HP and Dell Lead Latest Rush to Cloud Services

HP last week made its first public cloud services available as a public beta. This advances the company’s Converged Cloud portfolio as the company delivers an open source-based public cloud infrastructure designed to enable developers, independent software vendors (ISVs) and enterprises of all sizes to build the next generation of web applications.

These services, HP Cloud Compute, Storage, and HP Cloud Content Delivery Network, now will be offered through a pay-as-you-go model. Designed with OpenStack technology, the open-sourced-based architecture avoids vendor lock-in, improves developer productivity, features a full stack of easy-to-use tools for faster time to code, provides access to a rich partner ecosystem, and is backed by personalized customer support.

Last week Dell also joined the cloud services rush with an SAP cloud services offering. Although Dell has been in the services business at least since its acquisition of Perot Systems a few years back services for SAP and the cloud, indeed are new, explained Burk Buechler, Dell’s service portfolio director.

Dell offers two cloud SAP services. The first is the Dell Cloud Starter Kit for SAP Solutions, which helps organizations get started on their cloud journey quickly by providing customers with 60-day access to Dell’s secure cloud environment with a compute power equivalent to 8,000 SAP Application Performance Standard (SAPS) unit of measure and is coupled with Dell’s consulting, application, and infrastructure services in support of SAP solutions.

The second is the Dell Cloud Development Kit for SAP Solutions, which provides access to 32,000 SAPS of virtual computing capacity to deploy development environments for more advanced customers who need a rich development landscape for running SAP applications. This provides a comprehensive developer environment with additional capabilities for application modernization and features industry-leading Dell Boomi technology for rapid cross-application integration.

Of the latest two initiatives, HP’s is the larger. Nearly 40 companies have announced their support for HP Cloud Services, from Platform-as-a-Service (PaaS) partners to storage, management and database providers. The rich partner ecosystem provides customers with rapid access to an expansive suite of integrated cloud solutions that offer new ways to become more agile and efficient. The partner network also provides a set of tools, best practices and support to help maximize productivity on the cloud. This ecosystem of partners is a step along the path to an HP Cloud Services Marketplace, where customers will be able to access HP Cloud Services and partner solutions through a single account.

Of course, there are many other players in this market. IBM staked out cloud services early with a variety of IBM SmartCloud offerings. Other major players include Oracle., Rackspace, Amazon’s Elastic Compute Cloud (EC2), EMC, Red Hat, Cisco, NetApp, and Microsoft.  It is probably safe to say that eventually every major IT vendor will offer cloud services capabilities. And those that don’t will have partnerships and alliances with those who do.

Going forward every organization will include a cloud component as some part of their IT environment. For some, it will represent a major component; for others cloud usage will vary as business and IT needs change. There will be no shortage of options, something to fit every need.

IBM PureSystems Optimize Storage Too

IBM introduced the PureSystems products as expert integrated systems.  They are appliances, but with a twist. Like other IT appliances, they combined hardware (CPU, storage, network), software, and middleware in a tightly integrated package. Nothing new here. But then IBM optimized the entire system for the various components and added automation driven by expert intelligence in the form of patterns.  This was the twist, the secret sauce—expert intelligent-driven automation combined with top-to-bottom optimization—that promises to separate the PureSystems devices from all the other IT appliances out there. We covered a general discussion of PureSystems a few weeks ago here.

To recap: the result is a system with integrated expertise that combines the flexibility of a general purpose system, the elasticity of cloud, and the simplicity of an appliance. The expectation is that it can fundamentally change both the experience and the economics of IT.

In short, with PureSystems, an organization can get a complete infrastructure stack up and running in hours, not days, weeks, or months. It avoids the need to over-buy and over-provision through intelligent workload elasticity. Highly virtualized and easily extendable, it can accommodate change quickly and easily. In the process, it changes the economics not only of server deployment but of storage too.

Storage is a key element. To make maximum the use of virtual servers PureSystems needs virtualized storage. Virtualized storage makes storage provisioning fast, easy, elastic, and flexible. The built-in expertise transparently boosts storage utilization rates. It automatically pools diverse storage assets and optimizes physical media access for energy efficiency.  It leverages Easy Tier for efficient performance and thin provisioning to keep pace with growing data demands.

