Eswaran: When a customer is thinking about a solution, they make a buying decision. The next step for them is to deploy the products they buy as a result of that solution, which they committed to from a roadmap standpoint. Once they finish that, they have to operate and maintain the solution they put in place.
The classic problem in the industry is that, when the customer has a problem, after they have deployed the solution, they call the support organization. The support organization, if they determine the problem is actually with the project and the customizations, cannot support it. Then, the customer will be punted back to the consulting organization, whoever they used. In some ways, the industry plays a little bit of ping-pong with the customer, which is a really bad place to be.
What we're trying to do is get to the heart of it and say that we cannot introduce our organizational complexity to the customer. We want to make it simple. We want to make it transparent to them.
Everybody talks about business outcomes, but if there are multiple organizations responsible for the same business outcome for the customer, then, in my view, nobody is responsible for the business outcome for the customer. That's the second thing at the heart of the problem we're trying to solve.
At Software Universe we announced the launch of a new portfolio element called Solution Management Services, and I'll refer to it as SMS through this conversation.
Very briefly, what it does is offer the ability for us to support the entire solution for the customer, which is different from the past, where software companies could only support the product. That's the heart of what it means. But, it's the first step in a very large industry transformation we are ushering in.
Where we're going with this is that we're looking at what we call the concept of services convergence, where we're trying to make sure that we support the full solution for the customer, remove internal organizational complexity, and truly commit to, and take accountability for, the business outcome for the customer.
Specifically what it means is that we've put up an 18-month roadmap to fuse the services and the support organizations into one entity. We basically take care of the customer across the full lifecycle of the solution, build the solution, deploy the solution, and maintain the solution, They they have one entity, one organization, one set of people to go to across the entire lifecycle. That's what we're doing.
To put it back in the context of what I talked about at the new portfolio launch, SMS is the first step and a bridge to get to eventual services convergence. SMS is a new portfolio with which the consulting organization is offering the ability to support the solution, until we get to one entity as true services in front of the customer. That's what SMS is. It's a bridge to get to services convergence.
The cool part is that this is an industry-leading thing. You don't see services convergence, that's industry leading.
Just as SMS is the first step toward services convergence, services convergence is the critical step to offering "Everything as a Service" for the customer. If you don't have the organizations aligned internally, if you don't have the ability to truly support the full lifecycle for the customer, you can never get to a point of offering Everything as a Service for the customer.
If you look at services as an industry, it hasn't evolved for the last 40 or 50 years. It's the only industry in technology which has remained fairly static. Outside of a little bit of inflection on labor arbitrage, offshoring, and the entire BPO industry, which emerged in the 1990s, it's not changed.
Moving the needle
Our goal is to move the needle to have the ability to offer Everything as a Service. Anything that is noncompetitive, anything that is not core to the business of an organization, should be a commodity and should be a service. Services convergence allows us to offer Everything as a Service to the customer. That's where we are heading.
As we look at it, we see the biggest value in first treating it as a horizontal. Because this is going to be such an inflection point in how technology is consumed by the customers, we want to get the process, we want to get the outcomes, and we want to get what this means for the customer right the first time.
Once we get there, the obvious next step is to overlay that horizontal process of offering Everything as a Service, with vertical and industry taxonomies.
When you talk about inflection points in the history of technology, the Internet probably was the biggest so far. We're probably at something that is going to be as big, in terms of how consumption happens for customers. Everything non-core, everything noncompetitive is a service, is a commodity.
There are many different mechanisms of consumption. Cloud is one of them. It's going to take a little bit of maturity for customers to evolve to a private cloud, and then eventually consume anything non-core and noncompetitive as part of the public cloud.
We're getting geared, whether it's infrastructure, data centers, software assets, automation software, or whether it is consulting expertise, to weave all of that together. We've geared up now to be able, as a best practice, to offer multi-source, hybrid delivery, depending on, one, the customer appetite, and two, where we want to lead the industry, not react to the industry.
A different approach
If you look at the last few years and at the roadmap which HP has built, whether it is software assets, like Mercury, Peregrine, Opsware, and all of it coming together, whether it is the consulting assets, like the acquisition of EDS, which is now called HP Enterprise Services (ES), there was a method to the madness.
We want to approach [the market] in a very different way. We want to tell the customer, "You have a 5 percent defect level across the entire stack, from databases and networks, all the way up to your application layer. And that's causing you a spend of $200 million to offer true business outcomes to your customer, the business."
Instead of offering a project to help them mitigate the risk and cost, our offer is different. We are saying, "We'll take a 5 percent defect level and take it to 2.5 percent in 18 months. That will save you north of a $100 million of cost." Our pricing proposal at that point is a percentage of the money we save you. That's truly getting to the gut of business outcomes for the customer.
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