1.5x Explosion of information driving 54% growth in storage shipments every year. 70 per $1

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1 for future-network.at May 14th, 2009, Vienna, Austria Presented by Martin Forisch The Petabyte/Petaflop/Triple Digit Gb/s Aera is here and yet 1.5x Explosion of information driving 54% growth in storage shipments every year. 70 per $1 70% on average is spent on maintaining current IT infrastructures versus adding new capabilities. 85% idle In distributed computing environments, up to 85% of computing capacity sits idle. 2

2 !! Cloud computing is a style of computing in which dynamically scalable and often virtualised resources are provided as a service over the Internet. [wikipedia] Definition IBM is a service managment platform that provides a transparent infrastructure to users with near zero managment costs.

3 Definitions are Varied But There Are Some Common Attributes IT Customers: -! Flexible pricing -! Outsourced, on demand provisioning -! Unlimited scaling -! SW developer platform -! Flexible Common Attributes of Clouds Flexible pricing Elastic scaling Rapid provisioning Advanced virtualization IT Analysts: -! Threat to CIO -! Variable pricing -! No long term commitments -! Hosted, on demand provisioning -! Massive, elastic scaling -! Standard Internet technology -! Abstracted infrastructure -! Service-oriented Press: -! Pay by consumption -! Lower costs -! On demand provisioning -! Grid and SaaS combination -! Massive scaling -! Efficient infrastructure -! Simple and easy Source: IBM Corporate Strategy analysis of MI, PR, AR and VCG compilations Financial Analysts: -! Utility pricing -! Multi-core chips -! Hosted, xaas provisioning -! Parallel, on demand processing -! Scalable -! Virtualized, efficient infrastructure -! Flexible -! Disruptive technology

4 Common Attributes Indicate A Common Definition An Elastically Scalable, Virtualized System That Is Rapidly Provisioned With Flexible Pricing Models Common Attribute Flexible pricing Details Utility pricing, variable payments, pay-by-consumption and subscription models make pricing of IT services more flexible Elastic scaling Resources scale up and down by large factors as the demand changes Rapid provisioning IT and network capacity and capabilities are ideally automatically rapidly provisioned using Internet standards without transferring ownership of resources Advanced virtualization IT resources from servers to storage, network and applications are pooled and virtualized to provide an implementation independent, efficient infrastructure Source: IBM Corporate Strategy analysis of MI, PR, AR and VCG compilations Cloud adoption roadmap Operational Expense Low Increasing difficulty of application migration!!virtualize Applications!!Virtualize Middleware!!Standardize Applications?!!Standardize APIs?!!Cloud Service!!Cloud Platform!!Cloud Ideal SaaS PaaS High!!Standard IT High!!Virtualize Server / Storage / Network Capital Expense!!Automate Provisioning!!Outsource Infrastructure Mgmt!!Cloud Infrastructure Low IaaS Dynamic Infrastructure

5 Cloud computing: Why? There is increasing demand for IT resources, but decreasing ability to add more physical hardware to meet this demand! At datacenter capacity! In IDC studies, over 40% of data center customers report power demand outstripping supply: expansion = increasing density.! Financial constraint! New server budgets are flat against inflation, power/cooling/admin costs are accelerating; just buy a server no longer viable (Source: IDC )! Large amount of untapped resource! Average X86 HW utilization of only 10-15% (IDC and vmware.com)! 90% of all hardware purchased is X86 IDC (The Future of Virtualization, 4/08)! Process and red tape takes time! Provisioning applications currently requires hardware acquisition, approvals, installation, all of which takes a lot of TIME.! Solution: provides shared virtualized resource pools to:!!!! Enable fast prototyping Increase deployment speed Make use of unused resource Reduce lead times 9 Private Cloud vs Public Cloud Clients and Customers SERVICES SERVICES SERVICES Service Integration Service Integration Service Integration Traditional Enterprise IT Private Cloud Public Clouds Enterprise Over time, IT workloads will move to the Cloud delivery models as applicable. Examples:! Mission Critical! Test Systems! Variable Storage! Packaged Apps! Storage Cloud! Software as a Service! High Compliancy! Developer Systems! Web Hosting Source: IBM Corporate Strategy, IBM Cloud Seminar

6 !! Data storage! With cloud computing, data is stored on multiple third-party servers and is accessible via a web server interface!! Web-based application or service! Cloud service e.g., calendar, contact lists, word processing, presentations! Collaboration is facilitated by hosting applications on the web!! Flexible computing resource usage! Computing resources on demand!!! meet the Players more everyday

7 Some of the Player s Offerings Google "! Google Docs, Google Presentations, Gmail, Google Calendar, Google Apps "! Many free (advertizement subsidized offerings) "! gmail is most well known App being used; starting to insert Docs into this approach "! Recent Addition: Google AppEngine Cisco "! My Cisco consists of PostPath (mail) and Jabber (IM client) recently to round out their collaboration offering "! strong install base on WebEx acquired earlier Microsoft "! Business Productivity Online Suite Evolving Cloud model hosted SharePoint (portions), Exchange, and Live Meetings Online "! Windows Azure LotusLive IBM "! LotusLive - Providing SaaS models of both virtualized hosted and multi-tenant "! Full collaboration solution versus limited usage on on-premise/off-premise (flexibility w/out dependency) "! Blue Cloud Hosting clouds for customers Some of the Player s Offerings 2 Amazon "! Elastic Compute Cloud (EC2), S3 "! Offers PaaS, Storage aas Salesforce.com "! Force.com, AppExchange AMD "! Fusion Render Cloud Renders 3D games or applications in the datacenter and streams the output directly into the browser, rendering done on Petaflop GPU Cluster Onlive.com "! E.g., games on demand service provided by onlive.com "! Send control messages and receive compressed video images over the Internet "! Highly dependent on the compression/decompression technology and fast and highbandwidth data transmission

