Analysis IBM chief executive Ginni Rometty is to step down in April after more than eight years at the helm, with senior vice president for cloud and cognitive software Arvind Krishna taking over.

Krishna, who was a contributing factor in IBM’s acquisition of Red Hat in 2018, will become only the 10th CEO in the Armonk giant’s 106-year history. Jim Whitehurst, chief executive of Red Hat, will become president, while Rometty will serve as executive chairman until her retirement at the end of the year.

“Arvind is the right CEO for the next era at IBM,” Rometty said in a statement. “He is a brilliant technologist who has played a significant role in developing our key technologies such as artificial intelligence, cloud, quantum computing, and blockchain. He is well-positioned to lead IBM and its clients into the cloud and cognitive era.”

Rometty’s eight-year tenure oversaw IBM’s entry into the cloud as a serious player and continued leadership in R&D, particularly around emerging technologies; IBM’s run of being awarded the most patents now stretches to 27 consecutive years. In an era where cloud events have become supersized – the last re:Invent attracted 60,000 attendees – Rometty’s oratorial skill will be missed. Yet the storytelling around the entirety of the company did not quite match.

The bottom line will be where many of the think pieces point; IBM only broke a run of 22 straight quarters of declining revenue in January 2018, and it will ensure something of a mixed legacy for Rometty. Comparisons can certainly be made between Krishna’s ascendance and Satya Nadella taking the helm at Microsoft in 2014 – and look what has happened there.

But things are a little more complicated than that.

Speaking to this publication earlier this month, Nick McQuire, senior vice president enterprise at CCS Insight, noted how enterprise organisations were increasingly looking to deeper integrations with Microsoft and Google’s clouds by combining SaaS and other services with infrastructure.

IBM’s different business units, which are legion, do not have quite the same symmetry. Where else for instance explores all kinds of emerging tech, from blockchain to quantum, while still having a thriving mainframe business?

Bill Mew, a 16-year IBM veteran who now heads up cybersecurity consultancy Crisis Team, describes the continued balance sheet decline as a ‘sorry legacy’ for Rometty. Yet this should not be taken personally. Rather, it is indicative of where IBM is today.

“It shouldn’t be taken as a criticism of Rometty herself,” Mew tells CloudTech. “She was an enormously driven person who had a winning mentality, and she did her darnedest to turn the machine around and make it capitalise on some of the opportunities it had – but that didn’t enable her to do so.”

McQuire argues the new leadership team looks good on paper. “The combination is a good start and a good decision in terms of the next phase for IBM,” McQuire tells CloudTech. “It’s a good mix of having an individual [Krishna] who had been instrumental in some of the more important emerging areas of IBM strategy over the last number of years. Equally, having Whitehurst in there, almost an outsider looking in, is also quite valuable.

“It is an important next chapter – the role we’ll see in the market as not only the cloud market changes, but also as IBM changes,” adds McQuire.

As we have already seen, turning a ship the size of IBM around is no easy feat. For Mew, the fact that SoftLayer and Watson were opportunities which fell by the wayside exemplifies that virtually any executive could be placed in charge and they would struggle, although he notes his ‘enormous respect’ for Krishna and Whitehurst, and admits his view may be portrayed as cynical.

“They’ve spent an absolute fortune on Red Hat and it has to start to deliver soon,” says Mew. “You’ve seen growth in one quarter, but a large amount of that was for the latest mainframe. The question still exists about how credible [their] turnaround strategy is, and is the change in leadership going to make much difference?

“I have enormous respect for the guys stepping into her shoes,” Mew adds. “Again they are very capable, but again the question is – is IBM as an organisation going to innovate at the pace of AWS and others? I just don’t see it happening.”

McQuire notes comparing IBM directly to AWS’ mammoth growth, as a way of summarising Rometty’s legacy, is a ‘little bit unfair.’ Yet he does argue SoftLayer was a ‘victim’ of IBM not fully committing to the cloud when it should have done.

As a result, IBM remains firmly a second-tier player, behind the hyperscalers. Yet there are major customers out there. AT&T is an example, although the telecoms giant is also using Microsoft, given the latter stole IBM’s thunder somewhat in July by announcing their partnership within hours of the initial news.

McQuire believes the big-ticket clients will react to the move positively overall, noting the strategy behind the transition. Indeed, listening to Rometty’s keynotes offered a sense of this transition. At Think in February, the message was around the second wave of cloud; one which is open and has hybrid and multi-cloud at its core, but is secured and managed properly.

