In what is probably the biggest news of the week, IBM announced that it will split into two separate companies. IBM plans to accelerate its hybrid cloud growth strategy to drive digital transformations for its clients as well as separate the Managed Infrastructure Services unit of its Global Technology Services division into a new public company. The move, with strategic focus and flexibility to drive client and shareholder value, is expected to be completed by the end of 2021.
In a blog post, Arvind Krishna, IBM CEO said, "today, hybrid cloud and AI are swiftly becoming the locus of commerce, transactions, and over time, of computing itself. This shift is driven by the changing needs of our clients, who find that choosing an open hybrid cloud approach is 2.5 times more valuable than relying on public cloud alone.
We also know that there's tremendous value in focus. Our intent is to concentrate our energy on the things that matter the most to our clients so we can move them the furthest. As a more focused company, IBM will innovate and move faster and invest more strategically in the future of our business."
He added that the move would allow IBM to focus on its open hybrid cloud platform, which represents a $1 trillion market opportunity. The acquisition of Red Hat allowed IBM to build an open and secure hybrid cloud platform that cuts across all the places clients do computing—on-premise, private, and publicly-operated public cloud environments. This was the first major step to seize this opportunity and underpins everything that has followed.
With that said, the open hybrid cloud platform is indeed a big opportunity for organisations. At DSA, we understand how organisations are looking to fast track their digital transformation journey. Do check out our IBM digital showcase on the journey to cloud to find out how IBM can help you improve your business.
IBM's unique full-stack capabilities and a large ecosystem of partners and ISV's deliver innovation and enable clients to unlock the full value of the hybrid cloud and their data. At the same time, IBM's software portfolio focused on data and AI, automation and security enable the widest access to innovation through open source.
IBM's business, strategy and technology consultants help clients transform by modernising their existing applications, and by building new AI-infused data analysis capabilities on the leading open hybrid cloud platform. IBM's secure, mission-critical public cloud is designed to provide all required regulatory controls and offers clients a foundation of open-source software, security leadership and enterprise-grade infrastructure.
IBM's Systems business, integrated with the hybrid cloud platform, allows cloud-native developers to capitalise on the unique capabilities of IBM's hardware. Leveraging its long-term relationships with clients, IBM will continue to drive the innovation in hardware that enterprises rely on for their most mission-critical computing needs.
As part of this strategic acceleration, IBM is taking action to simplify and optimise its operating model for speed and growth. This includes streamlining its geographic model and transforming its go-to-market structure to support clients better.
IBM is also continuing to consolidate its shared services. This simplified and focused operating model will support accelerated innovation for the hybrid cloud and provide more flexibility to increase investment in growth areas. The result will be an enhanced financial profile with a clear trajectory for improved revenue and profit growth.
The New Company
The new company which will be named at a subsequent date will immediately be the world's leading managed infrastructure services provider. It has relationships with more than 4,600 technology-intensive, highly regulated clients in 115 countries, including more than 75% of the Fortune 100, a backlog of $60 billion and more than twice the scale of its nearest competitor.
The new company will be entirely focused on managing and modernising client-owned infrastructures, a $500 billion market opportunity. It will leverage its unrivalled expertise to offer hosting and network services, services management, infrastructure modernisation, and migrating and managing multi-cloud environments. These are critical services that are core to client operations.
With a streamlined business model, the new company will create value by helping enterprises optimise their performance through AI and automation. Its services will enable enterprises to build agility and efficiency into their infrastructure and data centres. The new company will also be able to partner fully across all cloud vendors, opening new avenues for growth, while maintaining a strong strategic partnership with IBM and continuing to serve existing and new clients.
"Most important of all, IBM and NewCo will continue to be united in the belief that we simply can't win unless our clients win. For both companies, client success will remain their north star. This relentless focus on clients' success is something that I am asking each of you to heed as we work to achieve our goal of creating two separate companies by the end of 2021. It is imperative that we all remain steadfast in our mission to help clients and continue to act as one IBM," wrote Arvind.
To experience some of the potentials of IBM’s cloud services, check out IBM’s Digital Showcase here.