IBM Invests $1B in PaaS in Quest for Cloud Leadership

IBM invests $1 billion to open its middleware to the cloud in a move to assume a leadership role in the cloud computing market.

LAS VEGAS—IBM pledged to invest $1 billion in a cloud platform as a service (PaaS) to connect enterprise applications and data to the cloud, delivering its time-honored middleware via the cloud.

IBM is opening its middleware to the cloud for the first time. Its middleware is the core of its $26 billion software business that runs core operations and connects vital business processes for major private and public sector organizations worldwide.

In so doing, IBM is creating a massive new market opportunity for itself and millions of developers around the globe. Today, approximately 18 percent of developers create cloud-based applications, but that number is expected to rise to 67 percent, or 12 million, by 2019, according to Evans Research.

IBM does not make $1 billion investments loosely. However, $1 billion seems to be the magic number for signifying that IBM is serious about a particular opportunity. The same figure was used to signal IBM's commitment to Linux (twice), to the cloud, to big data and analytics, and recently to launching a business unit to support IBM's Watson cognitive computing opportunity. Now, IBM is pledging another $1 billion to expand its position in the cloud arena.

At the IBM Pulse 2014 conference here, IBM said it is investing in the new era of hybrid cloud computing, which brings together the cloud and on-premises technologies. Hybrid clouds integrate the systems of engagement—built on social and mobile technologies, where individuals are increasingly engaging with organizations—with systems of record, where massive amounts of data and transactions are processed.

At the IBM PartnerWorld Leadership Conference here earlier this month, IBM CEO Ginny Rometty said the company is focused on three core transformations: data, cloud and systems of engagement to transform the IT industry.

The new $1 billion investment IBM is committing to the cloud is in addition to the $1.2 billion investment Big Blue announced last month to beef up its SoftLayer architecture and enhance the company's overall data center footprint.

Instead, IBM is announcing a new development environment and what the company refers to as an "IBM-as-a-service" solution to help clients and developers speed the adoption of hybrid clouds, which have the potential to usher in a new era of innovation across the enterprise. As part of its initiative, IBM is committing more than $1 billion for software cloud development and is launching new capabilities running on SoftLayer.

IBM is attempting to address three fundamental issues that will help speed the adoption of hybrid clouds: enabling enterprise for the cloud, integrating across enterprise environments and providing an open ecosystem platform for development.

According to Evans Data, there are more than 18 million software developers worldwide, yet less than 25 percent are developing for the cloud today. As the industry moves to the cloud era, millions of developers are looking to access tools and services that will enable them to leverage this fast-emerging opportunity. Moreover, enterprises are looking to innovate and drive value in a new era of hybrid clouds, which link systems of engagement with systems of record.