The tech giant inked two hybrid cloud deals and saw Red Hat OK its $34 billion offer.

Jeffrey Burt

January 22, 2019

5 Min Read
Thumbs Up
Thinkstock

IBM’s cloud-services business just came off a big week. In the matter of a couple of days,  the company announced a $325 million deal with Juniper Networks around its cloud efforts and a $550 million partnership with telecommunications giant Vodafone around cloud management and optimization.

At the same time, IBM also saw Red Hat investors approve its $34 billion bid to buy the open-source giant, the latest step in a deal that also has implications for IBM’s cloud ambitions. All of this comes as IBM competes in a fast-growing cloud market that includes such heavyweights as Amazon Web Services (AWS), Microsoft Azure and Google Cloud, which made their own news around moves they made in the retail industry.

The huge Red Hat deal has gotten it’s share of attention since officials with both companies announced it in October. But in a crowded cloud market, the agreements with Juniper and Vodafone enable IBM to make noise and show its strength with large companies, according to Patrick Moorhead, principal analyst with Moor Insights and Strategy.

Moorhead-Patrick_Moor-Insights.jpg

Moor Insights’ Patrick Moorhead

“These two deals are important as it reminds people that IBM is still in the cloud game versus the larger AWS and Azure,” Moorhead told Channel Futures. “IBM ‘gets’ large enterprises and, especially where it has other business, has a good cloud story. If you do most of your current business with Power or Z [mainframe systems], taking workloads to the IBM Cloud makes some sense as there’s one throat to choke and a more integrated experience.”

AWS is by far the dominant player in the public cloud, but IBM is seeing its cloud business grow. In the 12 months running through September, the company’s cloud revenues hit $19 billion, a 20 percent increase.

Most enterprises have dipped their toes in the cloud market, notes Jim Comfort, general manager for IBM Systems Services. However, as they get deeper into their cloud journeys, things get more complex and challenging. Most will adopt a hybrid or multicloud strategy, with workloads running both on-premises and in the public cloud, and in multiple public clouds. It also comes at a time when companies are going through transformations to embrace a more digital strategy.

Comfort-Jim_IBM.jpg

IBM’s Jim Comfort

In its seven-year agreement with Juniper, IBM will help manage both the network company’s on-premises infrastructure and workloads as well its cloud environments via the IBM Services Platform with Watson. Big Blue will help manage Juniper’s support systems, such as help desk, networks and data centers.

“With Juniper, we’re going to manage their existing infrastructure, which takes that burden away, as we transform and extend and move it into cloud functions one way or the other,” Comfort told Channel Futures. “Some pieces will stay; some will stay the same. We have completely modernized their whole support system.”

The Vodafone Business agreement has a number of elements to it. The telco not only offers cloud services to customers and supports such cloud platforms like IBM Cloud, AWS, Azure and Alibaba Cloud, but also is working internally to …

… transform its own operations.

The eight-year deal with Vodafone includes creating a new joint venture that will enable combining IBM’s offerings and expertise in multicloud environments with Vodafone’s 5G, network virtualization and edge-computing capabilities. At a time when 70 percent of organizations use 15 different cloud environments for their IT operations, there’s a need for reducing complexity, increasing automation and accelerating the decision-making process. The two companies also will develop new solutions that leverage IBM’s multicloud capabilities and Vodafone’s 5G, edge and internet-of-things (IoT) products, and IBM will manage Vodafone’s cloud systems.

“These are both examples at a high level of how IBM helps a client transform,” Comfort said. “It’s by being able to handle the modernization. Whether it’s on IBM’s cloud or other clouds, we’ve got a point of view and we’ll meet clients where they are.”

For many enterprises, the easy part of the cloud journey is over. They have about 20 percent of their workloads in the cloud. Now it gets more difficult, with more integration needed and more “fundamental modernization and transformation that needs to take place,” he said.

Acquiring Red Hat – the deal is expected to close later this year – will make the combined company a strong player in hybrid cloud. Comfort noted that containers are key to the transformation and multicloud efforts underway in enterprises, enabling greater application portability and flexibility between on-premises environments and the cloud — and between clouds. Red Hat’s portfolio includes the OpenShift container platform that includes Docker and Kubernetes.

All of the moves add to the opportunities the cloud presents channel partners, he said. The challenge for partners is to make sure they have the expertise they need in such areas as artificial intelligence, machine learning and analytics to ensure they can help customers as they adopt these emerging technologies and migrate more of the businesses to the cloud.

“Now what the client is doing is buying products that will help with digital transformation, so you have to have some of that expertise, whether it be application refactoring, whether it be AI and analytics capabilities — and that’s where we have a depth of capabilities,” Comfort said. “It might be harder for the partners to realize what the value-add is and invest around that.”

Free Newsletters for the Channel
Register for Your Free Newsletter Now

You May Also Like