“That which is most adapted”
Originally part of Darwin’s “Evolution of the Species” hypothesis, this quote was often used by an experienced Technical Director in a previous business. It was a warning to the business to not get great at just one thing but ensure we had other strings to our bow in case the market moved or someone else offered the same product/service at a significantly lower price.
In the past businesses have had more time to observe the market changes taking place and build new strategies, along with investment plans. Some still missed it, as witnessed by the likes of Blockbuster and Nokia.
Recently many markets have moved within days. New laws and restrictions can have immediate effect, especially if you are a high street retailer or an airline. How do you survive if no one is allowed in your shop or permitted to fly?
The second string of a strong on-line presence has been a significant factor in some retailers surviving. For many of the airlines a second string is not so easy to develop; according to The Telegraph 23 Airlines have collapsed to date.
Short term success is often about being the most adapted business in the market. Long term success is about being the most adaptable. Being both is rare.
Back in the 90’s many people wrote IBM off because they didn’t keep up with other PC vendors. But having been the most adapted; IBM compatible was the common term used then; and responsible for creating the market in the 1980’s, selling their PC Company enabled them to focus on other, more profitable, parts of the business.
Last year their Systems Business represented just 10% of their $77Bn revenues. With a Market Cap of 108Bn dollars, it demonstrates IBM has successfully continued to adapt. And just as they surprised everyone by launching a PC business back in 1981, their acquisition of Red Hat took many people by surprise.
Why would IBM, the IT company most recognised for being proprietary, want to buy a company known for being the leader in Open Systems?
To understand this, you have to share their vision of where the IT Industry will be in 10 years’ time. Today everything has been about the growth of the Cloud. Running applications on someone else’s hardware in someone else’s data centre. And someone else’s network, someone else’s software and so it goes on. An interdependent supply chain the business has little direct control over.
If all this is offered at a price that is cheaper than you doing it, and the management of data and securing the environment is more effective than you doing it yourself, then why not? For many small to medium size businesses this makes sense. They don’t have the skills to manage this on premise and a monthly fee removes the need for capital outlay.
For IBM the good news is that many of these cloud applications are being built on Linux today and Red Hat stands out as the market leader. So irrespective of whose cloud it runs on, the solution is increasingly likely to have a Red Hat component somewhere.
But this isn’t the traditional IBM market. The primary interest is larger enterprises who still have 80% of legacy applications running on-premise. Their migration is slow and patchy with many difficult to move. Also, some of the in-house skill sets supporting them today are different than would be required if these applications were migrated to the cloud.
So, the real reason IBM acquired Red Hat is their view that these enterprises will adopt a hybrid-cloud strategy. Maintaining much of their current installed applications on premise, along with their large data sets, whilst developing new applications in the cloud.
This architecture will require applications that can run across these environments with management, security and integration services that enable this. This is what has driven the huge interest in containerisation. To quote IBM; “containerisation involves encapsulating or packaging up software code and all its dependencies so that it can run uniformly and consistently on any infrastructure.”
By engineering the huge IBM software portfolio (now responsible for significantly more revenue than systems) to run on Red Hat, IBM is offering its enterprise customers a means of transitioning their IT environment to a hybrid cloud architecture. Where this architecture is based on IBM Systems and IBM Cloud fantastic, but even if it’s on someone else’s systems or someone else’s cloud, IBM are still a significant part of the solution.
As customers begin to understand this strategy and compare it against their own digital transformation projects, expect to see an increase in channel partnerships to enable this. In depth skills across proprietary and open systems are not that common. Add application integration, machine learning and security into the requirement and it quickly becomes apparent that many transformations to hybrid cloud projects will need more than one partner. As the customers adapt to survive, so must their suppliers.
Recognising the need to create these new partnerships, Tech Data has launched a Red Hat ecosystem, designed to bring those partners with specific skills around Red Hat products together with those in the traditional IBM community.
With two events last week and another scheduled for October we are investing resources into growing collaboration in this market.
For a recording of last Thursdays Webinar please follow the link:
For more information on forthcoming Red Hat events please contact: