IBM recently held its annual IBM Alliances event, focusing on SAP and Oracle (other major IBM-wide partners include Microsoft, Infor, Cisco, Juniper Networks and Citrix). IBM Alliances manages major relationships with technology vendors that cross several IBM service lines, e.g. GBS, GTS, Systems & Technology, and Software. Those seven major partnerships are significant and command ~15% of overall IBM revenues;

SAP

IBM’s largest partner has been, and remains, SAP. IBM conducts SAP-related work around GBS, including C&SI and AMS, Systems & Technology (including AIX servers, cloud computing and storage, now that IBM has sold its x86 server business to Lenovo). As always with IBM, no idea of scale was provided. Yet, 60% of SAP services work is project services and the remaining AMS.

Activity in SAP services remains driven by large ERP implementation in fast-growth markets, adoption of SaaS applications, especially in the U.S., and of new technologies, e.g. mobility and big data (along with SAP HANA). Work around SAP instance consolidation is less prominent. Interestingly, the success of SaaS applications in HR and CRM is resurrecting best-of-breed discussions, a topic that had disappeared in recent years.

Nevertheless, the vast majority of SAP services activity remains on-premise and implementation-related. IBM wants to increase its focus on SAP newer technologies: the company has invested in growing the number of consultants on SuccessFactors to 1.5k and is also accelerating on hybris.

SAP HANA is also a priority: IBM is officially certified for hosting SAP HANA.

SAP’s shift towards newer technologies is also inducing changes at IBM. IBM GBS EA’s SAP practice is investing in a skill shift towards more PMO and handling more complex engagements involving on-premise, cloud and SaaS services. Another area of investment in its SAP project business is towards Indian offshoring and onshore factories, selectively.

Oracle

A rising partner is Oracle, with whom IBM provides services from two main units: its Oracle practice, as part of Enterprise Application, itself a unit of GBS; and GTS, around Oracle middleware and databases.

Interestingly, Oracle shares with SAP the same strategy towards newer technologies. Differences exist, however:

• Like SAP, Oracle is undergoing a change towards SaaS and mobility. And like SAP, Oracle-related work is largely related to traditional on-premise implementations. IBM GBS’s Oracle practice is working on further strengthening the relationship with Oracle, investing in retail (former Retek) and omni-channel. Meanwhile, the Oracle unit is also investing selectively in professional services around Oracle software products specifically by geography, e.g. iflex in Middle East/fast-growth economies
• Unlike for SAP, IBM is investing selectively around Oracle SaaS products, focusing on two main initiatives: a ‘retail in a box’ offering, which combines a pre-configured Retek application hosted on IBM’s cloud; and the HCM Fusion Cloud application.

Mobility

Meanwhile, mobility remains an important driver for growth. This is where IBM's recent alliance with Apple comes into play: IBM is to develop 150 standalone apps in the next months that it will sell as software products. IBM’s apps are verticalized and target specific feeds: one such targeted app will help plane pilots to estimate their fuel needs for a given flight, based on parameters including weather conditions during flight duration, including time to take off and land.

The agreement with Apple on these standalone apps is mutually exclusive and IBM will only develop apps as "products" for iOS and not for other OS including Android. Yet, as part of traditional custom projects, IBM is to continue to develop apps for all OS.

Other terms of the agreement include reselling Apple mobile devices, and providing repair and maintenance services, including spare parts in countries where Apple is not present. Interestingly, IBM is open to buy the existing mobile device estate running on Android or on BlackBerry OS and replacing them with iOS devices, when necessary.

Work conducted with Apple is nascent at this point.

Along with this initial agreement, IBM is developing its apps strategy and also developing on a custom basis (whether on its IBM MobileFirst products or on SAP Fiori/Oracle OVD technology), to integrate with SAP and Oracle ERP applications. The offering is a work-in-progress but remains an important long-term development plan.

Tackling Increasing IT Complexity

IBM highlighted the similarities between the strategy of Oracle/SAP (i.e. cloud computing, big data and mobility) and its own strategy. And indeed, the three companies are well aligned. Nevertheless, from an IBM point of view (e.g. the SAP practice within GBS), the move towards cloud, big data and mobility has very considerable implications in terms of reskilling and the sales model, and even more in terms of handling complexity.

And perhaps one overlooked aspect of the move towards SMAC is that the world of IT is not getting simpler but largely more complicated. IBM's service mix (as well as Accenture's) around SAP and Oracle applications shows the co-existence of on-premise applications, SaaS applications, technical upgrades with SAP HANA driving new usages, and of course mobile apps, as well as public cloud, virtualized servers, and hybrid clouds. This increasing complexity is accelerating: as mentioned earlier, SaaS discussions are bringing back the notion of best-of-breed. In addition, IT services vendors are now reporting that SaaS implementations are becoming more comprehensive and more costly.

A lot of this growing heterogeneity has driven in the past five years the emergence of the cloud orchestration notion.  Cloud orchestration is a useful activity to handle complexity. Yet, in principle, this growing IT complexity seems in contradiction with what IT departments and also IT services vendors have aimed to achieve in the past 10 years, through process standardization initially, through IT vendor consolidation, and  IT product standardization. The question therefore remains how to reconcile complexity with a need for standardization and lower costs.

Looking ahead, it is becoming clear that the next economic slowdown will drive further standardization, similar to 2008-2010 when SAP clients invested heavily in SAP instance consolidation. The big question is therefore how to do this now, rather than in 5 years. The question remains open but NelsonHall argues several broad principles should be applied, including:

• Asking businesses to re-use existing tools, software, hardware or resources. In particular, IT departments have a role to play in offering a limited choice of, say, three standard technologies for one given business requirement. Limiting choice will optimize personnel usage and drive license cost down/maximize reuse
• Evaluate and measure on an ongoing basis the usage and impact on service desk/technical help desks, as well as proceed to code quality audits
• Be flexible by managing increasing heterogeneity. For instance, clients may want to maintain IT standardization in applications such as ERPs that are integrated with many other systems, while allowing more customization of little-integrated ones, e.g. SaaS CRM or mobile apps.