Vodafone and IBM - A New Hope

IBM and Vodafone yesterday announced that they are creating a collaborative venture that will go operational in 1H 2019 to develop, sell and deliver integrated connectivity and multicloud solutions, enabling enterprises to more easily embrace new technologies such SDN, 5G, AI, IoT, Blockchain and Edge Computing.  

Both Vodafone and IBM already sell and deliver multicloud solutions for the West’s most popular clouds (AWS, Azure, Google) as well as business must-have solutions for VMware and Oracle Cloud. 

Vodafone brings to the venture its strong local footprint in Europe, its global wired network, and its leadership position in IoT, a combination that has already proved successful as a door-opener into cloud- and edge-computing deals. The company also has several years’ experience selling and delivering multicloud capabilities, including partnerships that target some of the more challenging cloud markets, such as private clouds for SAP (partnering with Virtustream), and public services delivered on the Alibaba cloud. In addition Vodafone has a long history of delivering hosted private cloud. 

Meanwhile IBM offers a similar menu of hyperscale capabilities for multicloud (although not to date supporting Alibaba) and private clouds, as well as its own Softlayer public cloud. But most interestingly for the new venture, it also brings its deep expertise in leading edge areas of IT that would challenge almost any telcos: containers and serverless (which are beginning to displace traditional VMs as the basis of cloud infrastructure solutions); Artificial Intelligence, where IBM Watson is an acknowledged leader; and emerging technologies such as blockchain and quantum computing. At the same time IBM will also bring its considerable professional services to play, filling a gap at Vodafone for the many customers that need consultancy assistance with anything from cloud strategy to workload migration.

By bringing together specialist sales and delivery capabilities from both companies, the initiative will offer real depth of experience in selling and implementing hybrid and multicloud solutions. At the same time it will legitimately be able to claim to be a leader in the new capabilities that most enterprises are yet to implement, but that most organizations are going to need to remain competitive, particularly the integration of IoT, AI and SDN into core IT operations. 

The new venture is very focused on simplifying the customer experience, and will offer a single management and service experience across services delivered by both parent companies. To minimise customer integration, multiple cloud platforms will be pre-integrated to the Vodafone network, and customers will also benefit from simplified contracting and ordering processes.

The new venture is intended to be much more than a typical strategic alliance, and while in the interests of speed and efficiency it was decided not to form a separate legal entity, it will be established in its own home with its own staff. The first employees will be drawn initially from both Vodafone and IBM, and the venture has the highly ambitious goal of fostering an agile, startup-style culture, to match the agile expectations of their target customers. While the venture will have its own sales teams, it will also sell through the existing sales channels of both parent organisations. 

This deal represents a significant step for both companies. For IBM, it represents a very tangible commercial win, since it includes an eight-year (and USD 550m) agreement for IBM to supply managed services to Vodafone.  For Vodafone, in the words of CEO Nick Read, the venture will drive "radical simplification and efficiency in our business". PAC agrees with this analysis, since Vodafone will be able to offer a complete portfolio of IT solutions, without cost of developing and supporting them in-house.   Overall this arrangement should benefit both parents and customers, reducing the complexity that arises as connectivity, cloud and IT become ever more inseparable, and providing services that are both easier to sell and and easier to consume.