The Big Money is going to Cloud, AI and Data

In recent weeks there have been two very eye catching acquisitions in the IT World, SAP buying Qualtrics and IBM taking over Open Source leaders Red Hat. At first glance these may appear to be very different acquisitions. Red Hat offers support on an Open Source Operating System which has been around since the early 90s. Qualtrics has been an IT industry darling for just a few years; it operates in the experience management market (XM). Different companies indeed.

However the reason two of the IT Worlds biggest players were eager to acquire them are quite similar. It points to their recognition of what are the big themes of the coming years and the data requirements that underlie them; AI, Data, Cloud and Open Source Software.

Lets take a look at them one by one.

Everyone wants to get to AI, to get there you need data. AI is a huge area of investment. In order to get to AI you need to embark on a journey and that journey starts with data. This is not just the kind of data that SAP traditionally helped customers manage in their ERP systems. Customers now recognize that as valuable as their historical data is, it is the unstructured data of the kind that Qualtrics can provide that provides a new layer of insight. SAP CEO Bill McDermott said “combining SAP operational data with Qualtrics experience data would create an end to end data solution”.

It’s all about the Cloud. IBM already have an IaaS and Paas offering in the market and SAP offer many of their services in the Cloud. However the future is looking very Hybrid. Recent surveys from IBM revealed only 10-20% of workloads are being moved permanently to the Cloud. What customers want is flexibility, no Cloud vendor lock in and the ability to run workloads where and when they want. Red Hat with their Kubernetes distribution Openshift gives IBM the ability to get a jump on the Hybrid Cloud market. It won’t help them tackle the public cloud giants, but if they crack the very tough nut of Hybrid that may not matter.

Open Source is the future of software. Speaking about avoiding lock in, there is no better way to do this than by utilizing the innovation that is Open Source software. Red Hat have been the most valuable OSS company for some time. With the rise of technologies like Docker, Kafka and Tensorflow becoming mainstream is use cases for Data streaming,  Data management and machine learning IBM acquiring Red Hat and the Openshift ecosystem makes a lot of sense.

So while side by side Red Hat and Qualtrics may not look very much alike; the reasons they were acquired this month really do.