Enterprise Clouds and the MSP

The maturation of the Cloud Computing market continues to accelerate and so ubiquitous is the spread of workloads across all dimensions of the Cloud that one could argue that Cloud has become the new way of saying IT infrastructure. As is often the case with mature markets, commoditization has also accelerated and is impacting even the largest hyperscale providers, as evidenced by the recent decision by Rackspace to exit the IaaS segment in favor of the more profitable managed services opportunity. This decision is one being faced by other MSPs/CSPs as they look for ways to differentiate themselves and ensure their long-term survival. An alternative to the standard response of deploying greater numbers of x86-based systems is required to evolve along with the Cloud Computing market.

One could say that this second wave of Cloud, moving beyond server virtualization that began with basic workloads including test and development and moved up the application stack, is the beginning of mission critical workloads being moved to or even born on the Cloud. This evolution of the data center has begun largely without touching the backend systems of record so in the end, cost reductions have occurred only in the minority portion of the IT budget. So while Cloud is following the same path as server virtualization in terms of workload placement, it must be implemented differently in order to have the impact of fundamental change on the IT infrastructure and budget – short of moving 100% of one’s in-house x86 workloads to a public Cloud or managed services provider.

Based on these similarly aligned goals, managed service providers and IT customers are both looking for ways to implement business critical workloads, albeit for different, but shared economic reasons. MSPs moving up the application value stack by targeting specific verticals and workloads in order to stand out among the 35,000 competitors and customers looking to reduce IT infrastructure costs and leverage the multitude of Cloud-enabled benefits. As is the case with all workloads on System z, the economic benefits only increase as more work is consolidated on the mainframe and that holds especially true with Cloud deployments. We’ll come back to this shortly when we discuss acquisition costs vs. TCO.

While economics are one of the top three reasons customers are looking to leverage the Cloud, they will not sacrifice the other key criteria mentioned in the 2014 Future of Cloud Computing annual survey, which are security and availability/resiliency. Cost savings are of no value if your servers or applications are unavailable. What defines mission critical availability varies according to the provider, as some would have you believe that 99.9% is highly available. This “three nines” sounds impressive until you realize that this means almost 9 hours downtime per year and apply the $5,600 per minute average cost of downtime as estimated by Gartner in July 2014. This equates to a negative economic impact to your business of over $2.94 Million and reshapes ones thoughts on what high availability really is. What is undisputable is that IBM System z and the IBM Enterprise Cloud System specifically, with its industry-leading “five nines” or 99.999% availability truly equates to 24x7x365 application uptime. No other Cloud architecture can make this claim and one amazing customer example of just what this means is Visa, whose VisaNet transaction network running on the mainframe has had ZERO downtime for over 20 years.

Just as economics become irrelevant without availability, so too does availability without security. With all of the recent headlines about network and system intrusions and the devastating impacts to companies as well as their customers, the issue of Cloud security has never been more top of mind in the CxO-level offices. Their positions and even their companies overall viability are at stake from the ever increasing levels of cyber-attacks across the globe. The recently published 2014 Cost of Cyber Crime Study estimates that cybercrime costs US-based companies $12.7M each per year and that cyber-attacks have increased by 176% over the past five years. Knowing this, wouldn’t a Cloud platform that enjoys up to 98% fewer security breaches vs. x86-based Clouds be of particular interest and benefit under the deluge of attacks? What if I told you there is only one Cloud platform that also enjoys EAL5+ Security Certification – the highest available level? This type of Cloud architecture can only be achieved through a security focused and integrated design, not bolted on as an addition. The answer to what is the most secure Cloud platform in the world is the IBM Enterprise Cloud System.

We should pause for a moment to make an important point clear: there is no single right answer when it comes to the best type of Cloud deployment model. There are advantages and disadvantages for each type when it comes to Private Cloud, Public Cloud and Hybrid Cloud, and there are specific use cases for each as well. I’m not here to advocate or defend any of these as the preferred deployment method, but to make clear that all of the benefits being highlighted are available to customers regardless of their Cloud adoption method. When customers choose to utilize the IBM Enterprise Cloud System for their Private/Public/Hybrid Clouds, they gain access to all of the economic, availability and security benefits that it uniquely enables.

So let’s dive a bit deeper into the economic benefits question. Due to the ongoing and ever-increasing IT budget challenges mentioned earlier, organizations don’t always have the luxury of waiting for long-term ROI benefits from critical IT investments. Acquisition cost is a tangible consideration point when it comes to Cloud workload deployment decision criteria. However, there is a significant risk of being myopic when considering only up front acquisition costs. What if you could save 50% over just three years by adopting one Cloud platform over another? That time horizon is short enough to fit within most company’s depreciation cycles and the amount saved is significant enough to demand the attention of the CFO/Business Line Executive. This is an actual example of the savings offered by the IBM Enterprise Cloud System when compared to x86-based Clouds made up of at least (50) Intel x86 cores over that three year time frame. In addition, for MSPs/CSPs looking to offer customers access to mission critical workloads on the Enterprise Cloud System there is a new utility pricing model that offers true pay-as-you-grow financing to fit any sized budget.

A just-published GigaOm report shows that 81% of businesses surveyed admit to using Cloud-based applications that are unauthorized by IT. The potential negative impacts across all dimensions of the business are sobering and should serve as a call to action for IT leaders to eliminate this so-called “shadow IT” work by establishing and implementing a clear, leadership Cloud strategy. According to the recent IBM Global Cloud Study “Under Cloud Cover”, companies with a clearly defined Cloud strategy enjoy almost 2x the revenue growth and nearly 2.5x higher gross profit than their peers without one. One of the first steps in developing that strategy is to evaluate your Cloud deployment options and to this I would simply add the following recommendation: check the facts. Only the IBM Enterprise Cloud System can meet the stringent requirements that business critical applications demand from a security and availability standpoint while offering the economic benefits required to close the business case for adoption. I’ve touched on just a few reasons why here, but there are many more such as scalability, disaster recovery and ease of management/deployment to name just a few. I invite you to click here to learn more about how the IBM Enterprise Cloud System is the superior turnkey Cloud platform, regardless of your Cloud adoption model.

Thanks to Tom Follette – IBM Market Segment Manager Cloud – z Systems

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