Practical Analysis: It's Not Disruptive If It's Not CheaperPractical Analysis: It's Not Disruptive If It's Not Cheaper

It's been an astounding few weeks as we've watched the once largest company in the world slide into bankruptcy. At its peak, General Motors produced more than 6.5 million cars and trucks per year. Last year it produced about 2.2 million, according to The New York Times. Meanwhile, GM's domestic workforce, which once numbered 600,000, will shrink to just 40,000 when it emerges from bankruptcy. While the decline in hourly workers is related to the decline in output, there's more to it than that.

Beginning in the late '70s, the auto industry transformed itself from the automation levels that Henry Ford pioneered to its modern state through heavy use of industrial robots. The result was that a good chunk of welders and painters in particular were made obsolete by automation. The same thing is about to happen in IT. For the auto industry, the numbers were pretty simple: A robot typically costs less than two years of an employee's compensation, and the tasks at hand are highly repetitive and generally unhealthy for humans. While provisioning servers and storage doesn't rank up there with welder's chills or inhaling paint for a living, it's a task that can and will be automated in every data center that has more than a handful of servers.

One thing that's slowing that progress is the pricing of virtualization management and automation software. When you look at a $150,000 industrial robot, you get the sense of what you're paying for. Precise control systems, lots of servos and motors, heavy-duty construction, and the rest make the price understandable. When you look at a $150,000 piece of software with a 20% annual licensing fee that creates virtual machines from physical ones, it's more of a head scratcher. Add in a configuration database, patch management, application performance management, and orchestration software--all required to automate a data center--and you can quickly chalk up a seven-figure price tag for a data center with as few as a hundred servers.

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We often talk about virtualization and the automation that should come with it as a disruptive technology, but by definition a disruptive technology must change the cost of doing business. So far, software providers are charging more than the mass market will bear, making the calculation for jumping headlong into true data center automation a tough sell, particularly to CFOs who may not fully appreciate the value of a more nimble IT organization.

Software vendors had better be ready to sharpen their pencils, because this is the sort of game that Microsoft plays very well. There's no doubt that it's still playing catch-up against VMware, and others will offer management software with more features, but you can bet that Microsoft will set the bar for midmarket data center automation pricing and functionality. Its close partnership with Citrix has resulted in a good management product in System Center, and a great add-on with Citrix Essentials. Just as Microsoft marginalized Novell with its file sharing, Active Directory, and adequate management tools for each, it can do the same to automation vendors.

Art Wittmann is director of information Analytics. Write to him at [email protected].

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