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IBM updates cloud strategy after CIA loss

Joab Jackson | July 15, 2014
Two years after losing high-profile government work to Amazon Web Services, IBM has revamped the way it structures enterprise cloud services contracts, thanks in part to its US$2 billion acquisition of cloud services provider SoftLayer.

Perhaps most importantly, IBM's billing mechanisms have changed to better reflect a customer's usage in the cloud. Billing was one of the chief issues with IBM's original proposal to the CIA.

"Prior to SoftLayer, the previous billing to the cloud was not by the hour, like SoftLayer is," Crosby said. "These two new facilities will have everything available by the hour, like other cloud providers."

The work seems to be paying off: IBM has recently won contracts from U.S. federal government agencies such as the U.S. Department of Interior, the General Services Administration, Housing and Urban Development, the Defense Advanced Research Projects Agency, National Archives and Records Administration, the Department of Veterans Affairs and the National Weather Service.

IBM has invested a lot of energy in bulking up its cloud services since last year.

The company is investing $1.2 billion in building out data centers, working to bring the total to 40 around the globe by 2015. IBM is also investing an additional $1 billion to round out its Bluemix portfolio of services, and has purchased three companies -- Cloudant, Silverpop and Aspera -- just to embed their cloud management technologies into SoftLayer.

"We're still in early days for cloud in terms of both cloud offerings and customer adoption. While I expect cloud services and providers will continue to evolve, IBM is a strong foundation to build on," King wrote.

About half of the 6,000 SoftLayer customers are existing IBM customers looking to move at least some of their operations to the cloud, Crosby said.

This is not surprising. Nearly half of all large enterprises will move at least some of their operations to hosted environments, IT analyst firm Gartner has estimated.

One big driver for new business has been mobile computing, Crosby said. Banks, for instance, have been scrambling to offer mobile services, even if their back-end operations aren't prepared for this new type of workload.

"Five years ago, people checked their bank account balance maybe once or twice a month. Now they are checking it on their smartphone 10 times a day. Mainframes weren't built for Web levels of interaction, so we're doing that type of interaction out of the cloud," Crosby said.

Macy's, which operates 840 department stores in the U.S., obtained IBM hosted services, and a private connection to IBM's data centers, in order to offer more computerized interactions with its customers, as well as to set up a disaster recovery system that would resume operations should Macy's primary systems fail.

"Macy's is really doing big data analytics to understand their customers better," Crosby said. The company wants to go past the routine of addressing potential customers by marketing segments, and is looking at ways to customize offers and other material for each person.


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