IBM Announces Spin-off To Focus On Cloud

NewCo will free the parent to soar in cloud services, IBM says.

IBM is to spin off its $19 billion managed infrastructure services unit to, in the words of CEO, Arvid Krishna be “laser focused on the $1 trillion hybrid cloud opportunity” marking a major change for the 100+ year old technology company.

Howard Boville, senior vice president, IBM Cloud says the spin-off, dubbed “NewCo” will be the world’s largest company solely focus on managed services for customers with on-premise infrastructure, while in the other part of the business, IBM will focus on hybrid cloud and artificial intelligence (AI). “It’s a different focus, but one that’s more in tune, in terms of how customers are looking to solve the problems that they have at the moment,” Boville tells Global Finance.

Rather than viewing the cloud is a panacea for everything, Boville says it’s an enabler that provides a different way of running applications. “We see hybrid cloud and the use of AI as enabling tools for companies to better serve their customers, their shareholders and their communities.”

Hybrid cloud solves the problems of housing all your business processes on a single infrastructure. “That’s not a secure thing to do,” states Boville, “and the regulators believe this is a concentration risk.”  With an eye on regulators, IBM created a specialist public cloud platform for financial services that is both secure, with sophisticated levels of encryption and includes a policy framework for certifying compliance for IBM Cloud clients and their partners.

“You can actually combine your data as a financial service institution with other companies to get insights, but the two datasets never merge or affect the provenance—protecting the rights of the actual consumers of the bank, but allowing them to get  insights to improve the quality of the service that they provide to their consumers,” he adds.

The acquisition two years ago of Red Hat, an open-source software company, allows IBM’s open hybrid cloud platform architecture to work with a client’s existing IT infrastructures, regardless of vendor. “We believe that you should be able to work with multiple cloud providers. But we also believe that to be able to do that, you have to operate with open standards. The reason why that’s important,” Boville continues, “is that when you build your applications, you build them once and you can run them on multiple clouds and that’s different than if you go with separate cloud providers, bringing a range of complexity, not only in terms of how you run things, but also the type of people and skill sets that you need, which is just a Frankenstein’s monster of piece parts that you’re putting together.”

He says Red Hat’s OpenShift aligns IBM’s hybrid multi-cloud philosophy, with a simplifying environment for customers, who can then focus upon customer experience or whatever their competitive differentiation is.

Combine that with the AI and machine learning capabilities that IBM has with its supercomputer, Watson and its many IBM Marketplace Partners and IBM’s announcement today to accelerate it’s focus on hybrid cloud makes perfect sense.