Research Brief

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Research Report Why Mid-Market Enterprises Should Evaluate IBM Power Systems Introduction

Why should mid-market enterprises evaluate IBM Power Systems? The quick answers are because Power Systems can: 

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Drive down computing costs related to systems/infrastructure integration, cloud deployment and management, systems/application/database performance, and physical and virtual systems management; Provide an IT infrastructure upon which mid-market enterprises can deploy next generation cloud services, mobile applications, and business analytics; Obtain business analytics results faster than x86-based servers; and can Deliver superior Quality-of-Service (QoS) – especially stronger security.

In this Research Report, Clabby Analytics shows how various mid-market organizations are using IBM Power Systems to drive down costs, launch new initiatives, achieve faster results – all while achieving higher service levels. The Goal: Drive Down Costs While Launching New Cloud and Analytics Initiatives

Today’s midmarket enterprises are bogged down – especially when it comes to system deployment and management. Because these enterprises are spending so much time trying to get operations under control, they are having difficulty launching new business initiatives. Within midmarket enterprises, business units want to respond faster to client/partner needs, access to cloud services; individuals are demanding access to mobile applications; and the enterprise as a whole wants access to more and better information in order to make more informed decisions (business analytics). Meanwhile, the amount of information being stored – and the number of servers that need to be supported in order to run-thebusiness are taxing the ability of information technology (IT) organizations to keep pace. The ability to meet these challenges and thrive in this new world can be hampered, supported or driven by the IT organization. IBM’s Power Systems enable IT organizations to process more work than x86 servers – helping IT keep up with demands for more processing capacity. (Power Systems’ faster processors and advanced virtualization help mid-market organizations achieve greater efficiency, higher speeds and utilization rates than x86 architectures – and help users achieve business analytics results faster). Further, IBM’s Power Systems virtualization infrastructure helps mid-market enterprises build a foundation for cloud – and IBM tools and utilities help simplify management – helping to drive down overall IT costs.

In this Research Report, Clabby Analytics examines how and why mid-market customers are using IBM Power Systems to achieve the above-mentioned business results – and we take a look at where Power Systems development is headed in the future.

Why Mid-Market Enterprises Should Evaluate IBM Power Systems Background

First things first… IBM’s Power Systems have the ability to run three operating systems: IBM’s AIX (Unix); the “i” operating environment; and open source Linux. IBM’s AIX is the market’s leading implementation of Unix – far outselling both Oracle’s Solaris and Hewlett-Packard’s (HP’s) HP/UX. The venerable i operating environment has been available for decades, and is known for its high degree of integration (systems resources work in unison with applications and databases in this tightly integrated, highly-tunable, highly available environment). The Linux operating environment came to market in the 1990s, and has steadily improved in terms of enterprise class features (availability, security, scalability, etc.). Over the past several years has been a mass migration away from Oracle’s Solaris Unix and HP’s HP/UX Unix to IBM’s AIX operating environment. We attribute much of this migration to customer dissatisfaction with Oracle’s and HP’s hardware platforms (respectively SPARC and Itanium architectures). IBM’s Power Systems now own approximately 60% of the Unix marketplace. As for the i operating environment, IBM has continued to support and enhance i – and, accordingly, i has a very loyal user base. Further, there has been additional interest by independent software vendors (ISVs) and value added resellers (VARs) in building additional applications on this platform (showing that ISVs have confidence in the future of i). Linux growth has been slow but steady on Power Systems – but we expect this to accelerate as IBM is now investing more heavily on building and packaging Linux environments on cost-reduced Power Systems platforms. For more information on Linux on Power, see this report. How Midmarket Enterprises Are Using Power Systems to Improve Operations and Lower Computing Costs While Improving Performance and Competitiveness

The following subsections discuss how and why midmarket enterprises are now using Power Systems to improve operations and lower computing costs while improving performance and competitiveness: 

