W H I T E P A P E R I B M P u r e F l e x a n d F l e x S y s t e m : I n f r a s t r u c t u r e f o r I T E f f i c i e n c y

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1 Global Headquarters: 5 Speen Street Framingham, MA USA P F W H I T E P A P E R I B M P u r e F l e x a n d F l e x S y s t e m : I n f r a s t r u c t u r e f o r I T E f f i c i e n c y Sponsored by: IBM Randy Perry July 2013 Jed Scaramella I N T R O D U C T I O N Today's shifting trends are requiring enterprises to increase the efficiency of their IT operations to remain competitive in the market. As enterprises experience explosive growth in data, devices, and users, they are relying on their IT organizations to incorporate these elements into the IT environment and manage them. Progressive companies are shifting the focus of their IT departments to enhancing the delivery of IT services and away from the mundane maintenance of hardware systems or indeed from specifying, installing, and configuring hardware. This requires not only a change in IT processes but also a new type of IT infrastructure. Business Value Highlights Reduced time to manage led to a 60% reduction in annual operation expenses. Improved IT staff productivity reduced time to manage by 47%. Lower capital costs included 31% reduction in server hardware requirements and 28% reduction in datacenter footprint. More efficient infrastructure and improved IT staff productivity lowered annual costs of operation by 40%, saving each company over $0.5 million. More organizations are considering integrated systems that converge servers, storage, networking, and system-level management software to improve their IT efficiency. These pre-integrated, pre-configured, and pre-optimized hardware platforms speed time to deployment and are easier to manage. IDC interviewed companies that have implemented IBM's PureSystems solutions. The focus of this paper is how IBM PureFlex and Flex System have enabled these customers to improve their IT efficiency. The research findings indicated all customers benefited from the adoption of an integrated system in terms of improved staff efficiency, faster time to deployments, and capital and operational expense reductions.

2 On average, the customers were able to improve the efficiency of their IT environment by reducing capital and operational costs by a combined 40%. IDC estimates this equates to an annual savings of over $500,000. As a result of the need for less management time, several of the companies indicated they were able to redeploy staff to more valuable tasks, including delivering services or enhancing the environment. In detail: Reduced time to manage: The simplified platform and centralized management require less staff time and resources to deploy, manage, and monitor. The result is a 60% reduction in annual operation expenses. Improved IT staff productivity: The reduced time to manage means IT organizations can reduce their time spent "simply keeping the lights on" by 47%. Lower capital costs: Integrated systems optimize compute and power resources, which reduce server hardware requirements by 31% and datacenter footprint by 28%. S I T U A T I O N O V E R V I E W IBM PureSystems family is a portfolio of expert integrated systems built from the ground up to deliver an optimized hardware and software platform. Integrated systems combine compute, storage, networking, and management into factory pre-configured and pre-integrated solutions. PureFlex provides an infrastructure system, and PureApplication and PureData are optimized for specific application and customer workload environments and provide platform systems. IBM PureSystems thus provide a broad range of infrastructure and platform systems with built-in expertise. IBM PureFlex System a member of the IBM PureSystems family is a pre-configured, fully integrated infrastructure system with unified management of compute, storage, networking, and virtualization resources to support a range of general-purpose datacenter requirements. IBM Flex System the components that are used to build several of the PureSystems can be bought separately as the destination capability for those seeking a blade infrastructure. Encompassing compute, storage, and networking, IBM Flex System provides substantial management and deployment advances due to leading management capabilities with Flex System Manager. Integrated systems are specifically designed to provide more efficient and flexible IT resources and management environments than can be enabled by traditional datacenter architectures. This paper discusses how several IBM PureFlex and Flex System customers and partners are using expert integrated platforms to reduce the cost and improve the performance of cloud-enabled datacenters and services. 2 # IDC

