W H I T E P A P E R I B M P u r e S y s t e m s : D e l i v e r i n g 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 S y s t e m s : D e l i v e r i n g I T E f f i c i e n c y Sponsored by: IBM Jed Scaramella August 2013 Randy Perry E X E C U T I V E S U M M A R Y An increasing number of enterprises are seeking to leverage IT as a competitive differentiator in the market, whether it is how they deliver new products and services, engage with their customers, or increase the productivity of their own workforce. Today's datacenter is being pressured to support a sharp increase in the number of applications, users, and devices, in addition to the large and often unstructured data sets that companies are leveraging for critical business decisions through the use of analytics. Even with these demands from the business, IT organizations are still faced with stagnant budgets and must seek new approaches that deliver greater IT efficiency. Business Value Highlights Reduced management and operations costs: Organizations realized a 57% reduction in annual operational expenses. Improved IT staff productivity: Time spent "simply keeping the lights on" was reduced by 47%. Faster time to value: Enterprises were able to deploy applications 67% faster, and service providers were able to launch new services in half the time. Lower capital costs: Server hardware requirements were reduced by 32%, and datacenter footprint was reduced by 29%. Integrated systems, such as the IBM PureSystems family, combine compute, storage, network, and management software into preconfigured platforms optimized for the needs of specific workloads and customer environments. Many customers are using these integrated systems to simplify the datacenter environment and improve the efficiency of IT operations. IDC interviewed 10 companies that have implemented the IBM PureSystems family about how the solutions have enabled their organizations 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 reduced capital and operational expenses. On average, the customers were able to improve the efficiency of their IT environments by reducing capital and operational costs by a combined 45%. IDC estimates this equates to an annual savings of more than $680,000. 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. Reduced management and operations costs: The simplified platform and centralized management require less staff time and resources to deploy, manage, and monitor. The result is a 57% reduction in annual operational expenses.

2 Improved IT staff productivity: The reduced time to manage means IT organizations can reduce their time spent "simply keeping the lights on" by 47%. Faster time to value: IBM PureSystems integrated systems enabled organizations to deploy applications 67% faster and service providers to launch new services in half the time. Lower capital costs: Integrated infrastructures reduce server hardware requirements by 32% and datacenter footprint by 29%. S I T U A T I O N O V E R V I E W T h e D e m a n d f o r G r e a t e r I T E f f i c i e n c y Today's market is one of shifting paradigms and rapid transitions; there is an explosion in the use of mobile devices, cloud services, and social media each of which is creating new interaction points with customers and a company's own workforce, as well as new data streams that are increasingly an opportunity for new analytical insights. Datacenters and IT organizations are being pressured to support this significant growth in applications, data, and devices. Enterprises need their IT organizations to direct their strategic and tactical focus to innovating services, mobile solutions, and data analytics. To dedicate more resources to these types of initiatives, IT organizations must seek solutions that improve the efficiency of their current IT operations. The adoption of integrated systems in lieu of traditional approaches (i.e., procuring, configuring, tuning, and maintaining all the separate individual components) will be one of the most important developments in the evolution of the IT infrastructure market. Operational simplicity is a key benefit of integrated systems as they encapsulate compute, storage, networking, and management software into smaller, more efficient, and more easily managed infrastructure. B e n e f i t s o f I n t e g r a t e d S y s t e m s Compared with traditional approaches and procurement models, integrated systems provide key benefits related to IT efficiency. Specifically: Reduced management and operations costs: The simplified platform and centralized management require less staff time and resources to deploy, manage, and monitor. The result is a 57% reduction in operational expenses. Improved IT staff productivity: The reduced time to manage means IT organizations are able to reallocate staff to more value-added tasks. Resources can be focused on innovation and reduce their time spent "simply keeping the lights on" by 47%. Faster time to value: Built from the ground up, integrated systems speed up initial system deployment by 55% and use pre-defined patterns to rapidly provision applications to speed up application deployment by 67%. 2 # IDC

