Becoming an On Demand Business


In this section we will take at look at how you go about gathering the parts of the on demand puzzle.

A Journey, Not a Destination

If it came in a box, everyone would have it. There is no "one thing" you can go and buy, no "single action" you can take to become an on demand business. Rather, the path to on demand is an evolutionary trail. So the first principle to keep in mind as you plan your migration toward becoming an on demand business is that it is an ongoing journey, not a destination. The good news is, you achieve new business benefits at every step along the on demand path. So the rewards accrue all during the journey, not just at some distant destination.

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  • Webcast: Sam Palmisano presents on demand

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As depicted in Figure 1.1, IBM describes three elements that are part of the on demand journey: Business Transformation, Operating Environment, Flexible Financial and Delivery Methods. Let's take a closer look at each.

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Figure 1.1: The three elements of the on demand journey.

Business Transformation

The on demand journey begins with a focus on the business as a whole. The "Business Transformation" (BT) element of the on demand strategy provides the methodology and tools necessary for a thorough analysis of the current situation followed by transformation planning and implementation. Business transformation is about fundamentally improving the organizational structures, processes, and competitive standing of a business.

Depending on the situation, BT typically starts with an on demand customer assessment ranging from a two-day workshop to a more complex eight-week analysis. This assessment will identify and quantify the impact of business transformation activities for a particular business as it moves to becoming an on demand business. Figure 1.2 depicts the basic BT adoption process a business will follow as it begins its on demand journey.

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Figure 1.2: Business transformation adoption process.

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  • Business Transformation Overview

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To support its business transformation offerings, IBM is leveraging the deep business skills they gained through the acquisition of the PwC Consulting (PwCC) group in October of 2002. PwCC merged with an arm of IBM Global Services to become IBM Business Consulting Services (BCS). BCS now comprises 60,000 employees with business expertise and experience in 18 different industries.

Operating Environment

At its core, the on demand strategy refers to a business's need to respond to change both quickly and effectively. To support this need, the business must have a flexible computing infrastructure (hardware, software, and services all working together). This is what IBM calls an "on demand operating environment." More specifically, IBM states that an on demand operating environment is "...an end-to-end enabling IT infrastructure that can allow a business to execute IT operations that align with its business strategy. An IT infrastructure enables a business to be more responsive, to focus on core competencies, to benefit from variable cost structures and to be resilient to external threats." By having such an operating environment, a business is free to spend more time and energy on the things that differentiate it from its competitors rather than on managing internal computer systems.

The computing infrastructures typically in use today are not yet prepared to support an on demand business model. So what does this mean? Well it doesn't mean that you need to throw everything away and start over from scratch. In fact, the on demand strategy is being deployed in such a way as to leverage a business's existing investment in IBM hardware, software, and training. What it does mean is that every new purchase or project that comes under consideration should be carefully evaluated in the context of building an on demand operating environment.

In IBM language, this means you need to evolve your computing infrastructure over time such that it becomes increasingly integrated, open, virtualized, and autonomic. As depicted in Figure 1.3, these are the four key attributes that describe the operating environment necessary to support an on demand business. Let's take a quick look at each attribute.

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Figure 1.3: An on demand business must be supported by an underlying operating environment that is integrated, open, virtualized, and autonomic.

Integrated

The "integrated" attribute refers to the facilitation of information flow. The free yet secure exchange of information between key business processes throughout the inner workings of a business as well as with key suppliers and customers is one of the crown jewels of the on demand strategy. That's because integration breaks down the "silos" of information that create barriers to collaboration and allows business application programs to be more quickly deployed across organizational boundaries.

For maximum effectiveness, integration must occur at multiple levels. That is, information must be within reach of all authorized users (server and storage integration) and then properly interpreted by the various independent application programs that support core business processes (application program integration). So businesses should not allow the implementation of independent computer solutions (servers, storage, operating systems, middleware, and application programs) without giving careful thought to how these new solutions will be securely integrated (immediately or in the future) with the rest of the computing infrastructure.

