STG Bolstered by Product Performance, Management Stability
STG’s strong performance, helped boost the company’s stock which is now trading at $194.50, very close to a 52-week high. Big Blue’s across-the-board strong performance got a further lift when it was revealed in November that Warren Buffet, invested $10.7 billion, equal to a 5 percent stake in IBM. Buffet’s investment was no doubt sparked at least in part, by the fact that IBM’s Return on Equity to shareholders is 69.84 percent, according to Capital IQ.
While both IBM and STG’s financials tell a compelling tale, they are not the whole story. IBM in general and STG in particular, clearly owe their strong showing to the features and performance of the products. However, IBM’s ability to deliver strong after-market technical service and support, the stability of its business and its’ ability to steer clear of the management tumult that has plagued rivals like Hewlett-Packard also play a large part in its success.
For the past three consecutive years, IBM AIX and Power Systems have recorded the highest uptime and reliability ratings in ITIC’s annual Server Hardware and Server OS Reliability Surveys. In the latest updated ITIC October 2011 poll, IBM’s AIX v7.1 UNIX OS running on the company’s Power System servers scored the highest reliability ratings and recorded the least amount of overall downtime from Tier 1, Tier 2 and Tier 3 outages among 18 different server OS platforms. Reliability is key metric that contributes to lowering or raising total cost of ownership (TCO).
Corporate customers interviewed by ITIC say they are equally impressed with the quality and celerity of IBM service, support and documentation when IT staff lodge technical support calls.
The stability of IBM’s upper management and its ability to provide smooth, orderly leadership transitions resonates well with customers, Wall Street, press and industry analysts. After a decade as Chief Executive Officer Sam Palmisano will step down and will be replaced by Ginni Rometty, IBM’s senior vice president for sales, marketing and strategy, overseeing IBM’s Global Business Services unit, on January 1.
The solid management also extends to STG. Adkins, a 30 year IBM veteran, has successfully headed the group since 2005 and this plays a key role in customer retention. The STG management team has consistently delivered a clear message that includes tactical product launches and long-term strategic direction. This is stark contrast to the upheavals at competitors like HP and Oracle where tumultuous management changes occur with alarming frequency (HP) and large, often hostile mergers and acquisitions and nebulous product roadmaps (Oracle) have left customers scratching their heads regarding future product directions and undermines confidence.
Nowhere is this more evident than in the well documented and highly publicized disaffection of the Oracle (former Sun Microsystems) SPARC server installed base. IBM’s STG group has been able to exploit that dissatisfaction which accounted for a large portion of the Power Systems and System x’ competitive wins during 2010 and 2011.
Adkins and Steve Mills, Senior VP and Group Executive, in STG Software and Systems also outlined the group’s strategy for gaining new business in the ongoing tough economic climate where IT budgets are static. STG continues to invest heavily in research and development (R&D) to drive efficiencies and economies of scale to assist organizations in reducing IT management and labor costs and to cut power and energy consumption. Depending on the size and scope of the individual customer’s infrastructure and workload, Adkins claims that Power Systems servers running IBM’s DB2 are one-third the cost of Oracle DB. Similarly, he says, the System x can lower management costs by up to 50 percent and IBM’s storage platforms can assist businesses in lowering powering and operating cooling costs by as much as 60 percent.
Analysis
In order to maintain and extend STG’s current level of success through 2012 and beyond, IBM is now tasked with topping itself.
STG executives should continue to focus on:
• Differentiating the products: STG is a large group that encompasses servers, storage, cloud computing, software and systems offerings. It’s easy for even stalwart IBM customers to be overwhelmed by the sheer number of products and announcements. The STG Group must strive to highlight the most important product updates and announcements to customers. C-level executives and IT departments are overwhelmed by too much information. IBM’s STG group should emphasize the two or three most crucial products and services per quarter and communicate that via their sales and reseller channels and user groups. IBM has always been good about providing guidance but it must do even better.
• Delivering competitive acquisition, licensing and technical support costs: The biggest singular criticism leveled at IBM is the high cost of its after-market technical service and support. No one expects IBM to offer superior services at Flea Market prices. However, IBM has one of the largest service and support organizations in the world. IT could and should build goodwill in 2012 by offering special promotions, discounts and bundled incentives to loyal STG customers and prospective customers. A sizeable segment of the end user population is currently and will be strapped for capital expenditure funds for the foreseeable future.
• Appeal to Small and midsized businesses: IBM is well entrenched among large enterprises in high profile verticals like financial services, healthcare and government, to name just a few. Small and midsized businesses however account for nearly 60 percent of all businesses. SMBs with fewer than 300 users lack the clout and deep pockets of their enterprise peers. Nonetheless, their numbers and capital and operational expenditure power are enormous – particularly in emerging geographical regions like Africa, which is a big focus for IBM’s STG group. Indeed there are many SMBs in IBM’s vertical bailiwicks. IBM, its current and potential customers would all be well served by the availability of specific purchasing and licensing programs that provide aggressive entry-level price points and value-added licensing deals for SMBs.

