For several years, IBM has been eyeing the hybrid cloud, remaking itself into a provider with the platform that can enable enterprises to more easily move their workloads and data between their on-premises datacenters and the public cloud, and the multiple public clouds they are using.
For IBM, the key was last year’s $34 billion acquisition of Linux and open source software purveyor Red Hat. The company had a lot of what IBM was looking for in its hybrid strategy: openness. It also had OpenShift, a Kubernetes platform for container orchestration that is becoming the glue for Big Blue and its hybrid cloud ambitions.
OpenShift is foundational to IBM’s Cloud Paks, integrated containerized software offerings infused with artificial intelligence (AI) and addressing particular needs, from multicloud management and automation to applications, data and integration. First introduced last year, they are the hybrid cloud solutions that run atop OpenShift. OpenShift is the common fabric for all of them.
“OpenShift is that key substrate or fabric that will enable that consistency to run everywhere,” Michael Gilfix, IBM’s vice president of integration, tells The Next Platform. “What we’ve been doing is bringing our software capabilities to bear on OpenShift to be available and to run in cloud, in the same distributed fashion but with the same skillset. [Cloud Paks] are solutions that run on OpenShift. They’re designed for cloud deployment. It’s an easy way for customers who have existing investments in our technology to move to cloud. It’s an easy way for organizations that have workloads that are ‘stubborn’ to move to cloud. They can leverage Cloud Pak technology to help to get them there and it gives them a whole set of capabilities across security, data and AI, automation, all the things that they need to get them to become a digital business.”
IBM has been reinventing itself for more than a century, moving from punch cards to mainframes, up through PCs and commodity servers and now increasingly into the hybrid cloud space. Along the way it’s ditched outdated products in favor of emerging technologies with a larger growth trajectory. In recent years that’s meant selling its PC business to Lenovo in 2004 and then, more recently, its x86 server business – again to Lenovo – 10 years later. And while it has its eyes on the hybrid cloud and the booming AI market, as we noted last month, IBM right now is still dependent on its systems business to keep the revenue flowing in.
But even as the mainframes and other hardware continue to be the profit engines for IBM, the cloud is where the company’s head remains. When the board of directors remade the company’s leadership team earlier this year, Arvind Krishna, who was then senior vice president for cloud and cognitive software, replaced Ginni Rometty as CEO. And Jim Whitehurst, the CEO of Red Hat at the time of the acquisitions, was named president. Under their leadership, the company last month made another significant move, announcing plans to spin out its systems outsourcing and hosting business to enable it to better focus on AI and the cloud business.
Red Hat And The Hybrid Cloud
In the middle of that cloud push is Red Hat and the growing role of its technologies in IBM’s hybrid cloud ambitions. Those ambitions are as large as the opportunity. Gilfix estimates that about only 20 percent of workloads are in the public cloud; the remaining 80 percent haven’t made the transition due to challenges like data locality, security and compliance. Thus the adoption of hybrid clouds, in hopes of getting the benefits of the cloud regardless of where their applications are running. Having Red Hat in the fold gives IBM more capabilities to make that happen.
“One of the things the Red Hat deal did is it gave us a leading container platform and it put us in the middle of that ecosystem,” he says. “That’s really important because container technology is one of the foundational technologies for cloud. It put us in the midst of that ecosystem and that’s the critical technology for helping to evolve the software. The second thing that it did is it opened up a whole new ecosystem of developers that IBM didn’t have access to that are part of the Red Hat family. Those developers are going to accelerate innovation on the platform. One of the benefits of us sort of creating the singular IBM hybrid software is OpenShift is the core platform, [with] all of the developer innovation we’re bringing and the IBM software value-add, all running in the same environment, with consistent skills, delivery, security and portability and choice and optionality for our clients. That’s a very powerful combination.”
OpenShift At The Foundation
IBM this month has put a spotlight on OpenShift and its central role in the company’s hybrid cloud plans. Big Blue this week announced updates to its Cloud Pak software solutions designed to streamline capabilities in Cloud Pak for Data and Cloud Pak for Automation, including software provisioning patching, data discovery and document processing in hybrid cloud environments.
