January 31, 2019  4:50 PM

RPA bots vs. case management — both have value, one is transformative

Linda Tucci Linda Tucci Profile: Linda Tucci

Robotic process automation is not a transformative technology — so says a guy whose company has been recognized as a leader in the field. Robotic process automation (RPA), software that automates repetitive, rules-based tasks performed by humans, can save costs, boost productivity and improve a customer experience, said Don Schuerman, CTO at Pegasystems Inc., a business process automation provider based in Cambridge, Mass.

Don Schuerman, CTO, Pegasystems

“Robotics is really about making automation modular, reusable and fast to deploy – all great things, Schuerman said.

What RPA doesn’t do, he believes, is change how work gets done. And, as such, RPA bots present a risk.

“The risk is that companies are slapping on Band-Aids to existing processes when what they need to do is rethink those processes to meet the needs of a new class of buyer, a new class of competition and a new set of expectations in the market,” he said.

RPA bots: Repaving the cow path

In the business process management (BPM) space, where Pegasystems has operated for the past 36 years, automating existing processes is known as repaving the cow path, Schuerman said. The pressing need at most companies, however, is reinventing existing processes to become more “customer-centric.”

That effort starts with understanding the outcome a customer wants to achieve — opening a bank account, fulfilling a product order — and then designing a process that gets the customer to the desired outcome “in the easiest, most personalized and most efficient way possible,” he said. Amazon, Uber and Google excel at this.

For many enterprises, however, designing an outcome-based, customer-centric process will be challenging. Most companies were not built from the ground up to deliver a customer experience.

“They were built around systems that largely were developed to handle transactions, not to handle customer journeys,” Schuerman said.

Outcome-based processes

To develop customer-centric, outcome-based processes, companies will need experts who understand design thinking, which includes having an empathetic view of what the customer wants to accomplish. Most important, company leaders must understand that outcome-based business processes typically cross organizational divisions and other business silos.

“Actual transformation means that leaders of different organizations of the business need to sit down together and collaborate across functions to deliver something that is exactly for the customer,” he said.

Indeed, one of the reasons RPA is so attractive, Schuerman contends, is that it doesn’t require making these conceptual and organizational leaps. “I can put in some RPA bots, I don’t need to worry about working across multiple groups to get that done. I can improve some of my operational margins — I can show results,” he said.

Case management approach

Pegasystems, which acquired RPA company OpenSpan two years ago and has clients that have deployed tens of thousands of RPA bots across their contact centers, believes that RPA is a great “bridging technology.”

Companies aiming to transform their business process are better off taking a case management approach, Schuerman believes. In distinction to business process management (and RPA), which focuses on optimizing single repeatable processes, case management provides a view of all the steps — including one-off steps — that are involved in completing a case, be that delivering a pizza, processing insurance claims or running the 2020 Census.

“Case management is really about taking an outcome-based approach to automation” Schuerman said. “What we found with the case management approach is that you step back and ask, ‘First and foremost what is the outcome? What are we trying to deliver?’ Then, at a high level and using your customers’ words, ask: ‘How do we describe the stages or the milestones that we need to pass through to get to that outcome?'”

Digital process automation tools

Once the outcome is defined, then the group — and it is a multifaceted group — can fill in the detail  that needs to happen “under the covers:” e.g. the exceptions that need to be captured and spun off when things go wrong, the work that could be done in parallel to drive better outcomes.

That process transformation — sometimes referred to as digital process automation — also requires a set of tools —  from business process software to orchestrate the steps, to excellent mobile and web front ends, to APIs and to RPA bots for getting data from systems that don’t have APIs.

“I think the best use of RPA bots is to go get data in and out of systems that don’t have APIs,” Schuerman said. Embedding the rules of the process in the bot, however, just makes the bot another silo — and the process a repaved cow path.

December 26, 2018  1:55 PM

2019 CIO priority: AI-assisted enterprise integration

Brian Holak Brian Holak Profile: Brian Holak

I recently had the chance to sit down with Gartner analyst Massimo Pezzini to discuss what CIOs should be paying attention to in 2019. Pezzini, who specializes in enterprise integration architecture and infrastructure, naturally had a lot to say about the topic of integration — something he considers to be an increasingly vital consideration for CIOs as more applications and services, each with their own set of data and conditions, are brought into the fold.