Microsoft’s Windows Server 2008 and Windows Server 2008 R2 scored impressive reliability gains in the 2011 survey compared to the prior 2008 and 2009 polls. Survey respondents now rank Windows Server 2008 R2 as among the top three most reliable, mainstream server operating systems. Windows Server 2008 R2’s reliability renaissance is especially impressive since Microsoft’s Windows Server OS noticeably lagged behind the majority of the UNIX, Linux and Open Source distributions in the ITIC/Sunbelt Software (now GFI Software) 2008 and 2009 Server Reliability surveys. Among the other survey highlights:

• Security: The biggest surprise of the survey was the strong security showing by Windows Server 2008 R2
• Highest Percentage of Severe Tier 3 Outages: Oracle’s Solaris 10 running on SPARC hardware had the highest percentage of survey respondents — 16% – who said they experienced at least three and more than 12 unplanned per server, per annum prolonged Tier 3 outages lasting more than four hours.
• Lowest Percent of Severe Tier 3 Outages: By contrast just 5% of both IBM AIX v 7.1 and Microsoft Windows Server 2008 R2 survey participants reported experiencing at least three and more than 12 unplanned per server, per annum Tier 3 outages of more than four hours duration.
• Integration and interoperability issues: (e.g., incompatible drivers) and problems applying patches are the most common culprits of protracted, unplanned downtime. These problems are exacerbated when IT managers are forced to spend valuable time searching for fixes, or if the vendor has not yet recognized the issue and there is no fix.
• Server Age: A 57% majority of respondents said their servers – particularly the critical main line of business servers — are between one and three years old. Keeping the server hardware updated has a major impact on reliability. One-in-five survey respondents – 20% – said their servers were three-to-four years old.
• Server Refresh Rates: One-quarter – 25% — of businesses refresh their main line of business server hardware “as needed” and 10% said they upgrade a portion of their servers annually. However, 17% of survey participants said their organizations refreshed their main line of business server hardware every five-to-six years and another 15% indicated they had no specific timetable.

As with any poll, the survey did elicit some surprises. Foremost among these was the fact that organizations utilize a higher percentage of the inherent CRM solution’s functionality than previously thought. There is a long held perception that a significant portion of corporate end users find CRM packages too complex and fail to take full advantage of their features or avoid using them altogether. Failure to use a CRM solution not only squanders the corporation’s investment in the technology but it can also result in less efficiencies in tracking and managing customer relationships, with the unhappy consequence of making the end users less productive and their companies less competitive.
The survey findings contradicted those perceptions. A 52% majority of participants said that their businesses used 50% or more of their CRM’s functionality. However none of the respondents said they utilized “all” of the CRM’s functions. And nearly two-thirds or 60% of survey respondents indicated that in order to maximize CRM usage within the organization, senior executives lead by example and use it themselves.
As with any technology, CRM does present some challenges for would-be adopters. Foremost among these are: cost, complexity, ease of use and ease of manageability. Over half of the respondents revealed that they were using the “CRM-like” capabilities within Microsoft Office to achieve baseline CRM functions.