Open

The days of locking into a specific vendor's proprietary computing architecture are gone. Today, a computing infrastructure needs the flexibility (in vendor choice, in information exchange, in application selection, etc.) that only comes when that infrastructure is built around open standards defined by vendor-neutral standards bodies—standards with names such as Java, Web services, XML, and Linux. Most businesses choose to construct heterogeneous computing infrastructures that will include more than one type of server/operating system... and for good reason. Adherence to open standards will protect these investments and enable these different types of systems to work together, or integrate, at a lower cost over time. Other benefits resulting from the adherence to open standards include leveraging investments/skills in existing heterogenous computing infrastructures, speed of deployment for new projects, and freedom of choice. For the same reasons, adherence is also important when selecting storage devices for use in an e-business infrastructure. The "open" attribute of an on demand operating environment refers to compliance with open standards over proprietary ones. The benefit offered by an open infrastructure is increased selection when choosing solutions to address the specific and dynamic business needs.

Virtualized

In a virtualized computing environment, what you get is more than what you see. That is, a virtualized computing infrastructure insulates the users and application programs from the detailed physical constraints of the infrastructure, resulting in both simplification and improved utilization. Virtualization allows underlying computing infrastructure components to be more easily managed, reconfigured, upgraded, and even repaired without disruption to users.

Virtualization also allows the computing infrastructure to pool disparate physical devices (e.g., servers, storage devices, middleware, etc.) and present a unified view of those resources to users and application programs. These pools of resources can be shared and dynamically reallocated to users in concert with their changing needs—without disruption. Through this dynamic allocation of resources, a business can accomplish more work through a given computing infrastructure, resulting in better service and less wasted resources. The simplification and pooling of resources plays right into the hands of the on demand strategy.

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  • The on demand operating environment

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Autonomic

"Autonomic" is a term IBM borrowed from the vernacular of the human central nervous system. The goal of autonomic computing is for the computing infrastructure to manage itself just as the central nervous system manages the human body—without our conscious effort. Making computer systems self-configuring, self-healing, self-optimizing, and self-protecting reduces the costs associated with systems management and unscheduled downtime. The more complex the computing system, the more important autonomic computing becomes.

These four attributes—integrated, open, virtualized, and autonomic—are the principles that IBM is using to guide the development of its entire line of infrastructure products and services. So increasingly you will see attributes enhanced in important IBM brands such as eServer, TotalStorage, InfoPrint, WebSphere, DB2, Lotus, Tivoli, and others (the subject of later chapters). This huge portfolio of hardware and software products, in conjunction with the IBM Global Services consulting arm, represents a clear competitive advantage for IBM. Many businesses are frustrated with having to integrate disparate technologies themselves, which plays to a major IBM strength—providing complete solutions rather than selling individual pieces to the on demand puzzle.

Flexible Financial and Delivery Methods

The third element in the IBM on demand strategy is called Flexible Financial and Delivery Methods. In short, this element offers new ways to acquire and manage the information technology needed to support an on demand business. Figure 1.4 depicts the different ways a business can acquire IT.

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Figure 1.4: On demand leverages new ways to acquire IT resources.

The horizontal axis of the graph represents the IT cost structure—how you pay for the IT you need. Traditionally, a business treats IT purchases as fixed costs. The resulting fixed cost and asset structure can hinder the variability and responsiveness of an on demand business. With the on demand strategy, the further toward the variable end of this graph a business is, the better, because this allows the business to modify its IT services and costs as business dictates. An example of a more variable IT cost structure can be seen in the capacity on demand capabilities offered in the IBM eServer lines. As we will see in the next chapter, capacity on demand allows a business to turn on and off extra processing power in an IBM eServer as needed—and only pay for the IT capacity actually used.

Another way to achieve a variable cost structure while using the traditional computing approach to acquiring IT assets is through the Global Financing arm of IBM. This group is focused on finding ways to help businesses build on demand operating environments with flexible cost structures through low-rate financing, leasing plans, and other special offers. For example, IBM has an Open Infrastructure Offering (OIO). This is a single, customized, and strategic agreement between IBM and a business for the acquisition of both IBM and non-IBM hardware, software, professional services, maintenance, disaster recovery, and financing. The benefits of an OIO agreement are threefold. First, the predefined interest rates and monthly billings reduce financial risks and make budget planning easier through improved IT expense forecasting. Second, an OIO agreement provides a simplified acquisition process with a single monthly bill—IBM will act as paying agent for all IBM and non-IBM expenses. Third, an OIO agreement can reduce IT expenses through the price protection it provides against increases in software and maintenance fees. Every OIO agreement is unique and provides the flexibility to make changes in concert with changing needs. In addition to the OIO agreement, IBM Global Financing delivers a variety of leasing and TOTAL financing packages customized to meet the specific needs of a business.

