VALUE PROPOSITION FOR IBM SYSTEM i

December 2006

INDUSTRY MANAGEMENT BRIEF

V

ALUE

P

ROPOSITION

FOR

IBM S

YSTEM

i

Business Case for Gaming and Hospitality Deployments

International Technology Group

4546 El Camino Real, Suite 230 Los Altos, California 94022-1069

Telephone: (650) 949-8410

T

ABLE OF

C

ONTENTS

Security and Malware Resistance 14

Autonomic Functions 14 COST COMPARISONS 16 Profile Installations 16 IT Costs 17 Detailed Breakdowns 18

List of Figures

1. Three-year IT Cost Comparisons: System i- and Windows Server-based Scenarios

for Core Business Systems Deployment in Gaming and Hospitality 2 2. IBM System i Share of U.S. Gaming and Hospitality Workloads 4 3. Reasons for Employing IBM System i: Gaming and Hospitality Users 6 4. IBM System i-based Solution Offering for Gaming and Hospitality 10 5. IBM System i Partitioning and Virtualization Capabilities 12 6. Representative Causes of Planned Outages: Windows Servers 13

7. IBM System i Autonomic Functions 15

8. Profiles Summary 16

E

XECUTIVE

S

UMMARY

In the United States, the gaming and hospitality business generated more than $50 billion in revenues in 2005. According to Harrah’s, 52.8 million people made 322 million trips to U.S. casinos during the year. Millions stayed in the hotels, visited the entertainment venues and meeting centers, shopped at the stores, and took advantage of the other services located in properties.

In a fiercely competitive business undergoing continuous change, the IBM System i has maintained a strong market position. It remains – by a wide margin – the most widely used platform for deployment of core business systems in U.S. gaming and hospitality organizations.

Research undertaken for this report indicates that more than 70 percent of these organizations employ System i-based core business systems. Moreover, because System i users tend to be larger than those employing comparable systems on other types of server, the overall proportion of industry workloads run on this platform is significantly higher.

During 2006, between 74 percent and 93 percent of industry-wide lodging management system (LMS), casino management system (CMS), and finance and human resources (HR) workloads were processed by System i-based systems.

The System i and its predecessors have been de facto standards in the gaming and hospitality industry for more than two decades. System hardware and software have been continuously upgraded to implement new technologies and deliver new business functionality. The platform enjoys strong support from leading industry independent software vendors (ISVs).

The System i’s success has been driven by a number of factors. These include:

• Distinctive capabilities. Organizations that have deployed core business systems on the System i platform report that its ability to maintain very high levels of availability – often on a near-24x365 basis – is a critical benefit. Among 34 System i gaming and hospitality users surveyed for this report, for example, 32 (94 percent) cited this as a critical reason for employing this platform. Users repeatedly emphasized that casinos, hotels and other services operated on a 24x7 basis year-round, and that any downtime impacted bottom lines. The strengths of the System i in this area – which are a function of the system’s distinctive architecture and technologies – map directly to core business requirements.

Other System i capabilities valued by users included high levels of system integration that minimized technical complexities and facilitated deployment of new applications; exceptional scalability; comparatively low levels of staffing for system and database administration; and distinctive strengths in disaster recovery, security and virus protection.

It was generally agreed that System i capabilities in all of these areas were – by wide margins – better than those of competitive platforms, primarily Windows servers.

• Cost advantages. The System i platform may be perceived as more expensive than “commodity” Windows servers. However, this is unlikely to be the case if the overall costs of deploying, supporting and administering platforms for core business systems are taken into account.

Figure 1

Three-year IT Cost Comparisons: System i- and Windows Server-based Scenarios for Core Business Systems Deployment in Gaming and Hospitality

Three-year IT costs include hardware, systems and database software, maintenance, system and database administration personnel, and facilities costs for data center space, power and cooling. Higher costs for Windows scenarios are due to a number of effects. First, while Windows servers employed for light-duty applications may be comparatively inexpensive, cost structures for business-critical environments are significantly different.

Dual server configurations and cluster software, for example, must be employed for availability purposes – in contrast, System i users typically achieve high levels of uptime with standalone systems. Database license and support fees further increase costs.

Second, multiple core systems may be deployed on single System i platform. In the examples presented in this report, Agilysys LMS and materials management systems (MMS), Bally CMS and Infor (formerly Infinium) finance and HR systems coexist on a single System i platform using logical partition (LPAR) technology.

System i virtualization capabilities, and the platform’s strengths in system and workload management, enable high levels of overall capacity utilization to be achieved. Backup and recovery, including disaster recovery processes, are also materially simplified.

In comparison, users are usually obliged to employ multiple Windows servers to support comparable application suites. This adds significantly to the technical complexities that must be dealt with and tends to undermine service quality.

