IBM announced the pending acquisition application modernization capability provider Advanced, positioned by IBM as a strategic move to bolster its position in hybrid cloud and AI. The terms of the deal were not disclosed, but is expected to close in the second quarter of 2024.
This acquisition will enhance IBM Consulting’s services in mainframe application and data modernization, marking a significant step in IBM’s ongoing commitment to supporting clients through their digital transformation journeys.
Reflecting the urgent need for rapid organizational transformation, the acquisition promises to address the complexities of modernizing mainframe systems, which is crucial for many enterprises’ hybrid cloud strategies.
The move also aligns with IBM’s broader acquisition strategy under CEO Arvind Krishna, emphasizing the company’s deepening focus on hybrid cloud and AI capabilities.
Who is Advanced?
Advanced provides application modernization services, notably excelling in the legacy modernization market. Among providers of business software and services within the UK, Advanced is distinguished as one of the top three, demonstrating a robust track record in facilitating customers’ transition to cloud-based solutions, serving a diverse range of public, private, and third-sector organizations.
The company boasts an impressive turnover of US$339 million, supports a customer base exceeding 20,000, and is powered by a workforce of more than 2,500.
Advanced’s core mission involves simplifying intricate business challenges through mission-critical software, significantly aiding customers in their digital transformation endeavors and positively impacting the lives of millions.
Advanced accomplishes its mission by providing various services and tools designed to help organizations transition from older, often less efficient IT systems to more modern, agile, and cloud-compatible solutions.
The company’s focus includes assessing current IT infrastructures, designing modernization strategies, and implementing solutions that integrate seamlessly with contemporary IT environments, such as hybrid cloud systems.
Benefits to IBM
The acquisition of Advanced’s application modernization capabilities by IBM is poised to bring a range of strategic benefits to the tech giant. First among those benefits is a significant enhancement to IBM Consulting’s arsenal in mainframe application and data modernization, a critical domain for many large-scale enterprises.
The move nicely aligns with IBM’s overarching strategy in hybrid cloud and AI, where the company is actively expanding its footprint. The acquisition also directly addresses the growing demand for rapid business transformation, providing IBM with advanced tools and expertise to assist clients in staying competitive in a rapidly evolving digital landscape.
Mainframes, integral to hybrid cloud strategies for many organizations, stand at the core of this acquisition, positioning IBM to offer more comprehensive and cutting-edge solutions in this space.
This move significantly bolsters IBM’s capabilities in a crucial area, aligning with its broader focus on hybrid cloud and AI technologies. By integrating Advanced’s specialized expertise in mainframe modernization and migration services, IBM enriches its service offerings and taps into a pool of experienced professionals with over 30 years of experience in this field.
This acquisition brings a wealth of knowledge and skills across diverse industries such as financial services, insurance, automotive, and government, broadening the scope and reach of IBM’s consulting business.
The synergy between Advanced’s assets and IBM’s existing products, especially the watsonx Code Assistant for Z, indicates a potential for more innovative and comprehensive solutions for IBM Z systems customers.
The combination of Advanced’s innovative tools and IBM’s existing technologies paves the way for new advancements in IT services, particularly in the complex realm of mainframe modernization.
Analyst’s Take
The acquisition clearly indicates IBM’s commitment to strengthening its position in the mainframe modernization market. This sector remains vital for many enterprises in their digital transformation journey.
From a strategic standpoint, the acquisition is well-aligned with IBM’s broader objectives. It amplifies IBM Consulting’s capabilities, enabling the company to offer more comprehensive services in an increasingly crucial area for businesses seeking to modernize their legacy systems.
Integrating Advanced’s tools and expertise could accelerate IBM’s ability to deliver complex transformation projects, especially those involving integrating mainframe systems with modern cloud environments.
However, it’s essential to consider the challenges inherent in such acquisitions. Integrating new capabilities and aligning organizational cultures is not always seamless and could pose short-term hurdles.
IBM’s strategic move to acquire application modernization capabilities from Advanced underlines its aggressive pursuit of leadership in the hybrid cloud and AI spaces. This acquisition, among more than 35 since Arvind Krishna’s tenure as CEO began, highlights IBM’s commitment to evolving its service offerings and addressing the complex demands of the modern digital landscape.
By continually augmenting its capabilities through targeted acquisitions, IBM is expanding its technological breadth and reinforcing its position as a pivotal player in the industry. This latest acquisition is yet another example of IBM’s forward-thinking approach to helping enterprises navigate the complexities of hybrid cloud and AI.
Disclosure: Steve McDowell is an industry analyst, and NAND Research is an industry analyst firm that engages in, or has engaged in, research, analysis and advisory services with many technology companies, including those mentioned in this article. Mr. McDowell does not hold any equity positions with any company mentioned in this article.