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The GHY International (next page) shows how one company migrated to a more efficient Power Systems environment, thus improving computing throughput (more work done faster) while very significantly lowering systems management costs. A link with additional information on GHY can be found here. Two IT-Informatik examples (links can be found here and here) show how this hosted services provider was able to lower costs while improving services to its customers by using updated Power Systems combined with a highly integrated IBM Storwise V7000 solution. By lowering its computing costs and by running its hosted offerings more efficiently, IT-Informatik was also able to improve its competitive position vs. less efficient competitors. The Kwik-Fit Europe B.V. found on page 5 shows how Linux on Power Systems solutions were able to replace HP servers, enabling the company to provide faster customer service by achieving a three-fold improvement in the performance of its database servers. This link provides additional details on this Power Systems user.

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Why Mid-Market Enterprises Should Evaluate IBM Power Systems Improving Performance While Driving Down Computing Costs – Canada’s GHY International

Canada’s GHY International provides an example of how one mid-market company has been able to improve computing performance while driving down management costs. GHY International is a provider of custom brokerage services. The company needed a computing solutions that would enable its customers to track hundreds-of-thousands of shipments in near real-time. Further, the company needed a high-performance, integrated computing environment that could help it meet new and ongoing compliance and other regulatory requirements. And finally, the company needed to realign its IT support organization such that the company could use its IT resources to launch new initiatives (GHY had only 4 people in its IT department – and they were spending 90% of their time on server management and basic administration). GHY needed a systems environment that could handle hundreds-of-thousands of transactions extremely quickly, and that offered super-strong QoS characteristics (particularly security and reliability). Additionally, GHY wanted their system to be highly integrated in order to reduce management costs. To meet these needs, GHY chose IBM Linux-based IBM Power Systems primarily to address their heavy transaction processing requirements and to meet compliance/regulatory requirements (particularly security requirements).

The key to GHY International’s success in achieving its objectives was the choice of IBM Power Systems to replace existing x86 servers: 

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IBM’s Power Systems are more powerful than x86-based servers. Power Systems process 4 threads per cycle while x86 architectures process only 1 or 2. Further, Power Systems offer significantly more L1 and L3 cache (see Figure 1, page 6) – placing more data closer to the processors where it can be executed faster; IBM’s advanced PowerVM virtual machine environment (which offers such features as micro-partitioning, dynamic logical partitioning, integrated virtualization manager, and active memory expansion). Because of Power Systems advanced virtualization facilities, Power Systems can be virtualized in the 60-80% range (which is about double the virtualization rate of typical x86 deployments). Accordingly, GHY is able to get almost double the work out of its Power Systems servers. As a result of moving to PowerVM, “we went from 95 percent to only five percent of our time managing or reacting to our environment. And saved the business hundreds of thousands of dollars in licensing and application fees," claims Nigel Fortlage, vice president of IT and CIO of GHY International.; To drive down management costs, GHY International decided to use IBM’s System Director systems/storage/network management environment to manage their entire heterogeneous information systems environment (this includes Power Systems, Windows x86-based systems and associated storage). IBM Systems Director is also being used to monitor energy efficiency. GHY International’s move to Power Systems is a story about how one mid-market company has been able to exploit IBM’s PowerVM virtualization technology to improve systems performance and utilization –

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Why Mid-Market Enterprises Should Evaluate IBM Power Systems helping GHY International lower its costs for computer systems. It is also a story about how a mid-market company realigned its IT organization by using sophisticated, but easy to use, management tools to manage heterogeneous servers (Power Systems can run IBM i, IBM AIX and Linux environments in a single box – and IBM Systems Director expands management to other systems including x86-based servers running Windows and Linux – as well as to storage and network devices). Using the combination of IBM Power Systems, IBM’s PowerVM, and IBM Systems Director, GHY International has been able to improve operational efficiency while lowering acquisition costs (by getting more work out of the computers that they purchase).

