At PartnerWorld 2003 in New Orleans, IBM had a story to tell about its newest business transformation strategy. That strategy, called "e-business on demand," is focused primarily on organizations that--according to IBM--are on a journey toward virtualized IT services. The concept in its barest outlines is relatively simple: IBM is offering products that will enable customers to build information services that are not reliant upon fixed IT infrastructures. When a business cycle heats up, these on-demand information services can add IT capacity as needed, transparently. But when business cycles cool down, these same information services will be able to ramp down, shedding capacity and infrastructure to remain manageable with fewer personnel resources.

More Than Just Capacity Planning

However, there is more to e-biz on demand than mere capacity planning, and it's this key difference that will enable IBM to separate itself from the other purveyors of hardware and software services. IBM is building a technology within its products that will enable its goods and services to be slipped into these virtualized infrastructures. These products, like its blade servers and storage devices, along with its various software brands and operating systems, are designed to minimize the complexity of the modern IT environment. They are modular, open, and highly configurable with integrated management tools that maximize the limited resources of IT personnel.

E-biz on demand is also a blueprint for externalizing IT services when the need arises, allowing companies to focus upon their core business missions, instead of the endless cycle of system maintenance and upgrade. But, in order for organizations to realize the full benefits of an e-biz on demand architecture, they must look beyond the traditional requirements of IT and into the heart of what their core business processes are about.

The State of the e-Biz Revolution

IBM looks at e-biz on demand as the next logical phase in the business revolution that began in the 1990s. The first phase was the transformation of traditional business organizations into e-business enterprises. In that first phase, which IBM calls the "access" phase, organizations embraced the newest IT goods and services for productivity and connectivity to global markets. According to IBM, as companies saw the potential for exploiting the Internet and the global marketplace, they "accessed" the technologies that would extend their reach out into the virtual global community. And indeed, this rapid embrace has led to tremendous advances in the ways and means by which companies make their profits. In many cases, this embrace transformed the way organizations worked, in marketing, order gathering, manufacturing, fulfillment, and distribution.

e-Biz and the Economic Climate

However, IBM sees that initial business transformation as only the first phase. Why? Because each new technology brought into the organization has also brought an incredible infrastructural cost, in terms of equipment, personnel, and the complexity of internal business processes. In good economic times, companies have been able to shoulder that added expense and complexity in order to reap the economic benefits and to propel them into new markets opportunities.

However, there is a natural cycle to the business climate, times when the economy can not, for a variety of reasons, support the kinds of growth needed to sustain the past infrastructural investments in IT. Times like these.

Indeed, the 2000 collapse of the dot-com investment bubble that signaled the beginning of the current economic downturn landed many companies in a quagmire of complex, highly interlaced IT information systems that can no longer be supported by the economics that spawned them.

For many organizations, abandoning these highly complex systems is not an option: They represent vital links into other organizations and markets that still feed the overall core business. But the expense of maintaining these systems--and the inability to scale them back to a reasonable size--is preventing these companies from reinvesting in their own core business processes. This means less innovation within the company itself and fewer opportunities for the organization to reinvent itself to meet the needs of a newer, scaled-down marketplace. Moreover, by the time the economic cycles refresh themselves, those e-biz systems that are currently in place may no longer be resilient enough to respond to the new business climates.

Can a Virtualized IT Infrastructure Be Built?

It is this realistic re-examination of e-business and technology in the variable climates of economic expansion and contraction that has prompted IBM to push its technologies forward in search of real business solutions. And this push is aimed to answer some key questions:

1. Can organizations build a real virtualized IT infrastructure?
2. Can this infrastructure be sufficiently resilient to respond--on demand--to variations in business climate and/or capacity demand?
3. What would such an "ideal" infrastructure do a company's core business processes?
4. How can IBM build products and services that will integrate and perform flawlessly within this infrastructure?

Clearly, these are not trivial questions, for either IBM or its customers, and the solutions that IBM is proposing are not currently "out of the box" products that will solve every need. Indeed, in order to achieve the goal of a virtualized, on-demand infrastructure, not only will IBM need to transform its products, but organizations will need to transform their business models.

It is this business transformation--from a static, resource-intensive e-business infrastructure into a dynamic, virtualized infrastructure--that IBM has termed "e-business on demand." It's an infrastructure that is available when needed but does not require constant maintenance or expense when its capacity is not required.

