Reduce the Number of Servers
Len Sanatalucia from Vicom Infinity Solutions talks about data center simplification (and his customer's success story) using System z:
IBM's Don Zeunert talks about saving money quickly by moving to System z:
| by Timothy Sipples | September 11, 2009 in Economics Permalink | Comments (3) | TrackBack (0) |
More Price Reductions
While other vendors keep increasing prices, IBM announced a broad set of price reductions for its mainframe-related product offerings. Here are the highlights:
1. IBM reduced the price of IFLs (Linux engines) on System z10 EC machines by 40%. (With this latest reduction, by my calculation IBM has reduced the price of mainframe Linux hardware capacity by over 88% since the z900 shipped at the end of 2000.)
2. IBM announced a set of 7 "Solution Edition" offerings. They are complete packages that all include hardware capacity, multi-year hardware maintenance, software licenses (including z/OS), and multi-year software subscription and support. The whole kit is priced aggressively compared to the best solution competition can offer. In other words, buyers get all the superior mainframe qualities of service and cost-saving benefits for a simplified, take-no-prisoners, straight-up multi-year TCA (Total Cost of Acquisition) that won't require any special justification or analysis. The Solution Edition offerings are available now, worldwide, to all new and existing mainframe customers, for new applications that fit any of the following broad categories: Data Warehousing, Modern Application Development, ACI Financial Applications, SAP Applications, Business Resilience (GDPS), Enterprise Security Hub, and Java Application Server Consolidation.
| by Timothy Sipples | August 6, 2009 in Economics Permalink | Comments (1) | TrackBack (0) |
IBM Announces 2Q2009 Earnings
IBM's CFO Mark Loughridge announced that the company had another strong quarter and is raising earnings guidance for the full year.
System z hardware had a tough quarter for comparison, though (as was expected). The second quarter of 2008 was the first full quarter of System z10 EC shipments, and that was a blockbuster quarter for mainframe hardware. Globally System z hardware revenue was down 39 percent year to year (35 percent at constant currency). However, IBM's so-called "growth markets" (which include Asia-Pacific ex-Japan, Eastern Europe, the Middle East, Africa, and Latin America) demonstrated excellent strength, with mainframe hardware revenues up 17 percent. Clearly System z is increasing its global penetration. (You may recall a recent quarter when IBM announced the first System z sold in Vietnam, for example.)
Also, mainframe hardware profitability (i.e. margin) increased by 3 percentage points. Yet MIPS prices continued to decline because MIPS shipments were only down 20 percent year to year. All that is great news for customers (i.e. ever-lower prices) and for ongoing System z investment.
Unfortunately IBM does not break out System z software or System z-related services separately in their financial reports. Therefore it's difficult to get a complete picture of IBM's System z business because so much of it relates to software and services. However, Mr. Loughridge cited both ILOG and Cognos product lines as particularly strong. One of IBM ILOG's flagship products is Rules for COBOL, software which helps System z customers with COBOL application assets extract, modify, add, run, and manage business rules more flexibly and quickly, reducing code maintenance costs and complexity. Also (and I sure hope I won't get in trouble for revealing this fact), I am aware that IBM sold Cognos 8 Business Intelligence for System z here in my own little part of the world (Japan).
Thanks everybody.
UPDATE: Mr. Loughridge broke some news about new System z solutions that IBM will announce. Here's the relevant section from the earnings call transcript:
Mark Moskowitz - J.P. Morgan
....Mark, you mentioned in your comments about incremental workload [offerings?] introduced here shortly. Could you maybe give us some context in terms of how the workload engines in the mainframe business the last couple of years have boosted the annuity block in your software business? Has that helped leverage and can we see it be even more leverage with these new blocks coming out?Mark Loughridge
Yeah, I mean, when you look at the z Series platform, that new workload approach is really to draw a new customer content and new customer adoption into the platform, and we’ve been quite happy with our new workload performance over time.I think what is interesting about this now is it really does expand the aperture of the workload opportunities that we apply that approach to, so that’s why we are going to implement this new data warehouse offerings that enables real-time business analytics, consistent with our emphasis on business analytics. The enterprise disaster recovery solution enabling multi-location platforms for disaster recovery. Enterprise security hubs, the WebSphere application server, the enhanced SAP solutions — I mean, you put all five of those together, it substantially increases the aperture of opportunities that we now apply that new workload content to, and it has actually worked very, very well and we are quite optimistic about it going into the second half.
