IBM Taking Wait-and-See Approach On Mid-market Cloud Services

By D.H. Kass

January 12, 2010

IBM Corp. said that it is readying mid-market cloud computing solutions in six strategic areas as it closely examines application development in the segment to determine where to best invest its resources and prepare channel partners.

The vendor is focusing on mid-market cloud development in collaboration applications, development and testing, desktop, infrastructure and compute, infrastructure and storage, and business services, according to Ed Abrams, IBM vice president marketing, general business.

“We see the mid-market for cloud computing in a state of heavy experimentation,” said Abrams.

“Our eyes are wide open about this market and there’s no question given the growth potential in this space, market demand and channel demand that we will soon see more clarity about where partners can play and what we will be delivering to them,” he said.

Abrams said that IBM is readying channel partners for four types of mid-market cloud plays, namely, participating in the segment as cloud component suppliers, providers of public cloud services, cloud platform providers and cloud application enablers.

“The intent is to make solutions in all areas available for various partner types,” Abrams said.

He said that IBM believes that as mid-market cloud development matures and cloud services are more readily adopted by customers, a “netting down” will occur in the number of solution providers participating in the segment.

“We believe that our partners are getting well-equipped to work in the development of public and private clouds,” he said. “Right now, partners are still trying to discover where the market is headed and the right fit for them.”

Abrams said that a growing percentage of the vendor’s mid-market customers regard cloud computing as an “area to gain competitive advantages,” looking favorably on “areas where corporate data is not at risk,” such as software-as-a-service (SaaS) and collaboration.

“There’s a great deal of work being done around user-centered communications, collaboration, infrastructure and business process,” Abrams said. “Infrastructure-as-a-service and business processes are emerging just now,” he said.

But wide-scale adoption still is an encumbered road at this point.

IBM’s research suggests that cloud services among mid-market businesses not only lags behind security, data protection and disaster recovery on customers’ priority lists but also suffers from an industry-wide uncertainty regarding perceived risks to proprietary data, Abrams said.

Research data shows key market areas

The vendor’s data is supported by similar findings from studies conducted by researcher International Data Corp.

A recent IDC study, compiled from input supplied by IT executives, pointed to the cost benefits associated with cloud services and easy deployment as key drivers, while security, availability and performance led a list of inhibitors.

IDC analyst Frank Gens, in commenting on the researcher’s cloud services data, wrote in a blog entry that many more traditional IT suppliers will “charge more forcefully into the cloud services business in 2010, with a focus on enterprise-grade IT cloud services.”

The researcher’s data shows that key areas of adoption for cloud services include collaboration applications, web applications, back-up or archive, and business applications such as CRM, HR, and ERP.

Infrastructure-related cloud offerings, including IT management and server capacity, are regarded as less mature, and less understood, by customers, but, in IDC’s view, are likely to move to the forefront particularly if offered by name-brand vendors.

Abrams said that IBM is intent upon growing the mid-market for cloud services and has slated new products for release this Spring.

“We will be experimenting to see what makes the most sense for the marketplace,” he said. “We’ll be bringing new services, capabilities and resources to the mid-market space that supports the cloud.”