We terminated IBM contract because they lacked relevance, commercial flexibility, agility and a service portfolio,’ say Coats plc CIO
By Sooraj Shah
24 Aug 2015
Coats plc, the world's largest manufacturer and distributor of sewing thread and supplies, terminated its data-centre services contract with IBM because it felt that the tech giant lacked relevance, according to the CIO, Richard Cammish.
Cammish told Computing that in 2012 the British company's biggest data centre provider was IBM, but that within two years, IBM was no longer a service provider to Coats plc.
"By the end of 2014, IBM was no longer a service provider to Coats because they lacked relevance, they lacked the service portfolio, they lacked the commercial flexibility and they lacked organisational agility," he said.
The journey to remove IBM as a provider took a couple of years, Cammish said, as Coats plc started an ‘infrastructure optimisation programme'.
Cammish suggested that enterprises need to ensure they are making the most of their technologies, and look for other technologies such as virtualisation to "continue to squeeze" out value from what they have.
"First you have to take what you've got and squeeze the living day lights out of it, so you make sure you've only got the number of services you need," he explained.
"What IBM would say is, [virtualisation] means a reduction in revenue, when all we're doing is making sure our data centre engine is efficient and as slick as possible," he said.
"Once you've squeezed it, you can look at alternative vendors, so we moved to a service provider based in Austria who were running at a much cheaper price point [than IBM]," he added.
Cammish said that Coats plc paid a termination fee to IBM, which made commercial sense because data centre service provision is being commoditised.
He said the company, which made an operating profit of $131m (before exceptionals) in 2014, is now moving to Microsoft Azure. "We could have gone to Amazon Web Services or some other service provider, but because of our strong relationship with Microsoft, we're going for Azure," he said.
And Cammish said that the termination of IBM's contract should serve as a warning to Coats plc's other IT service providers - namely SAP and Salesforce.com.
"If SAP are looking to increase their market share they have to bring contemporary tools to the table... it's all about relevance, they have to have the right tools, the right price point, they have to have agility," he stated.
"Even though we're a £2bn company, we'd like to think we're quite agile; we make decisions quickly and implement quickly and I see that trend growing ... you need flexible, agile service partners to work alongside you if they are to be relevant, and work alongside you as part of the journey," he added.
Cammish told Computing that in 2012 the British company's biggest data centre provider was IBM, but that within two years, IBM was no longer a service provider to Coats plc.
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The journey to remove IBM as a provider took a couple of years, Cammish said, as Coats plc started an ‘infrastructure optimisation programme'.
Cammish suggested that enterprises need to ensure they are making the most of their technologies, and look for other technologies such as virtualisation to "continue to squeeze" out value from what they have.
"First you have to take what you've got and squeeze the living day lights out of it, so you make sure you've only got the number of services you need," he explained.
"What IBM would say is, [virtualisation] means a reduction in revenue, when all we're doing is making sure our data centre engine is efficient and as slick as possible," he said.
"Once you've squeezed it, you can look at alternative vendors, so we moved to a service provider based in Austria who were running at a much cheaper price point [than IBM]," he added.
Cammish said that Coats plc paid a termination fee to IBM, which made commercial sense because data centre service provision is being commoditised.
He said the company, which made an operating profit of $131m (before exceptionals) in 2014, is now moving to Microsoft Azure. "We could have gone to Amazon Web Services or some other service provider, but because of our strong relationship with Microsoft, we're going for Azure," he said.
And Cammish said that the termination of IBM's contract should serve as a warning to Coats plc's other IT service providers - namely SAP and Salesforce.com.
"If SAP are looking to increase their market share they have to bring contemporary tools to the table... it's all about relevance, they have to have the right tools, the right price point, they have to have agility," he stated.
"Even though we're a £2bn company, we'd like to think we're quite agile; we make decisions quickly and implement quickly and I see that trend growing ... you need flexible, agile service partners to work alongside you if they are to be relevant, and work alongside you as part of the journey," he added.
