https://www.straitstimes.com/business/companies-markets/ibm-falls-on-weak-consulting-sales-overshadowing-hashicorp-deal
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Good grief that answer AK gave sure is a lot of word salad without actually saying much.
IBM has told you where they are going to focus. Large jobs that have big ROI’s and large impacts. This is AK responding to Matt’s question below during the Q and A for 1st q. That means less emphasis on multiple smaller jobs, and more emphasis on fewer bigger jobs. That translates into a more focused and smaller go to market Consulting force. So yes you are correct Consulting will get smaller BUT more focused (I would say around the recent acquisitions that IBM has just spent 10 billion on)
Matt Swanson: I think, Matt, that’s a great question. So let me maybe take that, and I’ll address it from both the consulting side and the software side. If we were 12 months ago, I would say that there was a lot of excitement, and there was a lot of experimentation that we’re starting and people were not thinking through, what does this mean for my overall ROI? What are the economics of running GenAI. How do I get the people changes done so that the ROI can actually be realized. What is happening in all of my conversations this year, in the first quarter of 2024 is a lot of people have woken up that those issues need to be addressed as well. So when they talk to our consulting team, they are spending energy on, but can you help my people also do the transformation it takes?
What is the change process through which you can recognize those things? Then go to immediately asking, in these models, how expensive is it to run them and they begin to do the math, wait, if I run this model, just for this one business process, the infrastructure costs alone could be $300 million a year that doesn’t close the ROI. Can I do it in a much more cost-effective way but an equally good answer, and that is where you begin to see some of the models that IBM has produced, our Granite series play very strongly into helping them recognize their ROI by reducing the economics. And then lastly, and this is advice that I gave to the C-suite usually, and it resonates is don’t pick lots of little experiment, try to pick a few use cases, which can scale.
And by scale, meaning that they actually do impact a large fraction of the employees or their clients’ customers and they begin to have a large impact in how business is done by either improving revenue or by making the enterprise significantly more productive. That’s kind of a conversation shift from simply, oh, this is a neat new tool. Let me try out to see what I can do, not what I should do, but what I can do. And I think that, that is a big change in terms of helping the organization scale. So let me now wrap up the call. In the first quarter of 2024, we have executed on our strategy to deliver revenue growth and cash generation. allowing us to invest organically and through strategic acquisitions like HashiCorp. As always, we need to execute to capture the opportunity in front of us.
I look forward to sharing our progress with you as we move through the rest of the year.
When I was there, IBM Consulting did all sorts of "small jobs" for midsize to large businesses. Provide setup assistance on a DB2 UDB or Websphere configuration, for example, and while the partner is hanging around the office they'll sniff out an opportunity for bringing IBM developers onto some application that the customer is building. They were the sorts of jobs that would now be farmed out to business partners, if IBM isn't doing it already.
In other words...the comparison of "enterprise" vs "non enterprise" won't be strictly a measure of business size, but it will be more of a measure of opportunity size. If you're an "enterprise" (big) customer that doesn't otherwise use IBM products and services but wants some pinpoint help on some project, IBM would probably direct you to a business partner. If, on the other hand, you're someone who uses "lots" of IBM stuff, or maybe has the potential to use lots of IBM stuff, then IBM would work with you. Something like that anyway.
Mainframe makes up maybe 10% of Consulting. If they got rid of the rest, they wouldn't be able to afford to pay the dividend. And what part of Consulting is NOT enterprise? We don't consult to mom and pops.
Going just enterprise has been in the works for a while now if you are in consulting. Look for SW to ramp up Apptio and HashiCorp expertise ASAP. You don’t spend 10 billion unless you can back fill the folks needed to sell/service/consult the product lines
Look for IBM to get rid of all consulting except enterprise mainframe-related stuff (the part that makes money).
IBM dropped about 9 per cent in extended trading after the company’s weak 'consulting unit' sales disappointed investors.
Next on the chopping block is the Consulting Unit. Again.
"IBM shares sank nine percent in the after-trading session as the tech giant reported first-quarter revenue which came in lower than expected at $14.46 billion." https://www.moneycontrol.com/news/business/markets/world-street-dimon-warns-of-geopolitical-pitfalls-ibms-big-bet-metaverse-loses-billions-spotifys-disruptions-and-more-12707585.html
CEO values PR over HR. Buy a brand, get rid of existing staff.