When we talk about the disruption that results from digital transformation, we usually focus on enterprise consumers of technology. However, it’s also shaking up the enterprise software and hardware marketplace as well – and every large incumbent vendor is feeling the pinch.
Leading the pack of transform-or-die incumbents is IBM. This 103-year-old behemoth has a market cap of about $160 billion, although recent earnings have disappointed investors. Nevertheless, as a result of several key decisions they have made over the last twenty years, they are perhaps better suited to weather the current storm than any of their competitors.
How to Transform a Behemoth
IBM is no stranger to transformation. The company almost went under in the mid-1990s, until then-CEO Lou Gerstner got it on the ebusiness track. Today, “everybody is transforming,” says Robert LeBlanc, Senior Vice President, Cloud and Software Solutions at IBM. “IBM is coming through it too.”
Cloud computing in particular is the primary transformative force shaking up the incumbents. The shift from traditional software licenses and hardware sales to pay-as-you-go subscription revenues is upending their established business models. “Is the cloud driving the market or is the market driving the cloud?” LeBlanc asks. His answer? “Yes to both.”
Furthermore, this transformation requires a complete rework of existing enterprise software itself to follow modern cloud architectures. Without this cost-intensive redesign process, existing software would be unable to take advantage of many of the benefits of the cloud. “It’s an architecture challenge and a design challenge,” explains LeBlanc. “That’s why, two years ago, we formed IBM Design. Today, we have 500 designers around the world transforming the user experience of our products, with many more designers to be added over the next few years.”
Staffing up their global team of architects and designers, however, doesn’t explain their ability to transform their entire company. In fact, everything has to change. “Competitive advantage requires relentless change,” according to LeBlanc.
One critical move: the 2013 acquisition of cloud service provider SoftLayer. SoftLayer competes with Amazon.com, Google, Microsoft, and other public cloud providers, as well as offering more enterprise-centric capabilities, a strategy Amazon has had some struggles with.
SoftLayer is only part of IBM’s cloud strategy, however. In reality, they are all in with the cloud. “We’re applying a ‘cloud first’ strategy even to our infrastructure and hardware businesses,” explains LeBlanc.
In fact, IBM has been streamlining their hardware business, selling off various divisions in order to focus on Power 8 servers and System z mainframes. The goal is to offer “dynamic hybrid cloud,” LeBlanc continues. “SoftLayer with System z and Power Systems.” Hybrid clouds connect cloud to on premise environments and are shaping up to be a standard enterprise cloud configuration choice.
Rounding out IBM’s cloud offerings is their Platform-as-a-Service (PaaS) offering BlueMix. BlueMix leverages a broad spectrum of popular open source tools, enabling developers both in and out of large organizations to build cloud-ready software quickly and easily.
LeBlanc owes much of the promise of BlueMix to hard-fought lessons IBM learned over the last decade, as they built out their WebSphere middleware offerings to take advantage of the rise of Service-Oriented Architecture (SOA) in enterprises. “BlueMix’s PaaS fundamentals leverage the lessons we learned from building enterprise middleware capability,” LeBlanc says.
Read the rest of the article at http://www.forbes.com/sites/jasonbloomberg/2014/12/11/ibm-capitalizing-on-cloud-disruption/.
Intellyx advises companies on their digital transformation initiatives and helps vendors communicate their agility stories. As of the time of writing, none of the organizations mentioned in this article are Intellyx customers. Image credit: Patrick Feller.
