IBM Launches Wave of Cloud Computing Services for the Enterprise

Jean S. Bozman

As the momentum toward building private clouds and hybrid clouds accelerates, IBM is positioning its technology stack, and bringing new service offerings to market, to capitalize on that change.

On April 7, 2011, IBM held an IBM Cloud Forum  in San Francisco to discuss the trends in cloud adoption – and to introduce new products and services. Its primary target: private clouds, which will build on IBM servers and storage, IBM middleware and IBM services to help build these private clouds to support business processes. IBM believes that a range of cloud services is being built by their customers, in part to tap the services of the customers' business partners – and that the construction time for those clouds could be reduced by providing pre-tested solutions that support business workloads.

At the forum, IBM executives made clear that the first wave of cloud computing, was aimed more at application development and shared computing services for test/development and collaboration, and was often delivered via public cloud services.

The next wave, leveraging cloud computing technologies to support business services, is well underway, they said, as evidenced by IBM projects with customers to build private clouds, customers who are using public clouds to access specific services — and also hybrid clouds, which combine private cloud and public cloud capabilities.

Adding to the custom-built services it already provides to its longtime customers, IBM is announcing that it is opening up new options, by offering pre-built templates, components and services that allow customers to quickly assemble, and use, a private cloud. At the Cloud Forum, IBM introduced a number of services, ranging from the IBM SmartCloud Enterprise offering for public cloud providers to the technology for shared clouds and private clouds with IBM SmartCloud Enterprise+.

IBM is Focusing on Enterprise-Ready Clouds

Steve Mills, senior vice president and group executive of IBM's Software and Systems Group,  introduced the Cloud Forum day, speaking about Business Processing as a Service (BPaaS), in addition to the more widely known Software as a Service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (IaaS).

BPaaS brings the ability to leverage off-premise infrastructure to support business services, Mills said: "By accessing business services via the Web, [you can use] multi-tenant, shared infrastructure without the need to manage or control the underlying resources." But, in many cases, Mills and other IBM executives said, customer concerns about availability and security have prevented customers from deploying business applications onto cloud infrastructure.

Now, IBM is prepared to work with customers or service providers to build out such systems — and to directly supply these enterprise-level cloud services to businesses, as a form of cost-avoidance for building in-house IT infrastructure for specific workloads. IBM estimates that cloud computing will be a $7 billion business for IBM in 2015, with about $3 billion in incremental revenue, from new opportunities related to cloud computing.

Mills explained this focus on enterprise clouds further at IBM's Impact 2011 conference in Las Vegas the week of April 11: "If I'm running a business, I no longer have to think purely about whether I'm going to build or buy an application," he said. "From now on, I can actually call on somebody else to execute that element of my business." Examples include salesforce automation, accounting payroll, tax remittance and supply chain functions. "So, as you think about cloud, think about SOA really extended to a federated environment. It's not just the integrations you're doing within your business," he said. "It’s how you're integrating into other businesses. How you're tapping into their services and their capacity to complete your business processes." For that, he said, you need "BPM (business process management), choreography and strong connectivity, along with the ability to manage those service connections to ensure privacy and security."

Cloud Forum Announcements

New services and products announced at the IBM Cloud Forum include:

  • IBM SmartCloud offerings -- Enterprise and Enterprise+ (read Enterprise Plus). These are cloud services, delivered by IBM via more than 10 IBM cloud-computing centers worldwide (in the U.S., China and in multiple locations in Europe and Africa). It includes automation and rapid provisioning that IBM said could reduce costs by as much as 30% compared with traditional IT development environments.
  • The Enterprise service, which is available immediately, is built on IBM's Development and Test Cloud, which is already in place. It is designed to reduce app dev and test/dev costs for IT customers. It will supply availability levels at 99.5% uptime, and will support application development for Microsoft Windows and Linux operating systems. Some customers are also accessing IBM cloud services to run Monte Carlo simulations, and other burst-driven workloads. It will be available on a pay-as-you-go basis, at hourly rates.
  • The Enterprise Plus (Enterprise+) service, which is a pilot program now in use at a small number of client sites worldwide, will be released later this year, and is being positioned by IBM as a complement to the Enterprise service. It will provide what IBM calls "a core of multi-tenant services to manage virtual server, storage network and security infrastructure." Enterprise Plus is intended to support private cloud services, with high levels of security and availability. It is designed to support workload isolation; availability levels of 99.9% uptime or more; built-in support for systems management and deployment; and payment/billing functionality. It will target such workloads as analytics, ERP and logistics for Windows, Linux or IBM AIX Unix environments. It will be priced on a monthly usage basis, at prices agreed to by fixed contracts.
  • IBM SAP Managed Application Services, an offering that will run on the IBM SmartCloud and will become available later this year. Focused on automating labor-intensive tasks, such as SAP cloning, refreshes and patching, these IBM services will build the services catalog for SAP applications. It will automate the provisioning of SAP environments.
  • IBM Lotus Domino applications on the IBM SmartCloud.This will include support for the Lotus Domino Utility Server for LotusLive, for integrated email, social media for business, and access to third-party cloud applications. IBM said this will support a new server licensing model, but did not provide details.