Third, full time equivalent (FTE) staffing levels for system administration, database

administration and related functions are typically a great deal lower for the System i platform than for Windows environments. Organizations surveyed reported disparities of at least two to three times. There are corresponding differences in personnel costs.

• Integration. Throughout its history, the gaming and hospitality industry has been an early and aggressive adopter of new technologies. Most recently, operators have invested heavily in customer self-service tools accessed through the Web and kiosks, in wireless technologies, and in customer relationship management, business intelligence and other state-of-the-art capabilities. Increasingly, the casino floor has also become a “high-tech” environment characterized by pervasive electronic data collection mechanisms, real-time customer interaction, and sophisticated promotional, reporting and analytical tools.

The potential emerges to coordinate interaction with customers, automate transactions and collect information at all touch points – including gaming operations, hotel facilities, entertainment, restaurants and bars, retail outlets and other services across the entire property. Industry IT strategy is, increasingly, about integration.

Where does the integration process begin? The obvious starting point is core business systems. LMS, for example, typically act as the core repositories of customer data. Other core systems also consolidate key operational data. In most organizations, these are System i-based.

Organization-wide integration, under any scenario, will be a challenging process. Costs and difficulties, however, may be materially reduced by building upon these existing structures. No obvious benefit would be realized by attempting to rebuild such structures “from the ground up” around less stable and reliable platforms, forming significantly more complex server

infrastructures, and supporting less well-integrated and optimized applications. The results would more likely be delays, distractions, and major project costs and risks.

The attractions of making System i-based core business systems the focal point of integration strategies, moreover, have been reinforced by a new ISV initiative. Agilysys, Bally Technologies and Infor announced in April 2006 that they would cooperate with each other, and with IBM to offer a fully integrated suite of System i-based solutions for gaming and hospitality customers. Another major industry ISV, InfoGenesis, also participates in the group. InfoGenesis Windows-based point-of-sale (POS) applications are deployed as part of the solution suite.

Certain conclusions emerge clearly. Increasingly, the gaming and hospitality IT world is characterized by technological diversity and by deployment of new application solutions on distributed Windows and (to a lesser extent) UNIX and Linux servers.

But the value of these, and the extent to which they can contribute to broader goals of organization-wide integration and data transparency, depends heavily upon the effectiveness of centralized infrastructures. The System i platform is, by any reasonable business standard, the logical focal point for the creation of such infrastructures. Its distinctive capabilities also map more closely to the industry’s core business requirements than any other server platform.

The challenges that face the hospitality and gaming industry are not small. Why make the process of meeting them more difficult, expensive or risky than it needs to be?

B

USINESS

C

ASE

Overview

The following sections present additional information on and analysis of key aspects of the business case for the System i platform. Its industry position is reviewed, user survey results are detailed, and

integration issues and solutions are addressed.

System i technology differentiators are then discussed, and their significance for gaming and hospitality organizations is outlined. The report concludes with an in-depth presentation of cost comparisons and of the methodology used to develop these.

Industry Position

The gaming and hospitality IT world is a highly exacting place. Competition for gaming dollars has led to a fierce pace of technological innovation and IT investment.

The industry was, for example, an early adopter of business intelligence solutions, and it has remained on the leading edge of technology in this area. Even small operators typically employ advanced analytical tools, and larger operators use Fortune 500-class data warehouses.

More recently, there has been a surge of investment in new customer-facing solutions for use across gaming floors, hotel and restaurant facilities, entertainment and convention venues, shops and other points of service. Web self-service, kiosks and wireless technologies have received a great deal of attention, and the industry is rapidly becoming a leader in the use of these.

In such environments, the System i platform has maintained a leading position for deployment of core business systems. Figure 2 summarizes International Technology Group (ITG) estimates for overall System i shares of industry workloads for these in the United States.

Figure 2

IBM System i Share of U.S. Gaming and Hospitality Workloads

One reason for this position is that, for more than 20 years, the System i and its predecessors have been so widely adopted by gaming and hospitality users that they have become de facto industry standards.

In a highly competitive, technologically sophisticated business, however, historical presence alone would not have been sufficient to maintain the System i position. Its installed base would have been subjected to serious erosion long ago.

Other factors have sustained its market momentum. They include:

• Technological currency. Even the industry’s most loyal System i users agree that, if IBM failed to deliver support for latest-generation technologies on this platform, its popularity would soon erode. But this has not been the case. A checklist of the industry’s key technologies – Web self-service, wireless support, SQL interoperability, Java-based programming, real-time operations and others – finds the System i platform current in all areas

• ISV support. The System i platform has retained the support of the major ISVs offering core business systems designed specifically for the gaming and hospitality industry. This group includes market leaders such as Agilysys, Infor (for the finance and HR suite originally developed by Infinium) and Bally Technologies, along with smaller players.

