IBM: a prospective

PaaS Cloud and Big Data for the future of Big Blue
Dublin - 14 novembre 2014

CYRILLE VIGNON

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Introduction :
International Business Machines is a global company selling Information Technology (IT)
Hardware, Software and Services. Its revenue of $99.8 Billions (2013) and net income of $16.5B,
makes it one of the 10 most influential and powerful firms of the industry. Its ranks second among
US companies in terms of employees with over 435 000 workers in 170 countries.
IBMs former UK CEO Carl Symon outlined there is an ongoing reconceptualization of markets
and management of human, financial and information resources. The popular word for these
changes is globalization and it refers to how companies think and operate rather than where they
operate. IBM mostly sells digital services to global companies and that makes the location of the
business a second rank matter. For this essay we will then focus on the what IBM does rather than
where it does it.
Back in 2001 IBMs annual report stated that its almost impossible to distinguish between the
business strategy and the IT strategy of any successful enterprise. Early years of the 21h
century have seen this tendency gain momentum. What was true for any corporation in 2001 is
now crucial to a company whose field of business is actually IT. In the global economy
technology is translated into business value. In the case of IBM, it is not only a challenge in
terms of corporate results and efficiency. It is also a shift in the sense that IBMs products are the
IT tools that leverage results in other companies. In other words, the IT solutions provided by IBM and the likes of Oracle, Microsoft, Apple, Sun technology etc, - has led and will keep on leading
tomorrow's IT strategies in global business. Therefore the big strategic takes need to be tackled
now of as technologies developed today will frame the business patterns of tomorrow. in that
regard, following and anticipating the big trends of the market and IBMs strategic takes is an
interesting way to scout into the future of corporate IT strategies. Having said that, one has to
consider that IBMs massive weight and size allows it to be a the forefront of technology on
numerous fields. In order to be able to analyses the effect of the strategic takes we will narrow our
researches on two major fields : Cloud and Big Data.
After giving a brief overview of IBMs history as well as nowadays strategic and technologic
context we will explain its strategy in both fields and give some hints about its potential further
strategy. We will then review what impacts these might have on the global economy.

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IBMs history
IBMs History can be summed up to a series of milestones that marked the company and the
industry thanks to huge technological achievements. Here are the most remarkable moments of
Big Blue:

1911 Computing Tabulating and Recording Company, the ancestor of IBM is born

1923 Punch Card Technology

1944 Automatic Sequence Controlled Calculator

1956 First Magnetic Hard Disk Drive (RAMAC)

1962 Airline Reservation System (SABRE)

1969 IBM is part of the Apollo Spatial Program

1969 Magnetic Strips on ID and Bank Cards

1971 The Floppy Disk

1973 UPC Bar Codes

1981 The Personal Computer

1984 Speech Recognition reaches 5000 words

1997 IBMs Deep Blue defeats Worlds best Chess player

2001 IBM invests $1B in Linux

2011 Watson Program : leader of Cognitive Computing

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IBM in Ireland

Head Office
Sales and
Services

IBM Inside Sales

Technology
Campus

Dublin 15

Dublin 15

IBM - Tivoli
Netcool Wireless
Products
Engineering
Cork

Dublin 4

IBM United
Kingdom Limited
Belfast

IBM-Tivoli
Netcool Wireless
Products
Engineering
Galway

IBM Business
Continuity and
Resiliency
Services
Cork

IBM first established in Ireland in 1956 and now counts 3000 employees. IBM claims to be a corporate

2008 Buoys in the

Galway bay to monitor
sea pollution and fish
stock

In 1998 started the KidSmart Early Learning program. It gave computers

loaded with award-winning educational software to primary schools. The
investment was of $133 million, for 60,000 Young Explorer PCs worldwide.
Ireland received over 850 Young Explorer in 400 schools.

The Irish Cancer Society was awarded $75,000 by IBM. Employees of IBM
Ireland volunteered to develop a cloud solution to automate Door to Door a
service for cancer patients.

IBM Ireland is compliant

to the 4% energy
conservation rule. IBM
recycles more than 75%
of non
hazardous waste on an
annual basis.

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Product mix (revenue):

Software $26B,
Services $57B,
Hardware/Financing
$16B

2011 IBM volunteers employees gave over 15,000 hours of qualified help to
local Irish communities.
IBM funded $250,000 for those actions.