For IBM to succeed in this second wave, the corporate story has to tie together more seamlessly. “Ginni Rometty put some foundations in place – and some of the latest numbers, looking at the services side of the business, specifically around Red Hat as well, you’re starting to see a flywheel effect happening between the hybrid and multi-cloud and Red Hat capabilities that IBM has to market, with the services business,” says McQuire.

“The question there is – how can they create a cohesive vision that combines both the cloud business and the services business?”

Whether you see your glass as half-full or half-empty, the answer to that question is going to be an intriguing one as Krishna sets up for his new role.

Picture credit: Screenshot/IBM

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Cloud Pro

Welcome to the first issue of IT Pro 20/20, a brand new digital magazine that brings all of the month’s most important tech issues into clear view.

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Amazon Web Services (AWS) posted revenues of $9.95 billion (£7.59bn) in its most recent quarter, beating analyst expectations.

The results represent a 34% increase on Q418, while the full-year figure, of $35bn, are 36.5% up on 2018. The third quarter saw revenues of $8.99bn, with AWS contributing 11% of Amazon’s total pot, a figure remaining conistent with previous quarters.

As with previous quarters, Amazon does not go in for self-aggrandising prepared remarks, with chief financial officer Brian Olsavsky again taking questions. Most of the questions were on the subject of AWS and wider growth patterns.

“As we see it here, we grew from a $30 billion revenue run rate at the end of 2018 to a $40bn revenue run rate at the end of 2019 – so we continue to be happy with our top line growth,” said Olsavsky. “We had a larger dollar increase in revenue both year-over-year and quarter-over-quarter – so we’re very happy with the progress of the revenue and our adoption and acceptance by customers.”

The three letters of AWS saw a grand total of 68 mentions in the press materials. This represented a downturn from 79 this time last year. Many of the quarterly updates came as a result of the releases from re:Invent at the start of December, including new products for machine learning training kit SageMaker, as well as Amazon Braket, a service for developers to experiment with quantum computing facilities.

Alongside this, the general availability of hybrid cloud offering Outposts was announced, as well as a major partnership with Verizon. The latter was seen as a showcase for AWS Wavelength, a service which aims to offer ultra-low latency applications for 5G devices. Primary customers announced this quarter were the Bundesliga, going all-in on AWS and adding to the firm’s cadre of sporting clients, as well as Best Western Hotels, again announced at re:Invent.

The primary news from the past three months, however, was a blow from AWS’ perspective, with the awarding of the $10 billion-rated JEDI government cloud computing contract to Microsoft. AWS has confirmed it is appealing the ruling.

While slowing growth is to be expected given the speed at which AWS rose – and it was a cause for concern for analysts last quarter – Synergy Research argues that at 34% growth, AWS still holds a steady one third of the market. Microsoft, for whom Azure grew 62%, has risen by up to three percentage points year over year, according to Synergy estimates.

You can read the full AWS earnings report here.

Interested in hearing industry leaders discuss subjects like this and sharing their experiences and use-cases? Attend the Cyber Security & Cloud Expo World Series with upcoming events in Silicon Valley, London and Amsterdam to learn more.

Roland Moore-Colyer

Bobby Hellard

Microsoft saw its Azure business grow 62% in its most recent quarter after posting total revenues of $36.9 billion (£28.2bn) – yet chief executive Satya Nadella was keen to note the breadth of Azure’s stack as well as the bottom line.

The company’s Q220 figures, as ever divided into three primary revenue buckets, saw its ‘intelligent cloud’ stream increase 26% year over year to $11.8bn. ‘Productivity and business processes’ also hit $11.8bn at a yearly rise of 17%, while the ‘more personal computing’ category saw a negligible 1.6% yearly growth to $13.2bn – although a 19% quarterly rise. Total revenues were up 13% on Q219.

“In terms of the Azure momentum, it’s the sort of thing that we have seen even in the previous quarters,” Nadella said in response to an analyst question. “We have a stack that is, from infrastructure to the PaaS services, fairly differentiated.”

Among the products Nadella brought into focus were Azure Sentinel, a cloud-native security information and event management (SIEM) tool, and Azure Synapse Analytics, formerly Azure SQL Data Warehouse and rebadged in November. Maersk and Vodafone were cited as key of the more than 3,500 Sentinel customers – “recent CIO surveys affirm our leadership and strong structural position”, Nadella said – while Synapse was praised as a ‘very competitive product’.