3 U S E R C A S E S T U D I ES R e d c e n t r i c Redcentric is a hosting and service provider located in the United Kingdom. Redcentric, recently demerged from Redstone, delivers ISP and cloud services to a wide range of U.K. organizations from multiple U.K. and international datacenters. Redcentric is leveraging IBM's Flex System to deliver its infrastructure-as-a-service (IaaS) solution. IBM Flex System, a modular system of compute, storage, networking, and virtualization tools, is Redcentric's core platform to deliver IaaS. In addition to improving IT staff efficiency by implementing IBM Flex System, Redcentric was able to reduce datacenter footprint, lower capital expenditure for servers, and lower software licensing costs. Redcentric estimates IBM Flex System required 40% less hardware, decreasing its datacenter footprint. The reduction in server hardware also meant reduced software licensing cost upward of 70% since fewer cores were required. Additionally, the modular nature allowed Redcentric to control capital expenditures with a scalable environment with a pay-as-you-grow model, deploying additional servers to existing chassis only as the capacity is required. Specific to IT efficiency, Redcentric estimates the integrated nature and centralized management of IBM Flex System reduced management and monitoring operations by 35 40%. IBM Flex System was able transform Redcentric's IT service delivery with faster provisioning times from weeks down to hours. The previous process involved determining the server specification, going through the procurement process, deploying the server in the datacenter, configuring network and storage connections, provisioning the application, and testing and retuning the configuration. The pre-integrated, pre-tested IBM system enabled Redcentric to either eliminate or reduce the process elements, leveraging templates to speed configuration and provisioning via drag-and-drop functionality. Because of the improved IT staff efficiency achieved via IBM Flex System, Redcentric has been able to redeploy staff to value-added initiatives. Redcentric has stated it has enhanced its own environment and developed more services, including cloud services for voice, database, and disaster recovery. V a l e C a r d ValeCard is a Brazilian financial services company that was seeking a solution to streamline its datacenter operations and recordkeeping. Using the integrated design of PureFlex, ValeCard was able to improve its IT efficiency by 67% through improved IT operations and reduced management and maintenance costs. Compared with an alternative nonintegrated system with the same performance level, ValeCard estimates PureFlex is 20% less expensive. In addition to the capital cost savings, ValeCard has benefited in the efficiency of its IT operations; PureFlex is easier to operate and maintain the IT staff report few to no problems with the systems and calculated staff spend less than 10 hours per month to manage the server, storage, and networking within PureFlex. As a payment schemes, benefit card, debit card, credit card company, minimizing downtime is critical for ValeCard. Its services must be available 24 x 7 across the 2013 IDC #

4 whole country. With the legacy systems, it was not uncommon to average 45 downtime incidents per year; since the adoption of PureFlex, ValeCard has experienced no downtime. As a result, the IT staff is not burdened responding to fire drills and can focus on enhancing the environment and services. Perhaps just as important to the business is what the reduction in downtime does, ensuring this does not result in lost revenue and customer defection. ValeCard is experiencing rapid growth in its business; the company has grown 40% in the past two years. The swift expansion requires an agile IT infrastructure that is able to scale with the growth of the company. The modular nature of PureFlex has enabled ValeCard to meet these demands. Relative to the legacy system, the pre-integrated PureFlex speeds the configuration and deployment of new servers as well as the provisioning of applications. This has been vital to ValeCard as the company is continually bringing new products to market and adding new customers all of which place requirements on IT. The IT staff has been drastically more efficient as the time to deploy new services has been reduced from 60 days to 2 weeks. P e t e r B a k e r T r a n s p o r t Peter Baker Transport (PBT) is an independently owned transport company in New Zealand. The company specializes in logistics, transport, courier, and bulk freight movement services across New Zealand. With IBM PureFlex, PBT was able to lower costs, deploy servers and applications much faster, and reduce staff time spent on management and maintenance. As a result of these efficiencies, PBT was even able to bring applications that were previously in a hosting environment in-house further saving cost by eliminating hosting fees. The cost benefits PBT estimates it realized via IBM PureFlex were both capital and operating. PBT estimates IBM PureFlex saved 10 20% in capital costs over alternative solutions, along with the flexibility to add new servers. With IBM PureFlex's bladed architecture, PBT was about to fit more than double the number of servers in the same rack space. Additionally, IBM's training and support services were cited as critical factors in PBT's choice and experience. PBT needed only two systems administrators to set up, deploy, and test IBM PureFlex into its environment. In terms of ongoing operations, PBT has been able to make more effective use of its staff time. With the prior system, it was in a continual state of "firefighting," so much so that PBT estimates just keeping the system operational took one-third of the systems engineer's time. Since the adoption of IBM PureFlex, the same systems engineer spends only one hour per month on maintenance tasks, reducing the operational costs associated with keeping the lights on by over 90%. Staff resources have been further optimized by increasing availability and uptime. PBT utilizes the "call home functionality," in which IBM detects problems before PBT IT staff does and then proactively takes corrective action. P r o f i l G r u p p e n ProfilGruppen AG, headquartered in Aseda, Sweden, and with a workforce of over 350 employees, is a manufacturer and supplier of customized aluminum extrusions. The company is in a stage of rapid growth yet found that the legacy IT infrastructure was unable to scale to the increasing demands of supporting expanding business services 4 # IDC

