HP sets $2B in financing to speed cloud adoption

FRAMINGHAM (06/07/2011) – LAS VEGAS — On the big screen at its user conference here, Hewlett-Packard executives tried to make the practice of cloud computing “bursting” look as easy as drag and drop. But the users watching a demo of workloads being shifted to an external cloud provider know it’s not that easy, at least not now.

There are deployment and standards questions that will have to be answered and addressed. Even as HP worked to explain its technology, it also cited a more fundamental need for cloud deployment: money.

HP isn’t advertising the prices on many of its new systems, but turning enterprise IT shops into virtual resource pools that can adapt to cloud environments won’t be cheap.

That’s probably why HP CEO Leo Apotheker announced Tuesday that the company is setting aside $2 billion for customers to help buy its cloud systems.

Irv Rothman, who heads HP Financial Services, a wholly owned subsidiary of the company, said it will use financial tools, such as sale and lease back, where HP buys a customer’s assets and then leases them back for a specific period of time. It monetizes those assets and provides customers with a pool of cash, he said.

Rothman said sale-and-lease-back programs aren’t new, but a desire to move to the cloud is spiking interest in them. “We’ve got a lot of CFOs asking about it now,” he said.

Part of the appeal of the cloud is the ability to “burst” to external providers, or add capacity to provision peak workloads as needed, such as holiday buying demand, for just a few hours or a few months. It is seen as a less costly alternative to leasing rack space.

By the end of the year, HP plans to launch this bursting capability and expects to have a list of cloud providers that are integrated into its systems. Managed hosting provider Savvis will be one of the providers, with others to be announced.

Among those at the conference is Shawn Wales, who runs the global performance testing team for Deere & Co., heavy farm and construction equipment maker. Wales sees clear benefits to the concept of cloud bursting, but also has questions about its implementation.

“We have needed the ability to burst up – in our business, we’re very cyclical,” said Wales, particularly around the harvesting and planting seasons. “Having that capability is a game changer,” he said. Wales said the company is still using traditional methods for adding capacity, namely ordering racks from a provider. But the ramp time for that additional capacity is long.

But Wales questioned whether there will be a standard method of deployment.

“Developing a standard about how to deploy these applications,” in a cloud infrastructure, Wales said, “is really to me the bigger piece than the cloud aspect itself.”

“If you can’t either have a middle layer that figures it out for you [the application deployment], or the vendors come to a standard, it’s going to take a long time to move forward,” Wales said.

Nick van der Zweep, director of HP’s business strategy, industry standard servers and software, said HP is creating connectors that work with the various APIs of cloud providers, but said the company is also “concurrently working with the industry” on how to develop standards. He said his group is working on developing standards with the Distributed Management Task Force, a standards body.

Darius Hakimi, a business development manager at Norway-based integrator Atea, said he wants more detail about HP’s cloud bursting technology, but also said he’s likely to be cautious initially.

“I think this is probably the first implementation of it, so being the very careful person that I am, I’ll probably wait for the second implementation of it,” Hakimi said.

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick’s RSS feed . His e-mail address is pthibodeau@computerworld.com .

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