IBM is acquiring SoftLayer, a privately held cloud infrastructure provider. IBM hopes SoftLayer will enable IBM to  marry the security, privacy and reliability of private clouds with the economy and speed of a public cloud, with Fortune 500 companies the target market.

IBM says the majority of the Fortune 500 have concerns about how cloud will work with the IT investments they have already made, and many have been waiting for a cloud that is better than “good enough.”   As a result, although cloud is growing quickly, it’s still only a small part of the total IT spend.  There’s a lot of opportunity for IBM to capitalize on.

SoftLayer has a breakthrough capability that provides an easy “on ramp” especially for the Fortune 500 to adopt cloud. And for the SoftLayer born-on-the-cloud customers, IBM opens a new market into the enterprise.   Specifically, SoftLayer allows cloud services to be created very quickly on dedicated servers — rather than a virtual ones, which is the norm in the public cloud.

By building out a cloud on a dedicated server , a client no longer has to worry about sharing computing resources with other companies — thereby improving privacy, security and overall computing performance.  By using dedicated servers, software that was built for on-premise use can be more easily ported to the cloud.  It doesn’t have to go though as much heavy configuration as it does with a virtual server, which it was not developed to work with.

This capability will be added to IBM’s SmartCloud portfolio. IBM SmartCloud offers 100 cloud-based solutions for line-of-business execs including Watson Engagement Advisor; hybrid solutions such as IBM PureSystems, mission-critical cloud services for SAP on our SmartCloud Enterprise+ and the best private cloud solutions in the market.

Headquartered in Dallas, SoftLayer serves 21,000 customers with a global cloud infrastructure platform spanning 13 data centers in the U.S., Asia and Europe. SoftLayer excels at running cloud-centric, performance-intensive applications in mobile, social, gaming and analytics.

IBM is also announcing today the formation of a new Cloud Services division that combines SoftLayer with IBM SmartCloud into a global platform, reporting to SVP Erich Clementi, IBM Global Technology Services.

Financial terms of the deal have not been disclosed and the acquisition is expected to close later in 2013 following standard regulatory review.