The main reason for the breakup is to field two independent entities squarely focused on two unique and massive market opportunities. That’s an approach IBM expects to put both companies on a faster growth trajectory.
IBM looks to be primarily a developer of cutting-edge technologies that deliver enterprise digital transformations.
NewCo “will be laser-focused on client-owned infrastructure,” Krishna said, providing everything from traditional hosting and networking services to transformational ones like modernization of mission-critical infrastructure and hybrid and multi-cloud management for the world’s largest enterprises.
While IBM is divesting from infrastructure consulting beyond its own technologies, the company will remain “all in on application modernization,” Krishna said.
Global Business Services, a $16.63 billion division last year, will deliver those cutting-edge application services, be they modernizing applications, building new cloud-native ones or managing applications in a hybrid environment.
In recent years, Global Business Services and Global Technology Services have become largely untethered, Krishna explained, another motivation for the separation.
The trend IBM has seen in its customers is one of diverging purchasing cycles for infrastructure and applications, with the selection criteria and decision-makers most-often not one in the same.