5 and new employees. By implementing IBM Flex System, ProfilGruppen was able to increase IT performance and capacity while reducing management requirements and floor space. With a minimal IT staff (two people), ProfilGruppen required a solution that simplified management and maintenance so more time can be allocated to developing innovative new services to support the business. With IBM Flex System and Flex System Manager, the systems admin is able to manage the entire VMware environment and storage and network resources from a single point of control. This has led to a dramatic reduction in the time required for administration tasks, to a point that ProfilGruppen estimates the systems admin now spends less than one hour a month in the physical server room. The amount of time and resources diverted to handle downtime has also been minimized via IBM PureFlex and the Storwize V7000. The IBM Flex System consolidated traditional rack servers into a smaller footprint that is easier to manage and able to scale to future requirements. In terms of provisioning new virtual servers, the time has been reduced to just 15 minutes a 75% improvement. With the modular design of the Flex System, ProfilGruppen will be able to easily add up to five compute nodes to its existing chassis, essentially doubling the current VM capacity, which more than exceeds the projected five-year growth. F U T U R E O U T L O O K IDC examined 10 organizations that had deployed one of the systems of the IBM PureSystems family for a variety of business reasons. For this paper, we focused our assessment on how IBM PureFlex and Flex System improved the organizations' ability to deliver critical applications at a high-performance level with the most efficient use of IT assets. IDC believes that future customers can expect the following benefits associated with increased IT efficiency: More efficient IT infrastructure: Lower costs for hardware, software, facilities, and power compared with traditional piecemeal IT environments Improved IT staff productivity: Fewer IT staff required to keep the lights on freeing up resources for innovation and growth Faster IT operations: In support of company needs M o r e E f f i c i e n t I T I n f r a s t r u c t u r e By deploying IBM PureFlex and Flex System, the organizations interviewed for this study were able to increase their compute power to meet their projected business needs and at the same time reduce their hardware and software costs by 31% and their annual cost for datacenter space and power requirements by 28%. On average, the organizations are planning on saving $280,351 annually for the next five years as a result of more efficient IT infrastructure IDC #

6 ($) I m p r o v e d I T S t a f f P r o d u c t i v i t y A purpose-built integrated system has a huge impact on IT staff productivity. IBM pre-builds the system so that installation takes the equivalent of only 0.41 FTE, or 52% less than traditional installs. Because the system is integrated and highly virtualized, dayto-day support operations require very little staff time. Additionally, IBM PureFlex and IBM Flex System are highly reliable so that unplanned downtime is reduced by 97%. The companies examined in this study were able to reduce the time requirement for keeping the lights on from 33% to 18%. Reduced time to manage means IT organizations reduced operations costs by 60%, saving each company an average of $220,913 per year. Freed-up IT resources enabled organizations to respond quickly to changing business needs such as getting new business applications to market in less than half the time. The combination of a more efficient infrastructure and improved IT staff productivity lowered annual costs of operation by 40%, saving each company $501,264 per year. Figure 1 shows the annual value of increasing IT efficiency before and after the deployment of IBM PureFlex and Flex System. F I G U R E 1 A n n u a l C o s t o f O p e r a t i o n s B e f o r e a n d A f t e r t h e D e p l o y m e n t o f I B M P u r e F l e x a n d F l e x S y s t e m 1,400,000 1,200,000 1,000, , , , , , , , , ,653 Bef ore 144,740 Af ter Facilities and power Hardware and sof tware IT staf f productivity Source: IDC, # IDC

