Composing the perfect digital symphony - steps for Digital Transformation

1. P R E S E N T S
Composing the
Digital Symphony
All aspects of modern business can harness the power of digital,
but the whole is more than the sum of its parts. The key to
optimising your digital infrastructure is a harmonious arrangement IN ASSOCIATION WITH

2. 04
Introduction
Outdated core and backend systems
can hamstring even the most advanced
businesses. A holistic approach is needed
06
Bringing Value to Industry
AI and blockchain look set to release
businesses from the burden of data analysis.
Early adoption offers a competitive advantage
08
The API Economy
APIs allow for collaborative solutions to
develop organically across the market,
benefitting consumers and companies alike
10
Accessing Dark Data
AI-based analysis is set to harness the
reams of video and image content currently
unavailable to computerised systems
12
Hybrid Cloud
Flexible cloud networks manage elasticity,
allowing a quick response to demand spikes
and an efficient scale-down in slow periods
14
Removing Complexity
Cloud managed services place a company’s
internal operations in the hands of experts,
freeing up capacity to focus on core services
16
Challenges Ahead
Cybercrime and regulatory changes challenge
even the most agile companies. Forward
planning and external support are essential
Contents

3. In November 2015, Paris Orly International Airport was forced to
ground all its flights due to a software failure. The program that failed
wascalledDECOR,andwasusedbyair-trafficcontrollerstotransmit
weather information to pilots. It was an important piece of software,
and one that you might expect to be pretty sophisticated. It was
running on Microsoft Windows 3.1. Originally released in 1992.
Worse still, many of the people with the expertise needed
to fix the system had retired, making an upgrade in the near
future a necessity.
Thankfully, such examples are the exception, not the rule, and
most businesses realised they needed to update their digital ca-
pabilities a long time ago. Instead of disparate systems split up
in many different ways, companies are realising the benefits of
digitally enabled systems that are centralised, homogenised and
efficient in ways they have never been before. Making sure our
modern, digital age – where programs from a thousand different
developers, running on hardware from a hundred different man-
ufacturers, have to communicate frequently and instantaneously
– is allowed for at a business-wide level is imperative.
Get with the program
In February 2016, Deloitte released its annual Tech Trends 2016
report, and listed the eight biggest areas businesses are focusing
on with their IT strategies. The list echoed insights from a range
of other organisations, from the World Economic Forum and
Future Today Institute through to Gartner and IBM. All of these
organisations agreed technologies such
as the Internet of Things, virtual reality and
blockchain would have a part to play in
our digital future.
But Deloitte also identified a more
fundamental change to the way technol-
ogies are used. Many businesses, the
report found, are currently in the process
of ‘reimagining core systems’; while they
may have a flashy app that runs on the
very latest versions of iOS and Android,
their backend systems – which power
essential functions – are astonishingly
old and beginning to cause problems.
Some larger companies, particularly in
the financial services sector, could still
be using custom-built systems that were
set up for them in the 1970s. An even
greater number of firms are relying on IT
systems that were put in during the digital
expansion of the 1990s.
These core systems are a significant
drag on any new function that is imple-
mented, and make it unacceptably diffi-
cult for companies to keep up with new-
er competitors. Google, Facebook and
“Some larger companies
could still be using
custom-built systems
that were set up for
them in the 1970s”
Getting in tune with
the connected world
Information technology is now central to virtually every
industry. Despite this, many are still failing to take the
holistic approach required of a modern digital business
0504
Uber certainly aren’t held back by such
legacy systems.
These out-of-date core systems and a
compartmentalised approach to IT solutions
are the barriers stopping companies mak-
ing the most of their investments. Like the
individual players in a symphony orchestra,
digital systems may do well on their own,
but only through coordination and focus can
they produce a sublime masterpiece.
With the variety of digital systems now
in use, this is no easy task. Technologies as
varied as cognitive computing, application
programming interfaces (APIs) and hybrid
cloud systems must work together while implementing conceptual
approaches, such as data visibility and collaborative workspaces.
These disparate ideas are great on their own, but better together.
Diverse technologies
Given the bewildering range of technologies available, a company
could be forgiven for simply not knowing which way to turn.
One of the many new opportunities to explore is artificial intelli-
gence (AI), also known as cognitive computing or machine learning.
No longer the stuff of science fiction, it’s now possible to simulate a
human’s cognitive capabilities through the use of complex computer
systems. Such systems are able to sort and process information far
more quickly than any human could, and make recommendations
that are more informed than any single person could offer. And, like
humans, cognitive technologies are able to learn, adapt and improve.
But whether you’re a human or a machine, learning needs to
be sustained by access to high-quality and relevant information. In
order for cognitive technologies to do this, they need access to so-
called ‘dark data’, i.e. data stored in ways that have until now made
it inaccessible to computers. That’s often formats humans would
find very easy to interpret – pictures, videos, Facebook posts – but
wouldn’t mean very much to a traditional computer.
APIs can be a great way for businesses to maximise the value of
their data. Opening information up and encouraging development
beyond company walls can help businesses discover new uses for
their data, and to develop new services and even business models.
While each of these opportunities could be tackled one at a time,
in order for them to be put to truly transformative use they need to be
approached as a whole. Otherwise the end result could be disjointed,
disconnected and, ultimately, ineffective.
