Software Defined Everything (SDx) Series: Software Defined Everything Part 8: Succeeding in an SDx World
With SDx placing unprecedented demand on IT infrastructure and networking systems, our industry is in the midst of profound change whether we like it or not. The future of SDx infrastructure (SDxI) is vastly different from the familiar landscape of the past, and pretending otherwise is simply burying your head in the sand.
Over the past few months, we’ve explored what SDx means for the future of IT infrastructure. To help you get your bearings in a dynamic environment, we identified the broader macro trends affecting infrastructure and outlined the key attributes of the infrastructure of the future. We looked at who the new SDxI decision-makers will be, defined key use cases, and highlighted emerging form factors and delivery models.
In Software Defined Everything Part 8: Succeeding in an SDx World we provide some final thoughts on how to help your organization succeed in a changing SDx world. As an infrastructure vendor, how do you prepare yourself to meet changing customer needs? And how can consumers of IT infrastructure get the most out of promising SDx solutions? Whether you provide SDx infrastructure or are responsible for setting it up, laying the groundwork now is key to keeping your organization relevant and competitive in the future.
Four Strategies of Successful SDx Infrastructure Vendors
Just as legacy, hardware-based infrastructure acts as a bottleneck for SDx applications, traditional product development and delivery methodologies are hindering vendors’ ability to deliver new applications and solutions. Infrastructure demands and the speed of business continue to increase, and customers in the SDx world will not have time to deal with slow, complex processes from their infrastructure providers.
Sharpen Your Focus
SDxI products need to be simple to consume and sharply focused on a set of core competencies. The new SDx infrastructure tends to combine multiple smaller services orchestrated to deliver an SDx application, so companies that rely on a kitchen-sink or all-in-one approach will find it much harder to establish a strong toehold in the new SDx world. Think of what core value your infrastructure product adds for SDx applications and identify what you need to fulfill it.
If they don’t already, SDx application builders will come to expect traits and attributes like high availability, data archival and migration, and a rich set of APIs they can take advantage of. Clarifying your core value proposition will help you not only meet these needs, but also more effectively define the right use cases for your product, satisfy the most important SDxI attributes, and determine the right form factor for your solution.
The most successful SDxI vendors will continually raise the bar for innovation. Sharpening your focus helps you channel innovation in the right direction.
Shorten Your Release Cycles
SDx applications tend to have rapid release cycles to meet end-user needs and provide the agility to compete in the global marketplace. SDxI vendors need to mirror this by providing smaller, more frequent releases instead of large, less frequent ones. Start thinking about shifting from annual releases to half-year or quarterly releases. Monthly or weekly maintenance releases eventually should become daily or hourly.
Traditional waterfall and sequential methodologies often will hamstring teams trying to deliver on an accelerated cycle. SDx vendors need to adopt – or at least be versed in – incremental Agile methodologies such as Scrum that help promote continuous improvement and encourage rapid response to change. Investing in continuous integration (CI) capabilities also will help vendors find integration problems early and ship on a more predictable cadence.
Update Delivery Models, Revenue Structure, and Pricing
SDxI vendors need to figure out the best units of offering for their products and package them in easy-to-understand, easy-to-consume bundles. As we discussed in our last post, infrastructure delivery models have changed with SDxI, and value creation going forward likely will follow a subscription-based model instead of the perpetual license-based one so many have become used to.
Moving toward an “as a service” business model is not as simple as replacing perpetual licenses with subscriptions and working out a new price list. The shift requires a deep understanding of the model and commitment to it throughout the organization. Vendors need to adapt everything from revenue recognition and accounting processes to operational processes and customer service.
As with any other transition, the shift to SDxI delivery models may not always be seamless. We expect most successful SDxI vendors eventually will adopt a software-only model with improved gross margins and net margins over non-SDxI products, while COTS manufacturers pick up the hardware revenue. However, vendor revenue may drop during the transition from bundled, all-in-one perpetual pricing that includes hardware and software, to subscription-based pricing for software only. In time, the drop in one-time revenue should be replaced by a more continuous revenue stream.
Unlike historical pricing, which tends to have large number of components, SDxI pricing will be based on two vectors: 1) capacity- or use-based metrics, and 2) time. Meanwhile, SDxI components need to be grouped into two to three easier-to-select bundles that meet the needs of most of your customers, rather than a ten-page menu of offerings.
Modify your product price list and billing methods accordingly, and make sure the business as a whole understands the implications of moving to a subscription-based, software-only model. Some early adopters have already begun making the shift: Many networking equipment manufacturers already have started offering SDx-style pricing options, and companies such as SalesForce and Heroku have streamlined product offerings into commonly used bundles to simplify the buying process.
