1 On Demand Environment The next era CMSC466/666 Based on IBM On Demand Business.

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On Demand On Demand Environment The next Environment The next

eraeraCMSC466/666CMSC466/666

Based on IBM On Demand Business

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AgendaAgenda

Drivers for e-Business On Demand Drivers for e-Business On Demand

Characteristics of On Demand Business Characteristics of On Demand Business

On Demand Computing EnvironmentOn Demand Computing Environment

Evolution of On Demand Financial and Delivery ModelsEvolution of On Demand Financial and Delivery Models

Summary & ActionSummary & Action

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CIO

CEO

Companies generate innovations, in fat years or lean, by deploying new technology along with improved processes and capabilities.

Companies that linked business processes with trading partners show 70% higher profitability than those that do not.

42% of the top 500 IT executives said maintaining and managing excess complexity cost them an average of 29% of their IT budgets.

Institutions Face Challenges Institutions Face Challenges Across the OrganizationAcross the Organization

CIO Insight, 02/2003

Business Advisor Zone, 12/2/2002

McKinsey & Company, Volume 2 - 2003

CFO

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on demandon demand businessbusiness

business

Pricing Pressures

Security Threats

Capital and Asset Utilization

Constituent Customer Preferences

EconomyGovernanceProductivity

technology

Open Movement Commoditization

Clusters

GridsAutonomic Computing Web Services

Blades Virtualization Standards

Constantly Changing Environment

Requires constant improvement in Requires constant improvement in business design and business processbusiness design and business process

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Defining the next Defining the next computing eracomputing era

— Sam Palmisano, IBM Chairman and CEO

“An enterprise whose business

processes -- integrated end-to-end

across the company and with key

partners, suppliers and customers –

can respond with speed to any customer demand,

market opportunity or external threat”

“An enterprise whose business

processes -- integrated end-to-end

across the company and with key

partners, suppliers and customers –

can respond with speed to any customer demand,

market opportunity or external threat”

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Enterprises everywhere are Enterprises everywhere are embracing e-businessembracing e-business

Network EraNetwork Era

Client/Server EraClient/Server Era

Centralized EraCentralized Era

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The data on this chart -- from the US Commerce Department -- The data on this chart -- from the US Commerce Department -- demonstrates how enterprises have demonstrates how enterprises have made IT an integral part made IT an integral part of business over the past 40 yearsof business over the past 40 years. .

The history of the IT industry has been defined by The history of the IT industry has been defined by three three computing eras: the centralized era, the client/server era, computing eras: the centralized era, the client/server era, and the networked or e-business eraand the networked or e-business era. .

Enter IBM’s System/360, which launched the Enter IBM’s System/360, which launched the centralized eracentralized era of information technology in business. In this era, the of information technology in business. In this era, the prevailing business strategy was prevailing business strategy was automation of back office automation of back office processesprocesses, and the computing model was all about , and the computing model was all about centralized computing. In other words, mainframe centralized computing. In other words, mainframe computing. computing.

By the mid-80s and early 90s, the By the mid-80s and early 90s, the PC and client/serverPC and client/server revolutions had taken hold--enabling individuals to manage revolutions had taken hold--enabling individuals to manage many of their daily tasks more quickly, and accelerating the many of their daily tasks more quickly, and accelerating the staffing shift in many companies toward knowledge workers staffing shift in many companies toward knowledge workers over clerical workers. The computing model supported the over clerical workers. The computing model supported the stand-alone applications and processesstand-alone applications and processes that characterized that characterized this era. this era.

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Now, we are moving into a new era, the era of a Now, we are moving into a new era, the era of a services-led global economy. In this new age, the old services-led global economy. In this new age, the old needs of businesses haven’t disappeared -- but they needs of businesses haven’t disappeared -- but they are joined by a new set. are joined by a new set. The main criterion for The main criterion for competitive success now is responsivenesscompetitive success now is responsiveness: the : the ability to adapt and respond rapidly to ever-more-ability to adapt and respond rapidly to ever-more-volatile demand, coming from an ever-wider global volatile demand, coming from an ever-wider global marketplace.marketplace.

We are now in the early stages of the We are now in the early stages of the network eranetwork era. . Enterprises are focused on Enterprises are focused on integrating diverse integrating diverse processesprocesses (legacy and new), transforming the (legacy and new), transforming the entire enterprise, creating new business models, entire enterprise, creating new business models, and realizing business value such as increased and realizing business value such as increased profitability. profitability.

In the network era, our customers are continuing to In the network era, our customers are continuing to demand e-business and are striving to demand e-business and are striving to realize the realize the full value of enterprise integration.full value of enterprise integration.

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Evolution of e-businessEvolution of e-business

Access Enterprise Integration On Demand

Access | Publish | Transact | Integrate Internally | Integrate Externally | Adapt Dynamically

Optimize operations

Dynamically respond to the needs of customers,

employees, partners, and suppliers

Buying not browsing

Working not surfingGet on the Net

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Phase 1... access to digital information.Phase 1... access to digital information. This was all about publishing content, most of it of the This was all about publishing content, most of it of the static “look-up” variety. static “look-up” variety. Simple database queries allowed us to do things like check Simple database queries allowed us to do things like check

aa bank account, look at airline flight information.bank account, look at airline flight information.

Pretty easy to get in here. All an enterprise needed was Pretty easy to get in here. All an enterprise needed was

a home page. All an individual needed was a browser.a home page. All an individual needed was a browser.