IT-Informatik: Running Power Systems to Remain Competitive in SAP Hosting

IT-Informatik is a mid-market SAP consulting services company that also offers hosting services for online shops and web-based business-to-business applications. In order to maintain its competitive edge, the company needed to focus on improving systems, storage and organizational efficiency. In short, IT Informatik needed to grow and remain competitive with much larger organizations without increasing staff or expenses. To improve service quality, to improve application performance, and to lower IT costs, IT Informatik chose to implement several of its SAP hosting services on IBM Power Systems running the Linux operating environment. And here’s what happened: 

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Soon after its IBM Power Systems were deployed, IT-Informatik reported that it had decreased the number of processors needed to host SAP services by 50% (this makes perfect sense given that POWER processors can process twice as many threads as Intel servers); The company also reduced energy costs by 26% (which again makes perfect sense because fewer processors/servers are being used to do more work); Further, due to IBM’s integrated infrastructure (including various virtualization and management tools, IT-Informatik has been able to set up new SAP environments for its customers 80% faster than before, resulting in far greater customer satisfaction (more like customer “delight”)!

According to Jochen Wöhrle, head of infrastructure at IT Informatik: “we selected IBM PowerLinux [now named “Linux on Power”] for our mission-critical SAP systems because this platform provides excellent reliability and outstanding cost-efficiency. We evaluated several solutions, including x86-processor based servers, but IBM PowerLinux offered the best stability and scalability.” In addition to improving systems efficiency, IT Informatik also upgraded its storage architecture by implementing IBM Storwize V7000 virtualized storage systems – and by mirroring their new storage systems. Using IBM’s Metro Mirror technology, IT Informatik was able to improve the QoS that it could deliver to its SAP customers by improving data security (Metro Mirror enables IT Informatik to compete against larger German host service suppliers by providing continuous operations even in the event of failure at one of the hosting providers and locations). Furthermore, IT Informatik chose to use flash drives in its Storwize V7000 for faster disk performance – and combined these fast disks with IBM’s Easy Tier technology (which places hot data on tiers closer to the host in order to speed processing). According to Jochen Wöhrle: “this storage solution provides the

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Why Mid-Market Enterprises Should Evaluate IBM Power Systems

performance and flexibility we need to offer high-quality SAP hosting to our customers… by implementing IBM Easy Tier with flash drives, we boosted storage performance. This technology permanently monitors usage patterns in real-time and automatically moves the most frequently accessed data to the very fast flash drives to improve storage performance.” This IT Informatik story is all about achieving systems and storage operational efficiency in order to contain costs while improving service. By adopting POWER-based servers, IT Informatik was able to reduce the number of processors it needed by 50% (this theme should be familiar by now – POWER processors can process TWICE AS MANY threads as Intel x86 processors – so it is possible to get twice as much work out of POWER cores as compared to x86 cores. This represents a huge savings in acquisition costs (especially because IBM has lowered the cost of some of its Power Linux servers in order to compete directly with Intel-based x86 servers, as well as in software license fees). As was the case with GHY International, IT Informatik also focused on reducing energy costs. In this case, using fewer Intel servers to do the hosting work enabled IT Informatik to reduce energy costs by 26%! IT Informatik also improved its QoS – improving set-up time by up to 80% for some of its customers – helping to improve responsiveness to customer requests and thus drive more business.

Driving Business Growth: Kwik-Fit Europe B.V.

