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Mainframe rising

IBM’s latest mainframes—the z10 Enterprise Class and Business Class—have helped the company weather the slowdown in 2008, and helped it dominate the non-x86 server market. By Akhtar Pasha

Last February we analyzed IBM’s transformation from a product-centric model to a client-centric business model, one that would help IBM STG grow its business faster by giving its customers a single face of IBM and allow STG to spot opportunities for its mainframe business. Further we had also predicted that System z [z9 BC mainframe] would see a sea change in adoption—from zero revenue at the beginning of 2008 it has made strides to lift not only the non-x86 server market from negative to double digit growth but also helped in overall growth of server revenues.

While most server vendors had to deal with poor sales during H2 2008, IBM closed as many six big ticket mainframe deals in a year that saw the server market plummeting to 6.6% revenue growth in 2008 down from 25.2% growth in 2007. Anna University, ELCOT, TCS, Indian Airlines, Bajaj Allianz, and HDFC Bank all bought into the System z value proposition. With this success IBM hopes to change the IT landscape in India by broadening the adoption of mainframes in the SMB segment as well.

Mukul Mathur, Director-STG, IBM India/South Asia, said, “Firstly, if you take the overall server business from an IBM perspective, while the industry saw almost flat growth, we maintained the #1 position in the Indian non-x86 UNIX Server market ending the fourth quarter of 2008 with a 49.9% share in terms of factory revenue—thereby registering a gain of 12 points year-on-year (Q4 2008 over Q4 2007). For CY 2008, we led the same market with 37.9% share in terms of factory revenue, thereby registering a gain of 2 points year-on-year (2008 over 2007).” He admitted, “The transition of STG from a product- to a customer-centric model helped grow the mainframe business in India.”

IBM has been saying all along that the traditional landscape of India being perceived as a UNIX country has to change, as Indian companies continue to invest and grow. “To add to that, customers have always regarded the mainframe as the ultimate in server technology....today they have started using it and our customers in India have started to see a paradigm shift not just in the use of the Big Iron, but also in terms of bringing down their TCO,” said Mathur.

System z: no slowing down

Gartner said that IBM’s latest generation of mainframe hardware—the System z10—helped IBM weather the difficult economic environment that existed in 2008. Going forward, for the z10, 2009 will be more about tactical execution than about glitzy new announcements. Mathur said that IBM’s work and discussions would indeed be significantly affected by the global economic crisis. “The world has certainly changed since our last story. Could anyone have anticipated that the world’s financial markets would be restructuring themselves in a fundamental way - or that entire sectors would be turned upside down, or disappear entirely? We have given much thought to this at IBM. We know today that the world is smaller… and we also know that it’s “flatter.”… but it’s also about to become a lot smarter,” he added.

IBM’s mainframe business held up well in 2008, despite the downturn in the economy, based on the introduction of the z10 Enterprise Class (z10 EC), as well as the accelerated introduction of the smaller z10 Business Class (z10 BC) as witnessed in Indian market.

Further according to Gartner, IBM’s mainframe installed base, as measured in installed million instructions per second (MIPS) capacity, has doubled during the past five years, belying speculation about the diminishing role of the mainframe. The worldwide installed base of IBM mainframe MIPS at year end 2008 exceeded 14 million MIPS—up approximately 20% from end 2007, and roughly double of what it was five years ago. Similarly IBM has increased the clock speed of its processors four-fold—from 1.3 GHz in z9 EC/BC to 4.4 GHz in the z10 without increasing the power envelope.

With the addition of the IBM System z application assist processors (zAAPs) and integrated information processors (zIIPs) to the portfolio of special-purpose IBM System z processors, the reinvention of the IBM mainframe continues. Jointly, zAAPs and zIIPs provide significant System z integrated and cost-effective processing cycles for Java and DB2 for z/OS programming platforms.

