Arvind Krishna took over as the new IBM CEO today in a leadership shake-up that extends to the company’s largest acquisition Red Hat — whose outgoing CEO takes a presidential role in IBM, as the tech giant looks to the hybrid cloud for future gains.
He immediately set about making a series of leadership changes, appointing Bridget van Kralingen as Senior VP of Global Markets (succeeding Martin Schroeter, who retires after 28 years with IBM) and announcing the appointment of Bank of America’s Howard Boville to oversee the IBM Cloud. Boville starts May 1, 2020.
Krishna has a task ahead of him to clinch the kind of growth of an Amazon or a Microsoft: IBM has plateaued in terms of revenue growth for years, but it remains in many senses a hugely robust company: few could divest businesses with annual revenues of more than $10 billion over seven years and still hold earnings steady.
Krishna said: “We have to win the architectural battle in cloud.
“There’s a unique window of opportunity for IBM and Red Hat to establish Linux, containers and Kubernetes as the new standard. We can make Red Hat OpenShift the default choice for hybrid cloud in the same way that Red Hat Enterprise Linux is the default choice for the operating system.”
(Canonical, Microsoft and Amazon might all have thoughts on that…)
Stepping into the job today to replace retiring Ginni Rometty, new CEO Krishna has been at Big Blue since 1990, and was instrumental in IBM’s $34 billion acquisition of Red Hat; a purchase he sees as key to the future prosperity of IBM.
In a letter to staff, IBM CEO Arvind Krishna wrote: “IBM has already built enduring platforms in mainframe, services, and middleware. All three continue to serve our clients. I believe now is the time to build a fourth platform in hybrid cloud. An essential, ubiquitous hybrid cloud platform our clients will rely on to do their most critical work in this century. A platform that can last even longer than the others.”
(In IBM’s FY2019 annual report, the company noted that in 2013, cloud represented only 4 percent of IBM’s revenue: “Today, cloud is 27 percent; a $21.2 billion business”).
Going forward, he says the company needs to deepen its understanding of both hybrid cloud and AI. The aim is to use what he sees as IBM’s competitive strengths — its ‘open source and security leadership’ — to gain market advantage.
Krishna continued: “Culture is everything.
“It’s what drives capability in any organisation. One of my key priorities will be fostering an entrepreneurial mindset across our business. This is about being nimble, pragmatic and aiming for speed over elegance. And, it’s about being comfortable with ambiguity and continuously adapting to shifting circumstances.”
Earlier reports had suggested an uneasy mix of cultures as IBM bought Red Hat. With outgoing Red Hat CEO taking over as IBM President (a position also previously held by IBM’s Rometty) that culture may shift more towards Red Hat’s.
Red Hat Now Top Hat
As IBM shakes up the company’s top positions, its recent acquisition Red Hat also gets new leadership as former CEO Jim Whitehurst is drafted into the role of IBM president and head of IBM Strategy. Paul Cormier has taken over the Red Hat role.
Whitehurst noted in 2019, after the takeover was announced but before it was finalised, that Red Hat’s open source-style culture had initially gelled uneasily with IBM’s. As he put it, IBM approaches meetings politely, with a lot of smiling. Red Hat’s culture is one of “constructive conflict”.
As he put it in May 2019: “We’ve had this bluntly a little bit with IBM where we’ll have these meetings and they’re all so nice and polite, and we’ll be like ‘that sucks’ or ‘that’s ridiculous’, and we’re just used to our operating that way, we don’t mean it in a bad way; we assume positive intent.”
He went on to stress that his team feels being blunt is part of the culture at Red Hat, and that it is an integral process to the creation of new ideas at the company: “We really do try to encourage this kind of creative abrasion, which to a lot of people feel really really harsh. But we really think that’s how the best ideas emerge.”
Whitehurst’s move appears to tie neatly into the overall direction towards the cloud that IBM is proposing as Krishna says: “We have to win the architectural battle in cloud. There’s a unique window of opportunity for IBM and Red Hat to establish Linux, containers and Kubernetes as the new standard.”
Red Hat’s new CEO Paul Cormier has been — as they call it — a ‘Red Hatter’ for 19 years, and has been its president of products and technologies since 2008.
One of the key changes in the company that he oversaw was the move from a free-to-download operating system to the subscription-based Red Hat Enterprise Linux (RHEL) many are now familiar with and which has paid off handsomely for the company.
Both Krishna and Cormier are stepping into their new CEO roles on the same day in a move that will see Red Hat and IBM’s fate intrinsically linked as IBM aims to be top dog when it comes to hybrid cloud deployments. This is evident from the clear emphasis that both CEOs have given to hybrid cloud in their opening addresses.
Cormier in his letter to staff recalls “being on stage at Red Hat Summit in 2007 talking about the idea of any application, anywhere, anytime, which very quickly led to open hybrid cloud. No one, and I mean no one, was talking about it at that time.”
While Krishna’s hybrid cloud intentions are equally clear as he states: “We can make Red Hat OpenShift the default choice for hybrid cloud in the same way that Red Hat Enterprise Linux is the default choice for the operating system.”