UPDATE 2: CA reported its quarterly earnings, and they were solid. About half of CA's revenues come from mainframe software, and CA's CEO said that mainframe-related revenues grew substantially faster than distributed server-related revenues. He also talked about the company's "Mainframe 2.0" initiative.
| by Timothy Sipples | July 16, 2009 in Economics Permalink | Comments (0) | TrackBack (0) |
A Tale of Two Mainframe customers – one growing and one leaving the mainframe
This is the tale of two mainframe customers. One customer
has achieved a period of tremendous growth in their business, processing
transactions on the mainframe, while reducing expenses and becoming more
resilient. The other business chose to get off the mainframe at a significant
cost and in all likelihood, spends more today than they would have on the
mainframe. What’s interesting is that at one time, they shared the same system
infrastructure. And Clerity, a consulting firm, would like you to believe that
the non-mainframe customer got tremendous value in the move. Here are their
stories.
In any basic computer architecture class, a student will
learn that the fewer the number of data moves, the better for performance. Now,
in an era of regulatory compliance and privacy considerations, that becomes
exceedingly true because each instance of data must now be auditable and
recoverable which implies additional costs for each extra instance of data.
This becomes important when considering an outsourced computing environment. It appears that SIAC never got this level of education, while its customer, DTCC seems to have excelled in this computer architecture class. Even funnier is that Clerity has decided that SIAC is a model customer…that doesn’t bode too well for their other consulting arrangements.
So what really happened?
DTCC’s trading business was growing tremendously. But let’s have them tell you, in their own words:
Sometimes "insourcing" pays off more than
outsourcing. Until last year, two DTCC subsidiaries outsourced all their
infrastructure support activities to the Securities Industry Automation
Corporation (SIAC). Now, following the completion of a multi-year initiative,
DTCC has cut costs and bolstered business continuity by insourcing the
activities previously performed by SIAC into DTCC’s infrastructure. The two
subsidiaries are National Securities Clearing Corporation (NSCC) and Fixed
Income Clearing Corporation (FICC). ……
On top of strengthening the industry's business
continuity and infrastructure, the project is yielding financial benefits,
enabling DTCC to cut the industry’s overall operating expenses. In 2006, by
leveraging DTCC's processing capabilities, insourcing has reduced DTCC's annual
operating expenses an estimated $42 million, said William Aimetti, DTCC’s chief
operating officer. This was one factor that enabled DTCC to lower its fees in
2006.
And going back to another DTCC newsletter, they explained that they got a 167% performance improvement, without a line of code change, because they reduced the number of data moves and connections necessary to process a transaction:
To keep ahead of transaction volumes that have been rising sharply over
the past several years, DTCC has significantly increased the capacity of its
mainframe database for equity processing. The system, called Trade Repository
Processing (TRP), can now process at least 160 million sides per day. This 167%
increase is nearly triple the previous capacity of 60 million sides.
What’s more, the TRP can handle the additional volume within the same time frames, thanks to changes that make the system perform more efficiently. In addition, for current volumes, the upgrade allows DTCC to deliver certain participant reports, such as the Consolidated Trade Summary, up to 45 minutes earlier.
DTCC was able to do all this without modifying any of their
customers applications. While DTCC was hosted on the SIAC systems, they found
that there were extra network hops and copies of data deployed. They also were
heavily dependent on SIAC to make changes to the infrastructure on a regular
basis. Because both of the SIAC systems were located in the New
York City area, DTCC was also afraid that a single
catastrophe would take out the redundant systems and affect their availability.
