Virtual management start-up grabs $4 million in VC cash

Despite economic turmoil, venture capitalists remain confident about investing in software makers that work to optimize virtual server environments. 

Take virtualization management software maker Embotics, which Wednesday announced it had garnered $4 million in a Series B round of financing led by Canada's Covington Capital. Embotics, also a Canadian company, said in a statement that it intends to put the additional cash toward building out its server virtualization management technology and expanding global sales and operations.

"We are seeing strong market demand and this new financing will help us grow while maintaining our strong relationships with customers," said Jay Litkey, CEO of Embotics, in a statement.

Embotics flagship V-Commander software, which became generally available in December 2007, provides centralized policy-based management of virtual machines. The software can track each virtual machine throughout its entire life cycle, and associates specific policies around access, authorization and end of life with each virtual machine.

Industry watchers argue such investments prove the value of both virtualization and automation technologies, even during a recession.

"I think this [investment] reflects the fact that even -- or especially -- in a recession, cost-saving technologies like virtualization and automation continue to be important priorities for IT, because they both have great ROI. Our research shows around 90% of enterprises that deploy virtualization, and 77% of enterprises that deploy automation, report a measurable and positive ROI," says Enterprise Management Associates (EMA) research vice president Andi Mann.

For example, EMA found in a survey of 627 respondents earlier this year that virtualization benefits for enterprise IT managers include server consolidation (73%), reduced hardware costs (69%), lower system administration costs (50%), reduced data center floor space/rent (48%) and reduced software costs (34%).

The same survey revealed the enterprise IT managers also experience gains deploying automation software. Nearly 50% cited reduced manual management costs and 40% said deploying automation technology improved human resource efficiency.

According to Mann, "Automation can also stabilize (or even reduce) IT administration headcount -- our research shows that data centers that deploy automation can reduce their IT administration staff by around 50%, saving 11 [full-time employees] or almost three-quarters of a million dollars ($727,257) annually in staffing costs alone."

Embotics says its approach to tracking virtual machine life cycles can potentially help enterprise IT managers curb virtual server sprawl, which could negate the cost benefits if virtualization technology if left unchecked.

"Virtualization technology has become an integral part of most data centers, and the market is now looking at ways of addressing the problem of dealing with virtual sprawl," said Phil Reddon, managing director of Covington, in a statement. "Embotics has developed products that allow their clients to manage their virtual environments in an efficient and cost-effective manner. As a result, the demand for their products continues to grow at a significant rate."