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IBM e-business Hosting Services The Cisco Powered Network and Dedicated Hosting Architectures January 2002 Agenda The Value of Outsourcing Why IBM Global Services for Hosting? Why Cisco? Cisco Powered Network and the Cisco Dedicated Hosting Architecture Summary Key business drivers

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ibm e business hosting services

IBM e-business Hosting Services

The Cisco Powered Network and Dedicated Hosting Architectures

January 2002


The Value of Outsourcing

Why IBM Global Services for Hosting?

Why Cisco?

Cisco Powered Network and the Cisco Dedicated Hosting Architecture



Key business drivers

  • Focus resources on core strategic initiatives
    • Reduce upfront investment, conserve capital
    • Transfer financial and technical risk to provider
  • Time-to-market advantage
    • Fast path from strategy to implementation
    • Flexibility to respond quickly to market changes
  • More cost-effective than in-house solution
    • Minimal increase in staff and overhead
    • Benefit from provider's economies of scale in infrastructure investment and 24x7 operations

Why outsource your Web environment?


Key technical drivers

  • Access to specialized Internet technology and skills
    • Knowledgeable IT talent
    • Critical technologies --security features, high availability, applications
  • Enhanced reliability
    • Hardened 24x7 Internet data centers
  • Advanced server, application monitoring
    • Geographically dispersed load balancing
  • Performance optimization
    • Access to high-bandwidth Internet connectivity
    • Burstable, scalable capacity

Why outsource your Web environment?

hosting advantages

Performance and business benefits from hosting overshadow the large cost benefits

  • Downtime drops by close to 90% and average cost savings can reach 80-90%
Hosting Advantages

Companies gain 3 significant benefits from hosting

Access to skills

Better Performance

Lower Costs

according to Morgan Stanley...


due to hosting

In-House Cost/Server $35K

Hosted Cost/Server $7K

(80%)Rev from Reduced

Downtime/Server $52K

Employee Productivity $7K

Demand for critical web skills is growing faster than for any other occupation today.

The number of resources to maintain a hosted site is significantly lower.

Resources Dedicated to Site

# Emp In-house Hosted

0-5 29% 45%

5-10 21% 36%

10+ 50% 18%


due to hosting

Total Server Downtime (88%)

Total Employee Downtime (92%)

Downtime Incidents (87%)

Servers Affected (11%)

Employees Affected (44%)

Savings achieved through hosting expertise and economies of scale allow companies to improve their IT return on investment.

Value of hosting skills is also achieved by 24x7 service level agreements and gaining access to additional managed services expertise.

Sharp reduction in downtime, and the associated increases in productivity and potential reve-nue provide hosted companies with a clear business advantage.

Source: "The Internet Hosting Report," J. Camp, A. Henry, MorganStanley Dean Witter, November 2000


2Q Results

3Q Results

IBM Global Services 2001 Earnings Performance

Revenue $8.7B, +13% @CC

Revenue $8.7B, +9% @CC

Signings $16B

Backlog $95B

Signings $10B

Backlog $97B

Services +15%

Maintenance +3%

Services +11%

Maintenance +1%

  • Strong signings and backlog growth
    • Second largest signings quarter
    • $1 billion of Web Hosting Services signings year-to-date
  • Customer focus on cost savings and Infrastructure
  • Outsourcing and e-sourcing up 15%
  • Continued strength in Asia Pacific outsourcing
  • Web Hosting Services revenue more than doubled
  • Backlog continued to grow
  • $1.7 billion of Web Hosting Services signings year-to-date
  • Strong outsourcing pipeline
  • Outsourcing and e-sourcing up 13%
  • Web Hosting Services revenue up 50%
  • Continued margin improvement

