On Lack Of IT Readiness – And Innovators Dilemma. VMware Delivers A Sad Reality

Editor’s note: Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. More about Ben here. He hangs out 24*7 on Twitter.

At VMware’s annual extravaganza in San Francisco this past week, VMware’s application to join OpenStack was announced. The keynote in which it was announced held somewhere around 20000 people, arguably the cream of the IT world and, when the OpenStack announcement was made, the silence was deafening. I suspect that this had nothing to do with a reaction to the news in particular, and lots to do with the fact that VMware’s traditional customer – IT departments within large organization – are, generally speaking, paying little more than lip-service to the growing calls of a new generation of technology companies led by the likes of Box and Salesforce and heralding agility, mobility and social enterprise as key demands.

The seeming lack of innovation amongst VMware’s customers is important since it gets to the very heart of corporate IT’s ability (or lack thereof) to deliver what the business, and individual users within the business, need.I wanted to reflect on this fact, and what it means for both IT generally, and VMware as a particular vendor.

Enterprises Don’t Know What They Don’t Know – Vendors Are Happy to Take Advantage of That

I had lunch with the crew from Cloudability (see disclosure) at the show and we were talking about enterprise technology adoption and drivers for change and mapping that to where on the adoption continuum businesses are. My strong feeling during the discussion were, sadly, pretty critical of the state of corporate IT that is still living in a world where virtualization is pretty much as far into new technologies that they go.

It’s for that reason that I’m not completely incredulous at the legion of vendors at VMworld who were cloudwashing their products far and wide. After all, these vendors are in the business of selling kit – and it’s far easier to sell a piece of kit than it is to try and educate a customer about how much the world is changing and how much they’re going to have to reinvent their organization accordingly. others are not so forgiving of vendors, in particular Christian Reilly comes out with a very forthright perspective on where the “blame” lies;

While Reilly says it with color, his point is that vendors have an obligation to try and move the dial on technology, and just feed IT platitudes. But I wonder how realistic this is. Walking around the show floor I was reminded that the vast majority of VMware customers have no pressing need or desire to enter this brave new world. Yes their CEOs might be making some vague request that they “find out about this cloud thing” but all they really want to do is enough to meet the most basic of requirements whilst all the time focusing firmly on retaining control and status quo.

It’s not surprising then that around the show floor I saw literally dozens of companies calling themselves cloud-something that meet not the lowest-level definition of what actually constitutes cloud. This isn’t some kind of rant about the semantics of public versus private or open versus closed. Rather it’s a treatise on the fact that the business want to achieve an outcome which is generally tied to agility and that It remains a barrier to that.

Innovator’s Dilemma Rears its Ugly Head

So where does a company like VMware feed into this? It’s difficult for them and a perfect example of innovator’s dilemma. VMware, however you slice and dice it, make the lion’s share of its income from one product class. It makes awesome profits, it is in a burgeoning market and given those two traits, it is a very bitter pill to swallow to turn around and move to some unknown and untested “new paradigm”. Rather, and to mimic the trend within IT to do just enough to convince the CEO that you’re “doing this cloud thing”, VMware will do the minimum to tick some check boxes on a buzzword hungry IT buyer’s list. A list that as Reilly points out is created by the vendors themselves oftentimes.

Alex Williams reflected on this fact himself in his opinion piece when he suggested that VMware positioning as a leader in the cloud space was misguided. He rightly pointed out just how many startups exist that are rapidly disruption VMware’s hegemony, and that of other legacy IT players.

These two perspective – one from the buyer side and one from the seller side lead to an interesting situation – IT doesn’t know what it needs beyond some ill-defined terms and acronyms. The large IT vendors have a strong vested interest in delivering broadly what can be classed as the status quo and, even if they wanted to change, they do so into a market that is unsure, with products that are disruptive to their own profit margins and with a salesforce that is hell bent on avoiding any substantive change. Innovator’s dilemma indeed.

That’s not to say that VMware isn’t doing anything interesting – there were some cool things going on around VMworld. Some examples that have me interested from the VMware mothership include the awesome Cloud Foundry initiative, the rumored public cloud offering, the new Cinderella Project a very non-typical VMware project which aims to provide an integration between VMware’s systems and Amazon EC2 and S3 services.

Add to that their purchase of Nicira, the DynamicOps acquisition and the much heralded (at least from the punditry) joining of OpenStack and it is fair to say that changes are occurring, at least to some degree.

I can’t help but think though that the only real way to break the innovator’s dilemma and have VMware truly deliver innovative products is to force change on the business. In her wrap up of what she sees as a VMware in flux, Barb Darrow gave a few different reasons she sees change afoot. For me, it’s the final one which is most telling; the company retains huge market share in server virtualization, but that’s a saturated market that is rapidly becoming commoditized.

Some times it takes seismic change to make people move. Innovator’s dilemma effects both side of the IT buying relationship and VMworld was an interesting glimpse of just how wide the chasm is that both IT and IT vendors need to cross. This journey will be neither quick nor painless.