Arvind Krishna, Chairman and Chief Executive of IBM said the company is positioned to lead the era of hybrid cloud and artificial intelligence (AI).
“Hybrid cloud and AI are the two next great shifts in the technology landscape, and IBM is positioning itself to play a key role in this swift and massive transformation,” Krishna wrote in a letter written to investors.
He said the company sees the hybrid cloud opportunity at $1 trillion while the current enterprise deployment rate of AI is only in the single digits, which is another massive opportunity.
IBM aims to seize his opportunity with a platform-centric approach. Linux, Containers and Kubernetes act as foundation of its hybrid cloud platform while Red Hat OpenShift is its core product.
“We have a vast software portfolio modernized to run cloud-native anywhere. Our GBS expertise is a key factor in driving consumption and is currently helping hundreds of major clients on their hybrid cloud journeys. All of these capabilities are supported by our systems and cloud infrastructure, which allows us to build industry-specific clouds,” he wrote.
Based on this foundation, IBM looks to leverage Red Hat as a platform to offer an open, flexible and secure hybrid cloud product. This approach helps its clients connect their back office to their front office, modernize workloads, build cloud-native apps, and securely deploy and manage data and applications across various IT environments.
Krishna claimed that IBM’s clients find that choosing a hybrid cloud approach is 2.5 times more valuable than relying on public cloud alone. Over 2,800 enterprises use IBM’s hybrid cloud platform, up 40 percent over the past year.
The company built two industry clouds – Cloud for Financial Services and Cloud for Telecommunications – designed for mission-critical and highly regulated industries.
On the AI front, more than 40,000 clients have partnered with IBM to power their various business processes including hiring, supply chains and customer service.
The Armonk, New York-based company said its move to separate its managed infrastructure services business is among the key decisive moves the firm has taken to support its hybrid cloud and AI strategy.
The “NewCo” will offer hosting and network services, services management, infrastructure modernization, and migrating and managing multi-cloud environments. IBM claimed it will be the biggest in its field, with more than 4,600 clients at the start, including 75 percent of the Fortune 100 companies.
Krishna said the company closed seven strategic acquisitions that will strengthen its hybrid cloud and AI portfolio. “They enhance our software, expand our GBS capabilities in implementation and consulting, augment our security offerings, and support our go-to-market to drive hybrid cloud consumption,” he wrote.
The company has also elevated the role of its partners and expanded its ecosystem by adding hundreds of new partnerships with global system integrators, independent software vendors and third-party software partners to accelerate consumption of its hybrid cloud platform. Krishna said IBM is investing $1 billion to expand this ecosystem to include more partners who can broaden the reach of its software portfolio.
“In addition, we are aligning our go-to-market model with our hybrid cloud and AI approach, implementing a simplified client segmentation, putting IBM Garage at the center of our experiential sales process and working more closely with ecosystem partners so they can deliver more value to clients,” he said in the letter.
IBM generated $73.6 billion of revenue in the last full year, which is 4 percent less than in 2019. He attributed the decline to the broader uncertainty of the macro environment. Its cloud-related revenue grew 20 percent to $25.1 billion, which accounts for over one-third of its total revenue.
He said the urgency for digital transformation will fuel momentum for its business.