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	<title>loopback0 - Douglas Gourlay&#039;s Blog&#187; Business</title>
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	<description>Data Centers, Virtualization, and Cloud Computing</description>
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		<title>Validating Some Power/Cooling Cost Assertions</title>
		<link>http://www.douglasgourlay.com/blog/2010/02/validating-some-powercooling-cost-assertions/</link>
		<comments>http://www.douglasgourlay.com/blog/2010/02/validating-some-powercooling-cost-assertions/#comments</comments>
		<pubDate>Fri, 26 Feb 2010 23:47:44 +0000</pubDate>
		<dc:creator>Douglas Gourlay</dc:creator>
				<category><![CDATA[Business]]></category>
		<category><![CDATA[Tech]]></category>

		<guid isPermaLink="false">http://www.douglasgourlay.com/blog/?p=202</guid>
		<description><![CDATA[Am making a spreadsheet comparing different products and looking at longer term costs, maintenance, power, cooling, etc.  I felt that rather than scrubbing the DOE sites and trying to get power costs by state I would just use the national average, but then fell flat on that because I found negotiated rates could be much [...]]]></description>
			<content:encoded><![CDATA[<div id="attachment_203" class="wp-caption alignleft" style="width: 310px"><a href="http://www.douglasgourlay.com/blog/wp-content/uploads/2010/02/iStock_000000330791Small.jpg"><img class="size-medium wp-image-203" title="Power Costs per 10Gb Port seem to be an inhibitor to adoption" src="http://www.douglasgourlay.com/blog/wp-content/uploads/2010/02/iStock_000000330791Small-300x199.jpg" alt="" width="300" height="199" /></a><p class="wp-caption-text">What is the easiest way to account for space/power consumption of a network element?</p></div>
<p>Am making a spreadsheet comparing different products and looking at longer term costs, maintenance, power, cooling, etc.  I felt that rather than scrubbing the <a href="http://www.eia.doe.gov/cneaf/electricity/epm/table5_6_a.html">DOE sites</a> and trying to get power costs by state I would just use the national average, but then fell flat on that because I found negotiated rates could be much less than published tariff rates.</p>
<p>Then I stumbled upon what may be an easier solution to my quandary and one inline with what I see a lot of enterprises doing - call a hosting company.  I haven't talked to too many enterprise customers that are not at least considering if not seriously considering using a hosting environment, or event a full-blown cloud deployment for some portion of their enterprise data center workloads.  Why? - the main reason I keep hearing is that most enterprise customers cannot build big enough to achieve the same economy of scale as a Google, Microsoft, Facebook, etc.  So they may as well lease space from a provider who can achieve a higher density, lower PUE, better delta-T, and handle the compliance tasks like <a href="http://www.sas70.com/about.htm">SAS 70 Type-II </a>(<a href="http://www.switchnap.com/">Switch</a>, <a href="http://www.equinix.com/">Equinix</a>, <a href="http://www.corelink.com/">Corelink</a>, etc) and not to mention the IT assets put within the data center grow at a power/performance curve that usually breaks the facility they are housed within in 5-7 years, so who wants that on their books - better to let the provider manage/operate it.</p>
<p>In asking around I got to an average number of ~$155 per month per kilowatt consumed when in a hosted environment (ping, power, pipe).  Does this seem inline to you or too high/low based on what you are seeing?</p>
<p>With this data you can then extrapolate Watts/10Gb port across several systems and you get variability from $92/year per 10GbE port up to $372/year per 10GbE port assuming $155/month per kilowatt.  (I am eliminating my own companies products from this so as to avoid being a blatant advertorial...) Annualized hosting/power cost comes to $9,400 to $25,800.</p>
<p>I will be the first to admit there are HUGE differences in features, programmability, buffering, network segmentation, encapsulation methods, and Quality of Service Granularity between many of these platforms.  Those that performed the best were usally more 'switch like' with smaller buffers, less features, and fixed function ASICs for the data path.  Those at the top end of the spectrum were almost always products like Juniper's T640/T1600 and Cisco's CRS - extremely high function core routers with huge performance, buffers, shapers, policers, and probably most importantly a software upgradeable packet processing engine that allows incremental feature additions that execute in the data plane.</p>
<p>It's clearly not an apples-to-apples and don't want it to come across that way, my real question is - is using an average of US hosting pricing per kilowatt an effective way to get a model for opex cost/10Gb port or are there other models people would recommend?  Am pretty open to anything right now provided it is accurate and neutrally intentioned.</p>
<p>dg</p>
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		<title>The Peril of Earn-Out based Mergers and Acquisitions</title>
		<link>http://www.douglasgourlay.com/blog/2010/02/the-peril-of-earn-out-based-mergers-and-acquisitions/</link>
		<comments>http://www.douglasgourlay.com/blog/2010/02/the-peril-of-earn-out-based-mergers-and-acquisitions/#comments</comments>
		<pubDate>Mon, 22 Feb 2010 16:55:26 +0000</pubDate>
		<dc:creator>Douglas Gourlay</dc:creator>
				<category><![CDATA[Business]]></category>

		<guid isPermaLink="false">http://www.douglasgourlay.com/blog/?p=185</guid>
		<description><![CDATA[Thirteen years ago I worked at a small technology consulting firm, headquartered out of Columbia South Carolina, named The Computer Group.  TCG was acquired by IKON Office Solutions, the copier company. IKON then went on a spending spree over the next year acquiring many technology companies, largely small to mid-size systems integrators in a fairly [...]]]></description>
			<content:encoded><![CDATA[<div id="attachment_186" class="wp-caption alignleft" style="width: 270px"><a href="http://www.douglasgourlay.com/blog/wp-content/uploads/2010/02/iStock_000002132864XSmall.jpg"><img class="size-medium wp-image-186" title="Golden Handcuffs" src="http://www.douglasgourlay.com/blog/wp-content/uploads/2010/02/iStock_000002132864XSmall-260x300.jpg" alt="" width="260" height="300" /></a><p class="wp-caption-text">Sometimes the &#39;golden handcuffs&#39; tarnish the other hands in the company...</p></div>
<p>Thirteen years ago I worked at a small technology consulting firm, headquartered out of Columbia South Carolina, named The Computer Group.  TCG was acquired by IKON Office Solutions, the copier company.</p>
