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Interop: Why You're Paying Too Much for Data Center Technology

Distinguished panelists discuss Open Compute, the open source hardware community, and the benefits of building an ecosystem where users can collaborate and influence real change across an enterprise.

On Wednesday evening at the NYC 2013 Iterop expo Information Week's Financial Services editorial director Greg MacSweeney moderated a panel titled Why You're Paying Too Much for Data Center Technology (And What You Can Do About It). The topic on hand was Open Compute, a project started at Facebook nearly two years ago with the mission of building the most efficient computing infrastructures at the lowest possible cost.

According to the website, "By releasing Open Compute Project technologies as open hardware, our goal is to develop servers and data centers following the model traditionally associated with open source software projects."

Originally scoffed at by the big tier names, who naturally relied on tier one solutions delivered by the traditional vendor route, you can imagine the intrigue of the audience as Matthew Liste, managing director of core infrastructure platforms at Goldman Sachs and Eric Wells, VP of data center services at Fidelity Investments spoke about their collaboration in the project (imagine that!) and the advantages of leveraging Open Compute's technologies.

Najam Ahmad, director of technical operations at Facebook was on the panel to discuss. "Facebook started to build an ecosystem that is kind of open, with the belief that open source environment provide for more agility, quicker innovation and actually solves problems in the space. This way, we're not necessarily tasked with reinventing the wheel in silos."

"Facebook was the founding and only member of Open Compute… We took some of the work we did in data, server, and mechanical designs and made them available to the industry… We're building an ecosystem where users come together to build technology, and actual hardware people can develop those solutions. It started a new community of sorts."

Now, about 1,500 people attend Open Compute summits and workshops to discuss storage racks and network research design. "Now the community is getting together, actual users, and talking about problems at a deeper component level and coming up with solutions," said Ahmad with pride.

Value in Community

Panelist seemed to agree that, at the start, Facebook's Open Compute was only for companies "like Facebook" and didn't apply to their corporations with legacy infrastructure. But, as Well's put it, "Facebook is is forced to innovate because of the scale, and solve problems that haven't been solved before, and there's a lot we can learn from that."

Wells adds, "We continue to collaborate because we are competing in very competitive markets. There's a lot of changing technology, and we need to change things going forward. Having the benefit of hearing how others are solving problems, that's the compelling part of Open compute. That's the power of it. It's available and it's a powerful hinge if you're a smaller or larger company as well."

Goldman's Liste said, "One of the benefits of open compute, from our perspective, was the fact that the power of the community is driving user driven design, versus having vendor driven design… We want to buy what we need, not what a vendor designs for us. Now we have the flexibility to contribute directly, as well as understanding of what we're operating."

Fidelity's Wells reflected, "Several years ago if you asked me if I would accept a non tier 1 solutions, I would have said no, given our conditions and culture, and our circumstances. Slowly we've started to change the culture in our organization, we've taken people to collaborate externally, and they were able to develop solutions… Like anything else there are early adopters, but it is also a culture change and it's well worth it." He also admits the word community is not something you usually associate with big organizations.

The fourth member of the panel, Peter Krey, founder and president of Krey Associates spoke further about companies transitioning from more traditional hardware to cloud solutions. He observed, "A lot of companies are hybrid. They're either just dipping a toe into cloud, but a lot have on premise requirements as well, and for that reason alone you can benefit from Open Compute for even just one rack. Understanding ecosystem, trends, what's emerging, and whatever type of cloud company you might be speaking to.. Knowing that and understanding emerging trends allows you to be more thoughtful in how you utilize it. That's a compelling reason to be involved in this space."

Najam concluded that as technology changes, ecosystem change. "Most fail to evolve fast enough to changes in technology, and changes have been the faster than it's ever been. How do companies keep up? Well, that's the opportunity here, to build ecosystem, to build services going forward." Becca Lipman is Senior Editor for Wall Street & Technology. She writes in-depth news articles with a focus on big data and compliance in the capital markets. She regularly meets with information technology leaders and innovators and writes about cloud computing, datacenters, ... View Full Bio