7 C H A L L E N G E S / O P P O R T U N I T I E S Despite the promised benefits of integrated systems, IDC does recognize that there are challenges to this emerging technology. It's still an all-too-common scenario that server, storage, and networking resources reside in silos within IT organizations each with distinct staff and processes. In the adoption of integrated systems, the technology is often not the largest obstacle. Offerings like IBM PureFlex are built on established server, storage, and networking components, alleviating the risk associated with unproven technologies. To realize the full benefits of integrated systems, IT organizations need to be willing to adjust the staff and processes, from procurement to provisioning to management. The change in mindset toward a standardized approach does mean that IT staff will shift their time to innovative projects versus mundane maintenance tasks. Another challenge is that integrated systems are viewed as an alternative to the best-of-breed approach. Customers may perceive a trade-off in choosing an all-in-one solution versus building their own optimized solution. Vendors such as IBM need to demonstrate their expertise in designing and integrating the systems. The value proposition is in leveraging the systems vendor, with years of experience and a multitude of customer case studies, to streamline the procurement and deployment process and simplify the complexity in the datacenter. C O N C L U S I O N The customers examined in this study were able to transform their datacenters and improve the efficiency of their IT operations. IBM PureFlex and Flex System played a vital role in simplifying the IT environment and speeding time to deploy new applications and services. All customers were able to reduce both capital and operational costs; this enables the IT departments to redirect staff to new projects that enhance the IT environment and drive new services to the business. IDC sees an increasing number of enterprises and service providers turning to integrated systems as a method to streamline their infrastructure. These systems present a valid solution to IT efficiency so business can focus on employing new sets of data in analytics, speeding provisioning times to the business, and expanding IT services to new users. A P P E N D I X IDC utilized its standard ROI methodology for this project. This methodology is based on using in-depth interviews to gather data from 10 companies about their use of IBM PureSystems and then creating a financial model. The financial model quantifies the following elements of the companies' operations and measures the financial impact of technology on those elements: IT infrastructure: Costs for hardware, software, facilities, power, and related services 2013 IDC #

8 IT staff productivity: The value of IT staff in support of the business (Increasing IT staff productivity means reducing the time spent by IT staff in manual support tasks or repair and replacement and freeing up staff time to contribute to business activities.) End-user productivity: The value of end users of business applications (Increasing end-user productivity is measured in two ways increasing end-user work output and reducing end-user time lost to unplanned downtime, help desk issues, or other performance issues related to technology.) Business productivity: The value of business operations impacted by technology (Measurement includes increasing revenue and/or reducing cost of operations as a result of becoming faster to market or reducing unplanned downtime or other negative impacts on operations.) IDC uses a set of assumptions to calculate the benefits discussed previously: Time values are multiplied by burdened salary (salary + 28% for benefits and overhead) to quantify efficiency and manager productivity savings. Downtime values are a product of the number of hours of downtime multiplied by the number of users affected. The impact of unplanned downtime is quantified in terms of impaired end-user productivity and lost revenue. Lost productivity is a product of downtime multiplied by burdened salary. Lost revenue is a product of downtime multiplied by the average revenue generated per hour. Because every hour of downtime does not equate to a lost hour of productivity or revenue generation, IDC attributes only a fraction of the result to savings. As part of our assessment, we asked each company what fraction of downtime hours to use in calculating productivity savings and the reduction in lost revenue. IDC then taxes the revenue at that rate. Further, because IT solutions require a deployment period, the full benefits of the solution are not available during deployment. To capture this reality, IDC prorates the benefits on a monthly basis and then subtracts the deployment time from the first-year savings. Note: All numbers in this document may not be exact due to rounding. C o p y r i g h t N o t i c e External Publication of IDC Information and Data Any IDC information that is to be used in advertising, press releases, or promotional materials requires prior written approval from the appropriate IDC Vice President or Country Manager. A draft of the proposed document should accompany any such request. IDC reserves the right to deny approval of external usage for any reason. Copyright 2013 IDC. Reproduction without written permission is completely forbidden. 8 # IDC