Proving the Business Case for the Internet of Things

IBM and Vodafone join forces to deliver digital world

Steve Rogerson
January 24, 2019



IBM and Vodafone are creating a venture designed to help companies across Europe and beyond deliver innovation faster and succeed in a digital world. It will combine Vodafone’s knowledge of IoT, 5G and edge computing with IBM’s multicloud, industry expertise and professional services capabilities.
 
Building on more than two decades of collaboration between the two companies, IBM and Vodafone have entered into a strategic commercial agreement. It aims to provide clients with open, flexible technologies they need to integrate multiple clouds and prepare for the next wave of digital transformation enabled by AI, 5G, edge and software defined networking (SDN).
 
The venture will be lead by Michael Valocchi (pictured left) from IBM and Greg Hyttenrauch (right) from Vodafone Business.
 
With more than 70 per cent of organisations using up to 15 cloud environments as they strive to access powerful digital services, the interconnectivity of clouds and the vulnerability of data have become global issues. Together, IBM and Vodafone want to help companies remove the complexity and barriers from their technology choices and ensure that data and applications flow freely and securely across their organisations.
 
Under the venture, Vodafone Business customers will immediately have access to the full portfolio of IBM’s cloud offerings, underpinned by IBM’s industry expertise and open technologies.
 
As part of the agreement, IBM will provide managed services to Vodafone Business’ cloud and hosting unit, in an eight-year engagement valued at approximately $550m. Customers will benefit from IBM’s optimisation, automation and cognitive capabilities, which help them run their businesses effectively in a cloud environment.
 
The venture will co-develop digital services, combining the strengths of Vodafone’s position in IoT, 5G and edge computing with IBM’s multicloud, industry expertise and professional services capabilities.
 
“IBM has built industry-leading hybrid cloud, AI and security capabilities underpinned by deep industry expertise,” said IBM CEO Ginni Rometty. “Together, IBM and Vodafone will use the power of the hybrid cloud to securely integrate critical business applications, driving business innovation from agriculture to next-generation retail.”
 
The convergence of multicloud and connectivity could speed decision making, enhance automation and personalise experiences for end users in any location, even some of the most remote. For example, in the past, innovating on an oil rig would have been difficult due to lack of connectivity and disparate IT systems. Today, thanks to edge computing and IoT technologies from Vodafone working with AI and augmented reality applications from IBM, engineers can pinpoint and resolve faults on equipment in minutes rather than hours, potentially saving millions in lost productivity.
 
“Vodafone has successfully established its cloud business to help our customers succeed in a digital world,” said Vodafone CEO Nick Read. “This strategic venture with IBM allows us to focus on our strengths in fixed and mobile technologies, while leveraging IBM’s expertise in multicloud, AI and services. Through this new venture, we’ll accelerate our growth and deepen engagement with our customers while driving radical simplification and efficiency in our business.” 
 
Combining the capabilities of the two companies under one roof with dedicated executives from both companies, the venture is designed to act like a start-up and be responsive to rapidly changing market and customer demands. New digital services will be built using agile methodologies.
 
The venture will be operational in the first half of 2019.
 
“To deliver multi-cloud strategies in the real world, enterprises need to invest at many levels, ranging from cloud connectivity to cloud governance and management,” said Carla Arend, senior programme director at IDC. “This new venture between Vodafone and IBM addresses the full stack of real-world multi-cloud concerns with a powerful combination of capabilities that should enable customers to deliver multi-cloud strategies in all layers of their organisations. IBM's acquisition of Red Hat and Vodafone's emerging 5G technologies have the potential to amplify the value further and help enterprises ready themselves for the innovations of tomorrow. We estimate the global cloud market – hardware, software, services – to be worth $420bn in 2019. If you add to that the global cloud connectivity market which is worth $2bn, the combined market opportunity here is huge.”
 
Roy Illsley, an analyst at Ovum, added: “This is an era of unprecedented disruption with companies having to react fast to new competitors and business models as well to changing economic and political landscapes. Companies need choice, speed and flexibility. For this reason, the cloud market needs more diversity and more ventures like this. IBM and Vodafone are getting ahead of the game and by coming together are striving to make it easier for businesses to use any cloud, any data, any workload in any location. This could open up huge possibilities for the enterprise.”