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Summary:

Menlo Park-based nlyte Software has closed a $12 million round founded on the promise for nlyte’s data center infrastructure management (DCIM) product. In an IT world dominated by discussions about server virtualization and cloud computing, however, I wonder just who is buying into the DCIM vision.

green racks

Do data center operators need more software to help keep track of ever-sprawling assets – keeping tabs on what’s where, what’s actually being used, what’s connected to what? Menlo Park-based nlyte Software thinks so, and has closed a $12 million Series C funding round, led by NGEN Partners.

Nlyte’s so-called data center infrastructure management (DCIM) product is ideal for helping reduce energy costs via optimal design and capacity planning. But in an IT world dominated by discussions about server virtualization and cloud computing, however, I wonder just who is buying into the DCIM vision.

In a TechCrunch post on the new funding, nlyte CEO John Temple says that only “one data center in one hundred [with more than 100 racks]” is currently utilizing DCIM software. He sees this as an opportunity, but it also could be a sign of lackluster interest among data center operators. For example, many data centers already are reducing their energy consumption through server virtualization and virtualization-management tools. Forrester says that merely increasing the ratio of virtual to physical servers, and investing in more-efficient servers, can reduce server energy costs by up to 65 percent.

Increased interest in cloud computing could signal that the cloud will take over some of the energy-reduction workload, too. Public clouds inherently cut energy costs by offloading them to cloud providers, while some internal-cloud software is designed to maximize resource utilization through intelligent load-balancing and multitenant architectures. Companies utilizing either method of cloud computing might and seeing power costs drop might find DCIM software not worth the investment.

The counter to this argument is the reason for Temple’s optimism: demand for data center space is on the rise, so the number of potential DCIM customers should be, too. If data centers are, indeed, the new servers, there will be plenty of new targets for products like nlyte. For those truly concerned about power costs, virtualization or cloud software might not be enough.

Nlyte, for its part, appears to be thriving, so perhaps my skepticism is misplaced. However, it’s a fast-changing data center market, with energy far outpacing square footage in terms of costs, so we’ll see what options operators choose to ensure they keep those costs in check. DCIM vendors have a compelling story to tell if data center operators are willing to listen.

Image courtesy of Argonne National Laboratory.

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  1. Hey Derrick,
    You raise some good points here. If you would like to discuss things a bit further I’d be happy to set up an interview Jon Temple for you.
    Steve

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