To provide the appropriate storage PureSystems includes an optimized Storwize V7000; this is IBM’s premier storage virtualization product. The storage is 100% virtualized and includes capabilities for thin provisioning and snapshots. Mirroring capabilities are optional. Between the expert automation and the GUI storage operations are intuitive and simple. It packs 24 drives in 4 bays in the chassis. By clustering PureSystems together, you can get 950 drives of high capacity virtualized storage.

As a statement of direction, IBM intends to further enhance the integration of server, storage and networking with the introduction of an IBM Flex System storage node. This new storage system will tap the software functional richness of IBM Storwize V7000—including IBM System Storage Easy Tier for automated SSD optimization—while being physically and logically integrated into the IBM PureFlex System. This will allow greater integration of server and storage management to automate and streamline provisioning and lower overall cost.

Attendees at the upcoming IBM Edge 2012 conference, Orlando, June 4-8, get a close up look at PureSystems and the Storwize V7000 storage packed inside.  Five sessions on the new product have been added.  Several are what you would expect, like a PureSystems introductory session.  For storage people two look particularly interesting.

Storage for IBM PureFlex System: PureFlex is the PureSystems IaaS product. This session will go over the storage systems and management included in every IBM PureFlex offering. Although it will mainly focus on Storwize V7000, there are ways to integrate other external IBM storage.

IBM PureFlex System: Scalable Network: This session will focus on the networking element and will include a discussion on architecture, strategy, new product offerings, and a roadmap for networking using the next‐generation platform.  Clustering the appliances and the storage is sure to come up.

This blogger is scheduled to attend the conference June 4-6. For a chance to win free admission to the conference, watch this blog for upcoming posts with the details. And now for the legal stuff:  this post is sponsored, meaning I am being compensated, by the Storage Community for covering IBM’s Edge Conference.  However, the opinions and writing here are my own.

Hope to see you in Orlando.

IBM PowerLinux Changes the x86 Calculus

With Linux reportedly the fastest growing operating system in the work and 99% of Global 2000 enterprises intending to include open source software in their portfolios by 2015 (up from 73% in 2012), clearly open source Linux has long crossed the adoption chasm and achieved enterprise acceptance. This is an ideal time for IBM to introduce its new PowerLinux servers, which deliver the performance of IBM Power Systems at x86 prices.

The IBM PowerLinux introduction includes two Linux-only models, a 2-socket, 2U rack server (7R2) and a 2-socket compute node (p24L) intended to plug into IBM’s newly introduced PureFlex appliance. Each socket contains 8 POWER7 cores and 256GB of memory, and IBM has tuned the machines for key tasks, like Big Data.  BottomlineIT covered the PureSystems introduction previously here. PureFlex is a computing appliance that accepts a variety of nodes in the form of blades, including PowerLinux as a compute node.

IBM’s goal was to deliver PowerLinux at a cost of acquisition competitive with x86 systems.  For example, the PowerLinux system including POWER7, virtualization (PowerVM), and the Linux open source OS (either Red Hat or SUSE) costs $21,282 (USD). By comparison, a comparable Dell/Intel system (able to handle the same workloads and running VMware vSphere Enterprise 5 and Red Hat Enterprise Linux subscription and support comes in at $22,650 (USD). A comparable HP/Intel system running VMware vSphere Enterprise 5 and Red Hat subscription and support costs $24,838 (USD). Comparative cost data provided by IBM.  If you don’t want the PowerVM hypervisor, there is the KVM option.

Both the Dell and HP systems run 2-socket, 16-core 2.4GHz ER-2665 Sandy Bridge processors with32GB of memory, two 300GB SAS drives (15k), a 4x1GbE network controller, and a SAS, DVD, RAID storage controller. The PowerLinux system brings a faster 16-core processor (3.55 GHz) while matching the other specifications.

So, in terms of speeds, feeds, and cost, PowerLinux not only meets but exceeds the leading x86 systems for running virtualized Linux workloads. When you look at virtualization for PowerLinux compared to VMware vSphere 5.0, PowerLinux looks even better. PowerLinux handles 16 virtual CPUs per virtual machine vs. 8 for VMware and 4 CPU threads per core vs. 2 for VMware. Throw in the secure hardware-based hypervisor for PowerLinux (PowerVM) vs. VMware’s software-based hypervisor and the PowerLinux machine is the clear winner.

