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IBM Red Hat Acquisition’s Impact on Hybrid Cloud

As the IBM Red Hat acquisition comes closer to fruitionimpacts to customers on both sides will soon be realized. Now that the deal has been approved by the Department of Justice, the acquisition is on track to close later this year. What does this mean for those who currently use IBM and Red Hat products?  

Perficient has key partnerships with both IBM and Red Hat, with a significant number of our customers leveraging these technologies. About a quarter of our business is with IBM. Our CEO, Jeff Davis, said of the acquisition when it was announced, “For us, it’s two great partnerships joining forces. We are known and thought highly of by everybody on both sides,” he said. “Both sides have already reached out and expressed an interest in us being a key partner and helping bring them together out in the field. We’re excited about that.” This acquisition will affect us as a partner, but also our customers.  

From a partner perspective, here are a few of my observations on how I see the IBM Red Hat acquisition impacting the hybrid cloud market.  

Waiting for Change 

IBM has communicated that Red Hat will operate as a separate entity. With that, they have committed to maintaining the open source heritage, product portfolio, and go-to-market strategy for Red Hat.  

Even so, most customers are in a holding pattern until Q3 to see what happens. However, it’s unlikely much will happen even when the acquisition is final, especially with IBM’s commitment to treating Red Hat as a separate entity. We’ll have to wait 12 to 18 months beyond the deal close to see what if any changes will occur.  

Product Overlap  

While IBM and Red Hat certainly have complementary products, the acquisition will also create a lot of internal competition 

This product merge will do two things:  

  1. On the positive side, it opens broader set of available products to best fit customer needs. Both sides are filling gaps, and the joint portfolio can be complementary. 
  2. But it will also create redundancy that will need to be rationalized 

Customers need to start planning how they will approach these redundancies. A partner with expertise in both IBM and Red Hat can help navigate that journey when it comes to product selection.  

For example, IBM Cloud Private and IBM Cloud Kubernetes Service will need to be rationalized with OpenShift at some point. While these products don’t directly compete, there is a significant overlap in functionality. Will IBM continue to maintain it? Likely for a while, but for how long? And when will they shift it all to OpenShift? In the early months of the merger, there may be value in IBM maintaining multiple services that serve the same purpose but undoubtedly in the near future there will be a rationalization to eliminate redundant capabilities. Customers should get ahead of these decisions and start planning now. 

Read more about the portfolio overlap created by the acquisition.  

OpenShift Focus 

When it comes down to it, IBM is buying Red Hat for OpenShift, so that will take center stage. We will see continued investment from both IBM and Red Hat in that platform, and OpenShift will become the common foundation for both IBM and Red Hat solutions. IBM has already started a transition toward containerizing their entire portfolio, and last year prior to the acquisition news, the two announced a partnership to certify IBM middleware cloud products on OpenShift. We will see that continue and expand.  

Traditional middleware and data products will leverage OpenShift as a common abstraction layer to run on and across any number of cloudsOpenShift – enabled by Kubernetes – provides a common foundation across all platforms in both portfoliosDocker-based container formats and Kubernetes, while still young, have quickly established themselves as an industry standard. Both IBM and Red Hat recognize that this will be the common foundation for most cloud-based solutions going forward 

While OpenShift will take the spotlight, Ansible will be another important piece to drive DevOps and automation. We’ll see a growing reliance on it from IBM and more alignment with IBM products.   

Join Us in Minneapolis Next Week 

I’ll be speaking on this topic at an upcoming event in Minneapolis. If you’re in the area, please join Perficient and Red Hat for a discussion with Forrester analyst, Dave Bartoletti, on cloud and container strategy. E.G. Nadhan, Chief Technology Strategist at Red Hat, will also be moderating a discussion with customers, including TCF Bank and Sabre, on how this works in action.  

Event Details: 

  • Thursday, June 13th | 2:30 – 5:30 PM 
  • LaSalle Conference Center, Room PJ | 800 LaSalle Ave, Minneapolis, MN 55402 
  • Agenda: 
    • 2:30 – 3:00: Check In 
    • 3:00– 4:30: Presentation and Interactive Discussion 
    • 4:30 – 5:30: Happy Hour and Networking 

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Joel Thimsen

Joel Thimsen is a Principal in Perficient's Healthcare and Life Sciences practice and serves as a retained Chief Architect for several key customers in the sector.

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