Tim Schuetz IBM Sales Executive 2004 IBM Corporation

Today’s Enterprise IT Environment IT environments are becoming increasingly heterogeneous and complex. Legacy Systems and Databases Applications Value Chain Intranets Extranets Internet Transactions Customers © 2004 IBM Corporation PAGE 2 Networks

Evolution of the Species Scaleable High Performance Computing Compact Cardless Computing 1969 1975 S/3 96 Col Card S/32 1977 S/34 Advanced Architecture 1980 S/38 1983 1988 S/36 AS/400 2004 IBM Corporation PAGE 3 i. Series Server Consolidation New Workloads Inexpensive Interactive Computing Distributed Computing © 2000

Evolution of the Species – Alternate View Scaleable High Performance Computing Compact Cardless Computing The Internet is NOT the last great thought 1969 1975 1977 Advanced Architecture 1980 1982 1988 2000 Card to Batch to Cable to Private to S/32 S/38 S/34 S/36 S/3 i. Series AS/400 Public Cardless Interactive Networked an expense. Inexpensive IT as an investment © 2004 IBM Corporation PAGE 4 New Workloads Productivity Convenience Interactive Computing Server IT as a Consolidation weapon Distributed Computing Innovation 96 Col Card IT as

The Challenge: “In an ever-consolidating marketplace… industry executives rank information technology as both the greatest challenge and the greatest area of potential competitive advantage. It is the issue that will define the industry in the coming years. ” From: Addressing the Leadership Challenges in Wholesale Distribution National Association of Wholesalers-Distributors 2003 © 2004 IBM Corporation PAGE 7

Productive Responsive Needs Business Building an On Demand Business Improving the quality and speed of business decision-making through integrated systems Resilient Streamlining your infrastructure and optimizing resources Ensuring business continuity, resilience, protection from intrusion and threat IBM Systems Group e. Server and Total. Storage Flexible Growth Virtualization IT Optimization Systems Mgt Business Continuity Flexible Delivery Integrated Solutions © 2004 IBM Corporation PAGE 8 Overall Value of IBM

IT Optimization …the Goal Operations pr ic e Innovate Access Integrate Internally On Demand

Rapid Adoption of Instant Messaging Number of years to 50 Million Users 38 16

Correlating Company Performance with IT Budgets… §Revenue growth. In a Forrester survey of 122 IT executives, 22% said that their top priority is to help acquire and retain customers. §Return on assets (ROA). A company’s ability to generate profits from its existing asset base, including IT, is a good metric for a down economy. §Cash-flow growth. IT helps convert receivables into cash, but CIOs are becoming increasingly creative at managing down discretionary spending by breaking projects into smaller chunks or exploring pay-bythe-drink outsourcing contracts. Linking IT Spend To Business Results Forester 10/02 © 2004 IBM Corporation PAGE 11

IT Optimization: Reduction of Cost + Enablement IT Optimization Linking IT Spend To Business

IT Optimization - Industry Trends Linking IT Spend To Business Results © 2004 IBM

IT Optimization: Reduction of Cost + Enablement IT Optimization, is more than simply replacing smaller servers with fewer bigger servers. It is about simplifying and optimizing end-to-end IT infrastructure Ÿ Servers Ÿ Databases Ÿ Applications Ÿ Networks Ÿ Systems management processes The goals of consolidation are Ÿ Reduction of costs and complexity Ÿ Delivering a rational, stable IT foundation that enables growth Ÿ Provide a foundation for building an On Demand Business © 2004 IBM Corporation PAGE 14

IT Optimization: Reduction of Cost + Enablement Without the constraints of technology, skills or money, the ideal target environment would be: Ÿ One hardware platform, potentially clustered for DR and HA Ÿ One operating system, database, and middle ware stack Ÿ 3 instances of the OS: trusted network, DMZ and Test Why? Ÿ Concentrate skills, and maximizes productivity Ÿ Enable enforcement of best practices across all services Ÿ Largely eliminate data integration issues Ÿ Enable enterprise disaster recovery The ideal environment is almost never achieved Ÿ IT Optimization strives to get as close to the ideal as possible, while balancing constraints © 2004 IBM Corporation PAGE 15

