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IBM in £6.5bn 'on-demand' computing push

Hopes there'll be demand for it...
Written by Stephen Shankland, Contributor

Hopes there'll be demand for it...

IBM plans to add muscle to its "on-demand" computing push today with the debut of several efforts designed to help it defend its position in the technology world. The new efforts span Big Blue's storage, software and server lines and dovetail with the on-demand initiative to emphasise products and pricing strategies that can adapt to fluctuations in computing demand. The company is spending $10bn, or about £6.4bn, on developing and publicising the push, according to IBM. The Thursday launch will include a service that lets customers tap into varying amounts of server power, depending on changes in their demand, said IBM. It will also display a "virtualisation" technology that pools storage systems, so more of their total capacity can be used, and software that automatically changes the tasks assigned to low-end servers. Also on the menu is a revamp of IBM's WebSphere business software to allow it to be controlled by Big Blue's "grid" software, which was originally developed to unite groups of computers into a supercomputer. Topping the product and service debuts is the introduction of a major overhaul to IBM's pricing scheme, called the Open Infrastructure Offering. OIO is a customised contract under which customers pay for their entire collection of computing hardware, software and services with a single fixed monthly payment. IBM's on-demand plan is one instance of the utility computing trend that's sweeping the industry. In the ultimate vision of utility computing, companies pay for computing capacity as they use it, the way they pay for electricity today. In the nearer term, utility computing often means they can fire up a server's unused processors as needed or tap into an IBM data centre to accommodate spikes in demand. Utility computing is closely related to two other concepts that make it easier to treat computing gear as one gigantic pool of computing power: automation that lets computers manage themselves, and virtualisation that shields software from the underlying infrastructure it's running on. OIO cuts costs overall and permits customers to count on upgrades without worrying about what specific gear they'll need to buy in the future, said Mark Shearer, vice president of IBM's server products unit. "We take everything we do at IBM - hardware, storage, software, maintenance, disaster recovery, global financing - and we work with clients to put it all together so they have a single monthly payment over a period of years for their information technology infrastructure," Shearer said. OIO also can accommodate sudden jumps in computing needs, a feature that's a key component of IBM's overall on-demand push. Electronic payment specialist TSys is among the customers who have negotiated OIO contracts, Shearer said. The plans show a complete turnaround from the arrogant bureaucracy IBM had become in the 1980s and has been working for years to change, said Robert Frances Group analyst Ed Broderick, who is attending an analyst conference in Palisades, New York, on the IBM plans. "This is a new IBM I'm hearing about today than three years ago," Broderick said. "They are getting their act together on hardware, software and services. IBM Global Services and Global Financing are doing some crazy, wild stuff. IBM's easier to do business with. They're being more responsive to customer-driven requirements." Another major change in IBM's utility offering will be the ability to turn off capacity in some computers when it's not needed anymore. IBM offers this feature in its midrange iSeries line, and in coming weeks Big Blue will offer it in its pSeries Unix servers and zSeries mainframes as well, he said. On-demand computing is one of the central initiatives of new Chief Executive Sam Palmisano. "Customers no longer think about computing as a collection of piece parts," Palmisano told shareholders at the company's annual meeting Tuesday. "In the past, customers used technology to automate standalone operations like payroll and inventory control... Today, customers want to use technology to pull those standalone operations into a unified whole." Stephen Shankland writes for News.com
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