Enterprises are turning to hyper-converged infrastructure solutions because of their simple deployment model and high levels of automation. Some channel partners are cashing in on the technology shift, but traditional storage products still represent an enormous market.
HCI systems, which have been available for a handful of years, bundle server, storage, networking and virtualization functions in a single system. Initially, vendors such as Cisco, Dell EMC and Nutanix packaged the devices as appliances, turnkey solutions that were dropped into enterprise networks. Later, suppliers such Microsoft, Red Hat and VMware designed software-based solutions, which ran on generic white box hardware. A third variation on the theme comes from Dell EMC and Nutanix, which offer appliances customers buy in a cloud-like manner. In this approach, customers pay set monthly charges, and the vendor is responsible for any system upgrade. Finally, HCI as a service is also emerging.
This market is red hot. HCI revenue grew 76.3% year over year during the first quarter of 2018, generating $1.3 billion in sales, according to IDC.
Unsurprisingly, hyper-converged infrastructure technology is becoming key to many partners' business plans. "For the past few years, we have seen steady growth in HCI. But recently, we bid on a few very large [requests for proposals] that leverage HCI," said Greg Foster, infrastructure solutions practice manager at Force 3, a federal government systems integrator based in Crofton, Md. "If we land them, HCI will account for about 50% of our new business as opposed to the 15% to 20% seen the last few years."
Reliant Technologies Solutions Group has bet its future on HCI. "We sold a lot of enterprise storage in the past -- primarily EMC and Hitachi -- but we are 100% Nutanix HCI now," said Sandy Kohler, CEO at Reliant Technologies Solutions, an Edmonton, Alta., channel partner founded in 2012.
"We still service our old customers with their legacy solutions, but we believe the change to HCI is inevitable," Kohler said. "We don't sell any traditional storage. Everything is HCI or cloud."
A focus on agility
A few factors are driving the HCI purchasing frenzy.
For one, IT departments are under pressure to deliver services more quickly. Hyper-converged infrastructure solutions fit well with private and hybrid cloud deployments, which IT departments are pursuing to modernize infrastructure and match public cloud agility. HCI systems have state-of-the-art system designs, so they typically include more automation functions and take less time to deploy than traditional three-tier server solutions.
Organizations are searching for public cloud alternatives for a few reasons. Some businesses fear being locked into their cloud vendor if better options emerge in the future.
Also, certain workloads don't make sense for public clouds from a cost perspective. "Some businesses have had bad experiences or found cloud too expensive for their applications," said Mike Machulsky, executive vice president, business development at VertitechIT, a systems integrator that was founded at the turn of the millennium. VertitechIT sells mainly to healthcare providers, who represent about 80% of its revenue.
Public cloud pricing can be tricky for customers to quantify. Storing data in the cloud is inexpensive, but vendors charge when information moves in and out of the cloud, so applications supporting dynamic data become quite expensive.
A broader reach
Another reason for the growing interest in hyper-converged infrastructure technology is the types of workloads that mesh with the architecture have been broadening.
John McArthurresearch director, Gartner
"Initially, HCI was a great fit for [virtual desktop infrastructure] and simple web services," Force 3's Foster said. In business for 26 years, Force 3, which has about 200 employees, is a subsidiary of Sirius Computer Solutions and has relationships with leading hardware suppliers, like Cisco and IBM.
Recently, hyper-converged infrastructure solutions have been used for more demanding, line-of-business applications, such as high-performance database management systems. The technology has become increasingly mainstream. In addition, HCI system data backup and data recovery features have improved.
"Companies can architect their HCI systems to solve data availability and data protection issues," VertitechIT's Machulsky said. Corporations with multiple systems or data centers can spread processing requirements over multiple systems, increasing uptime, improving disaster recovery procedures and lowering costs.
Reduced spending on personnel is another HCI attraction. Traditionally, organizations had to hire server, storage, network and perhaps hypervisor specialists. With a hyper-converged system, they need one system generalist.
In addition, HCI systems include automation tools, so routine management time is reduced. In 2014, VertitechIT worked with Baystate Health, a $2.1 billion healthcare provider with 12,000 employees, to modernize its data center. The company replaced a traditional three-tier system with HCI systems, resulting in $6 million in savings and reducing the IT department's time to value by 50%.
Staying with legacy systems
Hyper-converged infrastructure solutions are gaining traction, but many companies still opt for three-tier solutions.
"The traditional server and storage markets dwarf the hyper-converged market," said John McArthur, research director at Gartner. While HCI solutions generate about $1 billion per quarter, storage and server systems each garner about 10 times more revenue.
Enterprises continue to invest in new storage solutions for a few reasons. "When it comes to data, most organizations underestimate how fast it will grow," Machulsky said. Storage solutions offer leading-edge functions that may be needed for high-performance applications. All-flash systems have been falling in price and deliver high-end performance. Software-defined storage has made it easier for companies to deploy and manage these systems.
The type of information being stored is also important for determining whether traditional storage or hyper-converged infrastructure technology is best. Emerging storage-centric applications like body cameras, streaming media, video vaults and records management solutions often involve unstructured data. HCI systems were built to handle structured data repositories, such as a database management system. Object storage solutions, meanwhile, do a good job supporting unstructured data, but HCI systems typically offer rudimentary functionality in this area.
The need for service emerges
For those channel firms selling hyper-converged infrastructure solutions, new consulting opportunities arise. The process begins with partners helping customers understand what HCI is and how it may, or may not, benefit their organization.
"Four years ago, when we were first exploring HCI, few customers knew what it was so we were doing a lot educational sessions," Kohler said.
HCI partner programs evolve
With sales rising, hyper-converged infrastructure solutions vendors are honing their channel programs. Starting August 2018, all Nutanix partners will need to be certified in the vendor's equipment. Previously, resellers only needed to sign up to become a partner, according to Rodney Foreman, vice president of global channel sales at Nutanix.
The company has three types of partners: pioneers, scalers, and masters. Those levels are determined according to how much experience a partner has with the product line, rather than sales volume. Pioneers have completed few sales, so they need a higher level of support than a master, an integrator that has finished a number of deployments.
Companies need help in other areas, such as evaluating hypervisors. VMware is the industry's dominant hypervisor, but companies adopting HCI may look at Linux kernel-based virtual machine hypervisors from vendors such as Red Hat.
"Companies need to be educated about the benefits, limits and risks found with the newer hypervisors," Gartner's McArthur stated.
Channel partners may also need to assist clients with change management. Indeed, hyper-converged infrastructure solutions alter the composition of the customer's data center team. Previously, organizations created silos of techies with deep expertise in specific types of technologies such as servers, storage, networking and hypervisors. With hyper-converged infrastructure technology, the need for technical depth diminishes, as individuals work across the silos rather than dive deeply into them.
Such changes can have a dramatic impact on a data center, especially ones that have been in place for years. Companies sometimes need assistance addressing cultural resistance and even possible sabotage.
Managing customer expectations is another channel task. Vendors may over-promise HCI capabilities, so end users expect too much from these systems or use hyper-converged systems for workloads they cannot easily support.
"The reseller needs to take on the role of the trusted advisor, the voice that helps IT make sure that HCI is a good fit for their workloads," McArthur said.