3 Lower capital costs: Integrated infrastructures run highly virtualized environments, reducing server hardware requirements by 32% and datacenter footprint by 29%. Price/performance: The pre-integration allows for a tightly optimized platform that is 26% less expensive than other platforms. I B M P u r e S y s t e m s F a m i l y IBM PureSystems is a family of expert integrated systems built from the ground up to deliver an optimized hardware and software platform. IBM PureSystems provide a broad range of infrastructure and platform systems with built-in expertise around specific workloads and use cases. The IBM Flex System, a modular blade system with storage, network, and management, is the primary building block for the PureSystems family. Each integrated system is built to be optimized for a specific workload or use case and is shipped, updated, and maintained as a holistic unit. The portfolio includes: IBM PureFlex System. This pre-configured fully integrated infrastructure system with unified management of compute, storage, networking, and virtualization resources supports a range of general-purpose datacenter requirements. IBM PureApplication System. This system is optimized to simplify deployment and ongoing management of enterprise applications. Leveraging "patterns of expertise" that capture and automate proven best practices for an application, the PureApplication System speeds application deployment, simplifies management, and reduces the risks associated with traditional application life-cycle models. IBM PureData System. An integrated system designed specifically for delivering data services in support of big data, PureData System comes in multiple models that are optimized for transaction processing, analytics, and Hadoop (unstructured data). Integrated systems are specifically designed to provide IT resources and management environments that are more efficient and flexible than those currently found in most traditional datacenter architectures. This white paper discusses how several IBM PureSystems family customers and partners are using expert integrated systems to reduce the cost and improve the performance of their datacenters. U S E R C A S E S T U D I E S 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 PureSystems to deliver its infrastructure-as-a-service (IaaS) solution IDC #

4 IBM PureFlex System, an integrated infrastructure system of compute, storage, networking, virtualization, and integrated management, is Redcentric's core platform to deliver IaaS. In addition to improving IT staff efficiency by implementing IBM PureFlex System, Redcentric was able to reduce its datacenter footprint, lower capital expenditure for servers, and lower software licensing costs. Redcentric estimates the PureFlex System required 40% less hardware, decreasing the company's datacenter footprint. The reduction in server hardware also yielded reduced software licensing costs 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 the PureFlex System reduced management and monitoring operations by 35 40%. With the PureFlex System, Redcentric was able to transform its IT service delivery with faster provisioning times from weeks 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 re-tuning the configuration. The pre-integrated, pre-tested PureFlex 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 the PureFlex System, Redcentric has been able to re-deploy staff to value-added initiatives. Redcentric has stated that 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 record keeping. Using the integrated design of the PureFlex System, ValeCard was able to improve its IT efficiency by 67% through improved IT operations and reduced management and maintenance costs. Compared with an alternative non-integrated system with the same performance level, ValeCard estimates the PureFlex System is 20% less expensive. In addition to the capital cost savings, ValeCard has benefited in the efficiency of its IT operations; the PureFlex System is easier to operate and maintain the IT staff reports few to no problems with the systems and spends less than 10 hours per month to manage the server, storage, and networking within the PureFlex System. For a payment schemes, benefit card, and debit card company like ValeCard, minimizing downtime is critical. Its services must be available 24 x 7 across the whole country. With the legacy systems, it was not uncommon to average 45 downtime incidents per year; since the adoption of the PureFlex System, 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, the reduction in downtime prevents lost revenue and customer defection. 4 # IDC

