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IBM Teams Up With Amazon for Cloud Database Service

Motley Fool - Sun Dec 3, 2023

The database software market has seen plenty of disruption in recent years brought about by the rise of cloud computing. Newer players like MongoDB and Couchbase have emerged, and it's easier than ever to spin up a database. In the past, companies would need to install database software on their own servers and handle all the management and administration. Today, the options have exploded.

You can install database software on a virtual server from any cloud provider and manage it yourself, or you can opt for a managed database service where most of the tedious administration is handled for you. Some managed database services even handle scaling up and down automatically, removing the need to think about the compute and storage requirements. Cloudflare's D1 database is a good example of database software made dead simple for developers.

While there are more options than ever, database software is sticky. A company with mission-critical workloads isn't going to risk disruption by ripping out its database software, and migrating from an on-premises database to a cloud database is not a simple process. It took Amazon(NASDAQ: AMZN) years to fully move off Oracle databases and switch to database services offered by its cloud computing arm.

The trend, though, is toward cloud databases. Companies that sell database software with large on-premises install bases need to make it as simple as possible to migrate to the cloud. Otherwise, they risk losing customers to competing products.

International Business Machines(NYSE: IBM) has been in the database software market for decades. IBM's Db2 database software, first introduced in 1983, is still widely used by its enterprise customers. While Db2 can be installed on cloud servers, IBM recently announced a new way for its customers to migrate to the cloud.

Teaming up with Amazon

IBM and Amazon Web Services (AWS) are collaborating on a managed database service that allows IBM Db2 customers to move to a fully managed cloud database service. Amazon RDS for Db2 offers IBM's database customers another path to the cloud, along with plenty of flexibility. Customers can go all-in on AWS or deploy to a hybrid cloud environment.

Amazon RDS already supports other database software, including Amazon's Aurora database, open-source software like PostgreSQL and MySQL, Microsoft's SQL Server, and Oracle's database. IBM's Db2 is now added to the mix.

IBM does offer its own public cloud computing platform, which includes a fully managed Db2 database service. But AWS is the overwhelming market leader, and IBM's core focus is on enabling and powering its clients' hybrid cloud workloads, no matter which clouds they use. When helping a client looking to move their Db2 database to the cloud as part of their digital transformation, IBM now has a good option for those wanting to use AWS.

There are multiple benefits of the new managed Db2 service on AWS compared to an on-premises installation. IBM found that customers were able to manage 60% more databases per database administrator, and that database operational costs over a three-year span were about 39% lower. Db2 on AWS also integrates cleanly with other IBM software running on Amazon's cloud, including the data store component of IBM's watsonx artificial intelligence .

Good timing

IBM, as well as many other enterprise IT and software providers, are seeing customers pull back to a degree in an uncertain economy. IBM has been experiencing weakening demand for discretionary projects all year, but one area where demand remains strong is digital transformation projects with clear cost savings and productivity gains. Companies are still willing to spend, but there needs to be a clear payoff.

The new Db2 service on AWS is aligned with the type of projects that are in demand from IBM's customers. Moving an on-premises database to the cloud, which can make database administrators more efficient and cut overall costs, is a slam dunk for enterprises looking to save money. IBM's consulting business can now offer the new service as an option, and it should help IBM retain database customers who may have otherwise eventually moved off Db2.

IBM's overall performance has been solid this year, with revenue adjusted for currency expected to grow by as much as 5%. The Db2 service on AWS should help the cause as IBM's customers continue to prioritize efficiency, productivity, and cost savings.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Timothy Green has positions in International Business Machines. The Motley Fool has positions in and recommends Amazon, Cloudflare, Microsoft, MongoDB, and Oracle. The Motley Fool recommends International Business Machines. The Motley Fool has a disclosure policy.

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