Microsoft by the Numbers
Profit Margin: 30.02%
Operating Margin: 39.51%
Return on Assets: 18.82%
Return on Equity: 43.76%
Revenue: $62.48B

Quarterly Revenue Growth: 22.40%
Gross Profit: $50.09B
Quarterly Earnings Growth: 48.40%
Total Cash: $36.56B

Total Debt: $5.97B

Source: Capital IQ

Instead, many industry experts and observers paint a grim picture of the 35 year-old Microsoft in a midlife crisis, well past its prime and unable to compete in new and emerging markets like smart phones, search engines, online search and advertising and the cloud against edgier rivals, most notably Apple and Google. Recent articles have made much of the fact that Microsoft garners far fewer headlines these days – about one-third to one-half as many mentions – as Apple, Dell, Google, Hewlett-Packard, IBM, Oracle, Research in Motion (RIM) and VMware to name a few.
Press of course, is relative, depending on the type of news one is generating. Still the prevailing sentiments in the news business are that “No news is not good news” and “It’s better to be damned than ignored.”
Microsoft executives are no doubt grateful that for a change, they are not one of the headliners in the increasingly vitriolic verbal volleyball that characterizes HP and Oracle’s disintegrating partnership. Similarly, press reports about Microsoft and its executives have been remarkably devoid of scandals – such as those that have recently rocked the HP board of directors.
That then begs the question, if Microsoft’s financials are so rosy, its core Windows and Office products in the black and thriving, why then are some industry observers writing the company’s epitaph?
A Tale of Two Microsoft’s
The answer of course, is that while the numbers aren’t lying, they don’t tell the whole story. For all intents and purposes, there are two Microsoft’s: one is the company that exists in reality and the other exists in the public’s perception. And the two Microsoft’s are indivisible.
The reality is Microsoft’s core businesses – Windows and Office continue to thrive – for now. The industry however, is inexorably changing. It is morphing from a fixed premises, subscription-based licensing model that has been the foundation of Microsoft’s astounding success and dominance over the past three decades to an increasingly mobile workforce that uses smart phones (Blackberry, iPhone, Android et al); tablets (the Apple iPad) and free Email and applications (Google Mail, Google Docs) to stay connected. In these emerging environments, Microsoft is playing catch-up and struggling to stay relevant as rivals like Google and Apple continually assault its core applications businesses.
It doesn’t help Microsoft’s case when high level executives decide to exit the company “to pursue other interests.” Chief Software Architect, Ray Ozzie, the iconic developer of Lotus Notes, is the latest high profile departure. Ozzie, who was touted as Bill Gates’ successor as Chief Software Architect, announced earlier this week that he was leaving Microsoft. No departure date has been publicly announced and until he exits Ozzie will lend his considerable talents to the entertainment division.
Ozzie’s exit follows on the heels of Robbie Bach and J. Allard’s departures earlier this year as executives in the entertainment and mobile divisions, respectively. Bach and Allard reportedly clashed with Microsoft chief executive and other executives on technology direction. Such divisions were made sharper by the flagging fortunes of Microsoft’s mobile and entertainment initiatives. After suffering the stinging embarrassment of pulling its KIN 1 and KIN 2 phones off the market on June 30, a scant six weeks after the product debuted to near non-existent sales.
The company is now regrouping around the Windows Phone 7, which it is targeting at business users. The new Microsoft mobile OS has garnered good reviews so far, now it has got to get users onto the platform. Microsoft will reportedly spend $400 in a fall and winter marketing campaign throughout the U.S. and Europe. Microsoft has more than just money invested in Windows Phone 7’s success. If it fails to gain tangible and significant traction, Microsoft may effectively be shut out of the lucrative but increasingly competitive and crowded smart phone arena.
Microsoft has other definite challenges – and they are daunting ones. It must:
• Make more headway in the search market. Bing is a very good search engine and does have traction. The latest statistics released by ComScore earlier this month, show Bing with an 11.2 percent market share. However, that is far behind Google’s 66 percent.
• Clarify its Azure and BPOS cloud strategies. Microsoft has made significant strides in its cloud offerings and strategies. But its marketing is still muddy. Microsoft must craft a cogent and cohesive cloud strategy and communicate it so that it resonates with the masses of existing Windows customers and potential users.
• Retain and attract top talent. Truthfully, the number and caliber of executive departures from Microsoft over the past several years has been no better or worse than the majority of high tech firms. But Microsoft is under a microscope and is judged more harshly than most of its rivals. Many of the departures were predictable; coming after decades of tenure and after the executives in question had made millions. That said Microsoft must retain and attract top talent. Easier said than done, I know.

