Seeking growth, SunGard Availability looks to Managed Services, expands Cloud strategy

Tom Paine

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Wayne-based SunGard Availability Services has been somewhat of a riddle to decipher.

The $1.4 billion (revenue) giant of the third party disaster recovery and business continuity industry it largely created (originally using excess Sunoco computing capacity-it was later spun off from Sunoco), has been rather stuck in the mud for the past several years, with overall revenue flat or slightly declining, while many cloud services companies have been growing rapidly or getting acquired for hefty premiums. Understanding SunGard Availability is not easy, as below the macro level it is composed of numerous components and services. But the essential transition underway reflects the fact that the disaster recovery business, at least in terms of SunGard's traditional business model, is simply not a growth vehicle for it now. The ongoing value of disaster recovery and business continuity services has been reconfirmed by events such as 9/11 and Hurricane Sandy, in which SunGard Availabilty played essential roles in helping businesses recover. However, competition from the high and low end, the rise of the cloud and reduced capacity requirements due to virtualization, and the commoditization and downward cost curve of hardware, have all been factors in constraining growth.

Reuters reported last Tuesday (as I was working on this story), citing unnamed sources, that parent SunGard Data Systems - also based in Wayne - was considering the sale of all or part of SunGard Availability, saying the sale could reportedly fetch up to $2 billion. SunGard Data Systems was taken private in an $11.4 billion leveraged buyout (LBO) in 2005, and its private equity investors have been looking to get their money out. Malvern-based SunGard Higher Education was sold for $1.7 billion last year to another PE firm that then merged it with Datatel(since renamed Ellucian); SunGard's other remaining major unit is SunGard Financial Systems. SunGard Data Systems management had spoken in the past of spinning off Availability Services in an IPO, but it seems unlikely that the unit has enough momentum right now to be an attractive standalone offering. SunGard would not respond to the Reuters report.

SunGard has long been a provider of a variety of managed services including hosting, but it has been moving aggressively in recent years to roll out its cloud strategy. In May, it announced a refocused strategy for its Managed IT Services, with an increased emphasis on Cloud architecture, virtualization technology and managed recovery. Jack Dziak, who joined the company in August 2011, was named in January executive vice president and general manager of Managed Services, and he leads the Managed Hosting Services team in North America.

In pursuing its strategy, SunGard Availability is sticking close to its traditional strengths in security and reliability and meeting high standards for service level agreements (SLAs), areas it suggests some of the newer cloud services entrants are not as strong in. These features are also critical to many of SunGard's major customers in industries such as financial services and pharma which must meet strict security requirements for regulatory purposes.

Much of the impetus for SunGard's emerging cloud strategy has come from its UK unit, including the 2010 acquisition of Dublin, Ireland-based Hosting 365, which in many ways has served as a testing ground for constructing SunGard's cloud environment.

SunGard entered the private cloud business officially in 2010, and offers services at its facilities located in Philadelphia, Colorado and Canada, as well as two UK locations. SunGard Enterprise Cloud Services (ECS) delivers IT infrastructure and operational support in either a multi-tenant(which might be considered quasi-public) or a dedicated, private environment via the same platform. The ECS platform is based on technology from VMware, Cisco and EMC.

But SunGard expects later this year to begin offering a self-service public cloud at a yet unspecified facility in North America. It will be a true multi-tenant facility supported by the Apache Foundation CloudStack, Xen and VMware. SunGard Availability is fully committed to CloudStack for its public cloud, Simon Withers, vice president of global cloud products at SunGard Availability Services, told me. (Simon is a UK native, but currently operates on both sides of the Atlantic, and when I caught up with him by phone he was in Philadelphia).

By entering the self-service public cloud market, SunGard is not trying to compete head-on with Amazon Web Services (AWS), the giant in that space. Rather, SunGard's offering is meant to complement its existing cloud services, offering clients an option for testing, development, and rampup, and perhaps use in a hybrid manner with ECS or on-premise systems.

Other issues are in front of SunGard Availability as it builds its cloud services strategy. Hosting and managing both Oracle DBMS and ERP and SAP ERP environments for customers are important parts of its business. Earlier this month, SunGard Availability announced support for virtualized platforms for its SunGard Managed Oracle Services. Virtualized platforms allow companies to make the transition from capital intensive, traditional dedicated infrastructure, leveraging scale and pay-as-you-go multi-tenant models. Managed Oracle Services are designed specifically to run ERP applications and Oracle Databases with pre-certified Oracle server and storage hardware and software, known as Oracle Red Stack.

SunGard Availability is also evaluating (and perhaps doing some test work) on the SAP HANA Cloud Platform, announced by SAP at its Sapphire Now conference in Orlando in May.

Another possible future platform for SunGard Availability's cloud offerings is VMWare's Hybrid Cloud, announced late last month. VMware initially will offer Hybrid Cloud out of four of its own data centers, but it appears to be looking for third-party partners to host the service. SunGard certainly could be an option given its close working relationship with VMware, although no plans are in place as of now.

Early last year SunGard AS established a partnership with Amazon Web Services for Advanced Consulting and Amazon Direct Connect services. SunGard's long term vision is to provide a broad portfolio of Information Availability solutions, including a planned offering providing customers with managed application availability for AWS environments.

In addition to its extensive hosting management expertise, SunGard Availability also brings some proprietary technology to the table. An example is its Recover2Cloud for vCenter SRM offering for VMware infrastructures at SunGard cloud-based recovery sites, introduced in April.

Inside SunGard Availability's Spring Garden Street data center /
Courtesy SunGard Availability 

SunGard Availability will add over 52,000 square feet of data center space across North America this year, and continues to expand in Philadelphia, adding capacity this year in Room 2 of its 1500 Spring Garden Street Philadelphia facility, Joe Sullivan, vice president of Product Management, Managed Services, told me. It consisted of an additional 13,500 sq ft of raised floor and 1,215 kW of sellable power, and came online in March.

SunGard Availability has over 3,000 employees.




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