In terms of workloads, one beta user, the University of Hamburg (Germany), compared two PowerLinux machines with ten x86 Linux servers for a big file serving workload. The result: PowerLinux delivered a 50% performance gain and a 30% lower cost of virtual file server acquisition.

If you look at a Big Data analytics workload—another increasingly important workload—the PowerLinux server with 4 threads per core has an immediate advantage over Intel’s 2 threads per core. PowerLinux also can handle parallel file systems across multiple servers using HDFS or the highly optimized IBM GPFS. In short, PowerLinux servers can natively exploit massively parallel processing across Linux clusters, which is what you want for Big Data.

PowerLinux already has been highly tuned by IBM. Should you deploy it as a compute node in the PureFlex appliance, you get the added integration, optimization, and automated expertise (patterns) IBM has packed into that device too.

The appeal of the PowerLinux system is that IBM streamlined it to match or exceed x86 cost and performance objectives. It, indeed, can beat comparable x86 machines running Linux virtualized workloads and do it at less than x86/VMware prices.

IBM PureSystems Change the IT Cost-Value Equation

How much of your IT budget goes to keeping the systems up and running versus how much you can devote to new business building projects? If yours is like most you probably spend more than 70% of your IT budget keeping the systems running, and most of that gets sucked up by labor. That leaves, at best, about 30% to spend on new initiatives, which is where the company’s next competitive advantage is likely to come from.

To flip the situation around, IBM this week unveiled a family of what it describes as expert integrated systems called PureSystems. The first two are PureFlex and PureApplication. IBM calls these expert systems because it has baked into the system large amounts of automated best practices around the majority of the processes for which most organizations need systems, whether web applications, database applications, or almost anything else a company might do.

These are, according to Rod Adkins, senior vice president in charge of IBM’s Systems and Technology Group, “a new category of business computing that combines server, storage and networking resources along with an array of built-in software patterns and business processes into one highly automated and simple-to-manage machine.” Essentially, IBM is introducing a pre-configured hardware/software appliance, which is not new.

The difference is what IBM added. Beyond the usual middleware and integration it baked in deep expertise. This expertise greatly expertise simplifies the process of setting up and deploying new systems combined with automated operation and workload optimization that leverages the expertise to determine the best ways to configure and deploy each workload. This reduces the labor and time entailed in designing, deploying, configuring, and administering the new systems, which lowers cost and speeds time to value. This is how the new systems change the IT cost-value equation.  Optimization also lowers costs by saving on license fees and conserving IT resources through higher utilization.

IBM estimates that a PureSystems machine can be running in four hours versus weeks if IT wanted to do it itself. IBM calculates PureSystems requires 47% less deployment labor hours and 73% fewer management hours compared to conventional systems.

This isn’t as costly a product as you probably imagine.  The entry PureFlex System starts at $100,000. A recent report put competing integrated hardware/software appliances at $750,000 or more. The entry level PureFlex can handle a midsize organization, and it painlessly scales as the organization grows.

It also changes the way you can think about IT staffing. You will need fewer system administrators. With so much of the IT process automated your people can focus on using IT to support new initiatives, which they can deploy in hours, not days, weeks, or months.

Maybe the most innovative part of PureSystems is the idea of patterns. Patterns are a staple of software development but PureSystems take the idea further.  These patterns are built-in software that encapsulates systems expertise so that the systems can automatically handle basic, time-consuming tasks such as configuration, upgrades, and application requirements. ISVs will offer specialized patterns and there is a toolkit any organization can use to build a custom pattern encapsulating a special process.

PureSystems also builds cloud computing right into the machine, enabling it to be a private cloud out of the box. Organizations can quickly create private, self-service, multi-platform cloud offerings that can scale up and down automatically.

Noted Steve Mills, IBM senior vice president of software and systems: “By tightening the connections between hardware and software, and adding invaluable software know-how, PureSystems is designed to help organizations free up time and money to focus on innovation.”

Other vendors offer specialized combo hardware and software bundles: Oracle has Exadata and Exalogic; NetApp and Cisco offer FlexPod; EMC, Cisco, and VMware collaborated to create VCE, which offers VBlock; and HP offers its converged infrastructure. Each vendor has its supporters. PureSystems, however, delivers expert yet customizable patterns, broad cross-platform capabilities, and the ability to handle whatever new technologies come out in the next decade through an unusually flexible virtualized architecture.