The biggest blow of all of course, was Bill Gates’ decision to retire from day-to-day Microsoft operations to concentrate on his philanthropic pursuits. This is great for Gates and his charities but he’s as close as you get to the indispensable man. Remember how Apple’s stock stumbled when speculation was rampant during 2009 about Steve Jobs’ health? Microsoft has also taken a beating in the press with rumors that Ballmer may leave or be forced out of the top spot. The truth is every high tech firm needs a visible face like Jobs at Apple, the triumvirate of Larry Page, Sergey Brin and Eric Schmidt at Google and of course, Larry Ellison at Oracle. Right now, there are no obvious successors or heirs apparent to Gates or Ballmer. For Microsoft’s sake Ballmer should stay at the helm for the time being.
Despite Microsoft’s issues, it would be a big mistake to write the company off. There are lots of positives. They include:
• Revenue and entrenched market share and continued dominance in the Windows and Office markets which should continue for the next several years.
• The Xbox Kinect and Windows Phone 7 appear to be gaining real traction.
• Broad, deep portfolio of cloud products which has shown impressive growth in the past 12 months.
• Robotics: Microsoft is also a pioneer in another crucial emerging market: robotics. Microsoft’s Surface is a multi-touch, combination hardware/software product that enables users to manipulate digital content via gesture recognition, such as hand signals or real world objects. Available since 2008, it has racked up some impressive wins and is in use at Disneyland’s Tomorrowland, select Sheraton Hotels and Harrah’s Entertainment.
• Security and Reliability improvements in the core Windows products. Microsoft’s 2002 Trustworthy Computing Initiative has been a rousing success. According to the National Institute of Standards and Technology’s (NIST) Common Vulnerability and Exposures Database (CVE) SQL Server is the most secure of the major database platforms, with the fewest number of reported vulnerabilities associated with the platform since 2002. And the results from the ITIC 2010-2011 Global Server Hardware and Server OS Reliability survey indicate that 86 percent of respondents rate the security of Windows Server 2008 and Windows Server 2008 R2 as either “Excellent” or “Very Good.” Similarly, 50 percent of survey participants indicated that Windows Server security has “improved significantly” while 24 percent say it has “improved somewhat” over the last three years. At the same time, none of the survey participants indicated they were contemplating wholesale defections to rival platforms, although the number of individual users deploying Apple Macs and iPads is on the rise.

There is no question that Microsoft will survive and continue to thrive in its core markets. The looming question is can Microsoft get its groove back to aggressively mount a challenge to Apple, Google et al, in the lucrative mobile, online, entertainment and cloud markets. It must go back to its roots and aggressively play to its strengths. Microsoft’s $36.56 billion in cash should buy a lot of advertising and a lot of talent.

The correct answer is Microsoft’s SQL Server. In fact, the Oracle database has recorded the most number of security vulnerabilities of any of the major database platforms over the last eight years.

This is not a subjective statement. The data comes directly from the National Institute of Standards and Technology.

Since 2002, Microsoft’s SQL Server has compiled an enviable record. It is the most secure of any of the major database platforms. SQL Server has recorded the fewest number of reported vulnerabilities — just 49 from 2002 through June 2010 — of any database. These statistics were compiled independently by the National Institute of Standards and Technology (NIST), the government agency that monitors security vulnerabilities by technology, vendor, and product (see Exhibit 1). So far in 2010, through June, SQL Server has a perfect record — no security bugs have been recorded by NIST CVE.

