Jul 27, 2007 (08:07 PM EDT)
HP-Opsware Deal Shows IT Automation Kicking Into High Gear

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When Netscape founder Marc Andreessen launched Loudcloud eight years ago, he hoped to revolutionize IT by selling companies computing power on tap. But few CIOs were willing to give up their data centers.

Andreessen didn't become a Silicon Valley billionaire by ignoring the market. He sold the data center hosting business and reshaped Loudcloud into a provider of nuts-and-bolts automation software to help businesses manage their own data centers. Last week Hewlett-Packard agreed to buy that company--reincarnated as Opsware--for $1.6 billion.

The deal comes less than a week after systems management vendor BMC bought RealOps, a developer of software for automating IT processes, ranging from applying software patches to provisioning servers.

IT automation is gaining credibility, but it's been a long time coming. The concept's been around since the heyday of mainframes, and point products are available from large vendors such as BMC, CA, HP, and IBM, as well as from startups such as Opsware, BladeLogic, Opalis, and RealOps. But its impact has been minimal, largely because IT departments haven't gotten serious about it. Just 10% of companies use software for automating IT changes and configuration management, estimates Tom Hogan, HP's senior VP for software.

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Visa is an example of how companies can change their thinking. Its new data center, which opened last year and handles $1 trillion in transactions annually, automates an array of processes centering on incident response and failover management. Using its own software and customized tools from vendors, Visa reduced its average time to detect and respond to an event like a network circuit going in and out of service from 20 minutes to one minute. The system knows what problems to send a person's way. "We've taken 500,000 alerts that were rolling across a technician's screen and reduced them down to 60 actionable events per day," says Rick Knight, senior VP of processing operations for Innovant, Visa's IT division.

Visa now resolves 92% of its networking and data-processing problems at the earliest of three levels of event escalation and response. Five years ago, automation was a management concept forced on administrators; now it's something the rank and file sees value in. Says Knight, "People have realized it's a way of doing business and a way to manage the complexity of the existing IT infrastructure."

Opsware's line of data center automation products, such as its Server Automation System and Network Automation System, offers the promise of smaller IT staffs. Savings also come from fewer mistakes, less downtime, and escalating only the toughest problems to IT experts. Getting those returns can mean investing $500,000 to $1 million or more in automation software, says IDC analyst Stephen Elliot.

HP's paying about 16 times annual revenue for Opsware, whose customers include Goldman Sachs, General Electric, JPMorgan Chase, and the U.S. Department of Defense.

Data center automation tools perform a variety of tasks that otherwise require IT grunt work. Some deploy, discover, and monitor applications. Others handle software patching, program maintenance, and hardware provisioning. In the past, data center automation required a hodgepodge of systems management and related tools. Now major vendors are trying to put together full automation portfolios.