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Bill Zeitler, senior vice-president of the server group, will head the combined division.
"Two years ago, the new storage organisation needed the intense focus of a start-up company. Since that time, we've won dozens of competitive battles," IBM said. "As solutions and integration become more important, we are now in [a] good position to combine our leadership products and deliver a powerful, unified value proposition to customers."
President and chief executive officer Samuel Palmisano said on-demand computing would be IBM's focus, as he described a vision of IT infrastructure incorporating technology from a broad array of product areas aimed at maximising businesses' flexibility and responsiveness.
IBM has saved $6.2bn (£4bn) by adopting integration technologies, but its savings from on-demand technologies will be even bigger, Palmisano said. Linda Sanford, the head of the storage division, will become senior vice-president of enterprise on-demand transformation.
IBM's chief on-demand computing evangelist will be strategist Irving Wladawsky-Berger, who will team up with Sanford on client communications.