IBM Reports Double-Digit Commercial Cloud Revenue Growth

IBM Corp. recorded double-digit revenue growth in its commercial cloud services segment as public cloud adoption accelerated among mid-market businesses, according to Vikas Arora, Vice-President of Cloud and Cognitive Software and Services at IBM India and South Asia.

IBM defines its “commercial” customer tier as any customer outside its top 200 enterprise accounts. As of early 2020, the company had more than 1,000 customers on IBM Public Cloud, a platform primarily targeting the mid-market segment.

“Our cloud integration platforms over the past two-three years have been very successful. In the commercial space, IBM’s focus has been on new customer acquisition and we are seeing double-digit revenue growth in this space, with public cloud gaining traction.”

Vikas Arora, Vice-President, Cloud and Cognitive Software and Services, IBM India and South Asia

Security Portfolio Sees Robust Growth

Within IBM’s commercial business, the security portfolio experienced particularly strong momentum. Arora highlighted that many smaller banks were actively investing in strengthening their security infrastructure, contributing to this growth. IBM’s broad security offerings — spanning identity, threat intelligence, and managed security services — positioned the company well as regulated industries began cloud migration planning.

The Red Hat Acquisition and the Hybrid Cloud Opportunity

IBM’s $34 billion acquisition of Red Hat — completed in 2019 — formed the strategic backbone of the company’s hybrid cloud push. IBM positioned the deal as unlocking a $1.2 trillion hybrid cloud market opportunity for 2020 and beyond. Red Hat’s open-source portfolio, including OpenShift and Ansible, gave IBM a platform-agnostic container and orchestration layer that could operate across on-premises data centers and multiple public clouds.

This is particularly relevant for regulated industries — such as banking, financial services, and telecommunications — where mission-critical workloads cannot simply be lifted and shifted to a public cloud. Hybrid cloud architectures allow these organizations to maintain compliance and data sovereignty while gradually extending workloads to public infrastructure.

What Is Public Cloud? A Quick Definition

For context, a public cloud is a computing model in which infrastructure resources — such as virtual machines, storage, and managed services — are made available over the internet by a third-party provider. Well-known examples include Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP). Pricing is typically consumption-based, with options ranging from pay-per-use to reserved capacity models. IBM Public Cloud sits alongside these hyperscalers, differentiating primarily through enterprise integration, security, and Red Hat-based open-source tooling.

India’s Public Cloud Market: Growth Projections

The broader market context in India was favorable at the time of this reporting. According to a joint report by Google Cloud and Boston Consulting Group (BCG), public cloud deployments in India were projected to grow at a compound annual growth rate (CAGR) of 25%, expanding from approximately $3 billion in 2018 to $8 billion by 2023. The same report estimated a cumulative GDP contribution potential of approximately $100 billion from 2019 to 2023.

Despite these projections, Arora noted that only 15–20% of the Indian cloud market was on public cloud at the time. The relatively low penetration was attributed to regulated industries — particularly banking and telecommunications — keeping mission-critical workloads off public infrastructure due to compliance and data privacy concerns.

Maturity Curve: From Pilots to ROI-Focused Cloud Strategy

Arora described a clear maturity curve in how organizations approach cloud adoption:

• Early stage: Customers running pilots and proofs of concept for specific AI or data analytics use cases.
• Intermediate stage: Enterprise conversations shifting toward security, data privacy, and managed cloud services.
• Mature stage: Organizations that completed automation years ago — notably banks and telcos — now focused on unlocking new revenue streams and increasing customer stickiness through deeper cloud investment.

Manufacturing represented a sector earlier in the journey, while financial services and telecommunications were described as leading adopters already focused on return on investment (ROI) metrics rather than initial migration planning.

“There is always a very strong focus on RoI through IT spends. Across sectors, some have matured earlier than others like banks and telecom. They accomplished automation several years ago. So, they are looking to unlock new revenue streams by increasing customer stickiness in terms of cloud spends.”

Vikas Arora, IBM India and South Asia

Key Takeaways for DevOps and Cloud Practitioners

• IBM’s commercial cloud growth is driven by mid-market adoption, not just its top-tier enterprise accounts.
• The Red Hat acquisition gives IBM a credible open-source, container-native story for hybrid cloud deployments — directly relevant to teams using OpenShift or Kubernetes.
• Security remains a top concern and a top budget priority, particularly for regulated industries moving toward cloud-native architectures.
• Organizations evaluating cloud strategy should expect to map their position on the maturity curve: pilot/PoC, active migration, or ROI optimization.
• Hybrid cloud — not full public cloud migration — is the dominant model for mission-critical workloads in regulated sectors.

Why VMware Cloud on AWS Migrations Require Careful Planning

VMware Cloud on AWS is a jointly developed hybrid cloud service sold and operated by VMware. It allows enterprises to extend their on-premises VMware environments into Amazon’s public cloud without requiring a full re-architecture of existing workloads. While that flexibility is genuinely attractive, the migration path from an on-premises data center to VMware Cloud on AWS introduces a set of challenges that teams frequently underestimate. Cost management, network reconfiguration, workload hygiene, and migration model selection all demand deliberate attention before a single VM is moved.