<p>IKON then went on a spending spree over the next year acquiring many technology companies, largely small to mid-size systems integrators in a fairly classic channel roll-up strategy to build footprint.  This was quite smart given the complexity of digital copier and printing systems coming to market in the mid 1990's as well as the upside and opportunity to move into adjacent markets aside from their core paper distribution and copier sales and service divisions.</p>
<p>The problem came not in the vision, although I can say that some of the engineers did ask the question, "Ummm, we work for a copier company?  Huh?"</p>
<p>When these companies were acquired almost every company was given an interesting choice - take some payment up front or take a bit smaller amount up front but if the company hits specific P&amp;L targets there is a significant upside (between a 50% to 200% multiplier) that is paid if the targets are hit or exceeded.</p>
<p>Now, we all learned in Sales 101 that leveraged compensation plans tend to be highly motivational to the principals involved, and this case was no different.  Each company was so singularly motivated to achieve their individual targets that the following happened:</p>
<p>1) Each group tried to keep their own identity<br />
Each group almost always referred to themselves by their 'old' name, and never as the identity of their new employer.  They never integrated their identities.</p>
<p>2) Cross-Charging became commonplace<br />
Each group started cross-charging the others for any internal resource sharing.  This made it more costly to use internal 'big company' resources than it often did to hire your 'own' resources because the cost-basis was higher because the other groups wanted to make a profit on each other.</p>
<p>3) No tools integration<br />
Their was no mandate to centralize IT resources, standardize on toolsets, etc.  Each company did things their way, and used any mandate to integrate as an opportunity to complain how 'corporate was slowing them down' and was an excuse for why any earn-out targets were not achieved.</p>
<p>4) Internal Competition<br />
Since there was significant overlap in product/services from each group, and no common positioning or strong hand at the helm the groups would compete with each other for customer opportunities.  There was no strategy or consistency in the pricing models between the divisions, and we looked like 20 companies to the end-customer, not one.</p>
<p>5) Haves/Have-Nots<br />
Their was pretty significant disparity as well between the equity distributions between those acquired and those hired.  This led to a haves/have-nots schism in the organization as well.  Many of the new hires would often ask a question I have heard repeated in other organizations where earn-out M&amp;A was tried, "Why am I working so hard to make them so rich?"</p>
<p>The net result?  IKON is still a copier company, does a good job at it.  But they closed the doors on the experiment of being a technology services company.  It is not regarded as a 'win'.</p>
<p>We can find many reasons why it did not work and I am certain there are other very valid opinions and reasons on why this experiment/investment did not yield the expected business results.  The reason I home in on the most though is the earn-out M&amp;A structure created a culture clash, especially when combined with product/services overlap, and lack of strong leadership.</p>
<p>I have seen recently other companies follow a similar model, and have seen the undercurrents of similar challenges.  Know any?</p>
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		<title>Cautious Optimism, Irrational Exuberance, Full-Circle Come-a-bouts, and Economic Recovery</title>
		<link>http://www.douglasgourlay.com/blog/2009/10/cautious-optimism-irrational-exuberance-full-circle-come-a-bouts-and-economic-recovery/</link>
		<comments>http://www.douglasgourlay.com/blog/2009/10/cautious-optimism-irrational-exuberance-full-circle-come-a-bouts-and-economic-recovery/#comments</comments>
		<pubDate>Sat, 24 Oct 2009 22:06:27 +0000</pubDate>
		<dc:creator>Douglas Gourlay</dc:creator>
				<category><![CDATA[Business]]></category>
		<category><![CDATA[Tech]]></category>
		<category><![CDATA[business results]]></category>
		<category><![CDATA[cautious optimism]]></category>
		<category><![CDATA[data center]]></category>
		<category><![CDATA[ethernet]]></category>
		<category><![CDATA[it]]></category>
		<category><![CDATA[Network]]></category>
		<category><![CDATA[value creation]]></category>

		<guid isPermaLink="false">http://www.douglasgourlay.com/blog/?p=151</guid>
		<description><![CDATA[Cautious optimism is a term I have been having many discussions lately with friends and analysts about - whether we are seeing true economic recovery or a bit of a 'W' and whether to make serious investments in planned growth or not.  Candidly, in IT we have compressed capital spending for a while, so it [...]]]></description>
			<content:encoded><![CDATA[<div id="attachment_152" class="wp-caption alignleft" style="width: 310px"><img class="size-medium wp-image-152" title="476_Full_Circle_Doors" src="http://www.douglasgourlay.com/blog/wp-content/uploads/2009/10/476_Full_Circle_Doors-300x281.jpg" alt="Everything seems to come full circle in IT..." width="300" height="281" /><p class="wp-caption-text">Everything seems to come full circle in IT...</p></div>
<p>Cautious optimism is a term I have been having many discussions lately with friends and analysts about - whether we are seeing true economic recovery or a bit of a 'W' and whether to make serious investments in planned growth or not.  Candidly, in IT we have compressed capital spending for a while, so it could just be a bit of elasticity - although one major thing strikes me as different.</p>
<p>In the current world order many of the IT investments seem to be directly proportional to short-mid term ROI, sure everyone wants to build for 5-10 years, but they also want to see real business results, right now.</p>
<p>Mostly this means that new project types are getting priority and IT is finding creative and innovative ways of delivering near-term business value without, hopefully, taking their eye off the architectural ball.  Ideally we can do both- deliver short-term value creation, while building towards a longer-term vision that enables IT to reinvent itself and infrastructure to transcend generational shifts. Sadly this is not always the case, some companies and people seem to want to either over-rotate on short-term. Sadder, others refuse to admit the world is changing.  Even worse are those who keep their head in the sand and cannot move at all.  Denying change happens is dooming almost any business to failure, embracing a fickle trend too quickly can be just as painful, and relying on past formulas from previous successes doesn't always work.</p>
<p>You may wonder where I am going with this.  Over the past thirteen years I have seen a lot of things change and come full circle- Cut-Through Switching, Lossless L2 Networks, Ring Topologies, Hosting/Cloud/Insource/Outsource.  Universal truth - things change and open and experienced minds that can capture this change tend to prevail.</p>
