When it comes to IBM’s vast services capabilities, David Sun has seen it all. Sun, the director of corporate business development for IBM Services, came to IBM 18 years ago when IBM acquired PwC Consulting and is now one of the driving forces behind the organization.
IBM Services is IBM’s professional services arm and includes two divisions. The first, IBM Global Business Services, provides management and strategy consulting, systems integration and application management services. The second, IBM Global Technology Consulting and Services, provides services related to infrastructure and cloud. Combined, they brought Big Blue 2020 revenue of over US$10 billion, although that is down slightly over 2019.
As IBM prepares to split into two companies, the IBM Services business is slated to remain with the “new” IBM, where it will account for over 40 percent of total revenue, and not be part of the “NewCo” managed infrastructure services provider.
Sun told CRN in a wide-ranging conversation that IBM Services remains one of the world’s largest services organizations and remains committed to working in a non-agnostic way with cloud, services and technology from IBM and other vendors. “The services part of the company has always been agnostic,” he said. “We are partners with all of our technologies. We know where we win in all those areas, where we think we differentiate. And those are all important. But from a services perspective, we’re always serving our clients.”
Here’s a look at where IBM Services is heading as IBM prepares to divide the company.
With IBM's acquisition of Red Hat , is there a push by IBM to get its acquired services companies to focus on Red Hat or the IBM Cloud? Or is it a hands-off approach to the services those acquired companies bring?
It’s a hands-off approach. Again, it’s going back to the client. If you study Red Hat and know where Red Hat OpenShift and Linux is, we’re all about open platforms. If you’re saying that IBM is looking to push Red Hat, well, we’re pushing open cloud architecture. And that’s a benefit to everybody. It’s not a benefit directly to the IBM stack necessarily, although we believe that it’s appropriately integrated with our overall mission to provide that open technology and open capabilities. ...
Red Hat is supporting all the hyperscalers. It’s supporting AWS. It’s supporting [Microsoft] Azure. We have specific ties around that. Other services firms are supporting Red Hat and all those other platforms as well. It really is an open architecture. [So] no, there’s not a specific imperative to push Red Hat as it relates to any of these acquisitions. It really is in combination of what we think that we are bringing to market for our that makes sense.
What is your organization's go-to-market? Does it work exclusively directly with clients or does it work with channel partners?
That’s probably a bigger discussion with some of our go-to-market salespeople. I’ll give you my perspective on it from services and the GBS [IBM Global Business Services] teams.
Most of the work that the services team does is direct to our clients. They’re usually looking to IBM to solve some of their most complex problems in transformation, and looking not only at business and strategy and digital innovation, but also how do they actually re-platform, what to re-platform, in terms of applications and capabilities around that area. And so we do our direct sales around it with some of the bigger enterprise clients around the world.
But we have channel partners that fill gaps that we have around solutions or addressing certain markets. There may be different territories or different-size clients where we have channel partners that really take the lead and they actually help bring in IBM when they think their clients need broader support, broader help, and deeper capabilities in a technology or platform. So it’s never a one-off answer of, say, it’s only IBM go-to-market. We do work with different partners in different market sets.
IBM recently made a number of acquisitions of solution providers, including Taos and TruQua. Why is IBM making such acquisitions?
From a services perspective, we’ve always been looking at ways to serve our clients the best. All of our clients, from an IT services and consulting services perspective, are buying across the board. They’re not looking to get particularly locked in or particularly honed in on just one platform or one capability, whether it be Salesforce or SAP, whether it be AWS or Azure or Google. We all see from our clients a need to be able to provide these consulting, implementation, migration, application and native app development capabilities. It’s important from a services firm perspective for IBM to be able to provide that to our clients. We have our own public cloud offering. We have a lot of security that’s tied to our technology capabilities. But from a services perspective, again, we’re always looking to provide the best thing to our clients in whatever form they believe is the best form. And that’s across all the different hyperscalers and through all of our different partnerships.
What is your strategy of looking at IBM channel partners such as Taos and TruQua as acquisition targets?
The broader sense is really aligning to what we’re trying to execute on for IBM as a cognitive, cloud-enabled company. These acquisitions really support that overall mission and that overall alignment to our strategy and our growth. And so I’ll use those specific examples and how that ties into different partners.
The TruQua acquisition is based on a partner that has a really great focus around SAP and SAP financials S/4HANA as part of their build-out of those capabilities and cloud together with transformational aspects of what they’re doing with SAP. IBM has been a deep, deep partner with SAP for over a decade starting with base-level ERP implementation. And part of that extended partnership with SAP is the continued building out of and support for their initiatives, but in line with our own initiatives around cloud and AI and cognitive. So that’s how that piece fits in with IBM in terms of our strategy.
