Former IBM chief Lou Gerstner’s 2002 book, Who says elephants can’t dance?, detailed how he had transformed Big Blue from being a failing company into a well-performing one with a solid future.
IBM has had its ups and downs since then, but has remained a relatively strong company. However, the oft quoted line that “no one ever got fired for buying IBM” no longer resonates like it used to in the enterprise.
IBM is facing new problems, ones that current CEO Ginni Rometty is having to deal with. She’s been in place for a just over two years and has had time to mould IBM into a company that’s fit for the future, but will it be flexible enough to cope with changes in how IT is provided and used today?
As part of this, Rometty’s had to address just what IBM stands for as a company. Always strong on the hardware side of things, the supplier has expelled a lot of energy in trying to position itself as a platform company, rather than a software one.
It has shied away from challenging the likes of SAP and Oracle on the software front, and has instead built up a strong position in software building blocks that could be used by other enterprise software packages. Things like transaction monitoring and integration services via its Customer Information Control System and MQ products.
However, a quick glance at IBM’s run of acquisitions in recent years shows it’s picked up a lot of software companies, which could have a powerful impact on its future direction.
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- IBM has created a standard two-page contract for customers using its cloud computing services to replace long and complex contracts and negotiations
- IBM has stretched the global reach of its cloud computing services by adding 12 locations to its network of cloud centres
At a hardware level, IBM has maintained its faith in its own technologies. Namely the mainframe and its Power-based systems, which have managed to make it through while its competitors’ equivalent systems have faded under the pressure of more commodity hardware approaches.
Having offloaded its desktop and laptop business to Lenovo some time back, IBM did the same with its x86 server business in 2014. This may have been handled less well than it could have been.
Sure, IBM can still source x86 kit from Lenovo – indeed, via its Global Business Services (GBS) team it can source the technology from pretty much any supplier it wants to – but it has lessened its own capabilities to innovate at a mixed workload level.
The Power CPU is undoubtedly powerful and has shown its strength in supporting Linux-based workloads. However, not all are Linux-capable and a past strength of IBM has been in dealing with multiple workloads across an integrated platform.
In 2010, IBM announced its zEnterprise servers that combined a mainframe workload feature alongside the ability to run Power or x86 blades with intelligent software to manage how workloads are provisioned and managed.
Without control over the x86 side of things, the zEnterprise runs the risk of being a mainframe/Power block only or, at the very best, having to use x86 blades that are not as well integrated into the system as buyers may want.
We are entering a period of “long tail” on-premise hardware usage, whereby more workloads will be moving to cloud-based platforms, and this is an industry direction Rometty seems to be betting on.
This hybrid approach of on-premise and cloud technologies will result in less hardware being bought by existing customers, which threatens IBM’s existing revenues.
Yes, IBM will still invest in the development of on-premise hardware for organisations that demand it, but cloud is the future as far as Rometty is concerned and, accordingly, this is where the investment is now going.
The devil is always in the detail, but IBM is still a force to be reckoned with and SoftLayer is its crown jewel
For proof of that one only has to look back to 2013 when IBM acquired a relatively young but interesting company called SoftLayer that had made a small, but significant name for itself in the cloud market, through the provision of an x86-based managed hosting and cloud platform.
This is now part of IBM’s Cloud Services Division and, following the departure of SoftLayer’s old CEO Lance Crosby, it is apparent Rometty is positioning IBM for the cloud era.
Since the acquisition, IBM has invested a lot in SoftLayer, including $1.2bn in an increasing number of global datacentres.
Quocirca believes IBM will bring Power into SoftLayer to provide a mixed workload capability, moving away from the more common approach of assuming that scale-out over a pure x86 platform can deal with any workload.
With open application programming interfaces allowing users to access the inner workings of SoftLayer, existing software assets can more easily integrate into the SoftLayer environment. The idea will be to create something that is transparent to the user across the hybrid platform.
Further down the line
So – what will the new, new IBM look like? If it does make a move toward becoming a cloud-first company, with more of its capabilities being surfaced through SoftLayer, its sales force must be reviewed as to what its capabilities are and how many people this requires.
Its GBS team will still be needed, as the moving of existing workloads from on-premise to cloud is not just a simple forklift move in most cases. It requires work to identify if the current approach is the best one and, if not, what changes will be needed to make the workload cloud-friendly.
Hardware innovation may well move to areas that are less visible to IBM’s clients. SoftLayer is still a hardware-dependent approach, but that physical hardware is under the complete control of IBM, so it can build its systems to meet its own needs for a highly virtualised, massively shared environment.
Software therefore becomes far more important – still, don’t expect IBM to become an enterprise resource planning or customer relationship management supplier, but do expect it to offer software-as-a-service capabilities in these spaces, with its own offerings acting as glue.
Is Rometty positioning IBM well for the future? Quocirca believes so. Whereas Gerstner saved a failing company, Rometty’s job is to reinvigorate one that was beginning to show signs of plateauing.
The devil is always in the detail, but IBM is still a force to be reckoned with and SoftLayer is its crown jewel. However, IBM has to make use of the rest of its gems, hidden across its estate, to ensure that it is still as valid in 10 years’ time as it has been over the past 10 years.