<p>Architectures have to change with the trend, the old way of doing things is not always the best- althought there are always viable lessons to be learned and due respect should be paid to past success.</p>
<p>Looking at networking, especially in the data center there are a lot of architectural changes in play.  Obviously, the changes being driven to effect convergence between Ethernet and FibreChannel is a big one.  The other is the collapsing of layers and efforts to simplify the topologies while increasing the scale of operations - I think in my next post or two I will have to explore these some more, what are your thoughts on other architectural changes in the data center network?</p>
<p>dg</p>
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		<title>Will Virtualization Commoditize the Network and Threaten Network Vendors</title>
		<link>http://www.douglasgourlay.com/blog/2009/08/will-virtualization-commoditize-the-network-and-threaten-network-vendors/</link>
		<comments>http://www.douglasgourlay.com/blog/2009/08/will-virtualization-commoditize-the-network-and-threaten-network-vendors/#comments</comments>
		<pubDate>Fri, 28 Aug 2009 22:59:24 +0000</pubDate>
		<dc:creator>Douglas Gourlay</dc:creator>
				<category><![CDATA[Business]]></category>
		<category><![CDATA[Tech]]></category>
		<category><![CDATA[infoblox]]></category>
		<category><![CDATA[network vendors]]></category>
		<category><![CDATA[networking team]]></category>
		<category><![CDATA[networking vendors]]></category>
		<category><![CDATA[plumber]]></category>
		<category><![CDATA[seekingalpha]]></category>
		<category><![CDATA[virtualization]]></category>

		<guid isPermaLink="false">http://www.douglasgourlay.com/blog/?p=135</guid>
		<description><![CDATA[Just a quick link and shout-out to Greg Ness of Infoblox and Twitter fame for a nice piece in SeekingAlpha that just hit here. As I have said often enough to have been quoted and mis-quoted a few times there is a potential value-shift in enterprise IT given the increased business value many enterprises are [...]]]></description>
			<content:encoded><![CDATA[<div id="attachment_137" class="wp-caption alignleft" style="width: 125px"><img class="size-full wp-image-137" title="Greg Ness" src="http://www.douglasgourlay.com/blog/wp-content/uploads/2009/08/Greg-Ness.jpg" alt="This is Greg, he likes DNS and DHCP, IP Address Management, Fine Scotches, and Infrastructure 2.0 " width="115" height="115" /><p class="wp-caption-text">This is Greg, he likes DNS and DHCP, IP Address Management, Fine Scotches, and Infrastructure 2.0 </p></div>
<p>Just a quick link and shout-out to Greg Ness of Infoblox and Twitter fame for a nice piece in SeekingAlpha that just hit <a href="http://seekingalpha.com/instablog/275505-gregory-ness/25106-will-virtualization-undermine-network-equipment-vendors?source=kizur">here</a>.</p>
<p>As I have said often enough to have been quoted and mis-quoted a few times there is a potential value-shift in enterprise IT given the increased business value many enterprises are realizing from virtualization which in some cases takes the network for granted or as one rather esteemed company once stated, "just dumb plumbing."</p>
<p>I don't want to be just a dumb plumber, and I think there are a set of very strategic activities the networking vendors can do to ensure that the network continues to deliver high-value and business-relevant services that enable the networking team within IT to keep their place in the pecking order.</p>
<p>dg</p>
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		<title>a smaller company, a big job, a great opportunity</title>
		<link>http://www.douglasgourlay.com/blog/2009/08/a-smaller-company-a-big-job-a-great-opportunity/</link>
		<comments>http://www.douglasgourlay.com/blog/2009/08/a-smaller-company-a-big-job-a-great-opportunity/#comments</comments>
		<pubDate>Wed, 19 Aug 2009 08:08:27 +0000</pubDate>
		<dc:creator>Douglas Gourlay</dc:creator>
				<category><![CDATA[Business]]></category>
		<category><![CDATA[jayshree]]></category>
		<category><![CDATA[mid cap companies]]></category>
		<category><![CDATA[silicon valley]]></category>
		<category><![CDATA[vc investment]]></category>

		<guid isPermaLink="false">http://www.douglasgourlay.com/blog/?p=121</guid>
		<description><![CDATA[As many people guessed on the poll that was ran in early July on NetworkWorld I could not relax for too long -- today I started my new job as the vice president of marketing at Arista Networks. In the spirit of any good marketing executive I prepared a bit of a messaging doc and [...]]]></description>
			<content:encoded><![CDATA[<div id="attachment_122" class="wp-caption alignleft" style="width: 310px"><img class="size-medium wp-image-122" title="Andy Bechtolscheim" src="http://www.douglasgourlay.com/blog/wp-content/uploads/2009/08/23switch.600-300x155.jpg" alt="Chief Development Officer and Chairman, Andy Bechtolscheim" width="300" height="155" /><p class="wp-caption-text">Chief Development Officer and Chairman, Andy Bechtolsheim</p></div>
<p>As many people guessed on the poll that was ran in early July on NetworkWorld I could not relax for too long -- today I started my new job as the vice president of marketing at <a href="http://www.aristanetworks.com">Arista Networks</a>. In the spirit of any good marketing executive I prepared a bit of a messaging doc and FAQ sheet to help me out in case I get questions by industry press, friends, my favorite bloggers, or the legions of Twitter-bots that follow my life's twists and turns...</p>
<p><em>Who is Arista? </em><br />
Arista Networks is an early-stage start-up in Silicon Valley, re-launched in 2008, that is building networking platforms that enable our customers to build network systems optimized for high-performance computing, virtualization, and cloud deployments.  Arista has a seasoned executive team including many industry veterans and successful entrepreneurs.</p>
<p><em>Why did I go to Arista?</em><br />
Candidly I was not looking to go to a start-up when I left Cisco.  I was expecting to land at a mid-cap since my friends tell me I am a bit of a 'big company guy'.  I also had many friends in venture capital tell me that if I wanted to go that route it would be best to do an operating role as a senior executive at a start-up.  This caused a bit of a quandary- I looked at many opportunities and it was amazing that, as I hoped, even in this market and economy there was an amazing amount of opportunities available.   When I looked at Arista I found a few things very intriguing:<br />
1) I knew the executive team very well having worked with Andy and Jayshree for over ten years each, there was a comfort level there.<br />
2) I usually can pick apart many networking start-ups architectures for making a series of 'rookie moves' that they later have to throw more money into fixing - I didn't find any of those at Arista.<br />