Clouded view
This is one of the reasons tech companies have been so keen
to offer new cloud computing services over the last few years.
Google’s cloud system combines storage, computing, data an-
alytics and machine learning, while Amazon Web Services brings
the expertise of one of the internet’s biggest retail and logistics
firms to businesses across the globe. But, as the cloud services
industry evolves, it is leaders in business
transformation that are coming to the fore.
IBM, for example, has over 100 years of
finding solutions to clients’ technology
problems to bring to the table.
A major benefit of working in the cloud
is it means you can keep all your critical
business information and processes in one
place. With the right fully integrated system,
employees in Lisbon, Lagos and Llanelli can
work on a single set of documents simulta-
neously. Even better, businesses can take
advantage of powerful computer systems
that would be impossibly expensive for them
to buy outright. By taking advantage of cloud
systems where necessary, businesses can
remain competitive for a relatively low cost.
If businesses don’t move soon, it might
become too late; people, organisations,
and (thanks to the Internet of Things) even
washing machines are generating infor-
mation at a rate we would previously have
thought impossible. This volume of data is as
extraordinary as it is intimidating, and will be
one of the biggest forces driving business in
the 21st century. If companies don’t develop
the most efficient and effective systems to
ride that tsunami, they will be washed away
by it – and by the commercial advantage it
will give to more capable competitors.
This is not going to stop. Business is
changing, and there are going to be more
companies who find their antiquated back-
end lets them down in the face of a younger,
more innovative start-up that has moseyed
into their industry. But by building systems
that fire on all cylinders when needed, any
business can be ready for the future.
50xmore data in the
digital universe
predicted by 2020
than in 2010
1.7MBof new information
created by every
human, every
second of every day
Source: IDC

4. The Olympics Games is the biggest sporting event on the planet.
With billions of people watching, and billions of dollars being spent on
advertising and staging, it’s also pretty big business. With each new
Games, some new technological development is rolled out to stun the
crowds and remind them that this is bigger than all the rest. In 1996 it
was DiveCam, in 2008 it was HawkEye, but in 2016 impressive new
technology was everywhere. Through a combination of the cloud,
sensors, 3D cameras and AI crunching the numbers, viewers could
see impressively complex statistics fed back in real time.
But these new technologies are not just changing the way we en-
joy the women’s 400-metre freestyle; they revolutionise the way busi-
nesses operate. Because systems can learn and surmise from huge
volumes of structured and unstructured data, they are not only able
to improve efficiency and reduce costs, but also improve and adapt
business intelligence. The exact ways in which these revolutionary
capabilities will affect business are only just beginning to emerge, but
we can be certain they will change the very ways we operate – at
a time when customers around the world are demanding just that.
At this year’s French Open, the French Tennis Federation and
IBM collaborated to bring real-time information, personalisation
and sharing to fans. The IBM SlamTracker captured and visual-
ised real-time data to provide tennis geeks with a constant flow
of facts and stats: serve speed, type of shot, duration, points and
A wake-up call
for business
With factors from cybersecurity to
data liability to consider, the business
environment has never been more
intractable. Industries must be awake
to power of technology to reinvigorate
winners. Built on IBM’s Watson technology,
IBM SlamTracker can track and actually un-
derstand the conversations taking place on
social platforms, discerning the sources and
sentiments of the exchanges.
Access to such comprehensive infor-
mation means individuals can make bet-
ter-informed decisions with less risk – and
that’s to the benefit of organisations, cus-
tomers and service as a whole. Cognitive
systems present a host of new possibilities;
they provide the tools necessary to prepare
companies for the future.
Who needs banks anymore?
Nowhere are these new technological tools
needed more than in financial services. The
industry is facing a plethora of new and in-
creasingly complex challenges – painful re-
minders of the 2008 crisis. Customers are
demanding increasingly complex services,
while remaining worried about who they can
trust. At the same time, compliance with a
whole new raft of regulations is costing fi-
nancial institutions a lot of time and money.
“People can bank without a bank now”,
as Sebastian Krause, General Manager
of IBM Cloud in Europe, put it. “There is
competitive pressure – including from oth-
er industries – so banks are becoming less
conservative in their approach to new tech-
nologies. The market will be disrupted even
“IBM SlamTracker
can track and actually
understand the
conversations taking place
on social platforms”
more in the future, so to stay in business
they must open up to a changed world. To
take the whole organisation on that journey
is a big shift and it needs not only the right
strategy, but also a lot of leadership.”
Take financial transactions: they are a
vital and ever-growing part of modern soci-
ety, but they are still, for the most part, con-
ducted through woefully out-of-date meth-
ods. As ever more parties and ever-greater
regulation are added, the level of com-
plexity increases even further. Fortunately,
there is an alternative.
Decentralised ledger technology (block-
chain to you and me) has the potential to
completely change the financial services
industry, through greater efficiency, trans-
parency and cost-effectiveness. For ex-
ample, JP Morgan is working with one of
the biggest names in blockchain – New
York-based Digital Asset Holdings – to
settle transactions faster and at signifi-
cantly less expense to both the company
and its consumers. The partnership has
also resulted in a considerable reduction in
the number of associated risks, including fraud and the liability of
cross-border payments.
