IBM CEO Ginni Rometty to step down: Analysing the cloud strategy and in-tray for the new boss

James is editor in chief of TechForge Media, with a passion for how technologies influence business and several Mobile World Congress events under his belt. James has interviewed a variety of leading figures in his career, from former Mafia boss Michael Franzese, to Steve Wozniak, and Jean Michel Jarre. James can be found tweeting at @James_T_Bourne.

Analysis IBM chief executive Ginni Rometty is to step down in April after more than eight years at the helm, with senior vice president for cloud and cognitive software Arvind Krishna taking over.

Krishna, who was a contributing factor in IBM’s acquisition of Red Hat in 2018, will become only the 10th CEO in the Armonk giant’s 106-year history. Jim Whitehurst, chief executive of Red Hat, will become president, while Rometty will serve as executive chairman until her retirement at the end of the year.

“Arvind is the right CEO for the next era at IBM,” Rometty said in a statement. “He is a brilliant technologist who has played a significant role in developing our key technologies such as artificial intelligence, cloud, quantum computing, and blockchain. He is well-positioned to lead IBM and its clients into the cloud and cognitive era.”

Rometty’s eight-year tenure oversaw IBM’s entry into the cloud as a serious player and continued leadership in R&D, particularly around emerging technologies; IBM’s run of being awarded the most patents now stretches to 27 consecutive years. In an era where cloud events have become supersized – the last re:Invent attracted 60,000 attendees – Rometty’s oratorial skill will be missed. Yet the storytelling around the entirety of the company did not quite match.

The bottom line will be where many of the think pieces point; IBM only broke a run of 22 straight quarters of declining revenue in January 2018, and it will ensure something of a mixed legacy for Rometty. Comparisons can certainly be made between Krishna’s ascendance and Satya Nadella taking the helm at Microsoft in 2014 – and look what has happened there.

But things are a little more complicated than that.

Speaking to this publication earlier this month, Nick McQuire, senior vice president enterprise at CCS Insight, noted how enterprise organisations were increasingly looking to deeper integrations with Microsoft and Google’s clouds by combining SaaS and other services with infrastructure.

IBM’s different business units, which are legion, do not have quite the same symmetry. Where else for instance explores all kinds of emerging tech, from blockchain to quantum, while still having a thriving mainframe business?

Bill Mew, a 16-year IBM veteran who now heads up cybersecurity consultancy Crisis Team, describes the continued balance sheet decline as a ‘sorry legacy’ for Rometty. Yet this should not be taken personally. Rather, it is indicative of where IBM is today.

“It shouldn’t be taken as a criticism of Rometty herself,” Mew tells CloudTech. “She was an enormously driven person who had a winning mentality, and she did her darnedest to turn the machine around and make it capitalise on some of the opportunities it had – but that didn’t enable her to do so.”

McQuire argues the new leadership team looks good on paper. “The combination is a good start and a good decision in terms of the next phase for IBM,” McQuire tells CloudTech. “It’s a good mix of having an individual [Krishna] who had been instrumental in some of the more important emerging areas of IBM strategy over the last number of years. Equally, having Whitehurst in there, almost an outsider looking in, is also quite valuable.

“It is an important next chapter – the role we’ll see in the market as not only the cloud market changes, but also as IBM changes,” adds McQuire.

As we have already seen, turning a ship the size of IBM around is no easy feat. For Mew, the fact that SoftLayer and Watson were opportunities which fell by the wayside exemplifies that virtually any executive could be placed in charge and they would struggle, although he notes his ‘enormous respect’ for Krishna and Whitehurst, and admits his view may be portrayed as cynical.

“They’ve spent an absolute fortune on Red Hat and it has to start to deliver soon,” says Mew. “You’ve seen growth in one quarter, but a large amount of that was for the latest mainframe. The question still exists about how credible [their] turnaround strategy is, and is the change in leadership going to make much difference?

“I have enormous respect for the guys stepping into her shoes,” Mew adds. “Again they are very capable, but again the question is – is IBM as an organisation going to innovate at the pace of AWS and others? I just don’t see it happening.”

McQuire notes comparing IBM directly to AWS’ mammoth growth, as a way of summarising Rometty’s legacy, is a ‘little bit unfair.’ Yet he does argue SoftLayer was a ‘victim’ of IBM not fully committing to the cloud when it should have done.

As a result, IBM remains a second-tier player in the minds of many, behind the hyperscalers. Yet there are major customers out there. AT&T is an example, although the telecoms giant is also using Microsoft, given the latter stole IBM’s thunder somewhat in July by announcing their partnership within hours of the initial news.

McQuire believes the big-ticket clients will react to the move positively overall, noting the strategy behind the transition. Indeed, listening to Rometty’s keynotes offered a sense of this transition. At Think in February, the message was around the second wave of cloud; one which is open and has hybrid and multi-cloud at its core, but is secured and managed properly.

For IBM to succeed in this second wave, the corporate story has to tie together more seamlessly. “Ginni Rometty put some foundations in place – and some of the latest numbers, looking at the services side of the business, specifically around Red Hat as well, you’re starting to see a flywheel effect happening between the hybrid and multi-cloud and Red Hat capabilities that IBM has to market, with the services business,” says McQuire.

“The question there is – how can they create a cohesive vision that combines both the cloud business and the services business?”

Whether you see your glass as half-full or half-empty, the answer to that question is going to be an intriguing one as Krishna sets up for his new role.

Picture credit: Screenshot/IBM

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