IBM’s Cloud Strategy: A Little Bit of Everything

By Dennis Barker

October 14, 2008

IBM launched a mini-campaign last week to promote its cloud computing strategy, and part of that strategy involves not using cloud computing at all.

In his official statement on the matter, Willy Chiu, vice president of the High Performance on Demand Solutions division, said IBM is moving clients and itself to “a mixture of data and applications that live in the datacenter and in the cloud.” A mix of on-premise and in-cloud operations, as another IBM exec put it. So, those concerned the world is going silly with cloudmania need not worry.

And if the critics are correct and it really is silly to stake a claim in cloud computing, IBM doesn’t seem to care. The company has made cloud announcements almost monthly during the past year, and last week outlined four ways it plans to “capture the cloud computing opportunity”: (1) offering its own set of cloud products and technologies; (2) helping other companies develop cloud services; (3) helping customers integrate cloud services into their businesses; and (4) building cloud environments for other companies.

“We see an enormous opportunity to help companies use cloud services and to integrate SaaS into their business,” said Dave Mitchell, director of strategy for IBM Developer Relations, during a discussion following IBM’s official announcement. Now that the “emotional” concerns about software as a service have settled, and security practices have proven effective, “the real challenges are bubbling to the top,” Mitchell said. The biggest one is integration. “You’re going to run some stuff on-premise, and some over the cloud. So how do you integrate and administer it all in the most effective way? That’s what we’re solving.”

IBM’s strategy for solving the integration issue: money and effort. Last November, it announced the Blue Cloud initiative, a program aimed at helping companies run large-scale applications and handle massive amounts of data across a distributed, globally accessible fabric of resources — or to move enterprise applications to a cloud. IBM supplies the know-how based on its own cloud construction experience, the hardware (typically racks of iDataPlex servers) and middleware (mainly Tivoli for service management).

The company says it has dedicated 200 “Internet-scale” scientists to cloud research and is sponsoring programs at universities to train the cloud scientists of tomorrow. In recent months, it has opened cloud computing research centers around the world where customers can develop and test cloud technologies with Big Blue’s assistance; the newest are in Brazil, Vietnam, India, and South Korea, for a total of 13. The company says it is spending nearly $400 million to expand cloud computing capabilities at its research parks in North Carolina and Tokyo.

All this research has paid off, Mitchell said, with technologies that enable instant provisioning of resources across many servers, dynamic workload management, utility-based usage and accounting, and improved security. “These technologies underlie everything we’re doing to make the cloud viable and affordable. Clients have the ability to allocate servers and other resources on demand. Advances at the component level include the promise of storage devices with extreme data access speeds.” A related program is the New Enterprise Data Center, focused on making IT more efficient. A major catalyst for the program is “the fact that the cost of running a datacenter has gotten extraordinarily expensive,” Mitchell said.

Anyone interested in a public example of an IBM cloud application can check out the beta site for Bluehouse, which demonstrates a place where people from different organizations can work together by sharing all kinds of files, holding online meetings, and so on. (IBM marketing says it combines social networking and online collaboration tools.)

IBM also has set up 40 “innovation centers,” where independent developers can “do porting, technical enablement, and have all the equipment they need to perform scalability testing and benchmarking,” Mitchell said. “We invested heavily in our technical blueprint for building a SaaS solution on IBM middleware, a multitenant solution. ISVs can take this information and bring it to one of our innovation centers to develop their own projects.”

IBM has been “quite aggressive in establishing datacenters and cloud computing centers internationally to lay the groundwork for a shift in how people view large-scale computing,” said Vishwanath Venugopalan, analyst with The 451 Group. “Not many cloud infrastructure providers have been as open with their own infrastructural plans.”