But is e-business on demand a real initiative on the part of IBM, or is it an IT pipe dream that IBM marketing has grasped hold of in this struggling economy? Can e-business on demand really work?

Will e-Business on Demand Work?

There's no question that historically business--and especially large-scale business organizations--would rather have a service-centered IT infrastructure. Indeed, going all the way back to the 1960s, businesses were generally very happy with leasing both the equipment and the software directly from IBM, including the systems engineers who helped to keep the information systems running. At that time, IBM's market predominance was supreme, and it was IBM's competitors who wanted to sell peripheral equipment to be attached to IBM's hardware that brought the successful anti-trust suit that eventually opened up the IT infrastructure to market forces.

In the past, especially during economic lulls, organizations have sought the cheapest means of outsourcing their IT infrastructure--through service centers, consulting contracts, and, most recently, ASP offerings. However, every time the economic cycles shift upward, the IT organizations within companies resurrect their own importance and their desire to bring IT services back in-house. Why?

Why Not Outsourcing for Everything?

First of all, during economic upswings, equipment and personnel seem least expensive to organizations, while the demand on the service providers seem particularly stretched to provide adequate customer support. It's at these times that IT directors and influencers can successfully argue, "We can do a better job in-house."

But secondly, there are always core business processes that need to be reinvented to keep the organization profitable in the marketplace. To support the reconfiguration of core business processes, IT has in the past almost always been called upon to build new services or expand existing services. Those requirements have--in the past--been better handled by dedicated employees who understand the business goals and who can negotiate the parameters of the reinvention through their roles within the organization.

The Nature of E-Business on Demand Technology

However, the tools that IBM is proposing to bring to the argument with e-business on demand are of a different ilk than the relatively simple IT outsourcing services of past years.

Consider IBM's "capacity on demand" servers, which place highly configurable, fully blown-out boxes that are ready to expand with the turn of a key:

• Customers pay for only what they use.
• Consider Web services, which allow the potential importation of software modules to seamlessly interface with and expand application services into a software infrastructure.
• Consider IBM's computing grid initiatives, where virtualized computational power can be spread over continents of machines and applications.
• Consider IBM's autonomic initiatives, by which machines and software are becoming increasingly "self-healing" and "self-configuring" without human intervention.

There is no question that the technology that is being invented and delivered today--the nuts and bolts of the IT infrastructure--is substantially different than it was in eras past. If one combines those elements of technology advancement with the requirement that devices and applications adhere to open, international standards, one can see that the scenery and props for a truly virtualized IT infrastructure are being hoisted into place. Are all the pieces in place yet? No! But they are arriving daily, quietly, incrementally, while businesses today are weathering the economic lull.

What's Still Missing? Who Da Man?

What is still missing, however, is the overall understanding and commitment of the business organizations themselves. Are they ready to make use of such a virtualized IT infrastructure? Have they re-aligned their business processes to take advantage of these advances? Will they have the foresight to embrace the e-business on demand infrastructure?

This is the question that IBM's e-business on demand initiative is asking each of us.

IBM says that it is looking for partners, in the community of e-business organizations, that are ready for this next phase of business transformation. It believes these organizations are the ones that recognize e-business is not an end in itself, but the beginning of a journey toward virtualized resources. It recognizes that these organizations will need to transform their core business processes to meet the goals that such an infrastructure provides. But IBM itself is willing to shoulder the burden of providing the technologies that will make such an e-business on demand work.

So, yo! Who is "da man" in e-business on demand? IBM has raised its hand, to point the way toward the future of IT, to lead organizations out of the complexity of today's IT quagmire. This was the message that IBM brought to PartnerWorld 2003. It's a message that each of us should consider as we prepare our organizations for the renewed 21st Century economy.

Yo!

Thomas M. Stockwell is the Editor in Chief of MC Press, LLC. He has written extensively about program development, project management, IT management, and IT consulting and has been a frequent contributor to many midrange periodicals. He has authored numerous white papers for iSeries solutions providers. His most recent consulting assignments have been as a Senior Industry Analyst working with IBM on the iSeries, on the mid-market, and specifically on WebSphere brand positioning. He welcomes your comments about this or other articles and can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..