IBM's Q1/ 2016 earnings declined again for the 16th time with the silver lining being a double-digit increase in cloud services revenues. Is the decline due to less focus on hardware and the enhanced focus on cloud and data analytics?
It starts frankly with the customer preferences. As consumption models move towards cloud based and utility-based computing, we reworked our portfolio in that direction. The revenue mix change is an engineered alteration. The portfolio as value to clients and investors becomes more relevant as we move to higher margins segments.
At the same time, we are helping the customers align to new capabilities around primarily cognitive computing and also on analytics and cloud. This does not mean that we are moving away from the hardware business. We have executed most of the transformation in terms of certain divestments that were no longer strategic or profitable. We have a robust portfolio for the future of technology world.
What challenges do CIOs face while transitioning from hardware centric infra to software defined or cloud?
Every CIO today has the top agenda around flexibility, speed to market and cost containment. This is where we can help to a large extent. Back to flexibility factor, the concept of hybrid environment allows us to implement what Gartner calls two speed IT or Bimodal IT. We can help them transform infra environment to drive cost containment or cost savings and reinvest in new business value and improve speed to market.
Security is always a concern but we and the industry are becoming mature to ensure robust security environment (on premise and off premise) for the organizations. There is a regulatory environment in certain industries that requires either in-country or on premise data. That restricts the movement of certain workloads of certain data sets on the public cloud.
For IT at scale on premise - on an average- is still advantageous. Companies with IT at scale implement on premse, but they have the capability through the hybrid model to scale up and down in a flexible environment for new projects. Over time all types of workloads will move to the cloud. We are now beyond the discussion of mission or non-mission critical IT. It is about the characteristics of workloads that need lower levels of latency, different levels of performance, etcetera to steer companies in one direction. And they can move in another direction without significant security concerns.
How much has IBM tweaked its marketing or sales strategy beyond the box push? Does your systems team interact often with CMOs, CFOs at the client beyond CIOs?
Absolutely. There is a change not only in the buying behaviors but who the actual buyer in the organizations is. We see traditional CIOs' mission centered more on service levels and cost containment whereas the new initiatives are driven by LOBs -HR, finance, marketing etcetera. Many traditional IT budgets have migrated into those LOBs. You have to retool your post supply chain to cater to those consumers with a different set of IT needs. There is more importance to the role of integrator or a solutions set that drives value to a specific industry.
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