In this “Ask the Expert,” Pezzini explains why CIOs should look to machine learning and robotic process automation in 2019 to help with their application integration efforts.

Editor’s note: This transcript has been edited for clarity and length.

In terms of enterprise integration, what should be a priority for CIOs in 2019?

Massimo Pezzini: From a technology perspective, there are a couple of interesting things going on. One is the use of artificial intelligence, machine learning and natural language processing to facilitate integration. We are a bit far away from the moment where applications will automatically connect into each other, but there are a certain number of vendors that are beginning to use, for example, a chatbot interface to help developers design their integration flow. You can call it AI-assisted integration development. So for the time being, it’s experimental. Products are available in the market, but they are not super mature. I would say this is an area for CIOs to keep an eye on in 2019 because this could help them dramatically reduce the cost of integration and make integration capabilities available to business users. Enterprise integration is a tricky thing. You have to connect here, connect there, move data around, et cetera — so only developers can do it right now. But hopefully, with the help chatbots and machine learning, it will be possible in the future for business users to create and develop their own integrations.

Let’s say you’re a data scientist and you wake up in the middle of the night with a great idea about correlation of data. In the morning, you want to go into the office and say, “I want to connect into this application or database, download data from there, download data from another place, put that data together and start playing with that data using machine learning.” That is not easy to do today because you need somebody building those integrations and interfaces for you. But there are some interesting tools in the market that are beginning to enable business users — or people who don’t necessarily have an IT or development background — to support these integrations by themselves.

The other thing for CIOs to have a look at is robotic process automation, which, from my point of view, is just an integration exercise. It is basically about automating manual processes through robots. The point is that RPA is a form of integration technology, which CIOs typically don’t like and the business users do like. So, from a CIO perspective, I believe one of the things to do next year is to look at those RPA technologies and see whether they fit with their enterprise integration strategy and with their requirements for cost reduction and efficiency.

December 20, 2018  4:48 PM

RRD creates governance structure for RPA development

John Moore John Moore Profile: John Moore
Automation, Automation management, CIO, Vertical markets

As robotic process automation projects become commonplace, enterprises are putting structures in place to manage and coordinate RPA development.

R.R. Donnelley & Sons Co. (RRD), a Chicago-based marketing and business communications company, provides one example. The company’s Digital Revolution initiative, which seeks suggestions from employees about how to improve the company, surfaced 90 suggestions involving robotics. At least 20 have become fully functioning services, and RRD’s RPA projects include automating repetitive document preparation tasks such as compiling, coding and categorizing data.

RRD has also dedicated personnel to RPA development — around 30 people work on software robots full time in the U.S. and India.

“The individuals developing RPA solutions in the U.S. are part of existing development organizations,” said Ken O’Brien, executive vice president and CIO at RRD. “These employees have been assigned as dedicated resources to RPA development, but bring the experience of working on applications in functional areas where we want to deploy RPA solutions.”

RRD’s India team, meanwhile, was formed to focus on RPA development across the global organization. The company has a presence in 28 countries.

RRD’s Enterprise Architecture (EA) practice also plays a role in RPA development, pursuing RPA standards and best practices. Firasat Hussain leads the EA practice for the organization and has responsibility for coordinating and accelerating RPA development across the corporation, according to O’Brien.

O’Brien said Hussain was selected for that role, in part, because of the need to align with the EA while driving standards for tools and platforms that support RRD’s technology solutions.

As executive vice president and CIO for RRD’s global organization, O’Brien has direct responsibility for all technology development and operations. This includes all RPA activities, as well as infrastructure and EA. He also sponsors the Digital Revolution as a member of RRD’s executive team.

Creating governance structures to coordinate RPA development should be on every organization’s agenda once they begin deploying more than a handful of software robots. Lack of governance leads to redundancy and unnecessary costs — a recurring pattern in technology adoption. Service oriented architecture governance became an issue a decade ago as organizations found themselves building duplicative services.

