There are many potential explanations for the less-than-robust performance, but IBM’s current strategy suggests that one component at least is a challenge to the traditional shrink-wrapped software business. As much as any software provider in the industry, IBM’s software business was optimized and built for a traditional enterprise procurement model. This typically involves lengthy evaluations of software, commonly referred to as “bake-offs,” followed by the delivery of a software asset, which is then installed and integrated by some combination of buyer employees, IBM services staff, or third-party consultants. This model, as discussed previously, has increasingly come under assault from open source software, software offered as a pure service or hosted and managed on public cloud infrastructure, or some combination of the two. Following the multi-billion dollar purchase of Softlayer, acquired to beef up IBM’s cloud portfolio, IBM continued to invest heavily in two major cloud-related software projects: OpenStack and Cloud Foundry. The latter, which is what is commonly referred to as a Platform-as-a-Service (PaaS) offering, may give us both an idea of how IBM’s software group is responding to disruption within the traditional software sales cycle and their level of commitment to it. Specifically, IBM’s implementation of Cloud Foundry, a product called Bluemix, makes a growing portion of IBM’s software portfolio available as a consumable service. Rather than negotiate and purchase software on a standalone basis, then, IBM customers are increasingly able to consume the products in a hosted fashion.
Stephen O’Grady (The Software Paradox: The Rise and Fall of the Commercial Software Market)