Microsoft Server Virtualization and Management

versus IBM management stack

Competitive Discussion Guide- May 2014
Introduction

market strategy: where to sell their products, what they need to acquire to
complement their portfolios, and what they need to shed or put on the back burner.

This discussion guide provides guidance for Microsoft field sales representatives to
discuss customer concerns about server and cloud environment management and
how solutions from Microsoft can help address those concerns. This document
provides information and facts to help field sales representatives compete
effectively against IBM Data Center and Cloud Management solutions. Use this
guide to:
Initiate sales conversations with technical decision makers (TDMs) and business
decision makers (BDMs) to identify sales opportunities.
Understand key messages and strategies for positioning Microsoft Hyper-V
and Microsoft System Center.
Sell Microsoft System Center against IBM Cloud Management Solutions.
Use this discussion guide in conversations with:
TDMs: Information Technology (IT) Administrators, IT Managers (IT
Implementers), VP of IT, Director of Technology, Director of IT, and Chief
Architect
BDMs: President, CEO, Chairman, and COO

1 | IT Operations Management Market Land Escape

Historically, the ITOM landscape has been dominated by four vendors: BMC
Software, CA Technologies, HP, and IBM. Gartner refers to these vendors as the Big
Four. These vendors continue to expand their portfolios through acquisitions and
some organic investments. However, software infrastructure vendors like Microsoft
and VMware are also broadening their portfolios to include management solutions
that provide deep-stack management. This shift in the management vendor
landscape brings new challenges to IT organizations to assess the breadth and
depth of management solutions or suites to determine when and where best-ofbreed, good-enough and portfolio integration are trade-offs worth making.

2 | The ITOM Big Four at a Glance

Strength

Their rich portfolio allows them to successfully compete in tactical sales with point
solutions and in strategic sales as IT preferred partners. Their typical operating
mode is not to innovate directly but to determine the next direction in which to take
the market and to acquire either the innovators that are spearheading the trends
or the specialists that will help them increase their customer base. The mega
vendors have the money and the market presence to push current and nextgeneration products. Consequently, they must base their strategies on the
management of their product portfolios and on the effective diffusion of their
2014 Microsoft Corporation | Confidential | For Microsoft Internal Use Only

Microsoft Server

Weakness

Opportunity

Threats

BMCs IT management The potential to

strategy is addressing execute on the
the consumerization strategy is
and the
impaired by the
industrialization of IT; current portfolios
it is addressing new
acquired solutions
and old challenges and which are now
is working on
showing their age
simplifying the needed and which are
solution. portfolios to difficult to discard
aid IT organizations in given BMC
their transformation to installed base.
the next stage of
maturity.

BMC has a golden

IBMs core strategy
The strategy
IBMs IT management
opportunity to focuses on new
pushes new
strategy focuses on
reinvent itself disruptive technology solutions toward new trends and the
innovative company,
management (cloud, systems of
transformation of IT
in line with the mobile, etc.) while
engagement while into BT. This will
successful
optimizing the
acknowledging the certainly agree with
introduction
management of legacy role of systems of the top IT
and Remedy. systems of record.
record. However, organizations.
The company
the transition from
shift to the model
one focus to the
other requires a
allowing innovation to
strategy that
happen via acquiring
abstracts the
innovative and
complexity of
people rather
legacy systems.
code, and give
This is not really
the means to
explicit in IBMs
innovative solutions
strategy.

CA owns a solid
CA has difficulty
portfolio based on
encapsulating a
strategic acquisitions good and solid
and an ability to
portfolio into a
capitalize on them.
clear strategic
Its solutions are
marketing
innovative depending message.
on product and
portfolio; its strength
lies with the
combination of
products and their
integration across the
IT management
portfolio.
The current strength o f The portfolio as a
HPs IT management whole appears a
portfolio is the
bit dusty and is
application
not really
performance
supported by a
management solution. strong marketing
vision.
Reminiscing about
past strategies
such as BAC and
others does not
help.

