IBM splits cloud business

If there’s one thing about IBM is that the legendary IT giant is not afraid to make hard decisions. It has acquired business that complements its offerings (such as Lotus and Red Hat) while splitting or selling off those that are not aligned to its business objectives (such as its printing divison which became Lexmark and its notebook arm which is now Lenovo).

Big Blue is doing it again with plan to separate the Managed Infrastructure Services unit of its Global Technology Services division into a new public company.

The new company will focus on managing and modernising client-owned infrastructures and offer hosting and network services, services management, infrastructure modernisation, and migrating and managing multi-cloud environments.

Expected to be completed by end 2021, the creation of two companies will allow each to have its own strategic focus and flexibility to drive client and shareholder value.

HUGE Hybrid cloud opportunity

“IBM is laser-focused on the US$1 trillion hybrid cloud opportunity. Client buying needs for application and infrastructure services are diverging, while adoption of our hybrid cloud platform is accelerating. Now is the right time to create two market-leading companies focused on what they do best,” said Arvind Krishna, IBM Chief Executive Officer.

“IBM will focus on its open hybrid cloud platform and AI capabilities. NewCo will have greater agility to design, run and modernise the infrastructure of the world’s most important organisations. Both companies will be on an improved growth trajectory with greater ability to partner and capture new opportunities – creating value for clients and shareholders,” he added.

With tighter integration and focus on its open hybrid cloud and AI solutions, IBM will move from a company with more than half of its revenues in services to one with a majority in high-value cloud software and solutions. IBM will also have more than half of its portfolio in recurring revenues.