TBRT ECH N O LO G Y B U SIN ESS RESEARCH , IN C.
TBR EVENT PERSPECTIVE
‘IBM as a Service’ will impact
everyone as IBM look...
www.tbri.com
TBR
IBM will continue to sell technology components, as the mainframe business is mature and profitable, and
...
www.tbri.com
TBR
IBM data center will enable headcount reductions as the firm builds its own “composable business.”
Please...
www.tbri.com
TBR
 Marketing
o IBM Mobile Push and Engage
Key IT manager announcements:
IBM enters the cloud delivered ser...
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IBM as a Service Will Impact Everyone as IBM Looks Ahead

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IBM as a Service Will Impact Everyone as IBM Looks Ahead

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IBM as a Service Will Impact Everyone as IBM Looks Ahead

  1. 1. TBRT ECH N O LO G Y B U SIN ESS RESEARCH , IN C. TBR EVENT PERSPECTIVE ‘IBM as a Service’ will impact everyone as IBM looks ahead IBM: Pulse Las Vegas, Feb. 24-26, 2014 Author: Stuart Williams, Vice President of Research (stuart.williams@tbri.com) TBR Perspective At its core, IBM is an information management company, not a technology company. By shifting its focus to a service-oriented customer engagement strategy, automating its data centers and slimming its hardware business, IBM seeks to shed low-profit, low-differentiation businesses and build a more agile and profitable company based on offering flexible “IBM any way you want it” information management solutions. The emergence of a new IBM This is turning into a watershed year for IBM, as the company sheds its x86 server business, opens its Power platform for licensing, launches an expanded “Cognitive Computing” business led by its groundbreaking Watson platform, and unveils a new “IBM as a Service” strategy. This transformation dramatically changes the way IBM engages with its customers, and it will shift IBM’s ecosystem and force competitors to adapt, adopt and improve. IBM Senior Vice President of Software and Cloud Robert LeBlanc spoke to the changing perception of IBM in the marketplace at the Pulse conference in Las Vegas: “There are some who still think of IBM as purely a computer hardware company even though, for many years, it has been steadily building a broad portfolio of software and services. Now it’s time for yet another reassessment: IBM as a cloud company. This shift to cloud — where hardware, software and services meld into one — represents the most significant change in IBM’s go-to-market strategy since it built a large blue-suited sales force to cater to businesses in the 1950s and ’60s. It’s a fundamental reinvention of the company, how IBM operates and how it delivers value to clients and society.”
  2. 2. www.tbri.com TBR IBM will continue to sell technology components, as the mainframe business is mature and profitable, and customers will still buy software; but automation will drive sweeping changes in the way the company delivers professional services. TBR estimates the private cloud services and cloud components business will grow from $55 billion in 2013 to $105 billion in 2018, which supports IBM’s traditional “own and control” buyers. IBM recognizes the power of a new category of buyer — an outcome buyer who doesn’t need to own and control underlying IT assets. Public cloud business growth reflects the shift in buyers, as the market will grow from $23 billion in 2010 to more than an estimated $91 billion in 2016. Much of this shift is at the expense of packaged offerings for traditional architectures like licensed software, servers, storage and data center hardware and IBM’s 2014 shifts reflects this new reality. Impact and Opportunities There are six key implications of IBM’s latest transformation: 1. IBM will invest in inside sales and continual customer engagement across a service-oriented life cycle. Traditional “blue suit” sellers will have to adapt to an even broader portfolio even as they move from transactional selling to maximizing customer lifetime value through “add-to-cart” approaches. 2. TBR believes IBM will increasingly personalize its engagement — starting with functional roles and extending to the multiple situational roles of each customer. Using social and mobile technologies, situational awareness and predictive insights, IBM will lead and support its customers on an ongoing basis — becoming a constant and trusted partner. 3. Customers (e.g., developers, IT managers or line-of-business buyers) face more choices in IT delivery, which requires more education on the tradeoffs between owning and renting solutions. TBR believes IBM will build a strong business in helping customers manage changes across business, process and IT DevOps — another aspect of the lifetime-based engagement cycle. 4. A shakeout of IBM partners will occur, as hardware-centric partners are winnowed down and IBM chases partners who invest in adding, extending or volume selling IBM services. IBM will encourage the development of unique IP in its ecosystem and facilitate the integration and consumption of these new services and offerings as part of “composable” elements. 5. Competitors will be forced to adapt, adopt or improve their portfolios. IBM is doubling down, betting on the transformational power of cloud and advanced software. IBM will force competitors to either increase their investments or risk lagging behind in the market. Using the power of closer relationships with its customers, closer ties to its ecosystem and its own cloud-enabled road map, IBM will reduce transactional barriers in its ecosystem and increase barriers to broad adoption of competing ecosystems. 6. IBM’s current revenue and expense structures will shift over the next five years. Revenue streams will shift from a transactional model to an annuity stream model. This shift will impact short-term revenues from up-front to continuous recognition as sales move from traditional blue suits to more engaged inside sales teams. Offsetting the short-term revenue hits will be cost efficiencies in service delivery and outsourcing gain through the broad application of SoftLayer technologies. TBR believes the automation of
