IBM’s Clayton Talks Hybrid Cloud Strategy, $1 Billion Investment

As IBM prepares to split into two companies, it is honing its hybrid cloud strategy. And the indirect channel will prove vital to the success of that effort.

Cameron Clayton is general manager of IBM’s hybrid cloud ecosystem and weather.

IBM’s Cameron Clayton

“We’re going to invest over $1 billion into our ecosystem and our partners,” Clayton told Channel Futures.

Independent software vendors, global system integrators, developers and strategic advisory partners, that means you.

A Recap of What’s Happening

By the end of 2021, IBM expects to separate into two businesses, one focused on hybrid cloud, the other on managed infrastructure services. (For now, Big Blue is calling the latter “NewCo.”) The initiative comes as hybrid cloud poses a $1.2 trillion opportunity by 2022, according to McKinsey & Company.

“Now is the right time to create two market-leading companies focused on what they do best,” Arvind Krishna, CEO of IBM, said recently. “IBM will focus on its open hybrid cloud platform and AI capabilities. NewCo will have greater agility to design, run and modernize the infrastructure of the world’s most important organizations.”

Industry observers seem bullish on the plan. For example, Anurag Agrawal, CEO and analyst at Techaisle, called the announcement, “brilliant, smart and the right move.”

“The three verticals – banking and financial services, industrial and manufacturing, regulated workloads – that IBM targets with its cloud services will benefit,” he said. (More on that financial services aspect in a bit.) “Partners will gain advantage and can more easily participate in [any of] three cloud tracks – build, sell, service – because the partner program will be less diffused.”

Daniel Newman, principal analyst at Futurum Research, concurred because the separation promises to create “a brighter future with more promising growth numbers.”

Understanding IBM’s Hybrid Cloud Timing, Vision

IBM’s cloud vision started to coalesce about a year before it bought Red Hat, Clayton said. Solidifying that purchase brought powerful tools and capabilities to Big Blue’s portfolio as it sought to expand from mainframe, and public and on-premises cloud offerings. The obvious candidate to add? Hybrid cloud.

“The ability to build once and run in multiple places, that’s really what the acquisition of Red Hat facilitated,” Clayton said. “That’s at the core of our hybrid cloud platform. This is an opportunity bigger than IBM by itself and we have to partner, and we want to partner, in order to lead … around that hybrid cloud category.”

Remember, he said, only 20% of workloads have so far migrated from on premises to public cloud.

“The rest haven’t because they’re really complex and not easy to move. They’re regulated, complex, high-volume situations like banks,” he said.

And who better to target those organizations than …

… an already embedded 109-year-old company? IBM just had to make sure its answer to hybrid cloud would meet its (and clients’) exacting standards and requirements. That’s why Big Blue has only emphasized hybrid cloud over the last six months or so.

“Hybrid cloud has been around as a term but, I would say, not really as practical reality,” Clayton said. “You could make an architectural choice to run some of your things in public cloud and some of your things in your on-premises data center, but you had to write both of them differently and separate streams of work to run the same application in both places.”

Conversely, he explained, when IBM says “hybrid cloud,” “you write it once and deploy with click of a button into any of those environments — mainframe, on-premises, public. It’s really a different and architectural feat to do that securely.”

Yet thanks to the Red Hat acquisition, “it’s really real today,” Clayton said.

What Makes IBM’s Hybrid Cloud Different?

For IBM, the biggest hybrid cloud differentiator had to happen on the security level. Again, the company largely works with regulated industries. It therefore cannot compromise or slack on any aspect of security.

“We’ve really invested there in a big way,” Clayton said. “We’re one of the only hybrid cloud companies that offers the level of encryption and security that we do.”

Thus, Big Blue built its hybrid cloud around the U.S. government’s Federal Information Processing Standard 140-2 Level 4 standard. Level 4 ranks as the highest level of security.

“It’s the super-secure module distributed in all our hybrid cloud infrastructure…around the world,” Clayton said. “We’re really the only ones that have done that to that level. It’s a specific industry standard in security and encryption, and it sets us apart from our competitors.”