Sreenath Chary, Business Unit Executive, Cross Server-Sales, IBM India, said, “There is no denying the fact that the transformation from product-to-customer model helped us make huge inroads in the Indian server market with System z servers in all major accounts. HDFC Bank was a testimony to this. This model allowed our account managers to dip deeper into UNIX houses to spot opportunity for mainframe systems giving customers the long-term value.”

Chary continued that the slowdown that was seen towards H2 2008 actually helped them in moving mainframes into the mid-market segment. Chary added, “In a recession, CIOs IT budgets are squeezed and they are looking at taming the costs centers of their DC and hence issues such as combined effects of space, power and cooling along with software licensing, people costs are weighing heavily on their minds. Hence we saw this attitude opening new frontiers of introducing mainframe servers to the Indian business.” Additionally Indian customers are realizing that the mainframe can consistently operate at up to 100% utilization without a single instance of failing offering high RAS and as well as a flexibility to consolidate hundreds of servers into a single System z machine without increasing the power envelope. He added that Indian CIOs are demanding high quality of service for planned/unplanned outages, reducing fraud and generating intelligence reports by capturing financial and consumer data. These business drivers are forcing them to take a look at mainframes.

Chary argued that single System z10 can replace hundreds of servers and yet operate at power as low as 4 KVA. It’s a huge saving in real-estate costs, power and cooling. However, he continued since these System z10 machines are a bit costly it makes business sense if you have a hundred servers and the ROI is quick if you are setting up a new data center. CIOs are serious about reducing their DC operational costs and are focusing on reducing space, power and cooling factors and the consolidation of huge server farms in excess of hundreds of x86 servers using System z servers. Chary said, “ELCOT, a government-owned IT service provider has bought two z9 Enterprise Class mainframe servers—one for hosting its various applications such as eCitizen Applications and in-house ERP [current load] and the other z9 EC for DR. It’s a classic case of server consolidation-virtualization project wherein 200 servers will be consolidated on to a single z9 EC system. This will help it in meeting the system scalability requirements without changing any characteristics of the DC—space, power or cooling.”

Similarly Indian Airlines has been using IBM’s TPF (Transaction Processing Facility), an OS to run applications such as the Airline Control System (ALCS) with zero downtime for the past 12 years. However to scale up and meet customer demand it chose the z9 BC for its ALCS for server consolidation and another z9 BC for setting up a DR center. Bajaj Alliance in India has deployed its data warehousing application on z10 Business Class servers along with DR and is going to save a lot on software licensing costs.

Linux use on the mainframe continues to grow—in number of customers and in number of Integrated Facilities for Linux (IFLs) per customer. Bajaj Alliance is using seven IFLs and ELCOT using eight IFLs. [Refer table: System z customer deployments for more information]

An opportunity in 2009

In larger installations, IBM’s play is to continue focusing on server consolidation opportunities. The mainframe (specific to the zLinux consolidation opportunity) has advantages in an environment where space or energy availability are issues, and where software-licensing models are mainframe-friendly, such as infrastructure server consolidation using Linux on System z.

IBM’s penetration of the use of its specialty engines in z10 BC customers is well below deployment in larger shops. Expect some substantial price reductions in specialty engines and associated memory for the z10 BC, as well as targeted promotion packages as IBM and its business partners double their efforts in the lower end of the market.

There is, IBM feels, an opportunity in building security-based solutions for home ministry or airports terminals—where it can monitor, detect any suspicious materials left at an airport terminus or capture any suspicious movements. “With the z10, along with IBM Virtual Operational Systems, we can add value in national security,” said Chary. IBM has proven deployments in the US in this sphere.

With its new System z product line (the z10 BC) and efforts to grow mainframe skills in India [most software houses such as Infosys, Wipro earn solid revenues from IBM System z customers in the US and Europe], IBM hopes to change the IT landscape in India by broadening adoption of mainframes in the SMB market.

akhtar.pasha@expressindia.com