Low-Cost Fast Path to Private Cloud

The private cloud market—built around a set of virtualized IT resources behind the organization’s firewall—is growing rapidly. Private cloud vendors have been citing the latest Forrester prediction of the private cloud market to growth to more than $15 billion in 2020. Looking at a closer horizon, IDC estimates the private cloud market will grow to $5.8 billion by 2015.

 The appeal of the private cloud comes from its residing on-premise and its ability to leverage existing IT resources wherever possible. Most importantly, the private cloud addresses the concerns of business executives about cloud security and control.

The promise of private clouds is straightforward:  more flexibility and agility from their systems, lower total costs, higher utilization of the hardware, and better utilization of the IT staff. In short organizations want all the benefits of the public cloud computing along with the security of keeping it private behind enterprise firewall.

Private clouds can do this by delivering IT as a service and freeing up IT manpower through self-service automation. The private cloud sounds simple. They don’t, however, come that easily. They require sophisticated virtualization and automation.  “Up-front costs are real, and choosing the right vendor to manage or deploy an environment is equally important,” says senior IDC analyst Katie Broderick.

IBM, however, may change the private cloud financial equation with its newest SmartCloud Entry offering based on IBM System x (x86 servers) and VMware.  The starting price is surprisingly low, under $60,000.

The IBM SmartCloud Entry starts with a flexible, modular design that can be installed quickly. It also can handle integrated management; automated provisioning through a service request catalog, approvals, metering, and billing; and do it all through a consolidated management console, a single pane of glass. The result: the delivery of standardized IT services on the fly and at a lower cost through automation. A business person, according to IBM, can self-provision services through SmartCloud Entry in four mouse clicks,.  something even a VP can handle.

The prerequisite for any private cloud is virtualized systems.  Start by consolidating and virtualizing servers, storage, and networking to reduce operating and capital expenses and streamline systems management. Virtualization is essential to achieve the flexibility and efficiency organizations want from their private cloud. They must virtualize as the first step in IBM’s SmartCloud Entry or any other private cloud.

From there you improve speed and business agility through SmartCloud Entry capabilities like automated service deployment, portal-based self-service provisioning, and simplified administration.  In short you create master images of the desired software, convert the images for use with inexpensive tools like the open source KVM hypervisor, and track the images to ensure compliance and minimize security risks. Finally you can gain efficiency by reducing both the number of images and the storage required for them. From there just deploy the software images on request through end user self-service combined with virtual machine isolation capabilities and project-level user access controls for security.

By doing this—deploying and maintaining the application images, delegating and automating the provisioning, standardizing deployment, and simplifying administration—the organization can cut the time to deliver IT capabilities through a private cloud from months to 2-3 days, actually to just hours in some cases. This is what enables business agility—the ability to respond to changes fast—with reduced costs through a more efficient operation.

At $60k the IBM x86 SmartCloud Entry offering is a good place to start although IBM has private cloud offerings for Linux and Power Systems as well. But all major IT vendors are targeting private clouds though few can deliver as much of the stack as IBM. Microsoft offers a number of private cloud solutions here. HP provides a private cloud solution for Oracle, here, while Oracle has an advanced cluster file system for private cloud storage here.  NetApp, primarily a storage vendor, has partnered with others to deliver a variety of NetApp private cloud solutions for VMware, Hyper-V, SAP, and more.

Big Data Analytics Defines Top Performers

A survey of over 1100 executives by the IBM Center for Applied Insights showed that organizations making extensive use of analytics experienced up to 1.6x the revenue growth, 2.0x EBITDA growth, and a 2.5x stock price appreciation compared to their peers.  And what they are analyzing is Big Data, a combination of structured data found in conventional relational databases and unstructured data pouring in from widely varied sources.

Big Data is growing fast.  By 2015 the digital universe, as forecast by IDC, will hit 8 zettabytes (ZB). (1ZB = 10²¹ bytes, one sextillion bytes). Adding to the sheer volume is the remarkable velocity at which data is created.  Every minute 600 new blog posts are published and 34,000 Twitter tweets are sent. If some of that data is about your organization, brand, products, customers, competitors, or employees wouldn’t you want to know?