IT Optimization: Reduction of Cost + Enablement Highly Visible Customer Benefits 1. Lower Costs Ÿ Reduced administration Ÿ Lower hardware, software and support costs Ÿ Optimized space and power Ÿ Enhanced predictability for budget planning 2. Improve Service Levels Ÿ Increased performance Ÿ Improved availability Ÿ Facilitation of change management 3. Enable New Capabilities Ÿ True enterprise disaster recovery Ÿ Accelerate applications/process integration Ÿ “On Demand” flexibility -- cost effectively deploy new services © 2004 IBM Corporation PAGE 16

IT Optimization Methodology on demand 1. Discovery 2. Data Collection 3. Island Identification 4. Infrastructure Redesign 5. Business Case 6. Implementation 7. Monitoring © 2004 IBM Corporation PAGE 17 Infrastructure Simplification Systems Consolidation Centralization and Physical

IT Optimization - Simplify Your Infrastructure ØDrive new levels of productivity from integrated server infrastructure ØReduce costs through infrastructure simplification ØIncrease asset utilization through virtualization ØRapidly deploy and provision new applications © 2004 IBM Corporation PAGE 18

Integrated x. Series Solutions • Simplify your Infrastructure – Consolidate aging Intel servers – Extend i 5/OS with complementary Windows applications • Optimize your Investments – Exploit i 5/OS Virtual Storage and Virtual Ethernet – Integrate i 5/OS and Windows backup – Leverage Resources, Skills and Best Practices • Offerings – Integrated x. Series Server – x. Series attached via Integrated x. Series Adapter • x 235 (1 -2 w), x 255 (1 -4 w), x 365 (1 -4 w), x 445 (2 -8 w) • Preview: Linux support* – Deliver support for Intel-based Linux applications – Provide a path to Linux on POWER *Planned availability 3 Q, 2004 This presentation contains information about IBM’s plans and directions. Such plans are subject to change without notice. © 2004 IBM Corporation PAGE 19

GHY International "We selected Linux on the i. Series because it was such a compelling alternative to the cost and complexity of managing nine separate Intel-based servers. “ Nigel Fortlage, Vice President of IT © 2004 IBM Corporation PAGE 20 0 1 2 3 4 5 6 7 8 GHY 820 0. 50 640 M OS/400 0. 30 DOCIMG Samba/Apache/My. SQL/PHP 288 M 0. 10 SUSETEST 192 M Test Partition 0. 50 LANAPPS 512 M Samba/DHCP/sendmail/Intranet FIREWALL Firewall / Squid L 2 TPVPN Po. PTo. P VPN IPSECVPN 0. 30 288 M 0. 10 128 M 0. 30 Masquerade VPN 288 M 0. 30 INETAPPS 288 M Mail Gateway/Intrusion Detection 0. 10 RHELAS 3 288 M Test Partition

Huhtamaki “Before consolidating on the i. Series and x. Series we required at least three dedicated administrators to run our servers…now because of its ease of use, we need only two administrators to run the new system. ” Brendan Carlton Systems Administrator, Huhtamaki © 2004 IBM Corporation PAGE 21

Simplify Your Infrastructure • Reduce costs by increasing asset utilization • Redeploy talent to manage your business, not your infrastructure • Rapidly provision new servers “"We have taken major steps to simplify our infrastructure by leveraging virtualization technologies with POWER Linux and Integrated x. Series Solutions on the i. Series. Prior to our server consolidation we spent 95% of our time just keeping our systems and network running. Now we spend 5%. ” Nigel Fortlage, VP of Information Technology, GHY International © 2004 IBM Corporation PAGE 22