5 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 the PureFlex System has enabled ValeCard to meet these demands. Relative to the legacy system, the preintegrated PureFlex System 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. R G I RGI Informatics LLC provides healthcare analytic software, database infrastructure, and analytic services to the users and providers of healthcare information. The company's flagship product, the Healthcare Analytics Solution, enables clinicians, rather than programmers, to access and analyze non-standardized healthcare data from disparate applications, including electronic medical records, specialty systems, operating room and intensive care units, clinical information systems, and sensor data from medical devices. To increase operational efficiency and maintain an iterative analytic environment, RGI migrated from conventional general-purpose servers to the massively parallel IBM PureData System for Analytics. Response times for complex queries have improved by x compared with conventional platforms and by 8 10x compared with software solutions. Data loads that once took six to eight hours are now done in minutes. The PureData System for Analytics also helps RGI use its IT and managerial talent more efficiently. With the PureData System, RGI saw a 33% increase in IT efficiency. Fewer staff members were needed to load data, manage systems, and provide services, so personnel could be reassigned to priority projects. Additionally, while distributed systems required maintenance and support for each database and server, the PureData System for Analytics, as an integrated platform system, has reduced management time. This allowed RGI to refocus several DBAs on improving the speed and performance of the applications. F U T U R E O U T L O O K IDC examined 10 organizations that had deployed one of the systems in the IBM PureSystems family for a variety of business reasons. For this paper, we focused our assessment on how these systems improved the organizations' ability to deliver critical applications at a high performance level with the most efficient use of IT assets. IDC expects 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 2013 IDC #

6 ($) 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 PureSystems offerings, organizations in the study were able to increase their compute power to meet their projected business needs while reducing their hardware and software costs by 32% and their annual cost for datacenter space and power requirements by 29%. On average, the organizations are planning on saving $279,617 annually for the next five years as a result of more efficient IT infrastructure. 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 one FTE, or 68% less than traditional installs. Because the system is integrated and highly virtualized, day-to-day support operations require very little staff time. Additionally, the IBM PureSystems family is highly reliable, so unplanned downtime is reduced by 96%. Companies in the 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 annual operations costs by 57%, saving each company an average of more than $680,000 per year. Figure 1 shows the annual value of increasing IT efficiency. 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 S y s t e m s 1,600,000 1,400,000 1,200,000 1,000, , , , , , , ,741 Bef ore Facilities and power Hardware and sof tware IT staf f productivity 137, , ,580 Af ter Source: IDC, # IDC

7 F a s t e r I T O p e r a t i o n s Increasing IT efficiency is more than reducing costs. Organizations that rely on IT depend on more efficient IT to deliver improved corporate agility as well. Faster operations start with the rapid initial deployment (including planning, installation, and testing) of the PureSystems offerings, which require 50% less time to deploy than alternative systems. Organizations in the study were able to reduce the time to deploy physical servers from four hours to 10 minutes and the time to deploy virtual servers from one hour to less than a minute (see Table 1). The benefits of faster time to market vary by application, from enhancing internal operations to generating revenue with a customer-facing application. T A B L E 1 I T S t a f f P r o d u c t i v i t y K P I 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 S y s t e m s Before After Savings % Improvement Platform deployment (weeks) Physical server deployment (minutes) Virtual server deployment (minutes) Source: IDC, 2013 C H A L L E N G E S / O P P O R T U N I T I E S While IDC believes integrated systems are an evolutionary part of the journey toward a more agile and efficient IT environment, there are certainly some anticipated obstacles. Integrated systems bring together previously disparate components into a single platform; typically, each of these distinct components existed in its own silo with a unique budget, procurement processes, life cycles, and IT staff. Migrating to an all-in-one system can be disruptive to the established IT roles and processes. There are early adopters that are ready to make the necessary changes to realize the benefits derived from integrated systems. For IBM to achieve critical success in the market, it will need to clearly demonstrate how the IBM PureSystems family can deliver improved IT efficiency for customers in their own individual environments IDC #

8 C O N C L U S I O N Companies are increasingly looking for flexibility, speed, and resiliency from their IT environments. Corporate strategies are also seeking to use IT to differentiate companies through deployment of new applications and use of new data analytics. For most enterprises, integrated systems represent a new alternative that builds on prior datacenter transformational efforts, including consolidation, virtualization, automation, and orchestration. The adoption of integrated systems enabled these customers to transform their datacenters and drive improved efficiency within their environments. The companies were able to leverage the IBM PureSystems family in a vital role to improve efficiency of their IT environments by reducing capital and operational costs and speeding time to deploy new applications. The re-allocation of staff to focus on innovation has resulted in new projects aimed at growing the business. 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 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. 8 # IDC

9 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 firstyear 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. WAL12388-USEN IDC #