IBM's Cloud CTO: 'We're in this game to win'

"We knew it was a massive opportunity for IBM, but not in a way that necessarily fit our mold," said Jim Comfort, who is now CTO for IBM Cloud. "Every dimension of our business model would change -- we knew that going in."

Change they have, and there's little denying that the cloud businesses is now a ray of sunshine brightening IBM's outlook as its legacy businesses struggle. In its second-quarter earnings report last week, cloud revenue was up 30 percent for the quarter year over year, reaching $11.6 billion over the preceding 12 months. Revenue from systems hardware and operating systems software, on the other hand, was down more than 23 percent.

Today, cloud is one of three key pillars of the strategy articulated by IBM chairman, president and CEO Ginni Rometty.

"Our platform is cloud," Comfort said. "It's not just that we're doing some cloud services, but that everything we do will be cloud-delivered. That's a declarative statement -- that's fundamental."

What IBM calls "cognitive" computing and its Watson artificial-intelligence services are another of Rometty's pillars, Comfort said. The third is a razor-sharp focus on industries.

"What you've seen so far is our evolution and morphing into a cloud company," he said. "Now you're going to see that emerge more and more strongly through an industry lens."

That industry focus is one of the key factors IBM is betting will set it apart from cloud competitors including Google, Microsoft and Amazon Web Services as cloud hype diminishes and attention shifts to innovation and industry transformation. In financial services, IBM is using its Bluemix Garages to bring developers together to work on blockchain-related technologies including new mobile banking and wealth management apps. It also recently launched its new IBM Cloud Video unit focusing on media and entertainment brands.

"We understand what matters from the perspective of industries," Comfort said. "AWS and Google don't; Microsoft does in certain domains."

Breadth is another area where IBM thinks it has an edge, particularly when it comes to offering a choice among cloud deployment models. "Choice with consistency" is what it promises, whereby customers can choose which model they want to use and still get a consistent approach in how applications and workloads are handled. IBM's Bluemix platform, for example, lets organizations and developers choose public, dedicated or local options for creating apps on the cloud.

"No matter what level you want to work at, we want to make sure you have choice so that you can evolve over time and for what level of abstraction makes sense," Comfort said.

Hybrid cloud setups will remain the norm in enterprises for "a long period of time" still, Comfort said, "but what cloud is really about is building apps, where you can consume services wherever they happen to be via APIs. It's all about APIs and API integration."

It's a sort of analogue to middleware, and it's another area where IBM thinks it's ahead. The company's API Connect software, for instance, integrates creating, running, managing, and securing APIs into a single product that can run on-premises and in the hybrid cloud. "We believe we have differentiation in the tools and capability we provide to agnostically manage that API world," Comfort said.

IBM also claims an advantage in enabling DevOps productivity. That productivity is one of the biggest sources of value in the cloud, but it requires a fundamental shift. To help make that happen, IBM offers its Bluemix Garage consulting services -- "our competitors don't do that," Comfort said -- along with tools and an ecosystem that's open to outside tools as well.

Further solidifying IBM's cloud advantage are accessible analytics tools such as BigInsights on Cloud and IBM Analytics for Apache Spark along with cognitive offerings based on Watson, Comfort said. Taken together, all these pieces "allow us to have a very different approach from our competitors."

In the Infrastructure-as-a-Service (IaaS) market, for example, IBM has the economies of scale to compete against AWS, he said.

"At the scale we have today, I can win on a TCO [total cost of ownership] basis against AWS by 20 to 30 percent," Comfort said.

But its emphasis lies elsewhere.

"We are focused more on the things we think will help us transform the industries we serve," he said. "We believe our balance of virtualization and dedicated environments allows us to address compliance and regulatory needs in a way that's better for enterprises -- especially those in regulated industries."

Looking ahead, one of IBM's biggest challenges in the cloud is integrating the older and newer parts of its business and articulating its full scope to customers.

"We are transforming," Comfort said. "We need to be better at talking about it and making it seamless so that people can find what they want."

IBM will continue to build out more industry-specific offerings and will focus more on the internet of things (IoT) as well. Last month, it brought IoT for Electronics to market; a counterpart for the automotive industry is on the horizon, Comfort said. Looking further ahead, an upcoming new release from IBM's Insights Foundation for Energy promises to enable weather-driven insights for transmission and distribution utilities.

Cloud is a key piece of what's often called the third platform of computing, and it's gaining new maturity, Comfort said.

"When people enter a new era, they usually start with things that could have been done in the previous generation but suddenly can be done better or more cheaply," Comfort explained. "Then it moves into things that couldn't have been done before."

Today we're starting to move into that second phase.

"We're just now getting to the transformative capability of cloud," Comfort said. "That's why we're so focused on industry transformation and the technologies required to do that. We're in this game to win."