Kyndryl claims to be the world’s largest IT infrastructure provider. A division of IBM until November 2021, it is now a separate company. Initially, little changed for customers — except perhaps the logo on their invoice — but with time, Kyndryl is taking advantage of its freedom from IBM to introduce new services and work with new partners.
What does Kyndryl do?
Essentially, Kyndryl does exactly what the managed infrastructure services unit of IBM’s Global Technology Services segment did: outsource the management of enterprises’ IT infrastructure, whether it came from IBM or another vendor.
Under IBM’s stewardship, the activities since moved to Kyndryl were in slow decline, from $21.8 billion in annual revenue in 2018 down 7% to $20.28 billion in 2019, and down 4.6% to $19.35 billion in 2020, according to IBM filings with the SEC. That hasn’t changed since the split: Kyndryl’s first full-year filing as an independent company, barely two months after the separation, showed 2021 revenue down a further 4%, to $18.66 billion. The decline continued into 2022, with first quarter revenue down 7% year on year, and the second quarter down 10%.
However, Kyndryl is beginning to develop new services, and is forming partnerships in a bid to grow its revenue. It estimates that the $415 billion market opportunity it addresses is growing at 7% a year, with some areas it is targeting (including security, intelligent automation and public cloud managed services) growing even faster.
Kyndryl has organized itself into six global managed services practices, each of which manages a different aspect of technology. These are:
- Applications, data and AI
- Cloud
- Core enterprise and zCloud, IBM’s mainframe-as-a-service offering
- Digital workplace
- Network and edge
- Security and resiliency
There is also a customer advisory practice that combines managed services, advisory services, and implantation.
In September 2022, Kyndryl also launched two new branded services, Bridge and Vital. The company calls Kyndryl Bridge an open integration platform, an operational monitoring system, somewhat like HPE GreenLake or IBM vCenter, that Kyndryl staff will connect to an enterprise’s existing IT infrastructure to help CIOs keep ahead of problems. Kyndryl Vital is essentially a design workshop, during which Kyndryl consultants work alongside an enterprise’s employees to prototype applications.
Who are Kyndryl’s partners?
At the moment of their split, Kyndryl and IBM were one another’s biggest suppliers, and that will remain true for the time being. But Kyndryl is free to independently explore, with no preference for IBM’s software and services.
Kyndryl named Microsoft its first cloud infrastructure partner in November 2021, announcing a similar partnership with Google the following month. But it took it until February 2022 to form a pact with Amazon Web Services.
IBM had partnerships with numerous software providers, and Kyndryl inherited or expanded some of those, including with Elastic, Lenovo, SAP, ServiceNow, and VMware.
Kyndryl has also formed new partnerships, including with Cisco Systems, Citrix, Cloudera, Dynatrace, EY, Field Safe Solutions, NetApp, Nokia, Oracle, Pure Storage, IBM subsidiary Red Hat, and Veritas Technologies. These partnerships expand Kyndryl’s repertoire when it comes to integrating products and services into Bridge, or incorporating them into co-creations with Vital.
How big is Kyndryl?
Kyndryl started with 4,600 customers (including 75 of the Fortune 100), over a quarter of IBM’s 350,000 staff, activities generating around $19 billion in annual revenue and an order backlog (or long-term maintenance contracts from all those customers) of around $62 billion. Where that puts Kyndryl in the rankings depends on what you’re measuring. Kyndryl says it’s the world’s largest IT infrastructure provider, although IT channel publication CRN says it’s only the fifth-largest solutions provider, a much broader category, behind Accenture, what’s left of IBM, DXC Technology, and Tata Consulting Services.
Is Kyndryl hiring?
Like crazy! Kyndryl hired over a dozen top executives in 2021, and by the end of the year had 88,683 employees. Although its hiring in the US has slowed, it had 1,141 lower-level job openings posted at press time, over half of them in the EU, with other significant concentrations in India and Japan. Half the openings are for technical specialists, with more than 100 openings in systems architecture and an emphasis on automation.
Who works at Kyndryl?
Most staff at Kyndryl simply changed email addresses, carrying on doing the same work for clients as they did at IBM before the split. Indeed, Kyndryl went out of its way to reassure customers that their key points of contact and support, and the other team members they work with, would not change, and that the company continues to work with experts in other divisions of IBM as it did before.