Crédit Mutuel Arkéa, meanwhile, began using cloud platform
Bluemix to improve and manage customer identification in June
2016. By creating a single (but multinational) Know-Your-Client
platform, the company no longer needlessly duplicates information
or data requests. The result is a dramatic improvement to the user
experience for both consumers and advisors.
More and more institutions are embracing this exciting new
financial technology, whether through their adoption of blockchain,
alternative payment systems or optimal customer data management.
Customer expectations are growing, but through such fast-paced
fintech development, they can be met.
Save a life
The benefits of advancing technology are not limited to improving
efficiency and security. Just as AI can absorb, comprehend and retain
everything there is to know about Roger Federer’s backhand, it can
do the same with corporate data.
AI start-up DeepMind is taking bold steps in this area. Through its
machine learning technology, medical data can be analysed far more
quickly and accurately than ever before, improving the diagnosis
process and treatment of a whole range of illnesses and afflictions.
As well as capturing unique information about individual patients’
health histories, cognitive computing provides vital access to pre-
viously concealed health data, while allowing it to be assimilated
in one place. IBM Watson Health, for example, can digest up to
40 million documents in just 15 seconds; that’s a pretty impres-
sive tool to have in the fight against cancer or dementia, say. Par-
ticularly when one considers that, by 2020, the volume of global
medical records is expected to double every 73 days – a rate far
beyond anything any conventional system is
capable of coping with.
IBM Watson Health focuses on offering
flexible, customisable services that cater to
every patient’s individual needs. Through
technological personalisation, organisa-
tions are able target specific patient groups
and reduce staff workloads, creating a more
streamlined and transparent process. Since
adopting IBM Watson Health, Bon Secours
Virginia Medical Group – a hospital-owned
multi-speciality practice – has been able to
create a viable platform between the tradi-
tional models of value-based care and fee-
for-service across its 100 locations. The suc-
cessful implementation of IBM’s technology
dramatically increased both quality of patient
care and revenue.
As you can imagine, healthcare exec-
utives quite like the idea of being able to
both improve patient solutions and record
management, and lower costs. The com-
bination of big data analytics and scalable
solutions can transform daily processes for
a whole host of industry professionals, from
researchers, physicians, care managers and
nutritionists, to CIOs, hospital administrators
and public health officials.
But the implications of this powerful new
technology go far beyond the core industry
of making people better. By collating data
from hundreds of different sources into
one space, the insurance industry could
dramatically improve preventive care man-
agement. Ultimately, AI systems can help
organisations and healthcare professionals
to improve the level of care they provide to
their patients, making life better for both in-
dividuals and society as a whole.
40m
Number of
documents IBM
Watson Health
can digest in
15 seconds
73days
Time it will take
the volume of
global medical
records to
double in 2020
Sebastian Krause
General Manager, IBM Cloud Europe
For the financial services industry alone,
blockchain could reduce annual global
banking costs by as much as $20bn. Some
fintech start-ups are already developing new
automated, programmable functions such
as ‘smart contract’ agreements, which are
executed with no human intervention once pre-
defined conditions are met.
By using IBM Bluemix’s blockchain service,
clients and partners can create their own
blockchain network with validating nodes and
a designated security service. From there, they
can deploy their own smart contracts.
Blockchain is a potential game-changer
for many other industries too, including
processing medical records in healthcare,
voting for governments, and creating licensing
for the music industry. And, as blockchain has
the potential to lower transaction costs, early
adopters will gain a competitive advantage.
0706

5. What makes the smartphone a truly remarka-
ble device is not that it is a very clever phone,
but that it is a complete lifestyle platform. The
apps that give the block of glass, metal and
plastic in your pocket utility – Uber, Twitter,
Netflix and the rest – aren’t usually made by
the manufacturer, but by some completely
separate – often even rival – corporation.
The lack of direct connection between
the manufacturer and developer is what
allows for true innovation. Each app has
a separate set of developers and funders,
maximising the device’s capabilities to pro-
duce a focused and often novel point of
utility, as opposed to a closely linked, but
ultimately tepid set of applications supplied
all-in by the hardware manufacturer.
In the same way, the opening up of
application programming interfaces could
easily lead to new, high-value services
springing up in company ecosystems. It
could bring increased value to custom-
ers, creating loyalty and, very importantly,
additional revenue.
Companies often have huge amounts of
data that could, in theory, hold the key to
Don’t isolate yourself –
collaborationis the future
By opening their systems up to others through robust APIs,
organisations can let their services, products and profits grow
in ways they could never even have imagined
improving their business processes for cus-
tomers. The problem is that data is usually
spread across a number of different apps,
with no simple way of being brought togeth-
er for meaningful exploitation.
APIs – which are, simply, a set of rules,
protocols and tools programmers can use to
interact with a pre-existing system – make
this exploitation possible. A third-party devel-
oper can access these tools and use them
to create their own technological offerings.
This means APIs aren’t just useful for the
original software manufacturers, but for the
businesses that make them as well.
By multiplying the number of platforms a
company is on, APIs also multiply the num-
ber of innovators the organisation is working
with, creating new ways for customers to
interact with the business and, consequent-
ly, increase levels of interaction with the
company’s products.
