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If there were any questions about how IBM (news, site) would use Cast Iron, which it acquired in May, the recent announcement by ADP that it is extending its tax filing system to the cloud and, as a result, a much wider market, gives some idea of how Big Blue is looking to recoup what it paid.

While the amount of money paid wasn’t disclosed, the acquisition gave IBM Cast Iron’s OmniConnect, an application that enables users to tie their SaaS applications with their on-premise applications no matter where those applications are located.

By tying up with IBM in this partnership, ADP (Automatic Data Processing) says it will be able to offer its clients its online tax filing system in the cloud and enable those clients to combine it with their online payroll systems.

ADP and Cast Iron

Without this kind of hybrid solution, the deployment of ADP’s tax system was virtually out of the reach of SMBs as it required use of substantial IT expertise to connect ADP’s system to legacy systems.

By using IBM Cast Iron integration software, new ADP clients will be able to use ADP Tax Services' payroll tax filing system without the considerable expense all this entails. ADP itself will also be able to expand the integration of its on-demand Tax Services with more on-premise payroll software and ERP payroll systems, which is exactly what it intends to do.

IBM and ADP

For IBM it’s also a good deal, apart from whatever costs they are getting from ADP for the service, as it provides a working example of how hybrid cloud and on-premise systems can be profitable for everyone. All it needs to do now is market it.

The partnership has also tipped IBM’s hand as to what its cloud strategy is going to look like in the future.

IBM, relative to other players in the same market, doesn’t have a huge amount of business applications, but with acquisitions with the likes of Cast Iron, it can offer other software vendors the ability to easily extend those applications into the cloud with connectivity products like Cast Iron’s OmniConnect.

. . .greater agility . . . and uncertain market conditions is driving the need to extend existing business processes with cloud capabilities . . . IBM is helping ADP cost-effectively accelerate the growth of its existing business, while expanding its reach to new markets,” ," said Marie Wieck, Application Integration Middleware general manager.

Integration Possibilities

When Cast Iron was bought in May, it was integrated into IBM’s WebSphere business along with the integration templates in OmniConnect that automate the mapping of user’s on-premise and SaaS applications.

The templates include a rich and deep set of maps and interconnect patterns that enable users to make the integrations with little or no coding requirements. The result is that its libraries pull together on-premise applications like Oracle’s PeopleSoft and JD Edwards with SaaS options like Salesforce.

IBM and the Cloud

Cast Iron was just one of several deals over the past months that enables IBM to offer cloud opportunities to companies that are looking to go that route, but it is probably the clearest example to date of where IBM is going.

In April, for example, it announced its Global Entrepreneur initiative that is to provide start-ups with no-charge access to industry-specific technologies in a cloud computing environment.

In February it expanded its data storage capabilities with the opening of a new 100,000 sq feet data center in North Carolina to support new computing models, and in particular cloud computing. And last November it launched a pair of public and private services targeted at developers building cloud applications.

It will be interesting to see where else IBM takes Cast Iron.