But the company brought in new blood for many of the most senior roles, either hiring in from other companies, or poaching from other divisions of IBM. CEO Martin Schroeter is ex-IBM, in fact. He left the company in June 2020, before the spin-off was announced, and came back to lead Kyndryl, then known as NewCo, in January 2021. He was previously SVP of global markets at IBM, and before that its CFO.
The next senior appointments, in March 2021, were chief marketing officer Maria Bartolome Winans, who came to the spin-off directly from her role as CMO for IBM Americas, and group president Elly Keinan, another former IBMer who took time out to work in venture capital after 33 years at the company.
Global head of corporate affairs Una Pulizzi was also a new hire in April 2021, previously in a similar role at GE, while general counsel Edward Sebold was chief legal officer for IBM’s Watson Health division.
Poaching of more senior IBMers continued in early May 2021. Chief transformation officer Nelly Akoth was previously with IBM Global Business Services; Leigh Price moved from one leadership role in strategy and corporate development to another; and Vineet Khurana became controller at Kyndryl after five years in three different CFO roles at IBM. Kyndryl’s global alliances and partnerships leader Stephen Leonard held a number of positions at IBM, most recently as general manager of the Power Systems division.
It wasn’t until the second half of May 2021 that Kyndryl began to name its top technical staff: CIO Michael Bradshaw is new to IBM, having previously served as CIO at NBC/Universal and as CIO for Mission Systems and Training at Lockheed Martin. CTO Antoine Shagoury is a former CIO of US bank State Street and of stock exchanges in London and the US. Most recently, he worked at strategic advisory partnership Ridge-Lane.
Other senior Kyndryl hires from outside IBM include Vic Bhagat, a former CIO for Verizon Enterprise Solutions, EMC, and several units of GE as the head of its customer advisory practice, and COO Harsh Chugh, most recently CFO at SaaS provider PlanSource.
Who is on Kyndryl’s board?
To provide the new company with more stability, Kyndryl’s board of directors will serve overlapping three-year terms through 2027, so it’ll take at least two elections for an outside group to take control of the board.
Kyndryl’s first 10 directors are:
- CEO Martyn Schroeter, board chairman
- Stephen Hester, lead independent director. He was CEO of RSA Insurance Group until June 2021, and is chairman of easyJet
- Dominic Caruso, retired Johnson & Johnson CFO
- John Harris, former VP of business development for Raytheon and board member at Cisco Systems
- Shirley Ann Jackson, president of Rensselaer Polytechnic Institute
- Janina Kugel, former CHRO and member of the managing board of German industrial conglomerate Siemens
- Denis Machuel, CEO of temporary staffing firm Adecco
- Rahul Merchant, former head of technology at retirement fund TIAA, Fannie Mae, and Merrill Lynch, and current board member at Convergint Technologies, Global Cloud Exchange, Juniper Networks, and Emulex
- Jana Schreuder, retired COO of Northern Trust and current board member at Entrust Datacard and Blucora
- Howard Ungerleider, president and CFO of commodity chemicals company Dow
What does Kyndryl’s split mean for IBM?
IBM is still one of the biggest technology businesses in the world. Its separation from Kyndryl freed it from a legacy business that wasn’t growing, and enabled it to reorganize into three main operating segments now called Software, Consulting (formerly Global Business Services), and Infrastructure. It’s doing well post-split: For the full year 2021 revenue from Software rose 5.3% to $24.1 billion, and Consulting made $17.8 billion, up 9.8%, although revenue from Infrastructure, the segment Kyndryl was spun out of, fell 2.4% to $14.2 billion. Those trends, both positive and negative, continued through the first half of 2022.
Customer needs for application services and infrastructure services are diverging, and so spinning off Kyndryl will allow IBM to focus on growing its open hybrid cloud platform and AI capabilities, IBM CEO Arvind Krishna said in October 2020. The split turns IBM from a services-led company to one making more than half its revenue from software and solutions.
But until that growth takes hold, Kyndryl and IBM remain close, as they began their separate lives as one another’s largest customers.
IBM, IBM Global Services, Managed IT Services, Managed Service Providers, Outsourcing, Technology Industry
Source: cio.com