These were the fundamental concerns that led DTCC to move out on its own.
Prior to this decision, SIAC signed a multi year agreement for software, systems and services with IBM. This agreement included discounted pricing assuming capacity growth projections that SIAC provided as their objectives. By sharing the mainframe infrastructure with DTCC, SIAC dramatically reduced their own operational overhead which was predominantly associated with batch processing and account reconciliation in the evening, while DTCC used the same processing infrastructure for trade transactions during the day. Each had applications that overlapped each other though.
When DTCC pulled their two applications from the SIAC
system, SIAC was left with a lot of free daytime capacity, but still a
reasonably busy system in the evening. But SIAC was now completely responsible
for the costs of this system. The growth potential that they had promised to IBM
would no longer be possible and as such, the discounts they were offered were
no longer relevant. This underutilized
mainframe was now quite a bit more expensive to SIAC than it had been when it
was sharing the expense with DTCC. That’s a fact…nothing sweet about that.
Now SIAC could actually have downsized with their mainframe
and reduced their costs. Instead, they chose to “down size” to a distributed
environment. In doing so, they also needed to solve federally mandated business
resilience requirements, something they had ignored on their previous mainframe,
and build another data center.
So using SIAC’s own words:
In 2006, when the Shared Data Center team, the technology
arm of the New York Stock Exchange (NYSE), evaluated its internal
infrastructure in light of competitive market factors, changing regulations,
and anticipated future growth, the decision was made to replatform its 1,660
MIPS mainframe workload onto IBM System p Model 595 servers running AIX and
UniKix rehosting software from Clerity.
"Quite simply, we can now transact more business per
hour at a lower rate," said Francis Feldman, Vice President of the Shared Data Center
So let’s parse this a little bit. Notice the timeframe:
2006….it’s the same time that DTCC moved off the SIAC system. The 1660 MIPS is
the combined processing power for both DTCC and SIAC. The reality is that SIAC
NEVER used all that capacity themselves, even though they owned the system. So
while factually true, it wasn’t real. Changing regulations refers to the need
to develop a second site outside the New York metropolitan area. After converting the
applications, SIAC had to create automation and recovery scripts and deploy the
new servers at an alternative location as well. I am assuming that they
licensed the software for those systems as well. And this required changes
for all of SIAC’s customers as well. That cost certainly isn’t factored
into the migration costs for SIAC. Finally, I wonder what SIAC’s cost were when
they shared the infrastructure….is the new solution more or less than that
environment? Unfortunately, we’ll never know because the new environment
includes a new data center….but I could imagine it was less.
So, an alternative plan, at presumably far less expense, effort
and time, with little or no application changes, would have been to downsize
the mainframe to the size appropriate to SIAC’s new capacity requirements. To
meet the resiliency objectives, SIAC could have installed a mainframe in
another geographic location using IBM’s Capacity Backup pricing which would not
have charged for software usage except during a disaster, while still allowing
for regular disaster preparedness testing with no additional licensing costs. Many of IBM’s customers take advantage of this
model for availability processing.
And has availability improved? Click here for a list of outages that SIAC experienced in 2008. All types, but not associated with the mainframe. Perhaps SIAC changed their reporting structure in 2008, but I can’t find many outages listed in a search on 2007, though there is an awful lot of information dating back many years on their site.
As for SIAC, I don't know, but they don't spend nearly the amount of time bragging about their infrastructure as DTCC. That should give you a clue right there!
| by JimPorell | January 6, 2009 in Current Affairs, Economics, History, Systems Technology Permalink | Comments (2) | TrackBack (0) |
Who do you trust? RFG? Yes. HP? No
In my last entry, I talked about the misleading information that HP provided regarding a consulting report to get off the mainframe. In that dialog, I also referenced the same consulting group giving pro-mainframe support and then asked rhetorically, who do you trust, RFG or RFG? I’ve worked closely with Robert Francis Group and I was wondering why they would have done this.
