NEW YORK (TheStreet) -- IBM (IBM) - Get Report is getting serious about boosting cloud-based revenue, announcing the U.S. Army will use the company's hybrid cloud to power one of the larger logistics systems in the U.S. government.
As part of the deal, terms of which weren't announced but which adds to an existing contract, IBM will allow the Army to use the hybrid cloud (a mixture of both public and private clouds) to make better use of data analytics, offering better performance, scale and reliability. In a press release, IBM said the Army will receive cost savings of 50% with the new model.
Logistics Support Activity is the Army unit that handles certain sensitive logistics data, including intelligence, life cycle support and assistance to current and future soldiers. IBM has worked with the unit since 2013, initially to manage the Army's traditional IT service needs. But the relationship has expanded since. Based on the previous success the Army has had with IBM, it's now moving to hybrid cloud and working with IBM to incorporate analytics and take advantage of its new cloud environment.
An IBM spokesperson noted that the cost savings being generated are piquing the interest "of other Army departments and across the government."
Shares of IBM were slightly higher in Wednesday trading, up 0.03% to $162.09.
"The Army not only recognized a trend in IT that could transform how they deliver services to their logistics personnel around the world, they also implemented a cloud environment quickly and are already experiencing significant benefits," Anne Altman, general manager for U.S. federal at IBM, said in a statement.
IBM is betting heavily on shifting toward the cloud, which allows customers to access software, platforms and certain IT infrastructure either locally (private), on IBM's servers (public) or a mixture of both (hybrid). At the company's investor day in February, IBM said it was targeting
in revenue from its important growth areas -- cloud, mobility, data analytics, security and social -- in the next four years.
As the company focuses on the five growth areas, IBM also said it would increase spending by $4 billion, excluding acquisitions. Much of the spending will go toward analytics and the cloud -- notably the hybrid cloud -- about which IBM has made several announcements recently.