Big data involves both structured and unstructured data.  Traditional systems contain predominantly structured data. Unstructured data comes from general files; from smart phones and mobile devices; from social media like Twitter, Facebook, and others; from RFID tags and other sensors and meters; and even from video cameras. All can be valuable to organizations in particular contexts.

Large organizations, of course, can benefit from Big Data, but midsize and small businesses can too.  A small chain of pizza shops needs to know the consumer buzz about their pizza as much as Domino’s.

IBM describes a 4-step process for tapping the value of Big Data: align, anticipate, act, and learn. The goal is to make the right decision at the point of maximum impact. That might be when the customer is on the phone with a sales agent or when the CFO is about to negotiate the details of an acquisition.

Align addresses the need to identify your data sources and plan how you are going to collect and organize the data. It will involve your structured databases as well as the wide range of enterprise content from unstructured sources. Anticipate addresses data analytics and business intelligence with the goal of predicting and shaping outcome. It focuses on identifying and analyzing trends, making hypotheses, and testing predictions. Act is the part where you put the data into action, whether it is making the best decision or taking advantage of a new pattern you have uncovered. But it doesn’t stop there. Another payoff from Big Data comes from the ability to learn, for the purpose of refining your analytics and identifying new patterns based on subsequent data.

Big Data needs to be accompanied by appropriate tools and technology. Earlier this month, IBM introduced three task-specific Smarter Analytics Signature Solutions. The first addresses anti-fraud, waste, and abuse by using sophisticated analytics to recommend the most effective remedy for each case. For example it might recommend a different letter requesting payment in one case but suggest a full criminal investigation in another.

The second Signature Solution focuses on next-best-action.  This looks at the various data uses real-time analytics to predict customer behavior and preferences and recommend the next best action to take with regard to a customer, such as to reduce churn or up-sell.

The third Signature Solution, dubbed CFO Performance Insight, works on a collection of complex and cross-referenced internal and external data sets using predictive analytics to deliver increased visibility and control of financial performance along with predictive insights and root-cause analyses. These are delivered via an executive-style dashboard.

IBM isn’t the only vendorr to jump on the Big Data bandwagon. EMC has put a stake into this market.  Oracle, which has been stalking IBM for years, also latched onto Big Data through Exalytics, its in-memory analytics product similar to IBM’s Netezza. Of course, small players like Cloudera, which early on staked out Hadoop, the key open source component of Big Data, also offer related products and services.

Big Data analytics will continue as an important issue for some years to come. This blog will return to it time and again.

Open Source Virtualization Saves Money

Virtualization is a powerful technology that enables numerous benefits detailed here, particularly saving money. The savings come mainly through the IT resource consolidation. When you add open source to the virtualization equation, it creates another avenue to savings.

 Virtualization technology, in the form of the hypervisor, is not exactly cheap. VMware, the industry’s 900lbs. hypervisor gorilla commands significant license fees. With its latest pricing plan introduced last year, the standard license starts at about $1000. Enterprise costs are based on processor sockets and memory and, given how it is calculated, VMware can require four times as many licenses as previously needed, which dramatically increases the cost.  Here’s VMware’s FAQ on pricing. Depending on the amount of memory licensing costs could run into the tens of thousands of dollars.

Open source virtualization, noted Jean Staten Healy, IBM’s worldwide Cross-IBM Linux and Open Virtualization Director, presents opportunities to reduce virtualization costs in numerous ways.  For example, the inclusion of open source KVM in enterprise Linux distributions reduces need for additional hypervisors, enabling the organization to avoid buying more VMware licenses.  KVM also enables higher virtual machine density for more savings. IDC’s Al Gillen and Gary Chen put out a white paper detailing the recent KVM advances.

 The ability to manage mixed KVM- VMware virtualization through a single tool further increases the cost efficiency of open source virtualization. IBM’s System Director VMControl is one of the few tools providing such mixed hypervisor, cross-platform management.  For general hypervisor management, Linux and KVM standardized on libvirt and libguestfs as the base APIs for managing virtualization and images. These APIs work with other Linux hypervisors beyond KVM (higher-level tools, such as virsh and virt-manager, are built on top of libvirt).

The combination of KVM technical advances, the slow but steadily increasing adoption of KVM, and the inclusion of KVM as a core feature of the Linux operation system is driving more enterprises deploy KVM along with VMware. Of course, the fact that KVM now comes for free as part of the Linux core means you can try it at no cost and minimal risk.

