Microsoft is repositioning its System Center management suite to make it the central management console, not only for Windows Server in the enterprise data center, but also for future workloads in the on-premises cloud and Windows Azure public cloud.

In doing so, it's saying the next version, System Center 2012, due by the end of the first half of this year, will challenge top systems management vendors IBM, HP, BMC Software, and CA Technologies. It will be a prospective, hybrid cloud system manager, capable of moving virtual machines from the data center to Azure and back again. Even more than the Big Four, Microsoft is lining up to butt heads with VMware, which is mounting its own challenge in the systems management space. VMware launched vCenter Operations last March, with monitoring, configuration management, and capacity management. Both Microsoft and VMware agree that virtual machine management is the key to future data center operations and workload management in the cloud. In the past, Microsoft has had a stronger hand in physical Windows Server management.

[ Want to see how Dell is putting itself in the middle between two virtualization heavyweights? See Dell Plays Switzerland Between Microsoft and VMware. ]

Windows Server along with Linux is the data center's fastest growing operating system and ships on 76% of x86 servers purchased, said Brad Anderson, a former Novell executive, now a Microsoft corporate VP. System Center started out in 2000 as a single application, Operations Manager, and has grown into a suite of eight applications. Anderson has guided its growth in the Server & Tools business unit; now it's that unit's fastest growing business, producing over $1 billion in revenue in 2011.

Almost half of all x86 servers shipped go out the door with a System Center agent on them; they're ready to be managed from the central console. Five years ago, that number was in the single digits, he said in an interview at his Redmond, Wash., office last week.

In its 2012 version, System Center will seek a more general purpose role. It's already used by about 20% of Windows data center administrators to also manage Linux servers, Anderson said. In the 2012 version, its Virtual Machine Manager component will be able to manage VMware's ESX Servers as well as Microsoft's own Hyper-V and Citrix Systems XenServer, making it a "cross hypervisor management system," he added.

System Center 2012 is due out sometime in the first half of this year and the next version "isn't your grandfather's System Center. Organizations of all sizes can use it to manage both their data centers and their cloud computing," Anderson said in the interview.

Last year, Microsoft added a knowledge center in Azure of the best Windows Server configurations to help customers build out private clouds.

There are a number of far-reaching changes in the 2012 version, but the main one perhaps is its embrace of the private cloud, blocks of heavily virtualized servers being managed in a more automated way. The private cloud extends to end users the right of self-provisioning virtual servers, with IT operating chargeback systems and billing the appropriate department. System Center 2012 incorporates terms like cloudadmin, and the symbol for Virtual Machine Manager, one of its eight components, is a server intersected by a cloud.

Virtualized data centers and private cloud computing, with user self-provisioning, "requires great management. The value of management has moved front and center in the data center," said Anderson.

But there are different ways to do this. VMware believes it can translate its virtual machine management capabilities into data center and cloud management. Microsoft thinks that's the wrong focus. It says System Center's ability to manage both physical and virtual resources is the right approach, with the Windows operating system the key building block.

Microsoft includes its Hyper-V hypervisor in Windows Server 2008 Release 2, and believes managing large blocks of virtualized servers is the key to future operations. Market researcher IDC said in late December that Microsoft's share of the virtualization software market is now growing at a faster pace than VMware's (20% annually vs. 12%), Anderson said.