IT Optimization - Integrate to Innovate i. Series Opportunities §Modernize Applications §Streamline Business Processes Access Enterprise Integration On Demand Buying not browsing Dynamically respond to the needs of customers, employees, partners, and suppliers Optimize operations Get on the Net Working not surfing Access | Publish | Transact | Integrate Internally | Integrate Externally | Adapt Dynamically §Extend Your Business Reach Collaborative Tools Business Application © 2004 IBM Corporation PAGE 23

i. Series Infrastructure Simplification • IBM Virtualization Engine – 3 rd Generation of Logical Partitioning • Up to 254 Partitions • Uncapped partitions • Hardware Management Console – IBM Director Multiplatform • AIX 5 L – Supported Across e. Server i 5 – AIX 5 L v 5. 2 • 1 processor per partition • Direct I/O support – Enterprise Edition • Integrated x. Series Solutions • Linux on POWER – Storage Management via i. Series Navigator – Backup Automation through BRMS – New Distribution for e. Server i 5* • Red Hat Enterprise Linux AS 3 (update) • SUSE LINUX Enterprise Server (next version) © 2004 IBM Corporation PAGE 24 – 1 TB Storage Spaces – Enhanced User Integration with EIM • Single Sign-on support • Password management from Windows – Product Preview • New Integrated x. Series Server • Linux support *Planned availability 3 Q 2004 This presentation contains information about IBM’s plans and directions. Such plans are subject to change without notice.

IBM Virtualization Engine on IBM e. Server i 5 © 2004 IBM Corporation PAGE

e. Server i 5 LPAR • ~20, 000 LPARs in Use Today • Introducing 3 rd Generation Partitioning – Automatic Processor Movement through uncapped partitions – Up to 254 Partitions • Benefits – Improves asset utilization – Responds to changes in application resource requirements © 2004 IBM Corporation PAGE 26

i 5/OS V 5 R 3 Storage Virtualization • Storage spaces created from OS/400 – – 1 MB to 1 TB each Up to 32 per Integrated x. Series Solution Up to 64 per Linux or AIX Can be dynamically added • Enables other OSs to Leverage Advanced e. Server i 5 Storage Architecture – Data automatically spread and protected – More disk arms for better performance – Automatic balancing of storage across drives – Consolidated Backup – Flexible Storage Management – Easy setup of multiple environments © 2004 IBM Corporation PAGE 27

Virtual Ethernet • Provides 1 Gb connections with no LAN adapters/switches – Between Partitions and Integrated x. Series Solutions i 5/OS LPAR 1 OS/400 DB DB i 5/OS Windows LPAR 2 Business Linux Intelligence Web Server Data AIX Application DB • Benefits – Extremely secure and reliable server communication over high-performance internal paths – Can reduce network traffic and exposure to "sniffing" i 5/OS Linux Application Data Windows Application DB © 2004 IBM Corporation PAGE 28 Data

Virtualization Enhancements for POWER 5 i. Series © e. Server i 5 Maximum # of partitions 32 254 Partitions per Processor Up to 10 Processor Movement Static Dynamic Up to 10 Static Dynamic Automatic Maximum # of Virtual Ethernets 16 4094 Maximum Virtual Disk per partition 2 TB 64 TB Partition Management Primary HMC Operating Systems i 5/OS OS/400 Linux i 5/OS Linux AIX 5 L 2004 IBM Corporation PAGE 29 IBM Virtualization Engine Systems Technologies

IBM Director Multiplatform* • Provides Centralized Management Across Heterogeneous Servers – – Collect inventory Establish Monitors Set Alerts Take automatic actions • Expanded to support additional operating systems – Server: i 5/OS V 5 R 3, Windows, Intel Linux – Agents: Servers + POWER Linux, AIX 5 L, …. • Integrated with PM i. Series for collecting and reporting multi-OS CPU utilization and capacity planning • Complements i. Series Navigator • IBM Virtualization Engine Systems Service * Product Preview: Planned Availability 2 H 2004 © 2004 IBM Corporation PAGE 30 *Planned availability 2 H, 2004 This presentation contains information about IBM’s plans and directions. Such plans are subject to change without notice.

i. Series Infrastructure Simplification Solution Scenarios §Consolidation ƒ Replace Windows Infrastructure servers ƒ Consolidate storage, backup and simplify operations ƒ Run multiple Linux servers in partitions §Solution Component ƒ Windows or Linux component of a key new application ƒ Simplify deployment of multi-tier applications §Integration ƒ Extend OS/400 applications with Linux or Windows applications ƒ Utilize Virtual Ethernets for application & server communication §Application Flexibility ƒ Leverage Windows and Linux application portfolio ƒ Reduce complexity of managing server infrastructure © 2004 IBM Corporation PAGE 31 OS/400 LPAR 1 OS/400 DB OS/400 Windows LPAR 2 Business Linux Intelligence Web Server Data Linux Web Server DB Data Linux Windows DB File Serving Messaging Data