Enterprise Linux users are now using KVM where they previously would have not bothered to virtualize a particular workload due to cost. This makes sense for several reasons; free being just one of them. Other reasons include the integration of the KVM toolset with the Linux toolset and the fact that Linux admins already know how to use it.

One large bank used Linux and KVM as a development and test resource in a private cloud. Normally, they would have needed to request more budget for VMware but since they had Linux with KVM they could just add Windows virtual machines. And by developing in Java, they could roll out prototypes fast.  In the process, the bank achieved high virtual machine density at minimal cost.

Another financial services firm set up virtual machines with KVM to monitor Linux usage for under-utilized hosts and then deployed virtual machine images to the host as warranted. The result: an ad-hoc grid of KVM virtual machines with high utilization, again at minimal cost.

KVM is a natural for private clouds. IBM reports private clouds being built using Moab with xCAT and KVM. The resulting private cloud handles both VMware and KVM equally well, making them plug-compatible.  With this approach, organizations can gradually expand their use of KVM and reduce, or at least delay, the need to buy more VMware licenses, again saving money.

KVM also is being exercised in a big way as the hypervisor behind IBM’s public Smart Cloud Enterprise, demonstrating how enterprise-capable this free, open source hypervisor is.

BottomlineIT expects VMware will remain the dominant x86 virtualization platform going forward. However, it makes sense to grab every opportunity to use KVM for enterprise-class, multi-platform virtualization and save money wherever you can.

The Return of ERP—Not Your Father’s ERP

Four years ago, Eric Berridge declared in his book Iterate or Die that traditional ERP systems were dinosaurs headed for extinction. He was right, but before ERP completely disappeared some products began to morph into something else. It took a few years and now we are witnessing the return of ERP. But this is not your father’s ERP.

As Gartner explains: Business applications are undergoing many changes. The realities of cloud computing, the accessibility provided by mobile technologies, and the impact of social paradigms are affecting the business application environment. And ERP is the business application most affected.

The recent recession and painstakingly slow recovery hurt the ERP business. Even worse, the costly, cumbersome, inflexible, outdated ERP systems the vendors were hawking hurt the businesses saddled with them. Now the survivors are creeping back and finding a radically changed ERP landscape.

ERP systems run many companies. Your company probably has one or, more likely, several. They combine business process with software and integrate numerous critical back-office functions across a company. The tight integration of the various functions and the use of a common database gave ERP systems their power to coordinate the organization’s core activities based on a single set of shared, consistent data. Having multiple ERP systems certainly complicates things but with decentralized organizations or those that inherited multiple ERP systems along with acquisitions and never got around to standardizing, it is a mess many, sadly, continue to struggle with.

The ERP idea is still good, but the old implementations were too costly, too slow to implement, and too rigid, and hard to use. Rather than help the business they prevented organizations from changing quickly. Today, the inability to change fast is disastrous. That’s why Berridge titled his book Iterate or Die. Many businesses that failed to heed his words did just that.

The latest twist to the ERP saga has been the marriage of ERP with social networking. As one ERP observer put it: Social media and ERP make good financial sense. Not only is social media being taken seriously as a proper business tool, but useful new tools, especially when engaging in conversation with customers, are emerging. For example, Salesforce.com acquired Radian6, which focuses on B2C needs, effectively allowing companies to participate in consumer conversations on the social web.  Expect to see a bigger convergence of CRM and social media. The integration of the enterprise CRM and Twitter, Facebook, and LinkedIn will allow organizations to bolster both internal and external customer relationship functions.

When Berridge wrote his book he mainly had in mind Software-as-a-Service (SaaS).  SaaS has moved into the mainstream for ERP, CRM, supply chain management, and financial systems.  Notes Roger Borek, Borek Business Solutions, a Microsoft ERP provider, the growth of SaaS ERP software is accelerating and analysts predict continued growth of through 2012. For most companies, this hosted delivery model requires no initial cash outlay for IT resources while enabling a faster software implementation, on-demand scalability, and improved ROI. These factors collectively reduce the total cost of ownership (TCO) and accelerate time-to-market benefits.

Typical of the new breed of ERP is Plex Online, ERP for manufacturers, and NetSuite, an integrated collection of SaaS applications including ERP.