And Taos, the more recent announcement that we made, is along the same lines with going back to our clients and addressing their needs around their movement to cloud, not only to IBM Cloud but also AWS, Azure and Google. Having native app development on an Infrastructure-as-a-Service platform ... is important in how you handle it through security and capabilities, and not disrupt these critical applications that are running day-to-day operations of those companies.
And so, again, having a multi-cloud capability through that acquisition is important not only to partnerships with large hyperscalers, but it’s filling IBM’s mission around the cognitive enterprise and supporting our niches around a cloud-enabled process change and application development change.
We’ve been talking about your partnering with IBM Cloud as well as other clouds. Has IBM Services’ partnership with IBM Cloud grown or changed in importance in relation to other public clouds?
I’m probably not the best person to speak about our cloud business. I don’t lead that unit. But I’ll tell you, from a services perspective, IBM Cloud is always part of the family and part of what we solution towards. It’s part of our differentiator, particularly around compliance and highly regulated industries that are really important, to maintain that security and that capability and that confidence. But as I said before, it’s not a de-focus in any way from IBM Cloud. We’re always including that as our portfolio part of our capability.
I think, if anything, you can see our acquisitions as really extending our services reach more than anything. It’s not de-emphasizing anything. It’s really extending our capabilities.
Would you then classify IBM Services as 'cloud-agnostic?'
Yes. Some folks don’t like necessarily talking about IBM as being agnostic. But truly, the services business is. I’ll take you back to the day where I came through [IBM’s] PWC acquisition about 18 years ago. The services part of the company has always been agnostic. We are partners with all of our technologies. We know where we win in all those areas, where we think we differentiate. And those are all important. But from a services perspective, we’re always serving our clients. And we need to provide those capabilities. We used to provide, and we still continue to provide, those capabilities through our partnerships with SAP, Oracle, etc. I see from a services perspective that hasn’t really changed.
Now, the players are different. The technology platforms are different. But in terms of an IT services consultant capability, it’s all about how you interact and orchestrate and provide the different value propositions together with your partners. It really isn’t any different, again, from an IBM services perspective.
Has anything changed in IBM Services as IBM splits into two companies ?
Those changes are ongoing. We’ve publicly announced that we’re going to spin off our infrastructure business by the end of this year. Everything that we’ve been publicly announcing remains on track. And there’s no change in that.
In terms of organizational changes, we announced that Martin Schroeter will be the CEO of Newco. And we’re continuing to work through all those activities, whether it be leadership, getting all the appropriate infrastructure in place in terms of financials or IT or HR and all the items you need to run a separate company. Those are all being put in place. It’s an ongoing effort, is what I would say. Nothing certainly completely ready yet. Just announcing our CEO. But I think you will see us making continued progress over the next couple of quarters
Your organization, IBM Services, will remain a part of IBM, right?
We’re working through all of that. I’m part of the changes that are going on. And part of what we embrace at IBM other than our clients is the change that is going on at the company itself. But yes, personally, on a go-forward basis, I’m remaining with our Global Business Services business team, and continue to focus on mergers and acquisitions. I still have oversight and overview for all of services right now until we work through all those other mechanics. But clearly right now I’m part of the team that’s trying to build the extension of the next generation of what we’re trying get to with [IBM CEO] Arvind Krishna and the rest of the senior team.
How has Arvind Krishna taking over as IBM CEO early last year impacted the mission of IBM Services?
I would say that Arvind coming in has generally been an impact across the company, not just for business services. I think that Arvind understood where we wanted to go as it relates to Red Hat and bringing that level of technology and capabilities into IBM, and set the stage for that. I think part of the next evolution that Arvind recognized was, in addition to the technology aspect of what we’re building out in IBM, that the services component around consulting, around cloud consulting and migration, was an important symbiotic relationship in driving our company going forward.
And so the impact on services has been very immediate. Under his leadership, we’re investing across the board. You have visibility in that through our recent announcements on the services side. So I guess I’m stating the obvious that, yes, he’s had an impact in the sense that you’ve seen all the services announcements and acquisitions. Arvind’s a tremendous supporter of the services business, and I imagine that he’s going to continue doing the same. [Senior Vice President of IBM Services] Mark Foster leads all the services business. But obviously he’s really been focusing on the GBS portion of the business before he got elevated to look at the overall services business. Mark is our overall leader, and [Senior Vice President, Cloud Application Innovation and Chief Operating Officer] John Granger is in charge of our cloud business.