IDC Analysis

IDC believes that IBM is aiming to step up its emphasis on the importance of security, availability and reliability for cloud computing – all of which speak to IBM's long-term focus on Business Processing. The reason for this focus on business processing is clear: It plays to IBM's historic strengths in the mainframe and Unix server platform markets. It gives IBM the opportunity to leverage its intellectual property (IP) that supports RAS (reliability, availability, serviceability) and security – and to apply this IP to a new, and rapidly growing, market space. At the same time, IBM needs to make clear that its cloud-enabling technology is addressing all of the server platforms in cloud computing, much of which is built on x86 servers and x86 server virtualization, in addition to mainframes and Unix servers. IBM's cloud services will be delivered on a mix of platforms, as they are in IBM customer sites.

Erich Clementi, senior vice president, IBM Global Technology Services, said, in a printed statement, that IBM's SmartCloud provided "the cost savings and scalability of a shared cloud environment plus the security, enterprise capabilities and support services of a private environment.” IBM has developed best practices that will be leveraged into a set of cloud deployment models—and offered as services, based on what Clementi described as thousands of cloud computing service engagements involving IBM.

It is an astute move to provide cloud services directly, as well as to provide the components of cloud computing to those customers that are building out their own private cloud infrastructure. IBM can play a role in all of those paths to market – as a provider of hardware and software; a partner in large cloud computing projects; working with channel partners to deliver products and services to IT organizations – and providing cloud computing services directly to businesses, on a global basis. With regard to that last role, IBM spent the last few years putting a worldwide cloud computing infrastructure is already in place. At the Cloud Forum event, several customers spoke about their deployments based on IBM technology, including and Univar.

Leveraging its strong positions in the software and services businesses, IBM is well-positioned to deliver managed services on its own cloud computing infrastructure. In addition to the full portfolio of IBM servers – IBM System x x86 servers, IBM Power Systems running IBM AIX Unix and Linux, and IBM System z mainframes – IBM has the WebSphere platform for app-serving and collaborative workloads and IBM Tivoli system management products for provisioning and managing virtual servers supporting business services on SmartCloud.

Challenges and Opportunities

However, IBM will likely find competition in this space, over time, primarily from HP, with its HP CloudSystem offerings, and also with its integrated systems initiative, for which is actively partnering with Microsoft on providing full technology stacks to support end-to-end business workloads.

HP has the capacity to build out directly offered cloud services, on its own, without partnering with others. But Microsoft has already built out its Azure platform in multiple, large cloud-enabled datacenters located around the world – in keeping with the governmental restrictions of geographic regions or countries, and with security and availability built in. Although Azure has been built out more as a PaaS offering, it is also clear that, over time, business services could be added to that platform. And, given the close cooperation between HP and Microsoft in building end-to-end workloads on combined infrastructure, IBM could eventually see competition from both HP and Microsoft working together.

Other forms of competition could emerge, if providers of cloud infrastructure, like Dell or Cisco, partner with large services providers, inclusive of large telecommunications companies. In addition, Oracle Corp., which initially did not push cloud computing, raised the profile of its cloud offerings in 2010, has the technologies, applications and middleware that would allow it to provide end-to-end managed, cloud-enabled business services by itself, or it could partner with other companies to deploy those end-to-end services across geographic regions.

However, the opportunity to be an early mover in the enterprise cloud services space is likely what informed IBM's earlier investment cycle. IBM's earlier investments in Asia/Pacific — including the build-out of two cloud-computing centers in China — and in Europe and in Africa, where cloud computing is seen as a way to leverage off-premises IT services where computing infrastructure is scarce, will pay off as a new wave of enterprise-focused cloud computing deployment takes hold. The combination of services and software will build on this earlier deployment of cloud computing infrastructure.


IBM's move into enterprise-focused cloud computing is a natural step for the company to take – and it has a time-to-market advantage over many of its competitors, given its deep investments in system management software and business services. Further, it leverages IBM's products and services in a new way that is likely to attract net-new business. However, as it moves forward with its private cloud offerings, IBM must take care to be clear in its communications with customers, so that they can fully understand its intentions and its roadmap in this new, emerging, market space.