IBM inks cloud ERP deal with Coca-Cola Amatil



news Global technology giant IBM this morning revealed it had signed a five-year, multi-million-dollar deal with Coca-Cola Amatil which will see the beverage company’s revamped enterprise resource planning operations hosted out of an IBM datacentre located in Sydney.

In 2012, CCA completed a major project to centralise its ERP systems onto a single SAP platform in Australia and New Zealand. The $65 million One Amatil information system’ (OAisys) project saw 120 legacy systems consolidated down onto a single system.

In a statement issued this morning, IBM said it would now host those systems in its Sydney-based cloud computing environment, in a move which would streamline CCA’s operations and processes across the wider South Pacific region and which was expected to drive “significant operational costs” out of the business.

CCA currently operates in six countries including Australia, New Zealand, Indonesia, Papua New Guinea, Fiji, and Samoa. Australia and Indonesia will be the first countries to use the IBM cloud platform to optimise and streamline CCA’s order management and distribution processes; increase operational efficiencies; and deliver consistent and exceptional quality of customer experience across the two geographies.

“We have a complex distribution network which requires our systems to be very efficient,” said CCA chief information officer Barry Simpson. “Indonesia is a vastly different market to Australia, as it has a more diverse trade to support across both modern and traditional channels. By using a common cloud platform across Australia and Indonesia, we will be able standardise and automate our operations and bring a consistent level of efficiency to our Indonesian business. Importantly, this will enable us to focus on growing our market share in Indonesia – which is a major opportunity for us in 2014.”

Under the agreement, IBM will manage CCA’s mission-critical SAP infrastructure in a cloud environment hosted in IBM’s datacentre in Sydney, which will eventually act as a cloud hub for the rest of CCA’s South Pacific operations.

“CCA’s plans to have Sydney serve as a cloud hub for its entire South Pacific footprint via IBM’s cloud platform will bring enhanced operational efficiency to its entire organisation,” said Grant Thomson, Cloud Business Leader, IBM. “CCA will be able to leverage best-practice processes from its Australian operation and apply them to the rest of the South Pacific region.

”CCA is keeping its IT operations in Australia to service its South Pacific operations, and in the process save significant revenue – this is an excellent example of how to leverage the power and flexibility of cloud computing,” said Grant.

The news does not represent the first time that CCA has gone down a cloud path for its infrastructure. In 2010, for example, the company spoke publicly about the massive task of migrating its 8,000 employees off Lotus Notes and onto Microsoft’s hosted Business Productivity Online Suite. And the company also makes use of Windows Azure.

On the face of it this represents a decent win for IBM with its still-nascent cloud computing business in Australia. The vendor has been a little slow off the cloud foot locally, and it’s good to see Big Blue finally pulling in some cloud computing contracts with major companies such as Coca-Cola Amatil. This deal will significantly bolster IBM’s cloud credibility in Australia.

However, it is also incumbent on me to question whether this arrangement actually represents a true cloud computing deployment, or whether it could be more accurately described as “hosted” or “managed services”.

Whenever discussing cloud computing as a concept, I like to go back to Gartner’s historical definitions of the concept. According to Gartner’s statement on cloud computing back in 2009, when the trend was first taking off, the analyst firm defines cloud computing as “a style of computing in which scalable and elastic IT-enabled capabilities are delivered as a service to external customers using Internet technologies”. Other important aspects are that the infrastructure is shared to a certain extent and metered by use.

Typically, when we’ve seen the Infrastructure as a Service paradigm of cloud computing technologies formally deployed in major organisations such as CCA in Australia, what we’ve seen is that those organisations have gained access to a standardised service catalogue of platforms which can be easily commissioned and billed by that organisation’s various departments. The use of those platforms can be easily ratcheted up and down.

However, in this case, I would question whether this is really going on for the main part. I strongly suspect that IBM is not providing a standardised service to CCA where CCA can easily commission and ratchet up and down standardised platforms on infrastructure which is shared with other customers. The “mission-critical” nature of CCA’s SAP platform, and its likely heavily customised nature, probably doesn’t allow that kind of delivery option.

Instead, I suspect that what we’re really seeing here is that CCA has outsourced hosting and some management of its core SAP-based ERP systems to IBM, but that IBM has created a customised, very non-cloud environment for those systems, and possibly not even entirely virtualised. Of course CCA would also get access to IBM’s proper cloud computing infrastructure, but I’d be very surprised if these core systems were being run on any kind of shared environment. We tend to see similar situations with every major Australian organisation — their core systems are managed traditionally, with cloud creeping in around the edges. Sometimes this fits the definition of “private cloud”; sometimes not.

To me, and I stress I don’t have inside information and could be wrong, this deal looks very much like one of a string of similar arrangements we’ve been seeing in Australia recently, which, although based on very traditional IT outsourcing lines, are being marketed as being “cloud”. No doubt this arrangement does contain some cloud computing elements. But I suspect it’s not quite cloud as many in the industry would prefer to see that term strictly defined.

Image credit: Daniel Morris, Creative Commons


  1. Renai

    I think your insight into the deal is spot on. CCA uses the IBM P Series AIX boxes, which tends to be a “scale up” approach (as opposed to “scale out”) to virtualisation and matches a hosted model. And how many other companies other than IBM offer “cloud” on a P Series?

    An interesting challenge for large companies getting to the cloud is this need to implement a scale out architecture for the monolithic ERPs – scale out is generally a non-traditional approach.

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