While it might be easy to dismiss APIs
as a way for companies to piggyback off
someone else’s success, it would be an ex-
pensive criticism to make; without an API,
a company is closing itself off from today’s
“Without an API, a
company is closing
itself off from today’s
interconnected world”
interconnected world, denying the realities of a market that delivers
revenue through collaboration and innovation.
APIs are the glue connecting the disparate systems that make
up modern technology. Instead of forcing a customer to navigate
away from a website in order to access a product or service,
APIs allow services and products from different companies to be
embedded in each other’s sites.
FloomIt, for example, is an app that lets you share photos with
strangers without divulging personal information. From the app,
you can directly order prints of photos from pharmacy chain Wal-
greens. Because Walgreens had made its printing API available to
developers, FloomIt was able to create a way for its users to order
prints in a secure and hassle-free way, benefiting both companies
as well as their customers.
But while the mutual benefits of having an API are obvious, hes-
itant companies may soon not have a choice in the matter. Regu-
latory bodies are increasingly interested in using companies’ open
APIs to streamline methods that monitor business practices, and as
a consequence, adopting robust APIs may
soon be a legal requirement.
Strategy or product?
However, in order for APIs to be effective,
somebody needs to be monitoring and
maintaining them. Research conducted by
the IBM Institute for Business Value has
identified that the key to providing a suc-
cessful API comes from a business treating
it as its own product for the potential cus-
tomer – the developer looking to improve its
own creation.
Organisations need to put a significant
amount of effort into making sure their
APIs are appealing and easy to use. And
they need to be designed that way from
the start, because only by using integrated
cloud systems can a business make its API
as user-friendly as possible.
IBM also identified that the most suc-
cessful APIs were developed with an insight
into what it was that customers actually
wanted. An API is useless unless it provides
access to the right tools, services and infor-
mation. If a company wants to meet those
needs – and especially if it hopes to locate
new ones – it has to monitor the ways APIs
are used across various industries, and not
just its own area of expertise.
They are not static things; APIs need to
be regularly redesigned and reorganised to
ensure their developers are taking full advan-
tage of their capabilities, while not misrepre-
senting the API owner’s business. APIs need
to reflect the owner’s values and priorities so
they can be used in a way that represents
“Regulatory bodies are
increasingly interested
in using companies’
open APIs”
Diego Segre
Vice President, IBM Hybrid Cloud Europe
Companies need to be ready to bring new
digital services to the market, opening up new
business models and new ways to interact with
Suppliers, business Partners and Customers.
APIs are a hugely valuable strategic
business tool for precisely this purpose.
Organisations can drive efficiency and agility
by making their data and functions available
for general use to customers improving
experience and loyalty, whilst also making the
APIs available for other organizations to build
new and innovative business uses previously
not imagined.
The API economy is here to stay, and
successful organisations see APIs as a
strategic foothold in today’s digital environment.
the company. They also need to be consist-
ent, allowing customers to easily identify and
understand the product they are using.
However, developing a successful API
is only half the battle; as with any product,
a comprehensive implementation strategy
is also required. Companies need to plan,
execute, analyse and iterate at every step
of the way, making sure the product they
end up with is multi-faceted and adapts as
technology – and consumer need – chang-
es. They will succeed if they understand
their business goals, make sure they have
the appropriate infrastructure in place, and
always have one eye on how the product
is being received.
With the IBM Bluemix platform, a com-
pany’s API can be stored in the cloud in such
a way that it is easily accessible to devel-
opers. Tools such as IBM’s API Connect
can coordinate each of the critical stages of
an API’s lifecycle, from creating the system
through to running it, maintaining it and –
importantly – securing it.
APIs encourage speedy, dynamic and
unprecedented innovation in the developer
community. If a business doesn’t already
have one in operation, it is closing the door
on a potentially endless list of possibilities for
future growth.
0908

6. It’s taken a long time, but computers are finally beginning to think like
people. Technology has always been good at arranging, analysing
and performing calculations on data, but that is not how humans have
traditionally stored information. People use literature and images that
require a degree of interpretation to understand.
If your company relies on a legacy IT system to inform its deci-
sion-marking process, this could be very worrying. The overwhelm-
ing majority of information in IT systems has been housed in a way
that computers – at least up until very recently – simply don’t under-
stand. From a company’s quarterly report to a Twitter user providing
feedback on poor service, information is being stored in a way that
computer systems just cannot comprehend.
Take the amount of information stored online in video content.
People have gravitated towards video as a communication tool as
increasing internet speeds have made it more practical and usable.
It’s an engaging, compelling and quick way to convey a significant
amount of information. Which is terrific, unless you’re a computer.
According to a 2016 report from Cisco, 79 percent of global
internet traffic will be in video form by 2020, meaning traditional
computing won’t have the capacity to analyse nearly 80 percent
of online information. For businesses, this is known as ‘dark data’:
unorganised, uncategorised and untagged data, usually designed
for consumption by humans, not machines. As well as videos, this
could mean newspaper articles, handwritten or typewritten reports,
Shining a light
on dark data
The majority of data collected is invisible to the
businesses that create it. Thanks to AI software,
business information previously hidden in plain
sight has become usable
and photographs. Unless a human being is
able to manually sift through all this informa-
tion – a task that could take a lifetime – busi-
ness leaders will continue to make decisions
based on the recommendations of comput-
ers less informed than they could be.
