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IBM Signals Intent to Add More Depth to Cloud Computing

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Yesterday, IBM announced its intent to acquire SoftLayer Technologies Inc. in a deal that will add more depth to that company’s future public cloud offerings.  SoftLayer is a privately held company and a cloud IT hosting provider offering on-demand data center and hosting services. As is its custom, IBM did not disclose any financial details but both the Wall Street Journal and The Financial Times cited an informed source as indicating the size of this deal is around $2 billion. This deal is expected to close in the third quarter. In its reporting, the Wall Street Journal cited a Barclay’s source as indicating that SoftLayer was on pace to generate $400 to $500 million in revenues this year, thus IBM ponied-up 5 times revenues in this latest acquisition move.

This latest announcement is further evidence in the ongoing battle that is brewing among the major enterprise-level technology vendors such as Microsoft, Oracle, SAP, Salesforce.com and others to position a depth of cloud-computing options for customers.  More importantly, it adds further evidence of the increased attractiveness of cloud computing for certain companies.

SoftLayer, which was founded in 2005 and is headquartered in Dallas, Texas, declares on its web site that it offers a global network of 16 points-of-presence data available for customers. This technology provider can be attractive to growing small and medium businesses by offering tiered IT infrastructure and cloud hosting service options that can scale with business needs.   The company further cites its presence as an approved Microsoft Hosting partner through Microsoft’s BizSpark® and Microsoft WebsiteSpark™ programs.

According to its announcement, IBM will establish a new Cloud Services division and position SoftLayer as an anchor in this new division within its IBM SmartCloud platform. This new division will report to Erich Clementi, Senior Vice President, IBM Global Technology Services. IBM’s announcement indicates that Smarter Commerce and other applications will be made available via SoftLayer over time to address line-of-business needs.

Supply Chain Matters finds that aspect a bit disappointing, especially after attending IBM’s recent Smarter Commerce Summit. We have concern as to another IBM organizational layering that limits IBM wide agility in timely market offerings such as B2B and B2C commerce fulfillment and end-to-end supply chain applications and predictive analytics support.

As is often the case, time and market dynamics will be the ultimate determinate.  In the meantime, this announcement serves as yet another salvo in the ongoing positioning of the large enterprise vendor community in their ability to support the wave toward cloud computing.

Bob Ferrari

 

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