Although these companies support other servers, they have updated their System i solutions to support the latest versions of this platform. They have also made major investments to ensure interoperability with other vendors’ offerings, and to support de facto industry standards.

Users of older systems have thus not – as has occurred in some other industries – been locked into functionally limited legacy environments. Nor have they been obliged to change platforms in order to deploy “state-of-the-art” solutions. They may leverage established System i infrastructures and skill bases while moving into new areas of functionality.

• Coexistence. For the vast majority of users, there has been no “either/or” choice between System i and other platforms. System i users surveyed for this report, for example, employed between 20 and 100 major systems, the majority of which are implemented on distributed Windows and (to a lesser extent) UNIX or Linux servers.

At the high end of the spectrum, one organization supported more than 150 Windows databases and more than 500 Windows servers. Even relatively small standalone casinos routinely operated from 20 to 50 Windows servers for business applications, as well as for such functions as e-mail, office automation, Internet infrastructure, and file and print serving.

Most users would have preferred higher levels of integration between their various systems. However, they were generally satisfied with interoperability levels between their System i-based systems and key applications deployed on other platforms.

Competition from Windows servers for deployment of core business systems has been restricted primarily to smaller properties, and to a handful of larger operators who have migrated specific applications. There has been no large-scale replacement of System i-based core business systems. Nor are there any signs that this will occur in the future.

Distinctive Capabilities

What differentiates the System i from other server platforms? A recent ITG survey of System i gaming and hospitality users offers answers to this question.

The following reasons were cited for employing this platform:

• Reliability, uptime and 24/7 operations. Although different terms were used to describe this capability, the ability of the System i platform to operate for long periods without outages was cited by 34 out of 36 organizations. The only exceptions were two small casinos whose clientele consisted primarily of day visitors.

This was, as figure 3 shows, by far the most highly valued strength of the System i platform. Figure 3

Reasons for Employing IBM System i: Gaming and Hospitality Users

Users variously characterized the System i platform as “highly reliable…very reliable…

completely reliable…completely dependable…utterly reliable.” Others referred to “better than 99 percent availability…99.9 percent availability…constant uptime…no downtime” and commented that their system “never crashes…never goes down.”

It was repeatedly noted that properties operated on a “24x7” or “24-by-7-by-365” basis. It was noted that even brief disruptions could result in immediate and significant loss of income. The effects of outages on a wide range of operations were commented on. These included gaming systems (“we’re five minutes walk from the next casino”), hotel and event reservations, check-in (“you don’t want to be anywhere near a check-in line if the system goes down”), along with POS, customer self-service, security and other systems.

Very high levels of uptime, according to users, could be maintained by standalone System i platforms. These experienced few, if any, unplanned outages. Planned outages were also reported to be rare and brief.

Although a number of organizations employed System i clusters, these were for disaster recovery (i.e., failover to redundant systems located at remote sites) rather than high availability purposes. There was general agreement that levels of System i uptime were significantly higher than those for Windows servers, even when the latter were configured in high availability (HA) clusters. Users particularly commented on the need to regularly take Windows servers offline for hardware and software upgrades, as well as for patching (meaning application of Microsoft patches to correct newly identified security and virus vulnerabilities, software malfunctions and other problems). Patching outages were reported to occur “two, three times a week,” “weekly” and “at least every two weeks.”

• Application availability and support. The second most common reason for System i deployment was the availability of key ISV offerings. Agilysys, Infor (Infinium) and Bally Technologies were mentioned most frequently.

Users also cited availability and quality of support from ISVs, and from IBM and IBM business partners, as contributing to their commitment to this platform.

• System integration and simplicity. The high level of integration of the System i operating environment, i5/OS, and the comparatively simple nature of administrator and developer interfaces were widely cited as a significant benefit.

The i5/OS environment was variously described as “very stable…easy to work with…very integrated” and users referred to “ease of management…simplicity of management” and

comparable terms. These characteristics, according to users, created less work not only for system administrators, but also for application, operations and other IT personnel.

Some users reported that i5/OS integration enabled faster deployment of new applications. One organization, which had recently replaced legacy systems, had deployed more than a dozen new applications from seven vendors. Considerable work was required to integrate these. The ability of IT staff to focus on application-level tasks, rather than having to deal with underlying systems software complexities was said to have saved a great deal of time and effort.

• Scalability. Users also cited the comparative ease with which System i capacity could be

upgraded. Organizations had in some cases experienced major workload growth due to expansion of operations, mergers and acquisitions, and other developments. System i scalability from entry-level to very large configurations simplified the challenges of handling such growth.

The ability to employ single System i platforms rather than multiple Windows servers was also mentioned. System scalability, along with partitioning and effective management capabilities, enabled users to deploy multiple systems on a single physical server.