Compare that to the ERP of the past that took armies of consultants several years to implement and tailor to the company’s needs at a cost of millions of dollars.  And even then many went widely unused, giving rise to the pejorative term shelfware.

The new ERP ideally will incorporate social networking, add gamification to make it easy to use and measure, and deliver it as a SaaS offering to make it fast and cost efficient. Gamification, notes Gartner, will drive process innovation—that’s something you would never associate with the old ERP. The result certainly won’t be your father’s ERP.

Amid Poor Earnings HP Launches Gen8 Servers

The bad decisions HP has made, especially announcements to kill WebOS and its tablet devices and its decision to get out of the PC business, have finally hit home.  The company’s 1Q2012 financials were dismal.  Revenue was down 7% while earning per share dropped 32%.

Still, don’t write off HP so quickly. Just last month HP announced a new line of servers, the HP ProLiant Generation 8 (Gen8). These servers represent an effort to redefine data center economics by automating every aspect of the server life cycle and spawned a new systems architecture called HP ProActive Insight architecture, which will span the entire HP Converged Infrastructure. HP clearly continues to play the game.

In fact, HP is adding features into the Gen8 servers, such as integrated lifecycle automation that it estimates can save 30 days of admin time each year per admin; dynamic workload acceleration, which can boost performance 7x; and automated energy optimization, which HP promises will nearly double compute-per-watt capacity, thereby saving an estimated $7 million in energy costs in a typical data center over three years.

Compared to the HP results, IBM had a good quarter, announcing fourth-quarter 2011 diluted earnings of $4.62 per share, compared with diluted earnings of $4.18 per share in the fourth quarter of 2010, an increase of 11%. Fourth-quarter net income was $5.5 billion compared with $5.3 billion in the fourth quarter of 2010, an increase of 4%. Operating (non-GAAP) net income was $5.6 billion compared with $5.4 billion in the fourth quarter of 2010, an increase of 5%. All this despite a weak quarter for its hardware group, which reported revenues of $5.8 billion for the quarter, down 8% from Q4 2010. The group’s pre-tax income was $790 million, a decrease of 33% due mainly to unexpectedly weak mainframe sales following a streak of record setting mainframe quarterly gains.

But still Gartner found IBM tops among all servers in Q4 2011 and #1 in the market for UNIX servers with 52.8% market share in that same quarter. IBM increased quarterly revenues by 17% year over year with IBM Power Systems and improved its share in comparison to Q4 2010 by 10.9%. For the full year of 2011, IBM led the UNIX server market with 45.9& market share, a gain of 6.9 points over 2010. IBM grew UNIX revenues by 23% over 2010, according to Gartner.

IBM also led the market for servers costing more than $250,000, attaining 69.4% factory revenue share in the fourth quarter with IBM System z mainframes and Power Systems. IBM also led this market for the full year of 2011 with 8% revenue growth over 2010, capturing 63.7% market share.

Meanwhile, IBM announced 570 competitive displacements in 4Q 2011 alone and nearly 2,400 competitive displacements in 2011for its servers and storage systems. For Power, it had more than 350 competitive displacements in 4Q alone, which resulted in over $350 million of business. Roughly 60% of the displacement by Power came from HP. Overall, almost 40% of the 2,400 displacements came from HP and more than 25% came from Oracle/Sun, another company that has struggled to get its product strategy on track.  IBM reports the competitive displacements in 2011 generated over $1 billion of business. 

IBM spent much of 2010 optimizing its Power Systems lineup, the latest optimized for data-intensive workloads, and buyers responded. The POWER7 processor offers 4, 6 or 8 cores per socket and up to four threads per core. With a 4.25 GHz top processor speed and an integrated eDRAM L3 cache these systems can fly.  In fact, IBM reports Power grew 6%, the fifteenth consecutive quarter of share gains in Power.

In other achievements from IBM’s Systems Group its x86 machines, the System x, scored a benchmark success with a world-record 4-processor result for Linux on the two-tier SAP Sales and Distribution (SD) standard application benchmark. This was achieved with an IBM System x 3850 X5, running IBM DB2 9.7, Red Hat Enterprise Linux 6.2, and SAP enhancement package 4 for the SAP ERP application Release 6.0. Specifically, the x3850 X5 achieved 12,560 SAP SD benchmark users with 0.99 seconds average dialog response, 68,580 SAPS measured throughput of 4,115,000 dialog steps per hour (or 1,371,670 fully processed line items per hour), and an average CPU utilization of 98% for the central server.