And SQL Server was the most secure database by a wide margin: Its closest competitor, MySQL (which was owned by Sun Microsystems until its January 2010 acquisition by Oracle) recorded 98 security flaws or twice as many as SQL Server.

By contrast, during the same eight-and-a-half year period spanning 2002 through June 2010, the NIST CVE recorded 321 security vulnerabilities associated with the Oracle database platform, the highest total of any major vendor. Oracle had more than six times as many reported security flaws as SQL Server during the same time span. NIST CVE statistics recorded 121 security-related issues for the IBM DB2 platform during the past eight-and-a-half years.

Solid security is an essential element for many mainstream line-of-business (LOB) applications, and a crucial cornerstone in the foundation of every organization’s network infrastructure. Databases are the information repositories for many organizations; they contain much of the sensitive corporate data and intellectual property. If database security is compromised, the entire business is potentially at risk.

SQL Server’s unmatched security record is no fluke. It is the direct result of significant Microsoft investment in its Trustworthy Computing Initiative, which the company launched in 2002. In January of that year, Microsoft took the step of halting all new code development for several months across its product lines to scrub the code base and make its products more secure.

The strategy is working. In the past 21 months since January 2009, Microsoft has issued only eight (8) SQL Server security-related alerts. To date in 2010 (January through June), there have been no SQL Server vulnerabilities recorded by Microsoft or NIST. Microsoft is the only database vendor with a spotless security record the first six months of 2010.

ITIC conducted an independent Web-based survey on SQL Server security that polled 400 companies worldwide during May and June 2010. The results of the ITIC 2010 SQL Server Security survey support the NIST CVE findings. Among the survey highlights:
• An 83% majority rated SQL Server security “excellent” or “very good” (see Exhibit 2, below).
• None of the 400 survey respondents gave SQL Server security a “poor” or “unsatisfactory” rating.
• A 97% majority of survey participants said they experienced no inherent security issues with SQL Server.
• Anecdotal data obtained during first-person customer interviews also elicited a very high level of satisfaction with the embedded security functions and capabilities of SQL Server 7, SQL Server 2000, SQL Server 2005, SQL Server 2008, and the newest SQL Server 2008 R2 release. In fact, database administrators, CIOs and CTOs interviewed by ITIC expressed their approbation with Microsoft’s ongoing initiatives to improve SQL Server’s overall security and functionality during the last decade starting with SQL Server 2000.

Strong security is a must for every organization irrespective of size or vertical industry. Databases are among the most crucial applications in the entire network infrastructure. Information in databases is the organization’s intellectual property and life blood.

Databases are essentially a company’s electronic filing system. The information contained in the database directly influences and impacts every aspect of the organization’s daily operations including relationships with customers, business partners, suppliers and its own internal end users. All of these users must have the ability to quickly, efficiently and securely locate and access data. The database platform must be secure. An insecure, porous database platform will almost certainly compromise business operations and by association, any firm that does business with it. Any lapses in database security, including deliberate internal and external hacks, inadvertent misconfiguration, or user errors can mean lost or damaged data, lost revenue, and damage to the company’s reputation, raising the potential for litigation and loss of business.

It’s also true that organizations bear at least 50 percent of the responsibility for keeping their databases and their entire network infrastructures secure. As the old proverb goes, “The chain is only as secure as its weakest link.” Even the strongest security can be undone or bypassed by user error, misconfiguration or weak computer security practices. No database or network is 100 percent hack-proof or impregnable.Organizations should consult with their vendors regarding any questions and concerns they may have about the security of ANY of their database platforms. They should also ensure they stay updated with the latest patches and install the necessary updates. Above all, bolster the inherent security of your databases with the appropriate third party security tools and applications. Make sure your organization strictly adheres to best computer security computing practices. At the end of the day only you can defend your data.

Registered ITIC site users can Email me at: ldidio@itic-corp.com for a copy of the full report.

