Start-Ups See Opportunity In Managing Virtual Servers
By Scott Denne
Managing virtual servers that dart around data centers isn't easy, but three new venture-backed companies that have emerged since November are offering products to make things simpler.
Server virtualization promises IT administrators lower hardware costs and fluid resources. These advantages, though, can come with significant management headaches. For instance, an appealing quality of virtual servers is their ability to move, but this makes them difficult to track.
"Virtualization breaks the fundamental tie between the hardware and software that runs on it and therefore creates new issues, problems and opportunities," said Ashmeet Sidana, a general partner with Foundation Capital and former VMware Inc. executive.
Smelling demand, Fortisphere Inc., V-Kernel Corp. and DynamicOps LLC have all come to market amid competition from several directions that will challenge their ability to become large, independent companies.
So far about 22% of all installed x86 servers are virtualized, a total that market research firm IDC expects to rise to 45% in the next two or three years. Having the right management tools available will certainly play a role.
"I don't think [the difficulty of managing virtual data centers] is holding back adoption, but it is making many IT executives rethink the business case and the expected savings that come with virtualization," said Stephen Elliot, director of enterprise systems for IDC. Most IT departments are too early in the cycle to have "felt the pain of managing the virtual infrastructure," but as they do they'll be looking for tools to bring down the costs and add automation, he said.
Traditionally, enterprise systems management has been dominated by BMC Software Inc., CA Inc., International Business Machines Corp. and Hewlett-Packard Co. As data centers virtualize it is unlikely that these companies will voluntarily loosen their grip; all four advertise products aimed at managing and simplifying different aspects of virtual servers.
Furthermore, systems management is of increasing importance for the vendors of hypervisors - the software platform that does the actual virtualization - who see it as a way to speed up the adoption of virtualization.
VMware has been wading into the management space since its September acquisition of Dunes Technologies SA. Also in May it bought Israel-based B-hive Networks Inc., a company whose software monitors each transaction in a virtual infrastructure and reconfigures the application infrastructure to ensure the service level of each application.
A start-up must navigate beyond the product road-maps of both the hypervisor vendors and the traditional enterprise systems management vendors to be successful in this market, said Dave Fachetti, a managing director of Globespan Capital Partners, which co-led a $10 million Series A round for Fortisphere in November.
"Fortisphere has created a new offering in centralized policy-based management of virtual machines," Fachetti said. To be successful, the company's products must incorporate knowledge of virtual operating systems, systems management and security, he said.
Fortisphere currently has two products in the market. Virtualization Insight provides a discovery and assessment of virtual machines and hosts, giving the administrator information about the operating system that is running and what users are associated with each virtual machine. Its other product, Virtual Foresight, uses the information from Virtualization Insight to employ policies for IT management and regulatory compliance. Prices start at $10,000, with the final cost dependant on how many physical machines are running it.
"VMware deeply understands operating systems but not enterprise systems management. They've been buying some capabilities but are probably not going to develop much on their own," Fachetti said.
The limitations of hypervisor vendors and traditional enterprise systems management companies can be seen in VMware and Hewlett-Packard's announcement last month that the two companies will collaborate on research and development as well as marketing, Fachetti said.
V-Kernel is in a good position to ease virtualization's growing pains by offering a series of software appliances that can be purchased separately to address issues as they arise, said Mitchell Kertzman, a managing director with Hummer Winblad Venture Partners, which co-led a $4.6 million Series A for V-Kernel in February.
V-Kernel sells virtual appliances, or virtual machines packaged with the company's software, that can be download directly from its Web site. The company's prices start at $199 per virtual appliance for every incoming connection a server has.
This model allows IT departments to buy only the features and capacity that they need at a given time, which will give V-Kernel a solid base as it expands its product offerings and customers expand their virtualization projects, Kertzman said.
V-Kernel's Capacity Bottleneck Analyzer gives an IT administrator a list of servers where capacity is overloaded and where there is room to deploy more virtual machines. It also predicts where in a corporation's data center future bottlenecks are likely to occur. The company also sells the Chargeback Virtual Appliance, which tracks which corporate groups are consuming which resources in the data center, allowing a corporation to know how much money the compute resources of a given group are costing.
V-Kernel is continuing to develop further virtual appliances to tackle different enterprise management systems problems in a virtual environment, said Alex Bakman, the company's founder and chief executive.
The newest company to enter the space is DynamicOps, an internal project developed to manage Credit Suisse Group AG's virtual infrastructure. The start-up spun off from the investment bank in January with an undisclosed amount of funding from Next II Venture Group, the investment bank's venture capital arm.
Although the company will not make its first product generally available until July, it has been running in production at Credit Suisse for over two years, said Rich Bourdeau, DynamicOps' vice president of marketing.
DynamicOps' Virtual Resource Manager provides corporations with an automated process of building virtual machines that is faster than building them manually and ensures compliance with IT policies. It also tracks each virtual machine through its lifecycle by monitoring if it is being used and what groups are using it. The company will be targeting financial services as well as other industries.
Getting around the challenges presented by large incumbents does not ensure a company's success. Competition will come from young companies as well as old. In February, InovaWave Inc., with backing from Matrix Partners and Silverton Partner, changed its name to Hyper9 Inc. and went back into stealth mode to develop virtual infrastructure search and analytics tools.
The last two years has also seen the emergence of a number of bootstrapped and angel financed virtual systems management vendors such as ManageIQ Inc., whose founder and CEO was the founder of publicly-traded Novadigm Inc., a systems management company that was bought by Hewlett-Packard for $122 million in 2004.