IBM Asia Pacific Analyst Insights – Red Hat has arrived at IBM

IBM recently held its 20th annual Asia Pacific Industry Analyst event in Singapore. Firstly kudos to IBM. No other vendor has had 20 Asia Pacific Industry Analyst events. IBM is not the same company that hosted a small number of analysts in Sydney just after the 2000 Sydney Olympics. I have attended 18 of the events; perhaps if I didn’t have three kids, I might have carved out a full 20.

In the initial Year 2000 event, not only was I childless and two months into an analyst career that is still going 19 years later, there was no talk of cloud, Watson or Red Hat, IBM was focused on large scale IT Outsourcing, Mainframes and PCs. The world was different. Digital was a technology company, not an essential business driver or a cliche depending upon your perspective. 

Fast forward to 2019. From an IBM watching perspective, the most significant development this year has of course been the closing of the Red Hat acquisition. Once the deal finally closed and IBM paid the $36 Billion to Red Hat shareholders it was time for the reality to set in. How would IBM integrate Red Hat? Would it become lost in the business, maybe holding onto the name for six months, or would it be treated how Red Hat, customers and partners wanted; that is part of IBM but separated from the IBM tentacles?

The talk is what the market wanted to hear. IBM appreciates the value of Red Hat’s partnership and depth of customers. Red Hat will remain independent, and at the same time, IBM is now fully open. That certainly is a change from 2000. IBM is in effect a partner of Red Hat that happens to hold the ownership papers. 

In principle, Red Hat independence is precisely what is needed; the challenge is going to be maintaining this at the same time that IBM must recoup the investment that it has made. IBM will be watched closely in the next 24 months and beyond to ensure that commitments to an open approach are maintained for Red Hat specifically and technology more broadly. 

The Red Hat acquisition has been rolled into the overall perspective of IBM for Hybrid Cloud. Of course, Hybrid Cloud is the buzz word of 2019; everyone is jumping on the bandwagon. For good reason. Perhaps in a pure world, 100% public cloud is a reality, but in the grittiness of enterprise IT, it is clear that the Hybrid Cloud is the critical model for infrastructure delivery across the next five years or more. The big cloud providers know this, and the legacy vendors know this. Of course, awareness is 1% of the battle for success in the Hybrid Cloud. IBM has a particularly significant opportunity across services, platforms and software for the Hybrid Cloud market, but it is going to take a substantial change internally and by customers, for it to execute. This change will relate to culture and perceptions in customers minds, particularly outside of the largest enterprises in the region. 

For example, the Hybrid Cloud Services market is a truly enormous opportunity, driven by ensuring automation and cloud to produce technology and business outcomes. No-one is there yet, and while IBM should be front and centre in this, it still has a long road to go to drive the growth and outcomes that will be considered a success in the Hybrid Cloud market including services. 

There is a lot more to IBM than Hybrid Cloud and Red Hat. The Hybrid Cloud opportunity for the first time in many years subsumes the Cognitive Enterprise (GBS, Watson, etc.). The Cognitive Enterprise market is increasingly competitive across a breadth of services, and IBM has to do more to differentiate in this space. It has had leadership before but needs to raise the bar higher to regain this position. 

Capture Point

It is a credit to IBM that they have invested in the Asia Pacific Industry Analyst ecosystem for 20 years. No one can claim this length of engagement, while perhaps all the IBM faces have changed, and many of the analysts, the continuity is appreciated. Red Hat was the key drawcard this year. The plans for Red Hat are very cognisant on the importance of an Open approach and the Red Hat ecosystem. If IBM and Red Hat can execute through this, then it has a genuine opportunity to be a leading provider of Hybrid Cloud services. Of course, it is much harder than this, but IBM has no choice, it has to make it successful, that should provide the motivation alone to get it right. 

About capioIT - Phil Hassey

If you require further information, please contact Phil Hassey, CEO of capioIT. capioIT is an advisory firm focused on helping organisations to understand emerging technology as the world becomes Digital. Phil may be contacted easily in the digital and real world. +61422231793
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