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IBM to Split Cloud and Legacy Business Solutions Into 2 Companies

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Connie Zhou IBM

Westchester’s global tech leader has announced plans to divorce its older infrastructure operations from its new focus on cloud-based technologies.

This month, IBM, the 109-year-old tech company based in Armonk, has announced it will be dividing the company into two independent operating models in 2021. The split aims to relieve the company’s difficulty in managing its disparate cloud-based and managed-infrastructure operations.

IBM will continue to focus on hybrid cloud platforms and AI through a sector of the company that will be adopting a modern growth plan: acquire digital platforms that would suit newer companies’ digital operating models.

“Hybrid cloud and AI are swiftly becoming the locus of commerce, transactions, and — over time — of computing itself,” says CEO Arvind Krishna. “This shift is driven by the changing needs of our clients, who find that choosing an open hybrid cloud approach is 2.5 times more valuable than relying on public cloud alone.”

The spun-off company, whose name and organizational structure are still being decided, will maintain the older (or legacy) business solutions and work with many of IBM’s current clients — the company will hit the ground running serving more than 4,600 clients (including 75% of the Fortune 100, Krishna points out) in 115 countries. It will continue to maintain around 90,000 team members and hold an annual revenue just under $19 billion — twice its leading competitor.

“As a stand-alone company, the new company will be able to build a more efficient operating model focused on service delivery excellence and designed to offer the next generation of transformational managed infrastructure services,” says Krishna. “NewCo will also have greater freedom to forge partnerships and alliances in the managed infrastructure services space. This will open new avenues for growth.”