In Cloud Pak for Data, that includes new industry accelerators for areas like banking, supply chain forecasting and retail. The accelerators – there are now more than 30 offered in Cloud Paks – are same data science tools designed for specific uses cases within the industry and which include sample data sets, prebuilt machine learning models and sample dashboards. IBM also is introducing the Watson Machine Learning Accelerator, a deep learning service for training models and monitoring workloads.
For Cloud Pak for Automation, the updates include process mining capabilities from tech partner myInvenio, integrated robotic process automation capabilities that IBM inherited when it bought WDG Automation this year and automation document processing that combines AI with deep learning and low-code tooling for faster and easier designing, configuring and deploying of document classification.
Such capabilities are becoming increasingly important during the COVID-19 pandemic, which is forcing organizations to have to adapt to a rapidly changing business model through such means as cloud services. Two areas that are seeing particular demand are personalized services – ensuring the organization knows its data to better serve the customer – and automation, which is crucial to finding new avenues of sustainable growth in a suddenly different business climate that doesn’t accommodate traditional technology.
“The industry accelerators that we’ve done in the data space is going to be hugely valuable for our clients,” Gilfix says. “One of the things that we hear oftentimes when people want to adopt a technology, they don’t know where to start. They need some guidance for teams that are just getting into the area of data science. It’s a fast-growing field [and] it’s not mature at large in the enterprises. Having these pre-built machine learning models for a given industry, helping them understand the kinds of reports and insights they should get for an industry standard. This is a great way to jumpstart those things.”
Earlier this month IBM introduced the IBM Cloud for Telecommunications, a hybrid cloud architecture designed in conjunction with more than three dozen partners – including Cisco, Nokia and Samsung – that also has OpenShift at its foundation and is designed to address challenges telcos are facing as they innovate on solutions for 5G networking and the edge. The architecture is built on IBM Cloud Satellite – a technology for launching cloud services on premises, at the edge or in the cloud that currently is in beta – and OpenShift, Howard Boville, senior vice president of hybrid cloud, and Steve Canepa, global general manager and managing director of the communications sector at IBM, wrote in in a blog post.
Competitive Hybrid Cloud Landscape
IBM is facing steep competition in the hybrid cloud space, particularly as the lines between on-premises datacenters and public clouds continue to blur. IDC is predicting that worldwide spending on cloud services, the underlying hardware and software, and cloud professional and managed services will grow beyond $1 trillion in 2024 and that hybrid cloud is a key driver behind the growth.
As we’ve discussed before, the promise of such growth and money – as well as challenges like data sovereignty and security – is driving vendors on both sides of the fence to look to reach onto the other side. That includes Amazon Web Services (AWS) with its Outposts hardware that can be deployed in enterprise datacenters and Microsoft (with Azure Arc) and Google Cloud (with Anthos) enabling organizations to run their cloud services anywhere. Oracle announced this summer a way for organizations to essentially get their own private region of the company’s Gen2 cloud.
Conversely, vendors like Dell Technologies, VMware and Hewlett Packard Enterprise are pushing their technologies into the cloud, giving enterprises the option of running them on premises or as services in the cloud. IBM, with its open architecture fueled by Red Hat and its upcoming Cloud Satellite technology also is looking to enable organizations to more easily adopt hybrid cloud strategies and run IBM Cloud services wherever they want.
Red Hat will remain at the center of IBM’s hybrid cloud efforts. In discussing third quarter results, CFO Jim Kavanaugh noted that Red Hat in the third quarter saw 16 percent year-over-year revenue growth. The company added about 125 services clients using Red Hat technology and Global Business Services (GBS) cloud-related signings jumped more than 25 percent, Kavanaugh said. IBM’s full-stack offerings drove more than $24 billion of cloud revenue over the previous 12 months, also up 25 percent. The number of Cloud Pak users more than tripled year-over-year.
During the conference call in October, Krishna said that the company hybrid strategy “is platform-centric. It is differentiated by Red Hat OpenShift, which is our market-leading open platform, a vast software portfolio modernized to run cloud-native and our GBS expertise that drives platform adoption and meets clients where they are on their cloud journeys.”
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