Category: Business

When I left Cisco I thought I knew everything. I felt I could go to any company, that I should probably be running wherever I went, and that I was quite unstoppable. I learned a lot in the last few years

If you’re reading this you know I went to Arista Networks – and to put it simply, we do things a LOT differently than traditional networking companies, and a lot differently from most VC-funded companies too. Now my boss, our CEO Jayshree Ullal, would kill me if I put up a post with the ‘secret awesome sauce’ that comprises how our engineering team builds software (what I can say is its the most fully automated development environment I have ever seen – a large percentage of the code is auto generated – especially the annoying bits that enables interprocess communications, test is automated so there is no BS regression testing, etc).

What I think is pretty equally awesome though is how we rapidly embraced the cloud and SaaS/IaaS capabilities. Here’s a few examples…

• I just wrote a press release for a product launch that is coming up. I used a tool called Scrivener I have worked with a bit that enables me to keep document ‘chunks’ handy and re-use them consistently. Nice for product descriptions, form data on them, and closing boilerplate. This I exported as a text block that I then went to Box.net whom we use for document collaboration.
• In Box.net in the Marketing folder I went to this specific product launch fold and created a Google Word Doc and put my first draft press release into it. Now the entire marketing team gets an email update that I did this and a collection of smart and savvy folks can pile on and help the document get better.
• We made our data sheets in Apple Pages rather than InDesign. Why? Simply because we don’t outsource our doc design and editing to third-party firms or agencies and keep it all in house so we wanted a simple and easy to use tool with decent layout capabilities. You can export from Pages to PDF easily and the Data sheets look good. More importantly when you find a mistake you don’t have to go back to a 3rd party agency to get the doc edited – its done in minutes in house.
• Similarly with our website – I remember taking weeks to get changes through in my previous job. Now we run Joomla! we have a few people who know it quite well and a few more who know how to quickly edit docs, change banners, etc. Web publishing is nicely simplified.
• Our Joomla! instance is hosted in the cloud on a hosting provider – no one has to worry about the hardware, or a disk failure, and so on – keeps the IT burden low.

I can keep going on how we have a BYOD culture from the start, with most people opting for Macs but a few outliers with Linux and such loaded on their PCs, how we use tools like SalesForce and NetSuite to avoid huge onsite server farms with lots of complex software, and how we use hosted PBX services like Fonality – which uses my friend Mark Spencer’s creation Asterisk in a hosted model to lower PBX costs.

We’ve identified what is core to our business – SW development, and kept that in-house in a very secure environment.  We’ve identified what is context – email (Gmail), CRM (SalesForce), ERP/Accctng (NetSuite), Content Management (Box.net), etc – and then worked with them to ensure they met our requirements as we grew and scaled.  I often state that I don’t know why a company our size would ever buy a server for IT – but then I found out we do have three VMs we run in-house for IT: One for NTP, one for DNS, and one for DHCP.  Not bad for 3/20ths of a machine…

The success of many of these companies clearly indicates that we are not alone in this use case – it does seem to be the smart way to build out if your compliance and regulatory environment supports it and you can accomplish your mission effectively.

dg

What is the easiest way to account for space/power consumption of a network element?

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 less than published tariff rates.

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 SAS 70 Type-II (Switch, Equinix, Corelink, 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.

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?

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.

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.

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.

dg

Sometimes the 'golden handcuffs' tarnish the other hands in the company...

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 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.

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?”

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&L targets there is a significant upside (between a 50% to 200% multiplier) that is paid if the targets are hit or exceeded.

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:

1) Each group tried to keep their own identity
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.

2) Cross-Charging became commonplace
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.

3) No tools integration
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.

4) Internal Competition
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.

5) Haves/Have-Nots
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&A was tried, “Why am I working so hard to make them so rich?”

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’.

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&A structure created a culture clash, especially when combined with product/services overlap, and lack of strong leadership.

I have seen recently other companies follow a similar model, and have seen the undercurrents of similar challenges.  Know any?

Everything seems to come full circle in IT...

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.

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.

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.

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.

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.

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?

dg