Delivering Solutions, Not Clouds

One vendor leveraging IBM’s tools to deliver its applications is iEnterprises. The company runs two datacenters to provide its CRM applications to desktop and wireless clients in the legal and pharmaceutical industries, among others. “We offer CRM solutions that are cloud-enabled, but we’re not selling cloud computing,” said John Carini, chief software architect. “The term doesn’t appeal to many of our customers. They just want a solution they know they can download to their BlackBerrys or Windows Mobile devices on demand.” Carini said iEnterprises is in the IBM partner program because “they’re providing a platform that companies like us can use to quickly build applications on and then serve them up to many different clients. It’s all relatively easy to use; everything is SOA-enabled.” 

“IBM has this initiative to go to market with cloud computing, but it’s also really good to partner with them because they’re not going to compete directly with us,” Carini said. “That sets them apart from some other software companies. They’re more of a middleware company.” (Mitchell notes a similar agenda: “We’ve made a very concerted effort to move away from commoditized hosting to higher-value middleware services.”)

One thing research has not answered, however, is the question of what applications should run locally and which can run in the cloud. “There’s not a black-and-white answer, there’s not a clear line that says ‘Thou shalt run that in the cloud,’” Mitchell says. In areas like CRM, HR and collaboration, he adds, there is a definite trend toward cloud-based delivery models. Anything involving a lot of collaboration, access from disparate locations, or is highly standards-based can be a good fit for a SaaS model. Mitchell says IBM is seeing applications being developed in finance, accounting and supply chain management, with relatively few areas being deemed off-limits to the kind of SaaS platform it is marketing.

“But there clearly are going to be companies that say ‘We’re never going to have our HR app running outside our four walls,’” he acknowledges. “What’s OK for one company is not OK for another.”

 With all this talk about cloud computing and SaaS, it might be tough to tell where one ends and the other begins. “We clearly make a distinction between cloud computing and SaaS,” Mitchell says. “Most people would agree that SaaS is an example of cloud computing, a subset, but clearly there’s more to the cloud than SaaS. Software as a service is the most visible, the most mature example of cloud computing out there. Bluehouse is a cloud solution. But within the cloud framework there are many other activities, such as infrastructure as a service, platform as a service. [T]here are also private clouds, with enterprise customers taking the cloud computing model and deploying it in-house to drive efficiencies. The key is that customers have an efficient and effective solution, whether it’s running in their own datacenter or someone else’s, or both.” (In conversation, Mitchell referred to SaaS far more often than he used the cloud word. The SaaS to cloud ratio was about 10:1.)

OK, So What Is Cloud Computing?

“Cloud computing as a concept is going through some definitional structuring,” Mitchell says. “People clearly have different opinions. Some take a broad view: anything delivered over the network. But such a definition is so broad it’s useless. We’ll have to wait a while for a definition that’s widely accepted, but cloud services should have some specific characteristics.”

He believes there needs to be on-demand, request-driven provisioning; scalability and dynamic workload management; the ability to offer a subscription or utility model; open standards-based applications; and foolproof security. “And the feedback we’re getting from customers,” he adds, “is that services and applications have to be available from any location on any device.”

While the IT community continues to work out that definition, “IBM continues to lay out its offerings for various customer constituencies, including ISVs and end users,” The 451 Group’s Venugopalan says. “This latest set of announcements is not as infrastructurally focused as IBM’s prior announcements and seems to broaden the applicability of cloud computing to capitalize upon greater awareness of the term.”

Whatever the definition of cloud computing actually is, most pundits will tell you the paradigm will catch on first with developers and SMBs. Thus, there might some concern over Venugopalan’s notion that Big Blue currently is limiting its target audience. “One area in which cloud computing shows promise is how end users can provision and begin using infrastructure with little more than a credit card, thanks to self-provisioning and wide-ranging automation,” he says. “To date, IBM has undoubtedly invested heavily in technologies frequently found in cloud infrastructure today. However, to the extent that IBM has revealed its cloud strategy, it is designed to best appeal to prospective customers of IBM’s extensive portfolio products and services offerings, rather than to small-time developers.”

Not that IBM is without a black book full of customers, both paying and potential, to tap.

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