3) I was very excited about the opportunity to build a software company that delivers the software through a network hardware platform - the core intelligence is the operating system.<br />
4) I didn't see much, if any, VC investment in IT infrastructure companies yet every time Ethernet went through a major speed/function transition there were always 2-3 mid-cap companies created.</p>
<p><em>Ok, so Arista makes a switch?</em> I don't think I would be happy at a company that just had one or two product lines. Arista has a solid vision for changing the way IT infrastructure addresses the new wave of IT architectures coming to the forefront today - But also remember the core value is the operating system, it is much more than just the hardware.</p>
<p><em>Ok, so what's the real story? </em>Let me give an example, I met with Ken Duda who leads the software development team.  I mentioned some features that focused on network and IT operations and would make life simpler for the network team, add value to the network, and enable the network to be far more 'real time' provisioned at scale.  I have been a public proponent of this particular capability for the last eight years, but was never able to get it shipping.  I saw a demo of it last week.</p>
<p>I like designing products, I like watching the things I work with customers and build to solve their problems ship and become a reality.</p>
<p><em>What did I learn at Cisco that will help me at Arista?</em> I have to say the last three years at Cisco were a phenomenal learning experience and veritable PhD in Marketing with great teachers like Paul McNab (perseverence, and technical marketing/solutions development - importance of verticals), Alan Cohen (thought leadership) Peter Linkin (rational, believable, and most importantly understandable messaging), Tom Keenan (operational management at scale, how to hire people that complement you but never compliment you), Hoff (hiring people WAY smarter than you are), and Anne Plese (social media maven, scary good marketing execution).</p>
<p><em>What will I do at Arista?</em> I am a little daunted by the scope of the role.  Things that I used to manage cross-functionally and always have a ready opinion about I now have to either manage, or do.  I think I will be learning a lot over the next few years.  A few things I want to do though are build great products, and use every available marketing vehicle to ensure our customers have visibility to them and most importantly use them successfully in the right places.   Short version, and to quote the inimitable Justin Timberlake, 'We're bringing sexy back' - to switching.</p>
<p>This will probably be the last post I put up here about Arista and my role there.  I intend to keep this blog as neutral as possible and have it reflect my own opinion while respecting my position at my employer.</p>
<p>dg</p>
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		<title>The Network&#8217;s Role in Cloud Computing</title>
		<link>http://www.douglasgourlay.com/blog/2009/08/the-networks-role-in-cloud-computing/</link>
		<comments>http://www.douglasgourlay.com/blog/2009/08/the-networks-role-in-cloud-computing/#comments</comments>
		<pubDate>Thu, 13 Aug 2009 22:57:51 +0000</pubDate>
		<dc:creator>Douglas Gourlay</dc:creator>
				<category><![CDATA[Business]]></category>
		<category><![CDATA[Tech]]></category>
		<category><![CDATA[bill gates]]></category>
		<category><![CDATA[cloud]]></category>
		<category><![CDATA[cloud computing]]></category>
		<category><![CDATA[computing power]]></category>
		<category><![CDATA[Firewall]]></category>
		<category><![CDATA[networking]]></category>

		<guid isPermaLink="false">http://www.douglasgourlay.com/blog/?p=115</guid>
		<description><![CDATA[For networking companies cloud computing could be the biggest boon or the biggest bane, or as is sometimes quoted - the road to (shareholder) hell is paved with good intentions. Network companies have been relatively and somewhat strangely quiet about cloud computing. Sure we've seen some partnerships, some demonstrations, and a lot of rhetoric- but [...]]]></description>
			<content:encoded><![CDATA[<div id="attachment_116" class="wp-caption alignleft" style="width: 310px"><img class="size-medium wp-image-116" title="Cloud Care Bears" src="http://www.douglasgourlay.com/blog/wp-content/uploads/2009/08/image001-300x225.gif" alt="It's all happy up in the cloud, right?" width="300" height="225" /><p class="wp-caption-text">It&#39;s all happy up in the cloud, right?</p></div>
<p>For networking companies cloud computing could be the biggest boon or the biggest bane, or as is sometimes quoted - the road to (shareholder) hell is paved with good intentions.</p>
<p>Network companies have been relatively and somewhat strangely quiet about cloud computing.  Sure we've seen some partnerships, some demonstrations, and a lot of rhetoric- but there really hasn't been a lot of action.  There certainly has not been purposeful, planned, development.  One of the reasons may be the school of thought that the network is an inherent beneficiary of cloud computing - certainly anything that spits more bits out and drives larger pipes is a win for networking, right?  The darker side is that at scale cloud computing represents a fundamental shift in the balance of purchasing power and a massive consolidation of computing, and thus purchasing capability into a smaller number of larger companies.</p>
<p>We've already heard about search companies building their own servers and even rumors of them building their own networking equipment.  When you have that much domain expertise consolidated and there is that degree of specificity about the features and capabilities required saving capex while lowering the power consumption reducing your overall operating costs against one of your biggest expense line-items is worth it to large enough providers.  Plus many of these providers know exactly what features they do and do not need - and there is variability between providers based on their respective philosophies about redundancy, fault tolerance, accounting, traffic engineering, etc.   Is this model for everyone?  Certainly not.  But for those with enough chutzpah, mass and the technical wherewithal, it seems to be working.</p>
<p>Now fast forward seven to ten years.  (like when Bill Gates once famously proselytized a vision based on unlimited bandwidth and limitless computing power - what would you do?) Imagine 50% of the world's compute capacity is owned by five companies.  The purchasing power would be immense, the value to a vendor of winning the deal is a make/break proposition to many start-ups and even mid-caps.  The ability to squeeze margin out of the vendors and define the exact requirements for what needed to be built, unparalleled.  High margins? Doubtful.</p>