It was reported that this was not the case for Windows-based systems. One organization found, for example, that seven pairs of clustered Windows servers were required to support a CMS that

At the high end of the spectrum, some large users managed multiple properties – in one case, more than 30 – with a single System i production server (a second, located at a remote “hot site,” provided disaster recovery coverage). This would be difficult, if not impossible, to achieve with Windows servers.

• Low staffing levels. Users also cited the comparatively small number of system and database administration personnel required to support System i environments.

Staffing levels were reported to be significantly lower than for Windows servers. Ratios of 2:1 and 3:1 for Windows relative to System i administrative personnel were cited. These are consistent with experiences in other industries.

Several users noted that, because the System i database is integrated into the i5/OS environment, dedicated database administrators (DBAs) were not required.

• Disaster recovery capability. System i strengths in this area were cited by some users. Attention paid to this subject had been reinforced by the impact of hurricanes on properties in such areas as Florida and (in the case of Katrina) Louisiana and Mississippi.

Users routinely employed dual System i configurations, with a failover system located at a remote site. Such arrangements had proven to be satisfactory. One organization reported, however, that it had been unable to achieve adequate results with Microsoft Cluster Server.

Other System i strengths cited by users included general “robustness,” security and virus protection, data integrity and protection, and specific technical features of i5/OS and DB2.

The survey covered 31 users (including nine Native American organizations) in the United States, along with two Canadian and one Asian users.

Integration Issues

Industry Challenges

The gaming and hospitality industry differs from others in the dynamics of its applications software market. No vendor offers a single, integrated solution such as the enterprise resource planning (ERP) systems that have been widely deployed in other industry sectors. The presence of ERP vendors such as SAP AG, and PeopleSoft and J.D. Edwards (both now part of Oracle Corporation) has been limited. Industry functionality is distinctive. Although there are commonalities between gaming and non-gaming organizations in such areas as hotel, restaurant and retail systems, integration of hospitality and gaming operations is a unique requirement. Even finance and HR systems, which are relatively standardized across most industries, must meet specific regulatory reporting mandates.

The conventional model of ERP deployment, with its highly structured software environments, large consulting staffs, and three- to five-year project cycles, has not proved popular among gaming and hospitality operators. Nor has it been widely adopted in the hotel and resort sector as a whole. Major integration challenges are nevertheless emerging. Creation of common customer interfaces, consolidation of customer-related information, and adoption of cashless payments across all activities now form part of most business strategies. Realization of these goals means that new integration must cut across traditional data and application silos.

How will this be achieved? Although implementation strategies vary between organizations, the general industry trend is toward infrastructures built around two main components:

1. Distributed systems. These are typically built around Microsoft software technologies, including

Windows servers and clients, Internet Information Server (IIS), SQL Server and others. These represent a de facto standard for a wide range of specialized systems, as well as for e-mail, Web and intranet access, office productivity, file and print serving, and other applications.

2. Central infrastructure. In most organizations, the existing central infrastructure is built around

the System i platform and DB2 databases supporting LMS, CMS, finance, HR and other core systems. That these are already built around a common database standard is a major potential benefit in addressing new challenges. The role of the LMS database becomes particularly significant as the ability to charge to guest rooms is extended to a broader range of services. For some, obvious questions are posed: Why are two architectures necessary? Could not the entire organizational IT infrastructure be built around Microsoft solutions? There are several reasons why this might not be a good idea.

First, central infrastructure challenges are significantly different from those of the distributed systems world. Not only are high levels of availability mandated, but also core transactional processes place more exacting demands on underlying databases than the applications for which SQL Server is typically employed. DB2 is better optimized to handle such processes, and there is a great deal more industry experience with DB2 than with SQL Server in this role.

Second, re-creation of a central complex around Windows and SQL Server would be a difficult and protracted process. Organizations would be obliged to replace core systems, as well as to migrate data and build new interfaces, which would be a major challenge in itself. Depending on property size and business profile, for example, it would typically be necessary to implement and maintain between 30 and 90 interfaces between LMS and other systems.

It would also be necessary to create and shake down new infrastructures of Windows-based servers, systems and database software, system and storage management, and high availability facilities capable of supporting 24x365 operations. In addition, new disaster recovery arrangements and new business-critical skills for Microsoft environments would be required.

For most organizations, this would be by far the largest IT project they had ever undertaken. Experiences with such projects in other industries suggests that, even if they are successful – which is far from guaranteed – they will dominate management attention, consume a large percentage of the organization’s IT resources, and preclude other major initiatives for long periods.

The ability of organizations to develop new forms of competitive advantage and to respond to the actions of competitors may be seriously impaired while such projects are under way. Moreover, risks are

magnified when – as is the case in gaming and hospitality – there is little industry experience in large-scale IT transformation initiatives.

