IBM Takes On Oracle, Cisco to Simplify Server ‘Scut Work’

International Business Machines Corp. (IBM) is taking on Oracle Corp. (ORCL) and Cisco Systems Inc. (CSCO) with server computers and software packaged and automated to reduce the time and money clients spend on “scut work.”

The world’s largest computer-services provider built what it calls PureSystems over four years, delivering server systems that are easier to install, automate, update and manage, IBM said in a statement. That frees information-technology staff to work on more valuable, business-specific tasks, it said.

IBM is positioning PureSystems as an offering that simplifies technology building blocks to compete with Oracle’s Exadata and Cisco’s UCS and VCE products. The system may also help IBM fend off competition to its hardware and software sales from Web-based cloud-computing services by providers such as Amazon.com Inc. (AMZN), said John Rymer, a Forrester Research analyst.

“They’re being challenged now by folks coming out with cloud environments,” Rymer, who did research work related to the project for IBM last year, said in a phone interview. “This product line is a very significant attempt by IBM to provide a competitive option to some of those cloud environments, something that can be installed on premise.”

Software and hardware together made up more than 40 percent of Armonk, New York-based IBM’s revenue of $107 billion last year, with services accounting for almost all of the rest.

Cloud Threat

IBM estimates companies use more than 70 percent of their IT budgets managing and maintaining existing infrastructure, said Steve Mills, IBM’s senior vice president and group executive overseeing software and systems. To help reduce costs, IBM is offering standardized configurations and pre-installed application “patterns” that companies can build upon more quickly than constructing their systems from scratch, he said.

“We have this ability to mass-customize, to lower the cost of computing,” Mills said in a phone interview. “Clients are spending way too much money just trying to get things to work properly.”

IBM identified the problem more than a decade ago when the cost of getting server systems up and running surpassed the cost of the hardware, Mills said.

Corporations want “IT employees to spend more time developing business services and less time on all the scut work, the basic manual labor of getting stuff configured right, getting it installed correctly, scaling it, raising the capacity,” Rymer said.

An in-house option that needs less tech support from the start may also be competitive against cloud services, Rymer said. Corporations are migrating to cloud providers such as Amazon’s Web Services, as they seek to run and store applications in outside data centers instead of buying and maintaining the servers and other hardware themselves. Forrester has estimated that the market for cloud-computing services will reach $61 billion by the end of this year.

IBM fell 1.3 percent to $202.33 yesterday. The stock has advanced 10 percent this year, and on March 5 closed above $200 for the first time, factoring in stock splits.

To contact the reporter on this story: Beth Jinks in New York at bjinks1@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

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