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How fast? “I think you could see growth rates in the 40 percent plus range [annually] around the x86, which is where all the interest is,” says IDC analyst Matt Healy, who co-authored a recent report on the virtualization sector.
The IDC report forecasts that the virtualization services market will levitate from its current annual level of $5.5 billion to a hefty $11.7 billion by 2011.
In fact as the market heats up, there are hardly enough qualified consultants to handle the work. “The growth of [virtualization] services at this point is a resource-constrained equation – not a demand-constrained equation,” Healy says, noting that this is often the case for emerging technologies.
“You don’t necessarily have all of the people you need to be able to do these things. But big organizations will be able to get them quickly, and we will not stay in this state for very long.”
Looking ahead, IDC predicts that the global virtualization services market will grow as follows:
(Source: IDC, 2007)
Big Players
Much of this lucrative pie will be divvied up among the mega players in the consulting market. Because of the complexity of virtualization consulting, and the fact that big projects require legions of top-shelf consultants, few (if any) small consulting firms are equipped to handle major virtualization consulting jobs.
“The technology has moved fast enough that you tend to see that the dominant services players are no longer the technology vendors themselves, such as VMware or any of the other software platforms,” Healy says. “But the dominant service providers become the global systems integrators.”
He lists the likely winners: “When you think services, and you think global systems integrators, you really look at IBM, Accenture, EDS, CSC, Capgemini, HP Services, the SAP and Oracles services arms to some degree, Dell, but much more focused on the infrastructure layer, Bearing Point, Tata, Infosys, and Witpro.” These are the firms with the expertise to handle a full-scale, multi-datacenter rollout.
Three Phase Virtualization Market
The growth of virtualization in the enterprise can be viewed as a three phrase process, Healy notes.
Phase one is pre-sales consulting. This is when salespeople romance prospective companies, touting the cost and efficiency benefits of virtualization. “There’s not a lot of revenue there, but it has to be done. A lot of it is given away for free in order to get the initial investment.”
Phase two – which is where many enterprises are now – is when the pre-sales courtship is over, and the consultant dollars start to flow. Enterprise must make sure their sysadmins and their internal IT people understand how virtualization integrates into their data center – and companies know they have to pay for this expertise.
Required for these jobs are consultants “who can look across the entire data center, look across the entire application stack, they don’t just focus on the infrastructure,” Healy says. They need to be able to handle large-scale load balancing and system configuration, and must be adept at envisioning network architecture.
“If you have seven datacenters worldwide that are all going to be virtualized, and a lot of them are mission critical, they need high availability, disaster recovery, hot back ups – this is not trivial anymore,” he says.
Phase three – still in the future – is when virtualization is no longer its own market. Clients won’t be soliciting requests for proposals for virtualization help, but instead will assume any large consulting firm handles it as a matter of course.
“In five years, there isn’t going to be a line item in the RFP that says, ‘You must be able to do virtualization.’ It’s going to be a given. And if you [consultants] can’t do that, you will not get short-listed for these deals.”
Two Particularly Hot Areas
In terms of how enterprise expenditures will change as the technology matures, the IDC report details the global virtualization market as follows:
(Source: IDC, 2007)
Note that in the graphic above, hardware support services captures the lion’s share of consulting fees. But as the market matures, this basic work is less important. Instead, the big systems integrators will earn a far larger percentage of the market:
(Source: IDC, 2007)
“What we’re seeing, and what we’re forecasting, is that systems integration and IT consulting are currently the fastest growing segments,” Healy says.
“Our recommendation for the big systems integrators right now is, if you do not have these capabilities, partner with people who have them, or make an acquisition,” he says. “If you don’t have these capabilities, the market will leave you behind. “
