IBM Adds SoftLayer To SCE Cloud Services

IBM Cloud Services Highlights

• Adds Internet-centric ‘Cloud native’ SoftLayer to existing SmartCloud Enterprise ‘Cloud enabled’ services
• Including SoftLayer, has 22 Cloud service data centres in all regions of the globe
• Launches SAP and Oracle SmartCloud+ services
• Readies OpenStack-based BlueMix platform for LoB developers for 2014 launch
• Customers Bison maxess and Monitise attest to the advantages of partnering in cutting down deployment time and supporting international expansion
• We estimate it will make over $2B Cloud revenues in 2013
• Expands the choices users have in how to run IT far beyond the ‘build or buy’ decisions of traditional outsourcing

We attended a fascinating day of presentations in London recently to discuss IBM’s growing portfolio of Cloud Services with Jim Comfort (General Manager, IBM Global Cloud Services) and others from the Global Services team. This is an area we have covered from the early days, looking at Global Services approach, as well as reviewing its reference model. You’ll want to know more about its acquisition of SoftLayer, its various SmartCloud Enterprise offerings and the implications for its customers, business partners and competitors.

Estimating IBM’s Cloud Revenues

In May IBM revealed that the Securities Exchange Commission (SEC) was investigating how it counts its revenues from Cloud Computing. We are not proficient to comment on how it recognises revenues from these services: however – whatever the complaint – it can’t be about the values themselves as IBM only reports growth rates (not the absolute revenues themselves) in its quarterly results. We’ve built a possible scenario, which we show in the Figure – generously including to the $7 Billion IBM has declared as its aim for end-of-year 2015. For what it’s worth we predict that IBM will make $2.3 Billion from all Cloud offerings in 2013.

IBM’s SoftLayer Addresses Public Cloud Services

These revenues are being boosted from acquisitions of course – including that of SoftLayer, which was closed in July this year and reported at around $2 Billion.
SoftLayer provides Cloud services from its 13 data centres – including 17 network Points of Presence (PoPs) – around the world. Founded in 2005 it has around 21k customers in 40 countries, around 100k physical servers and 685 employees. It describes its customers as ‘Internet-centric SMBs – born-on-the-Cloud’.
It offers a choice of hypervisor (or not for dedicated systems) and a predefined stack (Microsoft, VMware, Linux). Its Integrated Management Layer (IML) has 1600 APIs – more than any of its competitors. These allow storage, compute, and network components to be handled without manual intervention – with everything logged and traceable.
Jim’s definition of Cloud Computing is on-demand, rapidly provisioned service including compute servers, network, storage and ancillary services with consumptive billing which turns IT costs from fixed to variable ones charged by hour or month. Most initial deployments were ‘virtualised multi-tenancy computing’ which he believes fail to meet many users’ requirements. SoftLayer’s approach is to provide access to computing via APIs, allowing them to provision virtual servers (from single to 8-core quad servers) with lots of storage and running Parallel’s Virtuoso, Hyper-V, KVM or ESX hypervisors. We’re impressed that Racemi’s image-based provisioning is being used to help customers move their workloads to the SoftLayer Cloud.
SoftLayer is building its go-to-market approach starting with MSPs, ISVs and Sis. It claims to have relationships with all the important T1 Telcos, who are becoming resellers of its services. It typically sells to CEOs’, CFOs and CMOs rather than CIOs in companies running multiple mobile smart phone apps. Customers include gaming companies based in Turkey and South Korea, digital media companies such as Strug – an advertising brokerage company requiring a 100 msec response time – and large Enterprises running non-traditional IT such as seismology in the Oil and Gas industry.

OpenStack And The BlueMix Development Platform

IBM worked with Rackspace and others on the specification of OpenStack. It is in the process of building BlueMix to allow Line of Businesses to development applications using Cloud Foundry, based on OpenStack technologies. Automated techniques allow code development without having to deal with the technical details of the underlying infrastructure. Once developed applications can be deployed on the Cloud of choice – Amazon AWS, Rackspace, IBM SoftLayer, etc. General Availability of BlueMix will come in 2014.

