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Can IBM Reinvent Itself Through The Cloud

IBM CLOUD2013 was not a great year for cloud computing. Although the overall adoption of cloud appears to have increased by close to 12% this year compared to 2012, the revelations about the NSA PRISM surveillance program is expected to hit the cloud vendors hard. According to a Forrester report, the overall loss due to these allegations could be as much as $180 billion.

Despite these roadblocks, there is no gainsaying the fact that cloud computing is the future. One of the companies that is banking on cloud computing to reinvent itself is IBM. Having largely remained on the sidelines through much of the last two decades watching new and agile startups like Google and Amazon take over the tech revolution, IBM is fighting to make a comeback. According to a recent report on the New York Times, IBM is contemplating a series of close to 100 product announcements through 2014 which will enable the company to bring itself on to the cloud in various spheres of business; from ecommerce to marketing. In addition to these product launches, IBM is also planning to launch close to 40 other services in the areas of big data analysis and mobile product development.

IBM’s plans for the cloud is not a secret. The Armonk, NY based technology giant already earns over a billion dollars in revenue every year from the cloud. In addition to this, IBM has acquired multiple cloud and SaaS based companies like Soft Layer, CSL International and Cast Iron Systems in the recent past. These acquisitions have helped IBM get a major foothold in the areas of virtualization, IaaS and cloud integration systems. According to Lance Crosby, the CEO of Soft Layer; the 2014 product announcements will give IBM a 10 year headstart over technology rivals like Amazon.

IBM’s aggressive plans can provide a much needed impetus to the growth and adoption of cloud computing among enterprises; especially after the NSA PRISM revelations. Besides enterprises that stand to benefit from the slew of announcements directed at them, the affiliated technology infrastructure providers too stand to gain from the increasing cloud adoption.Business internet providers like AllStream, who are among the leading network providers in North America, have reported double digit growth in income in recent quarters primarily due to their cloud offerings.

However, the important question that needs to be answered is if the enterprises at whom IBM’s products are aimed at, see a need in the immediate future for such solutions. A VMWare study conducted in June 2013 showed that close to 79% of an enterprise’s annual IT budget is spent simply on maintaining legacy systems. This, despite the well known fact that cloud systems can bring the IT costs of enterprises drastically down while keeping the data protected on reliable third party servers. A primary reason for this inertia appears to be the fact that most employees are used to the legacy software and any migration will require investments in creating awareness of the new product.

Interestingly, most of such legacy systems are built by companies like the IBM. Consequently, enterprises that own legacy systems are much more likely to act on their cloud migration strategies if the installed cloud product belongs to the same manufacturer. This is a key advantage that IBM would be making use of while launching their cloud product. It will be interesting to see how 2014 changes the face of cloud computing. Will IBM be successful in its cloud computing strategy? Tell us what you think in the comments below.

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