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VMware buys Digital Fuel to make cloudonomics easier

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VMware bought Israeli startup Digital Fuel Monday in an attempt to give VMware (s vmw) customers better insights into how their IT investments measure up. Israeli newspaper Globes said VMware paid $85 million for Digital Fuel.

The concept of “cloudonomics” is centered on the aspects that make cloud computing a more cost-effective delivery model, but might well extend to the numerous considerations that organizations must take into account when determining if cloud computing is the right choice for any given workload. The latter concern is exactly what Digital Fuel’s “IT Financial and Business Management” software aims provide customers.

In a blog post explaining the deal, VMware’s Ramin Sayar described the decision:

“[A]s CIOs are increasing their level of virtualization and building out their private cloud capabilities to compete with the agility and cost of public cloud services, it’s getting more and more difficult to understand the true cost of the services they provide…. To answer this question without breaking into a cold sweat requires deep financial visibility into cost structures, the ability to monitor and deliver on SLAs, and a framework for making intelligent sourcing decisions.”

Digital Fuel, he wrote, provides “the ability to measure the costs and SLAs associated with a particular IT service whether sourced internally through your private cloud or externally from a cloud or SaaS provider.” Essentially, Digital Fuel lets CIOs confidently make budget decisions based on which option will cost the least, then keep their vendors or service providers in line once the application is up and running. Digital Fuel is presently available as on-premise software or via the SaaS delivery model.

Certainly, VMware, with its growing set of cloud services (sub req’d) that includes recent acquisitions WaveMaker, SlideRocket and Socialcast, and which already sells a variety of virtualization-management products and even an e-mail application, has a vested interest in proving to CIOs that it can deliver cost-effective services across the board. We’ll no doubt hear a lot more about its ever-expanding business at Structure 2011 next week, when CEO Paul Maritz sits down for a one-on-one chat our own Om Malik to discuss VMware’s cloud vision.

4 Responses to “VMware buys Digital Fuel to make cloudonomics easier”

  1. williamlouth

    “fox watching the hen house”

    I think this is only applicable when discussing a solution that pertains to be activity based costing solution when it’s method of collection and reporting resembles more traditional costing approaches which is the case for both DigitalFuel and Apptio.

    Cost Aware Runtimes & Services (CARS) can protect, prioritize, predict, and provision IT computing services and resources in-flight by way of self observation and self regulation. This is critical for cloud computing and hopefully the future of enterprise software because webscale != human scale and if you have to look at a dashboard to decide to act on something it is more than likely far too late. In addition the value of data collected has a much shorter shelf life than ever before.

    We need to access cost, value and performance in-flight in deciding the quality of service that will be offered by software services which will dominate the industry in the future.

    Immediacy in software service regulation is the now.

  2. VMware’s acquisition of Digital Fuel reflects the strategic importance of the emerging Technology Business Management market. However, this acquisition will be viewed by many CIOs as the fox watching the hen house. With enterprise IT spending expected to reach over $2.5 trillion, companies are demanding an independent perspective when it comes to making the best cost, quality and value decisions for IT. More of my thoughts on this acquisition can be found here:

  3. williamlouth

    Not being activity based means that this is basically traditional costing being applied to IT services which is only applicable when the source (a vm instance) is in fact not shared across multiple services in a software service supply chain. I suppose its a step up from tagging a VM but far off from actual activity based costing & metering which is immediate and much more accurate in its assignment and allocation.

    The question is do you really want to have separate solutions for costing, control, performance optimization, resource management,…..when this can be achieved using one framework based on inflight intelligent activity analysis & metering.

  4. Digital Fuel seems to help IT departments find out more about their internal costs and charge backs. VMWare helps IT departments stand up and manage their internal private cloud and also adopt a hybrid cloud model. This acquisition when integrated into the VMWare portfolio should help IT departments justify their costs and chargebacks. It should help CIOs make financial decisions on using a public cloud. I wonder how digital fuel quantifies security and peace of mind?