Elitsa Bakalova

A streamlined and growing IBM Consulting

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IBM Consulting delivers business transformation with an emphasis on industries leveraging IBM’s technology capabilities and growing partner ecosystem

The new IBM Consulting that emerged on Nov. 3, 2021, following the spinoff of Kyndryl is a streamlined and growing company that is a key enabler for IBM’s expansion into hybrid cloud and AI. IBM Consulting, which accounts for one-third of IBM’s total revenue and more than half of IBM’s headcount, is utilizing its established consulting, business transformation and application services capabilities to support clients’ transformation initiatives. IBM Consulting is leveraging proven and emerging technology offerings from IBM, along with IBM’s broadening partner ecosystem, to deliver platform-enabled transformation and innovation.
 
A notable change for IBM is the shift from a historically closed company that largely relied on IBM technology products and solutions to one that is much more open to partnerships. This shift increases IBM’s and IBM Consulting’s value propositions and, according to IBM Consulting SVP John Granger, drives “a renewed interest and excitement about what IBM is doing in the marketplace.”

Integrating industry skills and security into IBM Consulting facilitates value creation

Granger shared during the opening keynote of the IBM Consulting Analyst Summit that from a go-to-market standpoint IBM Consulting has two growth platforms. The first one enables clients’ journeys to hybrid cloud through application migration, application modernization and managing cloud environments. The second platform focuses on the delivery of business transformation through intelligent workflows, process expertise, AI-enhanced methods, automation, business process outsourcing, and data and AI solutions. Both platforms are underpinned by IBM’s ecosystem of partners, enabling IBM Consulting to deliver business transformation and solve clients’ complex challenges.
 
IBM Consulting is also increasing its already strong industry expertise by tapping into IBM’s industry capabilities to drive specialization in segments such as telco, banking, consumer packaged goods, energy and resources, and the public sector. As security has become a key priority for and enabler of digital transformation, moving IBM’s security services capabilities from IBM’s products business into IBM Consulting improves IBM Consulting’s value proposition. IBM Consulting will be better able to expand sales of security offerings to its clients, use its operational services capabilities to improve clients’ security performance, and tap into IBM’s partner ecosystem to increase security solution variety beyond IBM technology.

 
IBM Consulting is positioned for growth and is investing in attracting talent and developing resource skills such as by increasing certifications in ecosystem partners’ platforms to address client demand and drive revenue growth, which ranged between 16% and 18% year-to-year in constant currency during the past four quarters. Changing the way IBM thinks about partnerships and establishing an alliances organization within IBM Consulting to better identify joint opportunities for solution development and expansion also positively impacts IBM Consulting’s revenue growth. Expanding IBM Consulting’s capabilities through tuck-in acquisitions enables the company to strengthen its digital transformation capabilities.
 
In September IBM announced the acquisition of Dialexa, a digital product engineering services company based in the U.S., which will expand IBM Consulting’s product engineering expertise and improve its ability to deliver digital transformations. Dialexa is IBM’s sixth acquisition in 2022 and third in the professional services segment following the additions of Sentaca around telecom consulting and systems integration and Neudesic around cloud consulting to IBM Consulting. Emphasizing the IBM brand and clearly identifying IBM Consulting’s capabilities will enable IBM Consulting to better attract talent and capture client engagements, positively impacting the company’s growth.

 

IBM Consulting increases its competitive position by tapping into IBM’s global footprint, balance sheet and technology skills, including Red Hat capabilities being used by 4,000 Fortune 500 clients moving to hybrid cloud with support from IBM Consulting. IBM’s strong incumbency with multiple clients, such as around managing their application estates, improves IBM Consulting’s ability to establish deep client relationships and drive business outcomes through industry expertise. Supporting collaborative innovation with clients through the IBM Garage approach, which is used in 70% of IBM Consulting’s deals, improves the company’s ability to drive cross-functional collaboration between business and IT functions and deliver business outcomes through short sprints while prioritizing value.

Strategic partnerships enable IBM Consulting to deliver solutions that meet clients’ needs

While it has taken some time for IBM Consulting to augment its ecosystem and bring multiple partners together on engagements, the company currently has 12 strategic partners including Microsoft (Nasdaq: MSFT), SAP (NYSE: SAP), Kyndryl, KPMG, Workday (Nasdaq: WDAY), Oracle (NYSE: ORCL), Celonis, AWS (Nasdaq: AMZN), Salesforce (NYSE: CRM), ServiceNow (NYSE: NOW), Adobe (Nasdaq: ADBE) and IBM. IBM Consulting is augmenting partner-related revenue and changing its relationship with partners to successfully deliver transformations. For example, 18 months ago 42% of IBM Consulting’s revenue in EMEA was generated jointly with partners. The revenue share increased to 60% in November, and the target is to expand partner share to more than 70% in 2023.
 
