IBM Ranks #1 in Enterprise Cloud Survey: IDC

By Darryl K. Taft  |  Posted 2014-05-09 Print this article Print

During the first-quarter earnings call, IBM Senior Vice President and Chief Financial Officer Martin Schroeter further addressed some of the moves the company has made in the cloud recently.

"In the quarter, we announced a $1.2 billion investment to globally expand our SoftLayer cloud hubs," he said. "We launched BlueMix, our new platform as a service to speed deployment of hybrid clouds. We acquired both Aspera and Cloudant to extend our capabilities in big data and cloud."

Citing IBM's strategy for taking advantage of new trends, Schroeter cited major shifts in the industry "driven by data, cloud and changes in the way individuals are engaging."

He noted, "This quarter we had good performance in our offerings that address these shifts. Our business analytics revenue was up 6 percent at constant currency on a large base. Our cloud revenue was up over 50 percent, with doubling of our cloud 'as a service' business, and we had strong growth in mobile and security."

Meanwhile, IDC said survey respondents were evenly divided among companies in three size categories: 1,000-4,999 employees, 5,000-9,999 employees and 10,000-plus employees. Companies with fewer than 5,000 employees showed the highest share of respondents ranking full-service providers such as IBM as their top selection of business model options from which to procure cloud services.

Overall, U.S. buyers gave cloud service providers strong ratings, according to the IDC study. This applies to providing cloud services most cost-effectively and meeting quality-of-service expectations involving availability, speed of provisioning and simplicity of service provisioning, IDC said.

IDC researchers also concluded that, to be successful in the future, cloud service providers must build to where the "puck will be," which IDC analyst Frank Gens said IBM is doing.

In a note to clients in July 2013, Gens wrote that IBM is "skating to where the puck will be. ... with strong performances in its cloud, business analytics and Smarter Planet growth initiatives." Gens advised IBM to "skate faster" to accelerate its ability to compete in the public cloud space with its then-new SoftLayer acquisition. Since Gens' analysis, IBM reported cloud revenue of $4.4 billion for 2013 and a cloud growth rate of 50 percent for the first quarter. However, a first-quarter decline in hardware sales and other factors caused IBM's earnings to drop for the period.

Ultimately, IDC's new report concludes that players competing in the cloud services market will need to build to the end-state structure of a cloud service provider business model that resembles the automotive factory model of services delivery involving a robust ecosystem, localized app store, integrated digital services supply chain and a "cloud factory" consisting of PaaS, testing as a service (TaaS), IaaS and SaaS.

In the first four months of 2014, IBM announced its $1.2 billion investment to grow its global cloud footprint to 40 data centers in every major financial center and a $1 billion investment to open its enterprise software to the cloud to allow developers to create new applications for the hybrid cloud era on BlueMix. During the same period, Big Blue said it was launching an IBM Cloud marketplace to provide easy access to the company's cloud services for individuals across the enterprise from IT operations, line-of-business and application development.



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