Open Networking User Group (ONUG) Co-Founder and Co-Chairman Nick Lippis talks IT consumption models with SDxCentral. Nick elaborates on how changes in IT consumption models affect vendors and other stakeholders. As we’ll discover, vendor business models need to change if there is to be a sustainable ecosystem of software based infrastructure companies. The shift in IT consumption models also affects the ONUG as an organization. As a result, ONUG will lead this business model change as it is in its best interest to have sustainable open vendors who offer choice and options.
SDxCentral: Are you seeing a change in IT consumption models driven by cloud and software-defined infrastructure?
Lippis: Yes, the entire IT buying cycle and patterns are fundamentally changing. There is a shift toward software in the IT infrastructure market, which includes networking, storage and compute. As this technology shift accelerates, so too will IT consumption models and buying patterns.
Can you explain why you believe there’s a fundamental shift here? What’s different about cloud and software-defined infrastructure?
Lippis: There is no army big enough to stop the technology trend toward the separation of hardware and software of infrastructure products. Cloud and software-defined infrastructure are software and services based IT consumption. For the past 25 years, corporations and service providers have built infrastructure with boxes that integrated hardware and software. This model is fundamentally changing because it doesn’t address a corporation’s need to add business value. In short, the old model is getting in the way of competitiveness, agility and business value creation.
Does this shift affect the balance of power between IT sellers and the IT buyer? How so?
Lippis: Both established and start-up firms are working with IT business leaders to understand the linkage between IT consumption and business model changes. It’s pretty clear that the industry is shifting toward a buyers market where it has been a sellers market for the past few decades. The main reason for this change is that buyers have the power of procurement and during this cycle they are driving the change.
What impact does this have on IT vendor business models?
Lippis: As IT consumption models change, IT sellers’ business models will as well. At ONUG there will be many proof of concept demonstrations, all of which are based upon a software-defined infrastructure model. Infrastructure used to be capital equipment based. The new model for infrastructure is to align it with software lifecycle, which means faster feature rollout plus a business model based upon software licensing.
And what does it enable in terms of IT consumers business models?
Lippis: IT spending on infrastructure will come down, thanks to automation, to the use of commoditized hardware plus the speed and agility afforded by software. The hope is that IT organizations will be able to rapidly deploy prototypes, offer on-demand services, be more competitive and agile. In the end it is all about economic expansion through the use of new IT technologies.
For vendors looking into business models in this new software-defined ecosystem, what are some successful and sustainable examples you have seen?
Lippis: There are few. VMware’s NSX group is one, but it had the benefit of VMware’s large sales and marketing infrastructure. There are many start-ups and established firms that are in search of what will be the new business engagement model in this software-defined infrastructure era.
How does the move towards these new business models impact the ONUG community?
Lippis: ONUG is uniquely positioned and motivated to help IT providers fund the new and sustainable business models that address the new consumption models. It is in the ONUG community’s best interest that there is a large groundswell of software-based firms that are sustainable and thriving so that increased choice and options flourish.
As a leadership organizations, what role can ONUG play in this shift?
Lippis: ONUG will start the dialog about how IT consumption models are changing. Within the ONUG community are IT business leaders, procurement executives, venture capitalists, financial analysts, academics, large suppliers and service providers, as well as a wide range of innovative start-ups. ONUG’s narrative will increase in this space so as to provide a forum where IT consumption model changes can be factored into the new software-defined infrastructure business models. This will start at ONUG Fall at NYU co-hosted with Morgan Stanley on November 4th and 5th, and continue during 2016 and beyond.
Are there explicit steps ONUG is already taking? And how can the community at large participate?
Lippis: Many of the keynote sessions and the fireside chats at ONUG Fall will start this dialog and journey toward a sustainable software-defined infrastructure industry.