Three years ago, VMware CEO Paul Maritz announced his intention to build what he called a “Software Mainframe.” What did that mean? It meant that VMware engineers (2,000 of them) were going to build a software platform that was: 1) highly scalable and capable of supporting virtually any application and workload; 2) reliable – i.e. it never goes down and 3) incredibly secure; at much more attractive economics than traditional large scale commercial systems.

VMware today made a comprehensive set of announcements, spanning from hypervisor through policy management. Is this a software mainframe? Wikibon analyst David Floyer said on today’s Peer Incite Research call – “not quite, but it’s a step in the right direction.” What’s missing? VMware still doesn’t have the comprehensive security and management features of the mainframe, which was also a virtualized platform. Specifically, virtualization increases the number of entities that have to be protected from each other within the system (i.e. “nosy neighbors”). These include LUNs, memory resources, network ports, controllers, VMs, etc. And lots of them. The more entities you have the more boundaries need monitoring and the more data is created to monitor boundaries. This dramatically increases complexity and VMware security today simply hasn’t yet achieved mainframe-like status.

On the management side of the house, the tools for VMware still don’t provide application service level performance – management today is done at the VM and storage levels. If the number of apps being managed gets too large, users will get hot spots which means you’ve got to constrain the number of apps under management. While this can be addressed by creating multiple vCenters with like apps (in separate silos), this brute force approach is going to be somewhat less efficient with VMware compared to the classical mainframe. As the number of choices and permutations increases – management overhead goes up; especially as it relates to the amount of code required to do recovery. For example, in MVS, IBM’s mainframe OS, every module had two development teams, one for the functional code, one for recovery. That’s expensive – but effective.

Nonetheless, VMware is well on the way to achieving Maritz’ vision. Today, more virtual servers ship than physical machines. By the end of 2011, according to IDC and Gartner, 50% of all x/86 workloads will be virtualized. Less than 15 years after its founding, VMware runs nearly 1/2 of the workloads on the most popular platform (Intel x/86). Only the IBM 370 mainframe and the x/86 processor itself can claim such a rapid ascension in the world of the commercial enterprise.

The Services Angle

What this means is VMware is a large, multi-billion dollar opportunity that will attract services organizations. According to Todd Neilsen, COO of VMware, for every $1 spent on VMware licenses, $15 is spent in the ecosystem and services is the largest part of the ecosystem, comprising more than half of the VMware ecosystem spend.

Historically, services expertise has exploded in strategic areas of IT such as business process consulting, SAP implementation and management, application development, sourcing strategies, Microsoft platforms and the like; and VMware is no different. Big IT platforms require outside help to maximize ROI and accelerate time-to-value.

In the case of VMware, there are two main vectors IT organizations are seeing that involve services expertise: 1) getting VMware working for business and mission critical applications remains a complicated and nuanced task that requires deep expertise and 2) outsourcing infrastructure and apps to the cloud and establishing a compelling strategy requires outside help.

In theory, as it relates to #1, simplifying infrastructure will pressure services margins and squeeze providers. In reality, VMware opportunities are so large and it’s so early in the the race to IT-as-a-Service, that sharp services companies that understand how to exploit VMware for business advantage will continue to thrive. And all the big guns are going hard after this space including Accenture, CSC, Deloitte and the major IT providers that sell services including Dell, EMC, HP and IBM. As well, smaller integrators and vars are cleaning up in VMware providing local services that include VMware consulting, strategy, deployment and management; as well as desktop virtualization services.

As it relates to #2, outsourcing infrastructure services, VMware is taking an approach to work with service provider partners to enable the rental of IT resources versus requiring up-front capital expenditures. Maritz claims that there are 2,000 VMware service partners each day using VMware tools to offer rental-based pricing models to customers.

VMware’s vision is to take applications that are on-premise and ‘slide’ them to the public cloud; all the while maintaining the policy and security edicts of the application – i.e. these move with the app. And then allowing organizations to ‘slide’ the apps back or to switch service providers. On paper it’s a good vision because it will require a homogeneous infrastructure that is heavily VMware-based. VMware will push for using its own management and security tools as a standardization play. Not a bad strategy. Where it gets hairy is it’s not trivial to just ‘slide’ apps without sliding the data along with them – and moving data around, especially with production databases can be dangerous, slow and unpredictable.

Indeed, recent Wikibon research shows that less than 10% of IT organizations are actively pursuing hybrid cloud as a primary strategy. The reasons are several including: 1) IT organizations are still getting their private cloud acts together and 2) there are many other constraints holding back adoption. These include organizational uncertainties, line of business implications, the management of multiple external clouds, auditing concerns, SLA issues, integration with existing service catalogues and overall economics. The industry simply needs to do a better job providing clarity in these areas.

One emerging area of discussion revolves around data– specifically how to architect a data and metadata strategy that both leverages virtualization and cloud and at the same time doesn’t lock organizations in to a single supplier approach. Forward thinking services organizations are being proactive about this issue and choosing to forego traditional lock-in approaches in favor of accelerating adoption of cloud solutions.

Said another way – great service is the new lock-in and VMware continues to be a growth market that is increasingly strategic to SMBs and large organizations alike. While many issues remain, specifically around so-called hybrid cloud adoption, technology progression, maturity and experience will address these concerns over the next five years as the software mainframe (AKA cloud operating system) gets closer to reality.

Services will be at the heart of that transformation.