Earlier this week, Saugatuck participated in IBM Software Group (SWG) ‘s annual analyst event held in Stamford, CT. Key takeaways from the two days of group meetings and 1-on-1 discussions are as follows:

The event provided several major impressions. Overall, the strategies and directions that IBM discussed are very solid – the company clearly understands where it needs to compete, and where it needs to create competitive advantage.  Specific ways that we see this happening include the following:

1. IBM reinforces Cloud-centric option for enterprise software. This is not big news by itself, as IBM has been migrating toward a Cloud-centric/Cloud-leveraged software portfolio for quite some time. The presentations in this event basically reinforced that commitment – which is useful positioning for IBM, its partners, and its customers, as the company makes progress. IBM SWG already offers over 100 products via SaaS/Cloud and plans to translate/migrate its remaining portfolio over the next couple of years. However, IBM may be perceived by some to lack a crisp, clear, total-portfolio Cloud strategy since no roadmap has been released for specific products. But partners, customers, and even some groups within IBM will be comforted to hear the reinforcement message.

2. IBM is firmly committed to standardized Cloud offerings based on SoftLayer and Open Stack. Customers that are new users of IBM SmartCloud will be placed on the new SoftLayer/Open Stack structure. Existing users of SmartCloud will be migrated at a time that is appropriate for the user (such as during a major platform change). This is more good news for partners and customers – and should help IBM develop more opportunities by extending the range of Cloud technologies (and partner/competitor offerings) supported.

3. IBM is likely to offer a significant Cloud Platform/Marketplace within the next 3 to 6 months. While IBM did not formally announce plans for this Platform/Marketplace, it was discussed in considerable detail, as being a well understood requirement that must be delivered very soon. Based on those descriptions, we believe the Platform will be a one-stop-shop, which will include industry specific offerings as well as cross-industry offerings such as tools/facilities for app dev. IBM understands that all offerings on the Platform should be tested for compatibility and integration with each other and with the SmartCloud (SoftLayer + OpenStack) platform and other standards/interfaces. Given widespread and increasing enterprise demand for secure, standards-based platforms and marketplaces for finding, acquiring, and delivering business software and development tools, the lack of such a platform-based marketplace has likely limited IBM in its Cloud-oriented software sales and partnership success.

4. IBM is committed to expanding the commercial use of Watson. IBM considers Watson (made public in playing a winning the TV game show “Jeopardy” in 2011) as the initial foray into Cognitive Computing and the beginning of the 3rd generation of computing (1st gen: tabulating equipment circa 1900; 2nd gen: stored program computing circa 1950; 3rd gen: cognitive computing circa 2011). It also sees itself as needing to lead, or at least be in the vanguard, of such computing technologies in order to remain a true IT Master Brand. Those that develop and control, or at least influence, dominant technologies in turn gain the ability to dominate markets and ecosystems. Watson performs Cognitive Computing by:

  • Understanding natural language and human style communication
  • Generating and evaluating evidence-based hypotheses
  • Adapting and simulating human learning from training, interaction, and outcomes

5. IBM seeks a better user experience. Acknowledging that traditional software UIs tend to be limited in scope, technical in origin, and rarely transferable/sharable across devices, solutions, and platforms, the company is making a very substantial investment in improving user interfaces across their entire product line by creating the IBM Design organization, headquartered in Austin TX. This organization is being populated with notable industrial design talent and is charged with working directly with product developers to significantly improve customer experiences with IBM products.

Our bottom line: IBM is very aware of market transformation being caused by Cloud, and continues to move toward an increasingly unified, standards-based Cloud IT and business environment. These moves will serve their established partner and customer base well, and can protect IBM from significant loss in those areas. But as Cloud-native competitors continue to establish and grow their own partner/customer bases of influence, Big Blue needs to continue to consolidate, coordinate, and accelerate a Cloud-first mentality across its divisions.

This blog was originally published at Saugatuck's Lens360 blog on November 22, 2013. Published with permission.