POWER Linux on e. Server i 5/i. Series • Simplify your Infrastructure – Consolidate aging Intel servers – Extend i 5/OS with complementary Linux applications • Optimize your Investments – Share processor and memory resource – Move resources to where they are needed • Up to 254 partitions – Exploit i 5/OS storage architecture and resources • Linux shares resources with OS/400 and other Linux partitions: disk, tape, CD, DVD – Leverage Skills and Best Practices • Enterprise Edition – Extra Processor, Service and Education Vouchers # of Processors Max # of Linux Partitions i 800* 1 9 i 810* 1 -2 9 -19 I 825* 3 6 29 -31 I 870* 4 12 31 i 890* 12 32 31 I 520** 1 -2 10 -20 I 570** 1 4 10 -40 5”BIG”** 1 64 10 -254 *OS/400 V 5 R 2 Primary Partition © 2004 IBM Corporation PAGE 32 ** Requires V 5 R 3

Test & Development Problems §Adequately testing Microsoft Service Packs, Application Fixes, device drivers before they are placed in production §Too many test & development servers i. Series Solution §i. Series virtual storage enables storage spaces to be easily duplicated, providing the capability to test of an exact copy of the production image and hardware §One development/test server can support multiple similar production server environments Virtual Drives C: Image #1 D: E: Image #2 C: D: E: Benefits §Can reduce the outages caused by change §Can reduce the time it takes to build a test server §Can reduce the amount of server hardware that must be acquired & maintained © 2004 IBM Corporation PAGE 33 *NWSD

AIX 5 L on e. Server i 5 • Simplify your Infrastructure – Consolidate aging UNIX servers – Extend with complementary AIX 5 L applications • Optimize your Investments – – Share processor and memory resource Move resources to where they are needed Exploit i 5/OS storage subsystem Leverage Skills and Best Practices • Across e. Server i 5 servers – AIX 5 L v 5. 2* • 1 processor per partition • Supports variety of direct I/O devices – AIX 5 L (future) • Micro-partitioning, up to 10 per processor • Virtual storage and Ethernet • Enterprise Edition • Extra Processor Activated(570) and Service(520 and *Planned availability August 27, 2004 This presentation contains information about IBM’s plans and directions. Such plans are subject to change without notice. 570), and Education (570) Voucher © 2004 IBM Corporation PAGE 34

Memory Experts International “We found the i. Series to be a proven architecture that delivered both a technical leap over the competition and a more compelling financial case in our cost of ownership calculations. ” John Mc. Guinness, VP of Finance Memory Experts International © 2004 IBM Corporation PAGE 35

Simplify your Business Integration • Bring Your Applications to the Web NOW! – Start Simple or Grow Fast – you pick the pace • With i 5/OS You Have the Infrastructure – Web. Sphere Application Server V 5. 0/5. 1 Express for i. Series • With Web. Sphere Development Studio You Have the Tools – Web. Sphere Development Studio Client (WDSc) and Advanced Client • With i. Series Access You Have Additional Web-enabling Options! – i. Series Access for Web and Host Access Transformation Services Limited Edition (HATS LE) • Use the i. Series Developer Roadmap as Your Guide Find the i. Series Developer’s Roadmap at http: //www-1. ibm. com/servers/eserver/iseries/roadmap/index. html © 2004 IBM Corporation PAGE 36

i. Series Developer Roadmap Today Better Tools Better User Interface 5250 RPG/COBOL PDM This is where i. Series customers start on the roadmap RPG/COBOL Remote System Explorer (Classic Tools) CODE Visual. Age Use. RPG WDSc to develop and debug RPG on the desktop, then deploy to the i. Series Get “On” and “Off” the Roadmap at Your Own Pace! Better Architecture Better Portability Better Scalability 5250 Web Web Portlets Web Services RPG/COBOL ----- Java DB 2 and SQL Remote System Explorer i. Series Web tools i. Series Java Continue on tools the roadmap to Remote System IBM Explorer Web. Facing IBM Tool Web. Sphere HATS i. Series become an “On Access for Demand” Web business Use tools Web. Sphere Portal - Express V 5. 0. 2 that you already Web. Sphere Application Server - Express V 5. 1 for i. Series have to Application Server V 5. 1 for i. Series reface. Web. Sphere 5250 screens EJBs WDO Remote System Explorer i. Series Web tools i. Series Java Tools EJB, J 2 EE tools Web. Sphere Application Server Network Deployment V 5. 1 for i. Series © 2004 IBM Corporation PAGE 37

