Will IBM Go ‘All In’ On Cloud Computing?

June 22, 2011 No Comments

SOURCE:  InformationWeek

IBM has spent $14 billion in just the last five years acquiring analytics and optimization software companies that are vital to its Smarter Planet initiative. It has also talked up the growth and importance of cloud computing. However, where those two trends meet, IBM isn’t rushing to move its highly profitable analytics products toward low-cost, on-demand delivery models.

IBM has been on an acquisitions tear ever since 1995, when then-CEO Lou Gerstner purchased Lotus Development. Software and services investments initiated under Gerstner were part of a save-the-company strategy (as detailed in this IBM centennial image gallery), with the idea being to dump low-margin businesses, like DRAM, hard drives, and PCs, and move into higher-margin businesses.

The general strategy remains in place today under CEO Sam Palmisano, even as we’ve seen different spins on the software strategy. WebSphere got much of the attention in the e-business and SOA eras. Information management rose in importance as companies started grappling with the onslaught of data in the digital era. That led to the deals for Ascential (data integration) and Cognos (BI). The Smarter Planet push of recent years has turned the focus on analytics. Deals have followed with iLog, SPSS, Unica, Coremetrics, Netezza and others.

IBM now has a broad, deep software portfolio that other vendors might envy. But CIOs are increasingly frustrated with having to license, integrate and deploy lots of disparate on-premises software. When most other vendors acquire companies, they integrate the bits and pieces into their applications, such as ERP and CRM systems. That’s not as easy for IBM because IT doesn’t have a mission-critical transaction platform at the center of its software portfolio.

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