Expect to see RPA governance become more of a factor in 2019, as organizations scale up their software robot deployments.


November 30, 2018  6:43 PM

Adobe CFO John Murphy on CFO role as digital transformation evangelist

Linda Tucci Linda Tucci Profile: Linda Tucci

The question for Adobe CFO John Murphy was how had digital transformation changed his job. Are there decisions you’re involved in today that would wouldn’t have been involved in 10 years ago? he was asked.

Murphy, who assumed the CFO role at Adobe in April, was being interviewed at the recent MIT Sloan CFO Summit before a large roomful of his peers. He had already talked about Adobe’s “leap of faith” transformation from a desktop software company to a hybrid cloud powerhouse — a turnaround described by the San Francisco Chronicle as “one of the greatest comebacks in the history of Silicon Valley.”

Certainly, Adobe’s big bet on AI and machine learning as a key business differentiator means he’s involved in technology decisions that in the past would have been driven by the CIO or CTO, Murphy said.

CFOs are not the technology experts, Murphy said, and “they can’t pretend to be.” But they must “master the fundamentals of technology” in order to figure out how technology impacts the growth of the company and its customers,” he told his interviewer, MIT’s Hal Gregersen.

But here’s the aspect of his current CFO role that’s completely different from anything he’s done before in his career: He’s out there selling. “Now that Adobe has digital transformation as part of what we sell, I am able to tell our story to customers and show them how we measure that digital transformation. That’s actually new,” Murphy said.

Murphy said he usually starts client conversations by asking them to explain the problem they are trying to solve with a digital product and how they see their customers using the product, before getting into how they might monetize the investment.

Tips on making digital transformation part of the CFO role

Gregersen, the executive director of the MIT Leadership Center, asked if Murphy had any advice for finance folks who might have “a bit of fear” about the CFO role in digital transformation.

One thing that helps, Murphy said, is to apply new technologies to their own finance function. At Adobe a tech/IT council was formed to identify bottlenecks in the workflow. “We asked open-ended questions,” he said, encouraging employees to identify where they were struggling and to describe the process changes they’d make if they were “completely unrestrained” by resources.

“What we ended up with was a flood of ideas from the middle ranks telling us where the problems were,” Murphy said. As a result, finance has deployed a number of software bots and other robotic process automation software that are “generating excitement.”

Murphy’s participation in cross-functional teams at Adobe has helped him see how people “thought about a business problem and what technologies they evaluated to figure out the solution.” Participating in groups like this can get CFOs up to speed quickly in the technologies available today.

The element that’s crucial to becoming a player in digital transformation is understanding the business.  On assuming the CFO role, Murphy said it was important to him to spend as much time as he could with business leaders to understand their pain points and how they expect the finance organization to serve them, he said.  That interaction is critical to making the shift from utility player to strategic player. Asked by Gregersen for pointers on how to intercalate oneself into the business, Murphy said by “being a pain the butt.”

“Sometimes you force yourself into meetings to really understand the business… so you can figure out a way to help,” he said, adding that it’s hard to say no to someone who says they want to help.

November 30, 2018  4:05 PM

Include dark web security strategies to strengthen security framework

Kassidy Kelley Kassidy Kelley Profile: Kassidy Kelley
"Computer security", deep web access, IT security

Most people, according to Sixgill VP of Marketing Barry Spielman, know “nothing” about the dark web – an issue that he added is increasingly problematic as a lack of dark web security in cybersecurity frameworks puts data at risk.

Spielman’s bold statement came at the recent InfoSec North America conference earlier this month in New York, where he noted that only a small fraction of the internet is easily accessible by search engines and simple user searching. The rest of data, information, and content exist in two other versions of the internet: The deep web and the dark web. The deep web is likely already accounted for in your security policy to prevent access to untraceable, password protected content that doesn’t appear on search engines or indexes. The dark web, however, often remains unaccounted for.

Spielman’s tip? Treat the dark web like any other facet of the internet, and consider the risk and threats stemming from the dark web when developing your security framework.

What is the dark web?