Well, it looks like RFG is a lot more trustworthy than HP who misused the consulting report. Today, RFG put out a press release in which their headline reiterated:
RFG Still
Believes That the Mainframe Is One of the Best and Most Energy Efficient
Platform Options.
Well, it was certainly nice to see that and their explanation. Anyone hazard to guess when we might see a retraction or correction from HP?
| by JimPorell | November 17, 2008 in Economics, History, Innovation Permalink | Comments (2) | TrackBack (0) |
HP attacking the mainframe? Like a car vs. a truck
Well, HP
is at it again. They are making more generalities about IBM’s venerable
mainframe to scare customers off that platform. Check their facts and sources,
though and you’ll find that something’s rotten in Palo
Alto
Before we get into that, though, let’s do a quick comparison
benchmark to establish a baseline. Let’s compare a four passenger Mini Cooper
car 
to a two passenger Freight liner truck cab
. Benchmark 1:
which is cheaper to commute to work in? Pretty obvious, but I’ll vote for the
car. Especially given gas price vs. diesel now…the car is the “green” solution.
Benchmark 2: We want to move the contents of our house. Most people would say
the truck, but they’d be wrong. We need to accessorize and add a trailer to
each vehicle. Now the Mini happens to put the tailpipe right in the middle of
the car on many of their models. Why? You’d have to be a moron to put a trailer
on their car. As for the truck, with a large enclosed trailer, you can put all
kinds of materials in it. In fact, you might even put a couple of the Mini’s
inside. So we’ve just proven that with the right benchmark, either solution is
appropriate. But benchmarks aren’t reality either. Most people will move their
family in the car and outsource to a shipping company to move the contents of
their house. So continuing that analogy, there is no one computer that will
solve all of a business’ problems, neither a mainframe nor a PC server will do
the job by themselves. It’s all about collaboration and using the best servers
for the right jobs.
So let’s get back to HP’s claims. I’m a little confused by Robert Frances Group claims right now. In the HP quoted report, they say you get less electricity and floor space with a PC server than you do with a mainframe. I’ve never seen a mainframe that only ran a single workload. Most of them will have transaction processing, batch, interactive, query and decision support running all at the same time. It’s true that you can take one workload off of a mainframe and run it on a PC server and then compare that PC server to a mainframe. The data might actually be real, but as information, it is “incredible”. A single PC server may be smaller than a mainframe and use less electricity (The car). But no single PC server is going to be comparable to a mainframe running multiple workloads. In fact, RFG published a paper in which they said a mainframe will use 3% of the electricity of a comparable PC server cluster attempting to accomplish the same workload. It will also use a fraction of the floor space. (The Truck). But don’t believe me….here’s exactly what they said:
RFG believes mainframe computing platforms have many of the characteristics that will ameliorate, if not eliminate, the current challenges data center managers face with power and cooling. First, mainframe power consumption and heat characteristics are, for many companies, the most efficient servers in the data center. This is true in an absolute sense, where the energy per square foot is lower than any data center system measured by our clients. More significantly, this is massively true in a relative sense, when comparing power used per transaction. On a total workload throughput basis, mainframe system power consumption is almost negligible when compared with distributed systems on a power per transaction basis. As power and cooling costs continue to rise, IT executives should reevaluate mainframe computers total cost and overall value in reducing data center operations costs.
Quote used with permission of Robert Francis Group.
So who are you going to believe? RFG or RFG? Well, in the HP cited paper, RFG just republished the results of a report done by HP. So don’t throw RFG under the bus. Just understand that it’s HP’s low quality and misleading information at work, once again.
As for the Alinean update, it’s a single workload in each example. And in them, they talk about the SAP application server. But what about the database server? Typically, if the application server is on z, the database server is in DB2 for z/OS. Did that move too? The labor costs for System z appear to be much higher than the norm for a business. The report discusses the price of an older mainframe and again, some incredible Software license charges. But what if SAP was added to a newer mainframe? How would that have compared in this report? What if it was added to an existing, newer mainframe, what would the incremental charges be as compared to net new computing servers?
