RealTime IT News

Sun's HMO Approach to Services

MENLO PARK, Calif. -- Similar to the way a doctor tells a patient to stop smoking, Sun Microsystems is prescribing an ounce of prevention with a financial incentive for its data center customers.

On Tuesday, the Santa Clara, Calif.-based network computer maker launched a new subscription-based network services delivery model, called Sun Preventive Services. The company said the idea is to create a baseline diagnostic and then work with customers to help them improve security and reliability.

"We would walk in with a customer and say 'well, I see that you have this server or that system with security holes in it. Let's see what we can do to fix that,'" Sun CEO Scott McNealy said during a press conference here. The new offering is part of some 30 new hardware and software products Sun is launching as part of its regularly scheduled quarterly update.

After Sun analyzes the network, it said it produces what it calls a set of Key Performance Indicators (KPIs), which are warnings that a system could fail. Sun said it then establishes specific, measurable performance goals and offers some 100 new action plans to plug up the holes.

The program comes with a financial incentive of up to 20 percent off long-term services subscription costs to "customers who achieve and sustain their goals", a pricing model McNealy characterized as a "disruptive innovation."

"This is 'mankind versus IBM global services,'" McNealy said. "Instead of a spigot for custom invoices, you get a spigot for creative services."

Sun's Preventive Services director Mike Harding characterized the program as "Orion with a twist;" a reference to Project Orion, the code name for the $100 per-employee pricing model for Sun's Java Enterprise System software platform.

"It's a single price for customers with a shared risk and a shared reward," Harding told internetnews.com. "We surveyed 600,000 customers to establish the more common problems. We've learned that any time anyone touches a server; there is a 1-in-200 chance - or half a percentage point - in causing an outage. Our friends at IBM and HP have been working hard on the automated fix, but Sun is thinking more that you have to prevent first and recover second. With Preventive Services, a CIO goes back to the board and says, 'because we are living a healthy digital lifestyle, we just saved a ton of cash.'"

Harding said phase one of the project launched this week is specifically for Sun products only. Version 1.1 of the program will encompass Sun's iForce partners and is expected to launch this winter. Version 2.0 is due in May 2005 and will expand to all non-Sun systems, Harding said.

Sun has already performed 40 trial runs with representatives of its financial services, government and telecommunication partners. Harding said the program is being designed for the life sciences market as well as medium companies.

Mark Stahlman, managing director of research at financial analyst group Caris & Company, told internetnews.com Sun is trying to shake things up and that this is reflective of the recent trends in enterprise IT buying.

"There are a lot of people who are buying a lot more servers, so services that are attached to those sales are a good opportunity," Stahlman said. "Service is a category that includes a whole bunch of things, including consulting and break-fix capabilities. By radically altering pricing strategies, there are chances for Sun to grow more quickly. And when version 2.0 kicks in and they step out of their own product categories... that kind of a service strategy will kick in an afterburner and be a premium growth opportunity for them."