CA has a clear
opportunity to
accompany customers
evolving from
traditional IT
over the years
using its multiple
3 | IBM Cloud & Smarter
capabilities,
Nimsoft to large Infrastructure: Preparing
enterprise solutions.
New ITOM Market

for the

Strategy

IBM recognizes the technology disruption brought forth

by cloud, mobility, and smart infrastructure. IBMs
Now that HP
strategy for the next three to four years is to focus on
three main areas regarding the new ITOM cycle
has overcome
challenge:
acquisition difficulties,
1) Open standards as a means of enabling agility
we expect it
within and across organizations.
recover and
innovating again. 2) Advanced analytics as a new source of actionable
insights into how best to serve people.
Cross-divisional
3) Design as a competitive differentiator and key
cooperation
factor in improving productivity and engagement.
capitalization
IBMs strategy is to focus on these three key areas
hardware base
across the portfolio.
help.
This is applied to three market trends:
1) Abstraction of infrastructure
2) Understanding workloads and services
3) Understanding and resolving what happens within
systems. Geographic ReachIBM's international
business has become increasingly important to
the bottom line. With clients in about 170
countries, overseas sales account for more than
half of total revenues. The company's businesses
in developing markets in Brazil, China, India, and
Russia have been particularly active. It will open
10 offices in Russia, Kazakhstan, Ukraine, and
Uzbekistan in 2012, doubling its number of
branches in the region. Late in 2012, the company
opened offices in Malaysia and Indonesia as
Southeast Asia sees tremendous growth. IBM
continues to seek opportunities outside the
2014 Microsoft Corporation | Confidential | For Microsoft Internal Use Only

mature markets of North America, Europe, and

Japan.
IBM tries to bridge the old world with the
new. The disruption of technology will bring a
lighter way to engage with IT systems and
services. Yet the old world of systems of record
is the foundation from which new services are
built. Taking a clients view, IBM sees the need to
help customers cross the systems of recordsystems of engagement divide and abstract the
complexity of making the transition between old
and new.
IBM believes in open standards. Diversity is a
fact of life in IT management solutions. Many
clients have opted for solutions coming from
different vendors. IBM believes that open
standards are the key to eradicating the
integration problems that have plagued ITMS
products for years. While it has its own hardware
layer to support, its software is agnostic and built
on an open foundation.
IBM believes in analytics. IBMs perspective
comes from being able to analyze workloads and
understand their features, dependencies, and
patterns of usage and propagation. It sees
workloads as the major client challenge in terms
of deployment, monitoring, and understanding.
IBM solutions are therefore workload aware to fit
different situations and implementations.
IBMs IT management solutions alignment is
based on smart choices. The integration of
solutions that manage, operate, and maintain
systems of record and systems of engagement is
the biggest challenge of infrastructure and
operations teams. IBM has made significant
organizational and portfolio adjustments to
integrate and orchestrate existing and newly
acquired IT management solutions. Its internal
drive to simplification and integration has made a
big difference in clients adoption of IBMs IT
management portfolio

8)

IBM claims that cloud revenue for 2013

increased 80% YoY.

4 | Competing with IBM

Management Platform and Offering
IBM recently revamped their cloud management
platform strategy and offerings. IBM had been selling
three different solutions - Service Delivery Manager,
Tivoli Service Automation Manager, and Smart Cloud
Provisioning which are marketed under the SmartCloud
brand (under the larger Smart Planet umbrella
marketing theme). They now sell only one solution:
Smart Cloud Orchestrator (SCO). SCO will be based on
OpenStack architecture. Customers who purchased
IBMs previous offerings have no upgrade path
according to Gartner.

