IBM Interconnect 2017: Cloud Solutions; Watson-enabled Applications and Blockchain

By Joe Clabby, Clabby Analytics

Last week approximately 20,000 people attended IBM’s Interconnect Cloud Computing event at the Mandalay Bay complex in Las Vegas, and their reasons for attendance varied widely. Some wanted to learn more about IBM’s cloud and cognitive computing products and strategies, others were interested in traditional enterprise computing products, still others in application development or asset management or security. Interconnect, with its broad spectrum of keynotes, product demonstrations, customer testimonials and hands-on labs, was able to address the broad range of requirements of its attendees.

I went to Interconnect 2017 without a specific research agenda. Interconnect is the industry’s largest cloud computing showcase, so I went to learn more about IBM’s cloud strategy, its cloud products, its new cloud services and to learn what vendors and customers are saying about the cloud marketplace. After listening to the presentations of several IBM executives, after talking with numerous product managers at exhibition booths, after listening to customer testimonial after customer testimonial, and after watching product demonstrations – I left Interconnect with several new perspectives.

My biggest finding is that IBM has done a masterful job building an enterprise-class hybrid cloud environment that features analytics, machine learning and cognitive computing. I stopped publishing reports on IBM’s cloud efforts back into 2014 because I perceived that IBM was having a difficult time getting its cloud act together (more on this later). What I found at this conference is that IBM has a clear cloud strategy with offerings that are distinctly different from the cloud offerings of Microsoft, Amazon and Google. And due to these differences, I believe that IBM will see stronger growth in enterprise cloud computing as compared with its leading competitors over the next several years.

I also noted that IBM has become more aggressive in building-out its Watson/third party software ecosystem.  For the past several years IBM has focused strongly on adding cognitive and analytics overlays onto its traditional enterprise software environments. But at Interconnect 2017 I found dozens of Watson-enabled third party software vendors – and learned that IBM’s Watson organization is looking to recruit thousands of third party software makers to its Watson/cloud environment.

Finally, I observed that IBM is “all in” when it comes to Blockchain technology – and it has the perfect platform on which to implement Blockchain: LinuxONE. Further, IBM offers a secure, IBM-managed Blockchain service environment that should appeal to customers who want to offload their transaction processing to a company with a deep transaction processing heritage.

IBM’s Hybrid Cloud

After several years of watching IBM try to architect its own cloud environment (Smart Cloud), and several years of watching IBM acquire a whole bunch of cloud-related companies, including Cast Iron, Coremetrics, Sterling Commerce, Unica, Emptoris, Varicent and Kenexa – with no apparent cohesive rhyme or reason for these acquisitions – I lost confidence that IBM would be able to recover against new generation cloud competitors such as Akamai, Rackspace, Amazon, Google, Microsoft and the telcos. I determined that I would come back to covering IBM cloud computing when IBM had a clear strategy, a coherent product line and rising marketshare potential.

I’m back.

At Interconnect 2017, Arvind Krishna, senior vice president, Hybrid Cloud and Director, IBM Research, presented a slide that brought me back into the fold (see Figure 1). This slide shows an integrated, secure, cohesive Watson/analytics cloud environment on which a variety of IBM software solutions can run. The design of this environment is distinctly different from the design of competing clouds that lack deep cognitive and analytics elements. IBM has moved its rich portfolio of home grown analytics, transaction processing and integrated software solutions to this unique, enterprise-strength cloud – contributing to and helping drive the company’s $24.5 billion in software revenue. In the shaded area (upper left), IBM has also developed several ancillary businesses that run on its hybrid cloud – new businesses with unique offerings that exploit cognitive computing and analytics, and that represent a huge growth opportunity for the company. Healthcare, financial services and the Internet of Things are examples of these high growth opportunities.  In short, the company now has a clear strategy; it has a coherent product line – and, given the uniqueness of its position in the cloud marketplace, the company’s cloud environment has strong potential to significantly grow market share.

IBM’s Chairman, President and CEO Ginni Rometty spoke about the solid revenue growth that she is seeing in both Watson and the IBM Cloud. She also described how the IBM cloud can be differentiated from the clouds of other vendors such as Microsoft, Google and Amazon. She emphasized that IBM is in the hybrid cloud business, helping customers build clouds that suit their enterprise needs without having to give away their data. According to Ginni, the value of data is that it generates unique insights. Competitors, she argued, are often in favor of democratizing and sharing data – and this gives away the advantage of developing unique competitive insights. IBM advocates helping enterprises gather data from a variety of sources, both internal and external, to help generate those unique insights. Ginni’s speech made it perfectly clear that IBM knows its position in the cloud marketplace; that it knows what its customers want; and that the company can now deliver solutions to its customers that its cloud competitors cannot.