The dark web is a smaller part of the deep web that is explicitly private and requires special software and browsers to gain access. Dark web sites and forums are often used for communities that demand security for intellectual reasons, but it’s also host to a bevy of illegal activity ranging from narcotic sales to calls soliciting government attacks.

“The dark web has become a source for a tremendous amount of cybercrime,” Spielman said during the Demystifying the Dark Web panel discussion.

“We like to call [the dark web] a crowd sourcing of bad guys. When you put very smart people together with no rules, you can get very creative.”

What risk does the dark web pose?

You might now be thinking, “my company doesn’t sell illegal products or use the dark web, so I’m safe!” But if so, you’re incredibly naïve to the potential risks. As we enter the age of big data, the dark web is a host for enterprise information that can be sold for a profit — from passwords to insider trading information.

“You want to buy something, sell something, or you want someone to monetize what you’ve got. If you have insider information but don’t know what to do with it, you turn to the dark web,” Spielman said.

Since the dark web attracts experienced hackers and cybercriminals, law enforcement has only a modicum of luck when monitoring and punishing crime that exists there. As data security threats constantly multiply, so do the dark web sites that facilitate potential data crime. And when one site gets shut down in a high profile case – think Alphabay or Silkroad – it only creates opportunity for the millions of dark web users looking to host a new site.

From a law enforcement point of view, there are no laws on the dark web, Spielman said. The encryption, secrecy and perseverance of dark web forums and sites means there are constant risk and potential threats that need to be monitored. Enterprises should add security measures that manage and monitor potential dark web breaches — a tall order when much of the dark web is encrypted, hidden and secretly managed, he added.

Spielman advises, at bare minimum, creating an incident management plan for any proprietary data and information that could be floating around the dark web, and perhaps implementing cryptographic or intrusion software to prevent against these dark web threats.

“The better intelligence you have about what your threats are, the better you can use your cybersecurity resources in the best way,” Spielman said.

November 29, 2018  4:48 PM

Advancing tech, analytics techniques give rise to the ‘digital CFO’

Ben Cole Ben Cole Profile: Ben Cole
Big Data analytics, CFO, CIO, Tech advice

The rise of digitized processes and data analytics in modern companies has unquestionably influenced the CIO’s role — a topic we cover often here on SearchCIO. But realizing the importance of technology for modern business success is spreading throughout the C-suite, giving rise to a relatively new, highly sought-after position: the digital CFO.

Chief financial officers must reexamine their role as they navigate the “unprecedented and uncharted territory” of how to successfully operate in the increasingly tech driven world of digital business, said CGMA external relations VP Ash Noah when moderating a session at the MIT Sloan CFO Summit earlier this month.

“We need to adapt to this environment, we need to adopt these new technologies, we need to be able to leverage data so that we can truly add value to the business,” Noah said during the Digital Finance, Digital World panel discussion.

Increasingly, as the digital CFO is finding their way, they’re tapping into the business benefits afforded by machine learning, automation and advanced data analytics, panelists said. They were clear that technology is a huge driver as the CFO role evolves from an “information provider” for the organization — pulling together things like quarterly earnings reports — to a “problem solver” that helps the organization leverage data to increase business value.

The finance team has a ton of data available to them from various business departments and advanced analytics techniques can provide in-depth business insights for CFOs, said panelist Anitha Gopalan, CFO at Catalant Technologies.

The digital CFO knows how to harness that information to make informed, data-driven decisions. This can go a long way to help companies establish a stronger base for innovation and disrupt faster — essential goals for any digitized business, Gopalan added.

“Finance can be a huge enabler from that perspective,” Gopalan said.

One obstacle facing the digital CFO is the availability of too much data, with Noah saying they risk “analysis paralysis” when there is excessive information to pick through. Automation and machine learning are helping in this regard — but knowing what data is valuable relies on rudimentary CFO skills like knowing the business and its associated goals, panelists said.

Understanding business drivers will go a long way toward realizing what data is useful to solving specific business problems, they added.

“Every single person on the finance team has to truly understand the business model,” Gopalan said. “Understand the business drivers, what is the value that each of them are bringing.”