However, a new era of computing
has begun, one in which AI is able to sort
through all this dark data. By interpreting
meaning from the mess, computers will al-
low business leaders to make decisions with
more information and confidence than they
ever thought possible.
IBM’s capabilities were put to the test
in mid-2016 with a historic challenge: 20th
Century Fox wanted to know if its cognitive
technology platform, Watson, could be used
to generate a trailer for its forthcoming AI
horror thriller, Morgan. It turned out it could,
“Video content is
terrific, unless you’re
a computer”
and while the trailer Watson created was
impressive, the method it employed was
extraordinary. “Watson was able to mod-
el the scenes visually to determine: was a
scene scary? Was it a tender moment? Was
there sadness or happiness?”, explained
John Smith, IBM Fellow, Machine Vision
– IBM Research.
Real smarts, artificially
AI offers a new way of analysing, sorting and
creating data in a more intelligent and thor-
ough way. It is a significant improvement over
the old programmable systems that have
been popular for decades.
In the past, computer programs were
based on mathematics and strict rules,
following a rigid decision tree to come to a
conclusion. This worked fine with the limited
amount of organised and sorted data that
was used back then, but in today’s world
– with the sheer volume and complexity of
data that is now on hand – these antiquated
systems often fail under the pressure.
If you were to take a short YouTube
video, a computer would be able to tell you
very simple, tangible information about it:
its length, common colours, the number of
people who appear in it, and so on. Howev-
er, this information doesn’t usually matter to
anyone watching – they are more interested
in what can be learnt from the video itself.
AI systems make unlocking this infor-
mation possible. They are capable of writing
their own rules based on feedback – a man-
ner not dissimilar to how humans learn – and
by creating complex decision trees, similar to
those people automatically use to interpret
information and make an informed choice.
Through this method, a computer can learn
to watch a video and interpret information
from it, and in that way improve the recom-
mendations it makes.
These are immensely complex systems
that require a tremendous amount of com-
puting power to operate, which means that
owning a private AI system is rarely a prac-
tical choice. Fortunately, companies have
taken notice of this trend’s potential, and
have pushed towards making AI systems
available for hire to the private sector.
There is a real race on among indus-
try players to make APIs for AI systems
“Firewalls can only
respond to an attack that
is either in progress or
has already happened”
79%
of internet traffic
will be in video
form by 2020
1110
available to even the smallest companies.
IBM, Microsoft and Google are all current-
ly working on improving the AI systems
they have produced to unlock all kinds of
additional applications.
One such area is the field of cognitive
security. Protection against cybercrime used
to mean firewalls and antivirus programs;
systems initially designed to lock up data.
While these systems remain in place today,
they are not able to fight off modern attacks
on their own. Currently, firewalls analyse data
to detect abnormalities, such as a spike in
server traffic. While effective, they can only
respond to an attack that is either in pro-
gress or has already happened.
Cognitive security, however, is able to in-
spect dark data to identify what prompts an
increased risk of attack, and how to prepare
accordingly. Instead of waiting for an attack
to strike, cognitive security proactively looks
for where future threats may be coming from
and identifies where defences can be im-
proved. As the system learns, it is able to
identify and block new threats quicker than
any human could.
Security applications currently in wide-
spread use are undoubtedly impressive.
However, the next era of computing – the
doors of which have only just started to
open to us – holds untold promises of what
may be possible.
Ralph Demuth
Vice President, IBM Cloud
Technical Executive Europe
In the near future, online videos will represent
almost 90 percent of all consumer traffic.
This huge amount of information is currently
unsearchable, and is more commonly referred
to as ‘dark data’. Using image tagging and
face detection technology, we can start to
make sense of this information.
Dark Vision processes videos by extracting
frames and tagging them independently: you
can jump right to the frame you are looking
for, giving access to previously unmanageable
information. This particular example for video
processing uses IBM Bluemix OpenWhisk and
Watson services.
What’s more, the potential for utilising
Watson in the IBM Cloud is unlimited, from
helping an energy company to predict pipeline
corrosion to assisting a start-up in using social
data to predict market trends.

7. Domino’s has over 800 pizza stores in the
UK, and each day serves up over a million
pizzas. It used to be that you’d dial up the lo-
cal chain, tell the person at the other end your
order, and your Buffalo Chicken pizza would
be dispatched on the back of a scooter. But
the internet has changed all that; today, app-
based, mobile and web sales account for
50 percent of Domino’s total volume. This
increase in online platform delivery has been
sustained and rapid, with a 34 percent in-
crease in sales in the last year alone.
This massive rise in digital orders means
Domino’s has had to make some pretty ma-
jor upgrades to its data processing systems.
They used to be entirely on-site, in the form
of private servers, but at times of peak de-
mand their capacity was insufficient, causing
website errors, delays for customers, and a
lot of stuffed crusts going cold.