A | IBMs Confusing Cloud

Automation Platform Solutions

IBM: About

IBM is the largest ITOM software vendor with $100B

large hardware and software services.
1) Tivoli Management software approximates
$3.5B or 14% of total software revenue.
2) IBM leads two distributed ITOM submarkets:
Performance and Availability Management,
and Network Management.
3) Server hardware business is on steep decline.
IBM is also considering selling its low-end
server business.
4) IBM is struggling in China and European
markets with decreasing revenues.
5) YoY total revenue decline of 2%: Q4 declined
by 5.4% Q1 $1 billion workforce rebalancing
charge (i.e. layoffs)
6) Software = 25% of revenue and 45% of
profits. Software consistently growing in
importance.
7) IBM is focused on four key growth initiatives:
Smarter Planet, Growth Markets, Business
Analytics, and Cloud Computing.

B | Typical Architecture of SCO

Resource Intensive

Requires minimum 5 VMs, Central Servers 1 -4,

plus the Region Server. Central Server 5 is needed
if you need HA, and System Automation App
Manager must be deployed.

2014 Microsoft Corporation | Confidential | For Microsoft Internal Use Only

Separate Region Server needed for each

hypervisor that will be managed by SCO (i.e.
endpoint).
OpenStack is deployed as part of the SCO
installation. It is required to support user
authentication.

C | IBMs Messaging for Smart

Cloud Orchestrator

E | Issues with IBMs SmartCloud

Orchestrator

D | IBMs SmartCloud Orchestrator

Packaging
F | Another Point of Competitive
Differentiation with System Center

2014 Microsoft Corporation | Confidential | For Microsoft Internal Use Only

G | Winning Purchasing Criteria

I | Win Against IBM

Sell higher in the organization and engage with

the LOB managers if appropriate.
Understand IBMs motivation and sales tactics.
H | Winning with IBM Global
Point out the complexity of IBMs solutions and
Services (IGS)
future maintenance
costspush
Microsofts
superior time to value.
Highlight IBMs confusing, multiple cloud platform
offerings.
Sell Hyper-v leading virtualization platform and
the deep integration with System Center cloud
management platform including the broad set of
management capabilities.
IBM commitment to OpenStack is not mature. IBM
public cloud SoftLayer is not built using
OpenStack.
IBM is facing multiple challenges in the CMP
market. The company has to address criticism
from existing TSAM (Tivoli Service Automation
2014 Microsoft Corporation | Confidential | For Microsoft Internal Use Only

