The Cloud: Mother of Re-invention for IBM

ibm logoAs a 104-year old company, IBM has undergone many makeovers over the years to tack to the ever-changing winds of the technology industry and the market. 2015 ushered in what may prove to be one of it’s biggest transformations, when earlier this year, IBM CEO Ginni Rometty dramatically reorganized the company to better align with today’s cloud, mobile and analytics oriented technology landscape, and with the increasing consumerization of the business technology market.

This time, IBM’s restructuring puts software in the spotlight. IBM is replacing its former software, hardware and services silos with a more holistic approach designed to synchronize with customers’ growing preferences for cloud-based solutions. Research, Sales & Delivery, Systems, Global Technology Services, Cloud, Watson (IBM’s artificial intelligence and analytics), Security, Commerce and Analytics are now IBM’s main business units, with Mobility as an overlay to these groups. Meanwhile, IBM hardware and software channel teams will both report into IBM’s global Business Partner Group.

interconnect2015-800x160InterConnect 2015: Hybrid Cloud Takes Center Stage

In February, we had our first chance to see how these organizational shifts are coming to life. At IBM InterConnect, IBM rolled what had previously been three separate events for three different solutions groups (Pulse/Tivoli, Impact/WebSphere and Innovate/Rational) into one, reflecting the organizational changes. IBM took advantage of this opportunity begin to put its new story in perspective for an audience of over 21,000 customer, partner and influencer attendees.

IBM has cast it’s hybrid cloud strategy in the starring role of the next chapter of it’s story, with mobile, integration and business process, security, IoT and data, and the partner ecosystem in key supporting roles. Needless to say, IBM was trying to cover a lot of ground in a short amount of time, but here are the key themes that it emphasized:

  1. The hybrid cloud is key to digital transformation. IBM wants to provide customers with an open, flexible cloud experience across public and private clouds. IBM highlighted the importance of portability, announcing Enterprise Containers, based on a partnership between IBM and Docker. The partnership will result in IBM solutions integrated with Docker Hub Enterprise (DHE) to help companies to more efficiently run and build applications that will run anywhere, from a developer’s laptop to the IBM Cloud or on-premises. IBM also introduced Virtual Machines and Containers are now integrated as core infrastructure options in Bluemix, its cloud development platform, and virtual machined (VMs) powered by OpenStack to help IT deliver consistent, scalable business services and integrated monitoring.
  2. IBM MobileFirst, to help companies build and manage the mobile apps. According to IBM, 85% of enterprises have a mobile app backlog. IBM is positioning its MobileFirst Platform v7, announced at the event, to help companies to catch up with the backlog, and to get more value from their mobile app investments. Enhancements include capabilities to enable more efficient development, secure integration, continuous delivery, as well as an improved UI. IBM has also added a new component, the MobileFirst Platform Cloudant Data Layer Local Edition, for web and mobile access.
  1. Integration at the heart of hybrid. IBM had an Integration Booth at the event, and introduced 5 new services designed to connect clouds, refine and sync data across applications and clouds. These included API Harmony, API Harmony, which uses Watson to help developers find the right IBM or a third-party API for integration requirements; and Secure Gateway, to securely connect APIs, existing data, and systems to Bluemix through a Passport service.
  2. A new way to think about security. Most surveys show that security concerns are still the key inhibitor to cloud adoption. To help address this, IBM is encouraging customers to take a more proactive, analytics-based security approach. The vendor announced over 70 new security products and enhancements, and highlighted two 2014 security acquisitions, Lighthouse Computer Services and Crossideas as evidence of its focus on beefing up cloud and mobile security offerings to help businesses better protect, detect and respond to threats.
  3. IoT and data as agents of business transformation. The Internet of Things (IoT) and big data are two of the hottest IT trends. These two trends are also tightly connected, as the billions of IoT objects and devices coming online are generating massive quantities of data, which must be tracked, analyzed and put to practical use. As IoT exponentially accelerates data volume, velocity and variety, companies will need high-powered analytics solutions to harness and generate insights from it. This trend is behind IBM’s newly formed Internet of Things division, and initiatives that IBM is now exploring to leverage Watson analytical capabilities in an IoT world.
  4. The ecosystem is vital to IBM’s cloud success. In order to fulfill on its goal of creating the “most successful cloud ecosystem and developer experience in the industry,” IBM is ramping up programs for developers, ISVs, entrepreneurs and colleges and universities. In addition to more traditional programs, IBM is targeting top local communities and cities for as event hubs for meetups, classes, hackathons, learnathons and other programs designed to build a next-generation partner ecosystem in the cloud. 

White Clouds in Blue SkyPerspective

The changes that IBM is making to its organization and to its solution and partner focus are major ones. In the past, IBM operated in a more siloed manner, with each business unit owning its own P&L, budget, headcount and control. Back in the day, when companies often pursued different buying journeys and sought out different vendors for hardware and software, this made sense.

However, cloud computing has significantly blurred these lines. In the cloud model, buyers more often seek a solution, not piece parts. IBM’s new structure and vision are designed to meet these new expectations and demands. In an ideal world, these changes will enable IBM to more easily bring its technology innovations (such as Watson, Bluemix, and joint open source solutions) to market, and take center stage among in the cloud and adjacent markets.

But, the world is not ideal. Although IBM may have more IP, patents and research fellows than the next few tech vendors combined, it faces significant obstacles in terms of competing with more nimble competitors. To help address this, IBM recently hired Kevin Eagan, longtime Microsoft executive, as Vice President and General Manger for IBM’s Digital Channel. Eagan takes on the daunting task of making IBM easier to do business with, and as such, will play a pivotal role in IBM’s future cloud fortunes.

IBM also faces substantial pricing and margin hurdles. Will the board of directors and stockholders be willing to cannibalize traditional, higher margin business to build higher volume, but lower margin cloud business? Finally, can Big Blue get 400,000 IBMers energized and organized for the new mission?

At Interconnect, IBM demonstrated that it understands the magnitude of change that cloud, mobile, big data and IoT have wrought, and articulated its strategy to get ahead of the curve and the competition. Only time will tell if IBM can meet the necessary and perhaps more formidable challenges to change its systems, business model and culture to make this vision a reality.

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