Deal Done: Can HCL Technologies Revive IBM’s Legacy Software?

IBM's software business grew from its beginnings in the 1990s, but has since been eclipsed by third-party developers and by cloud-focused development, giving HCL an opportunity to see if it can take advantage of IBM's prior investment in this field.


India-based global solution provider HCL Technologies this week said it has closed its acquisition of multiple IBM software technologies, and introduced a new division, HCL Software, to operate its new enterprise software business.

With the close of the deal, valued at $1.8 billion, it remains to be seen whether HCL has the capability to revive sales of a software business that once helped build the PC industry but has been since eclipsed in many areas by more nimble third-party software developers.

As a result of the deal, which was originally unveiled Dec. 6, HCL now owns R&D, sales, marketing, delivery, and support for the software formerly owned by IBM.

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[Related: 7 Things To Know About The $1.8B IBM-HCL Technologies Deal]

For IBM, it is the end of an era. The company's push into software started with its 1995 acquisition of Lotus Development Corp. after years of losses as a way to take advantage of higher-margin product lines.

That acquisition helped spur the building of a software empire that included Db2 database software, WebSphere middleware suite, the Tivoli systems management software IBM acquired in 1996, Lotus and its groundbreaking Lotus 1-2-3 spreadsheet application and Lotus Notes email system, and the Rational software engineering technology IBM acquired in 2003.

However, over time, much of that software business was eclipsed as the growth of the software business spurred third-party developers to enter the market, often with modernized cloud-based versions of the applications.

With the close of the acquisition, HCL going forward controls the destiny of much of that software.

This includes Appscan, a security-focused application for identifying and managing vulnerabilities in mission-critical applications; BigFix endpoint management and security software; Unica, a cloud-based enterprise marketing automation software; and IBM WebSphere Commerce, an omni-channel commerce platform for B2C and B2B organizations.

HCL has also taken over what it calls Digital Experience, which includes the former WebSphere Portal, a platform for developing enterprise web portals to help businesses deliver highly personalized social experience to clients, and Content Manager, a full-featured multi-platform enterprise content management solution.

Also included is the Notes and Domino collaborative client/server software platform; and IBM Connections, a platform for integrating email, activity and task management, instant messaging, and file and document sharing.

HCL said it has already delivered over 340 partner releases and over 90 HCL releases of the software including Informix 14.10, Domino 10, and Workload Automation 9.5.

The shedding of IBM's software portfolio did not end with the HCL deal.

IBM agreed in April to sell the rest of its software portfolio that was not picked up by HCL to a New York-based private equity firm, Centerbridge Partners, which plans to spin those assets off to an unnamed company focused on technology to automate the work of marketing and advertising executives.

The assets include the IBM Marketing Platform and other IBM commerce products.

Ed Barbini, vice president of IBM corporate communications, told CRN at the time that deal was made, "the marketing and commerce assets are no longer core to this integrated model and are increasingly sold as stand-alone products."

For HCL, the ex-IBM software represents an opportunity, particularly when it comes to modernizing the applications.

C Vijayakumar, president and CEO of HCL Technologies, told investors in December that HCL plans to make as-a-service offerings of many of its software products available in order to ensure customers get the right software for their requirements.

Vijayakumar on Monday said in a prepared statement that HCL expects the products to see a good growth trajectory as part of HCL Software as the company invests in product innovation and agile product development.

“In addition, we see tremendous potential for creating compelling ‘as-a-service’ offerings by combining these products with our traditional IT and next gen services," Vijayakumar said.

In addition to the HCL Software business unit, which is built around the acquired IBM software, HCL also has another business unit called DRYiCE which focuses on native software intellectual property.

HCL executives were unavailable to provide further information, citing the short week because of the July 4 holiday.

IBM did not respond to a CRN request for further information by press time.