Headquartered in Harderwijk, the Netherlands, Kwik-Fit Europe B.V. is a car servicing and repair company, specializing in tires, brakes, roadworthiness testing (referred to as auto inspection in other parts of the world) and car service. As is the case with thousands of enterprises world-wide (see IBM’s Leading Through Connections – Insights from Chief Executive Officer Study), Kwik-Fit B.V. believes that the use of technology is critical to its future growth. To this end, Kwik-Fit has focused on improving the performance of its core databases in order to boost growth while improving customer service. The central problem faced by Kwik-Fit Europe was that its on-line booking system, the lifeblood of its business, was being overwhelmed by demand. Kwik-Fit Europe’s existing HP systems and databases could not keep up with this demand – and customer response time was beginning to suffer. As the company looked at the steady growth in transactions, they realized that their ability to deliver the high-speed service that their customers expected would be difficult to maintain. According to René ten Hove, the company’s Manager for ICT “this [situation] presented a business risk, as poor performance from our largest sales channel could potentially have damaged our brand image”. To remedy this situation, Kwik-Fit Europe evaluated several computing solutions (including x86-based servers), but chose more powerful PowerLinux [Linux on Power] solutions from IBM. And, according to ten Hove, the results have been spectacular: “Today, our databases can respond to queries from our online store servers three times faster than they could previously. Thanks to this increased performance, we estimate that the IBM PowerLinux solution will support our growing business for at least the next four years, helping us to reduce our operational expenditure through cost-avoidance on additional server hardware”. We attribute much of Kwik-Fit Europe’s triple performance increase to fast POWER processors, the ability of the POWER processor to execute twice as many threads per cycle as compared with Intel x86 architecture, and advantages in cache memory (see Figure 1 below).

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Why Mid-Market Enterprises Should Evaluate IBM Power Systems Looking to the Future: Power Systems in Business Analytics and Cloud Computing

As we examine IBM’s Power Systems design and POWER7+ processors, what we see is a microprocessor/system design that is ideal for handling data centric tasks/applications, as well as for handling business analytics – and that lends itself nicely to cloud service delivery. A closer look at IBM’s POWER7+ (see Figure 1) shows that it offers a very fast processor (4.4 GHz vs. 2.9 for Intel); a lot more cache to work with than Intel processors; a lot more main memory; and, most importantly, the ABILITY TO PROCESS 4 THREADS PER CYCLE as compared to two by Intel processors and one for mainframes (in all fairness, mainframes use a completely different approach to threading – so the number of mainframe threads is not really apples-to-apples in this comparison). Figure 1: A Comparison of Power 7+ to an x86 Environment

Source: Clabby Analytics, June, 2013

Because POWER7+ and related systems designs have access to fast processors, and lots of cache and main memory – and especially because these processors can process twice as many threads as an Intel processor. POWER7+ systems are positioned to executing business analytics workloads much faster than Intel-based servers (by a factor of 2). For midmarket enterprises looking to get business analytics results fast, Power Systems are clearly the better choice.

When it comes to cloud computing, mid-market IT buyers should look first at a system’s hypervisor (the code that enables virtualization), followed by the tools and utilities that help simplify, tune, and manage virtualization environments: 

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Power Systems run their own hypervisor (PowerVM) – and offer a rich suite of virtualization infrastructure and management products and utilities such as MaxCore, Intelligent, Intelligent Cache, Intelligent Energy and Active Memory Expansion. These advanced utilities enable Power Systems to be positioned as high-performance, high-utilization nodes in any cloud architecture. Power virtual machines (VMs) and x86 VMs can be jointly managed using IBM’s VMControl management environment (see this report) – enabling mid-market

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Why Mid-Market Enterprises Should Evaluate IBM Power Systems

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enterprises to more easily build and manage unified heterogeneous cloud environments. IBM also offers its “SmartCloud Entry” environment – which can be purchased on it’s own, bundled with the System Director prerequisites or pre-packaged with a Power Systems configuration as part of an IBM “Solution Edition” – helping to make the deployment of a Power System-based cloud simple and straightforward – and helping mid-market enterprises quickly gain the benefits of cloud service delivery.