Manager) and ISDM (IBM Service Delivery

Despite the promise of PureApplication, IBM's
Manager) customers, who are lamenting the lack
marketing around integrated stack systems has
of a fully featured orchestration engine to simplify
not yet overcome the strength of Oracle's
the development and maintenance of automation
engineered system market momentum.
workflows (a capability also missing in SmartCloud
Vendors such as Dell, Huawei, HP, and Supermicro
Provisioning); on the other hand, IBM has to
have more visible traction in the market for x86demonstrate that the SmartCloud offering is more
based big data solutions. As IBM ramps up its
than a rebranding exercise. Old and new
PureData solution, this will potentially enable the
customers are confused about the transition and
company to redress the balance.
further wonder how the commitment to
J | Win Against IBM Public Cloud (In
OpenStack will fit the strategy.
Private cloud engagements, particularly with
brief as not focus for this study)
enterprises rather than service providers, IBM
IBM is a large diversified technology company
would appear to have an edge. Professional
with a range of cloud-related products and
services are the company's bread and butter. Plus,
services. IBM's only true cloud offering is
IBM claims that it had 5,000 private cloud
SmartCloud Enterprise (SCE), although it also has
customers as of last year. We have a feeling that
a cloud-enabled infrastructure service called IBM
claim may rest on a rather loose definition of the
SmartCloud Enterprise+, as well as PaaS services.
private cloud, but no doubt some major portion of
Although IBM has improved the speed of its
those customers may be running SmartCloud
development cycle for SCE, its feature set still
software of some kind, which will soon be
lags significantly behind those of its competitors.
upgraded to include the OpenStack bits.
Enterprises are likely to be especially concerned
IBM's plan to make the latest, unvarnished
by the weaknesses in security capabilities and the
OpenStack bits core to all its cloud offerings is
inability
to
meet
regulatory
compliance
only one approach. Piston Cloud, Rackspace, Red
requirements.
Hat, and others will continue to deliver packaged
IBM's SLA is weak and it excludes maintenance;
OpenStack versions -- and soon the first
IBM typically has more maintenance-related
OpenStack appliance will arrive from Nebula,
downtime than its competitors. It also has a more
whose CEO, Chris Kemp was CTO of NASA when
complicated sign-up and contracting process than
the agency began developing the Compute
most of its public cloud competitors.
portion of OpenStack.
While IBM has a stated commitment to
Moreover, IBM does not have an OpenStack public
OpenStack, SCE is not currently based on
cloud yet, while HP and Rackspace do. Somehow,
OpenStack. Moreover, on 8 July 2013, IBM
it is difficult to imagine IBM going into the
acquired SoftLayer, which has its own proprietary
commodity public cloud business. To use the
cloud IaaS platform. This creates uncertainty
current IBM public cloud, we need to contact IBM
about the future direction of IBM's cloud
and wait for someone to get back to us. It is not
infrastructure platforms and portfolio, including
exactly the self-service model.
the future of the SCE offering as the platforms are
IBM essentially donated functionality from its
reconciled. Prospective customers should ask IBM
SmartCloud Foundation product to the Folsom
about its SoftLayer integration plans.
release of OpenStack -- and going forward, all
future versions of SmartCloud Foundation will be
built around OpenStack. Over and above the core
K | IBM Sales Tactics
OpenStack bits, Diaz says, SmartCloud Foundation
adds management, security, orchestration, and
IBM will target high in the organizationoften
more.
leverages CxO relationships.
IBM has gradually lost blade server market share
IBMs revenue is concentrated in large enterprise
through the past three years this share
accounts. These are often mainframe customers
declined from 25% in 2010 to 18% in 2013.
as well.
However, there is early evidence that Flex System
IBM has a large Microsoft alliance. IBM uses Hyperand its derivatives are now returning the vendor
V for server virtualization technology. IBMs
to net growth.
virtualization technology is based on hypervisor
IBM's x86 server strategy has long lived in the
firmware from its zSeries mainframe. Hypervisor
shadow of much stronger marketing and
firmware virtualization is not compatible with x86
messaging of Power and mainframe systems. The
platforms.
strong corporate commitment to PureSystems has
yet to dispel speculation about the vendor's
commitment to the x86 server market; and fresh
I N S TA LLE D B A S E Traditional focus on large clients
Introduce heavily discounted valuespeculation about IBM potentially divesting some
products during time of renewal
or all of its x86 server business will create
Discuss integration with customers e
additional flux until the situation is resolved.
infrastructure management products
Although we know IBM is investing strongly in
Use portfolio pricing
reference and case study generation, client
Upsell products
feedback indicates that the number of proven
references remains limited.
2014 Microsoft Corporation | Confidential | For Microsoft Internal Use Only

C O M P E T I T V E SI T
U AT I ON

Leverage portfolio pricin

Start with anopen messa
there.
Push broad portfolio and
management
May offer software at a hea
yeargreatly increase co
Leverage executive relationships
brand

CU S T O M E R L OC
K- I N

IBM Global Services customized

Initially aggressively discount SW
maintenance fees later

L | Position IBM as a Legacy

Physical Infrastructure
Management Vendor

Remind customer of the inherent complexity in

IBMs management tools
Reference IBMs three different cloud platforms
and evolving strategy
Is IBM trying to sell a low price solution which
ultimately will not match the customers needs?
IBMs most complete CMP solution is Service
Delivery ManagerAre they trying to sell another
cloud management platform to appear as the low
price solution?
IBMs other cloud management platforms require
additional IBM management tools for basic
functionality

M | Selecting Your Best Sales

Strategy

Compete
Understanding the Scenarios
Description
Customer has little IBM software installed or is
unhappy with their existing portfolio of IBM
management software
Greenfield cloud opportunity
What to Expect
IBM will leverage their brand strength and
potentially any hardware relationships.
They will likely utilize IBM Global Services or the
help of a channel partner to perform any upfront
consulting.
IBM will likely leverage their CxO relationships.
Compete with a full System Center Suite stack,
specifically focusing on the completeness of
Microsoft vision.

