IBM (NYSE: IBM) recently announced the completion of its acquisition of HashiCorp, known for its products that automate and secure the infrastructure underpinning hybrid cloud applications and generative AI. IBM stated that the combined capabilities will help clients accelerate innovation, strengthen security, and derive more value from the cloud.
HashiCorp’s capabilities are expected to create significant synergies across IBM’s strategic growth areas, including Red Hat, watsonx, data security, IT automation, and Consulting. Rob Thomas, Senior Vice President, IBM Software and Chief Commercial Officer, emphasized IBM’s commitment to investing in and growing HashiCorp’s capabilities, aiming to “infuse HashiCorp technology in every data center” by leveraging IBM’s global reach and R&D resources alongside HashiCorp’s leading technology and extensive developer community.
Dave McJannet, CEO of HashiCorp, highlighted HashiCorp’s decade-long experience in helping large enterprises succeed in hybrid and multi-cloud environments. He expressed enthusiasm about expanding their reach with IBM’s history, scale, and customer relationships to help their community automate, secure, and optimize their cloud infrastructure, offering an “end-to-end platform for hybrid environments.” Armon Dadgar, CTO and Co-founder of HashiCorp, noted HashiCorp’s pioneering role in cloud infrastructure and the alignment of vision with IBM in enabling hybrid infrastructure for major enterprises, anticipating further investment in R&D innovation.
The acquisition comes at a time when nearly 75% of enterprises are utilizing hybrid cloud environments. These environments, encompassing public clouds and on-prem data centers, are seen as crucial for innovation through a consistent approach to infrastructure delivery and management at scale. The increasing demand for managing and modernizing cloud infrastructure and security tasks, coupled with the projection of one billion new cloud-native applications by 2028 driven by generative AI, necessitates infrastructure automation beyond human capacity.
In a recent discussion, William Lobig, VP of Product Management for IBM Automation, highlighted how HashiCorp is a “perfect complement to our hybrid cloud strategy.” He drew parallels between Red Hat OpenShift providing a virtualization platform for consistent application portability and HashiCorp offering the same for distributed infrastructure, application, and security management. Lobig noted that HashiCorp is a leader in security management and infrastructure, particularly with Terraform. He also pointed out the synergistic relationship between HashiCorp Terraform for infrastructure lifecycle management and Red Hat Ansible Automation Platform for application configuration. “With HashiCorp being more for infrastructure lifecycle management, and then Ansible is more suited towards application configuration, we have infrastructure and platform deployment covered,” Lobig explained.
The acquisition also builds upon IBM’s existing portfolio of AI-driven IT automation capabilities aimed at optimizing IT spending and reducing costs. IBM’s automation software includes AI-powered tools for application management insights, full IT stack observability, application resource management, and financial management solutions. Lobig indicated that a key focus in the coming year would be on “bringing Red Hat Ansible Automation Platform and Terraform closer together” to leverage the strengths of both technologies. He also mentioned the integration of IBM’s FinOps, optimization, and observability tooling with HashiCorp’s offerings, aiming to provide insights into the cost implications of infrastructure choices made by Terraform developers. The goal is to make the infrastructure building process more cost-aware, preventing budget overruns and fostering a proactive approach to cost management.
HashiCorp’s product portfolio, including Terraform and Vault, is now available through IBM’s automation software portfolio. The acquisition, valued at $6.4 billion, involved IBM acquiring all outstanding common shares of HashiCorp for $35 per share in cash. IBM, a leading provider of global hybrid cloud and AI, and consulting expertise, aims to leverage this acquisition to further empower clients in their digital transformations across various industries. Lobig emphasized that the combination of HashiCorp with Red Hat OpenShift and Ansible provides a “holistic pipeline for code management of infrastructure and applications all the way up to the modern Kubernetes platform that those applications run on. It completes our hybrid story in that way.”
Looking ahead, Lobig sees “a huge opportunity around more modern and visionary approaches to how cloud Asset Management is done”. He envisions the development of “infrastructure graphs and application graphs” to provide a real-time inventory of IT estates, enabling more effective application of cost, health, performance, and automated considerations. He also highlighted the potential for enhancing security by integrating Vault with IBM’s network portfolio and expanding its capabilities for discovering and managing unmanaged infrastructure.
What this means for ERP Insiders
Hybrid is expected to be mainstay in global cloud computing strategies. IBM’s pick-up of HashiCorp is another big bet that hybrid computing will underpin most companies’ enterprise applications operating strategy. About three-quarters of organizations have implemented hybrid cloud models, combining both public and private cloud solutions, and by 2027, it’s anticipated that 90% of organizations will have adopted a hybrid cloud approach, reflecting the growing importance of flexible cloud strategies. Hybrid cloud infrastructure has seen significant growth in recent years, with projections indicating continued expansion. As of 2024, 94% of companies globally have integrated cloud computing into their operations. The hybrid cloud market is projected to reach $480.2 billion by 2033, growing at a CAGR of 17.4% from 2024 to 2033. Worldwide spending on public cloud services is reached $805 billion in 2024 and is expected to double by 2028. Bottom line is there is clearly an increasing reliance on hybrid cloud infrastructures, driven by the need for scalable, flexible, and efficient IT solutions.
The HashiCorp pick-up puts IBM on solid hybrid and AI ground. HashiCorp’s suite of products, including Terraform for infrastructure as code and Vault for secrets management, complements IBM’s existing offerings. This alignment is expected to strengthen IBM’s position in hybrid cloud infrastructure and security lifecycle management. IBM plans to integrate HashiCorp’s automation tools with its AI initiatives, potentially enhancing AI-driven application management and deployment. This synergy could lead to more efficient and scalable solutions for clients navigating complex cloud environments. The acquisition faced investigations by regulatory bodies, including the UK’s Competition and Markets Authority, reflecting concerns about market competition. However, the deal received necessary approvals, allowing it to proceed. Some industry pundits view the acquisition as a strategic move to solidify IBM’s leadership in the Infrastructure as Code market. However, others caution that the integration process may present challenges, potentially diverting focus from other growth areas like AI software development. The successful integration of HashiCorp into IBM’s ecosystem is anticipated to enhance IBM’s hybrid cloud and AI capabilities, offering clients comprehensive solutions for infrastructure automation and security. However, the long-term success of this acquisition will depend on effective integration strategies and the ability to maintain innovation within HashiCorp’s product lines.
Top 3 take-ways for CIOs. 1) HashiCorp’s Infrastructure-as-Code (IaC) tool, Terraform, will become more deeply integrated with IBM’s hybrid cloud strategy. CIOs should expect enhanced automation capabilities, particularly for managing multi-cloud and hybrid environments across AWS, Azure, and IBM Cloud. Assess how IBM’s integration of Terraform, Vault (secrets management), and Consul (service networking) could improve cloud governance and reduce configuration drift in your organization. 2) HashiCorp Vault will bolster IBM’s security offerings by improving secrets management, identity access, and compliance automation. This is critical for industries like finance, healthcare, and government, where data sovereignty, GDPR, and zero-trust security models are top priorities. CIOs should re-evaluate their identity and access management (IAM) frameworks and plan for deeper integration of Vault within their hybrid cloud security stack. 3) IBM’s control over Terraform’s ecosystem could lead to new licensing models, potential pricing changes, or deeper enterprise-grade features exclusive to IBM customers. Organizations relying on Terraform Open Source may see shifts in support and governance models, similar to how Red Hat handled open-source projects post-acquisition. CIOs should closely monitor changes in Terraform licensing and evaluate alternatives (e.g., OpenTofu) to ensure long-term flexibility in cloud infrastructure management.
