BT Enters the Cloud with the Virtual Data Centre

| Jun 19, 2009 | Managed IT Services | Competitive Intelligence Report

| Analysts: Dustin Kehoe, Bernt Ostergaard

Current Perspective: Slightly Positive
Vendor Importance: High
Market Impact: Moderate

Event Summary

June 18, 2009 –- BT has launched its Virtual Data Centre (VDC) offering dynamic services such as CPU, memory, storage (i.e., NAS and SAN), virtual servers, firewalls and load balancing that can be self-provisioned ‘on the fly’ to support its customers infrastructure requirements. BT’s VDCs will be available in the UK, Benelux, Germany, Italy and Spain and then plans to globalize VDC through additional facilities in USA and APAC later in 2009. VDC is supported by a range of professional services and targets the top 1,100 customers.

Analytical Summary

• Current Perspective: Slightly positive on BT for launching a global ‘infrastructure as a service’ offering dynamic computing, virtual servers, storage, load balancing and security across a shared platform because this move will attract the attention of enterprises that are exploring the available options for moving their IT infrastructure into a cloud environment to reduce costs, improve ROI and benefit from more transparent pricing based on a usage-based cost model. BT, however, is entering an already crowded market. The move puts BT directly into competition with system integrators and IT service providers (the ‘incumbents’ in the enterprise data center) with larger global footprints, a wider cloud computing portfolio (notably private cloud capabilities), and deeper pockets to front customers’ CapEx migration costs.

• Vendor Importance: High to BT because the company needed to offer dynamic computing solution to appeal to customers looking for next generation data center solutions that promise flexibility and cost-savings. BT’s Virtual Data Centre (VDC) is also a strong complement to its professional services capabilities helping customers address topics such as consolidation, virtualization, as well as IT audit, discovery and continual migration.

• Market Impact: Moderate on the data center services market partly because BT’s VDC follows similar offerings from major carriers, notably the Verizon Business CaaS and AT&T’s Synaptic Hosting), and partly because major IP service providers like IBM with a stronger financial position to front customers’ migration expenses are in this market already as well. While BT is likely to be a serious contender in several European markets, it will face serious challenges from global and national IT service providers in every country. If BT is able to align its professional teams and local sales organizations behind VDC, competitors will be forced to respond to defend their important national accounts.

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Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

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Recommended Competitor Actions

• IBM can point to its own June launch into the cloud with its Smart Business portfolio, where the new solution set, which initially focuses on enabling development and test environments as well as virtualized desktops, brings a comprehensive set of technologies and services that are required to support the effective deployment and management of elastic Internet-based IT services that are an integral “as-a-service” delivery. IT service providers and system integrators should generally question BT’s data center and application management credentials, as well as the carrier’s staying power in this capital intensive market segment. The dual responsibility of developing new technology ‘on the fly’ with customers’ business critical data ‘on board’ is not for the faint hearted.

• Verizon Business should highlight that customers can provision both virtual and physical services for supporting customers with test/development environments as well as physical servers to support high input-output applications such as database applications and e-mail. It should also highlight having a strong online platform to provision new services and solid SLAs metrics on portal and server availability and guaranteed provisioning times.

• Having a strong city ring infrastructure interconnected to a network of data centers across Europe COLT should strongly consider developing a similar utility computing proposition to support its customers looking to virtualize their IT infrastructure. Other providers such as Terremark, Rackspace, KPN/Getronics and HP/EDS should also raise the level of visibility for their existing service offers.

Recommended End User / Customer Actions

• Enterprise customers should be aware that there are many choices available for utility computing in a market that is still busy defining itself. Customers should be aware that BT differs somewhat from what Verizon and AT&T offer in that it will offer utility computing from more European facilities, with strong country organizations where it offers the VDCs and in-country professional services capabilities.

• Customers should consider utility computing propositions to support various business requirements. For example, enterprises with seasonal business (e.g., online retailers) will find benefits in being able to ramp up and down resources as required, others would benefit from staging/development, improving time to market for new services, or reducing costs through better use of virtualization. There will be a lot of developments in this space and customers should continue to monitor market trends closely.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Managed IT Services | More information

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