Dell to spend $1B on cloud services this year

Computerworld - As the market for cloud services grows, the big enterprise IT vendors are moving swiftly to develop cloud offerings that cater to their respective markets.

Dell this week said it plans to spend $1 billion this year to build 10 data centers to help support cloud services for enterprises. It will also produce new products -- pre-sized, tested and validated systems that will enable customers to build in-house private clouds.

Dell is likely to focus on the small to mid-sized customers, say analysts.

For its part, IBM this weekstepped up its efforts to bring larger enterprises into its cloud, in part, by offering support for SAP in what Ric Telford, IBM's vice president of cloud services, says will be a "true cloud" environment.

That means that SAP users will be able to dynamically provision instances on demand as well as elastically scale, said Telford. "If the SAP database needs more storage, we can dynamically add that - that's the advantage of cloud," he said.

SAP is the first ERP system that IBM will offer in a cloud environment, but others are planned, said Telford. Despite having the option of adding a core business system to a cloud, he doesn't see users shifting completely to it.

"Most customers will continue to keep a number of their workloads running in their own data centers," he said. This is also why IBM is delivering hybrid cloud models that integrate services running in the cloud and in a customer data center, he said.

"The cloud now gives them choices they didn't have before," said Telford.

The SAP offering will be part of its SmartCloud offering, which is due out later this year.

Figures released this week by Gartner underscore the need to build cloud services, particularly for infrastructure as a service (IaaS), which involves virtualized servers, storage and networking resources that customers can provision themselves. Gartner expects the worldwide market for IaaS is expected to increase from $3.7 billion in 2011 to $10.5 billion in 2014.

Cloud services "is a highly fragmented market and there is still room for everyone," said Matt Eastwood, an analyst at research firm IDC.

Today, Dell provides virtual desktops and hosting services. With this new approach, it will also offer IaaS, as well as services to help its customers deploy and manage these environments.

Eastwood said Dell has no choice but to move in this direction. "If Dell did not do what they are doing, then they would end up having conversations with customers where there would be uncomfortable pauses because they wouldn't be able to offer some of what their customers were asking them to do," he said.

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick's RSS feed . His e-mail address is pthibodeau@computerworld.com.

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