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

Why outsource your Web environment?

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

according to Morgan Stanley...

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%

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

Better Performance

Improvement/(Reduction) due to hosting

Total Server Downtime (88%)Total Employee Downtime (92%)

Downtime Incidents (87%)

Servers Affected (11%)Employees Affected (44%)

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

Lower Costs

Improvement/(Reduction) due to hosting

In-House Cost/Server $35KHosted Cost/Server $7K

(80%)Rev from Reduced Downtime/Server $52K

Employee Productivity $7K

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

Access to skills

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%

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

Companies gain 3 significant benefits from hosting

Hosting Advantages

IBM Global Services 2001 Earnings Performance

Source: IBM 2001 Earnings Presentation www.ibm.com/investor

• 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

Revenue $8.7B, +13% @CC

Services +15%Maintenance +3%

Signings $16BBacklog $95B

2Q Results

• 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

Revenue $8.7B, +9% @CC

3Q Results

Services +11%Maintenance +1%

Signings $10BBacklog $97B

Americas Europe Asia Pacific Total

IBM Global Services Capabilities

3Q 2001

61 Data Centers421 Processors189,053 MIPS1,267 Terabytes27,054 M/R Svrs

92 Data Centers175 Processors51,558 MIPS216 Terabytes10,728 M/R Svrs

613,748 570,500 274,869

201886

361,6111,915

56,935

1,459,117

21 Centers 10 Centers 8 Centers 39 Centers

23 Centers11,400,000 Calls

16 Centers5,932,000 Calls

24 Centers2,503,000 Calls

71 Centers19,835,000 Calls

Processing Capabilities

Managed Desktops

Customer Service Centers

e-business Hosting Centers

48 Data Centers290 Processors121,000 MIPS432 Terabytes19,153 M/R Svrs

➨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

➨500,000 non-IBM machines under management➨20,000 e-business engagements➨2,100 Hosting Clients➨Leader in Web Privacy and Security Services

GlobalAt A Glance

IBM’s Commitment to the Hosting Business

IBM Data Centers are Cisco Powered Networks.

Chicago ILLisle ILSchaumburg ILSt. Louis MODallas TX (2)Boulder COPhoenix AZSan Jose CA

Southbury CTNewark NJSecaucus NJWest Orange NJAshburn VASterling VARaleigh NCAtlanta GA

Mexico CityBuenos AiresSao Paulo

TorontoMontrealVancouverCalgary Portsmouth, UK

London Docklands, UKWarwick, UKParisEhningen, GermanyFrankfurtMilanRomeTurinMadridLebanon

TokyoMitaka

Singapore

$4 billion investment 35 e-business hosting centers

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

IBM 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

CiscoLeader 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

Small Medium Large

SCA 11000 SCA 11000

CE 507 CE 560

IDS 4230 IDS 4230

2621 2651

HSE HSE

CTE 1400 CTE 1400

PIX 525 PIX 525

7200

Content Engine

Intrusion Detection

Back-End Router

SSL Termination

Monitoring

Multiple ISPs (BGP)

Wireless Support

Additional Firewalls

Additional L3 Functionality 2621 3620

SCA 11000

CE 560

IDS 4230

2651

HSE

CTE 1400

PIX 535

7200

3640

Basic bundles – rest are options

Cat 2980 GACat 2980 GA Cat 4006Cat 4006

CSS 11051CSS 11051 CSS 11151CSS 11151

PIX 525PIX 525 PIX 525PIX 525

Layer 2 Switch

Content Switch

Firewall

Cat 6509Cat 6509

CSS 11155CSS 11155

PIX 535PIX 535

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.

Each Bundle Also has a High Availability Scenario

Benefits of Cisco Dedicated Hosting Architectures

Ease of deployment

Single point of support

Ease of management

Best-of-breed products

Faster time-to-service

Better SLAs – flexible, scalable, and reliable

Comfort factor – all Cisco equipment

Facilities Hosting/Co-location Service

Managed Hosting/ e-business Hosting/ e-sourcing

If Enterprise Wants to

Outsource

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

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

IGS provides Cisco Network Bundle (DHA) to Enterprise customer

IGS or customer- owned equipment.

Summary

• 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

IBM and CiscoThe logical choice