Embrace
Understanding the Scenarios
Description
Customer has installed some IBM ITOM tools.
Does the customer see this as a natural extension
of their existing IBM tools?
What to Expect
The key battle to focus on will be between IBM
Service Delivery Manager and Microsoft
Orchestrator. If IBM is positioning Service
Automation Manager or SmartCloud Provisioning,
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they are likely trying to hit a customer cost target

by offering a partial solution.
Embrace the existing IBM ITOM tools and show
how Microsoft products can co-exist.
Remember that IBM positions Service Delivery
Manager exclusively as a private cloud solution.

Surround
Understanding the Scenarios
Description
Customer has made the decision to build out the
IBM Service Delivery Manager or Service
Automation Manager or SmartCloud Provisioning.
What to Expect
If the customer has selected Service Automation
Manager or SmartCloud Provisioning, then they will
likely need other cloud management tools such as
configuration management, change management,
release management, and financial management.

It is important to stay engaged and try to sell

adjacent solutions like App controller and Service
Manager.
Ongoing engagement should also be used to
protect the Microsoft footprint as the IBM cloud
management platform solutions support multiple
hypervisors including XEN and KVM.

N | Expose the IBM Weakness

Complexity: Many features require additional IBM

management tools.
Customers who previously purchased Service
Delivery Manager or Service Automation Manager
have no upgrade path.
Legacy IBM solutions: IBM has taken many of their
Tivoli physical management tools and repurposed
or rebranded them for the cloud.

O | Handling Objections
Q. We already have IBM ITOM software to manage our
physical infrastructure.
A. IBM has some long established tools in ITOM.
However, Microsoft is far better aligned and
strategically positioned to deliver the requirements of
a comprehensive cloud management platform (CMP)

with our SDDC strategy and vision. Since our focus is

on the cloud stack, we are best positioned to both
leverage your existing IBM and Microsoft investments
by taking your business to the next level of IT agility,
efficiency, and cost savings in the cloud.
Q. Is Microsoft really a management company?
A. Yes, and one closely tied with the leading platform
for cloud computing. Microsoft invented leading
management innovations such as Hyper-V manager
and continues to pave the way for management
innovations in cloud through our System Center Suite.
Q. Why would you trust your hypervisor vendor to tell
you how much hypervisor you need?
A. Microsoft leverages its own domain expertise and
tight platform integration to provide accurate capacity
management and optimization to get the most out of
your cloud and overall Microsoft investment.
Q. I am concerned about vendor Lock-in.
A. Heterogeneity is a term used loosely by many ITOM
vendors (including IBM). The fact is that IBM has many
aspects of their own product suites that promote
vendor lock-in. Microsoft leverages existing
investments in infrastructure and management to fully
support heterogeneous and hybrid cloud environment.

5 | Resources
Refer to additional System Center 2012 R2 resources
System Center 2012 R2 on TechNet
Download and evaluate System Center 2012 R2
System Center marketplace
Check out our blogs
System Center 2012 R2
Read the System Center 2012 R2 Datasheet
Read the System Center 2012 R2 White Paper
See how System Center 2012 R2 Configuration
Manager and Windows Intune helps manage users and
their devices
Benefits and capabilities
System Center solutions
Virtual Labs: System Center 2012 R2
System Center 2012 R2 Cloud & Datacenter
Management
System Center 2012 R2 Configuration Manager
System Center 2012 R2 Endpoint Protection

2014 Microsoft Corporation | Confidential | For Microsoft Internal Use Only