RealTime IT News

IBM Takes Over LEGO's Infrastructure Biz from HP

On the same day that Hewlett-Packard is set to unveil its largest consumer product roll-out in the company's history, IBM will announce that it is chipping away at the enterprise side of HP's business by getting LEGO, the world's fourth-largest toy manufacturer, to switch its entire computing infrastructure from Hewlett Packard servers to IBM on-demand computing platform.

Under terms of the multi-year deal, IBM will put LEGO'S worldwide computer network into on-demand mode consolidating more than 230 HP computer servers onto just 34 IBM systems. LEGO has signed onto a fully integrated, open infrastructure using IBM's Unix eServer pSeries p690 and p650, eServer xSeries x440 and IBM Shark Storage SAN servers. The deal also includes Tivoli Storage Manager software.

For LEGO, the switch from HP to IBM is being driven largely by the seasonal nature of the toy industry. Like many toy retailers, LEGO experiences a peak in demand leading up to Christmas. The lead up to Christmas, which typically starts in October, is a critical time when businesses in this sector can generate up to 80 percent of their revenue. Using an on-demand infrastructure, LEGO can use just enough computing capacity to coincide with peaks in demand and save money during the lull periods.

"We are operating in a very competitive environment and need to respond to the dynamics of our market at a moment's notice," said Hal Yarbrough, senior director, LEGO Global IT.

With IBM's on-demand capacity, LEGO can reallocate processing and storage capacity according to varying business volumes and priorities. As a result, it is better equipped to handle any surge in marketing, ordering or fulfillment activities and more easily set up pilot projects and test their viability, without major investments. This will allow the company to reinvested savings into other areas, such as customer relationship management (CRM).

HP has tried remain in step with IBM's enterprise business with strategic initiatives like its Adaptive Enterprise strategy unveiled last spring. At the time, the Palo Alto, Calif.-based computing giant even follow up its "Everything is possible" campaign with a similar "On demand" campaign.

But analysts believe that IBM has done a better job at remaining focused on the enterprise market and explaining that focus. "I think HP has pushing the idea of the Adaptive Enterprise. I think what IBM has managed to do that I think the others have not done is probably explain in a fairly clear way why a sweeping strategic initiative is made up of small incremental steps," said Charles King, research director at Sageza Group.

For example, IBM introduced processor-based and memory-based on-demand capacity for its pSeries servers last spring at just the right time when customers started offset tighter IT budgets with computing capacity that could turn on just as the upgrade was needed.

"The way you get from here to there is not by broadjumping. It's done a piece at a time. IBM has been well focused to deliver the pieces in order for it to make sense," King explained.