In a strategic move to enhance its consulting business, IBM announced on Thursday the acquisition of application modernization assets from Advanced, a company based in Birmingham, UK, specializing in mainframe modernization and OpenVMS and VME migration services.
The acquired assets are poised to augment IBM Consulting’s capabilities in mainframe application and data modernization services, according to a statement from IBM. The integration of these assets is expected to synergize with IBM watsonx Code Assistant for Z, a generative AI-assisted product released by IBM in August of the previous year, aimed at facilitating the modernization of applications for IBM Z systems customers.
Upon completion of the acquisition, IBM Consulting will welcome experienced professionals from Advanced, boasting over 30 years of expertise in supporting clients’ mainframe strategies and application modernization agendas. These experts specialize in a range of mainframe application modernization services, including assessment and design, mainframe transformation and integration, and full deployment across various industry sectors such as financial services, insurance, automotive, travel and transportation, government, utilities, and media.
While the financial details of the deal remain undisclosed, both companies anticipate the transaction’s conclusion in the second quarter of 2024.
IBM’s Motivation for Mainframe Modernization Assets
Contrary to popular belief, mainframes are far from obsolete, particularly for IBM, according to industry experts. Michael Azoff, Chief Analyst at Omdia, emphasizes the ongoing relevance of mainframe application modernization (MAM) assets, citing the preference of many enterprises for mainframes due to their superior security, resiliency, and transaction throughput.
IBM’s annual report for 2022 revealed that 45 of the world’s top 50 banks rely on IBM zSystems, and mainframes are used by 71% of Fortune 500 companies, handling 68% of the world’s production IT workloads and processing 90% of all credit card transactions. Azoff suggests that the robust market for MAM positions IBM as a key player in this space.
IBM’s Acquisition Strategy Under CEO Krishna
While this marks IBM’s first acquisition in 2024, the company, under CEO Arvind Krishna’s leadership since April 2020, has been actively pursuing an acquisition strategy. With more than 35 acquisitions, IBM aims to strengthen its consulting business and enhance its capabilities in hybrid cloud and AI.
In August of the previous year, IBM acquired Equine Global, an Indonesia-based ERP specialist and cloud consulting services provider, to bolster its consulting presence in the Asia Pacific region. The same month saw the acquisition of Manta Software, a data lineage platform, to complement capabilities within watsonx.ai.
Earlier acquisitions included the $4.6 billion purchase of Apptio to assist enterprises in optimizing IT expenditure, particularly cloud costs. In April of 2023, IBM acquired SaaS-based PrestoDB provider Ahana.
