Monthly Research Update

Experton Group Weekly IT News

Shifting Business Strategies: IBM and Microsoft

By: Adam Braunstein

IBM Corp. and Microsoft Corp. both revealed products and plans detailing new strategies for addressing areas of business that deemed critical to their future success. For IBM, this includes expansion of its Project Big Green initiative aimed at providing hosting infrastructure that includes environmentally responsible solutions. Microsoft has announced new SMB-oriented offerings.

Focal Points:

• IBM opened a new energy efficient data center for hosting enterprise and other vendor infrastructure in Boulder, CO. last month. The 115,000 square foot data center, referred to as "The Green Machine" employs the exterior air for cooling when temperatures drop to an appropriately cool level, is powered partially by wind energy, and uses variable-speed air conditioning units to prevent overcooling costs and carbon emissions. The company claims the data center is 40 percent more energy efficient than ones that do not employ such technologies, and intends to continually improve capabilities to further reduce emissions and improve efficiency. Juniper Networks, Inc. announced a five-year engagement for IBM to host and manage infrastructure maintained at the facility. Separately, IBM disclosed that it is also working on a technical framework to enable an electricity smart-grid. The framework would allow for two-way communication between power utilities and electricity subscribers to provide real-time data on energy usage and curtail or alter power consumption during peak periods. Participation in such a smart-grid would deliver two-way communication to lower energy bills.
• In recognition of the shift towards delivering Internet-based solutions using software-as-a-service (SaaS), Microsoft is preparing to new tools within its Microsoft Online Services lineup. The company intends to deliver a cloud-based alternative to many of the server-based collaboration offerings it sells in what it calls the Business Productivity Online Standard Suite. The $15 per user, per month package includes key elements of Exchange, Office Communications Online, Office Live Meeting, and SharePoint. The online suite can be sold by Microsoft business partners and is currently in beta testing until the projected launch during the second half of this year. Microsoft intends to roll out services globally to help small and mid-sized businesses (SMBs) and large customers take advantage of cloud-based services and forgo costly and complex on-site installation and maintenance hassles.
• Microsoft also intends to roll out Windows Essential Business Server (EBS) 2008 and Windows Small Business Server (SBS) 2008 before year's end. Although Microsoft has been offering flavors of its SBS offering for nearly one decade, this, according to the company, marks the first time a solution is aimed directly at mid-sized businesses. The new version of Small Business Server incorporates improved client and server backup utilities, an improved Remote Web Workplace to access corporate resources via a Web browser, as well as Exchange Server and Windows SharePoint Services. To the products included in SBS, EBS adds Forefront Security for Exchange Server, Internet Security and Acceleration Server, and. System Center Essentials 2007. SQL Server 2008 is available with the Premium version of EBS. Pricing for SBS starts at $1,089 and $5,472 for EBS, each with five client access licenses (CALs).

Experton Group believes that enterprise vendors are working to alter the way in which they engage their clients by evolving from the old product and services sales model. For sales efforts to be successful from this point forward, vendors must offer complete solutions that also address new client pain points such as backup and recovery, energy efficiency, and regulatory compliance. Additionally, businesses are no longer satisfied with "one size fits all" delivery methods, and wish to choose between on-site, managed, and SaaS hosted solutions to best fit their needs and cost challenges. Moreover, IT and financial executives should watch for the inclusion of new and innovative funding methodologies, particularly as times of economic uncertainty manifest a slowdown in non-essential project development. IT and financial executives should work closely with line of business and executive management to ensure that selected infrastructure upgrades are capable of addressing projected and changing business needs, providing forward compatible integration capabilities, and offer rapid return on investment (ROI) or self funding opportunities.