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IBMs Bluemix Platform as a Service Cloud

Cloud computing is already at the tip of our fingers with applications such as Dropbox, Google
Drive, iCloud or Google Docs. But corporate cloud applications is slightly more technical since it is
not only about storing data: processing power,cognitive computing and business analytics to name
a few run trough the cloud. IBM has grasped the potential of cloud computing a long time ago and
sees the challenge of cloud computing as follows:
Globalization has brought competition into one unified market. Companies who think faster and
take faster relevant decisions gain competitive advantage and in the long run, markets. So
companies need to have a wider and wider perspective on the world to make the better decisions.
These processes require huge computer work and power that most companies cannot afford. IBM
is offering its PaaS cloud computing platform of integrated middleware, monitoring, networks,
servers and storage to serve others business needs.
Cloud solutions are made of Platform as a Service (PaaS), Software as a Service (SaaS) and
Infrastructure as a Service (IaaS). Reviewing all of IBMs offering in the cloud business would be
too long so we will focus only on IBMs Platform as a Service (PaaS) offering : Bluemix. We then
propose four direction in which IBM might want to further develop Bluemix.
Bluemix is a platform where the customers can pick frameworks, applications and jobs to work
with in their company. The idea is to offer a range of services that can work together and
complementarily to the existing IT capacities of the company. The cloud offers six main features:
computing power, cognitive computing, data analysis, storage, interconnectivity, empowerment of
hardware, security authentication.
The computing power: IBM has super-calculators the can handle hundred of thousands of
complex processes that regular computer cannot do. This computing power is offered through the
cloud: jobs orders are sent to the calculators (of which servers may be located anywhere in the
world). once the job is done results is sent back to the client. This service provides a pay as you
go pricing structure which allows to avoid investing heavily on super-calculators. Plus, clients
benefit from IBMs experience in data management save the cost of keeping up to the (fastening)
pace of technology improvements.
Cognitive computing is the ability for a computer to Think like a human brain would. Given a
set of parameters, events and past experiences, the computer is able to make decisions by itself.
It can learn from past situation and recall them when needed. IBMs program for Cognitive
computing is called Watson and is offered through Bluemix. Mass storage is also taken care of by
IBMs cloud solution. The data is conserved and protected in a secure environment.
Data analysis is made possible through the super calculators and also thanks to cognitive
computing. The recent acquisition of SoftLayer made IBM able to empower existing hardware in
companies. Each computer (especially in big companies) have limited processing power.
SoftLayer uses the interconnectivity given by the cloud to split big jobs (like reviewing a huge
database) into small ones and dispatches them to all the computers in the network. This way it
does not require investing too much in super-calculators power if the company already has an
existing IT network of hardware. The combination of Public solutions (IBM Super-calculators) and
Private means (companys computers) is called an Hybrid Cloud.

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Bluemix comes as a platform to link the different applications and processes in the organization.
The Customer Relation Management System with the sales data for examples. Below are the core
values of Bluemix:

Care Free

Elasticity

Scalability

Pay as
you go

Capacity

The main incentive of adopting IBMs cloud strategy is to gain speed. In The cloud allows to
streamline exchange of information quicker between the services of the company, between back
end processes to front end, between field and office, between procurement and delivery.
Transferring processes to mobile terminals is made easier because the flows of information are
already going through internet and made to interact with other applications.
For Example: BART, the railway transport system of San Fransisco is using a mobile application
based on Bluemix. It allows the maintenance people on the field to spot damaged pieces and send
a request for replacement. This request is directly sent to the procurement software as job to be
donewithout the need to do it manually. Field inspectors are only seconds away from their back
end support applications and supply chain.
In the future, IBM cloud should be further developed around four things :
Open Standard : 91 % of the softwares will be built for cloud delivery, says Gartners Hybrid cloud
is Next. The possibilities for Cloud applications are tremendous. But IBM will never have the time
and resources to develop a cloud solution for every need in every industry. This why softwares and
applications should all talk the same language to allow them to work together. Business and
cloud providers will benefit from it.
Open Business : Bluemix should welcome complementary products from other cloud providers to
its platform and sell them to the clients. This would benefit the customers but the smaller cloud
providers would benefit from IBMs good name, power and experience. To achieve this, IBM needs
to see its Business as a Service to the global economy. Not only giving outputs but also taking
inputs from other businesses the way Apple did with third party devs in the App Store.
Modular Structure: Each business is different and needs different jobs to be done. Most traditional
softwares (CRM, ERP, Accountings, Procurement) allow different uses to be made depending on
the purpose but those software are used to a 25% of their capacities. The other 75% or not
needed but are still paid for by the clients. This problem can be addressed by the flexibility of the
cloud which would allow processes to be made independently. It is more about get tasks done
than tackling the problematics of an entire department of the company.
Post Hybrid cloud: cloud applications will become more and more widespread and will address
more and more needs of companies. Data analysis will go deeper and deeper, its field will widen
extensively requiring more computing power that can provide computers of today. Quantum
computing will take over much of the data treatment (see the part on Big Data) and Personal

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Computers will become but windows into the data, without processing it. The post hybrid paradigm
will see clouds as engines and Personal computers as displays.

