With the acquisition of Applications Software Technology (AST), IBM has significantly boosted its Oracle Cloud offerings. This strategic move follows IBM’s earlier acquisition of Accelalpha and reflects a broader trend in the cloud computing market, where major companies aim to bolster their expertise by acquiring smaller, specialized firms. This trend is evident in similar moves by industry titans such as CDW, which acquired Mission Cloud for its AWS expertise, and TD Synnex, which purchased IPSense Cloud Migration.
Strengthening Oracle Cloud Solutions for Public Sector
Integration with IBM Consulting
AST, along with its subsidiaries 9Edge, Computer Technology Resources, and Symatrix, will be integrated into IBM Consulting, with a focus on offering Oracle Cloud applications to public sector clients. This integration targets state and local governments, as well as K-12 education institutions, aiming to facilitate digital transformation through Oracle Cloud solutions. By incorporating AST’s expertise, IBM is positioned to better address the unique challenges the public sector faces, such as entrenched legacy systems, skill shortages, and stringent security and compliance mandates.
Transitioning to the cloud poses significant hurdles for the public sector. Established legacy systems often require substantial overhauls, and there is frequently a lack of necessary skills to manage modern cloud environments. Additionally, stringent security and compliance mandates make it essential for these entities to have robust, secure cloud solutions. Kelly Chambliss, IBM’s senior vice president of its Americas Consulting division, emphasized that the acquisition would significantly bolster IBM’s public sector service capabilities, particularly in Oracle Cloud applications. This enhanced capability is expected to enable clients to confidently navigate their digital transformations.
Enhanced Client Solutions
AST’s expertise in Oracle Fusion Cloud Enterprise Resource Management and other Oracle Cloud products perfectly aligns with IBM’s long-standing partnership with Oracle, a relationship that spans nearly four decades. The merger not only broadens IBM’s reach in the public sector but also extends its capabilities to serve commercial industries such as manufacturing, energy, and consumer packaged goods. This strategic alignment is expected to provide substantial benefits to clients across various sectors, enhancing their cloud transformation journeys.
Justin Winter, CEO of AST, expressed excitement about the merger with IBM, highlighting the expanded opportunities it offers to employees and the enhanced solutions it brings to clients. With operations across the U.S., U.K., Canada, and India, AST significantly bolsters IBM’s market presence and capabilities in providing cloud transformation solutions. The combined expertise of IBM and AST is set to deliver robust, client-focused cloud services, further strengthening IBM’s position in the cloud computing market.
Broader Industry Trends
Acquisition of Specialized Firms
The acquisition of AST is part of a more extensive trend where large cloud service providers are enhancing their portfolios by incorporating specialized consultancies. This strategy enables these providers to meet the complex needs of clients across various sectors, particularly those that have been slow to adopt cloud solutions. By integrating firms like AST, IBM can offer more comprehensive and tailored cloud transformation services, catering to the unique requirements of different industries.
The financial terms of the AST acquisition were undisclosed, but the deal is expected to close in the first quarter. This acquisition, along with IBM’s previous purchase of Accelalpha, underscores the company’s commitment to expanding its cloud service offerings. This trend is mirrored by other industry giants like CDW and TD Synnex, who have also made strategic acquisitions to enhance their cloud service capabilities. These moves collectively highlight the growing importance of specialized expertise in the rapidly evolving cloud computing landscape.
Positioning for Future Growth
By acquiring Applications Software Technology (AST), IBM has significantly enhanced its Oracle Cloud services. This strategic decision aligns with IBM’s previous acquisition of Accelalpha and showcases a broader trend in the cloud computing industry. Major companies are increasingly acquiring smaller specialized firms to strengthen their expertise and expand their offerings. This strategic trend is also seen in the actions of other industry leaders. For instance, CDW acquired Mission Cloud to enhance its AWS capabilities, while TD Synnex bought IPSense Cloud Migration to bolster its service suite.
These moves highlight a growing focus on cloud technology, as businesses strive to keep up with the rapid advancements and competitive landscape of the tech world. By integrating these specialized firms, companies like IBM, CDW, and TD Synnex aim to provide more comprehensive and robust solutions to their clients. This strategy not only deepens their expertise but also broadens their market reach, allowing them to stay ahead in an ever-evolving and competitive industry.