Even under “best case” scenarios, the result would be to re-create capabilities that already exist. It is unclear what business value would be realized by this.

Solution Offering

The new solution offering from Agilysys, Bally Technologies, Infor, InfoGenesis and IBM allows organizations to build upon both of the main components of existing IT environments.

This offering, which is illustrated in figure 4, addresses central infrastructure requirements, as well as interoperability between this complex and Microsoft-based distributed systems and standards.

Figure 4

IBM System i-based Solution Offering for Gaming and Hospitality

The unique and critical value of this offering is that high levels of integration are realized between core LMS, MMS, CMS and Slot Management System (SMS), and finance and HR databases (which are in DB2) and InfoGenesis POS databases (which are in SQL Server).

In addition to InfoGenesis POS systems, other applications offered by these vendors are Windows server-based. These include Agilysys’ DataMagine imaging and archiving solution, and InfoGenesis enterprise reporting tools. Two Infor suites are also Windows-based. These are Corporate Performance Management (CPM), which includes financial planning, budgeting, reporting and analytical tools; and Talent

Management, which includes recruitment, learning and performance management tools.

A wide range of other Windows-based applications can also be interfaced to the System i-based central infrastructure complex. These may exchange data with core databases in real time, or periodically access records for analytical, reporting and other less time-sensitive applications.

The result can be described as a mixed-vendor, mixed-technology hybrid of distributed and centralized architectures. Or it may simply be considered to represent “the best of both worlds.”

AGILYSYS LMS Lodging Management MMS Procurement & Inventory

BALLY TECHNOLOGIES CMS Casino Management SMS Slots Management

INFOR Financial Management Human Capital Management Employee Self Service

DB2

INFOGENESIS Point of Sale

Reservations Self Service CORE i5/OS SYSTEM

Windows SQL Server AGILYSYS DataMagine INFOR CPM & Talent Management INFOGENESIS Crystal Enterprise

T

ECHNOLOGY

D

IFFERENTIATORS

System Architecture

From a system architecture perspective, the System i platform incorporates multiple elements. These include the performance and virtualization capabilities of the IBM POWER 5+ reduced RISC processor base; a highly integrated operating environment derived from earlier iSeries systems; reliability, availability and serviceability (RAS) features drawn from IBM mainframes; advanced system and

workload management facilities; and industry-leading autonomic (artificial intelligence) functions. As this description indicates, System i architecture has evolved in a manner that is significantly different from that of Windows servers. This is particularly the case in the following areas:

• System integration. The i5/OS environment includes not only core operating system functions, but also the DB2 database management system and tools for system, storage, backup and recovery, communications, security, operations and other management tasks. These are closely integrated and share common administrator interfaces.

The advantages of System i integration, described earlier in this report, include reduced implementation and administration complexity. This can translate into high levels of software stability; faster and more effective deployment and integration of applications; and lower staffing overhead and personnel costs.

Equivalent functionality in a conventional Windows server environment typically requires that users acquire, install, configure and administer multiple software products, often sourced from different vendors. This increases deployment complexity, and tends to create integration and administration challenges that are significantly greater than those faced by System i users. • Partitioning and virtualization. The System i supports LPARs. These may be employed to host

multiple operating system instances and applications and to better manage and balance workloads across the system.

Resources may be allocated and re-allocated dynamically between partitions, enabling

organizations to achieve significantly higher levels of capacity utilization than may be realized with dedicated server approaches.

LPARs are commonly used to host development, test and production instances on the same system (i.e., dedicated development and test servers are not required) and to perform software updates and other tasks without taking systems offline. They offer the broader potential to host multiple core business systems.

Up to 254 LPARs may be supported on a single physical System i platform, using the system’s firmware-based hypervisor. Linux and i5/OS instances may run in these.

System efficiency is further augmented by I/O, storage and local area network (LAN)

virtualization. Virtual I/O means that fewer physical adapters are required. Virtual LANs enable high-speed linkages within systems; i.e., external LAN connections are not required for

Figure 5

IBM System i Partitioning and Virtualization Capabilities

Partitioning and virtualization are supported for Windows servers by third-party solutions such as VMware and by Microsoft Virtual Server. The software-based techniques employed by these, however, are generally less efficient than LPARs and are less well integrated with other systems software components.

A further difference is that system and workload management facilities are less well optimized. The implications are important. It is not sufficient simply to create partitions. The overall efficiency with which system resources are utilized also depends on how effectively workloads are distributed, and how capacity is managed across these. System i capabilities in this area are among the most advanced in today’s IT world.

Windows-based partitioning and virtualization do not appear to be widely used in the gaming and hospitality industry. One reason may be that the skills required for effective use of these

technologies are significantly more complex and demanding than those of routine Windows server administration.