Expanding the Watson/Cloud Ecosystem

When I attended the World of Watson conference last year I noted that a growing number of vendors were starting to overlay Watson on top of their traditional software offerings. The big news at this year’s Interconnect conference was that cloud leader has now integrated Watson with its own Einstein program in order to simplify the use of its software and help users make better decisions.

At last year’s World of Watson conference, however, I left without a clear understanding of how IBM was going to make it possible for the broader ecosystem of third-party vendors to overlay Watson on top of their own infrastructure, management and application solutions. At Interconnect I learned that IBM is wide open to helping third-party software vendors, including competitors; integrate their solutions with Watson on the IBM cloud.

In short, third-party software makers who are not integrating analytics, cognitive services and cloud architecture into their product offerings are going to have a hard time surviving. IBM offers an integrated, secure cognitive/cloud environment on which third-party software makers can deploy their solutions. Vendors looking to the next wave in computing would be well served to look into deploying their solutions on IBM’s Watson Cloud.

Software makers who wish to know more about this topic should contact me at

Blockchain, LinuxONE and Blockchain for Hyperledger Fabric v1.0

In September, 2016, I started writing about Blockchain, a new way of processing transactions based upon sharing a common ledger (see this blog). I’ve since come to the conclusion that IBM’s LinuxONE platform, and its new Blockchain services are the best approaches to take when building Blockchain networks.

To build a Blockchain transaction processing environment, Blockchain users need secure platforms, networks and a ledger that accounts for transactions. For those not familiar with IBM’s LinuxONE, it is a platform that offers high-speed architecture, fast elliptic curve processing, and dedicated hardware for acceleration. It is 2.3 times faster than competitors – with integrated security levels such as EAL Level 5+ that no other architecture in the industry can match. Hardware security also includes FIPS 140-2 compliance. As part of the security features of this architecture, security keys are placed into protected memory and placed into hardware secure modules in order to prevent access and tampering. IBM does not make it possible for code to take control of secured modules, and focuses on encryption protection to prevent administrative abuse.   Try finding performance this strong and security this deep on any other platform…

At Interconnect 2017, IBM introduced a new Blockchain service, IBM’s Blockchain for Hyperledger Fabric v1.0 – a service that offers both security and scale, as well as related governance tools. This service, which uses LinuxONE servers on the back-end, helps protect from external as well as internal attacks, offers the levels of security previously described, uses the secure service containers and hardware security models previously described – all running on a highly auditable operating environment. I travel to parts of the world that are not familiar with LinuxOne architecture – where IT executives are reluctant to use it, preferring x86-based solutions – even though LinuxOne uses an operating environment that is quite familiar in the industry: Linux. For those geographies that want the best Blockchain implementation available, but don’t want to run their own Blockchain environment, I would strongly recommend evaluating the above mentioned Blockchain service.

One last thing on Blockchain: regulation. As transactions take place across various domains, they run into dozens or perhaps hundreds of regulations that must be addressed. Watson now offers a regulatory service that can help streamline the complicated problem of dealing with regulations. The Blockchain story – LinuxONE combined with automated Watson regulation services – will be difficult for other vendors to mimic and overcome.

Summary Observations

Over the past few years, I’ve watched the giant behemoth called IBM change its course. It has changed its cloud strategy – it no longer tries to compete with the public cloud vendors or the traditional enterprise cloud makers per se – it now offers a solution that is completely different. IBM calls its offering a “hybrid cloud” – a blend of integrated public and private cloud facilities driven by analytics and cognitive computing. The company has taken its traditional enterprise management tools and cloud-enabled them – weaving them into the fabric of the cloud. In fact, wherever it makes sense, it has cloud- and Watson-enabled its entire product line, from management tools and infrastructure through applications, reporting tools and databases. And it has modified its pricing and go to market models – actually promoting many of its offerings first and foremost as “software-as-a-service” solutions.

These changes at IBM involved huge internal cultural changes, including migrating the “enterprise computing old guard” to “new disciples of analytics and cognitive computing.” These changes involved “new think” – like how do we most efficiently develop and support applications under the new, analytics/machine-driven cloud model? And how do we offer traditional, on-premise solutions as well as Software-as-a-service solutions? They involved retooling, integration efforts, the introduction of new APIs to join the old world to the new mobile world – and the new cloud environment to the existing premise environment. IBM has worked to integrate existing traditional management applications into the new model of cloud computing – and to find or create new solutions more suited for the new hybrid cloud environments.

The IBM Cloud has come a long way since I stopped covering it in 2014. This week, at Interconnect 2017, I saw firm evidence that IBM has made it over the hump – and has transitioned to a modern, extremely competitive analytics/cognitive cloud company that can address enterprise needs for a blended, rationalized public/private/hybrid computing environment. Enterprises planning for a future of cognitively-enabled applications and secure Blockchain must take a closer look at the IBM Cloud.

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