A plan for four seasons
The solution was the hybrid cloud: a system
that allows enterprise to keep data secure
Ahead in
the cloud
The global economy increasingly exists in
the digital sphere. Hybrid clouds can bring
both value and efficiency savings to those
businesses that are quick to embrace them
in a private cloud, while using public cloud
storage of computational resources to run
applications that access and manipulate
that data. In the case of IBM’s hybrid cloud,
the streamlining of the various technologies
involved reduces the occurrence of bottle-
necks between what exists in the public
cloud and what exists on site, allowing a
more efficient workflow.
The flexibility of this system allowed
Domino’s to maintain its onsite data pro-
cessing system while having access to off-
site servers for additional data processing
in times of acute demand. This meant the
company could deal with most of its data
processing on site in times of normal de-
mand, but accommodate extra traffic during
peak periods without having to upgrade its
on-site IT infrastructure. As a result of the
hybrid cloud, security and efficiency are no
longer a trade-off.
By using the hybrid cloud, businesses
can add value and reduce costs, while also
improving their policymaking processes.
When combined with analytics services that
help to evaluate, refine and synchronise data
between the cloud, the company site and
devices, the hybrid cloud is able to help firms
make informed decisions with a far greater
degree of accuracy, as non-obvious trends
and correlations can begin to emerge.
By splitting tasks between private and
public servers, hybrid cloud technology
also helps create greater architectural flex-
ibility. Workloads can be deployed for use
on either a third-party server or an on-site
server, based on the specific demands of
each individual situation. Each task can be
designated for processing through the most
appropriate channel, boosting efficiency.
IBM even offers brokerage services to
allow companies to plan, buy and manage
IT services, picked and mixed from various
cloud models and suppliers. That way, they
can get all of the benefits of the very latest
resources and platforms at a lower risk – and
certainly lower cost – than if they were to try
and take it on themselves. Scaling up, when
needed, to a state-of-the-art infrastructure
means companies can punch significantly
above their weight – turning a small start-up
in Wales into an international conglomerate,
if only for a day.
Castles in the cloud
While VMWare was one of the first companies to offer hybrid cloud
solutions, most of the world’s biggest tech and IT firms have now
caught up. Microsoft offers its Azure Cloud service, which, while
established, is still being developed and improved, while HP is also
known for its open-source hybrid cloud. Amazon and Google, huge
players in in the public cloud, don’t currently cater for organisations
that want to keep some data in-house.
When IBM was tasked with redesigning the digital platform for
the Wimbledon Championships in 2015, it hosted the whole envi-
ronment in its hybrid cloud. This approach allowed IBM to allocate
cloud resources appropriately to each piece of digital content, en-
suring a seamless experience in a year when visits to the platform
ballooned to 71 million. It also allowed IBM to host the Wimbledon
Social Command Centre in a separate IBM Cloud, and provide in-
cremental capacity to supplement the main private cloud that has
supported the tournament for years.
This elasticity is one of the key attractions of the hybrid approach
– and business needs don’t get much more elastic than Wimbledon,
which goes from more or less nothing for 50 weeks of the year to
two weeks of absolute frenzy. The platform needs to scale efficiently
by a factor of more than 100 within a matter of days as the interest
builds ahead of the first match on Centre Court – and scale back
down again just as efficiently.
Wimbledon is an extreme case, but all companies experience
elasticity of one kind or another. How to deal with it without waste at
the low ebb of demand and loss of business when overstretched is
a fundamental issue facing business leaders the world over.
As data – and the efficient management of it – becomes ever
more important to firms operating in today’s tech-centric econ-
omy, the most agile and forward-looking will be adopting hybrid
cloud solutions in order to match their technological capabilities to
their business needs.
60%
Companies
considering
moving to a
hybrid cloud
17%
Average
reduction
in IT expenses
“By using the hybrid cloud,
businesses can add value
and reduce costs”
1312
Multi-cloud system
(82%) breakdown
Companies (1,000+ employees)
cloud implementation plans
Source: RightScale
55%
82%
Hybrid cloud
Multiple public cloud
Multiple private cloud
Multi-cloud system
Single public cloud system
Single private cloud system
No plans
11%
16%
9%
6%
3%
Source: RackspaceSource: Avanade

8. IT has become an integral aspect of any business. No longer should
it, or can it, be confined to just one employee, or even a single de-
partment. IT is both essential and heavily involved in every aspect of
a business; it provides a foundation for all processes, and, truly, it is
the lifeblood of any organisation.
Given its importance in the success of a business, the cost of
managing a proficient IT system continues to grow. So complex and
expensive to maintain are the numerous applications – and the level
of expertise required in particular fields to keep IT systems up to
scratch – that countless companies ignore the pressing need for im-
proved implementation; few can afford to do it all (and well) in-house.
Fortunately, however, there is an approach that can remove the
complexity and enhance quality and speed to market, all while re-
ducing costs: managing infrastructure through the cloud.
Securing reliability
Some of the biggest players in tech are now offering the solution to
a company’s ever-growing list of IT requirements, through the form
of managed services. Cloud managed services can encompass a
vast array of business needs, from managing databases to security
and even applications such as ERP.