HP mentions the BART system avoiding 50% of their paycheck errors. Wow…that sounds like a big number. They went to Peoplesoft, from what I guess was a homegrown application that was running on a mainframe…at least that’s what HP wants you to believe. So it sounds like the BART people are better running trains than they are at writing programs? I doubt it. That wouldn’t be fair to the hard working people at BART. But remember, if there are two paycheck errors a month and it goes down to one paycheck error a month, that’s a 50% reduction as well. (The Car). So sometimes the big numbers quoted are really just a meaningless indicator to scare you into thinking something else. How many errors a month was BART really seeing? I don’t know and neither do you based on HP's comments.
So let’s talk about something I do know about….consolidations of servers are occurring and System z has been a great place to do that. Nationwide and DGTI are two examples.
IBM has published a paper on SAP consolidation capabilities on System z. The HP press release described a customer that had mainframes and Windows servers. By eliminating the mainframe, they had a common skill set based on Windows. But how real is a customer with a single computing infrastructure? Maybe for relatively small customers, but not with larger ones. RENFE is the Spanish national rail agency. Prior to its reorganization into the two new operating companies, RENFE was composed of 18 separate business units, each with its own intranet system running various line of business applications. These included human resources systems, helpdesk applications and various internal communication portals. To drive better integration across the business and improve process efficiency, RENFE made a strategic decision to create a single information portal for all employees and that was based on System z.
IBM is eating its own cooking by consolidating many of it’s thousands of application and database servers onto System z. But that’s not the whole story either. They are also consolidating some onto System p and some onto System x. In each case, IBM is looking at underutilized stand alone servers, the baseline for the PC server marketplace and leveraging virtualization technologies to get a large reduction in physical server images. IBM is putting the right workload in the right place that makes sense for the business environment. (The Trucks).
We see constant examples of taking 100’s of underutilized standalone PC servers and consolidating through virtualization down to 10’s of higher utilized PC or RISC servers or individual mainframe servers. In each case, the customers are saving substantially on labor, environmental and capital costs. HP will tell you that 100’s to 10’s is good enough.
IBM mainframes, though, can get that down to single digits in many cases.
Look at HP’s Brazilian Navy example. A lot of folks may perceive that a mainframe could never go on a Battleship, Aircraft carrier, early warning aircraft or other military location. Well, those folks would be wrong. Today’s modern mainframe, the System z, going as far back as the zSeries z800 processor meets or exceeds the electrical, floor space, ambient temperature, humidity, air pressure and vibration specifications necessary to satisfy the locations in which those servers may be deployed. See page 12 to view a subset of these specifications. In addition, it provides operational redundancy built into the hardware architecture and operating systems that exceeds the availability requirements necessary to satisfy those particular business needs. And with its open programming models, including Java, J2EE, C/C++, in addition to the venerable COBOL and PL/I capabilities, it provides a hosting environment to capture those programming needs.
In fact, development belongs on the desktop. The most creativity and tooling is possible in that desktop and you can reboot the system at will to test your applications. IBM’s Rational Developer for System z (RDz) and Rational Team Concert suites provide an Integrated Development Environment that can leverage the simplicity of the open programming environment through its Eclipse.org tool base, but easily apply those skills and knowledge to mainframe application deployment. You want mainframe development skills? You have them in your hands already. Get the tools and put those people to work.
One of the principals of the mainframe has always been that the operating system, middleware and hardware are responsible for data locking, security, system resilience, storage management and capacity management. This enables multiple workloads to operate as individual processes and maintain the integrity of the system and the data. On other platforms, it’s typically the application that is responsible for many of these characteristics. In order to achieve these qualities of service, additional products must be acquired and additional code may have to be written by application developers to deliver these qualities. The point of this all is that a business might actually reduce the amount of code necessary to achieve their business objectives if it was targeted for deployment on System z and reduce their operational risk at the same time. To summarize this point, it can be the same code from distributed systems in a mainframe operational container and deliver superior operational performance. Same code, different container with superior operations model.
