It wasn’t too long ago that IBM announced a deal which would have more of an impact on its customers than its own business: the sale of seven legacy software products to HCL.
Announced in December 2018 and made official in June 2019, the sell-off of Appscan, BigFix, Commerce, Lotus Notes and Domino, Unica, Portal and Connections sent shockwaves throughout the industry. Companies which had built their technology stack based on having IBM software support were now left dealing with a completely new provider – and perhaps even wondering why they renewed their contract in the first place.
The deal also happens to give C-suite IT decision-makers a glimpse at how the mega-vendor might deal with the legacy software that keeps their businesses running.
Let’s take a look at what it means for IBM users and what companies can do moving forward to mitigate the business disruption from it as much as possible.
What the IBM and HCL deal means for customers
IBM has been shifting its attention and resources away from its hallmark software product line for years in a bid to join the ever-growing cloud market. One major move came at the end of 2018 with the announcement it would be selling off a portfolio of solutions to HCL, an international technology provider, at just 4 percent of market value.
The news – initially a shock – was merely the starting point for other licensing deals that IBM plans on targeting as it divests from its software portfolio, like the sale of Watson Marketing technology to private equity firm Centerbridge in 2019 or its Algorithmics portfolio to SS&C in 2019. There’s a clear business objective in play for IBM: redistribute resources from its software development and support teams to other areas of the company.
Ultimately, these types of deals leave companies that are locked into long-term deals with no say as to who their software support provider is. Where they may have started a contract feeling secure with IBM as their partner, they may end it while receiving services from a company they’d never heard of before.
When technology plays such an important role in a company’s operability – especially with solutions like Appscan and Commerce – a sale like the IBM and HCL deal suddenly becomes a risk for business disruption.
IBM still boasts a considerable portfolio of software products and clients, but its recent activity suggests that’s not where the company’s attention is. C-suite decision-makers may view that as a concern, considering the company is still regularly enrolling clients in standard software support and – when businesses only want to keep their existing infrastructure – legacy software support.
Simply put, the IBM and HCL deal brings more uncertainty into the fold than it does clarity.
What can we learn from the IBM and HCL deal?
The IBM and HCL deal continues a pattern that shows IBM is eager to move away from legacy software. It’s a big change for the many companies which have technology stacks built on that very software.
While they’ve been able to stave off forced upgrades by paying for extended software support, that window of opportunity seems to be drawing to a close with IBM and the type of service it’ll bring to the table. This forces its customers to options like HCL, which are unknown commodities when it comes to what type of service they’ll provide.
It’s not the position a company wants to be in when it comes to maintaining mission-critical applications. Yet, IBM isn’t offering its clients much of a choice.
There’s a growing cohort of businesses that pass on upgrading to versions with lackluster new features in favour of maintaining an infrastructure that’s tried, tested and stable. It’s a strategy that, if they continue with it, will potentially lead to their software support being sold to the highest bidder.
Perhaps what the IBM and HCL deal will best be known for then is the public’s pivot to third-party software support. With software support shifting away from IBM and exorbitant legacy software pricing in place anyway, it makes sense for a business to take software support into its own hands.
IBM third-party support is part of a fast-growing third-party support market that has partly risen as a result of the prohibitive legacy software model. It offers businesses a different avenue to achieve the same – or better – level of service, usually at half the price.
Third-party support represents a viable alternative to the continued sell-off that’s likely to follow the HCL deal. With an uncertain future ahead of IBM customers, it’s as close to a sure thing as many of them will ever get.
Interested in learning more about IBM third-party support? Talk to Origina today to schedule your free Feasibility Assessment.