IBM’s third quarter results see the company return to flat revenue growth following a strong Q2, but multicloud management holds out new promise.
Internet of Business says
IBM’s Cognitive Solutions business has seen revenue drop for the second successive quarter in the company’s latest quarterly financials.
For all Watson’s promise from a technology standpoint, IBM isn’t seeing the adoption levels it would hope for from its deep learning AI and enterprise digital assistant.
In a Q3 earnings call with analysts, the company’s management put these difficulties down to, “challenges in a few of these areas, specifically collaboration, commerce, and talent where we’re dealing with secular shifts in the market”.
However, cloud, security, and consulting continued their growth, offsetting IBM’s legacy businesses, with the performance in cloud driven by as-a-Service growth of 24 percent. Gross profit margin was flat, however.
The as-a-service model has gained a strong foothold across industry in recent years, driven by consumers not having to manage their underlying cloud infrastructures, while retaining control over operating systems, storage, and deployed applications when desired. Meanwhile, cloud providers such as IBM benefit from a more predictable and reliable income.
Commenting on the results, CFO Jim Kavanaugh said, “We continue to see strong client demand in the emerging, high-value segments of the IT industry. And our performance this quarter was driven by the offerings in hybrid cloud, in security, in digital, and in analytics and AI, a testament to our ability to deliver differentiated value to our clients through innovative technologies with the skills and expertise to implement these technologies.”
A second consecutive quarter of growth for IBM’s Technology Services and Cloud Platforms segment was led by hybrid cloud implementations. This week’s announcement of what IBM claims is the world’s first multicloud management technology aims to build on years of cloud investment at Big Blue.
IBM’s new Multicloud Manager is designed to make it easier to manage, move, and integrate apps across different cloud computing infrastructures.
The open technology provides an operations console for companies as they increasingly incorporate public and private cloud capabilities with existing on-premise business systems.
According to a new report from IBM’s Institute for Business Value, nearly all the companies it surveyed said they are using some form of cloud computing today, with 85 percent using more than one cloud environment.
However, though the rush to cloud is undeniable, research from Ovum shows that 80 percent of sensitive data and mission-critical workloads are still running in on-premise business systems, held back by issues of performance and regulatory requirements.
Arvind Krishna, senior VP of IBM Hybrid Cloud, said:
With its open source approach to managing data and apps across multiple clouds, the IBM Multicloud Manager will position companies to scale their many cloud investments and unleash the full business value of the cloud.
“In doing so, they will move beyond the productivity economics of renting computing power, to fully leveraging the cloud to invent new business processes and enter new markets.”
IBM explained how this might work in practice: “If a car rental company uses one cloud for its AI services, another for its bookings system, and runs its financial processes on on-premise computers in offices around the world, IBM Multicloud Manager can span the company’s multiple computing infrastructures enabling customers to book a car at increased speeds using the company’s mobile app.”
Big Blue’s big picture
IBM’s differentiated value proposition is driven by technology, industry expertise, trust and security, delivered through an integrated model. This underpins its growth in offerings that address hybrid cloud, security, analytics, and AI. These will likely form the backbone of the business as the century-old Big Blue continues to reshape itself.
Though cloud adoption is rapidly increasing, many businesses still depend on on-premise systems. IBM believes that multicloud solutions offer a convenient answer to the complex infrastructure problems that having multiple workload locations creates.
Twenty percent of business workloads have moved to the cloud, with this figure expected to increase to 40 percent by 2019. Yet, this still leaves 60 to 80 percent of processes happening on-premise.
As explained by the new IBM Institute of Business Value report: “Operating in a multicloud environment is a reality for most enterprise functions today, though too often it happens in silos. Instead of ignoring or attempting to stifle organisational forays onto multiple clouds, IT needs to get better at facilitating, orchestrating and optimising enterprise multicloud footing.
“Enterprises that assemble harmonised multicloud platforms now can position themselves for greater competitive advantage and lower costs.”
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