Microsoft has had a very busy three months. On the product side, the launch of Azure Arc at MS Ignite in November took the headlines, following on from AWS Outposts and Google Anthos. At the time the company noted hybrid cloud capabilities ‘must enable apps to run seamlessly across on-premises, multi-cloud and edge devices.’

Hence emphasis on the breadth of portfolio. “The fact that we have a control plane for hybrid computing that is multi-cloud, multi-edge… that’s a pretty differentiated aspect of it,” said Nadella, answering a question on Azure momentum. “The data side, both on the transactions, on the OLTP (online transaction processing) side, as well as on the analytics side, we now have cloud-native databases… that’s what you see play out in terms of customer adoption and the growth there.”

On the partnership side, three deals stood out. In October, Microsoft and SAP struck an agreement featuring SAP’s Embrace project, which aims to help customers become ‘intelligent enterprises’ by utilising the hyperscaler public clouds. It was written as a ‘preferred cloud’ deal, signifying a big win for Microsoft; Nadella described it in the earnings call as ‘exclusive’. A month later, Microsoft expanded upon its partnership with AT&T, running Azure services on AT&T’s burgeoning 5G network, while Salesforce said it was migrating various suites in another ‘preferred cloud’ tie-up.

With regard to customers, the announcement in October that Microsoft had secured the $10bn JEDI government contract – pending AWS’ appeal – was the natural standout. Nadella referenced it alongside the SAP partnership as an example of winning customers through the ‘differentiated approach across the cloud and edge.’

Speaking with Nick McQuire, VP enterprise at analyst firm CCS Insight, earlier this month, it was evident how Microsoft’s wider strategy was beginning to blossom. Microsoft’s decision to not publish specific cloud revenues – alongside Google – was previously a sign of weakness; now, while the obfuscation may frustrate the financial analysts, many accept the wider strategy at play.

“You see companies, typically from the CEO down, that are all-in on transformation, seeing the workplace environment and internal side of the house as part of that,” McQuire told CloudTech at the time. “That’s typically where you will see companies go a little bit deeper with a Google or Microsoft; they will embed the entirety of their SaaS applications capabilities in and around decision making for their infrastructure as a service as well. That approach very much favours Microsoft.”

You can view the full Q220 financial results here.

Interested in hearing industry leaders discuss subjects like this and sharing their experiences and use-cases? Attend the Cyber Security & Cloud Expo World Series with upcoming events in Silicon Valley, London and Amsterdam to learn more.

Nicole Kobie

Dale Walker

Nowadays, developers at pretty much every company require quick IT response time, self-service deployments, and a good user experience. And when it comes to line of business (LoB) activities, they don’t hesitate to bypass IT if they’re not satisfied with their current options. The result is that the past several years has seen the shift of applications and workloads deployed to a hybrid cloud model, with a mix of traditional on premise, private and public cloud platforms.

Yet the integration and orchestration of workloads between these various platforms means that there are factors companies must be aware of if they are to realise the cost and efficiency benefits they’re looking for from cloud services.

The hybrid cloud model: evolution, development and deployment

At first, companies ran their applications, data, and compute power on local servers on-premise. Some organisations utilised virtualisation technology for their IT infrastructures, with the intent of optimising the on-premise environment. As more companies established private cloud platforms, and developers continued looking for ways to deliver releases even more quickly, they began moving some workloads to public cloud services.

There’s been a natural evolution to hybrid cloud environments and the 'tyre kicking' has stopped. Yet there are questions to consider when weighing the pros and cons of designating different workloads within hybrid clouds.

Which applications and workloads to which cloud?

A good approach is to keep in mind the three main cloud buckets as options within a hybrid cloud environment: traditional, private, and public clouds.  Which applications and workloads belong in which bucket?

Since the first step is to know what questions to ask, here are a few to start with.