Companies such as IBM help thousands of clients set up and
manage (among other things) scalable SAP software landscapes in
Collaborate to
remove complexity
Given their increasing importance and complexity,
robust and scalable IT systems can rarely be adequately
maintained in-house. Cloud managed services provide
an opportunity for companies to have it all and more
the cloud, potentially delivering cost savings
of 20 to 25 percent over five years versus
traditional self-management and operation
of SAP software. “The cloud managed
services delivery model allows companies
to lead with a more flexible OPEX model”,
explained Susan Volkmann, Head of Cloud
Managed Services at IBM. “But it is not just
financial motivations these companies are
driven by. Improved and scalable technology
supporting their business requirements gives
them new revenue streams or helps them
unlock new clients.”
Refocusing efforts on the core business
of the company is one of the great advan-
tages of managed services. “We have made
the right decision in choosing IBM to provide
higher quality services to our customers all
over the world”, said Ryuzo Morita, Director
of KYOCERA Document Solutions.
By outsourcing such services, com-
panies place vital systems in the hands of
industry experts – teams with a wealth of
“By outsourcing such
services, companies place
vital systems in the hands
of industry experts”
dedicated resources and talent – to an ex-
tent that is simply not practical, nor afforda-
ble, in-house. Moreover, doing so ensures a
greater sense of business continuity, which
in turn enhances the level of service offered
to their clients.
This ability to instil a sense of reliability
is vital in competitive markets, particularly
given the mounting threat and destructive
nature of cyber-attacks. Today, a company’s
reputation, honed over decades, can be
devastated in a moment. In an event where,
say, the personal records of clients are sto-
len, the news can spread across global me-
dia at the click of a button.
Flying higher
While many companies are slow to adopt
managed services, either through fear of
passing such control over to a third party or
simply inertia, there are some that are taking
the leap forward. A case to note is Deutsche
Lufthansa, one of the world’s leading airline
carriers. Known for its reliability and outstand-
ing customer service at competitive prices,
in many ways Lufthansa stands alone in the
aviation industry. To further consolidate this
reputation with clients across the globe, in
August 2015, Lufthansa adopted IBM’s man-
aged services.
The group’s primary aim was to improve
the customer experience on the many web-
sites that fall under the Lufthansa umbrella,
which include Swiss International Airlines,
Germanwings, JetBlue Airways, Luxair and
Brussels Airlines. In addition to launching
a reengineering initiative for its online plat-
forms and expanding its hosting infrastruc-
ture, Lufthansa also sought to establish an
innovative content management system that
demonstrated greater functionality than its
pre-existing systems.
By outsourcing its online service delivery,
Lufthansa was able to provide its customers
a cutting-edge, personalised experience in
12 languages across 94 countries.
The company’s profitability was bol-
stered as a result of a growing number of
people booking online, together with a better
online service functionality that was achieved
at a reduced cost. Opting for cloud man-
aged services also enhanced Lufthansa’s
ability to expand with flexibility, while still
maintaining a reliable hosting infrastructure
that can support variable traffic demands.
As such, managed services have not only
helped Lufthansa to deal with the problems
of today, particularly those that prevail in
such a highly competitive industry, it has
prepared it for those of the future as well.
Naturally, there will be those that prefer to
conduct IT systems in-house, but there will
soon come a day when this is no longer an
option. As big data continues to expand at
an exponential rate, particularly through the
Internet of Things, and as more services and
products become automated, companies
must transfer these systems to an external
party in order to maintain their own focus and
core objectives, whatever those may be.
“Today, a company’s
reputation, honed
over decades, can be
devastated in a moment”
20-25%
Potential five-year
cost savings
1514
Susan Volkmann
Head of Cloud Managed
Services at IBM Europe
As companies venture into the digital era,
technology investments are no longer
the exclusive domain of the traditional
IT organisation. Influence from business
executives is growing considerably as
companies search the optimal way to increase
the value they bring to the bottom line and how
they can get faster to market.
We see more and more IT organisations
turning to cloud managed services so they
can realise the promise of agility, security and
availability. And although all C-levels might
have their own expectations and priorities,
they share a common goal of ensuring all
investments are optimal for the business.

9. As businesses become increasingly reliant on data and online plat-
forms, they are also becoming increasingly concerned about cyber-
crime. And they are right to do so.
According to IBM’s 2016 Cyber Security Intelligence Index, the
average client organisation monitored experienced around 53 million
security ‘events’ in the course of 2015, with 1,157 direct ‘attacks’
(defined by the report as “malicious activity that is attempting to
collect, disrupt, deny, degrade or destroy information system re-
sources or the information itself”). The five worst-hit industries were,
in descending order: healthcare, manufacturing, financial services,
government agencies and transportation.
Worryingly, the most likely culprit for your organisation’s next at-
tack is someone you thought you could trust, be it an employee,
contractor or consultant. Insider attacks still pose the most significant
single thereat to businesses around the world, accounting for 60
percent of all attacks.
The majority of these breaches involve the use of viruses,
spyware and malware – all methods that, given the right technol-
ogy, can be prevented. As the threat of cyberattacks continues,
businesses must take concrete steps to protect the integrity of
their IT infrastructure.
Fortunately, leading firms are now waking up to the threat.
