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IBM STG Analyst Forum Day 1 Morning Sessions

Summary of sessions from IBM STG's Analyst Forum Day 1. Systems, storage, virtualization and cloud computing were key elements.
Written by Dan Kusnetzky, Contributor on

I will be posting as time permits throughout the day. Only public data will be discussed. Information covered by non-disclosure agreements will not be discussed.

Environment

Unlike most industry events, there wasn’t a wall of loud sound barraging analysts as they entered the conference room. IBM did, on the other hand, present the obligatory video that is meant to set the stage for the sessions that were to follow. The video appeared to be a presentation deck with a moving background and an upscale version of Nikolai Rimsky-Korsakov’s Flight of the Bumble Bee.

8:15 AM Update

Integrated Systems: The Foundation for Smarter Computing

Rod Adkins, SVP Systems and Technology Group Introduced the third annual meeting for analysts. The goal was to present a much more effective meeting allowing analysts the opportunity to speak with IBM executives, executives from IBM’s customers and a discussion of strategy, product plans and industry events.

  • Rod reviewed the November 2010 STG analyst briefing and offered his view of what analysts should and ought to have taken away from the event. He also reviewed IBM’s long-term strategy and what the company was doing at that time to align IBM’s investments with that strategy.
  • He then went on to describe that this event will examine IBM’s 2015 STG roadmap and what the company is doing to achieve its goals.“Smarter Computing” is going to continue to be the catch phrase IBM uses.
  • Rod reviewed IBM’s 2011 year to date successes. High-end systems are providing 33% of STG’s revenue. This is up from 30% in the previous year. Overall the company has been experiencing greater than 35% quarterly growth through the third quarter of 2011.
  • The company introduced SmartCloud Entry (reviewed in a previous article).
  • Rod presented a comparison of how IBM is doing versus Oracle and HP. The chart was not very useful in understanding what was happening in the market.Each competitor had a line showing how IBM compares when revenue is considered. Relative percentages with no indication of total revenues really didn’t tell the analysts much.
  • All of IBM’s systems are experiencing revenue growth — System Z was up 28% YTD, Power Systems were up 15% YTD, System x was up 9% YTD and Storage grew 28% YTD. IBM continues to focus on investments in systems technology, growth markets (China, Romania, India and South Asia were called out), and strategic acquisitions to expand IBM’s offering in clustering, cluster management, blade computing, and storage virtualization.
  • Rod then reviewed how IBM's investments were designed to create products and services that will help customers transform their operations by delivering "tuned to task" systems and services.
  • To demonstrate IBM's understanding of the market dynamics, Rod reviewed IT's challenges in the areas of cost reduction, data growth, the continued need to improve analytical processing so customers can better address the real-time needs of their environments.
  • Rod then reviewed a few customer success stories. The Lego Group and China Telecom were highlighted.
  • Plans for each of the systems, networking, storage and software were discussed. Onward and upward is clearly IBM's focus.

Integrated Systems: The Value of Integration and Optimization

Steve Mills, SVP and Group Executive, Software and Systems

Steve only has a small amount of time for this analyst forum. So, he promised to focus on a very small number of slides.

  • What is going to deliver the best economics is IBM's focus. How to improve the tools, how to make best use of the tools and how to best present those tools is the focus of his team. There is choice in each of these areas and choice brings challenges with it.
  • Steve pointed out that his conversations with customers have highlighted that 70% to 80% of their budget is keeping current systems running reliably. This means that they are trying to leverage the remaining 20% to 30% of their budgets to address a rapidly changing environment.
  • He then focused on the ever-reducing cost of computing. Systems have reduced in overall price rapidly. Other components, such as storage have not seen as rapid reductions in price, but have experienced substantial reductions over time.
  • From his vantage point, it is not very productive to continue the platform versus platform debate. For the most part, this debate is focused more on preserving a specific person's employment, not a computer science-based discussion of which platform would be best for a given task or how different technologies can be used together to most efficiently address company's needs.
  • In the overall cost discussion, it is clear that operational costs continue to rise while hardware and software costs are declining. Integration, ease of management, flexibility and creation of greater value to provide an overall lower cost of ownership is clearly a better focus. IT is very labor intensive and IBM is looking at all kinds of ways to improve the labor equation. This is driving investment in better systems, management and operational technologies.

11 AM ET Update

Ah yes, another obligatory video. This time the volume was a bit too high. Rod Adkins came back to introduce the rest of the morning sessions

IBM’s Journey to Smarter Computing

Jeanette Horan, IBM VP and CIO

  • Jeanette was formally with IBM's software group. She's spent the last six months as IBM's CIO.
  • She commented that she has many more staff members to keep track of, but she doesn't have all of the platform choices some of her peers in the industry have. The analysts laughed when she said this.
  • Her focus can be segmented into three areas: business transformation, operational excellence and core technologies
  • CIOs have to think about four different things to determine what their mandate really is
    • Expand mandate - refine business processes
    • Transform mandate - Change value chain to improve relationships
    • Pioneer mandate - innovation
    • Leverage mandate - do more with less

  • Operational excellence - virtualize IBM's own infrastructure and do a better job of integrating services offered to the rest of the organization
    • Simplifying IT - data center consolidation and improve IT efficiency. This lead to an understanding of what applications were actually in use. Some of these applications really are no longer needed.
    • She had to convince stakeholders that moving to a more standardized environment would reduce costs.
    • They've chosen to consolidate on Z/Linux as the standard, virtualized environment. They've already realized a great deal of benefits as the process progresses.

  • Statistics so far
    • 5,700+ servers have been consolidated
    • Reduction of 47,000 sq. ft. of data center floor space
    • Reduction of 93% in software licenses
    • Reduction of 55% in physical network connections
    • Reduction of 20K MWh in power consumption
    • Reduction from 15,000 applications in 1987 to 4,500 applications today. She believes this is still far too many. She wants to see that number cut in half by 2015.
    • Increase in storage utilization from 50% to 90% using storage virtualization and optimization

  • They're now focused on two key areas - cloud computing and analytics to bring greater insight into the business
      • They've developed their own production cloud
      • They've deployed a development, testing and production cloud
      • They're using Blue Insight for analytics - Cognos-based on that standard Z/Linux environment
      • They're using LotusLive as a cloud-based collaborative computing environment
      • They're working on a desktop workplace cloud
      • They're now developing a storage cloud to make the best use of today's storage technologies.

  • Storage and Big Data
    • IBM has 10 Petabytes of operational data and 15 PBytes of backup
    • It has another 70-85 PBytes in other parts of the business with a growth of 25% per year
    • The IBM services information warehouse is a 5 Terabyte application built on DB2. This is making it more easily possible for project managers to go to a single source for data.

Smarter Industries

Craig Hayman, GM Industry Solutions, SWG

Craig reeled off a number of examples of how IBM has helped its customers

  • Real time analysis of retail point of sale data on Black Friday and Cyber Monday to help customers understand what really was happening in their businesses
  • Real time analysis that helped a police force rapidly capture criminals
  • Helping customers make better use of social media, business to business and business to consumer systems. He presented several examples of how IBM clients increased their revenues through the use of IBM's analytics tools.
  • Craig walked through a number of customer case studies. Of course, every single one of them was a happy, successful customer. Staples andState Bank of India were mentioned.
  • He then went on to talk about the concept of "Smarter Cities." The use of analytics could help leaders know a more about their costs, what people want and what the Cities would need to do to make their environments work better. Interesting to be sure, but where will cash-starved cities find money to purchase this type of service from IBM?

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