• What types of equipment do they use?
• How old is the server hardware? Is the configuration powerful enough?
• How often is the data center equipment/infrastructure upgraded?
• How much bandwidth does the provider have?
• Does the service provider use open standards or is it a proprietary datacenter?
• How many customers will you be sharing data; resources with?
• Where is the cloud services provider’s datacenter physically located?
• What specific guarantees if any, will it provide for securing sensitive data?
• What level of guaranteed response time will it provide for service and support?
• What is the minimum acceptable latency/response time for its cloud services?
• Will it provide multiple access points to and from the cloud infrastructure?
• What specific provisions will apply to Service Level Agreements (SLAs)?
• How will financial remuneration for SLA violations be determined?
• What are the capacity ceilings for the service infrastructure?
• What provisions will there be for service failures and disruptions?
• How are upgrade and maintenance provisions defined?
• What are the costs over the term of the contract agreement?
• How much will the costs rise over the term of the contract?
• Does the cloud service provider use the Secure Sockets Layer (SSL) to transmit data?
• Does the cloud services provider encrypt the resting data to prohibit and restrict access?
• How often does the cloud services provider perform audits?
• What mechanisms will it use to quickly shut down a hack and can it track a hacker?
• If your cloud services provider is located outside your country of origin, what are the privacy and security rules of that country and what impact will that have on your firm’s privacy and security issues?
Finally, the corporation should appoint a liaison and that person should meet regularly with a representative from the cloud services provider to ensure that the company attains its immediate goals and that it is always aware and working on future technology and business goals. Outsourcing all or any part of your infrastructure to a public cloud does not mean forgetting and abandoning it.
Private Clouds: Advantages and Disadvantages
The biggest advantage of a private cloud infrastructure is that your organization keeps control of its corporate assets and can safeguard and preserve its privacy and security. Your organization is in command of its own destiny. That can be a double-edged sword.
Before committing to build a private cloud model the organization must do a thorough assessment of its current infrastructure, its budget and the expertise and preparedness of its IT department. Is your firm ready to assume the responsibility for such a large burden from both a technical and ongoing operational standpoint? Only you can answer that. Remember that the private cloud should be highly reliable and highly available – at least 99.999% uptime with built-in redundancy and failover capabilities. Many organizations currently struggle to maintain 99.9% uptime and reliability which is the equivalent of 8.76 hours of per server, per annum downtime. When your private cloud is down for any length of time, your end users (and anyone else who has access to the cloud) will be unable to access resources.
Realistically, in order for an organization to successfully implement and maintain a private cloud, it needs the following:
• Robust equipment that can handle the workloads efficiently during peak usage times
• An experienced, trained IT staff that is familiar with all aspects of virtualization, virtualization management, grid, utility and chargeback computing models
• An adequate capital expenditure and operational expenditure budget
• The right set of private cloud product offerings and service agreements
• Appropriate third party virtualization and management tools to support the private cloud
• Specific SLA agreements with vendors, suppliers and business partners
• Operational level agreements (OLAs) to ensure that each person within the organization is responsible for specific routine tasks and in the event of an outage
• A disaster recovery and backup strategy
• Strong security products and policies
• Efficient chargeback utilities, policies and procedures
Other potential private cloud pitfalls include: deciding which applications to virtualize; vendor lock-in and integration and interoperability issues. Businesses grapple with these same issues today in their existing environments. At present, however, the product choices from vendors and third party providers are more limited for virtualized private cloud offerings. Additionally, since the technology is still relatively new, it will be difficult from both a financial as well as technical standpoint to switch horses in midstream from one cloud provider to another if you encounter difficulties.
There is no doubt that virtualized public and private cloud infrastructures adoptions will grow significantly in the next 12 to 18 months. In order to capitalize on their benefits, lower your total cost of ownership (TCO), accelerate return on investment (ROI) and mitigate risk your organization should take its time and do it right.

While there is a great deal of interest in the cloud infrastructure model, the majority of midsized and enterprise organizations are not rushing to install and deploy private or public clouds in 2010.