According to the UK Government’s Cyber Governance Health
Check, half of FTSE 350 companies regard the risk of cyberattack
Brace for
the future
From scaling up to Brexit, businesses
can’t afford to ignore the challenges that
fast-paced technological and regulatory
change bring with them
“Businesses everywhere will
need to make sense of the
vast and growing volumes of
data being amassed”
Unauthorised
access
Malicious code Sustained probe/
scan
Suspicious activity Access or
credentials abuse
Most frequently occurring incident categories
n 2014 n 2015
Who are the ‘bad guys’
Average
annual
security
events:
Average
annual
security
attacks:
Overall
Malicious
Inadvertent
Outsiders
Average
annual
security
incidents:
Event:
An event on a system or
network detected by a
security device or application
Attack:
A security event that has been
identified by correlation and
analytics tools as malicious
activity that is attempting to
collect, disrupt, deny, degrade
or destroy information system
resources or the information itself
Incident:
An attack or security event
that has been reviewed by IBM
security analysts and deemed
worthy of deeper investigation.
as the key threat facing their business. This
is an increase of 29 percent on reported
concerns in 2014.
Firms must take every possible step to
safeguard against their vulnerabilities. Each
business’ needs will be different, and their
attackers agendas varied. As the authors of
the IBM report pointed out: “While financial
gain is still a powerful motivator for cyber
criminals, it’s by no means the only one.
Last year’s attackers branched out in a big
way – inflicting physical damage, stealing
intellectual property and lodging political
protests.” Traditional security defences will
not stand up to this onslaught, particularly
as disruptive technologies bring new and
unpredictable vulnerabilities.
Although the figures are startling, the news is
not all bad. IBM reported its client business
had seen a significant reduction in events and
attacks from the previous year, while the rate
of discovery had increased, demonstrating
that – with the right support – businesses
can still turn the tide. »
2014
81,342,747
2015
52,885,311
2014
12,017
2015
1,157
2014
109
2015
178
37%
45%
20%
29%
20%
16%
11%
6%
8%
3%
55%
31.5%
23.5%
45%
60%
44.5%
15.5%
40%
Insiders 2014 2015
1716
Source: IBM Cyber Security Intelligence Index 2016
For latest stats, visit ibm.com/security/xforce

10. Brexit bother
In 2015, the European Commission’s arm
concerning banking and finance released
its newest directive covering online payment
services. Known as PSD2, it will bring a num-
ber of changes to the way online payment
services for businesses operate within the
EU. And the ramifications could be huge.
Under the directive, online retailers will be
able to ask consumers for permission to use
their bank details, meaning retailers could re-
ceive payments directly from the customer’s
account. Instead of payment intermediaries,
transactions will be carried out via APIs. The
new regulation will also result in the intro-
duction of ‘account information service pro-
viders’, or AISPs, which will allow users to
view all of their banking information – even
if dispersed between different accounts –
through one single portal.
While this added convenience will be
a boon to consumers, it will be a bit more
worrying for banks, who will need to decide
what role they can play in this new payments ecosystem. It could be
an opportunity for financial institutions to reinvent themselves, but
that would be very expensive at a time when their existing revenue
streams will be reduced and a whole new wave of fintech competi-
tors will be entering the market.
The outcome of the directive will be particularly unclear for busi-
nesses operating in the UK, which voted to leave the EU back in
June 2016 – particularly as, at the time of writing, the exact nature
of the country’s exit remains unclear. If the UK leaves the Europe-
an Union but remains a part of the European Economic Area, the
country will still be subject to many single market regulations, and
the PSD2 regulation changes will probably be implemented along
the same lines as if the UK were still a member of the EU (assuming
it does not exercise its right within the EEA to unilaterally place a stop
break on the policy). Indeed, implementation of the new regulations
should actually be easier in the UK than in many full member states,
as the country is already ahead in terms of data sharing due to the
UK Open Data Initiative.
Mountains of data
Regardless of what these regulations actually mean or how and where
they will be enforced, basic technological shifts mean businesses
everywhere will need to make sense of vast and growing volumes of
data. Everything from internet search engines to water bottles is gen-
erating data these days, but it is estimated 80 percent of the world’s
data is unstructured. Identifying the important parts of this huge dark
data pool – and any patterns and insights that can be discerned from
it – is an ongoing endeavour. Thankfully, a host of new technologies,
such as cognitive computing and APIs, are on hand to help. With the
right tools, this challenge can become an opportunity.
But the simple generation of that data
will also place greater costs on firms. Even
companies that would not consider them-
selves particularly data-focused will have
to deal with increasing amounts of data, as
they inevitably pivot further towards online
platforms in our increasingly digital age. All
this will require scaling up of data storage
and processing. Essentially, the challenge
will be ensuring that the most cost-efficient
method of storage and the best computa-
tional resources are used.
Indeed, in the changing digital environ-
ment businesses are set to face constant
regulatory and technological challenges. To
stand any chance of holding at bay these
unrelenting assaults, businesses will need
powerful, specialised allies to guide them,
allowing them to keep their eyes on the prize
of transformation.
“While financial gain is
still a powerful motivator
for cybercriminals, it’s by
no means the only one”
53mAverage number
of security ‘events’
experienced by
organisations in 2015
1,157Average number
of direct ‘attacks’
60%
of all attacks are
due to insiders
18
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11. Welcome to the
Cognitive Era.
A new era of technology.
A new era of business.
A new era of thinking.
ibm.com/outthink
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