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Greg MacSweeney
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Greg MacSweeney,
User Rank: Apprentice
10/9/2013 | 12:20:47 PM
re: Interop: Why You're Paying Too Much for Data Center Technology
Ha! Middle class companies (Goldman Sachs). LOL
Becca L
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Becca L,
User Rank: Author
10/8/2013 | 4:19:18 PM
re: Interop: Why You're Paying Too Much for Data Center Technology
At the conference, it sounded to me that a lot of vendors were starting to get their feet wet with the OCP community to better understand the needs and give their firms an edge. A case of if you can't beat 'em, join 'em.
Becca L
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Becca L,
User Rank: Author
10/8/2013 | 4:17:08 PM
re: Interop: Why You're Paying Too Much for Data Center Technology
This is the top 1% of the top 1% problem, isn't it? And everyone is trying to piggyback on the biggest influences in the arena. In that light, OCP is certainly a boon for the "middle-class" companies.
Greg MacSweeney
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Greg MacSweeney,
User Rank: Apprentice
10/8/2013 | 9:53:30 AM
re: Interop: Why You're Paying Too Much for Data Center Technology
Wow, even Facebook isn't hyperscale? I didn't know that. If Facebook can't get discounts from suppliers at its size, all other "normal" sized companies have no shot. I guess the OCP can do some good for medium sized enterprises.
pmorris135
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pmorris135,
User Rank: Apprentice
10/8/2013 | 2:41:56 AM
re: Interop: Why You're Paying Too Much for Data Center Technology
Actually, FB is medium sized compared to Amazon & Google, and so they could not get the levels of discounts and supply chain efficiencies, which is one of their drivers for creating OCP ... bring in a lot more potential buyers of a standardized whitebox solution direct from the ODMs allowing them to get the full volume discounts, etc.
IvySchmerken
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IvySchmerken,
User Rank: Author
10/7/2013 | 5:30:51 PM
re: Interop: Why You're Paying Too Much for Data Center Technology
In other words, Goldman and Fidelity are attaching themselves to big fish players like Facebook, Amazon, etc., to work together and influence the vendors on design of data centers. To some extent, this reminds me of the FIX protocol where users collaborated on a new electronic trading standard which then led the vendors to develop products based on the FIX language. FIX is now branching out into many areas of trade life cycle including post-trade.
Greg MacSweeney
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Greg MacSweeney,
User Rank: Apprentice
10/7/2013 | 2:56:24 PM
re: Interop: Why You're Paying Too Much for Data Center Technology
Remember that Goldman and Fidelity are "small" when compared to the hyperscale players (Google, Amazon, Microsoft, Facebook). In the financial services world, Fidelity and Goldman are the big fish. But when you compare them to the hyperscale players, they are small fish (in a really big pond).

Currently, only the hyperscale players have the leverage to push vendors to do something radically different. It seems that OCP can help the "smaller" enterprise users work together to bring about change.
KBurger
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KBurger,
User Rank: Author
10/7/2013 | 1:03:37 PM
re: Interop: Why You're Paying Too Much for Data Center Technology
And don't forget that IBM itself (and other Tier 1s) are embracing cloud, social, mobile, virtualization ... you could say that they are just trying to maintain their franchises (which is true), but also I think these vendors have learned the hard lesson that in today's environment putting all your eggs in the IBM (or whichever) vendor basket is not viewed as a best practice on the customer side. It's another aspect of risk management -- diversify your infrastructure/ecosystem somewhat (although the "one-stop shop" model still has appeal, too). Forward-looking firms like Goldman and Fidelity seem to recognize that the Open Compute model facilitates this. Plus, they are big enough, powerful enough, prominent enough that they are going to have a lot of clout in this model. Will the same apply to mid-size and smaller firms?
Greg MacSweeney
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Greg MacSweeney,
User Rank: Apprentice
10/7/2013 | 9:53:01 AM
re: Interop: Why You're Paying Too Much for Data Center Technology
The tier 1 vendors are probably threatened by OCP's progress, but at the same time it seems like they also need to get involved with OCP. For instance, OCP allows them to see exactly what a large community of enterprise users really need by getting direct and honest feedback from users.
Greg MacSweeney
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Greg MacSweeney,
User Rank: Apprentice
10/7/2013 | 9:50:58 AM
re: Interop: Why You're Paying Too Much for Data Center Technology
The Open Compute Project is starting to challenge the saying that many enterprise IT shops still follow: "nobody ever got fired for buying IBM." Of course, "IBM" is really any tier 1 IT vendor nowadays. However, OCP seems to be pushing enterprise IT leaders to think differently, which is a good thing. It is also pushing vendors to think differently about how they approach their clients.
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