IBM results reveal plans to shift traditional analytics to SaaS

IBM boosts cognitive and blockchain businesses, but admits there is work needed on its traditional analytics products and some will move to software as a service

IBM has more than doubled its cloud revenue over the past three years, according to its latest financial results.

The company reported fourth-quarter revenue of $22.5bn, up 4%. In the quarter, revenues from analytics increased by 9%, revenues from mobile rose by 23% and revenues from security leapt by 132%.

IBM chairman, president and chief executive officer Ginni Rometty said: “During 2017, we strengthened our position as the leading enterprise cloud provider and established IBM as the blockchain leader for business. Looking ahead, we are uniquely positioned to help clients use data and AI [artificial intelligence] to build smarter businesses.”

James Kavanaugh, IBM senior vice-president and chief financial officer, added: “The year 2018 will be all about reinforcing IBM’s leadership position in key high-value segments of the IT industry, including cloud, AI, security and blockchain.”

For the fourth quarter of 2017, IBM’s cloud revenue was up by 27%. In a transcript of the earnings call posted on the Seeking Alpha financial blogging site, Martin Schroeter, senior vice-president of global markets at IBM, said: “We help our clients to implement hybrid environments, integrating public and private and traditional IT.”

As Computer Weekly has reported previously, IBM is making big investments in cognitive computing.

Schroeter said the company’s cognitive business was an annuity–based business, adding: “Where we saw weakness was in a couple of traditional analytics offerings, such as data integration and content management.”

Read more about IBM cloud

  • The IBM SPSS Modeler and IBM SPSS Statistics predictive analytics tools help users and data analysts build predictive models and manage the analytics process.
  • IBM’s Watson cognitive, artificial intelligence technology and its cloud strategy are overtaking core product areas in terms of revenue.

Schroeter admitted the company needed to spend more time on developing these products better. He said some traditional analytics products would also be shifted to software-as-a-service (SaaS)-based licensing. During the earnings call, Schroeter did not say whether there would be any benefits to customers from such a licence shift.

IBM’s global business services generated $4.2bn of revenue in the fourth quarter of 2017. Schroeter said the company saw declines in its application management service business, particularly in North America and Europe.

The company is now moving its services business into the cloud, he said. “Not only are we building and moving new SaaS properties into the cloud, which have great margins, not only are we building the platform-as-a-service and building ecosystems around that, but we have a north of $120bn backlog in our services business that we are in the process of moving to the cloud,” he said.

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