IBM on Thursday said that it was acquiring application modernization assets from Advanced in an effort to enhance the mainframe application and data modernization services of its consulting business.
Advanced, which is headquartered out of Birmingham, UK, provides mainframe modernization and OpenVMS and VME migration services.
The assets and services acquired from Advanced are expected to complement the capabilities of IBM watsonx Code Assistant for Z, the company said in a statement.
IBM released watsonx Code Assistant for Z, a generative AI-assisted product, in August last year as part of its efforts to help IBM Z systems customers modernize their applications.
The employees from Advanced who will join IBM Consulting once the acquisition is complete have more than 30 years of experience in supporting clients’ mainframe strategies and application modernization agendas through an array of mainframe application modernization services, including assessment and design; mainframe transformation and integration; and full deployment, IBM said in a statement.
These employees have also worked across different industry sectors, including financial services, insurance, automotive, travel and transportation, government, utilities, and media, the company said.
The financial details of the deal were not disclosed. However, both companies expect the transaction to close in the second quarter of 2024.
Why IBM is acquiring assets to aid mainframe modernization
Mainframes, despite what many may believe, are far from dead, at least for IBM, according to experts and analysts.
Mainframe application modernization (MAM) assets are a good investment for IBM as many enterprises still prefer mainframes for their superior security, resiliency, and transaction throughput, said Michael Azoff, chief analyst at Omdia.
IBM in its annual report published in 2022 claimed that 45 of the world’s top 50 banks run on IBM zSystems. Furthermore, the company claims that mainframes are used by 71% of Fortune 500 companies, handle 68% of the world’s production IT workloads, and process 90% of all credit card transactions.
“The market for MAM is therefore strong and makes sense for IBM to be a prime mover in this space,” Azoff explained.
Along with acquiring mainframe assets, IBM released new z mainframes last year, and saw its mainframe business grow.
IBM’s acquisition spree under Krishna as CEO
While this is IBM’s first acquisition in 2024, the company has been on an acquisition spree. Since CEO Arvind Krishna took charge in April 2020, the company has acquired more than 35 companies in efforts to bolster its consulting business and boost its hybrid cloud and AI capabilities.
Last year in August, IBM acquired Indonesia-based ERP specialist and cloud consulting services provider Equine Global in a bid to boost its consulting business in the Asia Pacific region. In the same month, the company acquired Manta Software, a data lineage platform, to complement its capabilities within watsonx.ai.
Prior to that, IBM had acquired software provider Apptio for $4.6 billion to help enterprises optimize their IT expenditure, particularly cloud costs. The year 2023 also saw Big Blue acquiring SaaS-based PrestoDB provider Ahana in April.