Source: IBM 2001 Earnings Presentation


Asia Pacific



IBM Global Services Capabilities


e-business Hosting Centers

21 Centers

39 Centers

10 Centers

8 Centers






48 Data Centers

290 Processors

121,000 MIPS

432 Terabytes

19,153 M/R Svrs

92 Data Centers

175 Processors

51,558 MIPS

216 Terabytes

10,728 M/R Svrs

61 Data Centers

421 Processors

189,053 MIPS

1,267 Terabytes

27,054 M/R Svrs

Processing Capabilities

Managed Desktops





Customer Service Centers

24 Centers

2,503,000 Calls

71 Centers

19,835,000 Calls

16 Centers

5,932,000 Calls

23 Centers

11,400,000 Calls

  • 500,000 non-IBM machines under management
  • 20,000 e-business engagements
  • 2,100 Hosting Clients
  • Leader in Web Privacy and Security Services
  • 138,100 professionals in 60 countries
  • 201 Data Centers with 361,611 mips
  • $85B contract backlog $33B revenue in 2000
  • Unparalleled capability for major Web events
  • International Sales Organization


At A Glance

3Q 2001


IBM’s Commitment to the Hosting Business

  • $4 billion investment
  • 35 e-business hosting centers

IBM Data Centers are Cisco Powered Networks.

cisco powered network
Cisco Powered Network
  • Cisco partners with network services providers who offer the highest levels of quality and reliability
  • IBM is an authorized Cisco Powered Network service provider incorporating the latest in Cisco routing and switching network technology into its advanced e-business Hosting Centers


Leader in e-business

  • The worldwide leader in servers, software, services and technologies for e-business
  • Complete end-to-end e-business solutions leadership with unparalleled industry expertise
  • 150,000 experienced e-business consultants with over 25,000 engagements worldwide
  • Trusted partner with the ability to work with companies on a world wide scale
  • $5.6 billion R&D investment, $5.6 billion in capital expenditures and $500 million in strategic acquisitions


Leader in Internet expertise

  • The worldwide leader in networking for the Internet
  • Complete end-to-end networking product leadership
  • Consistently rated # 1 in networking industry customer satisfaction surveys
  • Horizontal integration model providing customers best-of class solutions
e-business Hosting Environment

Double security layer and high availability options available.


Cisco Dedicated Hosting Architecture

Cisco DHA is a set of network equipment, dedicated for each enterprise customer, for deployment in a cage or rack in IBM’s data centers.

Basic bundles – rest are options




Cat 6509

Layer 2 Switch

Cat 4006

Cat 2980 GA

CSS 11155

Content Switch

CSS 11151

CSS 11051

PIX 535


PIX 525

PIX 525

SSL Termination

SCA 11000

SCA 11000

SCA 11000

Content Engine

CE 560

CE 560

CE 507

Intrusion Detection

IDS 4230

IDS 4230

IDS 4230

Back-End Router








Multiple ISPs (BGP)



Wireless Support

CTE 1400

CTE 1400

CTE 1400

Additional Firewalls

PIX 535

PIX 525

PIX 525

Additional L3 Functionality




Each Bundle Also has a High Availability Scenario


Benefits of Cisco Dedicated Hosting Architectures

Cisco DHA Value Proposition

DHA comes with easy to use deployment guides

Cisco is the single point of support for all networking issues

HSE Management Product makes monitoring and daily management easy

Cisco has industry-leading L2-L7 products

Ease of deployment

Single point of support

Ease of management

Best-of-breed products

IGS provides Cisco Network Bundle (DHA) to Enterprise customer

Facilities Hosting/

Co-location Service

If Enterprise Wants to Outsource

DHAs are prearchitected, making it easier for IGS to design and install the enterprise web/e-commerce site

The DHAs have been tested and verified for inter-operability. This enables IGS to offer industry leading SLAs.

Cisco has industry-leading L2-L7 products

Faster time-to-service

Better SLAs – flexible, scalable, and reliable

Comfort factor – all Cisco equipment

Managed Hosting/ e-business Hosting/ e-sourcing

IGS or customer- owned equipment.

  • Cisco is the worldwide leader in networking components for the Internet
  • Managed Hosting Services is IBM’s core business
  • A network of multiple Tier 1 backbones that is global, fast, and highly reliable
  • Flexible web hosting infrastructures
  • Proactive and comprehensive management service options
  • Integrated repeatable solutions by industry leaders
  • Flexibility to add or subtract services and support as needed