IBM is preparing for the impending split of its services business as the company seeks to become a hybrid cloud superstar.
In October 2020, big blue revealed plans to spin off its services business, which it tentatively dubbed NewCo. Once the split is complete, the provider will retain its top 50 local accounts and open the rest to local partners.
When the split was first announced, IBM said the move would transform it from a US$71 billion company with more than half of its revenue in services to a company with a “majority in software.” and high value-added cloud solutions” and more than 50% of its portfolio as “recurring revenue”.
Now, the pure play technology provider is now focusing on hybrid cloud. Building on the acquisition of Red Hat in 2019.
Last October, the analyst firm Gartner analyzed IBM’s prospects after the NewCo spin-off.
“The spin-off is intended to increase IBM’s focus on hybrid cloud and AI opportunities,” the company’s US analysts said in a report.
“IBM’s acquisition of Red Hat brought a focus on the cloud and brought an infusion of talent, technology and an enthusiastic customer base. IBM leveraged Red Hat resources to rethink its cloud strategy with a focus on hybrid cloud platforms, based on Red Hat OpenShift, a technology that works across cloud platforms and on-premises environments to take supports container-based and cloud-managed applications.”
IBM local chain chief David La Rose told reporters that since the acquisition, the company has focused on retooling its solutions to accommodate the new multi-cloud strategy.
Last month, IBM CEO Arvind Krishna said the company was investing $1 billion in its partner ecosystem.
“To accelerate the consumption of our hybrid cloud platform, we are also rapidly expanding our ecosystem by adding hundreds of new partnerships with global systems integrators, ISVs and leading third-party software partners, and also elevating the role of partners,” Krishna said. .
La Rose said customers in Australia, like in other parts of the world, had more than one cloud environment in their business and three to five clouds was now the average.
“It’s not about locking yourself into a particular vendor or a particular cloud provider,” he said.
“The whole hybrid model and containerization that we’ve been through, with openshift as the glue, allows us to work with a company regardless of the cloud decisions they’ve made, Microsoft, AWS, IBM, Google, whatever.
“Actually, the whole concept here is that you want to build once and deploy anywhere. That’s the core of the strategy we have in place.
What’s in it for partners?
After the split, IBM, the provider, would retain 50 local accounts, or about 10% of its customer base. That leaves over 400 customers that IBM says will be left exclusively to partners.
“We’re looking at some customers that are very heavily service-focused with us today, where we have deep commitments, those will be the ones that IBM will continue to have a face-to-face team focused on,” La Rose mentioned.
“Then we have a large number of customers that we open the door for our ecosystem to play with us and those customers.
“There has always been this competitive nature with our managed infrastructure services business. [Partners] have their own managed services company, many of them much, much bigger than the infrastructure they sell.
“It now levels the playing field…the ecosystem is now central to IBM’s growth strategy going forward.”
La Rose said that once the managed infrastructure services unit became NewCo, as IBM called it, the vendor would give the company no special treatment.
“We will look at them from day one as a systems integrator, no different from how we look at DXC,” he said.
“Now, from day one, it will be a systems integrator that has an incredibly large amount of IBM infrastructure and software, but we will consider them a global systems integrator going forward. Treat them and manage them like that.
This ecosystem is also evolving with a cloud-for-every-use strategy the vendor outlined earlier in the year.
CRN understands that IBM will restructure its channel team with some members of the existing digital business group moving into new channel business units focused on specific industry segments. IBM intends to update partners in the coming weeks on the impact of these changes on commitments.
What now for Watson?
The other piece of the puzzle is Watson, IBM’s supercomputer, which has struggled to gain market traction as other vendors such as Microsoft have developed their own artificial intelligence solutions.
Watson will now be integrated with IBM’s industry-specific cloud offerings such as finance, mining and healthcare.
A long-time IBM partner and Watson specialist, Carrington Associates is a Sydney-based consultancy that works with some of the country’s largest organisations.
The company’s founder and managing director, Sachin Khisti, told CRN that with the integration of Watson into IBM’s cloud offerings, it made the package more attractive to customers and that he had already seen strong increase in new business due to IBM’s new channel strategy. .
“We probably get 10 to 15 logos literally every month, whether it’s a small deal or a big deal, just because IBM focuses on partners first,” Khisti said.
“So we will continue to work on that. So all the leads come from IBM, of course, but when we’re working on our own customers and trying to build solutions, it all depends on the environment that the customers already have.
“If the customer already has a platform, we usually work on it, whether it’s IBM or AWS, but if they don’t, and they want to build a platform -shape, we give it a kind of recommendation. We recommend the best platform available depending on what you are looking for. So I think that’s how we want to continue working with IBM and on our own account system.
In November 2020, CRN announced that IBM Cloud was to close its MEL01 data center in Melbourne at the end of November as part of a modernization program.
At that time, IBM offered three “modern” data centers in Sydney as migration options, specifically its SYD01, SYD04 and SYD05.
“To help our customers better serve their customers and optimize their businesses, IBM continually assesses, invests and modernizes its data center infrastructure to ensure they can fully realize the benefits of the hybrid cloud,” said the company said in a statement at the time. .
CRN asked if IBM intended to serve all local customers through its Sydney facilities or if there were plans to open new sites across the country. The company had not responded at the time of publication.