International Business Machines (NYSE:IBM) IBM recently announced that it is partnering with Avertra to enable companies engaged in the energy and utilities vertical to ramp up digital transformation.
Herdorn, VA-based Avertra is an integration services, products and consultancy company. It primarily focuses on the energy and utilities sector.
Avertra will host its MiCustomer Digital Experience Platform on to IBM’s cloud environment. The company will be able to gain deeper insights from its database by leveraging IBM’s cloud services like IBM Kubernetes and develop newer tools to boost efficacy for the entire sector.
Avertra forms a part of IBM’s hybrid cloud ecosystem. The company also uses IBM's Cloud Engagement Fund to gain access to cloud credits and technical resources to assist enterprises in migrating workloads to different hybrid cloud platforms, which also includes IBM Cloud. IBM Cloud Engagement Fund initiative is part of its $1-billion investment in the hybrid cloud ecosystem.
Growth Prospects Aplenty in Hybrid Cloud Space
IBM is witnessing robust traction for its cloud offerings among enterprises including energy and utility services providers in the past few years.
In September 2020, IBM inked a deal with oil and gas giant, Schlumberger (NYSE:SLB) SLB to move the latter’s DELFI cognitive explorations and production (E&P) platform on to its hybrid cloud.
Even before the pandemic, enterprises across all sectors including energy and utility, were rapidly shifting their workloads to cloud. Migration to cloud offers enterprises greater scalability, speedier deployment as well as cost efficiency and better security. COVID-19 crisis has only expedited this shift.
Per a Grand View Research report, the digital transformation market is expected to witness a CAGR of 22.7% between 2020 and 2027. This bodes well for cloud providers like IBM.
Further, integration of innovative technologies like artificial intelligence (AI) and machine learning (ML) with cloud technology will further drive the cloud market. The spending on cloud services, globally, is forecast to witness a CAGR of 15.7% between 2020 and 2024 and surpass $1 trillion, per an IDC report.
IBM continues to focus on expanding its presence in the lucrative hybrid cloud domain. IBM announced the split of its business in two separate units to capitalize on this trend, in October 2020. The tech giant will spin off (tax free) Managed Infrastructure Services, a unit of its Global Technology Services segment, into a new company by the end of 2021.
The company is acquiring smaller but intensely cloud-focused companies/start-ups to meet its hybrid cloud vision. Some of its recent acquisitions include Nordcloud, Expertus, Instana and TruQua Enterprises LLC.
Nonetheless, escalating expenses on hybrid cloud platform amid rising competition in the cloud vertical from the dominant players like Amazon’s AMZN Amazon Web Services, Microsoft (NASDAQ:MSFT)’s MSFT Azure and Google (NASDAQ:GOOGL) Cloud are a major threat. Increasing debt levels amid extensive restructuring efforts also put pressure on the stock.
Currently, IBM carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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