<p>Where would the network be?  Let's see, certainly my 'glass half full' self sees that there would be a large WAN opportunity and Internet core upgrades required to support the increase in mobile workloads and mix of elastic and real-time network traffic.  Ideally there would be a way of consistently signaling a particular packet's requirement for real-time, lossless, or an elastic traffic profile across multiple network providers with some guarantee they adhere to the marking.  Although with net-neutrality I doubt this will ever happen in any end-to-end consistent manner and the owners of the end-stations and clouds will over-provision capacity and use clever over-the-top mechanisms to solve this issue further reducing the carrier's value.</p>
<p>The main change for the network will be static and physical definitions of service bound to location shifting to much more dynamic addressing<br />
and embracing workload mobility.  The network needs to be able to move workloads to run on the server and in the location that can service that workloads performance and processing requirement in the most effective and efficient way possible.  This will enable and drive demand for follow-the-sun, follow-the-kilowatt, and follow-the-tax-code portability and mobility requirements.  This is not just moving a workload around the data center, this could be moving it from one continent to another, and not a one-time move, but a dynamic and elastic environment where resources are constantly being re-balanced to achieve operational efficiencies, meet customer SLAs, scale to add new customers or divest customers quickly, and ensure security/segmentation where appropriate.</p>
<p>As I have said before today's networks are not ready for this.  The static addressing model is broken, the routing protocols are not designed for the scale or the change-rate, and the need for abstraction and management is different than any networking vendor has embraced yet.</p>
<p>Let's assume that the technical hurdles get solved, that really smart people who solved the addressing problems for mobile phone systems, local number portability, and global roaming can use some of the same principles and solve the issues around globalization of IP addressing, /32 host route mobility, and really large scale routing tables.  Let's focus on what makes a networking system "cloud-ready" that is a bit more complicated than even these rather sizable network and routing architecture challenges- Religion.  Politics.  Business.  Control.</p>
<p>Here's the big 'gap' in everyone's story. Right now each vendor views their own system at the core of this cloud.  It's all about the network, server, VM, SAN, etc depending whom you are talking to.  Everyone wants to take their castle and put it on a cloud, without giving the keys to above-said-castle to anyone else.  This means a strong desire in every major player to keep business as usual and extend the current value proposition and operational models to the cloud as best possible, see what sticks, adjust, go from there.</p>
<p>I believe, depending how 'evolved' the segment is, this could be a major failure if the core capabilities of the technology are not designed around the principles needed in cloud environments: elasticity, self-provisioning, open APIs, programmability, trust, control, interoperability, etc.</p>
<p>Where are networking vendors failing and flailing?  Largely around the management and configuration interfaces to their systems -- <strong>The CLI is dead to the new world order</strong>.  Take every feature in a network operating system and write down the ones you use.  Put them on individual note-cards on a desk and then put the ones that are machine-readable, software controlled/instantiated, centrally provisioned, and globally scalable in a box we call 'Cloud Ready' and put everything else in the 'Old World' box. If the Cloud Ready box is pretty empty, that vendor will be left with one thing to differentiate - PRICE.</p>
<p>Everything in the networking world is instantiated by a CLI. Every cloud operator I know wants a machine readable interface, they want their devices to plug into a common management framework, they want a single point of administration and control.  For some this is home-grown, for some this will be VMware's vSphere, for others it may be another offering.   This 'Cloud OS' does job macro-scheduling, enforces work flows, and provides elastic scaling and depends on machine readable interfaces into switches, routers, firewalls, servers, storage, and so on.  It also will depend on consistency between managed devices - i.e. if stuff doesn't work identically between products the outliers are not likely to be adopted.</p>
<p>Many vendors are reticent to give their 'keys' to someone else's Cloud OS - i.e. if it can't be their own, they don't want to open the system up, to the operator this means now having to install multiple management systems when what they really want is one that can work with multiple vendors.  The message I heard one cloud operator tell me was, "Be Open or Die."</p>
<p>Make the shift to building planned systems architectures, and intelligently using networking protocols to provide a consistent abstraction to a cloud OS, there is a chance to win big.  Miss it, build fragmented systems with no management abstraction or not tie into the right eco-system of partners and risk rapid commoditization as the core value of your product can actually never be expressed to a customer/operator in a way they could use it.  Unused features is simply higher cost with no incremental value.</p>
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		<title>On Innovation in Emerging Markets</title>
		<link>http://www.douglasgourlay.com/blog/2009/07/on-innovation-in-emerging-markets/</link>
		<comments>http://www.douglasgourlay.com/blog/2009/07/on-innovation-in-emerging-markets/#comments</comments>
		<pubDate>Tue, 14 Jul 2009 22:49:51 +0000</pubDate>
		<dc:creator>Douglas Gourlay</dc:creator>
				<category><![CDATA[Business]]></category>

		<guid isPermaLink="false">http://www.douglasgourlay.com/blog/?p=41</guid>
		<description><![CDATA[The US Council on Competitiveness delegation to Brazil is going quite strong, this is the first moment of downtime I have had since things kicked off yesterday afternoon. One of the main discussion areas has been on how to take technologies out of the university and lab environment and bring innovations to market. One of [...]]]></description>
			<content:encoded><![CDATA[<p><img class="alignleft size-medium wp-image-42" title="innovation and Entrpreneurship" src="http://www.douglasgourlay.com/blog/wp-content/uploads/2009/07/innovation-300x199.jpg" alt="innovation and Entrpreneurship" width="300" height="199" />The US Council on Competitiveness delegation to Brazil is going quite strong, this is the first moment of downtime I have had since things kicked off yesterday afternoon.    One of the main discussion areas has been on how to take technologies out of the university and lab environment and bring innovations to market.</p>
