IBM Consulting can finally articulate its strategy in a sentence

John Granger, SVP, IBM Consulting, kicked off its 2022 Global Analyst Summit by stating, “We deliver business transformation powered by hybrid cloud and AI [artificial intelligence] leveraging the ecosystem.” The HFS Research team in attendance, with an amassed 60+ years of combined experience tracking IBM’s services business, looked at each other in near astonishment at the simple articulation of its strategy. In the year since IBM divested its managed infrastructure services business to Kyndryl and rebranded its services business as IBM Consulting, HFS has been awaiting evidence of how this would meaningfully impact its clients and partners. Here is what we learned and why it matters.

Clients and partners need what IBM is offering

IBM has never had a problem offering meaningful technology-enabled services and solutions to complex enterprise problems. It has had a systemic problem of boiling the ocean and offering too many things across loads of domains, from the Weather Company to Watson to low-value infrastructure services, all often complicated by uneasy internal competition with its technology business. There was no clear value focus. Now, no longer saddled with providing on-premises managed infrastructure services, treating Kyndryl and IBM technology as preferred partners rather than incestuous family members, IBM Consulting can create a value proposition and go-to-market strategy that makes sense and meets evolving enterprise needs, as aligned with the top initiatives cited by 602 global executives in Exhibit 1.

Exhibit 1: Modernization and effective use of emerging tech drives enterprise initiatives

Sample: 602 executives across Global 2000 enterprises
Source: HFS Research, 2022

From partnering to ecosystem orchestration and some healthy co-opetition

As Jason Kelley, the head of global strategic partnerships for IBM Consulting, said in an interview with HFS in 2021, “If you walk into a customer solo—it’s the power of one. If you walk in with a team, often even your competition, it is quicker, better, faster. This is not the future. This is now. This is what open means.” This “better together” mantra is what IBM Consulting has been cultivating. It always had partners. But now it is going deep with the 11 named global partners in Exhibit 2. GCP will soon make it 12. And by deep, we mean moving from a one-to-one partner model, which drove about 42% of its service revenue 18 months ago, to its current one-to-many approach, which is driving 60%+ of service revenue.

As it pushes into 2023, IBM Consulting expects the one-to-many approach to drive 70%+ of services revenue with an enhanced focus on orchestrating multiple partners, complex terms and conditions, and expanding deals. And yup, enter the hyperscalers and KPMG for tax, audit, and risk advisory services. Co-opetition is increasingly necessary to drive the best value for enterprises. Agnosticism is dead. Enterprises want opinions.

Exhibit 2: IBM Consulting’s roster of strategic partners for 2022 and beyond

Source: IBM, 2022

Client incumbency—driving big deals across five key industries

IBM is leveraging the focus and consistency in its offerings and its key ecosystem partners to drive enhanced “client incumbency”— big, transformative deals across five key industries. It has brought back the “big deal team” and introduced a very Accenture-like client segmentation approach. This approach is an effort to help clients realize greater value, anchored by its experience-led garage approach of co-create, co-execute, and co-operate. Its banking client TSB was on hand to tell the story of how IBM saved its bacon after the bank’s “digital meltdown” that left millions of clients with no online banking in 2018. Now the TSB and IBM story moves to relationship expansion – aka incumbency.

IBM has prioritized five key industries: telecommunications, banking, consumer packaged goods (CPG), energy and resources, and the public sector. It plays more broadly in other industries, but these garner the most focus and investment.

The Bottom Line: IBM Consulting has finally figured out what it wants to be when it grows up, and it is better aligned to help clients drive value than ever. Now it needs to tell the outside world.

Bravo, IBM Consulting. This is the most functional HFS has, perhaps ever, seen it aligned to driving relevant value to clients at scale. However, its hubris of being IBM fools the company into thinking its clients understand its services capabilities, industry approach, partnerships, and domain well. This could not be further from the truth. At its heart, services marketing is about showcasing the value that a company and its ecosystem bring to enterprises. IBM Consulting needs to help enterprises understand the post-Kyndryl reality. Enterprises will not be wasting their time if they choose to listen.