If you haven’t heard yet VMware acquired a SaaS IT financial management firm, Digital Fuel. There was a quiet announcement in June but for the most part it flew under the radar as most people were not familiar with their offerings. As of July Digital Fuel has closed and is now officially part of VMware.
Digital Fuel has been around for a while and they focus on the ability for companies to plan, manage, report etc. on the value and cost of a cloud based environment. In other words, they allow for detailed reporting on each cost of a piece of a cloud system. So for example, if HR spins up a virtual machine and hosts on the same host as AP you could actually figure out their share of the project and bill it back to the appropriate department.
I like this purchase for a few reasons. First, managing any IT project is complex, let alone a CLOUD or SaaS model and most IT departments end up carrying the budget burden of undefined expenses. Internal departments love assigning misc. and technology cost back to the IT department. Management then can’t find the difference between operations, productions, or separate capital project. It sucks if you are IT director trying to explain mysterious charges to your department.
Second, it shows the new direction the VMware is heading. It is feeling more and more that they are getting out of the traditional hypervisor business. From the new products and other acquisitions you see them evolving to more of a virtualization management company focusing on the different aspects of SaaS, application development, and cloud infrastructure.
Thirdly, it shows VMware moving up the enterprise stack. While VMware has 250,000+ customers the vast majority or in the mid market space, contrasting with Digital Fuel who focused primarily on fortune 100 companies like Cicso, Dell, GE, IBM etc. This will allow VMware to start to play with some of previous dominant players in this space, specifically IBM software, Oracle, and SAP. There very well could be a power shift in the core enterprise accounts over the next couple years.
Some More Details:
Below is some of the quotes from the press release and related documents.
“Cloud computing represents a fundamentally new model for IT, enabling enterprises to realize unprecedented gains in operational efficiency, while also understanding, managing and optimizing IT resources based on granular business metrics,” said Boaz Chalamish, VP and General Manager, VMware. “New levels of financial visibility and control in cloud environments will enable CIOs to engage with the CFO, line of business stakeholders and others around how IT investments translate to real business value. As an authority on helping organizations navigate the business operations of IT, Digital Fuel will add a significant capability to our portfolio, broadening beyond operational management to include business-centric capabilities.”
Digital Fuel’s portfolio for IT costing, budget, chargeback, cost optimization, vendor management and SLA management integrates with a broad set of systems, applications, data sources and third-party management technologies to deliver comprehensive, unified financial analysis. These offerings, offered both on-premise within an enterprise datacenter and delivered via Software as a Service (SaaS) models for maximum flexibility, will complement VMware’s portfolio of management solutions including vCenter Chargeback and Service Manager. The acquisition of Digital Fuel will enable VMware’s enterprise customers to:
- Engage more effectively with business stakeholders through meaningful measurements and reports, including a Bill of IT Services, chargeback, service level reporting, and vendor scorecards.
- Gain complete, consolidated visibility into IT costs (Capex, Opex and Service costs) across a broad range of financial data sources.
- Manage IT agendas with deep financial discipline, leveraging fact-based decisions across the IT portfolio to make informed financial trade-offs aligned to business priorities.
From Ramin Sayar, VP, Marketing, Blog:
This is why VMware is acquiring Digital Fuel. It’s about providing our customers with the deep visibility and the right measurement tools they need to manage IT in the right way. Specifically, I’m talking about 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. So you can stand up and have a fact-based, numbers-driven discussion with your CFO or CEO. And the combination of VMware and Digital Fuel is a perfect fit for this. The acquisition brings together our deep insight into the dynamically changing virtual infrastructure which is the very foundation for cloud computing, as well as our growing portfolio of application and end user computing solutions that are re-defining how IT is enabling your business processes. The combination of these solutions with Digital Fuel’s pioneering capabilities gives you the unprecedented ability to manage every aspect of your services from a financial – and business – perspective.