8 The IBM Technology Adoption platform supports innovators in IBM to make collaborative innovation faster, simpler and cheaper Cloud enabled innovation on TAP!! Enables innovators!quickly and easily prototype, test and deploy new technologies!! Lowers infrastructure costs!! Reduces system admin install and configuration time!! Provides reporting & monitoring capabilities 70 active incubations 10 new products Source: IBM HiPODS Savings: IBM Example Technology Adoption Platform Without Cloud $3.4M Annual Expense With Cloud $1.03M Annual Expense New Development Software and Other Costs Labor Costs (Operations and Maintenance) Liberated funding for transformation investment or direct saving New Development (for Business Enabling Capabilities) Strategic Change Capacity Depreciation (and Amortization) Deployment (1-time) Software and other costs Labor Cost ( %) Depreciation ( %) Annual Cost of Operation (- 79.0%) Note: 5-Year Depreciation Period with 5% Discount Rate

9 The Center in Wuxi, China, provides instantaneous development environments to individual developers China Cloud Center for Software Development and Test Customer Deployment Example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

10 Amazon/IBM Partnership (for EC2) What we ve announced: A partnership between IBM and Amazon Web Services that allows you to develop and deliver your applications in the cloud Why it matters: Easy to use. Start developing your applications on IBM software on Amazon Web Services in minutes. No barriers. IBM is providing no charge development software on Amazon Web Services. Pay only infrastructure charges as little as 10c a hour. Pay as you go. Run production versions of leading IBM software products including WebSphere Portal and DB2 and pay hourly only for what you need, when you need it. Portability. Use your existing IBM licenses for most IBM software products in the cloud or on premise it s now your choice. What workloads are we seeing move to Cloud delivery? Single virtual appliance workloads Test and Pre-production systems Mature packaged offerings, like and collaboration (see ) Software development environments Batch processing jobs with limited security requirements Isolated workloads where latency between components is not an issue Storage Solutions/Storage as a Service Backup Solutions/Backup & Restore as a Service Some data intensive workloads if the provider has a cloud storage offering tied to the cloud compute offering

11 What workloads may not be ready for Cloud delivery today? 1 Workloads which depend on sensitive data normally restricted to the Enterprise!! Employee Information - Most companies are not ready to move their LDAP server into a public cloud because of the sensitivity of the data!! Health Care Records - May not be ready to move until the security of the cloud provider is well established 2 3 Workloads composed of multiple, co-dependent services!! High throughput online transaction processing Workloads requiring a high level of auditability, accountability!! Workloads subject to Sarbanes-Oxley, for example 4 Workloads based on 3 rd party software which does not have a virtualization or cloud aware licensing strategy 5 6 Workloads requiring detailed chargeback or utilization measurement as required for capacity planning or departmental level billing Workloads requiring customization (e.g. customized SaaS)! Looking Ahead IBM is focusing on cloud computing!! Solutions & services to reduce risk, improve services and lower cost enabling public, private and hybrid clouds; requires new models for delivering and managing systems as pools of resources & a process management platform for cloud computing.!! New & improved platforms & services for cloud enabling platform choice and service delivery flexibility ; requires security, availability and scalability.!! Driving open standards for cloud computing enables interoperability and federation among providers; requires leadership and presence.!! Working across the industry enables flexibility and choice for customers; enabling more services to be delivered through public clouds, remote management of cloud services, federation of clouds open cloud manifesto dedicated to the belief that all clouds should be open OVF Cloud Standards Incubator Investigating technologies for advanced cloud computing IBM is delivering an ever-expanding portfolio of cloud consulting, cloud products & cloud deliver services, lowering cost for customers today and building platforms for tomorrow.

12 Possible Next Steps!! Examine your companies use cases for cloud compatible workloads Such As:! Single virtual appliance workloads! Test and Pre-production systems! Mature packaged offerings, like and collaboration! Software development environments! Batch processing jobs with limited security requirements! Isolated workloads where latency between components is not an issue! Storage Solutions/Storage as a Service! Backup Solutions/Backup & Restore as a Service! Some data intensive workloads if the provider has a cloud storage offering tied to the cloud compute offering!! Select a simple Scenario to gather experience! Eg. software test, development environment!! Develop your own Cloud Application Strategy!! Apply experience/ lessons learned Embrace!!!Innovative business models require a utility-like intelligent infrastructure that embraces complexity to be successful in the competitive, fast-paced, services-based global economy.!economics: Small up front investment and can be billed by consumption. Reduction of TCO allows clients to pursue operational efficiency and productivity.!risk MANAGEMENT: Small up front commitment allows trying new services faster and choosing. This reduces big failure risks and fosters innovation.!time TO MARKET: Adopt new services quickly for pilot usages and scale quickly to global scale.!information SOCIETY: Value-added information generated by collection and analysis of massive amounts of unstructured data.!ubiquitous SOCIETY: Accessible via a heterogeneous set of devices (PC, phone, telematics..)

13 Thank you! For more information, please visit: ibm.com/cloud