However, that is not to say that organizations – especially mid-sized and large enterprises – are not considering cloud implementations. ITIC research indicates that many businesses are more focused on performing much needed upgrades to such essentials as disaster recovery, desktop and server hardware, operating systems, applications, bandwidth and storage before turning their attention to new technologies like cloud computing.
Despite the many articles written about public and private cloud infrastructures over the past 18 months, many businesses remain confused about cloud specifics such as characteristics, costs, operational requirements, integration and interoperability with their existing environment or how to even get started.
De-Mystifying the Cloud
But just what is cloud computing, exactly? Definitions vary. The simplest, most straightforward definition is that a cloud is a grid or utility style pay-as-you-go computing model that uses the Web to deliver applications and services in real-time.
Organizations can choose to deploy a private cloud infrastructure wherein they host their services on-premises from behind the safety of the corporate firewall. The advantage here is that the IT department always knows what’s going on with all aspects of the corporate data from bandwidth, CPU utilization to all-important security issues. Alternatively, organizations can opt for a public cloud deployment in which a third party like Amazon Web Services (a division of Amazon.com) hosts the services at a remote location. This latter scenario saves businesses money and manpower hours by utilizing the host provider’s equipment and management. All that is needed is a Web browser and a high-speed Internet connection to connect to the host to access applications, services and data. However, the public cloud infrastructure is also a shared model in which corporate customers share bandwidth and space on the host’s servers.
Organizations that are extremely concerned about security and privacy issues and those that desire more control over their data can opt for a private cloud infrastructure in which the hosted services are delivered to the corporation’s end users from behind the safe confines of an internal corporate firewall. However, a private cloud is more than just a hosted services model that exists behind the confines of a firewall. Any discussion of private and/or public cloud infrastructure must also include virtualization. While most virtualized desktop, server, storage and network environments are not yet part of a cloud infrastructure, just about every private and public cloud will feature a virtualized environment.
Organizations contemplating a private cloud also need to ensure that they feature very high (near fault tolerant) availability with at least “five nines” 99.999% uptime or better. The private cloud should also be able to scale dynamically to accommodate the needs and demands of the users. And unlike most existing, traditional datacenters, the private cloud model should also incorporate a high degree of user-based resource provisioning. Ideally, the IT department should also be able to track resource usage in the private cloud by user, department or groups of users working on specific projects, for chargeback purposes.
Private clouds will also make extensive use of business intelligence and business process automation to guarantee that resources are available to the users on demand.
Given the Spartan economic conditions of the last two years, all but the most cash-rich organizations (and there are very few of those) will almost certainly have to upgrade their network infrastructure in advance of migrating to a private cloud environment. Organizations considering outsourcing any of their datacenter needs to a public cloud will also have to perform due diligence to determine the bona fides of their potential cloud service providers.
There are three basic types of cloud computing although the first two are the most prevalent. They are:
• Software as a Service (SaaS) which uses the Web to deliver software applications to the customer. Examples of this are Salesforce.com, which has one of the most popular, widely deployed, and the earliest cloud-based CRM application and Google Apps, which is experiencing solid growth. Google Apps comes in three editions – Standard, Education and Premier (the first two are free). It provides consumers and corporations with customizable versions of the company’s applications like Google Mail, Google Docs and Calendar.
• Platform as a Service (PaaS) offerings; examples of this include the above-mentioned Amazon Web Services and Microsoft’s nascent Windows Azure Platform. The Microsoft Azure cloud platform offering contains all the elements of a traditional application stack from the operating system up to the applications and the development framework. It includes the Windows Azure Platform AppFabric (formerly .NET Services for Azure) as well as the SQL Azure Database service. Customers that build applications for Azure will host it in the cloud. However, it is not a multi-tenant architecture meant to host your entire infrastructure. With Azure, businesses will rent resources that will reside in Microsoft datacenters. The costs are based on a per usage model. This gives customers the flexibility to rent fewer or more resources depending on their business needs.
• Infrastructure as a Service (IaaS) is exactly what its name implies: the entire infrastructure becomes a multi-tiered hosted cloud model and delivery mechanism.
Both public and private clouds should be flexible and agile: the resources should be available on demand and should be able to scale up or scale back as the businesses’ needs dictate.

