Earlier today IBM and Workday announced a partnership with the intent of Workday using IBM’s Cloud for its development and test systems. Announcements of SaaS vendors (like Workday) and IaaS vendors (like IBM) are popular these days, and we have commented on them earlier (e.g. Salesforce chooses AWS, SAP choosesMicrosoft (and earlierIBM), JDA choosesGoogle Cloud Platform, all the way back Infor choosesAWS.

But let’s dissect the press release in our usual style (it can be found here):

ARMONK, NY and PLEASANTON, CA – 15 Aug 2016: IBM (NYSE: IBM) today announced Workday(NYSE: WDAY), a leading provider of enterprise cloud applications for finance and human resources, has adopted the IBM Cloud as part of a multi-year strategic partnership. IBM Cloud will become the foundation for Workday’s development and testing environment providing Workday with greater efficiency, flexibility, and global scale.

MyPOV – Describes well what is going – Workday ‘has adopted’ IBM Cloud (likely SoftLayer) but will become the foundation for Workday’s development and test environments. Development and test environments are usually of less interest to SaaS customers, but the cost of providing, provisioning and maintaining them is a large chunk of CAPEX for any ISV / SaaS provider. The ease of use of provisioning instances does not only matter to enterprise building next generation applications, but also to ISVs / SaaS vendors and their developers. A lower TCO both in physical and labor cost to get an instance may even affect how many developers can work how efficiently on providing code, as it all comes from a development / R&D budget.

As IBM Cloud becomes the primary platform for Workday’s development and testing, Workday will continue accelerating the pace of innovation for its applications and services. IBM Cloud will also provide important capacity expansion in support of Workday’s growing development and testing requirements.
MyPOV – Describes what Workday gains, more flexibility to focus on its own application instead of running environments. Testing requirements also matter to customers, as often the so called ‘sand box’ environments run under that label – and easier and faster to access sand box environments mean easier and faster access to code for customers trying to familiarize themselves with upcoming release capabilities.

 “IBM and Workday are both delivering transformative applications and services in the cloud,” said Aneel Bhusri, Co-Founder and CEO, Workday. “Workday will use IBM Cloud to continue accelerating Workday’s internal development and testing efforts to support our ongoing global expansion.”
MyPOV – Good quote from Bhusri, interesting to see the focus on global. IBM Cloud’s is in a leading position here compared to the IaaS competitors – with close to 50 locations. And location matters both for performance in general – but for HR and Finance applications (as Workday builds) from a statutory and legal compliance perspective. When e.g. employee data needs to be in country (e.g. Russia), testing of code with the real customer / production data should be happening in the same country, too. A major challenge for all SaaS vendors at the moment, given the accelerated rate of regulatory changes we predict in the near term future.

"Leading enterprises like Workday continue to turn to IBM Cloud for its global reach, flexibility, and resiliency," said Robert LeBlanc, Senior Vice President, IBM Cloud. “Through a preferred cloud partnership with IBM, Workday can accelerate its innovation efforts to better serve clients around the world.”
MyPOV – Good quote of LeBlanc, too – highlighting the faster pace of innovation that is possible when an ISV / SaaS vendor gets rid of running their own environments.

IBM’s global cloud data center presence includes nearly 50 highly scalable and security-rich IBM Cloud datacenters in 17 countries on six continents. The company delivers enterprise cloud services ranging from analytics and Watson to Blockchain and Internet of Things to provide clients with more choice and flexibility in their digital transformation.
MyPOV – Important to mention the location number in the 50ies, with the closest competition working through the twenties in regards of numbers of location. IBM benefits here from the comparatively very small pod size of a SoftLayer data center compared to the competition, which allows IBM to open IBM Cloud locations with less load in a location than the competition.

Workday intends to expand the use of IBM Cloud over time beyond development and testing. Today’s announcement builds on the IBM and Workday partnership, which includes IBM’s global Workday Consulting Services, the 2015 acquisition of Meteorix–a leading Workday services partner–and IBM’s own use of Workday Human Capital Management for its global workforce. 
MyPOV – No ISV / SaaS vendor moves development and test environments to a platform without thinking what comes after that. Sandboxes, Learning environments, production environments etc. The elimination of any environment variable that may slow down the release of software with new capabilities or fixes is something DevOps and Product teams at ISVs / SaaS vendors strive for. Though even not mentioned, the question will be soon when e.g. production environments will run on the IBM Cloud.


