Where IBM i’s Double-Digit Growth Is Coming From

IBM just completed the best quarter for IBM i revenue in recent memory. While Big Blue no longer releases hard sales figures for the platform, the company did let it be known that the IBM i side of the house enjoyed double-digit revenue growth during the first quarter, which is great news for the platform. You might be wondering where that growth is coming from, and so are we.

With support for i5/OS V5R4 (finally) winding down and Power8 servers ramping up, now is as good a time as any for IBM i shops to get current with their setups. Judging from IBM’s figures for the quarter, many of them are biting the bullet and finally upgrading their systems.

To quickly recap: IBM reported just $1.66 billion in external sales for the Systems Hardware business, which is down significantly from a year ago when IBM still had the X86 server business. The mainframe business spiked by 130 percent thanks to new System z13 servers, which helped to offset the lack of an Intel server business, while the Power Systems business as a whole increased by 1 percent.

That might not sound like much, but it was the first time the Power Systems division had a positive number attached to its growth rate. (Those black figures sure are nicer than the red ones.) What’s more–and this is the real news here–IBM i did quite a bit to get Power Systems back in the black.

“Power revenue grew for the first time in several years and it was led by the Power i community in double-digit growth,” said Alex Gogh, the vice president of global sales for IBM server solutions, during his keynote at the recent COMMON conference.

To further flush out the news, IT Jungle asked two IBM i executives–Alison Butterill, product offering manager for IBM i, and Steve Will, IBM i chief architect–about this growth. According to Butterill, much of that growth in the IBM i business came from so-called “growth areas” around the world, such as Brazil, China, and Africa. “We’re seeing that in the financial areas, in healthcare and in retail,” she says. “And we’re seeing a lot of retailers looking at IBM i.”

Banks and hospitals face some of the strictest regulations of any industries, and that’s helping push them toward a platform that’s renowned for its security, Butterill says. “Our gut feel–and it is a gut feel–is that it has to do with the security built into [the platform],” she says. Not to take anything away from the reliability and availability of the Power platform, she says, “but it’s also the security of IBM i.”

It’s always good to hear about “net new” customers coming to the platform after all these years, and that’s certainly happening in the fast-growing areas of the world, Butterill says. “We’re seeing new clients come on board in traditional markets, North America and Europe, too, but not at the same growth rate,” she says.

The IBM i platform has always been about solving business needs, and nothing has changed in that regard. If you’re in the banking, healthcare, or retail space, security is most definitely a business need, especially coming off of 2014, “The Year of the Data Breach.”

In other industries, clients are having success finding IBM i apps that meet other business needs, such as having modern Web and mobile interfaces. “We’re seeing some real strengths as we move forward in our mobile solution,” Butterill says. “For example, in Japan. . . they saw a lot of growth around an application solution that they put a mobile front end on.”

IBM is obviously quite interested in having more workloads and more users come to the IBM i platform. (The “stickiness” of the system, after all, is up there with the mainframe.) But increasingly, getting new clients on the IBM i platform doesn’t automatically translate into selling boxes.

“When I talk to our ISVs–some of who are growing, and many of them are–they’re doing it in a SaaS [software as a service] or cloud environment,” the chief architect Will says. “They’re bringing those clients to the platform, but we’re not necessarily selling those new clients a box. We’re selling the ISVs a larger system that they can host new people on. As far as I’m concerned, they’re new clients.”

For example, the UK payroll services firm Moorepay recently bought a large IBM i-based Power Systems system to house its software on. The company, which processes payroll for more than 7,500 small and midsize businesses in the British Isles, is able to provide a service that might otherwise require companies to purchase their own servers.

“What we’re seeing is a lot of MSPs out there who are bringing business on board,” Butterill says. “The business, quite frankly, doesn’t care that they run on IBM i. They’re just solving a business problem. [Another MSP told us recently] that they moved 6,000 clients from the mainframe to IBM i. Does that count for 6,000 new clients for Steve and I? We count them!”

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