With Recent Investments, VMTurbo Growing Fast in Data Center Control

The problem that Benjamin Nye faces selling VMTurbo’s data center control software is that his customers often hear what they expect to hear.

Nye, the Boston company’s chief executive, tells customers that his software can give them control of their data center. But, he says, again and again all they hear is that it is just another monitoring system.

“We are trying to make sure that people understand what we mean when we say ‘control system’,” he says. “When they see that and understand that, they get the ‘Aha!’”

The difference between monitoring and control is at the center of how VMTurbo wants to shake up data center management. With demands for computing power growing from both consumers and businesses, and energy-hungry data centers expanding, VMTurbo sees an opportunity to make this whole, complicated system work more efficiently.

Nye and others have observed that the task of running a data center has evolved into a herculean task, beyond anything that a human can keep pace with—virtualization, hypervisors, and, a new data-storage architecture called “containers,” which allows more info to live in less server space but makes the data system more difficult to manage. Joe Kinsella, chief technology officer and founder of Boston-based CloudHealth Technologies, calls the phenomenon the “complexity gap.”

And without the ability to manage or control the demand for server space, many companies over-provision their data centers with more IT equipment than they need. The $20 billion IT operations management market, Kinsella says, “has not been able to keep pace with managing that complexity.”

Incumbents like IBM, CA Technologies, and BMC Software dominate the majority of that market, but smaller upstarts like VMTurbo, CloudHealth, and others are increasingly challenging their dominance, according to Gartner. The upheaval in IT management software mimics the fight in hardware for data storage and networking, as tech unicorns like SimpliVity and Infinidat take on giants like EMC, HP, VMware, and Cisco.

VMTurbo’s software acts as an autopilot for data centers. It creates a sort of marketplace inside of the data center to balance out supplies of server space and other resources with demand from applications and virtual machines.

A year ago, VMTurbo moved from its offices in Burlington, MA, to two floors in a Boylston Street office building in Copley Square. The company says it has had 19 consecutive quarters of growing sales.

It closed a $50 million Series D round in January led by Iconiq Capital and previous investors Bain Capital Ventures, Globespan Capital Partners, and Highland Capital Partners. Earlier in May, VMTurbo announced a strategic investment from Red Hat, the Raleigh, NC-based open source software firm.

Nye says VMTurbo customers see a 37 percent improvement in application performance, and a subsequent 20 to 50 percent reduction in data center capital expenses. Its customers average a return on their investment in three months, he says. And they span a wide range of sectors, including financial services, healthcare, technology, education, and utilities.

One of VMTurbo’s customers, a top-five technology company, had data centers expanding their storage capacity at a rate of 15 percent each month. In November, the company implemented VMTurbo’s control software. The company has not added hardware since, Nye says, because its existing servers are running at higher efficiencies.

“Our current projection is they won’t add any hardware for the rest of the year,” he says.

In addition to spending less on servers, Nye says companies could also allocate their human IT capital to long-term strategic decisions.

“The person who is running the data center today is responding to alerts,” he says, adding that many people managing IT systems artfully create these alerts and then, with equal skill, sort them off into an e-mail folder. “Things break, and the question is how fast can he or she respond to fix it. They cannot succeed; they can only not fail,” Nye says.

With about 340 employees, VMTurbo is hiring about 20 people a week. Despite that growth, Nye says, the last three quarters have been cash flow-positive.

The future of managing data centers, Nye says, will be creating more resilient systems that are tailored to companies’ needs. Those companies will need to take on more and more complexity than even today.

Nye says his company is looking to post more strong numbers for the rest of the year before making a determination about VMTurbo’s future strategy.

“Adoption of VMTurbo’s control system is more a question of ‘when’ than whether they will adopt,” Nye says.

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