<p>One of the constant themes was that Brazil, while the second largest economy in the western hemisphere is 20 years or so behind on venture capital and having an innovation culture and trajectory- there are several serious inhibitors to innovation based entrepreneurial ventures right now: lack of strong capital markets, business employment taxation, lack of corporate venturing, challenges creating companies because of 'red tape', concerns over intellectual property laws, and a culture where failure is absconded.  (you'd think failing is bad, but you can learn a lot from having managed through a downturn/liquidation).</p>
<p>One of the ideas we floated was creating a free trade zone for innovation based entrepreneurship.  Basically a physical geography where ventures can be incubated, the venture capitalists can work (think South Sand Hill Road), there are labor law and tax incentives that encourage the rapid development of technology, product, service but then allow the business to take flight and contribute back to the economy when of a sustainable size.  Imagine a central network and data center infrastructure that provides 'cloud-style' services to all the members of the technology free-trade-zone but lowers the cost by bypassing stiff import duties and tariffs.</p>
<p>Bring in top universities and skilled entrepreneurs and establish leadership and mentorship opportunities for the companies that are in the FTZ.  Bring in the top government sponsored enterprises and largest employers in the region, have them co-fund investment in solving their top-5 research projects.  Create a culture of corporate venturing and link the University, the Entrepreneur, and the existing commercial partner- function as a broker to ensure commercial market viability for the innovations.  Also! don't forget to provide good PR:  Imagine TechCrunch.br providing coverage and acknowledgment of the local venture community and entrepreneurial companies.  Whereas the student population today aspires to government or large industry jobs, create heroes out of the innovators.</p>
<p>Lastly start early.  Have the top businesses and government agencies that carry an interest in the success of the national and regional economy invest in the creation of the Brazilian equivalent of the Westinghouse Prize.  Target science and math research in high school, have a collegiate and graduate version that requires teams to work together and includes business plan development.</p>
<p>Create a culture of rewarding hard work, innovation, inspiration, and invention - groom and cultivate the best ideas, fund them in a pilot program that removes barriers to the opportunity for economic success and wealth creation.  Provide the counsel, mentorship, and resourcing to speed time to market and increase the success rate of the ventures.  Stimulate the economy of the future, with investment at multiple levels, today.</p>
<p>dg</p>
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		<title>Compete.org &#8211; Delegation to Brazil</title>
		<link>http://www.douglasgourlay.com/blog/2009/07/compete-org-delegation-to-brazil/</link>
		<comments>http://www.douglasgourlay.com/blog/2009/07/compete-org-delegation-to-brazil/#comments</comments>
		<pubDate>Sun, 12 Jul 2009 05:14:45 +0000</pubDate>
		<dc:creator>Douglas Gourlay</dc:creator>
				<category><![CDATA[Business]]></category>
		<category><![CDATA[Tech]]></category>

		<guid isPermaLink="false">http://www.douglasgourlay.com/blog/?p=36</guid>
		<description><![CDATA[Am packing my bags for a long trip coming up tomorrow, and I haven't packed my bags for a long trip in a while so TSA be ready...  and as those of you who follow my Twitter feed may remember I was spending some time at the Brazilian Consul in San Francisco recently as well, [...]]]></description>
			<content:encoded><![CDATA[<p><img class="alignleft size-medium wp-image-37" title="brazil flag" src="http://www.douglasgourlay.com/blog/wp-content/uploads/2009/07/brazil-flag-300x207.gif" alt="brazil flag" width="300" height="207" />Am packing my bags for a long trip coming up tomorrow, and I haven't packed my bags for a long trip in a while so TSA be ready...  and as those of you who follow my Twitter feed may remember I was spending some time at the Brazilian Consul in San Francisco recently as well, so here is why:</p>
<p>I recently was introduced to the <a href="http://www.compete.org/">US Council on Competitiveness</a> via the <a href="http://www.energy.gov/">US Department of Energy</a>.  The US Council on Competitiveness has been championing a multi-year project and engagement with the Movimento Brasil Competitivo and ABDI.  The three partners have convened six workshops – “U.S.-Brazil Innovation Learning Laboratories” – with the support of the US Department of Energy and the <a href="http://www.nrel.gov/">National Renewable Energy Laboratory</a>.</p>
<p>To meet these goals, the U.S.-Brazil Innovation Learning Laboratories has engaged forward-looking CEOs, university presidents and peers from the public sector – in both Brazil and the United States, representing a broad range of industries, large and mid-size firms and organizations, and leading academic institutions.</p>
<p>The Innovation Learning Laboratories will aim to:</p>
<ul>
<li>Map the innovation ecosystems of the United States and Brazil.</li>
<li>Identify key barriers to – and opportunities for – change and collaboration.</li>
<li>Design a policy strategy that will build the competitiveness potential of both economies, as well as the Western Hemisphere; and lay the groundwork for the 2nd U.S.-Brazil Innovation Summit in 2010.</li>
</ul>
<p>These Innovation Learning Laboratories are intended to produce fresh insights, real-time analysis, consensus-building and action recommendations – across the public and private sector – that will lend motivation and momentum to achieving a joint U.S.-Brazil innovation and competitiveness policy agenda for the planned 2010 U.S.-Brazil Innovation Summit.</p>
<p>With the focus on emerging and continuous growth geographical markets,  how to speed innovations to market, and the application of lessons learned to avoid mistakes of the past or leapfrog ineffective choices this crosss-functional team of industry, government, and academia will be a rewarding experience.</p>
<p>I was asked to discuss some of my favorite green IT and data center technologies, and how virtualization and cloud computing can be part of public policy, if anyone has any ideas on what else I should discuss please feel free to comment - am all ears.</p>
<p>dg</p>
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		<title>L, U, or V &#8211; the case for mid-cap consolidation</title>
		<link>http://www.douglasgourlay.com/blog/2009/07/l-u-or-v-the-case-for-mid-cap-consolidation/</link>
		<comments>http://www.douglasgourlay.com/blog/2009/07/l-u-or-v-the-case-for-mid-cap-consolidation/#comments</comments>
		<pubDate>Sat, 11 Jul 2009 00:37:58 +0000</pubDate>
		<dc:creator>Douglas Gourlay</dc:creator>
