IBM Moves To Virtual Servers To Boost On-Demand Computing

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September 30, 2003 (11:57 AM EDT)

IBM Moves To Virtual Servers To Boost On-Demand Computing

IBM expanded Tuesday its utility computing-style services by adding new on-demand services that let customers tap servers owned and operated by the Armonk, N.Y.-based computer giant.

Dubbed Virtual Server Services, the scheme offers access to three new platforms in IBM's eServer line -- the xSeries, pSeries, and iSeries -- that run Windows; IBM's own flavor of Unix, AIX; and IBM's OS/400 operating systems, respectively.

In July, 2002, IBM debuted a similar on-demand program called Linux Virtual Services that relied on hosted zSeries servers running Linux and Unix.

"This is a logical step for IBM," said Gordon Haff, a senior analyst with Illuminata, a Nashua, N.H.-based research firm. "IBM has a significant outsourcing business, and it's only natural for them to marry the idea of utility computing with outsourcing."

The new services targets companies that don't want to buy, maintain, and manage their own hardware, but want the flexibility of picking and choosing from a wide range of hardware and operating systems, said Michael Riegel, the manager of IBM's eBusiness Hosting Services.

"When we show them the whole end-to-end virtual solution, they get pretty excited about the cost savings," said Riegel.

Enterprises hiring IBM to host servers can also add other networking services, ranging from switches and routers to virtual firewall defenses and load balancing, said Riegel.

The servers, which are deployed in an IBM data center in Boulder, Colo., are partitioned with virtual server software -- in the case of the xSeries that runs Windows, it's provided by VMWare; virtual provisioning is standard on the other two platforms -- which allows IBM to install one or more applications on a virtual server, or mix and match servers to match customers' needs.

Users pay only for the computing capacity that they consume, said Riegel, and they can easily scale up that capacity or dial it down.

After establishing a baseline with the customer, IBM guarantees an additional 20 percent capacity that can be immediately switched on, said Riegel. "We can give them a lot more if they need it, although we'll need a bit of time to flip it on."

A one-time setup charge is levied at the beginning of the deal, with monthly fees calculated based on the server resources used. Each month, the user can reset the baseline, either up or down.

"We're the only one to let them scale down as well as up," claimed Riegel.

Other companies which aggressively tout on-demand computing, such as Hewlett-Packard, typically provide a base system -- usually on the customer's premises -- that can be scaled up, but not necessarily dialed down, he said.

According to IBM, businesses could see cost savings of up to 30 percent over acquiring and managing the hardware themselves. One company, which operates a news portal, saved 16 percent by switching to IBM's more traditional managed hosting from an in-house system. When the firm ran the numbers with IBM for shifting to the virtual server concept -- a move it's considering, said Riegel -- the savings added up to about 39 percent over in-house hardware.

Haff, however, cautions enterprises to check out such claims. "This approach to utility computing makes the most sense and the most compelling case when the resource is relatively expensive, but companies really need to do their financial evaluations carefully.

"Will you really be able to, for instance, reduce IT staff with something like this?" He urged companies considering hosted, on-demand computing to take a hard-headed and analytical look at the numbers.

The virtual server services concept, said Riegel, will be the foundation of additional initiatives that IBM will roll out over the coming months.

"Now we're offering servers on-demand," he said, "but later, we'll be using Virtual Server Services for applications on-demand and business processes on-demand."