This last week, Howard Boville of IBM provided an overview of where the IBM Cloud is and why it doesn’t compete directly with major cloud players like AWS, Google Cloud, or Microsoft Azure. This talk showed how a smaller cloud vendor like IBM could carve out space in what appears to be a crowded market and thrive. They do so by focusing on targeted verticals’ unique needs and, rather than competing directly with the other cloud players, finding ways to work with them instead.
This focus allows IBM to carve out and protect a beachhead in the cloud computing space. That is, to clarify where differentiation is needed and partner where it isn’t, providing customers with the best of both worlds and solidifying IBM’s unique advantage.
Let’s talk about IBM’s strategy and solution this week.
The Importance And Process Of Focusing
The major cloud players, due to their scale, have to be everything to everyone. They have to put ease of use in nearly everything to stay ahead of their competitors and grow their markets. Still, they tend to avoid focusing on verticals because that focus creates unneeded and unwanted complexity for most users that remain.
Whenever entering an already crowded market, the best approach is to focus on targeted verticals and provide services and capabilities that the dominant players either can’t provide or, in this case, don’t want to provide.
But you also don’t want to be exclusionary, because the other vendors are dominant and can lock you out if they see you as a threat. More important, customers don’t want an exclusionary service ether, because the large vendors will generally be less expensive for those efforts, like customer-facing efforts, that may not need the unique aspects of the targeted offering.
IBM’s placed their focus on four industries where IBM already has substantial competencies. Those vertical markets are Government, Financial Services, Telecom, and Healthcare.
These verticals encompass large to substantial enterprises and segments of the market where security and consistency are essential due to the respective firms’ size and the regulatory environments in which these firms operate.
Take, for instance, IBM’s unique approach to encryption. They use Homomorphic Encryption, which provides the ability to abstract and calculate the data without decrypting it.
First, they have given the keys to their customers. This last is a massive difference because major cloud providers typically keep a copy of the encryption keys to provide recourse if the customer loses them. But this practice creates a potential exploit if that vendor is compromised and an attacker gets the key, or law enforcement wants access to the data without the customer’s knowledge. There is an increased risk of critical loss by distributing the keys, but a far reduced risk of a breach that the targeted industries hold as the greater exposure, thanks to the regulations and their unique environments.
Another unique feature is IBM Cloud Satellite, which creates a consistent cloud service that can run on any primary cloud service. While companies may not need this extra support for everything, like an internal benefits application, they don’t want to have a mass of apps with little consistency and a lot of unique work. Partially by using their subsidiary Red Hat’s OpenShift technology, they have created a consistent set of services and tools that allow the resulting apps to run on any cloud platform. This practice preserves the customer’s multi-cloud option.
This IBM effort is a showcase not only of how to approach a market dominated by a few vendors but how much IBM has changed over the years. Today’s IBM is a huge Open Source advocate, believes and supports cross-platform efforts, thinks customer choice works for, not against them, and is focused more on what IBM customers want than ever before.
This change in strategy and their tight focus on the critical government, healthcare, finance, and Telecom markets makes them a unique solution in the crowded cloud service market.