Panelists reminded the audience that technology advancements typically require a new set of skills for the digital CFO — and their staff — to be successful.

Those tech and data analytic skills are not necessarily present in the organization, said panelist Doug Baker, a principal at KPMG. Although new tech creates vast new business capacities, developing the skills to tap into those capacities poses a real challenge for organizations.

When it comes time to find people with both advanced technical and data analytics know-how, “you have to look at your organization and recognize whether or not you have people today that are maybe underutilized and maybe could be doing that, but aren’t,” Baker said. “Or maybe, you just don’t have those people and need to go find them.”

From there, finding the balance between incorporating old school CFO traits and the ability to tap into advancing tech for business benefit is essential for the digital CFO as the role continues to evolve.

“The technical skills bring you to the table, but it’s then your knowledge of the business, your interaction with the business, truly being embedded in the business, that is key,” Noah said.

November 28, 2018  9:16 AM

Cisco network architecture targets CIOs. Will they buy it?

John Moore John Moore Profile: John Moore
architecture, CIO, Cisco, Cisco ACI, Cloud networking, Software defined networks

Cisco network architecture now has a new layer for the multi-cloud age and the vendor wants CIOs to know about it.

Technology architectures, sometimes derided as “marketectures,” have been around for ages. IBM was famous for them in the 1970s and 1980s, pushing Micro Channel Architecture, Systems Network Architecture and Systems Application Architecture, to name a few.

Cisco is hardly a stranger to architecture and can point to Digital Network Architecture (DNA), Application-Centric Infrastructure (ACI) architecture and intent-based architecture as its current examples.

Architectures tend to surface among large IT vendors with diverse product lines that have sometimes been assembled via acquisition. The architecture provides the vendor with a way to discuss its offerings as a unified portfolio and provides some assurance to customers that its varied product sets can work together or will integrate with each other down the road. Architectures can also create market differentiation — IBM’s Micro Channel Architecture, for example, is aimed to make IBM’s PC stand out among a growing array of PC clones.

CIO challenges

For the latest Cisco network architecture, which the company has dubbed multi-domain architecture, the motivation seems to span both goals: unify the product line and differentiate itself from rivals. David Goeckeler, Cisco executive vice president and general manager, networking and security business, outlined multi-domain architecture at the recently concluded Cisco Partner Summit 2018. Although his audience was mainly channel partners, his message also targeted CIOs.

David Goeckeler, EVP, Cisco

David Goeckeler

According to Goeckeler, CIOs are expanding to the cloud, tapping SaaS offerings and developing their own cloud-native applications to provide a “next-generation” digital experience.

“Every CIO is under pressure to deliver that new experience to their users,” he said.

Those experiences come from applications that enterprises deliver through multiple networking domains: in-house and outsourced data centers, public cloud, private clouds and SaaS offerings. There are also campus networking and branch networking domains, Goeckeler noted.

The task for CIOs is to manage those domains while also keeping pace with dynamic elements that populate, or interact with, the IT infrastructure stack: devices, applications, data and users.

“CIOs are required to manage a set of variables that are changing constantly,” Goeckeler said. “Networks we built 30 years ago are not geared to that environment.”

Cisco network architecture: Spanning domains

The latest twist on Cisco network architecture aims to help CIOs manage varied, multi-cloud infrastructures and enable them to connect any user, on any device and in any network, Goeckeler said.

But the problem with IT infrastructure is that organizations have been treating the different domains, including security, as independent parts of the network, he added. Cisco’s plan for multi-domain architecture is to interconnect all those domains while integrating security into the architecture, instead of tacking it on as an afterthought. Software-defined networking is shaping this architecture, which Goeckeler referred to as “one big software system.”

CIOs can think of this multi-domain approach as an architecture that spans other Cisco architectures.

“We are now beginning to integrate DNA (campus) and ACI (data center) together through common policies that can map across these domains,” Goeckeler wrote in a recent Cisco blog post.

Recent product launches also contribute to the multi-domain architecture approach. Cisco, for example, recently integrated security applications into its SD-WAN platform.