Other System i technology differentiators, including capabilities that facilitate high levels of availability, security and virus resistance, and autonomic functions, are discussed below.

The combined effect of these differentiators may be simply summarized: the System i is one of the few platforms that is designed to minimize complexity. Few would characterize Windows server

environments in such terms.

SYSTEM i

SYSTEM & WORKLOAD MANAGEMENT

OTHER SYSTEMS SERVICES

VIRTUAL LAN

VIRTUAL I/O & DISK HYPERVISOR

LPAR LPAR

High Availability

Maintenance of high levels of system availability over long periods can be a challenging process. Organizations must deal with risks of unplanned (i.e., accidental) outages caused by hardware and software failures, administrator and operator errors, workload spikes that overload systems, hacker attacks, virus damage and other factors. Vulnerability to these tends to vary widely between platforms. Unplanned outages can be highly disruptive, particularly if they occur during periods of peak business activity. The majority of downtime, however, will be due to planned outages. In some industries, this may not pose a problem because such outages can be scheduled to occur outside normal business hours. In gaming and hospitality, however, “normal business hours” are 24x365.

Like unplanned outages, planned downtime tends to be platform-dependent. In a Windows server environment, frequent planned outages will typically be required for hardware and software upgrades, including patching, along with preventative maintenance and other functions. Figure 6 shows

representative causes of planned outages.

Figure 6

Representative Causes of Planned Outages: Windows Servers

Avoidance of both types of outage is a central design parameter of System i architecture.

Distinctive capabilities are implemented. At the most basic level, these include industry-leading embedded RAS features. High levels of redundancy, along with monitoring, diagnostic, and fault isolation and resolution facilities are built into all major hardware and software components and subsystems. Operating system-level capabilities include Remote Journaling (file and system changes may be

automatically copied to a second server); Save While Active (backups may be performed without taking systems offline); and Clustering Management Services, which are embedded into i5/OS and leveraged by third-party solutions that are widely used in gaming and hospitality as well as in other industries.

LPARs further contribute to reduction of planned outages. Software modifications may be made, and new versions installed and assured without disrupting operations. Backups may also be performed, and batch

In certain areas such as clustering, functionally similar capabilities may be implemented for Windows servers. However, a key principle should be noted. Achieving high levels of availability and

recoverability inevitably increases configuration complexity. If underlying environments are already complex, the overall solution will tend to be less stable, or will require greater expenditure, higher staffing levels, or – more likely – both of these.

i5/OS integration also facilitates availability. Risks of software failure are typically less than for complex multivendor environments. Simplified, high-productivity management interfaces mean that the potential for administrator and operator errors causing outages, data loss, or both is reduced.

Security and Malware Resistance

There are also significant differences between Windows server and i5/OS environments in security capability as well as in resistance to viruses and other forms of malicious code (“malware”) such as worms, Trojans and zombies.

i5/OS users are generally less vulnerable to security violations. During 2005, the U.S. National

Vulnerability Database, operated by the National Institute of Standards and Technology (NIST), recorded 57 new vulnerabilities for Microsoft Windows Server 2003. Of these, 34 were rated as “high,” the NIST category for the most severe exposures.

Similarly, vulnerability to malware is affected by the operating system employed. Current industry estimates, for example, put the number of Windows viruses at over 100,000. A leading security solutions company, Symantec, identified more than 28,000 new Windows viruses and worms during 2005 alone, an increase of more than 80 percent over the previous year’s level. This trend shows no signs of abating. In comparison, there are no known native viruses for i5/OS, and malware incidents involving System i platforms are virtually unknown.

To some extent, this is because i5/OS is a great deal less well known, and is less attractive to virus initiators than Windows. Technical characteristics also, however, result in a level of vulnerability that is – by a very wide margin – less than for Windows servers.

In comparison, the Database has recorded no vulnerabilities for i5/OS or its predecessor, OS/400, since collection of statistics began in 1992. Although there are variations in definition of vulnerabilities

between different databases, other security sources confirm wide disparities between Windows and i5/OS in this area.

This does not mean that System i users do not face security or malware threats. But the probability that these will materialize is significantly less than for Windows servers. The staff time and funds that must be expended to guard against them is correspondingly less.

Autonomic Functions

The System i platform benefits from the one of the most advanced implementations of autonomic technologies within the IBM product line. Autonomic capability – meaning the application of artificial intelligence technologies to IT administration and optimization tasks – has been a major IBM

There are four categories of System i autonomic functions: configuring; optimizing; self-protecting; and self-optimizing. These functions, summarized in figure 7, extend across i5/OS and DB2 and are embedded into hardware components and subsystems.