SmartCloud Enterprise + Introduces Oracle And SAP Versions

Unlike SoftLayer, SmartCloud Enterprise ‘Cloud enabled’ applications are based on a more formal ITIL stack. They are run from 15 dedicated data centres including 57 delivery centres around the globe. IBM’s STG group made numerous SmartCloud announcements in February and June – mainly in adding SmartCloud features to its PureSystem offerings. Its latest services are for SAP and Oracle applications. In particular:

• SmartCloud for SAP covers all SAP Business Suite, Business Objects and HANA applications as a Service through a self-service portal, which includes SLAs through the application layer;
• SmartCloud for Oracle covers 100 Oracle database and business applications Automation and standardization and offers faster system provisioning, copy and database refresh

IBM’s Life Cycle as a Service (LCaaS) offering is designed to reduce the TCO of SAP and Oracle applications, providing customers with demo, preparation, blueprinting, realisation, test, final preparation, ‘go live’ and support services.

What The Customers Say

As usual IBM came armed with many impressive customer references to support its claims for speeding up deployment and cutting costs. We had a chance to talk to 2 in person. In particular:

• Bison has 600 customers, 600 employees and a turn over of around €90 Million; Christian Erismann talked it’s maxess offerings, which include the x-trade ERP application, mobile solutions and e-labels with e-Ink Technology; through using SCE+ it managed to cut start-up costs by 40% – becoming productive in 3 months; he sees a strong advantage in being able to offer ‘pay as you go’ services;
• Monitise is a UK-based ‘mobile money’ company with £72.8 Million revenues in FY 2013 and an impressive set of banking customers in the UK, US and a growing presence in emerging markets such as India and China; Nick Cheetham and Ed Addario talked to us about the company; it has a ‘licenses per user per month and transactional’ revenue model; it is partnering with IBM’s Software, STG, GTS and GBS divisions to promote 3 offerings; the advantages of the relationship include getting global sales and delivery reach as well as allowing the company to ditch its non-core service delivery, Cloud services and generic implementation activities

Bison has been an IBM customer for 30 years, while Monitise is providing financial services, an area where IBM generates 30% of its revenues – so it’s perhaps not surprising that they make good references for IBM’s new approach. Nevertheless they both demonstrate IBM’s intention to win new services revenues far beyond the traditional Business Outsourcing model of the past.

Some Conclusions – Implications For Customers And Partners

Today organisations have a number of multiple interconnected choices in how they run their corporate IT, which we summarise in the Figure. As a delivery mechanism the Cloud offers a greater scope to extend applications to mobile devices (whether located on premise or externally), the investment focus is moving from infrastructure to Line of Business, the nature of data – from structured to unstructured and spending – from capital operational expenditure with the hope of a lower bill. System suppliers are filling out their portfolios to meet these new requirements – expanding far beyond their traditional outsourcing services.
IBM has made great progress in its Cloud services – adding SoftLayer’s Internet-centric approach to its SmartCloud Enterprise. The former makes it a competitor to Amazon Web Services, Google, Rackspace and Others, while the latter continues as an all-IBM platform with an increasingly workload-optimised focus. Adding SAP and Oracle to its SaaS offerings will allow many users to cut solution TCO through reducing capital expenditure.
IBM has many Cloud data centres in all regions of the world, allowing it to offer international coverage and its business partners already offering hosted SAP or Oracle applications will find it a growing competitor in the SaaS area as a result, especially if they have a large Enterprise focus.
The OpenStack-based BlueMix platform will allow LoB staff without a detailed understanding of technical resources or software writing skills to develop applications to be deployed on public Clouds.
Overall we’re very impressed with the progress IBM is making in its Cloud services and can’t wait until it publishes its revenues so we can compare it with HP, Oracle, Dell and others.