[Updated August 15th 2016] I had a chance to catch up with IBM's Jim Comfort and Workday's David Clarke earlier today and there are a few additional takeaways:

  • Only the beginning - As usual with partnerships both partners point out that there is more to come... in this case I'd be more optimistic that this will happen given that SoftLayer supports Workday's architecture well, IBM is more than only a IaaS vendor but has e.g. Workday implementation business with Meteorix (see a tidbit on this in my Rising Event Report here).
  • Partnership synergies - It escaped me when writing the original blog post - IBM partnered with VMware earlier in the year (see here) and that partnership was important for the Workday partnership, as the vendor is using VMware for some aspects of its technology stack. A good example how partnerships enable partnerships.  

Overall MyPOV

As mentioned before, software vendors are looking for IaaS partnerships to reduce their cost of product development. It is a good time, as the IaaS vendors are almost desperate to get the load from ISVs / SaaS vendors onto their infrastructure, as the load is uniform. For an IaaS vendor to get 100 production environments from 100 enterprises is 100 sales, consulting and implementation cycles. In other words, a custom process. Compare that with becoming the cloud of choice for an ISV / SaaS vendor – those 100 production environments come from 100 customers of that vendor. And all are the same profile in regards of technical requirements, footprint etc. – and best the ISV / SaaS vendor will move them over time - themselves. So no surprise the race for the uniform load of ISVs / SaaS vendors is in full swing. As a matter of fact, it is the biggest prize for IaaS vendors at the moment.
How prized the ISV / SaaS load is can be seen in the case of Workday, with the industry anecdote that happened over three years ago: At HP Discover then COO Veghte saidthat Workday was moving to HP’s Cloud, dropping AWS. AWS CTO Werner Vogels quickly de-bunked that on Twitter, with re-confirmation from Workday. In the meantime, Workday has shared at their Tech Summits that it is using public cloud infrastructure for development and test environments. So let’s check what Vogel tweets or any other official reaction.

For the long time enterprise software observers, this comes as a little bit of a deja-vu, too – as over 12 years ago, shortly before the acquisition of PeopleSoft by Oracle, Workday picked the IBM technology stack to build its next generation of its software on. This announcement is different though, as it affects more the operational side, the Workday tech stack (seems to) stay fully intact and is not affected by the environment.

AWS CTO Vogels tweet back in 2013, when HP claimed Workday cloud load for the HP cloud
As always with partnerships – let’s look at this from the customer view first: 
It is good news for Workday customers when Workday can lower development costs, provide internal environments fast and more efficiently and provide environments in more locations. At the moment Workday does not develop in low cost / high talent locations (aka 'offshore' unless you count Ireland as such a location), but the IBM partnership gives the vendor that option. So ultimately the chance for more hands building code and code in more places. 
The good news for IBM customers is that IBM cloud has signed a large uniform SaaS vendor deal, which lowers the cost for IBM to run its cloud, may make locations more commercially viable and may even bolster the opening of locations beyond the 50+ locations IBM supports today. In difference to the partnership IBM has with SAP, that was more focused on the older SAP technology implementations, and presenting single customers with savings, this partnership has the potential of adding (over time and a few more decisions favorable for IBM) a lot of load to IBM’s cloud. Last but not least, the bare metal nature of the IBM / SoftLayer based cloud comes with advantages when speaking with more conservative organizations in regards of putting their sensitive Finance and HR data in the cloud. Being able to ‘see, touch & control’ a server takes away a lot of cloud angst from many CIOs and CTOs in more concerned geographies and cultures.

Overall a good move for both vendors, and most importantly for their future joint customers. Now we need to understand more, e.g. Workday confirmed running on OpenStack, IBM supports OpenStack, this will be a move that will make the partnership even more palatable to CIOs / CTOs as OpenStack is a known technology for them. And then the 1B$ question will be if and when production environments may move from Workday data centers to IBM data centers… plenty of questions. Stay tuned. 

