Interview: Understanding the Big Blue cloud

A SmartCloud future

Even with this depth of services available, IBM is acutely aware of the market share ‘cloud computing’ start-ups could potentially steal from its outsourced and managed IT services customers.

In March, IBM chief Sam Palmisano laid his bets on the table: cloud computing will be a US$7 billion ($6.5 billion) business for IBM by 2015.

Within a month, IBM launched SmartCloud enterprise – an IaaS service delivered from several global IBM data centres – the nearest to Australia being based in Singapore.

SmartCloud offers pay-as-you-go, self-service provision of virtual instances running Windows and Linux. It is pitched at application developers, marketers and casual users, with 99.5 percent uptime guaranteed by SLA.

The same platform will also be used to serve up middleware – tools such as Websphere app server, DB2 and Rational database tools, Lotus Domino server and some third party apps.

By the end of the year, Big Blue will launch a second generation "production quality" cloud labelled IBM Smart Cloud Enterprise +, extending its offer to the cloud provision of enterprise applications (such as SAP) running on enterprise operating systems (such as its AIX flavour of UNIX) on higher-grade hardware, matched with an SLA guarantee of 99.9 percent availability.

Shallcroft told iTnews that this service would likely be based in Australia.

The bigger picture: Integration

But even with these two genuine cloud computing platforms released, the questions must be asked: Could IBM realistically hit Palmisano’s target of US$7 billion in cloud revenues by 2015?

Considering that the world’s largest cloud compute, Amazon Web Services, is tracking at around US$500 million in revenues today, IBM’s goal would be no mean feat.

But that’s assuming Palmisano’s US$7 billion is based only on revenues gained from SmartCloud.

IBM’s future role will be as an integrator and broker of cloud services. That future is already well underway after IBM’s acquisition of Cast Iron in mid-2010.

Cast Iron’s technology, Shallcroft said, can "integrate workloads across both private and public clouds".

The US$7 billion figure also may assume that IBM will stretch the definition of cloud computing services well beyond what we know today as infrastructure, platform and software as a service.

Shallcroft envisages that the SmartCloud platform might someday soon serve as the infrastructure stack from which IBM could launch a range of new cloud computing services.

What would some of these services look like, if we polished up the crystal ball? Shallcroft had two very interesting suggestions.

One was ‘business process as a service’ – under which customers might choose not just to have their application software hosted and delivered as a service, but also outsource the execution of the entire business process to IBM.

It wouldn’t be dissimilar to the way, for example, that Accenture manages the Navitaire airline booking systems used by the likes of Virgin Blue and Jetstar today. The difference would be that instead of a straight outsourcing agreement, or SaaS play, the customer wouldn’t pay per IT transaction but rather, per business transaction. It might be per reservation on a flight booking tool, per employee on-boarding on a HR tool, or per loan application on an online banking tool, for example.

Analytics is also an "enormously important play for IBM", Shallcroft said, "a significant business opportunity" from which the company expects to generate a lot of revenue.

"We have started to look at SmartCloud as a platform to offer analytics services that multiple clients could consume," he hinted.

The catch is – competing with the Amazon’s and Salesforce’s would only reduce the premium IBM can charge its customers.

The challenge for Big Blue is to focus on areas where customers are prepared to pay for added value.