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IBM has announced that it is splitting itself into two public companies to focus on hybrid cloud growth, a $1 trillion market opportunity.

IBM will separate its Managed Infrastructure Services unit of its Global Technology Services division into a new public company (NewCo).

With tighter integration and focus on its open hybrid cloud and AI solutions, IBM will move from a company with more than half of its revenues in services to one with a majority in high-value cloud software and solutions. IBM will also have more than 50% of its portfolio in recurring revenues.

IBM is also taking action to simplify and optimize its operating model for speed and growth. This includes streamlining its geographic model and transforming its go-to-market structure to better engage with and support clients. IBM is also continuing to consolidate its shared services.

The simplified and focused operating model will provide more flexibility to increase investment in growth areas.

IBM plans to name the new company at a subsequent date. It is aimed to be “the world’s leading managed infrastructure services provider”.

The new company will be entirely focused on managing and modernizing client-owned infrastructures. It will offer hosting and network services, services management, infrastructure modernization, and migrating and managing multi-cloud environments.

NewCo will also create value by helping enterprises optimize their performance through AI and automation. It will be able to partner fully across all cloud vendors, opening new avenues for growth, while maintaining a strategic partnership with IBM.

The separation is expected to be completed by the end of 2021.


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