I am told I have a knack for identifying companies making waves in specific technology areas. One such company is Kyndryl, marking its second anniversary of separation from IBM. I believe it could be a compelling turnaround story about the growth that was not possible when it was a part of IBM. And quite frankly, who doesn’t like a turnaround story?
Recently I was fortunate to speak with Martin Schroeter, Kyndryl’s Chairman and CEO, about his scorecard a little over a year after the spinoff from IBM.
Dealt a challenging hand out of the gate
When officially separated from IBM on November 4, 2021, Kyndryl started life with $2B in cash on its books, 4,000+ enterprise customers in 60+ countries, and annual revenues of nearly $19B. Hardly a small startup!
That may sound fine, but under the covers, the business was experiencing declining revenues due to a lack of investment and a limiting charter of supporting the product-oriented business. Although the organization was critical to how IBM engaged with its customer base, it did not attract the investment it perhaps deserved and became a drag on IBM’s overall business. No one I discuss this with at IBM or Kyndryl disputes this with me.
What to do with the autonomy
Now a separate company, Kyndryl has taken the opportunity to invest in the offerings and practices that customers want from the company. The Kyndryl story is about growth and creating value for customers.
The company now has the autonomy to pursue opportunities, build capabilities, and join the ecosystems that matter to customers. Investing and the independence to act have set Kyndryl on the path to turning the business around.
Business offerings informed by customers
As a first step, Martin created a new business strategy shaped by the customer base. A Venn diagram of the following three questions; “What does the company do today that has real value?”, “Where are you investing for the future? “and “where do you give us brand permission to operate?” defined the company offerings – in fact, six new practices.
In the category of what “can we do for you today that has real value,” Kyndryl offers a Core Enterprise and zCloud practice. A firm offering, as today, Kyndryl manages about half of the mainframes in the world. The second practice in this category is the digital workplace, an open platform to foster employee collaboration and productivity.
Even in the core business, Kyndryl had struck some deals that would have been difficult to imagine when the company was part of IBM. The new Mainframe Data Pipe to Azure lets customers connect mainframe and midrange data with the Azure cloud. Similarly, Kyndryl supports Google Cloud’s Dual Run, which enables parallel processing to create digital copies of mainframe systems that run simultaneously on Google Cloud without negatively impacting core business processes or end-user experience.
In the “investing for the future” category, Kyndryl invests in four new practices. The first is Network and Edge, providing the expertise and technologies for the next wave of cloud with 5G-enabled edge and software-defined networking technologies such as SDN and SD-WAN. This practice is very different from previous networking practices under IBM, which were about reselling network gear.
The Kyndryl Cloud practice is also much broader in scope. In IBM, the business had to lead with the IBM Cloud precluding any engagement with Google, Microsoft, or AWS. The new cloud practice focuses on the large hyperscalers in the cloud space. Kyndryl has wasted no time forming cloud-focused partnerships with Microsoft, AWS, Google Cloud, and Oracle.
The Data Management and AI services and Security and Resilience practices round out the four new practices that form the set of capabilities that customers value.
Joining the ecosystem that customers value
Customers have said, “to be part of the future, not just part of my past, you need to build capabilities that I need, and you need to work with the partners with whom I work.”
Kyndryl has wasted no time by moving into and joining the ecosystem that the customer base uses to meet digital transformation needs. Kyndryl has formed agreements with 20+ partners, including the cloud-focused partnerships mentioned above, enterprise-oriented alliances with Red Hat, Cloudera, NetApp, and Nokia, and expanded partnerships with Dell and SAP.
New solutions for emerging business needs
Kyndryl has launched three new, homegrown solutions and services attuned to modern and emerging business needs. Kyndryl Bridge is an open integration platform that helps customers deal with the complexity of mission-critical systems with greater oversight, interoperability, and AI-powered analytics. You can think of Kyndryl Bridge as IPaaS or an integration platform as a service designed to streamline IT operations.
The company sees strong interest in the platform. In fact, Stellantis, a global automotive manufacturer, has just signed an agreement to use Kyndryl Bridge. The platform will support IT infrastructure management and real-time insights across Stellantis’ technology environment. The project is designed to give them smoother and more efficient IT operations across manufacturing facilities spanning the U.S., Latin America, Italy, France, Poland, and India.
Kyndryl Vital is a collaborative co-creation effort that helps customers better understand and fully envision the future states of the business and understand the challenges to get there. Vital spans problem definition to a deliverable solution to solve complex real-world business problems. Kyndryl Consult works with Kyndryl Bridge, Kyndryl Vital, and other solutions to help customers advance digital transformation initiatives.
Kyndryl has been making solid moves in forming new alliances and investing in new offerings. The proof is in recent customer engagements. According to the company, there have been new contracts with global enterprise customers, including Michelin, CaixaBank, BMW, Raytheon, Bangalore International Airport, CarreFour Belgium, Spain Ministry of Defense, Ricoh, Honda, Yamaha, and Singapore Airlines.
Now that Kyndryl is an independent company, there are exciting opportunities for future growth, such as the need for digital transformation services and managing and modernizing mission-critical information systems.
I look forward to following the next chapter of Kyndryl’s turnaround and hearing from customers who have benefited from Kyndryl’s expertise.