Listed on the New York Stock Exchange under the ticker symbol KD, Kyndryl, IBM’s former infrastructure managed services business, is now an independent company. While close ties remain between the two companies – IBM retains a 19.9 percent stake in Kyndryl, which will remain one of its largest customers – the spin-off offers new opportunities for both parties. As far as it is concerned, the Kyndryl spin-off plans to expand into markets such as intelligent automation, data services, cloud services or security and resiliency.
The company estimates that, immediately after the spin-off, these business areas will give it access to a potential market of $415 billion compared to $240 billion, prior to the spin-off. Today, Kyndryl captures only a small part of this market, with annual revenues of $19 billion. According to Antoine Shagoury, CTO of Kyndryl, “technology – the tools that Kyndryl creates and uses to deliver services to its customers – will play an important role in leveraging these opportunities.
He knows the company’s capabilities well. A former CIO himself, most recently at U.S. financial firm State Street Corporation and previously at the London Stock Exchange, Shagoury was a Kyndryl customer when the service was still part of IBM. When the IT giant approached him about the position of CTO of Kyndryl, his first reaction was, “You’re asking me as a former customer? Then sit down and take notes, because there are a lot of problems we’re going to have to solve. This approach was constructive for both parties: “The discussion started out fun and became exciting.
It sharpened our desire to bridge the gap, and to transform Kyndryl into the company it is becoming: a facilitator, a service enabler,” he said. Some of the problems Shagoury wanted to solve were related to what he calls “environment issues,” which the infrastructure managed services business was targeted to do. “The business was too focused around very specific subsets of applications, very focused on the IBM cloud,” he explained.
“This IBM business model was as deeply embedded in its customers’ businesses as it was in their own teams,” he added. “This was very limiting in terms of helping the customer move forward with the complexity of modernization, digitization and market availability, all components of the new paradigm,” the CTO further said. Kyndryl has now freed itself from these constraints, as the company decides on its own way of working with customers.
Naturally, customers are concerned about Kyndryl’s separation from IBM: Shagoury says that when he worked in the banking industry, “this kind of separation would have made everyone in the office think.
“Many of Kyndryl’s customers are concerned about service continuity, but there’s no need to worry,” Shagoury says: Kyndryl and IBM are each other’s largest suppliers and customers, and both companies are committed to ensuring business continuity for their customers. Aside from these continuity concerns, the other question on CIOs’ minds is whether there will be enough change.
In particular, they wonder about Kyndryl’s ability to innovate. “We are one of IBM’s biggest customers. As such, we have direct access to research results. If there’s something really unique happening at IBM, we can easily discuss it, include it as an opportunity.
“But Kyndryl will also be an innovator in its own right,” he added. Already, the spinoff has 3,000 patents; another 800 patents are pending approval, with more likely to be filed before the end of the year. “We are far more innovative than people realize,” the CTO said. “Almost 40 percent of our patents are in AI. You wouldn’t think that would be the case for an infrastructure company.” What’s more, these patents won’t be sold. “We want to use them for the customer, for their modernization and transformation process.”
“The third big concern CIOs have about the spinoff is whether they will still have access to the right partners,” Antoine Shagoury said again. “CIOs come in with a list of partners they want us to partner with,” he related. “Every operating environment is different, and the recipe for helping a company modernize or optimize its environment is never the same.
The key is to make sure you have the right partners every time,” he explained. “Kyndryl’s new leadership is explaining to teams internally and externally how they can help build the ecosystem of partner environments that will help the company thrive,” the CTO added.
The role of technology
Technology will play a critical role in building the ecosystem, and Shagoury is at the heart of that. “I lead all the development, all the architects, all the research and the platforms themselves. The question is how do we deliver our tools and services, and the strategic platforms, and how else do we deliver our services in this ecosystem model,” he further explained.
He wants to expose the technology that Kyndryl has inherited and will build, so that its people working in different sectors, with different practices, are aware of what is available, and can see if it can be applied to their environment.
A lot of that technology is about automation. “We do more than 9 million automation activities every month for our customers,” Shagoury said, including server lifecycle management, incident response and remediation, all the way up to asset and patch management services.
“Automation is creeping into the technology stack, and it now includes robotic process automation (RPA) services and beyond to programmatic automation services,” the CTO said. The infrastructure managed services company that Kyndryl has become has gathered metadata on its operations.
“We now have one of the largest operational data lakes in the world around that metadata, so we now have AI components that feed into our customers’ operations or automation tools, as well as our scheduling tools,” Shagoury further said.