Customers Get Hip to System z Value Proposition

Are a pair of recent Intel-to-System z defections a harbinger of what’s to come?

It used to be that mainframe pros had their hands full just stemming the tide of Big Iron-to-x86 defections. Could the reverse now be the case?

Perhaps. Some renegade mainframe shops are bringing it all back home to Big Iron. In fact, there’s enough of a trend afoot—with a handful of prominent national customers having already embarked on transitions of this kind—that IBM Corp. itself has taken notice.

Big Blue last week highlighted two such customer wins: Nationwide Insurance Co. and Nexxar Group, a modestly-sized financial services firm. Nationwide and Nexxar are two vastly different companies with vastly different requirements, but—as IBM officials like to point out—the mainframe is a flexible- and affordable-enough alternative for customers of just about every stripe.

Big Iron’s biggest recent win is Nationwide. The insurance and financial services giant recently moved its Web site along with 10 of its mission-critical applications from distributed Intel servers to a virtualized Linux environment hosted on a pair of IBM System z990 mainframes. What’s in it for Nationwide? Reduced operating costs, for starters, say officials, who anticipate savings of as much as $15 million over the next three years—thanks in large part to an 80 percent reduction in datacenter real estate, as well as a reduction in middleware and application licensing costs. Most importantly, representatives claim, by moving now to a highly scalable z990 foundation, Nationwide won’t have to purchase an additional 750 Intel-based servers before the end of this year simply to meet its ever-growing capacity requirements.

The Nationwide win underscores—and helps validate—zSeries GM Jim Stallings’ claim that the “hidden costs” of the x86 model (namely, its increasingly prohibitive data center power and cooling requirements, in addition to the rising cost of data center real estate itself) will ultimately compel many customers to shift their x86 workloads back to Big Iron.

“Power costs [for distributed Intel servers] are a very direct issue for a lot of our customers. It’s starting to factor into how they make their buying decisions. I ran into a very large customer [with] a huge Intel server environment and they’re beginning to measure the acquisition costs [of additional Intel servers] in kilowatts per server,” said Stallings in a June interview. “In the data center, every square foot is air-conditioned, so there’s the cost of the real estate, but then there’s the cost to power and cool all of that. In one-fourth of the footprint, you can run the same workload [on a mainframe]. The price of [data center] real estate is not going down, it’s going up. Data centers are getting larger and larger. As customers acquire more and more servers, you’ve got to cool them.”

There may be something to this, says industry veteran Charles King, a principal with consultancy Pund-IT Research, who nevertheless cautions against over-exuberance. After all, King notes, one big win for Big Iron does not a bona-fide trend make.

“At one level, Nationwide qualifies as merely another among many enterprise-class Linux-on-System z triumphs. Similar wins pepper IBM’s past and have helped the company successfully promote the mainframe as the IT industry’s preeminent enterprise IT platform,” he points out. “The Nationwide success story reminds us that System z earns its weight in merit badges as a world-class solution that fixes what traditional technology competitors cannot.” One positive takeaway from the Nationwide win, King argues, is that the System z value proposition—i.e., a mixed workload development environment which is capable of supporting both existing (business-critical) applications and migrating legacy applications—was apparently a key driver. “The Nationwide success story dramatically underscores the high-end value proposition IBM’s System z solutions offer the enterprises that have long been IBM’s target customers.”

A More Compelling Example

The irony, King argues, is that Big Blue’s considerably smaller Nexxar win offers an even more compelling testimonial for Big Iron backers. “While System z continues to drive solid sales and revenues for IBM, some have attempted to brand it an enterprise-specific solution ‘too complex and expensive’ for smaller, mere mortal companies. Nexxar disproves that shoddy theory by demonstrating the potential of the System z Business Class platform, which IBM developed to meet the specific needs of small- and mid-sized organizations,” he observes.

Nexxar—which has a mere 800 employees (Nationwide has 35,000)—also shifted existing workloads from x86 systems back to the mainframe. In Nexxar’s case, the company consolidated more than 80 Intel-powered servers onto a single IBM System z9 Business Class (BC) mainframe running Linux. While Stallings’ much-ballyhooed “hidden” x86 costs weren’t necessarily prime drivers in Nexxar’s case, officials nevertheless anticipate that the movement to System z9 BC will let it “streamline” its maintenance processes and reduce its IT support staff by about 75 percent.

That’s a big deal, says King. “With its low entry price, high capacity and flexible configurations, reduced middleware costs, and specialty engines for Linux, Java, and data serving, the System z9 BC provides a robust platform ideal for businesses serious about doing business,” he argues. “Overall, Nationwide and Nexxar demonstrate that IBM’s practice of leveraging the flexibility of Linux with the mainframe’s unmatched virtualization capabilities is not only healthy but a growing solution for organizations from IT-focused small and mid-market businesses to the world’s largest enterprises.”

Recasting System z as an Affordable Play

System z—and particularly the System z9 BC—figured prominently in another recent IBM media event: the announcement, earlier this month, of an ambitious new SAP investment program amounting to some $40 million over the next five years, that’s designed to help make SAP a more affordable proposition for mainframe customers. To that end, Big Blue plans to offer rebates of up to $250,000 for some System z and SAP implementations.

IBM’s new System z Integrated Information Processor (zIIP) specialty engine is one of the focal points of the push, along with DB2 and IBM’s de rigueur Global Services tie-in. According to Gartner analysts Mike Chuba, Dale Vecchio, and John Phelps, zIIP and some of IBM’s other mainframe-centric initiatives have helped recast Big Iron as a surprisingly affordable—if not compelling—move.

“The System z9 BC and z9 [Enterprise Class] are the first IBM servers to offer the zIIP, which frees up computing capacity and lowers software costs for selected DB2 workloads,” the trio points out. Although IBM claims to deliver Day 1 cost savings for SAP customers—thanks to zIIP—the Gartner analysts caution customers against irrational exuberance. “The offering promises to benefit SAP applications in terms of price-to-performance ratios, although we urge customers to verify with IBM just how much the zIIP will be used by DB2 calls from their SAP workload, as it will vary.”

With its new SAP push, analysts say IBM is changing course. “IBM has historically eschewed packaged solutions, particularly on the mainframe. Now the company is trying to establish the mainframe as a ‘solutions platform’ and is putting money into making this happen,” they write. “IBM continues to show strength and vision, providing help for creating mainframe solutions for … ISVs, and it will likely continue to steer growth toward Linux, Java, SAP and DB2.”

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