• Should it stay in the “vault”? When hybrid cloud and multi-cloud were new concepts, integrating cloud environments posed security and privacy concerns. There’s an old joke that the formula for Bush’s Baked Beans and Coke always stays in the vault. Companies may still want to keep their secret sauce — critical applications and workloads — in traditional environments on prem and designate low criticality, low complexity workloads to public clouds. Overtime, we’re seeing less and less of that thinking, but it’s still a consideration
   
• Which workload to which cloud? Due to incentives and potential license costs savings, it may be more cost effective to run legacy Oracle workloads in Oracle Cloud, Microsoft workloads in Azure, and so on. New applications may make sense to develop and deploy on AWS because of the rich set of DevOps tools available in AWS
   
• What’s the most efficient way to handle fluctuating workloads? When applications have computing and storage requirements that are highly variable for whatever reasons, say a website is extremely busy only during certain periods, “cloud bursting” may make sense.  Use an on-premises private cloud to handle normal workload and automate the scale-up to burst peak workloads to a public cloud
   
• Will a do-it-yourself cloud migration work? Many companies start off attempting cloud migration themselves, especially if they are currently managing their own legacy environment and want to move to a hybrid cloud environment. Perhaps they’re currently using Azure and have employees trained on Azure. However, a business case justifies moving or creating new applications on AWS. Some companies attempt to take that same Azure-skilled workforce, expecting that knowledge to apply to AWS, and handle the integration between the two environments. It isn’t that easy.

There are tools, technologies, frameworks, and processes specific to Azure and vice versa, those that are unique to AWS. There’s a steep learning curve between them and companies have two options. If they don’t want to rely entirely on the skills of in-house staff, they can seek help from a partner or a systems integrator. Another option is to reach out directly to cloud providers who typically have some level of consulting built into the cloud platform in the form of tutorials, knowledgebase articles, training classes or training videos that can make the migration easier.

Final thoughts

Most companies that I’ve worked with over the past three to four years, if not longer, eventually want to move to public cloud. They may already have a public cloud strategy in place. Yet they don’t plan to get rid of their traditional or private clouds in the near future. They’re cherry picking workloads that make sense to move to public cloud. Other companies have a cloud-first strategy with the goal-in-mind to move or create new applications on public cloud only until they can eventually decommission their legacy on-prem infrastructure and/or private cloud.

In summary, a hybrid cloud strategy is a must have in the foreseeable future.

Interested in hearing industry leaders discuss subjects like this and sharing their experiences and use-cases? Attend the Cyber Security & Cloud Expo World Series with upcoming events in Silicon Valley, London and Amsterdam to learn more.

SAP announced solid cloud revenues for its most recent quarter and noted it hit all of its revenue targets in 2019 – yet a quarterly downturn in new cloud customers caused some concern.

For Q4 2019, cloud revenue was at €1.90bn, up 35% from this time last year. Combined cloud and software revenues were €6.85bn, up 8% from Q418, while total revenues, of €8.04bn, also rose 8% year on year.

Yet while new cloud bookings rose 19% in Q4 to €878 million, it represented a significant decline from 39% the previous quarter. Alongside this, just over half of the rise in Q4 was attributed to a significant on-premises customer committing to move the majority of its SAP portfolio to the cloud over the coming three years.

This is one potential area of interest going forward. As this publication reported in October, SAP announced it was going with Microsoft Azure for a ‘preferred cloud’ partnership. This related to the launch of Embrace, SAP’s blueprint to help customers become ‘intelligent enterprises’ by utilising the hyperscaler clouds. At the time of the Microsoft partnership, and while Amazon Web Services (AWS) and Google Cloud were noted, Microsoft was the only beneficiary of this extended partnership. The cloud to which this on-prem customer was migrating was, naturally, Azure.

Key customers SAP cited in this quarter were Deutsche Telekom, Ford and Lockheed Martin, who all went live on ERP behemoth S/4HANA. Ford was noted as a customer with no previous SAP experience replacing competitors’ software at scale, alongside British Telecom and Tech Mahindra.

Vodafone, meanwhile, was singled out for special mention as it went live on a single global instance. Co-CEO Christian Klein noted the case study was a ‘perfect example of a hybrid landscape… licensing and operating a combination of on-premise and cloud technology, allowing them to gradually transition to cloud at their own speed.’

As regular industry watchers will know, SAP insisted the journey from moving on-prem revenues to cloud would be a long one. There were other benefits noted: Klein said capex had dropped 45% in spite of supporting a much larger cloud ecosystem.

Plans for 2020, Klein noted, included integrating acquired cloud assets, sustainability, as well as vertical-centric solutions. It was ‘a big lever to further accelerate ERP market share gains’, he added. One such recent example of movement in this area was a partnership with Accenture to cover cloud for utilities. Klein added the estimated market size for vertical cloud solutions would be more than €150 billion by 2023.

You can read the full financial report here.

Interested in hearing industry leaders discuss subjects like this and sharing their experiences and use-cases? Attend the Cyber Security & Cloud Expo World Series with upcoming events in Silicon Valley, London and Amsterdam to learn more.