LiveArea’s Perspective on the IBM-HCL Announcement
December 19, 2018
Recently, IBM announced it is selling $1.8B in IBM software products to HCL, an IBM alliance partner based in India. The deal is expected to close by mid-2019. For LiveArea, the game-changer is the divestiture of WebSphere Commerce (on-premise) along with IBM Digital Commerce (IDC). While other commerce-related offerings will remain in the IBM portfolio – including IBM Order Management (SaaS) and IBM Sterling Order Management (on-premise) – IBM effectively is exiting the eCommerce platform business it helped inaugurate in 1997.
What does this mean for IBM WebSphere customers? How should users proceed? We’ve got a point of view that may help users plan for and manage the coming disruption. But, first, some history.
Why the Divestiture?
IBM went on an acquisition spree in late 2000, adding more business software to its portfolio. This included acquisitions such as Sterling and Unica. The move allowed IBM to transition into the business user applications space faster and compete more effectively.
But as opportunities ebb and flow, and markets run their course, most large technology companies will rebalance their portfolios. For instance, IBM has a long history of doing this in its hardware business – think personal computers and Intel servers.
In his analysis of the HCL-IBM deal, Forrester’s Allen Bonde, Vice President, Research Director, writes, “Overall, IBM is continuing to reformulate its strategy as an end-to-end enterprise solutions provider, even as it doubles down on open source and cloud development tools and technologies such as AI and blockchain. Selling off these collaboration and experience assets should help to clear out space for investing further in these areas and more rapidly executing its SaaS vision.”
Many LiveArea customers go to market with WebSphere Commerce and WebSphere Portal. Both solutions have run their course on a technology stack that is no longer modern enough and doesn’t align with the industry’s move to microservices and APIs.
Moreover, as the eCommerce market has matured, SaaS-first platforms like Salesforce Commerce Cloud and SMB entrants like Shopify, BigCommerce, and Magento have erased opportunity in the SMB market for WebSphere Commerce. The companies that have benefited most from WebSphere Commerce have been large retailers where customization and complexity in their business models drive to a platform like WebSphere Commerce.
IBM, recognizing the effort, cost, and time it would take to rewrite or modernize its eCommerce platform, elected to sell WebSphere Commerce and IDC. HCL has been working with IBM for a couple of years on product development and maintenance of many of the products it’s acquiring from IBM, making it easier for HCL to assess the value of the portfolio.
What’s a User To Do?
A transaction like this gives customers pause – and rightly so. It’s likely, for instance, the transition to HCL will impact IBM employees who work on these products, including talent in offering management, development, and support. Churn is highly likely – and this may affect feature releases and support.
So what should you do?
For IBM WebSphere Commerce users, it depends on where you are in the product lifecycle. If you’ve started a move to V9, our advice is to complete the upgrade. You will get benefits from the containerized deployment model in the areas of patching and feature upgrades. If you haven’t started an upgrade, we recommend you wait to see what happens with the HCL transaction — that is if you are happy with WebSphere Commerce and comfortable with the total cost of ownership.
IBM has been working on several Watson-based products, including personalized search and a Watson-powered promotions engine. These products were to be accessible at no charge to WebSphere Commerce V9 customers. With the transition to HCL, we can’t imagine a “free” scenario. If these newer products must compete independently in the marketplace, competition will be fierce. Pure SaaS plays in each of the areas or more SaaS first ecommerce platforms that bundle this technology have a head start over IBM.
If your eCommerce enterprise is built on V7 or V8 of WebSphere Commerce and you have struggled with a high total cost of ownership, and you don’t need the complexity and customization capabilities of WebSphere Commerce, we recommend you begin the work of evaluating a new platform. The cost of upgrading to V9 to take full advantage of its more modern architecture will be the equivalent of implementing a platform equipped with many more pre-built integrations to third parties and an active ecosystem of apps, cartridges, and third parties.
As for IBM Digital Commerce, we don’t recommend moving to this offering. The product is still under development, and few customers are live on the product today. Although IDC has enjoyed a high degree of focus from IBM Offering Management recently, the acquisition by HCL may change this focus. It’s uncertain what HCL will do with the offering. Here, too, we recommend you start evaluating alternatives.
We believe that in the long term, a SaaS platform makes the most sense. It enables innovation and simplifies development.
While our guidance is to transition from older versions of WebSphere Commerce, we believe IBM continues to hold a leadership position in order management. We recommend the IBM Order Management (SaaS) and IBM Sterling Order Management (on-premise) be considered for digital transformation projects that require robust omni-channel OMS capabilities.
As a longtime IBM business partner and a company that supports a wide variety of platforms – Salesforce Commerce Cloud, SAP Hybris, Magento, BigCommerce, and Shopify – LiveArea can help minimize the disruption associated with a transition from WebSphere Commerce. Accelerators and a wealth of experience we bring to migrations can help you speed and simplify your move.
If you have questions about next steps, drop us a line. We are happy to assist you as you navigate what may be a challenging transition.