Clouds have been gathering on the software-horizon and IBM has been busy changing tack to avoid sailing into the stormy seas of standalone products. What had once been IBM’s industry-leading enterprise software for e-commerce and marketing automation solutions is now, officially, someone else’s problem.
In December 2018, IBM announced they were selling a big piece of their customer-engagement software offerings to India-based HCL Technologies for $1.8 billion. The remainder of that software was recently sold to private equity firm Centerbridge Partners this April for an undisclosed amount.
When asked why IBM was abandoning what had once been a very profitable part of the company’s portfolio, Vice President for Communications Ed Barbini points to the cloud-based computing trend. “The marketing and commerce assets are no longer core to this integrated model,” he said.
In other words, cloud-native’s tendency towards stream-lined applications often means that marketing automation functions are now being packaged and sold as stand-alone software tools. The company has long been committed to their one-provider-to-offer-them-all model, despite prevailing winds blowing towards the more collective approach favored by the cirrus-creating set.
Despite big blue’s acknowledgment that the cloud is here to stay, they may have fallen behind some of their more innovative IT competitors. John Kelly, IBM senior vice president of Cognitive Solutions and Research echoed Barbini’s sentiment that it was time to clear out business units that are no longer ‘core’ to their operations.
“Over the last four years, we have been prioritizing our investments to develop integrated capabilities in areas such as AI for business, hybrid cloud, cybersecurity, analytics, supply chain and blockchain as well as industry-specific platforms and solutions including healthcare, industrial IoT and financial services. These are among the emerging, high-value segments of the IT industry. As a result, IBM is a leader in these segments today,” Kelly said. “We believe the time is right to divest these select collaboration, marketing and commerce software assets, which are increasingly delivered as stand-alone products.”
On the topic of innovative IBM competitors, Adobe may be well-known for its multimedia software but has recently ventured into the business of big data with their acquisition of marketing firm Marketo. The company has been working at full tilt to connect the data-dots on consumer web activity, purchase preferences and social media monitoring to create individual profiles meant to personalize a customer’s online interactions.
The California-based business plans to build a central hub for their collected consumer information and will partner with other software companies to ensure compatibility between data stores. It appears they have their eye on the future and it doesn’t look like Photoshop. Chief technology officer Abhay Parasnis asserts that their new marketing direction is a natural evolution as Adobe has always “… [pushed] the limits of creative expression and storytelling.”
As for IBM, they are working towards becoming industry leaders in the cloud-hybrid market – those systems that operate both on-premise and on public cloud services. In the world’s second largest tech-transaction ever, the business went all in to acquire RedHat – a provider of open-sourced software products and an expert in cloud-based services – for $33 billion last October. Whatever the outcome, IBM is fully committed to their new course and the success it hopefully brings.