Vodafone and IBM have forged a partnership to offer business services and applications that leverage the cloud, IoT, AI and 5G connectivity.
U.K.-based Vodafone Business, which accounts for about one-third of Vodafone's overall revenues, is paying IBM $550 million over the course of an eight-year managed services agreement.
With the agreement, Vodafone is combining its IoT portfolio, 5G, and SDN expertise with IBM's full portfolio of cloud offerings along with Big Blue's Watson artificial intelligence capabilities. One example of the partnership's potential is offering customers Vodafone's 5G network slices for private networks that could be combined with both edge computing and core cloud capabilities from IBM.
According to Vodafone Business CEO Brian Humphries, the goal of the partnership is to simplify the path of innovation for Vodafone's business customers as they make their digital transformations. Currently, more than 70% of organizations are using up to 15 different cloud environments, which impedes their digital transformations and causes additional security concerns, according to IBM's research.
"I think with our customers there is a common theme in our discussions and that's businesses are facing more complexity than ever before," Humphries said on a webinar this morning. "From running their businesses, to adopting new cloud technologies to driving an innovation agenda, to addressing security considerations, ultimately what they always ask for its simplicity and trust. They need a partner that can help them make sense of how all of this technology works together."
Another example of how IBM and Vodafone Business would work together is farming, which would include IoT sensors in the ground, on equipment and on drones. All of the information—such as weather conditions—can be sent to either a private cloud or hybrid cloud to help farmers make key decisions before they even plant their crops.
The venture will get underway in the second quarter of this year in the U.K., Ireland and Germany by addressing the needs of multinational customers. In addition to the blending of both companies' technologies, IBM also brings its professional services team and cloud expertise to the partnership.
"From a people perspective, the strength and innovation of Vodafone, combine that with IBM and our cloud capabilities underpinned by the innovation in AI and blockchain and wrapped around an industry professional services component, that really has the makings of something that is ahead of the market," said IBM General Manager Michael Valocchi, who will co-lead the partnership with Vodafone Business' Greg Hyttenrauch. "The capabilities both Vodafone and IBM bring to the table in a customer-centric manner is something that we truly believe in. I think we'll see a lot of success from a growth and a customer centricity perspective."
While Vodafone and IBM have partnered on other projects over the past two decades, work on the current venture started about a year ago.
Hyttenrauch said his team and Valocchi's team are collocated in London to physically work on the project side by side. In addition to the physical work, both companies will be sharing objectives and metrics with each other.
"I think as each month has gone by I've gotten slightly more excited by the possibility of what it means for ourselves, but more importantly our customers," said Hyttenrauch, director of cloud and security services for Vodafone Business. "We really see it now as a chance to bring the capabilities of two industry leaders closer together under one roof.
"I think what's important is the ethos of what both IBM and Vodafone want to achieve is a speed in the simplicity because the kind of solution that needs the right blend of cloud and conductivity really isn't possible from one provider today. We see this as a massive opportunity to accelerate into the market together."
The partnership will also give Vodafone added ammo in its battle against other carriers, such as BT, Telecom Italia, Deutsche Telekom and Telefónica, in the countries where it offers mobile and fixed-line services.
For IBM, the partnership is another means of moving beyond competing head-to-head with other cloud providers, such as Amazon Web Services, Google, and Microsoft Cloud, by leveraging its cloud, technologies and expertise in other verticals.
IBM announced yesterday that it had signed a $325 million contract with Juniper Networks to help it transition to cloud-native while also streamlining its IT operations and services.
Hyttenrauch said on the webinar that IBM's $34 billion deal to buy Red Hat was ample proof of IBM's belief in open source, and that Vodafone was also a big believer in open source and flexible solutions for its customers. Hyttenrauch and Valocchi both said that open source would play a role in their venture.
"The opportunity for enterprises to really begin to take advantage of digital in that intersection of connectivity and cloud is growing every day and with it the potential for complexity," he said. "And I love the thought that between Vodafone and IBM, we're going to be able to simplify that complexity at a speed and a scale that can really help those companies probably beyond just trying to do it themselves.
"The future is exciting. I would certainly say we're ready."