Ultimately IBM is developing its cloud strategy because another big trend in IT is becoming
increasingly important for businesses: Big Data. The bound that ties PaaS Cloud Computing and
Big Data can be explained through a metaphor.
In the automotive industry, car makers started sharing their car platform to save R&D and
production costs. The chassis would be the same, pieces would come cheaper because of
economies of scale, allowing cheaper prices and more volume sold. This set of mind of open
architecture gave more time to the carmakers to differentiate on other fields (car design, interior,
seat, electronics, comfort). This brought more diversity to the customers as well a cheaper price.
Now PaaS Cloud is the chassis, and Big Data is the fuel for differentiation.
As Tim Cook, CEO of Apple explains "This is all about transforming enterprise. Reinventing the
enterprise. Taking big-data analytics down to the fingertips of people so they can spend their time
making complex decisions not running around and around getting data. "
This leads us to the second part where we will review IBMs position in Big Data and the vision it
has for the future.

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Big Data and Data Analytics

Big data : extremely large data sets that may be analyzed computationally to reveal patterns,
trends, and associations, especially relating to human behavior and interactions.
The field of action for big data is vast and the potential applications are endless. In 2013 especially
there was a sudden burst of awareness about the importance of Big Data. With countless articles
and conferences giving wide theories on the subject one cannot help but wonder what is really
made possible. Past the fuss, remains the certainty that Data is Becoming the new natural
resource and hence is the new basis for competitive advantage as IBM puts it. In this part we
will state IBMs position review the applications of Big Data today and in the future.
Since 2005 IBM has invested $24B both R&D and 30 acquisitions (among which i2, SPSS, SRD,
Q1 Labs, Cognos and SoftLayer)in the field of big data.
This investment has led to more than 40,000 service engagements for IBM cloud solution.
Tough data has always been a valuable asset it is now exploitable and widely spread thanks to the
IT revolutions. The growing power computer calculation makes it easier to process bigger and
bigger amounts of data. The challenge for IBM is to stay ahead of the curve to provide the best
products in this field. There is a forecasted market opportunity of $266B for Big Data & Analytics
Market in 2017. 4.4 million data analysists will be needed by 2017 to answer the needs for the
demand to come. The big data market is already skyrocketing as big companies in all fields realize
they can make a more proper use of their data. Here are a few examples:

Data today

Big Data tomorow

Automotive

Data warehouse optimization

Connected vehicle
Actionable customer insight

Audi using big data to analyse and

forecast possible car breakdowns and
using lean procurement for spare
parts supplies.

Consumer Products

Optimized promotions
effectiveness
Micro-market campaign
Real-time demand forecast
Loyalty cards

Ads that are personalized and

customized to suit the mood of the
customer (Social media semantic
analysis), its location, the time of the
day, its consuming habits

Government

Monitoring international affairs

through cartographic applications.
Data visualization
Threat/fraud prediction and
prevention

In the end, a Big brother type of

citizen monitoring to prevent
misbehaviours. cf. Minority Report

Telecommunications

Network analytics
Location-based services

Automated responses proposed to

texts thanks to semantic analysis

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Data today

Big Data tomorow

Monitoring all statistics around
players, teams, clubs, weather,
context to provide the best quote for
sport bets.

Online Bets

Trading

Models based on recognizing

known patterns that indicate an
upcoming change

Taking a potentially unlimited number

of factors (cloud scalability) into
account to forecast stocks evolution.

So what is IBMs position today ?

Data Management: IBM has a leading edge in data management since the conceptualization of
the relational database in the 70s by IBMs mathematician Edgar F. Codd. It boasts of giving
cutting edge results while lowering administration, storage, development and server costs
As speed is at the heart of the competitive advantage provided by big data and as the Data is
relevant for a limited time period IBM has invented the Stream Computing. It allows real time
analysis of live information scattered around the globe in different sources and formats to bring
help to the decision-maker.
IBMs Info Sphere relies on the power of Hadoop System which provides with a way to put
together the capacities (processing power, storage, ram) of machines within a network (intranet
and corporate network) to process the data and analyze it, store it. This open source project is an
Infrastructure as a Service (IaaS) offered to save the cost of a dedicated server. It works in he
same logic as SoftLayer within BlueMix but also provides analytics, visualization, development
tools, performance and security features.

In the future IBM should develop further its Big Data offering on the following points

- Helping businesses building their Hybrid cloud systems basing them on PaaS cloud (IBMs
BlueMix) and preparing them for the Post Hybrid Cloud Era.

- Preparing the transition to Fully Cloud Based Computing since companies will soon not be
able to follow the pace of technology upgrade.

