Blue Chip Builds Out 1.5 Million CPW IBM i Cloud

February 10, 2014 Timothy Prickett Morgan

Blue Chip got its start in the garage of founder and current managing director Brian Meredith back in 1987, even before there was an AS/400. The company was originally created to provide third-party maintenance on System/36 and System/38 gear, and over the years it expanded into the AS/400 and successor markets. About a decade ago, Blue Chip got into direct product sales, including IBM’s Power-based systems as well as X86 iron, and also into managed services. Now, it is investing heavily in the cloud, and for IBM i workloads in particular.

Blue Chip has around 200 employees in operations in the United Kingdom who help it peddle and provide its products and services, plus another 100 or so who work in the company’s Itheon software unit. Itheon has a big development lab in Sri Lanka, and the iAM: Servers tool is used by Blue Chip to do management and monitoring of the servers in its two data centers in the United Kingdom. iAM Servers can babysit servers running OS/400, i5/OS, and IBM i in addition to Windows, Linux, Unix, and OpenVMS. The company has approximately Â£35 million in revenues in the past year, which converts to around $58 million if you need to think in U.S. dollars. As companies in the IBM i space go, Blue Chip is one of the biggies.

Blue Chip is located in Milton Keynes, northwest of London in the county of Buckinghamshire. The company operates two datacenters in another county, Bedfordshire. The Tier 4 data center for production workloads is in the town of Bedford, which is about 50 miles from Central London by train. The company has its Tier 3 data center, which is used for disaster recovery operations, in the nearby town of Kempston, which is close enough to Bedford so synchronous replication can be done between the two sites. The Tier 4 data center has about 350 racks today, explains Chris Smith, who is in charge of IBM solution sales at Blue Chip and who is also the iSeries cloud specialist for the company. This data center can be expanded to hold about 600 racks, and has sophisticated features such hot and cold aisle containment, free outside air cooling–made possible by the mild British climate in Bedfordshire where the temperature rarely gets over 85 degrees Fahrenheit (30 degrees Celsius). The Tier 4 data center has traditional CRAC refrigeration cooling for times when the weather gets warm, and there are redundant, multipath power links into the facility as well as a variety of communications links from all the major telcos that come in on multiple paths. And because it owns its own data centers, it can do its own maintenance, unlike those who put their machines in a co-location facility to build a cloud.

That Tier 3 data center has 160 racks of gear, and it includes a lot of vintage AIX and OS/400-IBM i gear. By the way, the vintage moniker applies equally well to AIX shops as to IBM i shops.

“Some people are still running AIX on Power3 chips, unbelievably,” says Smith. So don’t think it is just OS/400 shops who hold onto old releases. “The older generation of stuff makes up about 20 percent of the systems these days,” says Smith, referring to the disaster recovery business. “The remaining 80 percent are Power5 systems and above, and the majority of Power5 customers are looking at moving to Power7 right now.”

Even though IBM has withdrawn support for AIX 5.3, a lot of customers, particularly in the financial services industry, are stuck because the cost of upgrading their Power4 iron and application software can be in excess of millions of pounds. “The cost of upgrading the applications far exceeds the cost of moving to new hardware,” says Smith.

Hence, providing backup services for this vintage iron has turned into a solid business for Blue Chip. So has the third party maintenance business where Blue Chip got its start two and a half decades ago, The company has about 2,000 IBM i systems under maintenance throughout Europe, with an obvious concentration on the United Kingdom and Ireland. The company has customers in the United States as well and is eager to add more.

The newest business is its Power-based cloud, which does not yet have a clever marketing name and Smith grouses that Apple stole the best name when it got a trademark on iCloud. Last summer, the company had a cluster of Power7-based machines with an aggregate capacity of 1 million CPWs of performance. (CPW is short for Commercial Performance Workload, the online transaction processing test that IBM uses to gauge the relative performance of IBM i machines.) As 2014 is getting rolling, Blue Chip has added a bunch of Power7+ machines and boosted the aggregate capacity to 1.5 million CPWs.

Most of the machines in the Blue Chip cloud are based on Power 720s, which offer the lowest cost per unit of capacity for IBM i and which also allows for the risk of downtime to be mitigated because customers are not all crammed onto a few machines, but spread across a larger number of machines. Smith says that the company uses local storage on each server and carves it up using volumes to match the logical partition slices, but now the company is taking a second look at storage area networks again. In particular, Blue Chip is looking at putting the Storwize V7000 arrays, which have a lot of the virtualization functions of the SAN Volume Controller plus thin provisioning, data tiering, flash copy, and other functions added. You can make the V7000 act as a front end for flash storage arrays (the FlashSystems in particular) and this is precisely what Blue Chip is thinking about doing. The FlashSystem arrays have lots of I/O capacity.

The IBM i portion of Blue Chip’s Power-based cloud has about 50 customers so far. Customers pay on a per-CPW basis, usually in chunks of 500 CPWs. It costs around Â£1,200 per year for 500 CPWs of capacity on the cloud, and that includes the cost of the operating system, various middleware, and maintenance on the slice. Some customers have really small partitions, others have large ones, and still others have many partitions spread around the cloud. The customer with the largest partition has 26,000 CPWs in total (about half of a machine), while the one with the most slices has 21 partitions of various sizes hosting many different applications.

Contracts are done annually, and customers can rent capacity on the Blue Chip cloud for up to five years in one fell swoop. Blue Chip can stand up small sandbox partitions on its cloud for software testing ahead of production, and the company is contemplating giving such sandboxes away for free to encourage customers to try it and then buy it. “We want to get ore ISVs working with us and get more business for their software,” says Smith. To that end, there is already a plan in place to add more CPWs of capacity to the Blue Chip cloud later this year.

The interesting thing is that the cloud is attracting new customers, who are deploying ISV applications on the cloud. “Around 25 percent of IBM i customers for our cloud are new to the IBM i platform,” says Smith. “For the two decades that I have been on the platform, the customer count has been going in the other direction, and this is a big change.”

And, a welcome one at that.

The other big change is who is making the decisions, and why. “There are more people looking at the cloud now, and it is as much about who is making the decisions as it is technical and economic factors,” Smith explains. “It is not the IT people, but the business managers and owners. They don’t want to know how the hardware is made up anymore. They want a service level agreement.”