IBM’s tripling of UK cloud capabilities tells a long story

SUMMARY:

Growing its number of UK cloud data centers  is a good, if short term news story, but in shining its light on that, IBM seems to have missed a story that could oblige many business to take a second, or even third look.

captureibm_largeThe news from IBM this week – that it is investing in tripling its cloud service data center capabilities in the UK over the next year – is significant enough in its own right. But in a way it also sets a shadow over a combination of new developments and existing capabilities within the company that are arguably more important for business users.

It could be, of course, that IBM is playing that old theatrical trick of shining a single spotlight on ‘the star’ while in the surrounding darkness stage hands are moving in a whole orchestra. And that analogy may be pertinent, for orchestration does look like the goal the company is pitching at.

First the news bit

The company has announced a tripling of its UK data center capacity, from two six separate sites. According to Helen Kelisky, Vice President of Cloud for IBM UK and Ireland, this is the largest commitment IBM has made, with regard to cloud, to any single country at one point in time.

One of the new data centerswill be in Fareham, and one in Farnborough, with the latter located in the Ark Datacentre facility, and targeted towards public sector services provision. There is no word as yet on where the other two might be located. The total number of data centrers in Europe now rises from 12 to 16, while globally it numbers around 50.

The market background to this focus on the UK is a digital economy worth more than £118 billion, according to Matt Hancock, Minister of State for Digital and Culture, and cloud adoption by UK businesses rising by 84% according to the Cloud Industry Forum.

In the wider world, analyst firm IDC predicts cloud consumption will generate a cloud service revenue of $195 billion by 2020, rising from $20 billion in 2015. Kelisky claims that IBM is the leader in the UK cloud market with more data centrers than any other vendor – when the new ones open next year.

The number of data centers does, at first, appear to be on the high side compared to other cloud service providers, but that does assume that apples are being compared with apples. Many of them still focus on the provision of resources, with some infrastructure services and management available on top. This is a good place to shop for those businesses with a strong – and cloud motivated – IT department to provide the development and management of such services.

For the service providers, however, that can be market where price competition is fierce and the revenue trend is always tending towards zero. A recent report, `Equinix And The Unsustainable Issuance Of Debt And Equity To Finance A Barely Profitable Business’, published in the Wall Street observing website, Seeking Alpha,  points to the increasingly narrow ledge that such companies can find themselves balanced upon. 

It is also a potential minefield for businesses without extensive IT expertise on board, and IBM is pitching a number of services at users looking for more help or shortcuts. Two of those services have been used by a recent client win the company is also keen to shout about.

This is Thomson Travel, which is about to start trialling a cloud service developed by the company working with the London Bluemix Garage. The ‘Garage’ brand refers to a network of IBM cloud services development consultancies around the world, and the new service is based on the use of IBM’s Watson cognitive processing system, and will allow customers to receive advice and suggestions on holiday destinations based on natural language requests.

The initial explanation of the process makes it look as though the same results could be achieved using a web service tick-box model and a relational database. But the advantage with Watson is that the more information it is fed the more it learns about both individual users and groups of users by age, income and other social factors. As the trial progresses Watson will be feeding back to customers, so it does have the capability to make for an increasingly sticky service for Thomson as customers come back with more requests and information.

It is possible to see this becoming a predictive holiday identifier, which could make it an attractive prospect, both from the customers’ point of view and for Thomson itself.

The marriage of Watson and Blockchain

Watson is now increasingly being coupled with expertise from IBM’s long-standing Global Business Services Division to build a growing number of customer-focused, industry-specific platforms. Having played for many years in the same marketplace as the major consultancies such as Accenture and CapGemini, Global Business Services has considerable expertise to draw on across a wide range of industries.

This is now being close-coupled with Watson, packaged up and tailored to fit the needs of an industrial sector, and made available as a cloud-service deliverable that is intended to take users a fair way down the road to productive use, rather than leave them to the possibilities of learning both cloud and Watson from the ground up at the same time.

Not surprisingly, the early targets will include the traditional low-hanging fruit of healthcare – with the announcement earlier this year of the Adler Hey Children’s Hospital `cognitive hospital’ project being a good example. Other `old favourite’ fruits on the IBM picking list include financial services and retail.

IBM has also just launched a new business unit, known as Industry Platforms, which will now start heading up this higher level of targeted services. The appointment of IBM’s Global Business Services boss, Bridget van Kralingen, as its new head suggests the company is putting a fair bit of faith in it as a long-term direction.

Former Accenture executive,  Mark Foster, has been drafted in to take over from van Kralingen as the head of Global Business Services.

In addition to the services of the Bluemix Garages and Watson’s cognitive processing capabilities the new platforms will add Blockchain technologies. This can be used to build highly secure, distributable transaction ledgers that can be used in a wide range of different applications areas.

The most obvious, of course, is in financial services so it is no surprise that this area, coupling Blockchain with Watson Financial Services as the basis of targeted service offerings, will be the first one lined up in the IBM sights. 

My take

IBM’s trajectory here highlights one of the key dichotomies growing in the cloud sector. There is an increasingly clear choice for users between low-cost delivery of something in the cloud – which if the user is well-staffed with cloud experience and has some sound planning ready to go can be a good option – and a more expensive but more comprehensive service that allows them to start, and develop, their own cloud experience at a point they understand and makes sense to them.

Time will tell, but my guess is that the majority of early cloud adopters fall into the first group – and may well be getting close to being used up. The majority of the rest may well welcome some experienced help, and having six data centers in the UK alone suggests the company expects high demand.

Image credit - IBM