- Developing on demand and pay as you go deals to deliver unlimited scalability to big
firms and tailored offers to smaller companies with a limited buying power (start ups and
SMEs).
- Making Cognitive Computing a standard product within their product mix to make sense and
use of the Unstructured Data. It represents 80% of the 2,5 billions of gigabytes of data
generated everyday. This tendency is bound to grow even more in the future with people
expressing trough unstructured means (videos, symbols, natural language) in a qualitative
rather than quantitative way. The Watson research project aims at achieving that. It should
pushed forward because unstructured Data will ITs next challenge.
- Funding research on Quantum computing to urge the possible application in Big Data. Indeed,
quantum computing, in contradiction to binary computing allows a single bit to contain 3
variables instead of two in the binary system. This is made possible by the ubiquity of a
quantum bit that can be in two states at a same quantum moment. In practical terms such a
coding allow an exponential amount of information to be delt with.

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Conclusion
In the end Big Data is a subject that calls for attention since it will shape the future of our business
models. But one shall not forget that Big Data is only made possible thanks to cloud computing
given the processing power required. Today Big Data is at its early stage and the possibility are
still limited. Tough, in a near future there should be a huge leap forward with quantum computing
made an operating reality. Companies need to be aware of it because it will revolutionize the way
information is dealt with. It will create a gap between those who make relevant use of the data and
those who dont. Models will be created to make the calculation more efficient and a whole
industry will emerge based on mastership of these new capacities.
Cognitive computing will allow businesses to integrate unstructured, qualitative data to their
decision making. The sectors of banking, insurance, finance will rely on Big Data to deal with
uncertainty and risks. Medicine will benefit from data analytics to prevent diseases and prepare a
relevant answer. So will car makers.
Our smartphones are first class providers of real time personalized, geolocated, both qualitative
and quantitative information about us. We publish our consuming habits, likes and dislikes, dreams
and wishes, pain and delights. Ultimately this information will be processed to extract valuable
information out of it. (commercial, surveillance purposes). Connected products and wearables are
the next step to the ever-online status that big data will help leveraging. But this ever increasingly
connected lifestyles may be bound to destroy actual link between people. Moreover it makes a
market of everything : emotion, feelings, heartbeats will be items of trade. Since then shall the law
set the limit of technology implementation or is it everybodys choice ?

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Sources

Papers and Journal Articles:

IBMs great innovations How Big Blue stays ahead by keeping up with the times, Emerald
Insight, 2004
IBMs Vision for the Future in Patient-Centric Global Health Care,Richard Bakalar, 2008
IBM Strategy: New Models For the Future, IBM, 2001
IBM Faces the Future, Patricia A. Galagan, 1990
Apple and IBM: Is this the future of the workplace? Jacobs & Axelrad, 2014
IBM: Decline or Resurrection? Bruce Lloyd Robert Heller, 1994
IBM marches towards Post Silicon Future, Jacobs & Axelrad, 2014
Better business outcomes with IBM Big Data & Analytics, IBM Software, 2014
Strategic imperatives, IBM Investor, 2014
Centennial Timeline, IBM, 2014
Scenario Planning and Contingency Planning, 1994
How IBM Is Retooling Itself for Future Cloud Business, Preimesberger, 2014
Hybrid Cloud is next, Gartner, 2013

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Websites and Other Resources

http://hadoop.apache.org
http://www-03.ibm.com/software/products/en/infosphere-streams
http://www-03.ibm.com/software/products/en/infobigienteedit
http://www-03.ibm.com/software/products/en/category
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http://www.siliconrepublic.com/careers/item/36786-up-to-21-000-jobs-could-be
http://www.maynoothuniversity.ie/progcity/2014/05/big-data-series-critical-analysis-of-the-irish-bigdata-skills-report/
http://sentdex.com/sentiment-analysisbig-data-and-python-tutorials-algorithmic-trading/python-bigdata-analytics-stock-algorithmic-trading-part-1-big-data-files/
http://www.wallstreetandtech.com/latency/big-data-for-intelligent-trading/d/d-id/1268561?
http://www-01.ibm.com/software/fr/data/bigdata/?cm_sp=MTE23184
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http://ibmdatamag.com/2014/03/going-beyond-data-science-toward-an-analytics-ecosystem-part-1/
http://www.ibm.com/big-data/us/en/
http://www.ibm.com/ibm/responsibility/downloads/profiles/Profile_Ireland.pdf
http://www.ibm.com/investor/att/pdf/Business_Perspective_September_2014.pdf
https://www-304.ibm.com/connections/blogs/ibmireland/?lang=fr_fr
http://www.siliconrepublic.com/innovation/item/24247-the-world-is-now-our-lab
http://citadel100.com/about/reasons-to-choose-ireland-for-data-centers/
http://www-03.ibm.com/press/ie/en/pressrelease/39133.wss
http://www.exit-online.org/link.php?tabelle=transnationales&posnr=135
www.foreignpolicy.com/articles/2014/01/02/8_economic_trends_to_watch_in_2014
http://www.macrotrends.net
http://www-03.ibm.com/press/ie/en/pressrelease/39133.wss

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