Ironically, the previous best four-processor result, 12,204 SAP SD benchmark users on Linux, was achieved by the HP ProLiant DL580 G7.  The new benchmark-winning IBM x3850 X5 was configured with four Intel Xeon E7-8870 processors at 2.40GHz with 30MB shared L3 cache per processor (4 processors/40 cores/80 threads), 512GB of memory, 64-bit DB2 9.7, Red Hat Enterprise Linux 6.2, and SAP enhancement package 4 for SAP E.

IBM is not hesitating to press its advantage.  Besides its Migration Factory to facilitate migration to IBM platforms, it announced services designed to help companies upgrade IT infrastructures in the face of technology challenges like exponentially larger data volumes, server sprawl, increasingly complex infrastructures, and flat budgets. These include new financing options for those wanting to migrate from HP or Oracle/Sun technologies, including 0% financing on two key IBM systems families: IBM Power Systems and IBM System Storage. Specifically, through March 2012, organizations in the US or Canada can finance (12-month full pay-out lease) between $5,000 and $1 million in Power Systems and/or System Storage technologies at 0%.

As BottomlineIT sees it, this kind of competition is only good for companies that depend on IT.

The Online Subscription Services IT Challenge

The online subscription services business segment is hot and businesses are waking up to the kind of recurring revenue stream online subscription services bring.  Over the last few years, subscription-based services have become a bit of the rage, declares SF Fashion+Tech.

More than a rage, IDC projects the software-as-a-service (SaaS) subscription service segment to increase revenues at 6X growth rate. Accenture estimates business process outsourcing (BPO), another subscription service segment, will top $300 billion in 2012. SaaS and BPO are online subscription service businesses.

Driving the growth of subscription services revenue is the concept-to-cash business model introduced by OneBill, a young SaaS company.  Interest has been so strong that conventional businesses are looking at how they too can catch this wave by adding a subscription revenue component to their existing business strategy or revenue model. From healthcare to financial services organizations are looking at it to capture incremental and new revenue this way. With a little creativity almost every company can develop a subscription revenue component.

Concept-to-cash expands on the traditional lead-to-cash model. It enables myriad innovative pricing and revenue opportunities, everything from pay-per-use to tiered recurring revenue programs to conditional offers that can be mixed and matched in a variety of ways to maximize revenue from each customer.

Subscription services are attractive for their ability to reduce the customer’s cost by making it possible for them to subscribe to a service rather than buying outright. The lower recurring subscription cost makes the purchase more manageable. Customers that might not have been profitable before can become profitable now as subscribers to services delivered over the network. Subscription services also become a way to reach new markets and completely different customers from the organization’s traditional base.

The big obstacle to concept-to-cash subscription services revolves around the underlying subscription management platform.   While the subscription services business has rapidly evolved, the underlying billing and management systems lagged behind, forcing companies to settle for inadequate systems that have been cobbled together from bits and pieces of existing systems.  Specifically they try to modify their existing financial, billing, and accounting systems. The results are a kludge.

Lacking is an integrated, comprehensive online subscription services commerce platform that integrates all the business components required to support a subscription services operation, concept-to-cash. It also should be able to handle new and different services that may evolve later or to meet changing customer demands.

As a platform it should do it all: consolidate customer acquisition, retention, management, and critical business functions from marketing, sales, and operations as fully integrated capabilities and enable data to flow from process to process without special handoffs or the need for work-arounds. It also must handle the latest subscription service offerings, including contingencies and dependencies while supporting the process all the way through every piece in the service value chain—customer service, retention, billing, collections, settlement, and all the way to the GL. Finally it must provide analytics that lets management understand the activity, test and evaluate different offers and combinations of offers, determine customer value, and assess results to maximize return.

To date OneBill Software has emerged as the first such integrated subscription commerce platform on the market. Built from the ground up as a unified cloud-based platform, it is designed to address the needs of all participants in the subscription service process including marketing, sales, operations, IT, and channel partners.

A few others have started to introduce subscription services tools. One is Zuora, which describes itself subscription billing system.

Things will get even more challenging for IT as companies use subscription services as part of an effort to monetize social media. OneBill already has started talking about this.