Executive interview: Sebastian Krause, general manager, IBM Cloud Europe

Tapping into cognitive computing

In IBM’s case, its cloud revenue is being generated from enterprises looking to modernise the IT infrastructure running within their own firewalls, so they can tap into the IBM Cloud’s cognitive computing abilities, in the form of IBM Watson, as well as big data analytics and emerging trends like Blockchain, says Krause.

“There are many call centres that are using our Watson capabilities, whether this is to translate speech to text or understand empathy patterns or emotions, because when you are in a support centre, you want to understand the emotional state of the counterpart you are talking to,” he says.

Its cloud business is also being buoyed by the popularity of the IBM Industry Framework offerings, which consist of tailored middleware and IT infrastructure assets that are designed to address industry-specific pain points.

“Specifically, in the enterprise space, we are having requirements from banking and insurance, and other industries that we have been serving for decades that need to have these mission-critical capabilities, while putting a lot of emphasis on security from both a data revelation and infrastructure perspective, which is what they expect from IBM,” he says.

And its decision to provide such customers with industry-specific tools and technologies forms the cornerstone of IBM’s “value-add” proposition.

“I see us playing in the value-add space for enterprise IT for specific technology and industry use cases, [with IBM] giving a flavour of industry context, instead of just being a pure, plain vanilla provider like some of our competitors,” he says.

“If you’re analysing where the revenue and market share is coming from for certain public cloud providers, it is basically the storage space, and not that much is [coming from] frameworks where you are providing a value-add for an industry, business model or value chain, which is where we are playing a major role.”

Crystal ball gazing on cloud

As for how the cloud story for enterprises is likely to play out in the years to come, it is IBM’s view, informed by decades of dealing with enterprise clients, that just a third of enterprise workloads will run in the public cloud in time, but how clean this predicted split will be remains to be seen.

“It is a myth that everything will go to the public cloud over the next 15-20 years, as companies realise it doesn’t make sense to move all their workloads into the public cloud for multiple reasons,” he says.

“A third of workloads (most likely 40% or more) will be on-premise workloads behind the firewall, and then the remaining 20-30% will be a pure hybrid implementation, where you have data and compute sat on different deployment platforms,” he says.

And this is because, in Krause’s view, how enterprises view public cloud has shifted, as organisations prioritise getting the most out of their existing technology assets. 

“The fundamental shift we are seeing in Europe is that customers don’t start with thinking [public] cloud first, but what can we do from an existing infrastructure perspective to get to a cloud infrastructure that is private and allows me to seamlessly get into a public cloud if needed,” he says.

“That hype that everything has to be all-in the cloud, first in the cloud and everything has to be public, has gone now.”