News Analysis
In early May, IBM and Microsoft announced they were extending their partnership with the introduction of Copilot Runway. As the name suggests, the new offering is geared towards helping enterprises manage their copilots as well as create and customize copilots, including Copilot for Microsoft 365.
With it, organizations can create copilots for specific business needs including finance, field service and employee experience, all with the stated goal of increasing productivity. IBM is also creating a dedicated practice with consultants specialized in Microsoft copilot skills, especially those needed for deployment. IBM is offering three kinds of copilots to start, namely:
- Procurement and Finance Contract Copilot: A copilot to extract information from contracts.
- Customer Service and Field Service Copilots: Provides access to self-service options and generative AI-driven search.
- Employee Experience Copilot: Designed to increase employee engagement in the workplace.
IBM and Microsoft's partnership already extended to copilots, for example their collaboration with Virgin Money, whose conversational virtual assistant is powered by Microsoft copilots to help with credit card management.
The difference in this case is it pushes the partnership into new territory, especially with the creation of a dedicated service to enable copilot development. It also appears to demonstrate the start of consolidation in the AI market, as we've seen with previous workplace technologies where a few large vendors dominate a market populated by smaller, important players. So what is happening here?
When Big Tech Joins Forces
IBM's decision to collaborate with Microsoft on IBM Copilot Runway, despite its own strong lineup of generative AI tech, is a move rooted in practicality and strategic advantage, Sean Spittle, lead software developer and managing partner at InspectNTrack, said.
Simply put, Microsoft 365 is everywhere. It is a staple in countless organizations around the globe. By integrating IBM's advanced AI with Microsoft’s widely used applications, IBM can quickly and effectively put its tools in the hands of more workers.
For organizations using Microsoft 365, Runway smoothes out the transition and rollout time to bring IBM’s AI into their workplace, and doesn't require overhauling their existing systems. "Everyone's already familiar with the Microsoft suite, so blending IBM’s AI in there feels natural and less like a disruption,” he said.
Microsoft’s cloud infrastructure and services provide the crucial reliability and scalability needed for deploying serious AI capabilities, he continued. This infrastructure backbone ensures that IBM's AI solutions perform at their best without running into bottlenecks or reliability issues. It is about using a trusted system to make sure the fancy new tools work seamlessly.
The collaboration also represents a broader trend in tech where companies are working together rather than competing on every front, Spittle said.
By joining forces, IBM and Microsoft can offer solutions that neither could have delivered alone. “In essence, it’s about combining strengths to make sure businesses get the best, most user-friendly AI tools possible,” he said. "This partnership is not just about tech giants teaming up for show; it genuinely makes AI adoption smoother and more efficient for businesses."
Related Article: Regulators May Finally Get to Tame Big Tech
Making the Argument That Two Giants Are Better Than One
The sell is that companies that adopt these integrated solutions will immediately boost productivity and drive tangible business success. The goal is straightforward: make it easier for businesses to use advanced AI, driving efficiency and results without unnecessary headaches.
Could IBM have used its substantial enterprise presence to gain traction without turning to Microsoft’s Copilot? Many organizations have offerings from both vendors in their stacks, albeit for different products, but wouldn't that ease the way for IBM to move forward? The partnership is the better way to go for many compelling reasons, said WireFuture founder Tapesh Mehta.
The ability to tap into their complementary strengths is one clear advantage, he said. Microsoft 365 is ubiquitous across industries and is an ideal partner for extending IBM's generative AI solutions. Collaborating with Microsoft provides IBM access to a worldwide customer base and visibility in business productivity programs. But IBM isn't the only company to benefit here. Mehta lists a number of mutual advantages:
- IBM expertise in AI and Consulting: IBM offers deep expertise in AI creation and consulting services, he said. This particular expertise can improve Microsoft's existing abilities to provide a much stronger value proposition for enterprise clients.
- Enhanced product offerings and integration of technologies: Collectively, IBM and Microsoft can bring together AI technologies to produce stronger solutions, he added. IBM's AI models could improve Microsoft's Copilot for 365 with much more robust tools, for example.
- Customized Solutions: The partnership enables the creation of highly customized solutions for specific business requirements. Enhanced user experiences and improved adoption amongst enterprise clients are just two of the potential results here.
- Shared accelerated innovation resources for R&D: Research and development may be accelerated through pooling resources. Microsoft and IBM can collaborate on AI systems and applications to stay in front of competitors and meet client requirements.
- Knowledge exchange: The collaboration builds shared information between the two businesses to create best practices and novel approaches to AI deployment and control.
- Improved market competitiveness: IBM could have competitive edge in the enterprise AI marketplace by becoming a partner with Microsoft, he said. The complementary qualities of both companies will result in much stronger offerings, which draw in more clients and boost market share.
- Trust and credibility with clients: Microsoft and IBM have built strong reputations with their enterprise solutions. This cooperation can help build client trust and credibility to help win new business and retain current clients.
- Operational scalability and efficiency results in streamlined deployment: An integration of IBM's Copilot Runway with Microsoft 365 could simplify deployment for enterprises. This makes it simpler and quicker for clients to put AI solutions into action.
Related Article: How Smaller Digital Workplace Vendors Are Integrating Generative AI
IBM Strategy
IBM values growth across multiple strategic partnership dimensions, said AI advisor Jay Cuthrell. As such, the long-running partnership with Microsoft as evidenced by annual reports is a crucially important dimension.
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IBM's acquisition of professional services firm Neudesic in 2022 made IBM's commitment to relevance across technology, software and furthering services through IBM consulting clear. That same year, 2022, saw SAP, Microsoft and AWS all report $1 billion in revenue for the year. “By 2023, 40% of IBM Consulting revenue came from strategic partnerships like Microsoft,” Cuthrell said.