IBM Partners See Growth In Big Blue's $1.2B Cloud Investment

IBM gave its cloud computing business a $1.2 billion boost Friday, outlining plans to build 15 new data centers across the globe as part of a major expansion of its SoftLayer cloud services into new markets around the world. The investment, IBM said, will allow channel partners and customers to deliver high-performance services globally across the SoftLayer network.

Lance Crosby, CEO of SoftLayer for IBM, told CRN that the expansion allows IBM partners -- big and small -- to have a global reach. "IBM partners will be able to re-skin SoftLayer, re-sell it, and [it will] enable them to build applications from the ground up. Now, with a global footprint, it allows any customer to have a global reach with enterprise-class security and compliance with countries around the world."

Large IBM partners with existing SoftLayer business see Big Blue's global expansion of its cloud footprint as a huge win, allowing them to push SaaS and PaaS solutions into territories that had been previously hard to crack because of technical and regulatory red tape.

[Related: IBM's North American Channel Chief: Wired For The Channel ]

"For our traditional IBM business data centers in South America and Australia, [it doesn't] mean anything. But for a growing number of our SoftLayer customers that want to move into different global geographic markets, this swings the doors wide open for us to grow that business," said Ernie Yenke, president of Lighthouse Computer Services, a Lincoln, R.I.–based solution provider with a growing SoftLayer customer base.

"We will be able to sell our cloud solution in countries where we wouldn't have been able to before," Yenke said. Data retention laws that dictate how and where a company's data resides have kept business stateside, Yenke said. "If we can take a SoftLayer customer and help them build cloud-based solutions overseas, then that's new business for us," he said.

Central to IBM's global cloud expansion is its recent acquisition of infrastructure-as-a-service firm SoftLayer. Acquired last year for $2 billion, SoftLayer earned $500 million in revenue in 2013 with 30 percent of sales driven through the channel, according to Crosby.

NEXT: IBM Expects $7 Billion In Cloud Revenue By 2015

Mid-market IBM partner Tom Hughes, director of alliances for the Technology Solutions Group at Ciber, a Greenwood Village, Colo.-based IBM partner, said IBM's cloud investment will have an uncertain impact on his business. "It all depends on how closely SoftLayer and these data centers fit into IBM's current cloud offerings. As an IBM partner, I haven't yet seen the benefits of the SoftLayer acquisition. I'm going to have to reserve judgment until IBM does a better job in communicating what those benefits will be," he said.

IBM's doubling down on SoftLayer comes as it winds down its existing cloud offering SmartCloud Enterprise, which is slated to be phased out the first quarter of 2014. SoftLayer is IBM's answer to rivals Amazon Web Services and Microsoft.

IBM has stated it believes the global cloud market will be worth $200 billion by 2020, and it expects to do $7 billion in cloud revenue by 2015. In its most recent reporting period, IBM earned $1 billion in cloud-related revenue -- with about half going directly to cloud services and the other half toward software and services supporting the cloud.

"To stand still in cloud in this market is to fall behind," said Laura DiDio, an analyst with Information Technology Intelligence. "This is a very pragmatic move by IBM that signals to customers and business partners that hitching their wagon to IBM is going to be something they can count on for the years ahead."

The new cloud centers will be in Washington D.C., Mexico City, Dallas, China, Hong Kong, London, Japan, India and Canada, with plans to expand in the Middle East and Africa in 2015. IBM said the 15 new data centers will bring the company’s total cloud footprint to 40 locations in 13 countries. SoftLayer CEO, Crosby said that 13 of those 15 data centers will be SoftLayer data centers.

Smaller IBM partners, selling traditional IBM solutions, are less excited but say they are eager to learn more as they transition their customers off hardware to cloud services.

"More and more of my customers are eager to convert their IBM’s hardware into cloud services," said Debbie Fitzerman, president of DFC International Computing, a small Toronto-based SaaS provider and IBM partner. "With data centers in Canada, that's one less data-privacy hoop I have to jump through."

PUBLISHED JAN. 17, 2013