IBM System z Q1 2013 – Fast Consolidation For Algar Telecom

IBM System z Highlights

  • 7% revenue and 27% MIPS growth over Q1 2012
  • Continues to diversify with ‘hybrid computing’ units
  • Linux now accounts for 23% of installed MIPS
  • New software offerings concentrate on making it easier and cheaper to work on new workloads and expand the functionality for non-technical specialists
  • Algar Telecom in Brazil demonstrates that System z ‘speaks Portuguese’
  • System z is the ultimate integrated system

ibm system z
IBM has been keen to sell its mainframes to new customers. Algar Telecom in Brazil is a perfect example of a large company in a growth market taking on System z and its attached ‘hybrid’ zBX processor to consolidate a number of key applications. You’ll be interested to learn about the benefits, especially in the speed of deployment.

IBM System z Q1 2013 Market Update

IBM continues to succeed with System z, telling us that in addition to the 7% revenue and 27% MIPS growth reported in its quarterly financial statements:

  • It has signed 195 new accounts since the launch of zEnterprise in Q3 2010, 1/3rd of which have been in growth markets
  • It has sold more than 240 ‘hybrid computing’ units over the same time, which include 55 DB2 Analytics Accelerator machines and 185 attached zBX[1] boxes
  • Three quarters of the top 100 enterprise accounts have now installed IFLs running Linux
  • That in total Linux now accounts for 23% of installed System z MIPS

We make that about 15 new customers in Q1 with 20 hybrid computing units shipped including 5 DB2 Analytics Accelerator machines and 15 zBXs.
Our view is that System z is doing well due to the importance of product introductions, with the zEC12 boosting sales significantly over the last 2 quarters. It was by far the strongest server platform in an otherwise disappointing Q1 for STG, whose revenues dropped by 17%. We’ve updated our MIPS model in Figure 1, showing revenues and revenue growth by quarter since January 2003, complete with major product launches.

New System z Offerings

IBM works hard to expand the usage of System z for customers who sometimes find the licensing costs prohibitive. It has announced 4 new initiatives:

  • System z Test and Development Offering – allowing users to create a low-cost development environment for new applications, system integration testing and development; this is not just for new applications, can be for existing production workloads in a new Test/Dev environment with incremental growth
  • Active Multiplex Pricing for GDPS Active/Active – enabling workload mobility between primary and disaster recovery servers for testing resiliency in a high-availability environment
  • System z Capacity Offering for Cloud – providing a semi-flexible balance of incremental capacity growth for System z usage over a 12 to 18 month period
  • System z Disaster Recovery Capacity Cloud – gives ‘active mobility’ between zEnterprise primary and disaster recovery servers in mirrored data centre configurations

In addition it launched a new Enterprise COBOL compiler, Rational Developer for System z and Rational Developer for Enterprise, as well as a new CICS TS Feature Pack for Mobile Extension, IBM Mobile client, Cognos Mobile on z/OS. In the area of workload deployment it launched Business Process Manager for z/OS, Operational Decision Manager for z/OS and Integration Bus on z/OS. These help to automate System z operations to help business managers access to system features. Tivoli System Automation on z/OS provides end-to-end automation, while CICS Transaction Server for z/OS Value Unit edition helps with rapid deployment of new Java workloads.
These announcements will mean little to non-System z users, but illustrate the constant tweaking IBM does to keep its mainframes relevant for new applications, the integration of mobile access and the involvement of non-technical users. These are tweaks at the edge of a very integrated system: users of big x86 systems are still playing with partitions and virtualisation for the most part.

Algar Telecom Uses System z For Consolidation

IBM has been active in selling mainframes to new customers in ‘growth markets’ and this quarter we listened to Sthefano Carneiro of Algar Telecom about his experiences in Brazil. It was founded 50 years ago and now has 50k employees and 2 million customers in 100 cities. It provides mobile, broadband, Internet over ADSL and 3G, data communications, cable TV (DHT and cable) and code for domestic long-distance and international calls.
Algar developed a strategy in 2010 to modernise its computing selecting four main aims, which were:

  • Retire the ‘out of warranty’ servers and older technology
  • Deliver high availability and performance
  • Support the growth of the business for a 3-year period
  • Reduce operational costs for power, cooling and space

Algar is a big user of Oracle, including databases, Weblogic, Siebel and Identity Management. It also uses MySQL, Nagios (an Open Source monitoring service), Lotus Notes, InfoSphere DataStage.
It worked with IBM to analyse candidates for the consolidation process, including all Intel and RISC servers as well as looking at ways for consolidating applications and analysing all the operating costs. The project scope was to consolidate over 80 physical servers running applications and databases, provide for an expected capacity growth of 20% per year over the next 3 years and to implement the new system in one month and the migration of applications over 3.
The chosen solution included the purchasing of a zEnterprise 196 M32 with 24 active and 8 on-demand IFLs, 700GB of memory and a zBX with 16 HX5 blades with 16 active cores with 64GB memory each. Mainframe virtualisation was provided by z/VM6.2. It was connected via a SAN with a Power P780 P7 server and StorWize V700 storage array, using SVC to connect to other storage arrays. Sthefano pointed out that the mainframe is located on the 9th floor, making it the highest altitude mainframe in the world.
The configuration runs approval, testing and productions servers with over 70 virtual servers on the mainframe itself and more than 50 in the zBX.
Algar has discovered a number of benefits from the project, including:

  • Reducing the total cost of ownership and for the next 3 years
  • A reduction on Capital Expenditure
  • Increased scalability
  • Increased availability, mitigating the need to stop the high-end production servers
  • Greater flexibility – it can use the environment for Cloud computing at a later stage
  • Better time-to-market – the virtualised environment with Capacity on Demand provides for faster and easier deployment of new applications
  • Better technology with the latest generation z196 and Power 7 servers

The project achieved the consolidation aim of replacing 80 physical servers with a single server. It also shows that IBM is very international – Sthefano noted that System z ‘speaks Portuguese’

Some Conclusions – What New Integrated System Vendors Can Learn From The Mainframe

System z demonstrates a status all large integrated ‘systems of record’[2] should aim for. IBM has successfully removed many objections to System z – that the processors are more expensive, the entry price too high, are only used in banks, are never sold to new customers and always run proprietary z/OS workloads. However it has not removed prejudice many in our industry have against mainframes.
As system suppliers build out their integrated system strategies they could do worse than using System z as their model. After all most users don’t know or care what system is running the workload, leaving CIOs to choose the system with the best fit and balance for the scale, type and budget. We think IBM should include System z in its PureSystem marketing and expect a growth in uptake by public Cloud providers – an area hinted at by Algar Telecom for its own future expansion.


[1] See our Acronym Buster for explanations of these and others in this article
[2] For a discussion see our article on Ambuj Goyal’s ideas

4 Responses to “IBM System z Q1 2013 – Fast Consolidation For Algar Telecom”

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  1. […] Continued here: IBM System z Q1 2013 – Fast Consolidation For Algar Telecom … […]

  2. […] listed here – System z is missing today, although we covered its new introductions recently, as are storage systems, which is announcing its new stuff at Edge2013. The announcements cover […]

  3. […] IBM does a good job of illustrating the relevance of its latest offerings by putting them in context of its existing customers, describing its focus as Cloud, mobile, analytics and security. Its customers sometimes spread the use of mainframes to new workloads – Algar Telecom in Brazil for instance is thinking about extending mainframe use beyond consolidation to Cloud services (see our previous analysis). […]

  4. […] Reading – see how IBM has been supplying Algar Telecom with its first mainframe in […]

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