Web. Sphere Application Server – Express With i 5/OS! Any customer upgrading to i 5/OS automatically gets WAS - Express • Express Web Application Tooling and Runtime JDK 1. 4 IBM Web Enablement for i. Series (5277 – WE 1) is the ordering vehicle • WAS – Express V 5. 0 Comes pre-loaded • WAS – Express V 5. 1 Not pre-loaded but CD’s shipped with the order IBM Telephone Directory Provides “Out of the-box” functionality Provides a valuable application all customers can use IBM Survey Application – NEW! Deploy into any version of WAS for i. Series WAS – Express Shipped with i 5/OS © 2004 IBM Corporation PAGE 38 Ready to use immediately for creating, configuring, and managing web surveys Source Code included! Use as a guide to develop WAS apps!

Web. Sphere Development Studio Version 5. 1. 2 Features: GA 7/23/2004 Web. Sphere Development Studio (host) 5722 -WDS C/C++ COBOL RPG ADTS Web. Sphere Development Studio Client Remote System Explorer i. Series Projects Web Tools for i. Series Java Tools for i. Series IBM Web. Facing Tool Without System Screens Classic Tools (CODE and Visual. Age RPG) Enterprise Generation Language Host Access Transformation Services Toolkit Web. Sphere Studio Site Developer With built-in i. Series Enhancements © 2004 IBM Corporation PAGE 39 Host Components : V 5 R 3 Enhancements to Compilers And ADTS Web. Sphere Development Studio Client (WDSc) – Workstation Tools New Enhancements! • Build web sites with zero coding • Create & test portlets in a visual environment – no coding • New keyword support in Web. Facing – INVITE & DSPATR • HATS Toolkit shipped as part of WDSc Unlimited Licenses

Lotus Domino and Workplace • Lotus 6. 5. 1, a unifying release that reduces deployment costs and helps “i. Series delivers the reliability and improve productivity scalability we need to make our plans a reality. What is most • Lotus Workplace delivers a portalimpressive is that we now have just a based integrated communication and single i. Series Domino server, rather collaboration tools than seven, with the ability to support thousands of users with complete reliability. For Toyota, this is absolutely invaluable. ” John Fiander, IS Technical Infrastructure Manager Toyota GB © 2004 IBM Corporation PAGE 40

Portals Optimize e. Business Portal - Single Point of Personalized Interaction with Applications, Content, Processes and People § Mail (Notes, Web mail Exchange, POP 3) Navigation § Host based (5250, 3270) § ERP (JDE, SAP, Peoplesoft etc) Customization § Client server (via Citrix) Personalization § BI (Crystal Reports, Business Objects, Cognos) Single Sign On § e-Business (Web. Sphere and other J 2 EE applications, Domino applications) People Awareness § Sametime/Quickplace from IBM for Collaboration § Productivity Portlets (Documents, Spreadsheets, Slides) © 2004 IBM Corporation PAGE 41

Portals Optimize e. Business Strategy User Perspective IT Perspective Integration at the glass SAP/JDE/ERP 5250/3270 Business Intelligence Navigation Customization Groupware Personalization Client Server Single Sign On Syndicated Content People Awareness Secure Access Collaboration Productivity Portlets © 2004 IBM Corporation PAGE 42 Optimizing On Demand Business with i. Series

REAL business benefits! Customer Self Serve Downstream Processes Penetrate new markets Reduce retail costs Extend Application reach: - new employees at new sites - remote/mobile access 7 X 24 Save Costs - infrastructure Increase productivity Employee (Intranet) End User (Internet) Partner (Extranet) © 2004 IBM Corporation PAGE 43 Supply Chain Integration Downstream processes - Reduce Transaction O/H Reduce Inventories - JIT 24 X 7 operations

