Will multicloud and software anywhere be the differentiator that IBM needs?
After having been IBM watchers for many years, we are in a unique position to assess what is happening and what has changed. What made the IBM Think conference interesting was not a huge number of brand new products; rather it was the focus on consistency of software across platforms. The theme could be summarized as the anywhere conference. One of the biggest challenges as businesses adopt cloud and machine learning/AI as their platform is the ability to have consistency and predictability and manageability. What does it all mean? Here are our top ten takeaways from this year’s Think conference.
- All IBM Software Anywhere. No matter where you looked it was clear that IBM is focused on making sure all of its software could be implemented on any cloud platform. Included in this new approach is Watson AI/ML software, hybrid and multi-cloud management, blockchain, and security. This is an important move for IBM. With the growing strength of the open source movement and IBM’s adherence to open source it is possible for IBM to reposition itself as a multi-cloud leader.
- Decoupling analytics services from infrastructure. Over the past decade IBM has invested significantly in analytics software ranging from Cognos and SPSS to Watson APIs and the Cloud Private for Data platform. Now, with the integration of analytics software under the Watson brand IBM is moving to create common APIs that enable these services to work in concert with each other. In addition, IBM is focused on helping clients manage data from multiple sources, cleansing data and integrating data through the use of automation and machine learning.
- Hybrid and multi-cloud at the core. IBM has been proclaiming hybrid as its strategy for many years. It has been complicated to explain exactly what hybrid meant — Did it mean connectivity services between mainframes/data centers and cloud services? Probably. This is changing. Now hybrid and multicloud has as much to do with providing all the same services and integration across any cloud – a smart strategy for a company that had lost the public cloud battle to Amazon. The more cohesive and standards based strategy based on Kubernetes, Istio, and Calico means that consistent services underlie everything.
- Multi-cloud management. Cloud management services have been an ongoing evolution of IBM management story for the past two years. Now it is coming into sharp focus with a set of standards based management services that can run across any cloud. The cloud management offerings provide a way to manage not just infrastructure provisioning and costs, but also include SaaS application management. IBM has developed a dashboard that enables the customer to visually see everything that is running and performing across platforms.
- Blockchain. IBM has been working on commercializing blockchain for a number of years. The company donated its open source blockchain technology, Hyperledger to the Linux Foundation in late 2015. The most significant developments of IBM’s approach to blockchain is that IBM is making blockchain available anywhere in an effort to help avoid vendor lock-in and give customers choice (on IBM’s infrastructure or any other on premises or cloud infrastructure including AWS, Azure, and OpenShift). Additionally, IBM is providing premium support services for Hyperledger Fabric. We see evidence of market momentum with early, in production blockchain use cases for food safety and global shipping (IBM Food Trust and Trade Lens respectively). We expect blockchain to be implemented in a wide range of supply chain transaction where trust, security and auditability are critical (i.e. pharmaceuticals, high-end electronics, and possibly the tracking of global travelers).
- Partnering strategy matures. IBM has made a significant change to its partnering strategy this year. Under new executive leadership there is now a single partnering program across ISVs, distributors, and channel partners. With one partner program IBM will have a lot more to offer its partners in terms of financial benefits. IBM is focused on making partnership easier – for example, the partnership contract has gone from a 25+ page document to just a few pages. In addition, the company is focused on value add partners rather than partners that simply resell IBM technology. Finally, the partnership organization has implemented a Net Promotor Score (NPS) system to get real-time feedback from business partners. The NPS ratings help IBM make changes to the program in response to partner ratings.
- Security at the core. IBM has a huge security software and services business – the security division has over $2 billion in annual revenue. With an increasing number of end points and the explosion of distributed computing, the attack surface for businesses has become overwhelming for many businesses – in many instances cybercriminals only need to successfully exploit one element of a corporate network. Rather than focusing on individual offerings, IBM is now focused on embedding foundational security capabilities as part of both its cloud and data platforms. This is important in an era of highly distributed computing. Some new offerings including Secure Service Containers and pervasive encryption on the z platform. While IBM has a strong security reputation, integrated around the company’s Security Immune System (a security orchestration and analytics service) the company has not done enough to spotlight this strength. In addition, the organization does a good job of explaining individual products, like MaaS360 and QRadar. However, IBM doesn’t demonstrate how its security offerings come together to create a secure end-to-end environment.
- Infrastructure lives on. While most of the focus of the conference was on cloud and data, IBM maintains a strong focus on the IBM Z and LinuxONE platforms as well as IBM Power, storage and storage software. IBM LinuxONE and Z are being used by a variety of companies that place a priority on security, manageability and a scale up, rather than scale out approach. In addition, customers are using these infrastructure options to create private, on premises cloud. These hardware capabilities are being made available as cloud services. Furthermore, IBM has seen increasing growth in their flash storage business.
- IBM is all in on open source. While this is not a new strategy for IBM, it is gaining even more traction in the era of cloud and AI. Finally IBM is getting recognition from the developer community that it is not trying to coopt open source and turn it proprietary. IBM’s strategy that is predicated on having software operate on any platform means that open source and consistent APIs is mandatory. In addition, a successful Red Hat acquisition could push IBM to dedicate more resources to open source.
- Red Hat acquisition. Although IBM is restricted about what it can say publically about the Red Hat acquisition, it is clear that the company believes Red Hat is one of the keys to its multicloud strategy. Red Hat’s OpenShift Container Platform for example is already cloud agnostic. The acquisition is anticipated to close in the second half of 2019. The bottom line IBM has had a tough few years as it worked to regain market acceptance. Having been IBM watchers for decades, it is clear that IBM is beginning to crawl out of its doldrums and beginning to gain traction with its strategy. Financially, IBM has suffered because it is moving away from having thousands of independent products to integrated, subscription offerings. We believe that this is a short-term problem. IBM now has two strong leaders at the product side of the business: Arvind Krishna, head of cloud and software and Tom Rosamilia heading all hardware and the associates software (storage, operating systems and other infrastructure software) – two very strong leaders. IBM is making strides in focusing on vertical industry solutions based on cloud, data, and blockchain with some of its largest customers. It feels as though IBM is regaining its self confidence and focusing on large enterprises. It is not trying to be something it is not – a commodity cloud and data company. There are many more changes ahead as IBM becomes an even bigger company with the forthcoming Red Hat acquisition. How the company balances its traditional enterprise customer focus with the open source heritage of Red Hat will determine the future.