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Jim Whitehurst’s Sudden Exit As IBM President Raises Red Hat Red Flags: Partners

“If you are part of the Red Hat organization you are reeling right now,” says the CEO of a top IBM partner who did not want to be identified. “This raises Red Hat issues. The difference between the two companies is culture. The Red Hat culture is more open. They work from the bottom up. The IBM culture is top down. There is definitely going to be a perception in the field with Jim’s departure that something is going on with IBM -Red Hat.”

The sudden departure of former Red Hat CEO Jim Whitehurst as IBM president on Friday raises Red Hat red flags as IBM moves to continue to capitalize on its $34 billion acquisition of the open source powerhouse, said IBM partners.

In fact, partners said they see Whitehurst’s exit as a sign of the cultural conflict between the agile, fast-paced, Red Hat open source culture and the slower, more bureaucratic IBM culture. They said the differences between the two companies is sure to be exploited by IBM competitors in the sales trenches as the hybrid cloud architectural battle heats up.

“If you are part of the Red Hat organization you are reeling right now,” said the CEO of a top IBM partner who did not want to be identified. “This raises Red Hat issues. The difference between the two companies is culture. The Red Hat culture is more open. They work from the bottom up. The IBM culture is top down. There is definitely going to be a perception in the field with Jim’s departure that something is going on with IBM -Red Hat. I don’t know what happened here, but his departure feels rushed and it is sure to raise issues.”

Whitehurst, who was CEO of Red Hat for 12 years, is widely credited with building the company into an open-source powerhouse by embracing the unorthodox open source software culture. One day before his sudden exit, Whitehurst espoused in a LinkedIn post that one of the “hardest parts of innovation is having the courage to act, decide and prioritize quickly.”

IBM CEO Arvind Krishna announced Whitehurst’s departure as part of a series of leadership changes that also included the exit of IBM Senior Vice President of Global Markets Bridget van Kralingen, who will be replaced by IBM Senior Vice President Rob Thomas.

IBM shares dropped five percent or $6.73 to $140.11 in the wake of Whitehurst’s sudden exit. That translates into a $6.1 billion drop in IBM’s market cap in one day.

CRN reached out to IBM and Whitehurst but had not heard back at press time.

The departure of Whitehurst, who will remain as a senior advisor to IBM Chairman and CEO Arvind Krishna and the IBM leadership team, comes two years after IBM paid $34 billion for Red Hat in one of the largest deals in tech history. IBM did not name a replacement for Whitehurst.

IBM has been careful to keep the Red Hat business – which is headed up by Red Hat President and CEO Paul Cormier- a 20- year Red Hat veteran- at arm’s length to ensure that the open source software maker continues to drive robust double digit sales growth. Red Hat revenue grew 17 percent in the most recent quarter compared with the year ago period.

The CEO for another top IBM partner, who did not want to be identified, said he sees Whitehurst’s departure as an ominous sign of the differences between the Red Hat and IBM cultures.

“For me not having Jim at IBM hurts because he was an outsider with chops that brought instant credibility,” said the CEO. “His decision to leave shows me that there are issues between IBM and Red Hat. I always wondered whether Jim would be able to deal with the IBM bureaucracy.”

The CEO, who did not receive any kind of communication from IBM about the leadership changes, said Whitehurst’s departure is disappointing given the need for IBM to get more talent from “outside” the IBM bubble. “What IBM needs is more executives that can think outside the box because all their critical thinking is the same way,” he said. “I have become accustomed to non IBM executives not being able to deal with the IBM culture.”

Another top solution provider executive, who did not want to be identified, said he sees the IBM shakeup opening the door for Red Hat competitors to raise issues with the IBM-Red Hat strategy. “This is going to open the door for Ubuntu and other Linux distros,” he said. “IBM is definitely going to face deeper scrutiny on Red Hat. This is a big loss for IBM. Jim Whitehurst built Red Hat. Why did he leave? Do they really have a handle on what they are trying to do with Red Hat? This leaves a lot of uncertainty around the IBM Red Hat strategy.”

Krishna,, for his part, said he is confident that with the management changes that “IBM will be in a stronger position to help our clients and our business thrive.” In fact, he said, IBM’s hybrid cloud and AI strategy is resonating with customers.

“I believe we are at a watershed moment in our journey,” he said in the missive announcing the leadership changes. “As the world begins to reopen, IBM has a unique opportunity to be positioned for a new and exciting era of growth, continue to accelerate the rate and pace of execution of our strategy, and strengthen our client-centric culture and our ability to provide technical expertise. To that end, we are announcing a series of important leadership changes effective immediately.”

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