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The vertical axis of the graph is used to illustrate the different levels of IT ownership a business can elect. At the bottom, you see the traditional approach in which the business owns the IT assets. As you move up the vertical axis, you begin to approach a model of computing in which the business owns less and less of the IT asset it uses. At the very top of the graph you see the strategic outsourcing option in which the IT assets used by the business are owned and operated by a service company. In between these two extremes is a wide range of options that blend the two ownership models. Herein lies the new frontier of grid computing, which aims to make more efficient utilization of a collection of heterogenous IT resources. A company might choose to implement its own internal grid to maximize utilization of IT resources—an approach leaning toward the "customer owned" end of the graph. Alternately, a company might choose to purchase the capacity it needs from a grid that sells IT capacity the way an electrical utility sells electricity—an approach leaning toward the "utility" end of the graph. Either way, the result is a more flexible and variable way to meet the IT needs of an on demand business model.

Linux Virtual Services is an example offering from the utility computing segment of the on demand strategy. The offering provides a way for a business to acquire large-scale Linux mainframe computing capacity (processors, storage, networking, etc.) over the Internet. Rather than having to purchase a zSeries server to run Linux applications, a business can instead opt to access a dedicated partition of an IBM owned and operated zSeries server and have IBM run the needed applications. This option eliminates the up-front capital costs of purchasing a server while also referring all the systems management efforts back to IBM. Herein lies an opportunity to consolidate server workloads (IBM will even port non-Linux applications as necessary), reduce costs, reduce headaches, gain flexibility to instantly respond to changing workloads, and only pay for the capacity you need.

For example, Mobil Travel Guide will use Linux Virtual Services to deliver its new "Mobil Companion" offering, which offers customized services to auto travelers. In this way, Mobil will only be paying for the computing power and capacity it needs rather than investing in its own physical Web, database, and application servers (see the More on the Web inset).

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  • Linux Virtual Services

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Linux Virtual Services is one example of IBM's growing utility computing portfolio, which also includes other managed hosting services along with industry-specific grid computing offerings and the Globus toolkit for building your own grid. All the utility computing solutions are built using the on demand operating environment products covered in the remaining chapters of this book.

The arrow in the graph depicts the trend in the on demand business model toward a more variable IT cost structure. This is achieved through a blend of owned IT resources and the utility computing approach to achieve flexibility in capacity and function at the lowest possible cost, that is, to achieve an on demand operating environment.

The Value Cycle

No matter how good a given investment may be, the funding necessary to make the investment has to come from somewhere. Figure 1.5 depicts potential sources of funding for on demand initiatives called the Value Cycle. The basic idea is to use the savings from one project to fund additional on demand initiatives. While you can enter the cycle at any point, we will begin our discussion at the "IT Efficiency" block. Often a business can do relatively simple things, such as server or storage consolidation, to reduce IT costs. The resulting "hard dollar" cost savings can then be passed up to the "Business Productivity" block, where the focus is on reducing costs through business transformation. For example, a business may choose to restructure and optimize the order-handling process. Once again, the savings from this project are then passed down to the "IT Efficiency" block, where another step down the on demand path is taken.

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Figure 1.5: The on demand reinvestment cycle.

By starting with simpler projects that offer easily identifiable savings, you can often "jump start" your on demand journey and create cash flows that can be reinvested to keep the cycle going.

Building Blocks and Beyond

You will recall from earlier discussions that the on demand business model must be supported by a flexible computing infrastructure or "operating environment" that is integrated, open, virtualized, and autonomic. To achieve this new level of computing, there are many elements of the infrastructure that must work seamlessly together. The next two chapters will explore some of the individual elements or "building blocks" that work together to provide the basis for an on demand operating environment—namely, servers, software, storage, and printers. The last chapter will then show how some of these building blocks are combined to provide some example on demand solutions and will review IBM's roadmaps for the future of on demand.




Building an On Demand Computing Environment with IBM. How to Optimize Your Current Infrastructure for Today and Tomorrow
Building an On Demand Computing Environment with IBM: How to Optimize Your Current Infrastructure for Today and Tomorrow (MaxFacts Guidebook series)
ISBN: 193164411X
EAN: 2147483647
Year: 2003
Pages: 20
Authors: Jim Hoskins

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