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IBM sees growth in SA’s hybrid cloud demand

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Craig Holmes, IBM Southern Africa technology executive.
Craig Holmes, IBM Southern Africa technology executive.

Computing giant IBM’s acquisition of Red Hat has seen it increase its share in SA’s cloud market, as more local organisations deploy hybrid cloud architectures to support their operations.

In 2019, IBM and Red Hat closed a transaction under which IBM acquired all of the issued and outstanding common shares of Red Hat for $190 per share in cash, representing a total equity value of about $34 billion.

The deal, believed to be one of the biggest acquisitions of a business software company at the time, has since accelerated IBM’s business model, extending Red Hat’s open source solutions to a broader range of clients, according to IBM.

Since the deal, IBM says its strategy around hybrid cloud and artificial intelligence (AI) has resonated among its local customers, helping it to streamline go-to-market strategies and develop new offerings as it continues to increase its partner network.

This, as SA’s cloud computing boom has been further fuelled by the COVID-19 pandemic, with more organisations migrating to the cloud.

During a recent virtual roundtable, Craig Holmes, IBM Southern Africa technology executive, explained that while the two companies still operate as separate entities, the acquisition has allowed IBM to offer local firms multiple public clouds across environments from Microsoft, Amazon and Google Cloud, which are not only competitors, but also strategic partners.

“IBM’s strategy was to offer choice, so the acquisition of Red Hat was absolutely strategic to the IBM hybrid cloud. It is the control plane that allows companies to innovate with our software on any infrastructure – private cloud, public cloud or physical infrastructure.

“We believe our clients want choice and Red Hat has always had a relationship with Google Cloud, Microsoft and Amazon and this allows us to offer clients the ability and capability to deploy Red Hat in any cloud,” explained Holmes.

The acquisition has seen IBM and Red Hat expand their integrated solutions, with its family of containerisation software products, Red Hat OpenShift, “super-charging” the company’s open and secure hybrid cloud platform, he added.

IBM’s total cloud revenue for its second fiscal quarter increased to $7 billion, up 13% year over year. Red Hat revenue, meanwhile, grew 20% year over year.

IBM’s AI-powered Cloud Pak offerings, which are built on Red Hat OpenShift and hybrid cloud platform, drove the $6.1 billion in second quarter sales for IBM’s cloud and cognitive software segment, according to the company.

IBM recently announced it is investing $1 billion to help its global partners and their customers remain at the forefront of hybrid cloud and AI solutions, to assist them in navigating through the challenges and opportunities presented by the pandemic.

The company noted it is investing in developing emerging tech skills, expertise and support by ensuring its vendor partners are trained and highly skilled, as part of its drive to increase competencies amid the IT skills shortage across the globe.

"New programmes, funding and a simplified approach empower our partners to deliver innovation for customers. This will also drive IBM’s hybrid cloud and AI strategy as customers modernise, migrate cloud workloads and infuse AI into their businesses,” noted Holmes.

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