On the partner relationship side, 18 months ago IBM Consulting in EMEA had 1:1 relationships with partners as partnership deals were historically sequential; however, the relationships evolved in 2022 to 1:many and partnerships are now multidimensional with several vendors included in engagements as transformational solutions require technology from different providers. IBM Consulting’s goal for 2023 in EMEA is to have a partner orchestrator role that coordinates offerings from multiple partners to deliver seamless solutions to clients. While IBM is one of IBM Consulting’s strategic partners for technology solutions, it is important to note that IBM Consulting follows a client-first mindset when selecting partners for joint solution delivery and is open to working with other technology partners if IBM solutions are not the right choice for the client.
 
As Granger said, “We are the trusted advisor and intimately embedded in client [relationships] but with our point of view, bringing some of IBM’s technology and going where the client wants to go.” IBM also highlighted its relationship with Kyndryl around on-premises managed infrastructure services, which were moved to Kyndryl after the spinoff. While Kyndryl is a key part of IBM’s managed services provider ecosystem and supports IBM in delivering mainframe modernization and moving joint customers to the cloud, IBM has expanded the infrastructure services partners beyond Kyndryl to provide customers with options.

 

During the keynote presentation on the second day of the event, IBM had representatives from SAP, AWS and KPMG on stage to showcase its collaboration with different types of partners and the nuances of each relationship. IBM recently celebrated the 50-year anniversary of its partnership with SAP, a vendor with which IBM delivers services, solutions and technology. IBM Consulting is enhancing its portfolio with accelerators to speed up SAP implementations. AWS is a more recent partner for IBM, partnering since 2016, but is one of the fast-growing relationships in terms of resources and revenue generation.
 
Key success factors of the relationship include the cultural alignment between IBM and AWS, especially around customer-centricity and relationship development. IBM also combines the IBM Garage approach with AWS’ innovation mechanisms when working with clients around defining technology-agnostic models and prototyping joint solutions. IBM also recently partnered with KPMG to address clients’ needs around financial processes improvement utilizing IBM Consulting’s consulting, applications services and business process services expertise; IBM’s research and technology capabilities; and KPMG’s expertise in audit, tax and consulting. Through its partner ecosystem, IBM is seeking new ways to deliver solutions to clients that have compelling value propositions and attractive pricing.

IBM Consulting utilizes its data, AI, hybrid cloud, transformational consulting, and design and experience capabilities to capture growth opportunities

IBM is infusing data and technology across IBM Consulting’s offerings to enable clients’ business transformation

IBM Consulting leads with data and AI offerings to scale AI in organizations and uses technology to improve processes and help clients gain access to data. The company works closely with its industry sector leaders and its partner ecosystem to enable clients’ business transformations through data and technology, such as improving customer experience and driving customer intimacy across sales and services cycles. For example, IBM Consulting is enabling the U.K. healthcare industry, which according to Client Partner and UKI Data & Technology Transformation Leader Clare Mortimer is a “data-rich, but information-poor industry,” to better understand the value of data and adopt data-driven decision making.
 
IBM worked with the U.K. Health Security Agency, which had five data platforms and was challenged by massive data duplication and high costs to run the solutions, to help it understand the value of data. IBM and AWS established a single platform for enterprise data analytics to address protection and surveillance needs in the U.K.’s public healthcare sector. To implement the solution and stand teams quickly, IBM Consulting utilized a core team in the U.K. and its global delivery capabilities, including in Spain, India and Brazil.

Transparent and trustworthy AI solutions support talent transformation activities

IBM Consulting is also utilizing data and AI to enable clients to transform talent, gain skills and build an adaptable workforce. The company is integrating AI in process workflows to facilitate clients’ search for skills and improve accuracy of decisions such as around hiring skills, building skills, retaining skills, paying for skills and planning for skills. As Senior Partner and UKI Talent Transformation Leader Andi Britt stated during a breakout session on talent transformation, IBM Consulting utilizes AI solutions to provide recommendations for different levels of employees, including experts, managers and practitioners, who use their recommendations to make decisions.
 
AI solutions have to be transparent and trustworthy, so IBM Consulting emphasizes providing ethical AI that analyzes vast amounts of data and makes the best recommendation around ethical values such as individual rights, privacy, nondiscrimination and nonmanipulation. For example, IBM Consulting worked on a skills inference engagement with a multinational medical, pharmaceutical and consumer packaged goods corporation. IBM Consulting provided AI solutions to scan and analyze the client’s internal data using AI and build a competency framework that gives a sense of skills supply within the organization.

