Drawn to the Cloud

  • Article by: STEVE ALEXANDER , Star Tribune
  • Updated: February 12, 2012 - 6:20 PM

After being acquired by software giant VMware, Shavlik Technologies has a new goal: Cloud computing.

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Mark Shavlik is the founder of Shavlik Technologies, a New Brighton-based computer security firm that was acquired by VMware of California last May.

Photo: Jim Gehrz, Star Tribune

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When New Brighton security software firm Shavlik Technologies was acquired last May, it became part of a software megacompany -- California-based VMware Inc.

But far from disappearing into the cloak of darkness that envelops many small companies acquired by industry giants, the former Shavlik operations are emerging as a corporate research and development center.

And the company is hiring. Fueled by the financial strength and worldwide marketing of its $3.8 billion parent, the 150-employee New Brighton operation is now hiring 20 more technical people.

The former Shavlik operations also are being swept along on the industry's race toward "the cloud" -- the trendy computing-over-the-Internet technology in which Shavlik has only dabbled until now.

"It's like a space race to be the first in cloud," said Shavlik Technologies founder Mark Shavlik, now VMware vice president and general manager of small and medium-sized business management solutions. "Because once people adapt to the new cloud technology it's going to be like musical chairs for software providers, and some are going to get left out."

So what's "the cloud"? Broadly, it means shifting computer operations from your computer or a corporate data center to geographically remote data centers that are accessed over the Internet.

"We're in the very early stages of cloud computing," said Jagdish Rebello, a cloud computing analyst at California research firm IHS iSuppli. "But it definitely looks like that's the future direction for corporate IT departments."

Consumers use cloud computing without thinking about it. Google's free Gmail service runs in the cloud because it exists on computers located in remote data centers. Apple's new iCloud service stores a consumer's music in a remote data center so it can be listened to on a computer or an iPhone.

Some corporations also use cloud computing to save money. Instead of buying computers and paying people to run them, corporations can use computers and software in the cloud for an hourly rate -- it's like the difference between buying a car or renting one at unusually low rates. Today, cloud computing can run vital corporate functions such as human resources or sales force management.

Shavlik has provided security software and network optimization services on disks or electronically, but rarely through the cloud.

Its main business has been helping corporate customers regularly install critical software "patches" that protect programs from newly found hacker vulnerabilities.

'Virtualization'

Part of Shavlik's value to VMware's cloud strategy is that it deals with the small and medium-size business market that VMware didn't address until recently. And a large part of VMware's value to Shavlik is that the parent firm pioneered the key technology that makes cloud computing work.

Called "virtualization," the technology enables a single computer server in a corporate data center to do the work that formerly required 20 servers, which vastly simplifies data center management. Virtualization works because each software application on the server is fooled into thinking it has the server to itself.

Similarly, virtualization in the cloud will allow many corporations to share the same computers without knowing it. Computing power can be shifted from one corporate customer to the other in seconds as the need arises, and each company pays only for as much computing power as it uses.

But the switch to cloud computing still faces some hurdles. Because the cloud is new, its promise of cheap and reliable computer service is still largely unproven. And while corporations can take comfort in knowing that trusted names such as Amazon, Microsoft and IBM run cloud computing services, they still worry about entrusting critical data to computers that work over the Internet from a location usually unknown to the user.

Business customers become more skittish every time hackers attack a bank or a big retailer, stealing corporate secrets or personal information.

"IT people are extremely nervous about anybody else managing their data," said Rebello of IHS iSuppli. "What's really scary is that data from several different companies could be located on one site. What if one company snoops on the other? There's also a loss of control in that you don't know where your data is -- it might be in India."

But Rob Juncker, VMware senior director of research and development in the old Shavlik operations, thinks security fears about the cloud are overblown.

"We can secure data in our cloud better than a small business can in their IT department," Juncker said. "We have security experts, and we routinely run network penetration tests and security audits on our company."

Moving to the cloud

So far the cloud remains only a goal for VMware, which today gets most of its business from providing software to corporate IT departments, said Rajesh Ghai, an analyst at ThinkEquity in San Francisco who follows the company. VMware's goal is to attract those loyal data center customers to its cloud software instead, he said.

If the strategy works, it will mean huge changes for Shavlik's group, because cloud technology will force changes in his business model. Because the cloud promises cheaper prices for customers, he'll need to make up for lost revenue by doing a bigger volume of business.

"Cloud prices are significantly cheaper, so we'll need a lot of customers for it to make sense," Shavlik said.

But the customers will come, he argues.

"The cloud makes it easier for small and medium-sized companies to run a business,'' Shavlik said. "There's no capital expense for computers and software anymore -- you use your Visa card to buy that service in the cloud. There's also less need to have expensive technical staff."

Analyst Rebello predicts that today's security concerns about the cloud will wear off.

"Consumers used to be nervous about using a credit card online," he said. "But now nobody thinks twice about doing it."

Steve Alexander • 612-673-4553

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