IBM has announced that it has an agreement to acquire Nordcloud, a European leader in cloud implementation, application transformation and managed services. The goal here is to further advance IBM’s cloud migration and transformation capabilities, an important aspect of its hybrid cloud platform growth strategy. IBM needs to do that to capture value in one of the most important domains of technology at the moment: cloud & AI. IBM’s stock has lagged former peers, and it needs to unlock new playbooks for a new outcome.
This acquisition is significant after IBM blew the integration of Softlayer a few years ago. IBM was clearly ahead or at par with other cloud players like Amazon, Microsoft and Google through Softlayer, but was quickly outcompeted due to conflicts which created an innovation hangover when a company decides to protect a one oasis. The IBM infrastructure business made it impossible for IBM to redesign its business as it did not want to kill the unit that was generating a huge revenue in the firm. Yes, cloud was about doing away with infrastructure, and IBM was making huge money from infrastructure.
This is similar to the Microsoft innovation handover with Windows. For years, Microsoft was built around Windows, affecting innovation across all units of the company; Steve Balmer, Microsoft former boss, led that strategic philosophy of Windows-first. But when the new boss, Satya Nadella, came about 6 years ago, he shifted from Windows-first, and built a new mantra of anywhere-first. Within years, the market cap of Microsoft quadrupled, as he unlocked Microsoft products and put them anywhere people could buy them, including in Apple and Google platforms. Today, Microsoft stock has grown from $366 billion to excess of $1.66 trillion in just under 6 years.
The new playbook from IBM has a promising future. Why? IBM has already put its infrastructure business in the market. So, that conflict and hangover are gone. With that, Nordcloud could seed that future IBM is looking for in this new age of cloud and AI. Expect the machine to rise.
Part of the press release
Headquartered in Helsinki, Finland with offices in 10 European countries, Nordcloud’s mission is to help businesses become stronger, fitter and more agile with cloud. From Gartner’s Magic Quadrant to The Financial Times’ league table of fast-growing European companies, Nordcloud is recognized as a leader in public cloud services. Over the past 10 years, the privately held company has grown into a pan-European leader in cloud transformation services. It is one of the few providers triple certified in Amazon Web Services, Google Cloud Platform and Microsoft Azure.
“Our clients are increasingly taking a more holistic approach to application modernization that allows them to operate across a traditional IT environment, private cloud and public clouds,” said John Granger, Senior Vice President, Cloud Application Innovation and Chief Operating Officer, IBM Global Business Services. “IBM’s acquisition of Nordcloud adds the kind of deep expertise that will drive our clients’ digital transformations as well as support the further adoption of IBM’s hybrid cloud platform. Nordcloud’s cloud-native tools, methodologies and talent send a strong signal that IBM is committed to deliver our clients’ successful journey to cloud.”
“IBM’s hybrid cloud approach is very complementary with our cloud-native approach to helping clients migrate, manage and modernize in the cloud,” said Fernando Herrera, Chairman and Founder, Nordcloud. “As an experienced partner in today’s cloud ecosystems, we work with all of the public cloud providers for the good of our clients throughout Europe. I am very excited to embrace IBM’s open innovation mindset and help grow its global footprint.”
Leading IT industry analysts estimate the market for cloud professional services will exceed $200 billion by 2024.1 IBM’s open and flexible approach to advising, building, moving and managing clients’ hybrid environments gives enterprises the freedom to choose from multiple providers to best meet their business and IT needs. This acquisition is the latest example of how IBM is expanding the breadth and depth of its hybrid cloud offerings to manage complex integrations – of technologies, people and processes.
Following the close of the transaction, Nordcloud will become an IBM Company. Financial details were not disclosed. The transaction is subject to customary closing conditions and is expected to close in the first quarter of 2021.---