Figure 7

IBM System i Autonomic Functions

SYSTEM

Self-configuring Self-protecting

Connect automated services CPU capacity upgrade on demand Enterprise Identity Mapping EZSetup Wizards

Hot plug disk & I/O Linux & Windows Virtual I/O RAID subsystem

Switchable auxiliary storage pools Windows NetServer file/print support Windows dynamic storage addition Wireless system management access

Automatic virus removal Chipkill Memory Digital certificates Digital object tagging Enterprise Identity Mapping Integrated Kerberos support Integrated SSL support IP takeover RAID subsystem Self-protecting kernel Tagged storage Self-optimizing Self-healing

Adaptive e-transaction services Automatic performance management Automatic workload balancing Dynamic disk load balancing Dynamic LPAR for i5/OS & Linux Expert Cache

Global resource manager Heterogeneous workload manager Quality of service optimization Single-level storage

ABLE problem management engine Auto-fix defective PTFs

Automatic performance adjuster Chipkill Memory, dynamic bit steering Concurrent maintenance

Domino auto restart, clustering Dynamic IP takeover, clustering Electronic Service Agent (“call home”) First-failure data capture & alerts Service director

DATABASE

Self-configuring Self-protecting

Automatic collection of object relationships Automatic data striping & disk balancing Automatic distributed access configuration Automatic object placement

Automatic self-balancing indexes Automatic TCP/IP startup Graphical database monitor

Automatic enforcement of user query limits Automatic enforcement of user storage limits Digital object signing

Object auditing

OS-controlled resource management

Self-optimizing Self-healing

Automatic Index Advisor Automatic memory pool tuning Automatic query plan adjustment Automatic rebind & reoptimization Automatic statistics

Caching of open data paths & statements Cost-based Optimizer

Automatic access path protection

Automatic backup/restore of database objects Automatic database object extents

Automatic database restart

Automatic system-managed journaling First-failure data capture & alerts

The most obvious benefit of System i autonomic capabilities is that they improve the productivity of system and database administrators. Automation of administrative tasks also, however, reduces the potential for human errors leading to performance bottlenecks, outages, data loss or corruption, and other

C

OST

C

OMPARISONS

Profile Installations

Calculations for three-year IT costs are based on profiles of the three U.S. gaming and hospitality properties that are summarized in figure 8.

Figure 8

Profiles Summary

PROPERTY LARGE MIDSIZE SMALL

Profile 120K sq. ft. casino – 1,850 slots 130 table games – 10 poker tables 5,000 rooms – 15 restaurants 6 entertainment venues 2 million sq. ft. convention space Sportsbook, racebook

5,000 employees

100K sq. ft. casino – 1,800 slots 60 table games – 10 poker tables 450 rooms – 12 restaurants 10 entertainment venues 20K sq. ft. convention space Sportsbook, racebook 2,000 employees 50K sq. ft. casino – 1,400 slots 30 table games – 8 poker tables 600 bingo seats 200 rooms – 8 restaurants 5 entertainment venues 10K sq. ft. convention space 1,200 employees Applications LMS/MMS, CMS, finance, HR/payroll LMS/MMS, CMS, finance, HR/payroll LMS/MMS, CMS, finance, HR/payroll Number of users 600 250 150 SYSTEM i SCENARIOS Servers System i 520 - 7736 2 x 1.9 GHz POWER5+ 7100 CPW i5/OS System i 520 - 7734 1 x 1.9 GHz POWER5+ 1200 CPW i5/OS System i 520 Express 1 x 1.9 GHz POWER5+ 1200 CPW i5/OS

Personnel 0.9 FTE 0.6 FTE 0.45 FTE

WINDOWS SERVER SCENARIOS

Servers 2 x (4 x 3.0 GHz dual core) 2 x (2 x 3.0 GHz dual core) 4 x (2 x 2.0 GHz dual core) Windows, HA cluster software Oracle RAC (LMS/MMS) SQL Server (other applications)

2 x (2 x 3.0 GHz dual core) 6 x (2 x 2.0 GHz dual core) Windows, HA cluster software Oracle RAC (LMS/MMS) SQL Server (other applications)

8 x (2 x 2.0 GHz dual core) Windows, HA cluster software Oracle RAC (LMS/MMS) SQL Server (other applications)

Personnel 2.3 FTEs 1.35 FTEs 1.05 FTEs

To ensure that results are generally representative and to protect the confidentiality of individual organizations, profiles are composites based on the experiences of multiple organizations.

System i configurations host Agilysys LMS and MMS, Bally Technologies CMS, and Infor finance and HR suites. Windows server configurations host competitive Windows-based equivalents of these, supported by Microsoft SQL Server (CMS, finance and HR systems) and Oracle (LMS and MMS) databases, and by third-party HA facilities.

Cost calculations are specific to the profiles and scenarios presented here. Actual costs experienced by individual user organizations may vary.

