IBM Projects $7 Billion Cloud Revenue

Back in 2011, IBM projected that cloud services would generate $7 billion in revenue for the company by 2015. This statement came during an interview with IBM’s CFO Mark Loughridge. This year, the company’s path towards this ambitious goal became clearer. This article takes a closer look at how IBM has delved deeper into the cloud and launched a wide variety of cloud services that respond to the needs of enterprise users.

Serious about the cloud

IBM’s latest cloud computing strategy reveals that cloud computing is no longer just a passing trend or an experiment for the company. IBM has a distinct vision of recognizing and supporting “client defined clouds” and cloud resources that are customized for individual customers.

“Ultimately, IBM believes many Fortune 500 cloud services users will become hybrid, public/private cloud operations,” says Jim Comfort, VP of cloud offering management for IMB’s Global Technology Services. Although they’re not there yet, they are making positive steps in that direction. “Many businesses are becoming service providers for themselves,” according to Comfort. They’re concentrating on a private cloud first, with use of public cloud infrastructure-as-a-service to follow.

According to Ric Telford, VP of cloud services at IBM, the company plans to base its approach on its interactions with existing customers, for instance FritoLay, American Airlines and IndiaFirst. “The cloud is not one thing, one size fits all,” said Telford. “Over the last few years, there’s been a lot of tire kicking. Then you get to the more mainstream adoption. We feel we are entering that wave of computing now.”

Along with offering basic cloud infrastructure, the company intends to offer services which will help customers develop their on-premises, private clouds or integrate their data center operations with external cloud suppliers. It expects the IMB cloud to be the primary target of such efforts, but doesn’t discount using its expertise in integration to connect to Amazon EC2, Rackspace, or other existing public cloud suppliers.

Seven Keys

InformationWeek editor at large, Charles Babcock, has identified seven keys to IBM’s cloud strategy that will enable the company to reach its target of $7 billion in revenue:

1. Starter Kit for Cloud on Power Systems – Gives Power server users a way to include virtualized Power servers as part of their private cloud operations.
2. SmartCloud Services – takes advantage of infrastructure-as-a-service external to the enterprise data center. IBM uses the integration product form its Cast Iron acquisition to provide the connections.
3. New SaaS Options – The company plans to develop more SaaS initiatives in the coming years.
4. CloudBurst for Developers – CloudBurst, a hardware appliance for accessing and managing virtual servers remains a strong element of IBM’s approach to cloud computing.
5. PaaS for Developers – Cloud platform-as-a-service (PaaS) remains an important component of IBM’s approach to cloud computing. PaaS has been extended beyond Rational tools into application deployment and management in the same environment.
6. Self-Service Portal – While IBM currently offers a self-service portal for both Power and x86 environments as part of its SmartCloud Foundation, the company aims to improve how customers can access and work with its cloud computing offerings.
7. Consulting Services – The company hopes these services will enable customers to decide how much help they need setting up the self-service portal and other elements of their cloud services, including metering, chargeback, management and security.

It’s projected that one-third of the projected revenue will come from the SmartCloud Foundation set of software products for implementing cloud computing. The other one-third will be from direct IBM cloud services (e.g. IaaS or PaaS) and the remaining third will come from SmartCloud Solutions, which are SaaS offerings and sets of business processes targeted at specific business and industry groups.

Above the competition

In order to emphasize how it stands head and shoulders above its competition, IBM has launched the Cloud Standards Customer Council, which will define requirements and influence existing standards bodies. Target areas for the council include the Distributed Management Task Force (DMTF), which is responsible for determining the Open Virtualization Format for virtual machine portability, and the Open Group, which is a vendor body that sets the SOA Reference Architecture. This is IBM’s way of setting itself apart from the Amazon approach which presents customers with their infrastructure and simply invites customers to use it as it is.

“We’ve seen Amazon go after a different kind of customer,” says Telford. “We’re dealing with the enterprise customer. Our basic pricing will be similar to what you see at Amazon.” While IBM is concerned with setting itself apart, it’s aware that Amazon Web Services, the business unit responsible for EC2, has more or less defined the range on what cloud suppliers are able to charge.

Summary

In a 2011 interview, IBM’s CFO Mark Loughridge projected that cloud services would generate $7 billion in revenue for the company by 2015. A third of the revenue will be from the SmartCloud Foundation software products, another third will be from direct IBM cloud services and the remaining third will come from SmartCloud Solutions, SaaS offerings and sets of business processes. This article takes a closer look at how the company plans to achieve this ambitious goal.

CCSK Exam Preparation

In preparation for the Certificate of Cloud Security Knowledge (CCSK), a security professional should be comfortable with topics related to this post, including:

• Cloud service models (Domain 1)
• Cloud deployment models (Domain 1)
• Cloud service brokers (Domain 1)
• Provider selection (Domain 8)
• Differences in S-P-I models (Domain 10)