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One year on: has Softlayer made IBM a serious cloud player?

Tue 15 Jul 2014

In the year since it spent $2bn on cloud specialist, Softlayer, IBM has promised to spend an awful lot more money in the area. This anniversary has given the media a chance to review the wisdom of the decision in an industry whose history is littered with failed acquisitions and mergers – and the feeling is pretty positive.

Softlayer’s CEO Lance Crosby is interviewed on an IBM site so the questioning is a bit like Smash Hits interviewing One Direction. Why did he agree to become part of IBM? “I realized that they had all of these things that I had put on my whiteboard that I was going to build and host, but I knew it would take me years and years to get there.”

Perhaps part of the success has been to keep a lot of the original culture as Crosby says the emphasis was on integrating back office functions and not swallowing the whole elephant.

He said: “I thought the biggest challenge we would face was being crushed or overwhelmed by IBM. Thankfully, [IBM CEO] Ginni Rometty had the foresight to leave us as a standalone for a period of time. That allowed us to learn about IBM, and allowed IBM to learn about SoftLayer.”

And for the next 5 – 10 years: “We will continue to drive the infrastructure piece for the IBM portfolio.”

Information Week has an interview with George Kandis, IBM’s chief strategy officer and the numbers he reports are quite impressive:

“Over the last 12 months, SoftLayer has gained 6,000 new customers. IBM purchased SoftLayer for $2 billion in July 2013. Kandis says SoftLayer’s customer base was composed primarily of small and midsized companies, with some verging on becoming much larger companies. The thing they had in common was they did not have big IT departments, but were looking to expand infrastructure rapidly, Kandis told InformationWeek.”

One thing customers may have been impressed with is the investment announcements over the last year.

IBM has put $1.2bn into expanding SoftLayer’s global data centre infrastructure – it now has 40 sites including a new one in London.

Another $1bn was announced for Watson, its cognitive technology project that is particularly aimed at big data (and winning Jeopardy)

And a further £$1bn will be spent establishing BlueMix as cloud platform-as-a-service,

It all adds up to a solid ‘work in progress’.  IBM is considered a significant player in cloud, if a little late to the party. Money has been committed and spent and it is winning new business. The year ahead can be look forward to with optimism perhaps but with a wary eye on aggressive competitors and fickle customers – engagement with customers can wreck any plans.

Other reading on IBM/Softlayer’s first birthday

Tech Times:  IBM SoftLayer buy proving to be a winning decision

IBM statement:  SoftLayer Fuels Hybrid Cloud Growth for IBM with New Clients and Services


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