				<category><![CDATA[Business]]></category>
		<category><![CDATA[Tech]]></category>

		<guid isPermaLink="false">http://douglasgourlay.com/?p=32</guid>
		<description><![CDATA[LUV, not the airfield in Dallas popularized by Southwest's 'Free LUV' campaign but instead a few letters often used to describe the macro-economic climate we are operating in right now.  Everyone wanted a 'V' - the sharp drop followed by a quick bounce-back, I don't think we are seeing this.  The opposite extreme is the [...]]]></description>
			<content:encoded><![CDATA[<p><img class="alignleft size-medium wp-image-33" title="southwest_takeoff" src="http://loopback0.files.wordpress.com/2009/07/southwest_takeoff.jpg?w=300" alt="southwest_takeoff" width="300" height="223" />LUV, not the airfield in Dallas popularized by Southwest's 'Free LUV' campaign but instead a few letters often used to describe the macro-economic climate we are operating in right now.  Everyone wanted a 'V' - the sharp drop followed by a quick bounce-back, I don't think we are seeing this.  The opposite extreme is the 'L' - again a sharp decline but this time relatively flat and no foreseeable return to the previous high.  Right now many folks seem to thing we are operating in a 'U' - sharp decline, protracted period of weak performance and a return to previous levels in a couple of years.  In the  IT infrastructure segment I tend to agree with the 'U' view, largely because IT infrastructure tends to be a lagging indicator of economic recovery and many organizations will constrain budgets to last through the downturn and then have an elastic reaction spending quickly during a period of economic recovery to break-away from their competitors.</p>
<p>But this time is different than 2001-2003, there are a few other factors at play.</p>
<p>1) <em>Cloud computing is taking off.</em> We can all argue the size, the velocity, and innumerable other factors relating to 'the cloud' but there are a few seminal truths - many new companies are trying to get started buying as little IT infrastructure as possible.  Why buy a server when I can host the VM somewhere for less, save my capital, and have global access to the application?  The list of reasons to embrace cloud/hosted applications and infrastructures is a long one and better left to other pundits, lets accept that it is happening.  If it is happening there will be a power shift in IT spending, if there are a smaller number of larger customers buying power is consolidated.  Discounts structures often go up and the top talent both in pricing and contract negotiation as well as in IT architecture often flock to the 'largest and coolest'.</p>
<p>Imagine a world where 80% of the compute and storage capacity is owned and operated by less than one-hundred firms who operate this critical infrastructure in the most resilient facilities possible and provide it as a service to every other business while maintaining all the critical processes and systems to ensure the businesses stay solvent.  The balance of power between the vendors and the customers may shift over the next three to five years.</p>
<p>2) <em>The tech titans are taking shots at each other</em>.  I'm not going to turn this into a discussion about 'who started it' or 'who pulled the trigger first'.  While we were in the 90's through mid 2000's there was an incredible amount of innovation as IT consumerized and came to the masses.  Cost was engineered out, technology was simplified, green screen monitors became flat screen high-definition displays, technology became common-place and approachable.  Growth for large infrastructure companies came from several sources - GDP was the main one.  Every company will argue about why their market/segment/product will have a growth curve that will be super-linear to GDP on the upturn, and then point to macro-economic decline when they have a bad quarter.  It's what we do.</p>
<p>Around 2006 though the number of innovative new markets with large enough opportunities to create a $1B+ top-line revenue stream started becoming fewer and further between.  The barrier to entry for IT infrastructure start-ups was getting larger and larger stymying new market creation and the customers were increasingly being pretty well served by what they had slowing down refresh cycles on mainstream infrastructure.  We can argue it is all about investment protection all day, and we all love products that last - but if you cannot build a product with enough new business value delivered in three to four years to churn your installed base after the depreciation schedule is hit you should seriously question the efficacy of your development strategy.</p>
<p>Big new markets were gone, so what happened - the tech titans all started looking around at each other and like a scene from a mafia movie saying, 'Hey...  what are YOU doing?'  To each titan the other has something that looks 'interesting'  whether that be telephony, services, networks, servers, storage, consumer, operating systems, etc.</p>
<p>3) <em>Where are the VC dollars on infrastructure?</em> At some point in the past few years the VC well started getting dry - I think it was a failure-based inhibition that slowed investment down.  For the path of many companies in the infrastructure market the barrier to entry, especially for a silicon based system became incredibly high. Many of the companies funded in the early part of this decade did not have the glorious IPOs or liquidity events that were the hallmark of the late 90's.  The investment pool got nervous, and frankly the low-barrier to entry web based, service-based, and to some degree software-based start-ups received an increasingly larger percentage of the IT focused venture funding.  Investments in hardware-based infrastructure, especially silicon based became, well... hard.</p>
<p><em>So how do these factors combine? </em></p>
<p>For the tech titans to continue to grow they have to move into each other's core markets unless there is a rapid rebound followed by sustained GDP growth.  The investors want to see share price growth and it is hard to grow a company with over $20 Billion in sales at the rates investors would like to see.</p>
<p>The titans will make more 'platform' buys- companies with established revenue bases, loyal customers, and footprint in their markets. The target acquisition profile will be a mid-cap with a loyal customer base that enables the titan to garner enough share in the new market to justify the premium, but lets face it - buying public companies can be cheaper than buying private ones.</p>
<p>There are not a lot of startups- the ones that can be successful will have two very interesting dynamics - no one chasing them from behind, and a hungry set of potential acquirers that will often bid each other up to get their hands on the innovation, technology, and entrepreneurial team.</p>