Next: In Part 2 The Pros and Cons of the Cloud

Among the other survey highlights:
• Nearly two-thirds of respondents — 63 percent — indicated they/their organizations use the various Apple devices for both personal and business functions.
• An overwhelming 82 percent majority of survey participants said they use their iPhones to access corporate Email and data.
• 24 percent, who did not currently own an iPhone, said they “have already decided” or are “very likely to switch” with an additional 35 percent saying “it’s possible we’ll switch when the current contract expires.”
• Eight out of 10 organizations said they are “more likely to allow more users to deploy Macintoshes as their enterprise desktops” in 2010-2011, up from 68 percent in the 2009 survey.
• The number of organizations reporting large complements of Macs and OS X 10.x in their organizations continues to climb. Some 7 percent of respondents said they have more than 250 Macs in their enterprise. In the 2008 survey, only 2 percent had more than 250 Macs.
• The percentage of mobile/remote users using Apple devices is rising quickly & significantly
• The line between Apple consumer and enterprise usage continues to blur : 79 percent of survey respondents said that their firms will increase integration with existing Apple consumer products such as the iPhone to allow users to access corporate e-mail and other applications in the 2010-2011 timeframe. This is an 11 percent increase from the 68 percent of respondents who answered that query in the ITIC/Sunbelt 2009 Apple Enterprise Usage survey.

Analysis
The growing popularity of Apple products in the personal lives of IT managers is having a continued spillover effect in the enterprise. The acceleration of interest compared to our previous surveys tells me this trend will continue unabated during the next 12 to 18 months.

This is the third Apple Consumer and Enterprise Survey conducted by ITIC and Sunbelt since 2008. Each successive survey has shown a steady increase in both the number of Macs and Apple devices being deployed by corporate enterprises. ITIC will release the results of additional survey questions on Apple product satisfaction, reliability, security and ease of adoption/integration in August, 2010.
Particularly noteworthy is the survey participants’ strong interest and enthusiasm for the iPad, a product just a few months old. Plus the already strong iPhone adoption will continue as old wireless contracts expire. One can only project that if iPhone becomes available on Verizon in the U.S., the numbers of additional enterprise-based units could be staggering.
Thus far, consumer and corporate users appear to be nonplussed and largely unaffected by the iPhone 4’s much publicized antenna problems which have led to reports of dropped calls the essay comments and first person customer interviews. First person customers interviews on the topic have elicited little more than a shrug. One user said, “So what? All mobile phones and PDAs drop calls.”
Still, Apple must respond decisively and quickly to address any performance, quality and reliability issues related to any and all of its products. Apple has a press conference scheduled for later today to address the issues.
At present however, these issues do not appear to be having an adverse impact on iPhone 4 sales.
With Apple’s enterprise success though, will come new challenges. IT managers who participated in the ITIC/Sunbelt survey extolled the features and functions of the Apple Macs, OS X 10.x, iPhone and iPad for consumers. However, as more and more Apple devices make their way into the enterprise, the lack of enterprise-class third-party management and performance-enhancement tools and technical support is becoming a significant barrier and impediment to widespread enterprise adoption. It is not as problematic though, for organizations that currently have just a few Macs or isolated pockets of Macs and OS X 10.x in specific departments such as graphics. Still, Apple will have to address these issues if it is to mount a serious challenge to Microsoft’s dominance. So far, the company has been silent about its enterprise strategy.
A new consortium of five third-party vendors calling itself the Enterprise Desktop Alliance (EDA) has taken the lead to promote the management, integration and interoperability capabilities of the Mac in corporate environments. Apple is well advised to forge a closer relationship with the EDA and its member organizations to foster greater third party integration and interoperability between Apple devices and rival platforms.
Part 2 of the Apple survey results as they relate to security issues will appear in a subsequent blog.