Dive Brief:

• IBM and SAP announced on Wednesday that, moving forward, the two companies will formally collaborate on cloud technologies.
• The goal of the collaboration is to combine IBM’s cognitive capabilities, as well as its cloud and power systems, with SAP’s software and cloud platform.
• The companies said they will co-locate resources in Palo Alto, California and Walldorf, Germany, where SAP is based. 

Dive Insight:

The cloud market is a good area for the two companies to place bets on future growth. The worldwide public cloud services market is projected to grow almost 17% in 2016 to total $204 billion, up from $175 billion in 2015, according to Gartner. IBM currently has just 7% of the cloud market, according to Reuters.

Collaborating may help the two companies modernize their systems and appeal to the new digital economy much faster. Amid slumping stock, IBM has continued to move away from selling hardware, focusing more on cloud-based services, Big Data and mobile security.

IBM and SAP said working together allows them to try and better serve the increasingly cloud-based business environment. They also will work to improve on-site offerings, cognitive capabilities and enhance both the customer and user experience. 

"We’re formalizing a complementary set of capabilities to simplify and speed outcomes for clients evolving to become cognitive enterprises," said Bridget van Kralingen, senior vice president of IBM Global Business Services.