IBM Dynamic Infrastructure Announcement and the Mid-Market Enterprise

With today’s ‘Dynamic Infrastructure’ initiative announcement, IBM is positioning itself as a holistic technology solution and service provider and partner. It combines all the element of separate cloud delivered services (cloud based, managed, and on-premise) and also traditional on-premise hardware, software and services.

• Managed Services
• Cloud Computing
• Software-as-a-Service and Infrastructure-as-a-Service
• Traditional on-premise based software, hardware and service

If IBM is to become a trusted partner of mid-market enterprises, they need to present a vision of a holistic technology/solutions partner that understands the mid-market enterprise and the value proposition that IBM’s Dynamic Infrastructure brings. Several vendors can offer pieces of these solutions like managed services or SaaS, etc., but no single vendor has the experience, product/services portfolio, industry experience and partner/ISV ecosystem to become this trusted partners. IBM has the market presence, solutions and partner ecosystem to be this vendor with the ‘Dynamic Infrastructure’ initiative.

Why will IBM be more successful with this strategy in the mid-market?

Several vendors have offered pieces of this service successfully to the SMB and mid-market. However, the mid-market enterprises has limited IT resources and technology expertise. Some of these businesses have adopted segments of this type of solution, piece-meal from several different vendors. Vendor A provides managed security service, vendor B provides online backup service, the vendor C provides on-premise virtualization solutions, etc. When the mid-market enterprise experiences problems – they don’t know who to turn to. Some managed service providers (MSPs) are re-inventing themselves as aggregators of several of these services and have started to see partial success. These MSPs lack some of the deep industry/technology expertise and also some of the flexible computing cloud computing infrastructure that provides the reliability, high-availability and SLA’s essential for getting the mindshare of mid-market enterprises for whom things like these are critical.

How will this service resonate with mid-market enterprises in today’s tough economic climate?

• If these recessionary conditions are deep and protracted – the mid-market enterprises need to reduce costs by reducing IT resources, postponing upgrades of existing IT infrastructure and applications. These enterprises (especially if they are growth oriented companies) will be able to benefit significantly by this initiatives. When looking at a 3-5 year TCO provided by this initiative. This initiative helps preserve upfront capital expenditures and cash and shifts them to monthly operational expenses.
  • IBM can also benefit with the availability of IBM Financial Services programs for the mid-market
• If these recessionary conditions are shallow and short – mid-market enterprises will be more inclined to stay the course and possibly look at new initiatives like ‘Dynamic Infrastructure’ over a longer time horizon.

What IBM needs to do to win in the mid-market enterprise with this initiative?

• Need to engage the regional mid-market service providers(MSPs) more as they have the direct relationship with the mid-market customers.
• These mid-market service providers can provide the ongoing day-day relationship with the client, 7X24 active management of the services provided to their client, onsite component of the interaction with the client.
• These MSPs will provide the on-going care-and-feeding and training required to make this program successful.
• IBM needs to provide a more comprehensive value proposition and short-term ROI with financing and flexible payment plans to get the mindshare of the mid-market enterprises and the ecosystem partners.
• Convince VAR to work with IBM to offer a bigger portfolio of IBM Dynamic Infrastructure services.

Cloud Computing and Services – Can this provide the market disruption in the current economic environment!

Cloud computing and services include any subscription-based service that is delivered over the internet in real time, providing flexibility by extending an enterprises internal IT resources, staff and expertise. It encompasses several of the web-based solutions/services listed below.

• Infrastructure-as-a-Service:
  • A way to add computing, storage and bandwidth capabilities in real-time without investing in additional in-house IT infrastructure or support personnel
  • The customer has no incremental investment in servers, storage, support and management people and expenses.
  • Solutions for server, storage, security, high availability/disaster recovery, web content  delivery
  • Key Examples:  Amazon, IBM, AT&T
• Software-as-a-Service (SaaS):
  • The application developer delivers the application supporting a multitenant architecture over the internet that is accessed using a web browser.   Includes application platform and ISV applications developed  using  that platform.
  • The customer has no  incremental upfront  investment in server or software  licenses for these applications.
  • Solutions for business, collaboration, productivity applications
  • Key Examples:  Netsuite, Salesforce.com, Google, Cisco/WebEx, CitrixOnLine, Microsoft.
• Managed Services (MSP):
  • Provide outsourcing or out-tasking of specific application, network, and systems management functions. Management can mean simply monitoring, or it can include management and performance monitoring of the application, system tuning, corrective actions for systems on customer’s premises.
  • This service is delivered remotely over the network from the Service Provider or VARs data center, some MSPs provide onsite management/support as required.
  • The customer has reduced need for IT expertise and support.
  • Solutions for security, data backup, remote server/ desktop/network management, desktop virtualization.
  • Key Examples: Iron Mountain, EMC, Symantec, AT&T, SunGard, HP, IBM, Verisign
• Hosted Services (HSP):
  • Hosted Services provider host, service, and  update the infrastructure systems and/or applications software at their data center. These systems/software is owned and managed by the service provider, and are either dedicated or shared (multitenet).
  • The value-added services/ applications are delivered remotely over the network from the service provider or VARs data center to the end-user.
  • The customer has no incremental upfront  investment in server, storage, and support people (maybe for software licenses) for these services.
  • Solutions for business, database, e-commerce, productivity, communication applications
  • Key Examples: Savvis, Rackspace, Navisite, Sungard, AT&T.

 Cloud architectures have the ability to scale to meet customer demand and traffic spikes in real time. Businesses don’t have to constantly re-engineer their environment and add systems to handle peak loads. Businesses don’t have to wrestle with the underlying infrastructure and core technologies or the day-to-day operational, performance and scalability issues of their IT infrastructure. Instead, they can focus their resources on the core business functions.

The primary target market and consumers for the various segments of the external cloud computing services are SMBs, mid-market enterprises and departments of large enterprises. In addition to the cloud services vendors, the VAR channel and Service Providers (network) will play a few role in the cloud computing ecosystem. What is the short-term prognosis for these services? The SMB and mid-market businesses are under severe pressures in the current recessionary economic climate. They are considering all option that help them control costs (both systems and people resources) to get through the current economic conditions and credit crunch. They are open to new and innovative ideas.

Will these market conditions provide the disruption that the cloud initiatives need to drive demand and market uptake?