Ÿ Phase 2... real transactions... real e-business.Phase 2... real transactions... real e-business. Don’t just check a flight departure time... book your seat. Don’t just check a flight departure time... book your seat. Don’t just look at your bank account... move some moneyDon’t just look at your bank account... move some money

This requires more than a Website. This takes behind-This requires more than a Website. This takes behind-the-scenes integration of technologies and business the-scenes integration of technologies and business processesprocesses..

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Phase 3: Phase 3: On Demand On Demand BusinessBusiness

IBM called it the “Advanced” phase and now IBM called it the “Advanced” phase and now defined it as “on demand.”defined it as “on demand.”

This was where everything was headed; and This was where everything was headed; and that not that many people had gotten there that not that many people had gotten there yet.yet.

Most importantly, this is about end-to-end Most importantly, this is about end-to-end integration -- of the processes within the integration -- of the processes within the enterprise, as well as all the relationships enterprise, as well as all the relationships and transactions that anchor that and transactions that anchor that enterprise in markets and industries.enterprise in markets and industries.

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Bus

ines

sD

esig

n

Financial &

Delivery M

odels

ComputingEnvironment

On Demand BusinessOn Demand Business

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Three things in mindThree things in mind

-- The design of the business models -- The design of the business models and processes.and processes.

-- The implications for the supporting -- The implications for the supporting technology environment.technology environment.

-- And how they’re going to acquire and -- And how they’re going to acquire and manage its processes and technology. manage its processes and technology.

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Bus

ines

sD

esig

n

On demand business

Responsive Variable Focused Resilient

ComputingEnvironment

On Demand BusinessOn Demand Business

Financial &

Delivery M

odels

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4 characteristics to on 4 characteristics to on demand organizationsdemand organizations

Responsive to the changesResponsive to the changes Variable cost and hence a good part of Variable cost and hence a good part of

the cost become related to the output of the cost become related to the output of the organization the organization

Focused on the core competency Focused on the core competency Resilient to changes in the environment Resilient to changes in the environment

and adaptive without comprising the and adaptive without comprising the objectiveobjective

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Bus

ines

sD

esig

n Financial &

Delivery M

odels

ComputingEnvironment

On Demand Operating EnvironmentOpen

IntegratedVirtualizedAutonomic

Requires an On Demand Operating Requires an On Demand Operating EnvironmentEnvironment

On Demand BusinessOn Demand Business

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The on demand operating The on demand operating environmentenvironment

IntegratedIntegrated

AutonomicAutonomicVirtualizedVirtualized

OpenOpen

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Self-Protecting

Self-Healing

Self-Optimizing

Self-Configuring

Autonomic Computing AttributesSelf-managing systems that deliver..

Secure Information and Resources

Anticipate, detect, identify, and protect against attacks

Increased Responsiveness

Adapt to dynamically changing environments

Business Resiliency

Discover, diagnose, and act to prevent

disruptions

Operational Efficiency

Tune resources and balance workloads to maximize use of IT resources

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WSDL

Web Services

Globus

Linux

SOAP

XML

Sample Open Standards Sample Open Standards

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IBM in LinuxIBM in Linux UNIX-like Scalable operating systemUNIX-like Scalable operating system

Reduces cost of ComputingReduces cost of Computing

Increases freedom of choiceIncreases freedom of choice

Fosters innovationFosters innovation

Promotes a culture of open standardsPromotes a culture of open standards

Open Distribution & Open Source Code.Open Distribution & Open Source Code.

Supported by a global community Supported by a global community

Rich solutions offeringRich solutions offering

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Virtualization Technologies Virtualization Technologies TodayToday

Virtual Servers (Linux VMware)

CPU Upgrade on demand

Virtual Database(DB2 Federated)

Virtual Storage(StorageTank)

Virtual File Systems(General Parallel File System and Network File System)

Virtual Mainframe(Global Distributed Parallel Sysplex)

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The efficient and flexible combination of resources to optimize operations across and beyond the enterprise

People Processes Information &Infrastructure

+ +

IntegrationIntegration

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Bus

ines

sD

esig

n Financial &

Delivery M

odels

ComputingEnvironment

On Demand BusinessOn Demand Business

New ways to pay for and manage IT Flexible Variable Managed Optimized

Redefines Financial and Delivery Redefines Financial and Delivery ModelsModels

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Flexible Financial and Delivery Flexible Financial and Delivery ModelsModels

Fixed

Traditional IT

Managed Operations

Utility Services

Capacity On Demand

Financial Models

Del

ive

ry M

od

els

Off Premises Shared

Variable

Off Premises Dedicated

On Premises Utility

Mixed

On Premises

Customers choose where and how they Customers choose where and how they access ITaccess IT

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Bus

ines

sD

esig

n

Financial &

Delivery M

odels

ComputingEnvironment

On Demand BusinessOn Demand Business

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Summary & Summary & RecommendationsRecommendations

1. Business Design integrating all stakeholders is essential for value delivery

2. Increased IT infrastructure Investment as % of capital assets

3. Align infrastructure Investment to On Demand computing environment

4. Increase awareness & IT literacy to overcome the Digital Gap

5. We are all stakeholders and KOM is ideal forum for thoughts leadership.

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...Thank you

http://www-306.ibm.com/e-http://www-306.ibm.com/e-business/index.htmlbusiness/index.html