Big Blue Buys Another Cloud-Ish Business

December 9, 2013 Timothy Prickett Morgan

IBM has promised Wall Street that it will have a $7 billion cloud business by the end of 2015, and it has gotten out the checkbook once again to help it along its way to that goal.

Last week, IBM said that it has inked a deal with Dexia, a financial services company based in Brussels, Belgium, to take over the operations of its Associated Dexia Technology Services unit. ADTS is a service company not unlike IBM’s own Global Services that provides services to Belfius Bank, Belfius Insurance, International Wealth Insurers (IWI), Banque Internationale à Luxembourg (BIL), Dexia and Dexia Asset Management (DAM).

As part of the deal, IBM is taking a controlling stake in ADTS and is changing its name to Innovative Solutions for Finance; the amount it spent for that stake was not revealed. But IBM did say that ISFF has contracts with the various entities formerly served by ADTS that are worth $1.3 billion over seven years.

Dexia has been spinning off parts of itself in a slow-motion fashion since 2006, but ADTS was the common glue for these entities. Now, with IBM in charge, Dexia is getting out of the IT business and the units can pursue their own separate strategies as they see fit.

“After a long and careful selection process, Dexia has chosen a strong partner endorsing a new industrial future for the company and its employees,” explained Karel De Boeck, chief executive officer of the Dexia Group, in a statement. “At the same time, this agreement is yet another significant step forward in the Group’s orderly resolution.”

Exactly how the IT infrastructure for the former ADTS clients will change over time was not made clear, but there were plenty of references to “the cloud.” IBM did not reveal what systems these entities currently have installed. Several of the former Dexia units as well as Dexia itself have OS/400 and IBM i platforms.

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Do the Math When Looking at IBM i Hosting for Cost Savings

COVID-19 has accelerated certain business trends that were already gaining strength prior to the start of the pandemic. E-commerce, telehealth, and video conferencing are some of the most obvious examples. One example that may not be as obvious to the general public but has a profound impact on business is the shift in strategy of IBM i infrastructure from traditional, on-premises environments to some form of remote configuration. These remote configurations and all of their variations are broadly referred to in the community as IBM i hosting.

“Hosting” in this context can mean different things to different people, and in general, hosting refers to one of two scenarios. In the first scenario, hosting can refer to a client owned machine that is housed in a co-location facility (commonly called a co-lo for short) where the data center provides traditional system administrator services, relieving the client of administrative and operational responsibilities. In the second scenario, hosting can refer to an MSP owned machine in which partition resources are provided to the client in an on-demand capacity. This scenario allows the client to completely outsource all aspects of Power Systems hardware and the IBM i operating system and database.

The scenario that is best for each business depends on a number of factors and is largely up for debate. In most cases, pursuing hosting purely as a cost saving strategy is a dead end. Furthermore, when you consider all of the costs associated with maintaining and IBM i environment, it is typically not a cost-effective option for the small to midsize market. The most cost-effective approach for these organizations is often a combination of a client owned and maintained system (either on-prem or in a co-lo) with cloud backup and disaster-recovery-as-a-service. Only in some cases of larger enterprise companies can a hosting strategy start to become a potentially cost-effective option.

However, cost savings is just one part of the story. As IBM i expertise becomes scarce and IT resources run tight, the only option for some firms may be to pursue hosting in some capacity. Whatever the driving force for pursing hosting may be, the key point is that it is not just simply an option for running your workload in a different location. There are many details to consider and it is to the best interest of the client to work with an experienced MSP in weighing the benefits and drawbacks of each option. As COVID-19 rolls on, time will tell if IBM i hosting strategies will follow the other strong business trends of the pandemic.

When we say do the math in the title above, it literally means that you need to do the math for your particular scenario. It is not about us doing the math for you, making a case for either staying on premises or for moving to the cloud. There is not one answer, but just different levels of cost to be reckoned which yield different answers. Most IBM i shops have fairly static workloads, at least measured against the larger mix of stuff on the public clouds of the world. How do you measure the value of controlling your own IT fate? That will only be fully recognized at the moment when it is sorely missed the most.

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