Regulations drive clients’ sustainability initiatives

According to IBM’s 25th edition of The CEO Study, which published in May 2022 and covers 3,000 surveyed CEOs across more than 40 countries and 28 industries, 81% of organizations have a sustainability strategy in place and 53% of the CEOs rated sustainability as a top priority; however, only 35% of the polled organizations have started executing sustainability initiatives. Approximately 63% of the surveyed CEOs expect digital capabilities and AI to help close the sustainability gap. IBM Consulting is well positioned to capture growth opportunities in sustainability. The company is leveraging its Sustainability Services portfolio and industry expertise; tapping into IBM’s broad capabilities in software and systems as well as Red Hat and IBM Research; and utilizing its partnership ecosystem to help clients become sustainable enterprises.
 
As IBM Consulting Partner and IBM DACH Sustainability Services Market Leader Elisabeth Goos stated during a breakout session on sustainability, while sustainability transformation is a complex business challenge, legislation is a big driver for sustainability, especially in Europe, which surpasses North America and APAC in sustainability initiatives. Stricter regulations and measures at the European Union and national levels — for example, punitive measures in Germany that amount to 2% of clients’ revenues and negatively affect profits — and customers’ desire to purchase sustainable products and their willingness to often pay a higher price are pushing IBM Consulting’s clients to accelerate sustainability initiatives.

Showing business use cases for the metaverse supports solution adoption

IBM Consulting provided a breakout session on the metaverse led by IBM Consulting Distinguished Engineer Chris Hay and IBM Consulting (in the U.K. & Ireland) iX-Customer Transformation Service Line Leader Suzanne Jones. Hay set the direction of the discussion by defining what is behind the metaverse, which is a rapidly evolving virtual world. According to Hay, the metaverse is not about one or two technologies; it is a promise to build on a new set of values — connections, commerce, consent, collaboration, community and copresence — and collectively drive the idea of a co-reality.
 
During the presentation, Hay shared multiple use cases for the metaverse across industries and noted that financial services organizations and telcos are showing increased interest in IBM’s metaverse-related solutions. For example, use cases could include metaverse commerce, in which IBM provides a 3D virtual storefront for VR and augmented reality (AR) that is connected to an omnichannel experience through the IBM iX Experience Orchestrator; metaverse workplace, where employees and customers could meet through secure web-, AR- or VR-based 3D virtual spaces; and metaverse branch, which provides optimized virtual spaces for real-time communication and tasks based on public platforms and virtual worlds.
 
An example of a metaverse branch is IBM Consulting’s work with a hospital in Japan where IBM Consulting created a digital twin of the hospital that is accessible to patients who want to learn what will happen during their stay, such as using simulations to see what the CT scan process looks like.
 
When asked during the session why clients should choose IBM for this type of work, Hay explained that IBM is a cloud, design and experience company and importantly IBM has an ethical point of view regarding hybrid cloud. For example, financial services companies face challenges when adopting public cloud platforms due to regulations around data protection and security. However, IBM provides broad options for partners and technology and is increasingly more open to working with an ecosystem of partners to address clients’ specific business needs. And notably, all work on the metaverse is done with business value, user value and a sustainable mindset in place, such as using web-powered solutions instead of pixel streaming, which usually is expensive from a cost and sustainability standpoint.

In conclusion

IBM Consulting is well positioned to continue expanding in the IT services and management consulting segments due to its clear focus on providing consulting and business transformation and application services capabilities augmented by industry and technology expertise. The global transition to a partner-friendly approach and a client-first mindset when developing solutions broadens and deepens IBM Consulting’s capabilities and increases its value proposition and attractiveness. IBM Consulting’s scale, global service delivery capabilities, established experience design resources through IBM iX, and ability to collaboratively innovate with clients through the IBM Garage approach enable it to successfully run and deliver transformations across the globe. Its emphasis on nurturing client relationships, along with its proximity to clients and understanding of industry nuances and regulations, enables the company to capture opportunities in the dynamic market environment, such as around sustainability and healthcare in EMEA.

 

IBM Consulting Analyst Summit: IBM Consulting held its first in-person analyst event in EMEA one year after the spinoff of Kyndryl into a separate managed infrastructure services company. The event took place in IBM’s new location for its Innovation Studio in London’s South Bank region. The goal of the two-day event was to provide an update on IBM Consulting’s strategy, capabilities and future direction; showcase how the company works with strategic partners such as SAP, Amazon Web Services (AWS) and KPMG; and dive deep into multiple IBM Consulting use cases.