<p>I personally think we'll see the 'U' with a period of elastic IT spending starting in 2012 through 2013, and in a timeframe bordering that by a year or two will be a wonderfully fun period of tech consolidation.  It's a good time to be an M&amp;A lawyer specializing in tech or maybe an investment banker brokering these transactions.</p>
<p>dg</p>
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		<title>The Cat is Out of the Bag</title>
		<link>http://www.douglasgourlay.com/blog/2009/07/the-cat-is-out-of-the-bag/</link>
		<comments>http://www.douglasgourlay.com/blog/2009/07/the-cat-is-out-of-the-bag/#comments</comments>
		<pubDate>Tue, 07 Jul 2009 15:47:15 +0000</pubDate>
		<dc:creator>Douglas Gourlay</dc:creator>
				<category><![CDATA[Business]]></category>

		<guid isPermaLink="false">http://loopback0.wordpress.com/2009/07/07/the-cat-is-out-of-the-bag/</guid>
		<description><![CDATA[Brad Reese from NetworkWorld broke the story of my departure from Cisco today - arguably one of the most under-whelming stories of the new millenia although somewhat personally impacting with a bit of ego-gratification thrown in. I mean, when I joined Cisco 11+ years ago as a Systems Engineer there was no such fanfare! I [...]]]></description>
			<content:encoded><![CDATA[<div class="wp-caption alignleft" style="width: 310px"><img class="size-medium wp-image-8" title="cat_out_of_the_bag" src="http://loopback0.files.wordpress.com/2009/07/cat_out_of_the_bag.gif?w=300" alt="The Cat is Out of the Bag" width="300" height="156" /><p class="wp-caption-text">The Cat is Out of the Bag</p></div>
<p>Brad Reese from NetworkWorld broke the story of my <a href="http://www.networkworld.com/community/node/43315#comment-211865">departure from Cisco</a> today - arguably one of the most under-whelming stories of the new millenia although somewhat personally impacting with a bit of ego-gratification thrown in.</p>
<p>I mean, when I joined Cisco 11+ years ago as a Systems Engineer there was no such fanfare!  I got a nice t-shirt from my previous company as a thank you, and put my stuff into my Honda and drove across the country, moving to San Francisco to work with the financial customers on the west coast.</p>
<p>Rapidly the financial customers became the 'dot com' customers with really network-intensive infrastructures- CNet, Yahoo, Hotmail, Exodus, and multiple pet-food companies all of whom thought that Fedex liked 40lb bags of kibbles.</p>
<p>From there ended up leaving the field and going to a product management role for the application delivery products: server load balancing, global server load balancing (where the bulk of my early patent filings came from), caching, IP/TV, and content distribution networks.  A lot of good learning here.</p>
<p>Then in 2001 on to the Catalyst 6500 line, roles in software, hardware, and chipset product management, the high point being the introduction of the Supervisor 720 and associated linecards in 2003.  Had a ball with that and still have the poster we made sitting in my office.</p>
<p>In 2004 Luca Cafiero, Tom Edsall, and I were sitting in a room having one of those not-so-quiet meetings where we discussed what to build next.  I assure you there is nothing any engineer or PM gets more passionate about than what to build next and nothing they love more than the opportunity for a clean-sheet design.  For some engineers and PMs it is a once-in-a-career chance to apply everything you learned and everything you think would be 'really cool' and put it into play.  As interactive as those meetings are we walked out of it with a base-line plan for what would become over the next four years of architecture, research, and then development the Nexus line.  I was fortunate that I got to be a part of this project with new ASICs, new operating system, new systems design, and new management platform.</p>
<p>In 2006, in collaboration with my mentor and boss <a href="http://www.aristanetworks.com/en/Management_Team">Jayshree Ullal</a>, I took on an interesting 'rotation' role into marketing, something I had not understood very well and wanted to learn so I would know what to expect.  This ended up being an entirely different set of challenges than I had expected- one of culture change, resource reallocation, budget alignment, and so on.  It wasn't about inventing the cool feature or product line any more, it was about how to cost-effectively tell the story the best way possible so the right people hear it.  I knew how to tell the story, but wasn't certain how to get it beyond the four walls I could speak to.</p>
<p>We created a vision for Cisco - Data Center 3.0, that put a wrapper around the breadth of technology we were trying to consistently communicate. We started the <a href="http://blogs.cisco.com/datacenter">data center blog</a>, and for a few months it wallowed but rather than keeping it to just the executives we encouraged many people to 'pile on' and participate.  In the end the DC blog became the top blog only passed by the News@Cisco one (which is the default landing page so hard to beat it).<br />
We built up a stellar team and then in twelve months launched more product lines into the market than many groups or companies do in three-five years.  Lot of fun, rewarding, and a very intense time.</p>
<p>Finally, I was spending a lot of my time writing development plans and marketing strategies for cloud computing, virtualization, and espousing the benefit of looking at the data center as a whole, not just the parts.</p>
<p>So finally, after eleven+ years, I started to look around outside of Cisco- some opportunities sneak through the firewall and some looked interesting.  I wasn't sure what to do next, go back to engineering?  rotate through sales?  stick with marketing?  While all have their merits none were that exciting singularly.</p>
<p>Rather than taking the first job that made it through to my inbox or voicemail I decided to take a few months off, take a vacation somewhere I could never do while employed (am thinking of climbing Kilimanjaro and then playing Hemingway with a camera for a bit), and see what opportunities do exist that would be a good match.  There are three things I am doing though:</p>
<p>1) I started a small software company to build a software application/service for the general aviation community.  It's fun to apply least-cost-path routing algorithms to plane traffic and find the truly optimum path, altitude, and fuel stop for any trip.</p>
<p>2) Taking the above-said vacation, any ideas on where to go beyond shooting big game with a Canon 5D please let me know <img src='http://www.douglasgourlay.com/blog/wp-includes/images/smilies/icon_smile.gif' alt=':)' class='wp-smiley' /> </p>
<p>3) Datacenter, virtualization, and cloud consulting with a few companies in the valley. As one of my all-time favorite managers (Jim, you know who you are) said to me you have to 'keep the blade sharp' - so I know I need to keep my toes in the water while finalizing my next step, which is this afternoon's activity.</p>
<p>dg</p>
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