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IBM today reinforced its commitment to what most see as the future of enterprise computing with its acquisition of Cast Iron Systems, a privately held cloud-computing software and services company that aims to simplify life for companies eager to blend their on-premise and on-demand application suites.
Terms of the deal were not disclosed, but by virtue of the purchase IBM sent an unmistakable message to competitors and customers alike that it's serious about providing the inevitable bridge between old-school, on-premise software installations and on-demand applications that are cheaper and more malleable in an increasingly mobile computing landscape.
IBM (NYSE: IBM) shares inched up $0.61 a share, less than 1 percent, to $129.61 following the announcement.
"The combination of IBM and Cast Iron Systems will make it easy for clients to integrate business applications, no matter where those applications reside," Craig Hayman, general manager of IBM's cornerstone WebSphere unit, said in a statement. "This will give clients greater agility and as a result, better business outcomes."
Companies running on-premise applications from IBM, Microsoft (NASDAQ: MSFT), SAP (NYSE: SAP) and Oracle (NASDAQ: ORCL) will now be able to fold in Software-as-a-Service (SaaS) apps from the likes of Salesforce (NYSE: CRM) and NetSuite (NYSE: N) without disrupting their daily operations or paying for expensive third-party integrators, IBM officials said.
"The integration challenges Cast Iron Systems is tackling are crucial to clients who are looking to adopt alternative delivery models to manage their businesses," Hayman said.
IBM projects annual cloud computing software spending, including SaaS applications, will surge to more than $126 billion by 2012, up from an already impressive $47 billion invested in 2008.
IT research house IDC pegs cloud-based IT spending, not counting pure SaaS endeavors, to at least triple in the next three years to more than $45 billion by 2013.
Cast Iron Systems, based in Mountain View, Calif., is already integrating cloud and on-premise application suites for companies including Time Warner (NYSE: TWX), ShoreTel (NASDAQ: SHOR) and eBay (NASDAQ: EBAY) with its OmniConnect integration platform.