More Apps / SaaS vendor and IaaS vendor partnerships (in chronological order):
  • Infor runs on Amazon AWS (read here)
  • SAP on IBM Cloud (read here
  • Lumesse on Salesforce Cloud (read here) and
  • NetSuite on Microsoft Azure (read here)
  • JDA chooses Google Cloud Platform (read here)
  • SAP chooses Microsoft Azure (read here)
  • Salesforce chooses AWS (read here

More on IBM:
  • News Analysis - IBM Boosts Support to OpenStack's RefStack... first serious attempt to make OpenStack interoperability real - read here
  • Event Report - IBM Interconnect - IBM innovates and partners into the hybrid cloud era - read here
  • News Analysis - IBM and VMware announce partnership to accelerate enterprise hybrid cloud adoption >> Looking promising - read here
  • Event Preview - IBM Interconnect 2016 - read here
  • Site Visit - IBM Design Studio Austin - read here
  • MarketMoves - IBM strikes 3x in Fall - Cleversafe, The Weather Company and Gravitant - read here
  • News Analysis - IBM launches Industry's First Consulting Practice Dedicated to Cognitive Business - a good move it's early times - read more
  • News Analysis - IBM plans to acquire Cleversafe to propel Object Storage into the Hybrid Cloud >> a good move. Read here
    Market Move - IBM acquires StrongLoop - nodejs comes to BlueMix - read here
  • News Analysis - IBM and ARM Collaborate to Accelerate Delivery of Internet of Things - The IBM NextGenApps Stack emerges - read here
  • Progress Report - IBM Cloud makes good progress - but needs to attract more load - read here
  • Market Move - IBM gets into private cloud (services) with Blue Box acqusition - read here
  • Event Report - IBM InterConnect - IBM makes bets for the hybrid cloud - read here
  • First Take - IBM InterConnect Day #1 Keynote - BlueMix, SoftLayer and Watson - read here
  • News Analysis - IBM had a very good year in the cloud - 2015 will be key - read here
  • Event Report - IBM Insight 2014 - Is it all coming together for IBM in 2015? Or not? 
  • First Take - Top 3 Takeaways from IBM Insight Day 1 Keynote - read here
  • IBM and SAP partner for cloud - good move - read here
  • Event Report - IBM Enterprise - A lot of value for existing customers, but can IBM attract net new customers? Read here
  • Progress Report - The Mainframe is alive and kicking - but there is more in IBM STG - read here
  • News Analysis - IBM and Intel partner to make the cloud more secure - read here
  • Progress Report - IBM BigData an Analytics have a lot of potential - time to show it - read here
  • Event Report - What a difference a year makes - and off to a good start - read here
  • First Take - 3 Key Takeaways from IBM's Impact Conference - Day 1 Keynote - read here
  • Another week and another Billion - this week it's a BlueMix Paas - read here
  • First take - IBM makes Connection - introduces the TalentSuite at IBM Connect - read here
  • IBM kicks of cloud data center race in 2014 - read here
  • First Take - IBM Software Group's Analyst Insights - read here
  • Are we witnessing one of the largest cloud moves - so far? Read here
  • Why IBM acquired Softlayer - read here
More on Workday
  • News Analysis - Workday Delivers Payroll for France Customers - read here
  • Progress Report - Workday Tech Summit - Good Progress, More Insights, Less Concerns - read here
  • News Analysis - Workday and ADP partner to Deliver a Seamless Customer Experience for Global Payroll - read here
  • Event Report - Workday Rising - Learning is there and good housekeeping - read here
  • News Analysis - Workday completes Talent Management with Learning - Finally - or too late? Read here.
  • Event Preview - What I would like Workday to address this Rising read here
  • News Analysis – Workday to Expand Suite of Applications for Healthcare Industry - with a SCM twist - read here
  • News Analysis - Workday supports UK Payroll - now speaks (British English) Payroll  - read here
  • Workday 24 - 'True' Analytics, a Vertical and more - now needs customer proof points - read here
  • First Take - Top 3 Takeaways from of Workday Rising Day 1 Keynote - The dawn of the analytics era - time to deliver Insight Apps - read here
  • Progress Report - Workday supports more cloud standard - but work remains - read here
  • Workday 22 - Recruiting and rich Workday 22 are here - read here
  • First Take - Why Workday acquired Identified - (real) Analytics matter - read here
  • Workday Update 21 - All about the user experience and some more - read here
  • Workday Update 20 - Mostly a technology release - read here
  • Takeaways from the Salesforce.com and Workday partnership - read here
  • Workday powers on - adds more to its plate - read here
  • What I would like Workday to address this Rising - read here
  • Workday Update 19 - you need to slow down to hurry up - read here
  • I am worried about... Workday - read here