dominic: I still only think that only 30 percent of the Power Systems-IBM i shops out there have true DR/HA.
There are certain verticals that are absolutely heavy in HA/DR usage. And the challenge with a lot of them is that there’s a lot of archive type systems that run in the background. Their company uses them as like a legacy app, and they’re not sure what to do with it. So, I think that’s what skews the number a little bit from why it’s so low.
TPM: Well 25 years ago, it was only 10,000 customers with HA/DR software out of 275,000 unique AS/400 shops, and about a decade ago it was about 20,000 out of 150,000 unique customers. And if it is 30 percent today, then it is 36,000 out of 120,000 customers. The HA/DR base is growing a lot faster than the IBM i base is declining. So, there is that.
John Dominic: That sounds plausible to me. I think the hybrid cloud is eating heavily into the on premises customers that are still active and on maintenance. You know, you can’t just take a customer that has a really old setup and move them in the cloud. Technically, we can replicate them. The challenge is that the cloud receiver is at a certain level and they can’t be too great of a distance apart, which isn’t really a problem for Maxava but it is a problem for the underlying IBM i infrastructure.
The cloud is a huge part of the Maxava business and has been a huge transformation for us. I think that’s why we are probably bringing on more net new logo business than other players in the space at this point. So, we’re continuing to focus on those type of service provider partnerships. We work with customers, of course, and we try to help them collaborate with the partners, and we are kind of the glue that holds this whole thing together. Another huge driver for our business is that the coronavirus pandemic really made a mess of things, obviously. A lot of people retired during 2020 and 2021 and 2022. Over the last five years, we had a lot of face-to-face meetings with customers where their system administrators decided to retire, and the COVID hit and they could not come into the office, and businesses decided that all of these risks were too high. I think the pandemic was a scare itself, and we weren’t out there advertising it as a scare tactic. We were just trying to help people deal with it effectively.
We talk a lot about what the risk factors look like, like what’s really happening. People tend to focus on natural disasters, like the Biblical-class stuff, but the reality is a disaster is something else, like a truck drives into their telephone pole and cuts the power and therefore access to applications for customers.
So the question is: How much risk are they willing to bear? As you say, that the economics of HA/DR make more sense not only from the IT side, but the real big deal is that when you have continuity, you reduce financial loss.
I think there are still two challenges. Number one, I think people in the IT department traditionally have seen insurance as the answer. They have insurance for these problems. And the reality is insurance only covers on the order of 30 percent of losses, which, if you were worried about a natural disaster, and you’re in Nebraska probably wasn’t a big threat. But here comes the pandemic, people can’t work in your company, the business isn’t open, what’s going to happen? So you’re going to have losses unless you have DR or HA. With high availability, it means that amount of data and downtime they are going to have is minimal because we have the system available somewhere safe, where they can have hands on it somewhere where it can be managed remotely. So that that’s what was a huge driver during COVID is the remote collaboration aspect of it. But number two, continuity actually gives them better insurance premiums. So if you know you’re only going to get 30 percent coverage, you need better continuity, you will also get the benefit of saving on your insurance premiums. For a lot of customers, a lift and shift to the cloud, which some VARs want to do, is too risky.
There are always going to be reasons to keep machines on site – safe harbor, data sovereignty, security, and so forth. With cloud DR, you’ve got all the critical sensitive stuff onsite and you’ve got the data available in a different zone so it’s safe if it’s a regional problem. You’ve got a partner standing by if you need them to collaborate in an emergency. The business will survive. But when you put it all on prem, you take a huge risk.
What I’m finding is that a lot of our island customers in the Caribbean and Asia are definitely evolving from wanting to keep both of their systems on the island because they have been conditioned to do that for 40 years. But now they’re starting to look at having a third scaled-down emergency box somewhere else, like Canada or Ireland or something. Just in case they have a complete failure, a worst case scenario. And they can synchronize back after the storm or whatever is over. And that’s a big change. Because the thought was always if I’m down on the island, well, we’re not doing any business anyway. But with all the banks and insurance companies on one island, the failure bleeds out to outer area thanks to the Internet. This is why I think there’s resistance to fully hosted in manufacturing, banking, and insurance – they want to spread out the risk, not condense it.
TPM: Last point: Do you count disasters, and if so, how has it changed in the past ten years?
John Dominic: That’s funny, that is the front end of a presentation that I am working on right at this moment.
You can look back 20 years in the United States and see that not only is the frequency just going up and up and up, but here in 2023 we are toward the top end of the annual disaster number that you can expect in the last five years of disasters. And not only that, the cost of recovery is going up and up and up because the amount of data loss and damaged resources just goes up every year, too. A business looking at this from a risk assessment point of view will see that if they are going to have a disaster then every year it’s going to be more expensive than the previous year. There is also the possibility of another pandemic, and so we need to make smarter moves. And I think that’s why we’re seeing such a big drive right now for this stuff. It’s not the traditional disaster recovery, it’s covering the business risk and therefore it’s being driven at a much higher level.
Here’s the thing: The money you spend on resilience before a disaster is way more valuable than the money spent after a disaster. So for every dollar you spend ahead of time, it’s worth $1,000 after the fact. We focused on cloud and therefore provided pay as you go pricing. The beauty of that is you get all the benefit on Day One, but you spread the cost out. And if you have a disaster, having spent the money upfront is way more effective than spending it afterwards cleaning up a mess. I think that’s why people come to the cloud for HA and DR. They need to spread out cost as much as possible and risk as much as possible.
This content is sponsored by Maxava.