IBM Leverages Pervasive Encryption to Grow the IBM Z Mainframe Customer Base in a Hybrid Cloud World

IBM Leverages Pervasive Encryption to Grow the IBM Z Mainframe Customer Base in a Hybrid Cloud World

IBM is introducing a major strategy to transform its foundation enterprise platform, the mainframe – now called IBM Z – into a new cornerstone for hybrid cloud IT.

The new IBM z14 machine brings with it hardware and software enhancements intended to generate more mainframe installations in hybrid clouds by making it easier to link enterprise data centers with multi-cloud off-premises deployments.

Because hybrid cloud is rapidly emerging as the deployment goal for large and mid-size organizations, this new positioning and marketing is a mechanism to enhance the IBM mainframe’s role in next-generation hybrid clouds.

The key tenets for this IBM strategy involve deep security, data protection, extensive analytics – and wide support for blockchain open ledger solutions. New features, such as pervasive encryption, secure containers, and enhanced open-source development, will be packaged with new software pricing and multi-cloud support.

The IBM z14 system positions the IBM Z’s role as an important platform for data migration and the protection of transactional data, associated with real-time analysis and machine learning (ML) leveraging that data.

Key to this strategy is that secure transit for important data, protected by secure containers, will be packaged along with pervasive encryption on the hardware system itself. IBM will retain the positioning of z platforms as scalable, resilient, and highly secure, but will emphasize its role as a platform with open connections to multi-cloud, distributed networks.

This could be a turning point for the public perception of IBM mainframes: After years of positioning “centralized” vs. “distributed” computing, IBM now sees that a “both” positioning could help it grow IBM mainframe presence in fast-growing hybrid cloud deployments spanning scale-up and scale-out infrastructure. This approach has the potential to expand the zSystems installed base more rapidly, and has company-wide implications for IBM’s profitable, recurring mainframe revenue.


Going Forward

On July 17, 2017, IBM announced that the new IBM zSystems platform, the z14, has the following:

  • Pervasive Encryption: IBM has said it will encrypt all data, leveraging on-chip encryption/de-encryption built into the IBM Z’s 10-core processors. This addresses high levels of customer concern about cyberattack vulnerability. Pervasive encryption will not require changes to applications, databases and other workloads running on the IBM Z, and it will not require an overhead tax related to system performance. Given that security is often listed as the top priority for IT organizations, the pervasive encryption features should attract wider consideration outside the traditional IBM mainframe customer base. This positions IBM Z as an important hub for data transiting the system, or for data being sent to the system via data migration and containers.
  • Extended Support for Open and Connected Interfaces: Expanded support for open application programming interfaces (APIs) will extend IBM mainframe capabilities for security and analytics to a wider pool of developers and DevOps personnel. Customers have seen IBM build on open interfaces before – especially in the Linux environments running on IBM mainframe platforms. Here, IBM is confirming the open development direction for customers and ISV developers, in recognition of open-systems momentum for AppDev and DevOps, and as a pragmatic assessment of next-generation development for its mainframe platform.
  • Support of Deep Analytics and Machine Learning:Addressing large data pools, or data lakes through the use of multiple IBM Z hubs is designed to reduce large data transfers to centralized data centers for deep analytics processing. Machine learning will automate the process, speeding time-to-results for business organizations looking to Big Data coming from structured and unstructured data resources. Many customers are in the early stages of designing and implementing a software-defined infrastructure strategy, for which data migration and data locality will play important roles in determining efficient placement of data for rapid processing. This gives IBM time to work with customers and system integrators to implement SDI environments, which tend to be built out in phases, over time.
  • Added Support for Open Development: A new focus on Secure Containers, Open Languages, and microservices aims at attracting more open-source development for IBM mainframes. New features, such as enhanced visualization of code, more software tools and plug-ins, build on previous features for ease-of-use, open-source programming and multi-cloud support. IBM can be expected to market these through hands-on workshops in key cities, such as San Francisco and New York, which are highly visible centers for customer cloud development projects.
  • New Software Pricing for Hybrid Cloud: IBM is providing new pricing terms for zSystems software, responding to longtime customer concerns about pricing and maintenance fees that have impacted buying and leasing decisions. This pricing is responsive to cloud-computing’s pay-as-you-go pricing models. It will take time to see how the customer base responds to these new pricing models, and how they will relate to patterns of IBM mainframe software-related sales, which impact IBM and longtime zSystems ISV partners, like Computer Associates, Compuware and BMC. By introducing pricing for secure containers, IBM is moving to a new, and evolving, model for its mainframe software pricing that is absolutely essential to growing the mainframe customer base as the developer community sees demographic shifts to Millenials and young professionals.


Timing of the Announcement

The July news can be expected to promote sales and leasing in the fourth quarter of calendar 2017 – traditionally the strongest quarter in IBM’s fiscal year, which ends on Dec. 31, 2017. General availability for IBM z14 platforms will begin in September. From a revenue-generating perspective, the IBM mainframe has long been an important foundation for IBM’s systems business, especially in view of reduced volume shipments for IBM Power Systems in recent years – and the acquisition of IBM’s Systems x x86 server business by Lenovo in 2015.

Budgetary concerns at most companies have led to close scrutiny for high levels of IT spend. This is why the software pricing changes are so vital to the IBM z14 product rollout. If business organizations agree that pervasive encryption will help them to protect against cyber-attacks, while supporting hybrid cloud expansion, then the z14 launch could lead to more IBM systems growth in 2017 and 2018.


Planning to Expand the IBM Mainframe Customer Base

IBM zSystems have seen modest growth in recent years, building on a worldwide installed base that is adding net-new units in more geographies and more cloud-computing scenarios. Growth in EMEA (e.g. Middle East, Africa and Eastern Europe), regional China and multi-cloud access have helped growth, as has introduction of all-Linux LinuxONE zSystems in recent years.

Now, with the z14 platform, IBM plans to accelerate that growth by placing more mainframes, more quickly, into new and emerging hybrid cloud scenarios. Secure and resilient support for important IBM workloads, including IBM DB2 databases, transactional applications (e.g. CICS) and IBM-compatible ERP applications could drive more business to IBM cloud centers and IBM z14 systems. However, this won’t happen automatically. IBM must be clear in communicating the technical and business-model changes it has made with the IBM Z platform.

This strategy plays to IBM’s enterprise data-center strengths, even as it looks to expand IBM z14 placements for customers’ cloud workloads requiring more security and availability than has been widely available on other cloud platforms. It is designed to appeal to extended enterprises that are building out hybrid cloud infrastructure. This is where the DevOps software tools and open APIs will play an important role in attracting more types of workloads to the IBM Z platforms.

Equally important for IBM will be marketing the pervasive encryption solution to two specific groups – cloud service providers and telcos –  both of which could leverage secure data technology – and deliver secure data services to end-customers without requiring those end-customers to have zSystems expertise. This suggests that IBM could add a focused go-to-market (GTM) campaign with CSPs, hosters, telcos and software partners aimed at facilitating IBM Z use in hosting and cloud data centers. IBM has not formally announced that GTM program, but it would be a logical extension of the drive to host more IBM mainframes within the IBM Cloud public cloud – and customers’ hybrid clouds.

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