“Building this architecture is game changing for our customers and is the biggest opportunity we have seen in a very long time in the networking business,” Goeckeler said, speaking at Cisco Partner Summit 2018.

The bid to reinvent the Cisco network architecture across multiple domains is a development that bears watching. The question for CIOs is whether Cisco’s end-to-end architecture fits into their plans or whether a multi-vendor approach, in which the CIO takes responsibility for the overarching plan, makes better sense.

November 26, 2018  4:32 PM

Multivendor RPA strategy is trending at enterprises

Linda Tucci Linda Tucci Profile: Linda Tucci

Should an enterprise’s robotic process automation (RPA) strategy include working with more than one vendor? In a recent interview I had with a global manufacturer of automotive parts about its multiyear RPA project with Redwood Software, it came to light the company was simultaneously using leading RPA vendor UiPath.

“You don’t want to put all your eggs in one basket,” said Anna Berger, functional design lead in finance at Faurecia, which has operations in 35 countries.

The multivendor RPA strategy makes sense for the automotive company.

Redwood Software has extensive experience in automating finance processes, in particular ERP systems from Oracle and SAP. Faurecia has worked with SAP for over a decade, rolling out a single, integrated SAP system to about 98% of its 300 sites; it has some 35,000 users in SAP.

“We have taken the position that for processes which are quite standardized and which are very linked to SAP, we want to go with Redwood, which is strongly integrated with SAP,” Berger explained. Faurecia is using Redwood on a major project to consolidate 25 shared services down to a handful of regional platforms.

UiPath and Redwood RPA projects follow similar best practices. For example, tremendous effort goes into making sure the process is accurately described and that everyone agrees on the process description. But the automation focus is different.

“UiPath is for topics which are less linked to SAP and which may have to go between multiple systems and [involve] processes which are less standardized,” Berger said.

Multivendor RPA strategy

Forrester Research analyst Craig Le Clair, who follows the RPA market closely, said a multivendor RPA strategy is becoming more common. “I see it trending that way,” Le Clair said. One reason for the movement toward multiple vendors is that RPA came in initially through the business side, which hired its own integrators.

As the IT side has gotten involved, business units that are happy with their RPA deployments don’t want to switch vendors, resulting in a multivendor RPA strategy by default. Secondly, the RPA platforms have different talents — increasingly by necessity.

“When you have a lot of the market value captured by the top three RPA vendors, the other 40 have to find spots,” Le Clair said, referring to Blue Prism, UiPath and Automation Anywhere as the triad at the top. A vendor like Redwood, which specializes in finance processes and has expertise in Oracle and SAP, has developed a library of bots to automate this area of operations, saving companies time.

The RPA platforms also tend to split between those that are focused on back-end functions where interaction with humans is minimal and those that are being deployed in call centers, where the automation must co-exist with an employee who may be jockeying between 15 and 20 screens. An example of the bifurcation in the market is Blue Prism, which doesn’t do contact centers, Le Clair said.

In any case, Forrester believes the RPA market is still on a strong growth trajectory for 2019.

November 21, 2018  7:05 AM

Beware of unwitting bias in AI algorithms, experts say

Nicole Laskowski Nicole Laskowski Profile: Nicole Laskowski

Companies need to know how bias can unwittingly creep into recommendations from AI algorithms, according to panelists at the recent AI and the Future of Work event at MIT.

Sophie Vandebroek, vice president of emerging technology partnerships at IBM, suggested companies start with scrutinizing their training data. “AI algorithms are only as good as the data used to train the system,” she said.

For example, an AI algorithm trained on data from a company that has more men than women software engineers might conclude that men are better software engineers than women, “which of course we know has nothing to do with the job and is irrelevant to the hiring decision,” Vandebroek said.

Checking the training data for bias is necessary but not sufficient for ridding AI algorithms of bias, said Gabi Zijderveld, chief marketing officer and head of product strategy at Affectiva.

Bias can also be subconsciously coded into an algorithm by developers. “We build what we know,” Zijderveld said. She recommended that companies strive for diversity when putting together their teams, as they can collectively act as an anti-bias failsafe. Besides, she said, diversity also “fosters creativity and innovation.”

