IBM-Red Hat Deal to Influence CIO’s Cloud Decision
For several years, IBM remained a laggard in the cloud market. It’s reluctance to cloud adoption reflected in its quarterly revenues, for several quarters, while its contenders surged ahead with their heads in the cloud. One of the reasons for IBM to undertake the $34 billion acquisition of Red Hat was to strengthen its position in the $1 trillion hybrid cloud market, where IBM’s revenues have largely been flat.
The buy-out was the biggest deal in IBM’s history and the world’s second-largest technology takeover. Needless to say, IBM leaders are banking on the deal that closed in July, with a strong belief that it could transform the company, making it one of the biggest cloud power-houses in the coming days.
Recently, CXOToday caught up with Subram Natarajan, Chief Technology Officer at IBM India Private Ltd, who explains why the IBM-Red Hat acquisition matters to the enterprise moving to cloud and how the deal can change the hybrid multi-cloud landscape in the years ahead.
CXOToday: What made IBM bet big on hybrid, multi-cloud? How can the Red Hat acquisition help IBM in this journey?
Subram Natarajan: We believe hybrid multi-cloud architectures will replace the ‘one-cloud-fits-all’ approach. Today, businesses are seeking to drive value from the integration of public and private clouds by taking the hybrid multi-cloud approach. The approach uses a combination of on-premises, private cloud and public cloud architecture, with the best-in-class resources from different cloud vendors. A hybrid approach enables teams to run applications across private, dedicated and multi-tenant public cloud infrastructures, while a multi-cloud approach embraces multiple vendors to support a breadth of enterprise workloads.
We have based our bets on three emerging trends we are witnessing in the market. The first and the most important is the hybrid cloud adoption – most enterprises are actively pursuing hybrid deployment with less than 20% of their workloads already moved to public clouds. Over the next few years, this balance could shift to a ratio of 80:20 to 60:40 or even 40:60 depending on the sector and the respective regulatory environment.
Secondly, most customers have been using multiple clouds that include private cloud as well. Different studies show that customers today on average use 6-15 different types of clouds. Lastly, container technology is now emerging as the largest standards for any kind of cloud. With Linux OS at the heart of the majority of the server installations, containers are becoming the new way of deploying a cloud-agnostic environment. This is an area where IBM-Red Hat partnership exemplifies. Because together we feel that, we have a very compelling value proposition to serve. We made some announcements recently on our first joint portfolio – Cloud Paks. These are bundles made up of Open-Shift with more than 100 other IBM software products. There is a Cloud Pak for Applications that drives app modernization, there is a Cloud Pak for Automation serves business process management. Cloud Pak for Management caters to managing multi-cloud use case. We have announced support of OpenShift on our mainframes. We also announced services such as advisory, implementation, support that customers can leverage in their journey towards hybrid multi-cloud.
CXOToday: How can the acquisition help solve some of the most pressing challenges that CIOs currently face today?
Subram Natarajan: During the early days of cloud computing, enterprises were led to believe that every application would reach the destination in a short order of time. It has been 10 years since. As I said earlier, industry analysts estimate that one-fifth of all enterprise applications have moved to the cloud. Adequacy of cost-benefit, regulatory restrictions and security were the common inhibitors. However, technology has come a long way in overcoming some of these hurdles.
One of the often ignored, but important reasons is that the cloud has become an increasingly complex environment to manage. This stems from the confusion as to what constitutes a cloud-centric development project versus a cloud-ready product. Kubernetes, for instance, is a development project, not a product. Many customers have been under the belief that all Kubernetes distributions—all 125 plus were compatible. That is not the case. When it comes to deployment, they quickly realized that these were not on the same timelines, lifecycles, etc. Just like products, all the clouds, even though they have the same underlying technology, are all different. So, as customers want to span clouds, they are realizing now that they need four or five different islands of technology stacks that developers have to work on. Such a situation is unsustainable from a management perspective.
This is where the Red Hat and IBM synergy comes in to help address the blockers. Apart from Red Hat directly leveraging the work by IBMers in open source communities, strong packaging of technology stack helps ease the interoperability woes. Another considerable benefit is the massive optimization of IBM products to run on Red Hat products—including Red Hat Enterprise Linux and OpenShift. We will spend more energy enabling other open source projects to run on this infrastructure to solve these challenges.
CXOToday: How are CIOs gaining from your recently transformed software portfolio?
Subram Natarajan: We have transformed our software portfolio to make it cloud-native, allowing enterprises to build and run critical applications on multiple public and private cloud infrastructures. With the help of our software portfolio, organizations will be able to build mission-critical applications once and run them on all leading public clouds, including AWS, Google Cloud Platform, Microsoft Azure, Alibaba, IBM Cloud and private clouds. CIOs can seamlessly migrate their critical applications to multiple cloud internet-based servers. The portfolio will help CIOs move their core business applications to the cloud securely or in other words, it will help them with their technology buying decision.
CXOToday: How are your Cloud Paks different than what others have in the market today?
Subram Natarajan: Cloud Paks offer a faster and easier way to enterprises to modernize their core business and run it on any infrastructure, be it on-premises, using a cloud provider of their choice, or—more likely—a hybrid of multiple cloud vendors and data centers. By delivering container-based IBM software certified for production and built on Red Hat OpenShift with common operational services, Cloud Paks provide a complete solution with consistent management experience and qualities of service. Therefore, enterprises do not have to build, integrate, test, and secure a custom solution from an assortment of pieces and parts.
Flexible Cloud Pak licensing enables them to transform parts of their business over time, and consume new capabilities at their own pace. The combination of a common platform based on OpenShift, modern and consistent software capabilities in Cloud Paks, and extensibility based on open standards is the underpinning of IBM’s hybrid multi-cloud strategy.
CXOToday: How has the Indian market reacted to Cloud Paks so far? And which segments will IBM be targeting?
Subram Natarajan: There has been a positive reaction to our Cloud Pak discussion with many of the customers. Given that Hybrid multi cloud is a reality, customers are looking for a scalable architecture that leverages the innovation that the open source community brings. Cloud Paks encapsulates all these challenges in an effective manner and at the same time provides a platform for integrating other essential elements (such as Security, resiliency and data). More than 50 percent of the servers worldwide are on the cloud. India is conducive to the adoption of Cloud Paks owing to the increasing acceptance of open source software and Linux in the country by both – Governments and the private sector
CXOToday: What are some of the biggest challenges you are facing with companies embarking on digital transformation?
Subram Natarajan: First and foremost, the enterprise’s appetite to undertake and succeed in the digital transformation initiative and therefore a strong sponsorship will be needed. This not only requires the agenda to be driven across and along the organization but also to build a culture that embraces the new world order. We call this a cognitive enterprise. From a technology standpoint, using the right platform, tools along with right team will help to bring the digital journeys to a reality quickly. Choice of open source based tool set, following the right methodologies (DevOps, Agile, design thinking) will help integrate the technology and business architectures easily.
Finally, choice of a partner who has successfully delivered such transformation projects, specifically in the domain will help overcome several pitfalls, specifically during the early days of the project.