90 Percent of Small and Midmarket Companies Want to Keep Their Critical Apps and Data Out of the Cloud; Scale Computing Interview Part II

There is a tendency among technology providers to sometimes pooh-pooh the virtualization needs of small and midsized businesses and only focus on the needs of the “really big enterprises.” However when one considers that the 900,000+ companies with 20-500 employees in Canada, the UK and US are less than 30% virtualized, a tremendous opportunity exists for the right technology provider to meet their specific needs. In the second part of my interview series with Scale Computing’s Global Solution Architect, Alan Conboy, and its EVP and GM, Patrick Conte, we discuss what specific needs these size companies have and how Scale Computing is positioned to meet their needs.

Jerome: What is so special about the needs of small and midsized businesses and what does Scale Computing offer to meet their specific needs?

Patrick:
Scale has done well in verticals because our product really answers the needs of the midmarket guy. The ratio between the number of IT people and the number of employees is very skewed, especially in manufacturing.

One of our customers, Midwest Acoust-A-Fiber, makes injection molded carbon fiber parts for auto manufacturing. It has 1,000 employees and one full time IT guy. That IT guy manages their manufacturing and MRP system, their Exchange and their back office accounting all from one console. This is all managed via Scale HC3.

I’d like to segue here and provide you some insight into what we found out when we surveyed the marketplace. We did not simply want to believe research done by CRN and others out there so we sponsored a survey by a group called ApplicationContinuity.org to which 3,300 IT professionals responded from companies of various sizes.  

When we looked at the data of the guys that responded to the survey, 74 percent of them had five or less IT specialists. This speaks to the fact that people are doing a lot with very little resources. But these are not Fortune 1000 guys. Midmarket companies need providers like Scale Computing as literally 3 out of 4 of them only had five or less IT guys.

Another interesting factoid: 90 percent of the respondents felt it was critical to keep their key applications and data in house and not running out in the cloud in some form or fashion. That may not seem like a big deal but, to be honest, we were not sure what to expect when we did the survey. It was interesting to find out that they were strongly in favor of keeping critical applications and data in-house for bot security and data control reasons.

The top applications that these companies felt that they needed to keep on site align with what the Scale HC3 and our storage products. The number one application is accounting and finance. Number two is manufacturing. In terms of percentages, those are in the 90s. Messaging and email are not far behind at 70 percent. Document and content management are also both in the 70 percent range.

These are the top applications that people felt needed to be kept in house as well. In terms of what midmarket companies smaller than 500 are looking for, the top two items were security and redundancy with them defining redundancy as “a solution that is highly available and provides disaster recovery.”

93 percent said it was critical to have 24x7x365 support. Again, we were not sure that this was going to be the case. Enterprises always expect that but we did not know if small companies had this same expectation or felt the same way. Turns out, 93 percent of them thought support was critical.

In terms of what drives their decisions, or what they refer to as “decision drivers,” it is factors such as: (1) Who is going to be my virtualization partner; (2) Who can best help me consolidate my infrastructure; and (3) Who can help me make the most efficient use of my resources. One of the least important decision making factors was the brand of the vendor.  Yet among all the factors that small and medium size companies listed as important, the number one factor that influences their technology decision is high availability.

This is really the number one problem that Scale Computing set out to solve: Providing a highly1 available solution for the midmarket. If you need high availability, today the way you get it is virtualization.

If you need virtualization, you really need all of the following pieces (and all of this complexity.)  We call this the spaghetti diagram for obvious reasons as you need the VMs, physical servers, network protocols and two layers of switching in the spindle.

For the last four years Scale Computing has been living at the bottom of this picture in just the spindles. As long as NFS, CIFS and iSCSI were up and running, Scale was doing its job. We did not care if VMs failed at the top or whatever. That was IBM, HP, Dell, VMware’s issue, not ours.

However we always set out to build a full virtualization system. That’s why the company is called Scale Computing and over the last two years we’ve been heads down building a virtualized infrastructure on top of shared storage. We started out with shared storage because we had to have that foundation for virtualization.

If you are going to reconstitute failed VMs, you need to go into a shared storage infrastructure and get them. If you are going to rebuild a physical server that has failed, you need to be able to go and get all of the guest OS’s and everything that was running there, pull them out of shared storage, and put them on something else.

What Scale Computing has done with HC3 is take all of the complexity out of the equation. It has instead put all of those components in the middle into an appliance and then provided the tools so it may be managed as an appliance.

Architecturally this is what makes us different from everybody else in the marketplace. It looks and feels as though you are running your VMs right on top of your storage. You access them directly as if you working with direct attached storage (DAS) but you get all the benefits from shared storage to include the high availability that they so highly prize.

As a company the thing that makes us different is that we are laser focused on the midmarket. An interesting point about the midmarket, in just our top three markets, US, UK and Canada, there are 900,000 companies between 20 and 500 employees. No more than 30 percent of them have really done anything as it relates to virtualization which translates into a 25 billion dollar opportunity. We feel pretty good about that.

This is the instrument of the simplicity that we are talking about: HC3. It is a stack of boxes that is absolutely the easiest, most affordable virtualization system for a midsize company. Second, it is built to be highly available.  We have removed all points of failure from the cluster so we are delivering a fault tolerant system for the cost of a few server nodes.

Finally, the HC3 is scalable. If you need more resource, you just add a node. If you need more resources, you add in more nodes. Performance actually gets better over time as you add more nodes because we are mirroring and striping across all drives and all nodes so the more spindles you have, the more performance you get. An 8 node HC3 cluster will actually perform better than one with three or four nodes.

Probably the most important consideration here is that there are never any virtualization licenses, fees, or other fees like that you pay to scale ever. All of the licenses are included in the cost of the appliance. So long as you are up to date on support, you get everything. You get new software, new versions, updates, upgrades, bug fixes, everything as all licenses are part of the appliance.

In part I of this interview series, we examined how complexity in midmarket IT solutions is driving the need for a hyper converged infrastructure.
In part III of this interview series, we will discuss the technologies that Scale Computing uses to drive down the costs in its HC3 solution.
In part IV of this interview series, we discuss how Scale Computing delivers the high levels of availability and reliability that nearly every SMB seeks in its computing environment.

Jerome M. Wendt

About Jerome M. Wendt

President & Lead Analyst of DCIG, Inc. Jerome Wendt is the President and Lead Analyst of DCIG Inc., an independent storage analyst and consulting firm. Mr. Wendt founded the company in September 2006.

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