Philips Taps HP for Utility Computing

Score one for the 'Adaptive Enterprise' team. Philips becomes the first major customer to set up and run HP's utility data center (UDC), which helps businesses adapt to changing business needs, independently.
Posted September 25, 2003

Clint Boulton

Philips' semiconductor division has chosen to use an HP Utility Data Center (UDC) as it looks to pare information technology (IT) costs with technology that adapts to changing business needs on the fly.

Financial terms were not disclosed. But Nick van der Zweep, director of Utility Computing for HP, said Philips is the first customer to set and run a UDC independent of HP, nothing that HP has long employed UDCs in-house, or outsourced them to companies such as Ericsson.

An HP UDC automates and virtualizes functions such as the software that powers server operations and allows for the speedy reconfiguration of servers and storage in response to the evolving needs of those applications. It is a centerpiece of the company's overarching

Palo Alto, Calif.'s HP is competing with IBM , EMC , Veritas , Sun Microsystems and Computer Associates in the drive to sink their claws into customers' data centers by offering computing capabilities that may be called upon on-demand. This new customer can be considered a win by HP over its rivals.

van der Zweep told the HP UDC is currently running at Philips Semiconductors' largest site in Nijmegen, based in the Netherlands.

"Their semiconductor division is made up of different departments and all of them have different data centers with different infrastructure from different vendors," van der Zweep said. "All of them were managed differently. They ultimately went in and centralized and consolidated the mess with a UDC."

One of the attractive characteristics in enterprise computing these days is the ability to manage and view assets from a single, dashboard-like view. Accordingly, the HP UDC at Philips is managed from a single console where server and storage resources can be allocated within minutes without requiring an administrator to physically re-configure the servers and corresponding infrastructure.

One of the upsides to the UDC, is that Philips was able to use servers it owned in the UDC, which automatically raises return-on-investment for the business. It also allows Philips to manage IT as a service based on HP's IT Service Management methodology, and relies on HP OpenView management software. And in the spirit of utility computing akin to the way an electric company conducts business, Philips and HP are also working on setting up a pay-per-use storage environment.

"The UDC will help Philips cut 45 percent of the division's IT costs from 2001, when the dot-com boom failed, to 2004," said van der Zweep, who noted that he has seen an alternating cycle in IT where companies opt to decentralize infrastructure operations and consolidate those operations every three years.

Vendors and customers aren't the only entities enthusiastic about what utility computing can bring to the table. Analysts have been, by and large, bullish on its progress. One in particular found the HP/Philips pairing, the latest in a long relationship between the companies, quite positive.

Vernon Turner, group vice president, global enterprise server solutions, IDC, said more major customers like Philips will come to the UDC table as HP's Adaptive Enterprise strategy matures.

However, some analysts caution there is an appropriate time and place to deploy such technology -- and the right amount of money for it.

In a recent report, Yankee Group Analysts Andy Efstathiou and Jamie Gruener determined that utility computing does not make sense if it only addresses the challenges of the existing IT market. Their logic is that although it lowers the investment hurdles for a business to try new things, it requires a huge investment in restructuring the application, management, and virtualization layers needed to run such an environment.

"Utility computing has the opportunity to address many of the key challenges IT managers face and lower the cost of individual computing transactions. [But]... vendors must make a massive investment in enabling technology over a 10-year period." said Efstathiou, who also noted that vendors are taking a wait and see approach to the approach.

Still, the lucrative potential for vendors to infiltrate the data centers of many customers has not been lost. HP, IBM Veritas, Sun and CA have all been quick to point out weaknesses in each other's approach or design. But until more customer wins emerge it will difficult to shake out who is doing what right, analysts said.

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