IBM Consulting acquires Dialexa, strengthening digital product design services

Companies must stop viewing their digital transformation journey as a cloud migration initiative. Instead, becoming cloud native is about the value they can reap through digitizing operations and products. To truly become cloud native, organizations must blend the constant curiosity of an engineering mindset, the collaboration of DevOps culture, and a keen appreciation of business objectives for the products or services their customers seek.

This shifting enterprise mindset led to IBM’s acquisition of Dallas, Texas-based Dialexa.

Dialexa is a digital agency focused on the development of hardware, software, and mobile solution development. Dialexa’s 300+ employees and strong revenue growth will add to IBM’s consulting business, which has accumulated an array of cloud, development, and industry capabilities over the past 24 months.

Dialexa brings end-to-end product engineering capabilities, product mindset, and methodologies to IBM

We at HFS believe technical service providers are integral to supporting an enterprise’s digital transformation journey. Yet, these enterprises expect partners to do more than enable technology in the current market; they must bring experiences, frameworks, and talent to enhance their customers’ product and supply chain programs. In HFS’s 2022 Pulse survey, 44% of decision makers in the Global 2000 indicated that in two years, technology must be embedded into the transformation of their business, from talent to products to customer experience.

In a briefing with IBM Consulting and Dialexa’s leadership teams, this acquisition was presented as a means for both firms to embed and scale digital agency services by improving product development, delivery, and performance. The acquisition adds to IBM product design mindset capabilities intertwining how technology can be used to create products while impact on experiences and long-term business outcomes.

What piques HFS’ interest in Dialexa’s value proposition is proposed ability to deliver digital product development services across hardware, software, and cloud while incorporating machine learning. Akin to IBM, Dialexa uses a “lab” engagement framework to visualize problems and then incorporate a tech stack with machine learning tools to deliver outcomes and improve performance throughout a product’s lifecycle.

This strategy further validates that being a technology provider is more than just being good at delivering digital solutions—the Horizon 1 mindset in Exhibit 1. Rather, by adopting the principles of experiential and exponential, you boost the value all partners receive from working together.

Exhibit 1: Creating lasting value is a multi-horizon approach

Source: HFS Research, 2022

IBM aligns its acquisitions to improve its customers’ ability to cultivate, design, implement, and experience a digital-first mindset

In the past few years, IBM has invested in executing its platform-centric, hybrid-cloud, and AI (artificial intelligence) strategy focusing on customer centricity. It continues to bolster its consulting group with key acquisitions that meet the market’s evolving needs. IBM has acquired assets that boost its multi-cloud, applications modernization, 5G, and IoT (internet of things) design, development, and optimization strategy.

While IBM’s strategy has been iterative, the components of BoxBoat, Turbonomic, Sentaca, SXIQ, Taos, and others have continued to add arrows to its consulting quiver. Dialexa can potentially upgrade IBM’s ability to bring these companies and their components together via a compelling product design mindset. This mindset is attractive to today’s business leaders wanting to understand the digital engineering result in product delivery, customer experience, and monetization.

With this acquisition, IBM increases its presence in the high-growth market for digital engineering services. With Dialexa, it can put together multiple pieces of a product design strategy, development, and performance while keeping the mindset that modern product lifecycles are a non-linear way of thinking.

The Bottom Line: Dialexa adds further specialization and talent to IBM in its efforts to deliver a digital-first product design mindset as part of its Consulting services.

In IBM’s move to acquire Dialexa, HFS sees IBM’s ongoing efforts as the goal of services and consulting firms helping their customers digitally transform and adopt the seven pillars of becoming a cloud native.

While the proof is in the pudding, Dialexa’s culture appears to align nicely with IBM’s. The firms share similar views. Hardware, software, engineering, and cloud comprise a modern company’s product portfolio fundamentals. HFS sees this acquisition’s potential to magnify IBM’s recent investments with design and product engineering talent and skills. It confirms IBM will continue its journey to deepen its technical expertise and be a catalyst for progress.

HFS will want to see how well IBM Consulting embraces this new team and identifies opportunities to cross-sell these services into its traditionally technically oriented customer base. We also feel it will be important to keep Dialexa’s leadership engaged and leverage its passion for digital product design across IBM’s Consulting, Garage, and Cloud teams.