Accel-Backed ScaleXtreme Takes Data Center Management To The Cloud

Data center automation is a hulking $14 billion segment of the enterprise IT industry dominated by hulking giants like IBM, HP (through its $1.6 billion Opsware acquisition), BMC (through its $800 million BladeLogic acquisition in 2008), and VMWare. Companies often have thousands of servers, both physical and virtual, that need to be managed, and on top of that they are trying to keep track of virtual machines on Amazon’s EC2 or Rackspace. A new enterprise startup called ScaleXtreme is tooling up to attack IT systems management from the cloud.

It is backed by Accel Partners, which took its entire $2.5 million series A round last August, and its two co-founders have some serious enterprise startup chops. CTO Balaji Srinivasa was the principal product architect for BladeLogic before it was sold to BMC. CEO Nand Mulchandani founded and sold several enterprise startups in the past (Oblix to Oracle, Determina to VMWare), and was also the CEO of OpenDNS and an EIR at Accel.

ScaleXtreme wants to do the same thing to data automation that Salesforce did to CRM. Replace million-dollar deployments that take months with a five minute download that can have a machine being managed from the cloud in five minutes. And instead of an upfront $1,500 licensing fee per machine, plus maintenance and upgrade fees, ScaleXtreme is shooting for something closer to $150 a year per machine. “This is a radically different model,” says Mulchandani, who started out as an enterprise IT sales guy. “You download the agent and you are done—no sales people, no Italian suits flying across the country.”

Mulchandani sees data center automation as a greenfield opportunity for a cloud-based enterprise startup, much like CRM was a decade ago. “The space has atrophied,” he says, “with very long deployment cycles, and millions of dollars spent on deployment. Nothing has happened in data center automation. These larger guys, like IBM and EMC, are tuned for on-premise. For them, the cloud is this bolt-on thing, not built from ground up. A lot of people are spinning up 100 or 1,000 to 10,000 machines on Amazon in bursts and then they go away. These older products are not designed for this rapid escalation and de-escalation of machines.”

There are firewall issues as well, and IT admins want to be able to manage it all from their iPads or Android phones. The service will aslo add social elements, and offer a way for IT admins to share (or sell) scripts for managing different configurations of virtual machines. It will be like an App Store for data automation scripts.

The service will work both on servers inside a company’s data center and virtual servers on Amazon and other cloud computing data centers. When a company spins up a server on Amazon, that virtual machine still has to be managed like any other: software needs to be deployed, patched and updated. The current data center automation software is so expensive that it doesn’t make much sense to use it cloud-based systems that cost pennis per hour. ScaleXtreme’s pricing model is more in line with other cloud services and is built to scale up and back across to virtual machines inside corporate data centers.

Other startups playing in the same space include Puppet Labs and ScienceLogic.

It’s a classic disruptive strategy—go after the underserved white space (the enterprise cloud), and then start picking off the main market with a radically lower price (first on the poorly-served edges in remote data centers and branch offices, and then in the main data centers). Now all ScaleXtreme needs to do is pull it off.