  3. 3. www.tbri.com TBR IBM data center will enable headcount reductions as the firm builds its own “composable business.” Please see the Related TBR Research Notes and Commentary section for additional TBR event perspectives and commentaries on the changing market landscape. Event Overview IBM reshaped its traditional Tivoli-centric and developer-focused Pulse event into “The Premier Cloud Event,” launching multiple products and using its new roles-focused go-to-market strategy that targets developers, business buyers and IT managers. Event attendance was up to 11,000 from 7,000 the previous year. IBM added a Cloud Developer event for 1,000 attendees, a Cloud Partner track and a greatly expanded set of sessions. With presentations from SVP Steve Mills and other senior executives, Pulse became a part of a powerful suite of concurrent announcements tied to the RSA and Mobile World Congress conferences, both attended by TBR analysts. Despite positioning the Pulse event as a cloud conference, IBM already took one step past cloud and into what TBR labels the post-cloud world. Composable Business is the intersection of all IT service sourcing (mainframe, distributed, private and public clouds, and even Business Process as a Service offered from service providers). The vision is for firms to enable business model and business process agility through IT flexibility. If this sounds like SOA and earlier visions of flexible, integrated and composite actions, the outcome is the same. However, instead of narrow or proprietary technologies, cloud services have very broad acceptance and penetration of enabling technologies and maturing APIs. The vision is perfect for IBM’s ability to advise and support the complex IT environments of its large enterprise customers and a powerful differentiator against a host of technology, services or cloud vendors. Key Developer announcements:  BlueMix, IBM’s PaaS offering, was built using open-source Cloud Foundry and expanded with IBM development tools, user interfaces and services. BlueMix represents the basis for API-based, composable and agile development.  SoftLayer, IBM’s $2 billion IaaS acquisition, will be expanded with an additional $1.2 billion to open and update IBM data centers around the globe.  IBM acquired Cloudant to provide a No-SQL Big Data as a Service. Key Business buyer announcements: IBM announced it will expand and offer several solutions via the cloud. Customers intrigued by the power of Watson and how it can assist in call centers will have an opportunity to dip their toes into the offering via IBM Watson Discovery Advisor — a try-then-buy pattern TBR believes IBM will expand across its solution portfolio.  Analytics o IBM Watson Discovery Advisor o IBM BLU Acceleration for Cloud o IBM Maximo Inventory Insights  Human Resources o IBM Kenexa Talent Suite o IBM Connections
  4. 4. www.tbri.com TBR  Marketing o IBM Mobile Push and Engage Key IT manager announcements: IBM enters the cloud delivered service management space with its Service Engage and Mobile Management offerings. One key to enabling the agile enterprise is easy-to-consume platforms, such as those offered by ServiceNow and New Relic. Service Engage offers IT managers the ability to manage mixed workloads in the cloud and on premises along with connected devices and business applications. The new offerings are available both “as a Service,” hosted on IBM SoftLayer, and as on-premises installed software.  Service Management o Service Engage encompasses four offerings for IT service management — control desk, applications management, workload automation and performance management. Entry in this space is initial, and IBM will compete with born-on-the-cloud vendors New Era and ServiceNow as well as traditional firms CA, HP, Dell and BMC.  Mobile Management o Cloud-based mobile device management and security for corporate-issued and personal mobile devices used in an enterprise environment o Mobile Device Management and Security o Maas360 (Fiberlink) Related TBR research notes and commentary ITO versus cloud services: Battle of the business models MWC 2014: Operators must accelerate transformation to survive RSA Conference: Customers seek security integration to improve threat response IBM continues paving the road to cloud, acquiring DBaaS provider Cloudant and investing in platform capabilities Technology Business Research, Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, professional services, telecom and enterprise network vendors, and operators. Serving a global clientele, TBR provides timely and actionable market research and business intelligence in a format that is uniquely tailored to clients’ needs. Our analysts are available to further address client-specific issues or information needs on an inquiry or proprietary consulting basis. TBR has been empowering corporate decision makers since 1996. For more information please visit www.tbri.com. ©2014 Technology Business Research Inc. This report is based on information made available to the public by the vendor and other public sources. No representation is made that this information is accurate or complete. Technology Business Research will not be held liable or responsible for any decisions that are made based on this information. The information contained in this report and all other TBR products is not and should not be construed to be investment advice. TBR does not make any recommendations or provide any advice regarding the value, purchase, sale or retention of securities. This report is copyright-protected and supplied for the sole use of the recipient. Contact Technology Business Research, Inc. for permission to reproduce.

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