IBM’s plans to corner or corral the cloud – it’s all a matter of governance by Jon Hansen

Posted on December 13, 2014


When IBM approached me earlier this week to talk about their recent collaborative partnership with JDA Software, I thought sure – why not.

After all, it would be interesting to learn where Big Blue fit into the picture in terms of Gartner’s proclamation that the Postmodern ERP Era is upon us.

“The plan is to create an ecosystem of technology partners to extend IBM’s service capabilities to its customers” – Pete Wharton, Commerce Solutions Product Marketing Leader, IBM

In preparing for the interview with IBM’s Pete Wharton, I noted that the company had also made several similarly interesting announcements regarding what I will call “new partnerships.”  In fact it seemed that everywhere I looked, and with every other news-wire notification I received, IBM was popping up everywhere.

The first thought that came to my mind as this seemingly disparate panoply of partnership activity became clearer, was that IBM appears to be trying to corner the cloud market.

Rather than focus on the single JDA story, when I talked with Pete I came right out and asked the question . . . is IBM trying to corner or corral the cloud?

While Pete’s answer was more eloquent in that rather than corralling the cloud , he said that IBM is simply looking for the best way to serve their clients interests by “unifying” a “segmented solution world” through a very active “partnership acquisition” strategy, the end result is still the same.

I then suggested that what he was really saying is that IBM was acquiring strategic partnerships as opposed to companies, in an effort to remain essential to their clients – a statement with which he agreed.

In the process I observed, IBM is going for what I would call a “cloud ubiquity” status, by becoming the cloud conduit for the business world.  Pete liked the sound of that.


Cloud Ubiquity


My next question was obvious . . . how is this collective and collaborative cloud going to be governed?  Is IBM going for an influence without assimilation model?

The basis for this question goes all the way back to an August 28th, 2007 post I wrote here on the Procurement Insights blog titled “Public Sector Procurement Practice and the Principles of External Economies, Clustering and the Global Value Chain.”

Even though my original reference to governance was in the context of the three relationship models that existed between buyers and suppliers, I felt that the same could also be applied to the relationship between IBM and its expanding array of new “partners.”

The following is an excerpt from that post:

According to Humphrey and Schmitz (2002), “value chain research focuses on the nature of the relationships between the various actors involved in the chain, and on their implications for development.”  In this regard, they emphasize that governance is an essential element of a value chain in that coordination is required “to take decisions not only on ‘what’ should be, or ‘how’ something should be produced but sometimes also ‘when,’ and ‘how much’ and even at ‘what’ price.”  (Note: the same questions that apply to production can also apply to purchasing decisions.)

While coordination may occur “through arm’s-length market relations or non-market relationships,” it is the latter that applies best to government procurement practices.  In the area of non-market relationships, Humphrey and Schmitz identified “three possible types of governance; a) network implying cooperation between firms of more or less equal power which share their competencies within the chain; b) quasi-hierarchy involving relationships between legally independent firms in which one is subordinate to the other, with a leader in the chain defining the rules to which the rest of the actors have to comply and c)hierarchy when a firm is owned by an external firm.”

When I asked Pete which of the three – or combination of three – governance models IBM was planning to use, he said that the answer to this would be best provided by those higher up in the organization.  I wonder how high up the proverbial corporate ladder I will have to ascend?  I will keep you posted.

In the meantime, and as indicated previously, one thing is abundantly clear . . . IBM is making a M-O-V-E.

Whether you refer to it as the creation of an ecosystem of technology partners, a unified approach to bringing together a segmented solution world or, a ubiquitous conduit in the cloud, Big Blue is trying to corner or corral the cloud.

Think of it has a reverse break-up of AT&T with positive implications for everyone involved, as well as being something similar to what Parthenon may be attempting in the public sector through their Periscope activities.

2015 is definitely going to be an interesting year!


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