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A revolution is underway in data centre technology. And it is being driven by customers desperate to cut costs and improve responsiveness.

Before he jumped ship and formed his own technology company, Vern Brownell was becoming increasingly uncomfortable with his job.

As the chief technology officer of Goldman Sachs, Brownell had presided over a huge expansion in the international investment bank's IT capacity.

Over time, a handful of mainframes was replaced, first by tens, and then by thousands of Unix and Windows servers. Thousands of other devices compounded that complexity. Complicated systems management tools were added to try to manage the mess.

"I looked at all this and thought: 'I am the guy who created this environment," he says, "I felt responsible for creating a nightmare." Brownell knows that, like his peers running complex, IT-dependent organisations, he had no real choice. But, he says: "I never felt it was right.

There was something fundamentally wrong with the technology." Why, he asked himself, was it so expensive to manage? Why so difficult to change? And why was the utilisation of all this power so low? Brownell, of course, was not alone in his frustrations. Big data centre operators regularly complained about the growing complexity, and industry leaders, among them Larry Ellison, CEO of Oracle, and Scott McNealy, CEO of Sun, often promised a future nirvana, when computer power would be available on tap, on a "pay as you go" or "utility model" basis.

Whatever they said didn't make much difference: all the while the software and servers, storage and networks proliferated.

Now, all that is starting to change - dramatically. And the experts agree that computing is on the cusp of one of its periodic seismic revolutions. And this one, they say, will have profound implications.

"We're at one of those rare points in time when we universally agree," says Bill McColl, professor of computer science at Oxford University and the CTO of Sychron, a provider of provisioning tools for automated data centres. "We're in transition from proprietary, expensive and manually intensive computing to a more commoditised, more automated, virtualised and cheaper model," he says.

It is a model in which all the devices in a data centre - processors, storage, networks - are virtualised; in which services are paid for on demand; in which business needs dictate which resources are used; and in which automation finally drives down IT costs (see box).

"[This] will have a huge impact on the technology industry. [And] it will bring about a profound change in the way organisations source, use and pay for technology," said Gary Barnett, an analyst at technology research company Ovum, in a recent report.

Sceptical customers may thinking they have heard some of this before. But the weight of investment is undeniable: "There are 20,000 young software companies out there, and at least 40% of these are aimed at virtualisation," says Nora Denzel, senior vice president and general manager for Adaptive Enterprise at Hewlett-Packard (HP).

Brownell left Goldman Sachs to set up one of those companies, eGenera, a pioneer of blade servers - a new technology that simplifies and reduces the costs of server-based computing. Bill McColl set up Sychron to address another area - automatically linking business demands with underlying virtualised resources.

Executives at HP say they are betting the company on the inevitability of this new model of computing: The company has so far invested $3 billion in R&D and $100 million in acquisitions in this area. IBM, Sun and Microsoft are all doing likewise.

Driving down costs

The IT industry is frequently accused - deservedly - of creating solutions to solve non-existent problems. But not this time.

In 1990, IDC said that 20% of all IT costs were in operations. That figure, considered too high then, is now more like 60%.

"Spending on servers is down to $55 billion a year. But users are spending twice that on managing them," said Tim Howse, chief technology officer of Opsware, a software company set up to automate data centre operations, speaking at the recent IDC conference on dynamic computing.

The opportunity for businesses to slash their IT costs is huge - even without adopting full utility computing. "Through adaptive computing, CIOs can flip the ratio for spending heavily on operations to spending heavily on innovation," says Mark Potts, CTO of the Management Software Organisation at HP's Software global business unit.

HP estimates that 80% of IT spending goes on infrastructural and application maintenance. Its target is to get this down for customers to single digits.

"Around 70% of what CIOs are now spending is just on treading water," concurs Rob McCormick, CEO of Savvis, one of the world's biggest data centre operators.

How long will the momentous change take? Most analyst firms see adoption of the basket of technologies involved rising rapidly over the next two to five years.

Gartner, the IT advisory company, has a six staged model of adoption that stretches from the preparatory phases of consolidation through to virtualisation, automation and, ultimately, business process or policy-driven IT (see box). Ultimately, Gartner analysts think businesses will be able to benefit from highly flexible, lower-cost, business driven IT.

They don't put a timetable to it, but warn it is complex and could take years.

BT, one of the leading data centre operators and services suppliers, takes a similar view. "You shouldn't underestimate the difficulties involved here.

The shift should be done in a componentised way - virtualise the risk," says Colin Hopkins, director of BT's data centre services and telehousing operations. BT offers a virtualised storage service today, and will soon introduce a virtualised network service. But virtualised processing, especially in complex environments, is further out.

The wave is already building, however. Blade servers, for example, are now being used by thousands of companies, and some are beginning to use virtualisation.

Dynamic provisioning is also catching on fast - regardless of how virtualised the underlying technology is: Opsware, for example, cites one customer, Fox News, that, for the day of the US SuperBowl, was able to more than double the number of servers it had available.

Another example is Savvis: It uses blade servers, dynamic provisioning and virtualisation technologies to provide resources on demand to services customers - among them several Wall Street banks.

Grid computing is also beginning to win acceptance at service providers and users, giving dramatic results to companies such as Acxiom, Bristol Myers Squibb, Société Générale, JP Morgan and Peugeot - among others. These early adopters demonstrate that grid is not just about numerically intense computing. "They don't want references from mad scientists," points out Martin Hingley, VP of IDC's European systems group.

These dramatic cases are just the start, says Rich Friedrich, director of Internet Systems and Storage Labs for HP. "We're setting out to re-invent the economics of IT. We're in the very early days."