Can we know anything about open source in a pandemic world? IBM is the first big tech name to report earnings since the virus struck, and with the acquisition of Red Hat, they’re also the giant in the open-source enterprise software space. Do they offer us any clues about the way that the open-source software space, and even cloud software, might be impacted by the virus and shutdown? We’ll see.
IBM’s new CEO, Arvind Krishna, set the stage in the call by calling out the “unprecedented global public health crisis.” COVID-19 caught the world by surprise with the pace of its spread and the impact it had on locking down the world economy. No company was likely to have planned for this, including IBM, and IBM was in fact in the midst of a leadership change and restructuring when it happened. But just because IBM opened with the pandemic doesn’t mean that their focus for the future is to address work-from-home in future pandemics. It’s to create a new application model that would be more agile if more WFH is needed, for any reason. It’s about technology.
As far as technology direction is concerned, Krishna was also clear. IBM wants to be the hybrid cloud focus of tech, the go-to company for anyone who is serious about hybrid cloud. In a realistic sense, that means every enterprise who has any cloud computing aspirations at all, so this is a significant broadening of scope for IBM. Remember, IBM had shed its hardware lines except the mainframe stuff, and it was rapidly contracting to become a mainframe company in a cloud world. No longer.
On its earnings call, IBM’s Krishna made the same point I’d cited from an internal IBM memo when he took the reins. Hybrid cloud is the fourth pillar of IBM’s success, the thing that takes over from the traditional hardware, software, and middleware business to propel IBM into a leadership position…again. In their early days, IBM’s motto (they even gave out notebooks with it on the cover) was “Think.” Now, it could be “Think Hybrid Cloud.”
Krishna also makes a point I touched on in my blog yesterday; buyers are looking for sellers who will weather the pandemic and shutdown storm. “As our clients adjust to this new normal, they need a partner they can trust. IBM is that partner.” I think it’s IBM’s intention to rebuild the position they once had in strategic influence in the data center.
Strategic influence has been the most important factor in IT vendor success for literally decades. Since I started to measure it in 1989, IBM led the pack by a large margin. In fact, their early influence was 40% higher than any other, which meant IBM could set the tech agenda, and sell into the climate they created. Since 2011, though, its influence has steadily dropped, to the point where prior to the Red Hat deal, there were four companies that had greater influence. Red Hat was one, and of course IBM now owns that.
Enterprises have told me from the first that they strongly favor cloud strategies based on open-source components. Part of the reason is their growing fear of lock-in, at a time when developments are coming fast and a vendor’s position might suddenly collapse. Open-source levels the playing field, increasing competition among vendors and mobility among buyers. Red Hat obviously has the pieces to the hybrid puzzle, so all that’s needed is to put them together.
The key to the hybrid cloud position, and the strategic influence it brings, is the notion that there is such a thing as a hybrid cloud platform. As strange as it may seem, vendors have up to now failed to grasp that an application is designed to run on something, and the “something” it runs on is a platform. If the hybrid cloud is to become the computing strategy of the future, it has to have a platform.
If there is a singular best hybrid cloud platform, the vendor who offers it is in the driver’s seat. IBM intends to be that vendor, by accepting that the hybrid cloud is an “architectural battle”, then winning it. Krishna says “we give clients that unique ability to build mission critical applications once and run them anywhere. Together with Red Hat, we are establishing Linux, Containers and Kubernetes as the new standard. This is winning the architectural battle for hybrid cloud.”
Red Hat, even before IBM’s acquisition, was known as an aggressive promoter of the single-supplier strategy, the concept that a sifi book I once read called a “circular trust”. Red Hat Enterprise Linux works best with Red Hat middleware, which works best with OpenShift for containers and the cloud, which works best with RHEL hosts…you get the picture. Hybrid cloud is the value proposition that validates this circularity, because it requires all the components. If applications are designed for a hybrid-cloud architecture, then hybrid cloud architecture defines and unifies the entire Red Hat product line, and its value proposition.
Hybrid cloud is critical to IBM, but so is artificial intelligence (AI). In fact, IBM executives like Krishna tend to mention the two together most of the time. AI has a powerful appeal as a means of addressing complexity in all its forms, and it’s something IBM has pushed (with things like Watson) for years. But the AI emphasis in the first earnings call after the start of the pandemic shows that IBM sees AI as a means of assuring operations when lockdowns disrupt the normal operations practices of their customers.
A lot of AI positioning by IBM has been almost philosophical in nature. Analytics and AI will help you make better decisions, spot problems, address opportunities. Nice, but not really compelling. Now, AI can help you keep your data centers running and your customer and supply-chain portals running even when your staff is forced to work from home. Nothing abstract there.
I think IBM wants its AI to be almost like an IBM account team of old; always on site, always consulted, always influencing, always a part of the business. AI can be a path to managing the complexity that enterprises perceive exists in deploying hybrid cloud, containers, Kubernetes. Add AI to hybrid cloud, assume you can move application components between cloud and data center, and you have a kind of “my-business-as-a-service” framework. When companies fear capex, they can migrate more to the cloud and make it into opex. When they’re confident, they can pull it back again.
Promoting this through sales/marketing is obviously a challenge, and IBM thinks it has a solution, which they describe as a “more technical approach to selling.” While they don’t break it out this way in any forum I’ve seen (including the earnings call), enterprises tell me that it seems to have four focus areas.
The first one is that IBM recognizes that it needs to focus on a deeper sell, because cloud and hybrid cloud decisions go deeper, in technical terms, than the executive teams of enterprises. IBM account efforts have typically focused on those executive teams, and now they have to be prepared to go deeper, to present technology details. Red Hat has faced that all along, of course, so their experience helps here.
The second focus area is demonstrations and proof-of-concept work. IBM doesn’t want to fall into the sales trap of showing that something can work, they want to show something working. The critical piece of promotional material that links executive teams and project teams is an actual demonstration of an actual product. That sort of thing proves that the solution isn’t too far away, which is important when it’s needed quickly.
This concept is extended by the “virtual garage” concept. Instead of relying on having IBM consultants, developers, and client personnel setting up a kind of garage shop to build an implementation, IBM proposes to do it virtually. This seems a great way of addressing sales/marketing in a pandemic world, but they appear to have been working on this approach even before COVID-19. If you want account control, you have to get account presence, and the broader base Red Hat brings just doesn’t lend itself to traditional major account teams.
The final focus area is public cloud services. Hybrid cloud hybridizes the data center and the public cloud. Even if IBM thinks they can own the data center, having a hybrid cloud architecture that compels the introduction of a hungry potential competitor like Amazon, Google, or Microsoft invites problems. IBM needs to promote its own public cloud to secure the full benefits of its hybrid cloud positioning. It can’t be an exclusive relationship, but it can be preferential.
Looming over these four areas, and the entire hybrid cloud question, is whether we’re inevitably going to embrace a hybrid cloud platform as a service. Right now, applications that are divided between public and private cloud hosting tend to be made up of components either designed for the data center or for the cloud. Yes, there are some that can be moved between the two, but there’s a distinct front-end/back-end structure. That’s due in large part to the fact that development practices for the two “ends” are different. If some vendor came up with a hybrid PaaS with its own set of APIs, applications could be written entirely to the PaaS, and the PaaS APIs could be mapped either to the cloud or the data center as needed.
This would be a profound change in development, but if IBM is right about the hybrid cloud’s importance in future IT, it may be a change that IBM will not only have to support, but lead.