Develop Partnerships and Ecosystem Alliances
The most successful SDxI products are part of a wider software-orchestrated ecosystem. Many SDx applications involve components from multiple providers, and customers expect these APIs to work seamlessly. Vendors need to understand how they fit into different ecosystems and establish the right partnerships to ensure maximum compatibility and minimum frustration for customers who tie the components together.
When vendors put together recommended ecosystems with demonstrated best practices, they provide SDx application builders with starting templates to improve their own speed to market. For example, many customers use load balancing as a service in the cloud. This means any load balancing as a service provider needs to make sure its solution works well with all major cloud service providers.
Customers want to be able to build flexible, scalable applications quickly. Cross-data-center, cross-provider integration and testing make it easy for customers to use components from different vendors to work as a whole.
Four Steps to Becoming a Smarter SDxI Consumer
While much of our series has looked at infrastructure changes from the point of view of the SDxI vendor or service provider, at the end of the day all of us are SDxI consumers as well. As old infrastructure models and operating processes become less and less effective, next-generation infrastructure helps you meet the essential SDx requirements of personalization, security, efficiency, speed, and agility.
To make sure your organization stays competitive in an SDx world, you need to harness technology to promote key business goals and create a culture that makes it possible to do so. Here are four steps to get you started:
Make Sure Technology Supports Key Business Objectives
SDxI solutions can help increase productivity and agility in ways previous-generation technology never could. SDxI components are designed to scale better, improve product reliability, shorten development cycle time, and reduce errors by leveraging popular and well-tested software components. But before investing another dollar in infrastructure upgrades or overhauls, you need to clarify your organization’s core values and what sets you apart from your competition.
Forward-thinking organizations already are finding different ways to adapt to an SDx world. Some have designed and created their own infrastructures from the ground up, while many others are utilizing the power of the cloud. The most successful ones have honed their core values into business differentiators and invested in the right technology to advance them.
Look hard at the role technology plays in your organization and how well your systems further your most important business goals. Once you decide which applications need to be built or bought to help support your goals, that will help shape what changes need to be made in your infrastructure.
Find the Right Blend of Vendor Proprietary and COTS Components
Performance of commercial-off-the-shelf (COTS), also known as “white box,” hardware has gained ground in recent years. COTS components are responsible for some of the most dramatic SDxI cost savings and form an important part of many next-generation infrastructures. The challenge lies in deciding when to use them and when to leverage vendor products and expertise.
Based on the core technology of your infrastructure, examine which SDxI use cases are most relevant to your organization. This will help you narrow down which vendors would be most appropriate for you and compare them against the solutions you would need to build on COTS hardware.
In general, COTS hardware satisfies use case needs on opposite ends of the spectrum. On one end are customers with the most basic compute and data handling needs. On the other end are those that have extensive, complex infrastructure requirements and the human power to customize components to meet those needs. The largest SDx players such as Facebook and Google have leveraged COTS hardware to help them dominate their industries, but most organizations will have a blend of COTS and proprietary vendor hardware.
Create an SDx-Aware Culture
Developing an SDx-ready organization requires people who have the right mindset, not just the right skill set. In the same way that vendors need organization-wide support as they transition to new business models, companies need the same as they keep themselves competitive in an SDx world.
The most effective employees will understand that collaboration and integration, not siloed turf wars, are the only way they can meet the relentless demands on IT. Teams need to shift their focus away from IT features and toward solutions that support business objectives. Technically, SDx architects should be very comfortable with next-gen technologies, DevOps tools, and scalable architectures with a blend of private and public clouds.
Encourage employees to educate themselves and learn as much as they can about SDx infrastructure, and give them the means to do so. Larger, more established organizations also should consider breaking up large development teams into more agile ones capable of “failing faster” in order to innovate faster.
4. Beware of Empty SDx Packaging
One last word of caution: Some vendors will inevitably try to adopt an SDx mantle without making any substantive changes to their products. Here are some ways to tell when a “new-style” vendor is nothing more than an old-style company with a skin-deep makeover:
- The company simply wraps existing CLI in new APIs and claims the solution is DevOps-enabled.
- The company virtualizes a hardware appliance without optimizing the solution or changing the way users work with the appliance.
- The company simply sells their hardware products with a subscription-based or capacity-based pricing without investing in new metering or licensing mechanisms, in the hopes that the trend will reverse itself and they can revert to their old ways.
- The company decides to sell their products “as a service” but still expects customers to pay as an upfront perpetual software license model rather than a subscription-based model by locking customers into 3 year up-front contracts and paying expensive “setup” fees.
With few exceptions, the industry as whole is still attempting to apply old models against the new SDx world. We hope this series has spurred thought about how our industry can best meet the needs of an SDx world, and more importantly, how your organization can stay competitive in it. We encourage you to take advantage of this window of opportunity and make the changes you can while others are missing the boat.
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