This article walks through the most common migration challenges and practical steps to address each one.

Challenge 1: Managing Migration Costs

Cost savings from a cloud migration rarely materialize immediately. During the transition, organizations typically run dual environments — the existing on-premises infrastructure alongside the new VMware Cloud on AWS deployment — which means paying for both simultaneously. Staff time, tooling, and potential downtime windows add further expense.

To keep costs under control:

• Perform traditional maintenance before migration begins. Clean up servers, apply outstanding OS and application patches, and decommission unused workloads before touching the migration toolchain.
• Rightsize CPU and memory resources. VMware Cloud on AWS can scale to meet almost any demand, but your budget cannot. Audit current resource allocation against actual utilization and resize accordingly prior to migration.
• Use a workload checklist. Physically track each server through the optimization process. A checked-off checklist prevents workloads from being moved in a degraded or bloated state.

Understanding that upfront investment is unavoidable — and budgeting for it — puts organizations in a much stronger position than discovering those costs mid-migration.

Challenge 2: Addressing Network Configuration Early

Network configuration is typically the first major obstacle in any AWS migration, and VMware Cloud on AWS is no exception. Regardless of how deeply embedded a workload is in its existing architecture, IT teams need a clear network migration strategy before VMs begin to move.

VMware Hybrid Cloud Extension (HCX)

VMware Hybrid Cloud Extension (HCX) is a network migration toolset bundled with VMware Cloud that significantly simplifies this process. Key HCX capabilities include:

• WAN optimization, compression, and deduplication — reduces the data volume transferred over the wire during migration.
• Layer 2 network stretching — allows VMs to be relocated without changing their IP addresses, a significant operational relief for application teams that rely on hard-coded addresses or complex DNS dependencies.
• Bulk and scheduled migration modes — supports both live vMotion and cold migration workflows.

One frequently cited advantage of HCX is that it can sustain migration throughput beyond the standard 250 Mbps vMotion bandwidth limit, making it more practical for organizations with constrained WAN links. HCX does require additional configuration steps to set up the network overlay between environments, but the Layer 2 stretching capability and WAN optimization generally justify that overhead.

It is worth noting that HCX cannot compensate for poor storage hygiene on the source VMs — a point covered in the workload optimization section below.

Challenge 3: Choosing the Right Migration Model

Once the network framework is in place, teams must decide between two broad migration strategies: a rebuild in the cloud or a lift-and-shift (forklift) migration.

Rebuild in the Cloud

A rebuild approach involves replicating workloads natively in VMware Cloud on AWS while keeping the on-premises systems running in parallel. Benefits include:

• A smaller cloud footprint optimized for the new environment
• Removal of legacy cruft — outdated software, stale configurations, unnecessary services
• A fresh start that can result in a more stable and better-performing platform

The tradeoff is time and labor. Rebuilding each workload is resource-intensive. For large or complex environments, the effort and cost may make this approach impractical.

Lift-and-Shift Migration

A lift-and-shift migration moves VMs to VMware Cloud on AWS largely as-is, either via live vMotion (minimal downtime) or a cold migration (brief planned outage). This is faster and less expensive in the short term, but it carries a critical risk: moving workloads without pre-migration cleanup means you are replicating existing problems into a paid cloud environment.

Common issues that inflate cloud storage costs during a lift-and-shift migration:

• Temporary files and patch remnants left on system drives
• Installation ISO files stored on server desktops or in downloads folders
• Runaway log files and abandoned application data
• Bloated profiles consuming disproportionate storage

Left unaddressed, these issues can easily double a server’s effective storage footprint when it moves to the cloud. HCX’s WAN optimization will not fix bad storage habits at the source — it simply transfers whatever is on the disk more efficiently.

Recommendation: Regardless of which model you choose, treat pre-migration workload cleanup as a non-negotiable step. Use the optimization checklist described in the cost management section above and sign off on each server before it enters the migration queue.

Challenge 4: Preventing Long-Term Waste Post-Migration

Moving to VMware Cloud on AWS does not automatically resolve existing configuration debt. Oversized VMs, misconfigured resources, and excess files all persist in the new environment — and in a consumption-based cloud model, those inefficiencies translate directly into ongoing monthly costs.

Steps to prevent waste from becoming a recurring problem:

• Establish a FinOps or cloud cost governance practice before or immediately after migration. Set budgets, tag resources consistently, and review utilization reports on a regular cadence.
• Implement automated rightsizing reviews. VMware Cloud on AWS exposes resource utilization data that can be used to identify over-provisioned VMs and reclaim capacity.
• Enforce storage hygiene policies. Define and communicate what is and is not acceptable to store on VM system drives. Automated policy enforcement tools can help maintain standards post-migration.
• Document misconfigurations found during migration. Use them as the basis for updated configuration standards going forward.

Summary: Key Actions Before You Migrate

A VMware Cloud on AWS migration is not a shortcut to a clean, optimized cloud environment — it is a structured engineering project. Organizations that invest in pre-migration preparation consistently encounter fewer surprises, lower unexpected costs, and a more stable post-migration platform.