CRM 2019
CRM 2019

IBM Bets Its Future on Hybrid Cloud as IBM Cloud Revenue Tops $19 Billion

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IBM made its unconditional and end-to-end commitment to a hybrid-cloud future unmistakably clear during its quarterly earnings call this week as CFO Jim Kavanaugh dropped the H-bomb 28 times. Kavanaugh tied hybrid cloud’s virtues to everything from customer innovation and productivity to every positive element in IBM’s strong fourth-quarter performance.

So while I wasn’t at all surprised to see that hybrid cloud was a major theme for IBM in its Q4 and year-end earnings call, it was remarkable to see just how intimately IBM has tied its position and perception to the hybrid strategy, which is predicated on the notion that most companies around the world will deploy a mix of traditional on-premises systems with new cloud technology and services for many, many years to come.

Hybrid computing’s certainly at the top of my list for where the industry’s headed this year—in my list of Top 10 predictions in Cloud Wars Outlook 2019: The Engine of the Digital Economy, it was my #1 trend.

Cloud Wars Outlook 2019, including IBM future hybrid cloud

So whether you’re a business executive evaluating the leading cloud providers or an executive within one of the top cloud vendors, it’ll be worth your time to take a look at how broadly and relentlessly IBM CFO Kavanaugh hit on the hybrid phenomenon in both his prepared remarks and in the Q&A with analysts. I won’t cite all 28 mentions, but here are some of the most important mentions:

  1. “Total software revenue was up 2% as we entered the quarter with a good pipeline of software opportunities and executed well against them, driven by hybrid-cloud adoption” plus strong demand for AI and analytics.
  2. In Global Technology Services, “We had great signings throughout the quarter, reflecting strong demand for hybrid cloud implementations and our value prop to deliver productivity.”
  3. As customers move “more mission-critical workloads to the cloud, they need to securely move their data and their workloads across multiple cloud environments,  and that requires a hybrid-cloud and open-cloud strategy.”
  4. Referring to two massive cloud contracts IBM announced earlier this week, Kavanaugh said, “That’s why companies such as Vodafone and BNP Paribas are leveraging the IBM Cloud, where they are able to benefit from our hybrid cloud and multi-cloud capabilities that give them easy access to the most advanced technologies.”
  5. Kavanaugh then tied the nascent and potentially revolutionary field of quantum computing to the hybrid approach, along with IBM’s new and fast-growing IBM Cloud Private for Data and its $33-billion acquisition of Red Hat three months ago: “We’re adding innovative services such as the world’s first commercial quantum computer available on the IBM Cloud…. ExxonMobil is already using it to help address its most complex business challenges, such as energy exploration and chemicals manufacturing. The number of new clients using IBM Cloud Private accelerated in the fourth quarter, and adoption is growing for our IBM Cloud Private for Data platform, which was named a leader in the first quarter 2019 Forrester Wave report on Enterprise Insight Platforms. All of this is a validation of our hybrid and open approach to the cloud. On top of that, we’ve got a strong foundation for driving synergies across our entire business with the addition of Red Hat because the value we see from the combination of IBM and Red Hat is all about accelerating hybrid-cloud adoption.”
  6. IBM will continue to boost its investments in hybrid-cloud development and enhancements in part through the proceeds from its recent sale of some lower-value assets that will “not only improve our go-forward revenue profile but also enable us to increase investments in high-value IT segments such as hybrid cloud, AI, and blockchain.”
  7. In the company’s massive Global Technology Services business, Kavanaugh said, “We are obviously winning with our hybrid-cloud momentum. We had  strong signings in the quarter that were led by the hybrid-cloud value proposition, which enabled us to deliver signings of $15.8 billion, which is up 21%.”

So, the hybrid craze that’s sweeping the tech industry might have its epicenter at IBM, where the #5 company in the Cloud Wars Top 10 is betting heavily that everything from quantum computing to services and customers’ quests for innovation will become essential elements in the unfolding hybrid story.


Disclosure: At the time of this writing, IBM is a client of Evans Strategic Communications LLC.

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