Web. Sphere Portal – Express & Express Plus • Web. Sphere Portal Express & Express Plus V 5. 02 – Portal - Express includes document management and productivity components – Portal - Express Plus adds ST, QP & collaboration center • Web. Sphere Portal Express packaged with Enterprise Edition* – I 520, 825, 870, 890 = 20 per user licenses – i 570 = 60 per user licenses • Flexible per-user or per-CPU licensing – Portal Express $85/user or $33 K/cpu – Express Plus = $135/user or $53 K/cpu * Number of user licenses will vary based on i. Series system model and Enterprise Edition entitlements © 2004 IBM Corporation PAGE 44

Trademarks/Disclaimers page 8 IBM Corporation 1994 -2004. All rights reserved. References in this document to IBM products or services do not imply that IBM intends to make them available in every country. The following terms are trademarks or registered trademarks of International Business Machines Corporation in the United States, other countries, or both: 400 CODE/400 DB 2 Stylized AIX IBM Logo e-business logo APPN AS/400 e DB 2 Universal i. Series Host Integration Host on Demand Host Publisher HTTP Server for IBM Power. PC AS Payment Manager Integrated Language Environment e(logo) Server Screen Publisher DB 2 UDB for AS/400 Series Web. Sphere i. Series Access MQSeries Web. Sphere Advanced Edition i. Series Access for the Web MQSeries Web. Sphere Commerce HATS Limited Edition AS/400 Net. Commerce Net. Data Web. Sphere Standard Edition Net. Commerce Web. Sphere Portal Just. Mail Web. Sphere MQ Visual. Age for RPG Web. Sphere Business Integrator x. Series Web. Sphere Development Studio Client Operating System/400 IBM Web. Facing Tool OS/400 Web. Sphere Host Access Transformation Server Web. Sphere Development Tools for i. Series Lotus and Smart. Suite are trademarks of Lotus Development Corporation and/or IBM Corporation in the United States, other countries, or both. MMX, Pentium, and Pro. Share trademarks or registered trademarks of Intel Corporation in the United States, other countries, or both. Microsoft and Windows NT are registered trademarks of Microsoft Corporation in the United States, other countries, or both. Java and all Java-based trademarks are trademarks of Sun Microsystems, Inc. in the United States, other countries, or both. SET and the SET Logo are trademarks owned by SET Secure Electronic Transaction LLC. C-bus is a trademark of Corollary, Inc. in the United States, other countries, or both. UNIX is a registered trademark of The Open Group in the United States and other countries. Other company, product or service names may be trademarks or service marks of others. Information is provided "AS IS" without warranty of any kind. All customer examples described are presented as illustrations of how those customers have used IBM products and the results they may have achieved. Actual environmental costs and performance characteristics may vary by customer. Information in this presentation concerning non-IBM products was obtained from a supplier of these products, published announcement material, or other publicly available sources and does not constitute an endorsement of such products by IBM. Sources for non-IBM list prices and performance numbers are taken from publicly available information, including vendor announcements and vendor worldwide homepages. IBM has not tested these products and cannot confirm the accuracy of performance, capability, or any other claims related to non-IBM products. Questions on the capability of non-IBM products should be addressed to the supplier of those products. All statements regarding IBM future direction and intent are subject to change or withdrawal without notice, and represent goals and objectives only. Contact your local IBM office or IBM authorized reseller for the full text of the specific Statement of Direction. Some information in this presentation addresses anticipated future capabilities. Such information is not intended as a definitive statement of a commitment to specific levels of performance, function or delivery schedules with respect to any future products. Such commitments are only made in IBM product announcements. The information is presented here to communicate IBM's current investment and development activities as a good faith effort to help with our customers' future planning. Performance is based on measurements and projections using standard IBM benchmarks in a controlled environment. The actual throughput or performance that any user will experience will vary depending upon considerations such as the amount of multiprogramming in the user's job stream, the I/O configuration, the storage configuration, and the workload processed. Therefore, no assurance can be given that an individual user will achieve throughput or performance improvements equivalent to the ratios stated here. Photographs shown are of engineering prototypes. Changes may be incorporated in production models. © 2004 IBM Corporation PAGE 45