CIOs can also help set the tone by investing in a strong culture, according to Nichole Jordan, managing partner of markets, clients and industry at advisory and accounting firm Grant Thornton LLP. “You’re bringing together a lot of individuals with different backgrounds — behavioral scientists, data scientists, sociologists — to work together,” she said. “You’ve got to be clear on your culture.” It’s important that a company’s ethics, values and acceptable behaviors are spelled out to employees.

November 2, 2018  2:51 PM

IBM-Red Hat deal: Minimal influence on CIOs’ cloud decisions, for now

Mekhala Roy Mekhala Roy Profile: Mekhala Roy

The tech world has been abuzz after news that IBM is snapping up Red Hat for a whopping $34 billion, making it the third biggest tech-deal of all time.

Experts say, however, that the IBM-Red Hat deal will likely have little influence on enterprise IT cloud strategies, at least for now.

Ed Featherston, vice president and principal architect at Cloud Technology Partners, sees it as a move aimed at boosting IBM’s profile in the cloud space to give the company more credibility when it talks to customers about hybrid cloud.

“Without having done this, IBM would have probably faded away,” Featherston said. “I can’t think of a single client I have worked with in the cloud, whether public, private or on prem, that doesn’t have some level of the Red Hat stack in those environments, and now it’s [going to be] IBM Red Hat stack in their environments.”

Gartner analyst Dennis Smith believes the move will help both companies reset their cloud narrative.

Though Red Hat has had some initial success with the open source container application platform OpenShift, it needed some additional wind at its back from a scale and growth standpoint, Smith said. The deal also provides IBM with the potential to have a better story when talking to clients about their legacy applications, he added.

“Assuming [these clients] are a very loyal IBM customer and have a very large legacy footprint that they are looking at moving into some type of a cloud environment, they have additional options now,” Smith said.

IBM-Red Hat deal: Will it affect the cloud landscape?

During a media call earlier this week, Arvind Krishna, senior vice president of IBM Hybrid Cloud, said the acquisition redefines the cloud market.

“As our clients are moving to hybrid cloud, and they all use multiple cloud, they need the technology and they need a platform that lets them operate in that environment with security and comfort of portability,” Krishna said. “Together, that’s what we can get for them.”

But Gartner analyst Lydia Leong believes the IBM-Red Hat deal will have very little impact on the current cloud landscape and should not influence buying decisions related to public cloud.

Red Hat’s relative strength in on premises container solutions does not transform into any form leadership in the cloud market, Leong said. Containers are not cloud, she said, they are an infrastructure construct that customers may use as part of a cloud solution, just like they use virtual machines as part of a cloud solution.

Major public cloud vendors — AWS, Microsoft Azure and the Google Cloud Platform — all offer Kubernetes-based container services that come at no extra charge to their customers, she said. The customer pays for the infrastructure cost but doesn’t pay extra to run containers, she explained.

“Plus, the use of containers, regardless of whether or not that includes Kubernetes, doesn’t make applications magically portable,” she added.

But IBM has continued to look for ways to build business outside of its on-premises infrastructure, sales and services business. Having ownership of a Linux distribution that is used widely across all the cloud vendors could be an interesting way for IBM to build cross-cloud services, said Scott Cameron, Azure Principal Solution Architect at Insight.

“But I don’t see it immediately affecting most of our customers and how they deploy cloud,” Cameron said.

Should CIOs care?

At least to start, Featherston believes CIOs have nothing to be worried about. The IBM-Red Hat deal is expected to close sometime in the second half of next year. As long as IBM lets Red Hat be Red Hat — allowing the open source provider to continue with the way it has conducted business — the impact for CIOs, whether they choose to go with IBM or not, should be minimal, he said.

He also sees no reason for existing IBM customers to think about changing their cloud strategy because if anything, the deal will ultimately give them more flexibility.

“They can feel safer if they want to stay with an IBM cloud model,” he said. “But they don’t have to feel that it’s a risk if they go elsewhere because they are still going to be an IBM customer, they are still going to be running Red Hat in AWS [if they decide to go with Amazon cloud].”




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