Flexibility presents another main difference with IBM’s hybrid cloud thanks to Red Hat’s OpenShift services. Organizations may build an application once and run an application from anywhere – mainframe, private, hybrid or public cloud – using OpenShift.

Channel partners will prove integral to IBM’s hybrid cloud implementations. To that end, they can expect a range of support.

“We’re really trying to help them with enablement, migrations, technical resources and skills, architectural reviews, running pilots, investing in helping them understand the security dimensions, regulatory, and we will listen and learn,” Clayton said. “We’re huge believers in enabling and training our partners and making sure they have all the resources they need.”

‘Make Money Right Now’

Even though IBM’s hybrid cloud strategy remains in development and rollout, there are a couple of key areas where the company is facilitating partner cloud revenue now. The first is through the Red Hat Marketplace, which IBM debuted last month.

“We don’t only want our partners to help us tell the hybrid cloud story, we genuinely want to help them make money right now,” Clayton said.

The portal features more than …

… 50 commercial products and gives partners a way to “sell their software today and make money,” Clayton said.

ISV partners so far include Anchore, Cockroach Labs, CognitiveScale, Couchbase, Dynatrace, KubeMQ, MemSQL, MongoDB and StorageOS. Solutions comprise 12 categories including artificial intelligence/machine learning, database, monitoring, security, storage, big data and developer tools.

IBM Beefs Up Financial Services Cloud Partner Roster

The second partner-centric cloud area revolves around financial services. IBM just announced more on this in-motion effort earlier this month. Recall that IBM launched its public cloud product for banks, IBM Cloud for Financial Services, in 2019. This past summer, the vendor introduced its partner ecosystem for the platform. Then in mid-October, it said it has beefed up that lineup with new partners. These experts will help banks integrate third-party services and modernize applications, all to improve the customer experience.

IBM designed the financial services cloud with Bank of America and a number of other global banks.

“They came to us and said they love the architectural approach, ‘you understand us and our security requirements; we want to innovate more than we have in the past, and we need to [team] with more partners,” Clayton said.

So, once it finished IBM Cloud for Financial Services, Big Blue signed more than 50 partners — and it beefed up that number with 15 more in October alone. Avaya, Bulpros, Crealogix, Izicap, Movius, PDV Financial Software, Silverlake Logistics and Infrastructure Sdn Bhd, SureStep, Triple Point Liquidity, Trūata, Turbonomic, vArmour and WorkFusion all just teamed up with IBM.

“They’re joining this ecosystem for financial services because we help them get through the security control plane reviews, access more banks throughout the world … and standardize the process to become a partner of these banks,” Clayton said. “Part of our billion-dollar investment is to bring ISVs on board and help them grow their businesses.”

Evaristus Mainsah, general manager, cloud, Cloud Pak and edge ecosystem at IBM, agreed.

IBM’s Evaristus Mainsah

“IBM will guide ISV partners through each step of the onboarding process, which includes a security controls assessment, workload migration and readiness validation,” Mainsah wrote in an Oct. 15 blog. “This process supports partner compliance initiatives with the IBM Cloud Framework for Financial Services requirements and efficient onboarding through a systematic approach supported by IBM’s technical, security and regulatory teams. IBM will help validated ISVs discover new opportunities by leveraging its global network of financial services partners and customers.”

And given that 40% of IBM’s total revenue comes from financial services, it makes sense that the vendor is pumping money into this domain.

“Supported by a Cloud Engagement Fund established as part of a $1 billion investment in our ecosystem, IBM is helping to accelerate the adoption of our platform for these new partners by addressing financial and technical obstacles,” Mainsah said. “The fund gives IBM the ability to create financial frameworks for partners, layering in cloud credits and technical resources to help launch impactful business relationships.”

Overall, the channel’s demand for working with IBM’s cloud services and banks “has absolutely taken off,” Clayton said.

“We’re just keeping pace with the demand from our partners,” he added. “It’s a great problem to have.”