Power Systems Customer Examples in Business Analytics and the Cloud

The examples used in this section include Bernard Chaus (a clothing retailer) that makes use of Power Systems for business analytics; and a large Chinese bank (name withheld at the request of the customer) that illustrates how Power Systems are being used in the cloud. Bernard Chaus – Improving Customer Service and Profitability

For one of the best examples of how Power Systems can be used to process business analytics, consider how apparel manufacturer Bernard Chaus is using business analytics to improve sales, analyze in-season buying trends, and track hot selling products. Using a Web-based tool provided by Sky IT Group, Bernard Chaus allows its suppliers and retailers to make production, order and markdown decisions based on real-time data. Retailers use this system to better predict and prepare for holiday shopping spikes in business – as well as to make in-season changes. Working together, Bernard Chaus and its retailers/suppliers are thus able to swiftly respond to changing market demands – and this, in turn, drives profitability. Using analytics solutions, Bernard Chaus has been able to reduce quarterly sales revenue losses due to mark downs by almost 50%. From a technology perspective, the Bernard Chaus business analytics solution is built on Sky IT Group's dashboard-driven business intelligence platform and uses IBM DB2 software and uses POWER-based systems to execute business analytics as well as enterprise resource planning (ERP) workloads. A Chinese Bank and Cloud Computing

Facing strong competition in China’s rapidly growing banking marketplace, a large Chinese bank determined that improved customer service could set it apart from its competitors and boost profitability. To improve customer service, the bank determined that it needed to be more agile (able to respond to changing customer needs more quickly), and that it needed to improve time-to-deployment. Accordingly, the bank chose to embrace a cloud computing approach that would meet their flexibility and ease-of-deployment requirements – while also improving the utilization rates of the systems they had already purchased. Power Systems were chosen on the basis of performance; the ability to rapidly integrate into an existing cloud environment (Power Systems can be pre-packaged as cloud environments); and due to the ability to achieve high utilization rates (PowerVM helps deliver utilization rates in the 60-80% range). After examining x86-based alternatives, the bank chose to partner with IBM and build a cloud computing environment on Power Systems. This environment uses IBM POWER7

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processors, PowerVM, and IBM SmartCloud Entry (SmartCloud Entry is a complete virtualization and provisioning solution that helps enterprises rapidly deploy and easily manage clouds).With fast processors and a rich virtualization environment, the bank has boosted its ability to respond to changing customer needs while at the same time accelerating deployment (the time it takes to deploy a workload has been reduced by 99%). Using IBM’s Power Systems in combination with IBM’s SmartCloud Entry environment has enabled this bank to set-up virtual machines faster, respond to changing customer needs for services more quickly, and has increased systems utilization greatly.

Summary Observations

Mid-market enterprises frequently do not perform due diligence when it comes to server selection. x86-based servers are selected without looking at the characteristics of the workload to be processed – and without properly weighing the strategic impact that choosing under-powered systems might have on a company’s ability to reduce acquisition and operational costs, improve customer service, respond to changing market needs, and to take competitive initiative. By taking advantage of fast processors, a superior systems design, integrated infrastructure, and rich management facilities, the mid-market enterprises described in this report are reducing their computing costs while achieving results faster than their competitors (thus creating a competitive advantage). These enterprises are also enjoying stronger security and higher-availability/reliability as compared with most x86 solutions.

Power Systems run three operating environments. AIX is most often found in large enterprises that demand the highest levels of availability, scalability, and security. The i operating system is found in large enterprises as well as mid-market enterprises – it is the choice of customers who want pre-integrated, highly-tuned ISV/VAR supported solutions. As for open-source-based Linux, this operating environment when deployed on Power Systems has the potential to greatly reduce computing costs for mid-market enterprises through faster processing, greater utilization, and simplified manageability . As a parting comment, consider this: the business impact of a system selection is always greatest when the server can execute the work, and deliver the results to the business in a timeframe that has maximum impact, at no greater cost than is necessary to meet business service level requirements. Mid-market organizations are finding that making a Power Systems choice enables them to lower operational costs, while at the same time meeting strategic objectives to provide superior customer service and while improving competitive positioning.

Clabby Analytics http://www.clabbyanalytics.com Telephone: 001 (207) 846-6662

Clabby Analytics is an independent technology research and analysis organization. Unlike many other research firms, we advocate certain positions — and encourage our readers to find counter opinions —then balance both points-of-view in order to

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decide on a course of action. Other research and analysis conducted by Clabby Analytics can be found at: www.ClabbyAnalytics.com.