So this started by pointing out inaccuracies in the HP press
release. How can a business use that information? Well, maybe to buy an
individual compute server, that information may be helpful (The Car). But
looking at an enterprise that needs to satisfy multiple business needs, it
doesn’t appear too helpful at all (The Truck). They use Apples to compare to Oranges
| by JimPorell | November 12, 2008 in Economics, Innovation, People, Systems Technology Permalink | Comments (5) | TrackBack (0) |
Siemens Getting Out of the Server Business
There's a shakeup in the mainframe hardware market to report. Fujitsu Siemens Computers (FSC), previously a 50-50 joint venture between Fujitsu Limited of Japan and Siemens AG of Germany, will now be 100% owned by Fujitsu as Siemens sells its stake in the company, effective April 1, 2009. Fujitsu will pay 450 million euros to Siemens as part of the deal.
FSC's primary markets are in Europe. Among its products are mainframes running the BS2000/OSD operating system. These mainframes trace their ancestry to 1960s RCA Spectra mainframes. Fujitsu also produces two other types of mainframes: Fujitsu-ICL machines running the VME operating system (with primary markets in the U.K.) and domestic Japanese market mainframes running the OSIV/MSP and OSIV/XSP operating systems. In the past Fujitsu also produced Amdahl mainframes which ran IBM mainframe operating systems.
Fujitsu's mainframe lines are incompatible with one another. Fujitsu has become something of a "mainframe collector," buying out ICL and Siemens to take advantage of their revenue streams. The challenge for them, and for their customers, is whether there will be any tangible investment back into the businesses. Fortunately these customers have an option: migrate to System z.
| by Timothy Sipples | November 9, 2008 in Economics Permalink | Comments (0) | TrackBack (0) |
CA zIIPs Along
CA, one of the world's largest software companies, recently announced a new release (r17) of arguably their most important database product: IDMS. This new release exploits the zIIP specialty processors available on System z9 and z10 mainframes, improving price-performance. CA also "saw considerable growth in new mainframe capacity and maintenance" in its just concluded fiscal 2Q2009 corporate earnings.
| by Timothy Sipples | November 9, 2008 in Economics Permalink | Comments (0) | TrackBack (0) |
IBM Announces 3Q2008 Earnings Details
IBM CFO Mark Loughridge discussed the company's 3rd quarter earnings moments ago. In his prepared remarks, Loughridge noted that IBM System z hardware revenues increased an impressive 25 percent year to year, with double digit revenue growth in all geographies. MIPS (capacity shipped) grew by 49 percent. (You can do the math on what that means for price-performance.) Within that, the specialty MIPS segment grew a whopping 120 percent, driven by increasing Linux and Java use on the mainframe. Loughridge noted that these results likely mean that IBM once again gained server marketshare with System z. System z is one of IBM's fastest growing businesses.
Despite that result, IBM's total hardware revenues were down due especially to weakness in X86 servers. System x (IBM's total X86 server business) declined 18 percent, with blades down 8 percent. System p grew 7 percent.
Software revenues grew significantly, although IBM did not specifically break out System z-related software.
Thank you, IBM System z customers. We sincerely appreciate your continued patronage. Please keep letting IBM know how to do even better.
| by Timothy Sipples | October 16, 2008 in Economics Permalink | Comments (0) | TrackBack (0) |
IBM 3Q2008 Earnings Preview
Amidst turmoil in world financial markets, IBM gave an early preview of its third quarter, 2008 earnings. Diluted earnings were $2.05 per share, an increase of 22 percent over 3Q2007. "We remain confident in our full-year outlook," CEO Samuel J. Palmisano remarked.
More details, including any particular business unit results, await IBM's regular earnings announcement after the U.S. stock markets close on October 16, 2008.
| by Timothy Sipples | October 9, 2008 in Economics Permalink | Comments (0) | TrackBack (0) |
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