The Return of Appliance-Based Computing

Cost containment efforts have forced many enterprises to look at the true cost of their system. Ironically, oftentimes the preferred alternative is one first touted almost two decades ago.

by Rob Meinhardt

Cost containment dominated enterprise trends in 2009. Looking across all business areas, organizations sought ways to reduce overall spending. IT budgets were hit harder than most. For many organizations, what followed were months of agonizing staff reductions, canceled or delayed projects, and time spent figuring out how to do more with less.

These efforts forced many organizations to take a closer look at the true cost of their systems. What many found was that traditional software solutions are expensive. How much more expensive? Much more than one thinks when compared to new, alternative solutions because software is simply one component of an overall solution, even though it is sold as “the solution” by software vendors. The other components of a software solution include the required hardware, additional third-party software prerequisites (additional database licenses, etc.), and deployment and integration services. These additional costs add up quickly and obscure the true costs of software-only solutions.

What enterprises may not be aware of are the increasing number of alternatives available. Depending on the sector, there are alternative approaches to solving IT challenges in a more efficient and holistic way. Software-as-a-service (SaaS) is one such approach, as is its cloud computing cousin. However, although holding great promise in several sectors, SaaS solutions are not always the best alternative because of technical limitations or concerns surrounding security, performance, and availability.

Ironically, in a number of solution areas, the dominant alternative is one first touted almost two decades ago.

The all-in-one appliance approach first found its adherents in relatively simple IT functions that could be implemented on a “set and forget” basis. Security firewall vendors were among the first to push the hardware appliance heavily. The software solution came baked into optimized hardware that could be slapped into a rack and be up and running quickly with minimal configuration needed.

IT organizations like the model for the same performance and security reasons vendors do, but also because deployment is a breeze and the initial and on-going costs of appliances are considerably less software-only solutions or SaaS-based solutions. With the appliance model, gone are additional hardware and software prerequisites because the black-box approach of hardware appliances bundles everything needed into an all-in-one, turnkey solution.

Also gone, and far more considerable, are the professional services costs of the integrator needed to handle the complicated task of installing and integrating new software into an existing environment. Finally, and although varying by solution area, the inherent focus of most appliances is to hide complexity from its end user and thereby simplify its installation, integration, and use. This simplification usually has the added benefit of reducing training time so administrators can be productive more quickly, further reducing the overall cost of the solution.

Systems Management may be one of the best examples of a market turned upside down by the rapid adoption of appliances. Long dominated by software vendors that primarily served larger enterprises via software-only solutions, a new breed of vendors is bringing appliance-based solutions to this market. The result: the availability of robust yet rapid-to-deploy systems management tools to an entirely new class of organizations that could previously not afford the complexity of the software-only solutions. Another interesting side effect has been that the increased competition from appliances has resulted in the steady erosion of overall license costs for systems management, as software vendors compete with the less costly all-in-one appliance model.

For example, consider a large Colorado school district that opted to use a systems management appliance. Having evaluated software-only solutions four years earlier, the IT department had given up because of the high costs and complexity of these solutions. Even if they could have afforded one, they would have had to send an administrator to weeks of training; they were advised that it would likely be several months before their administrator could be productive.

Last year, the IT organization started their search again when the district adopted a new initiative providing a laptop for each high school student. Reaching out to the software vendors they had previously considered, the district also discovered a new appliance-based solution. After evaluating the products, they realized that the appliance-based solution could meet all their needs and more. The deciding factor came down to the total costs among the different tools. Discounting drove license costs among the competing solutions to comparable levels. Yet, the additional costs involved in provisioning and rolling out the software-only solutions drove up their costs, making them between 25-30 percent more expensive. In an especially tight economic climate where every dollar counted, the district’s choice became simple. They now manage their district’s PCs and servers via a hardware appliance.

These examples promise to make 2010 the year of appliance-based computing. As technology continues to mature, innovation is becoming less about coming up with new types of technology than it is about taking existing technology and making innovations for its deployment and use. Appliance-based computing exemplifies that innovation and in doing so offers a lower cost solution versus traditional software solutions. As the global economy gradually gets back on its feet, IT departments around the world will recognize that an all-in-one hardware appliance can offer an alternative -- one that will continue to see increased adoption in 2010 and beyond.

Rob Meinhardt is president of Dell KACE. Prior to co-founding KACE, Meinhardt worked for as a principal with R.B. Webber & Company (RBW), a strategic management consulting firm, working on strategic marketing projects for startup and public technology companies. Meinhardt holds a BA in Economics from Yale. You can contact the author at

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