IT Costs

IT costs include the following:

• Windows server configurations. Costs include server hardware acquisition and three-year 24x7 maintenance coverage, along with licenses and three-year support for Windows Server 2003, SQL Server, Oracle Real Application Clusters (RAC) and Windows HA tools. Costs for Microsoft software include Software Assurance.

• System i configurations. Costs include acquisition of hardware and i5/OS, along with three-year 24x7 hardware and software maintenance coverage for these. Configurations for the large and midsize properties are equipped with i5/OS Enterprise Edition. The small property configuration is an IBM Express offering.

Costs for all Windows server and System i components were calculated based on discounted vendor U.S. list prices as of October 2006. All server configurations are rack-mounted. • Personnel costs. These were calculated for FTE values shown in figure 8. Calculations were

based on annual average salaries of $83,909 and $68,411 per year for i5/OS and Windows server system administrators respectively, and $86,760 for DBAs for Windows server scenarios. DBA tasks in System i scenarios are handled by i5/OS administrators.

It is assumed that the workload of DBAs in Windows server scenarios is evenly divided between Oracle and SQL Server instances. The annual salary of $86,760 is the average of a $90,714 per year value for an Oracle DBA and $82,806 per year for a SQL Server DBA.

Annual salaries for all personnel for Windows server and System i scenarios are increased by 30.5 percent to allow for bonuses, benefits and other non-cash compensation, as well as training and related items.

•

electricity consumption and footprints. Costs are for data center occupancy, including service clearances and allowance for inactive areas, for electricity consumption for servers, and for power and cooling equipment.

Occupancy costs are based on a conservative assumption for annual average cost per square foot for existing facilities (i.e., costs do not include new facilities construction). Electricity costs are based on a conservative assumption for average price per kilowatt/hour. All calculations are based on U.S. norms.

Calculations do not include costs for applications software, external storage, peripherals, networks, PCs and other client devices, personnel other than for system and database administration, and other resources not identified above.

Detailed Breakdowns

Detailed breakdowns of costs are presented in figure 9. Figure 9

Three-year Cost Breakdowns

PROPERTY LARGE MIDSIZE SMALL

SYSTEM i SCENARIOS ($000) System 159.6 58.6 36.3 Maintenance 8.3 8.3 8.3 Personnel 295.7 197.1 147.8 Facilities 3.4 2.9 2.9 TOTAL 467.0 266.9 195.3

WINDOWS SERVER SCENARIOS ($000)

Hardware 49.9 33.1 28.6 Maintenance 12.7 12.3 12.3 Systems software 77.9 65.1 62.0 Database software 155.7 83.0 52.6 Personnel 648.3 379.5 295.6 Facilities 12.7 10.3 9.2 TOTAL 957.2 583.3 460.3

A

BOUT THE

I

NTERNATIONAL

T

ECHNOLOGY

G

ROUP

ITG sharpens your awareness of what’s happening and your competitive edge . . . this could affect your future growth and profit prospects

The International Technology Group (ITG), established in 1983, is an independent research and

management consulting firm specializing in information technology (IT) investment strategy, cost/ benefit metrics, infrastructure studies, deployment tactics, business alignment and financial analysis.

ITG was an early innovator and pioneer in developing total cost of ownership (TCO) and return on investment (ROI) processes and methodologies. In 2004, the firm received a Decade of Education Award from the Information Technology Financial Management Association (ITFMA), the leading professional association dedicated to education and advancement of financial management practices in end-user IT organizations.

The firm has undertaken more than 100 major consulting projects, released approximately 160

management reports and white papers, and delivered nearly 1,800 briefs and presentations to individual clients, user groups, industry conferences and seminars throughout the world.

Client services are designed to provide factual data and reliable documentation to assist in the decision-making process. Information provided establishes the basis for developing tactical and strategic plans. Important developments are analyzed and practical guidance is offered on the most effective ways to respond to changes that may impact or shape complex IT deployment agendas.

A broad range of services is offered, furnishing clients with the information necessary to complement their internal capabilities and resources. Customized client programs involve various combinations of the following deliverables:

Status Reports In-depth studies of important issues

Management Briefs Detailed analysis of significant developments

Management Briefings Periodic interactive meetings with management

Executive Presentations Scheduled strategic presentations for decision-makers

Email Communications Timely replies to informational requests

Telephone Consultation Immediate response to informational needs

Clients include a cross section of IT end users in the private and public sectors representing multinational corporations, industrial companies, financial institutions, service organizations, educational institutions, federal and state government agencies as well as IT system suppliers, software vendors and service firms. Federal government clients have included agencies within the Department of Defense (e.g. DISA), Department of Transportation (e.g. FAA) and Department of Treasury (e.g. US Mint).

International Technology Group