IBM talks up cost savings, including 'workforce rebalancing'
(2024/01/25)
- Reference: 1706188698
- News link: https://www.theregister.co.uk/2024/01/25/ibm_q4/
- Source link:
IBM is recasting its ambitions for annual run rate cost savings by upping the target by another $1 billion, and will pull multiple levers to get there – including completion of the Weather Company’s asset and job cuts.
The enterprise tech bellwether has just filed results for [1]calendar Q4 : revenue edged up four percent year-on-year to $17.4 billion; Software was up 3.1 percent to $7.5 billion; Consulting grew a 5.8 percent rise to $5 billion; and Infrastructure was up by 2.75 percent to $4.6 billion. Financing fell to $200 million.
Operating profit for the quarter ended December 31 was up to $3.75 billion.
[2]
CEO Arvind Krishna said IBM had entered the financial year with the intent to throw its muscle behind cloud computing and software, including AI - though it does not break out AI turnover in a standalone division, so progress is hard to decipher.
[3]
[4]
He said the sales pipeline for generative AI and WatsonX in Q3 was in the "low hundreds of millions, since then demand continues to increase and our book of business in the fourth quarter is roughly double the third quarter amount."
"There was a balance of both large and small transactions across both segments," Krishna added. "Enterprise use cases of addressing code modernization, customer service and digital labor continue to offer meaningful near-term benefits to clients."
[5]
IBM highlighted work with customers using the WatsonX code assistant for Red Hat Ansible, including a pilot with Citi "where initial results point to substantial developer productivity and core quality improvements that have led to plans for a rapid expansion focused on scaling for enterprise-wide outcomes."
Other clients in this space range from NatWest to Lockheed Martin, Boehringer Ingelheim, and Seville Football Club, which is using WatsonX to find the right players to sign by describing attributes that are then scanned across more than of 200,000 scouting reports.
In a rundown of the biz dynamics in the quarter, CFO James Kavanaugh said software was boosted by its Hybrid Cloud Platform sales, and Transaction Processing. zSystems still benefited from a refresh cycle, and Red Hat revenues went up eight percent.
[6]
"Clients are also prioritizing cloud modernization and cloud-based application development projects. This focus on digital transformation and AI initiatives to drive productivity and cost savings has been consistent throughout the year," said the chief financial officer. All of this brought in consulting dollars to IBM.
For the year, IBM grew two percent to $61.9 billion, with Software and Consulting up by five percent each, and Infrastructure down five percent. Operating income was $7.5 billion, up from $1.78 billion, as total expenses fell to $25.6 billion from $31.5 billion.
IBM expects "similar macro trends" in 2024 to the ones it experienced last year. Krishna said: "Every client I speak with is asking about how to boost productivity with AI and how to manage their technology stack, much of which is deployed across a hybrid environment, public, private and on-premises. These trends continue to fuel demand for both hybrid cloud and artificial intelligence."
Kavanaugh said IBM remains "laser focused on productivity initiatives" to "digitally transform our business processes and scale AI within IBM. This includes simplifying our application and infrastructure environments, streamlining our supply chain, aligning our teams by workflow, reducing our real estate footprint, and enabling a higher value-added workforce through automation and AI-driven efficiencies."
IBM had set a target of making annual run rate cost savings of $2 billion by the end of 2024 and has passed the $1.5 billion mark, which it said freed up money to invest in beefing up productivity and investments in technical and industry skills.
[7]IBM Cloud is upgrading a datacenter and users will have to halt their Power VMs
[8]Using GoAnywhere MFT for file transfers? Patch now – an exploit's out for a critical bug
[9]The rise and fall of the standard user interface
[10]Ex-IBM staff ask US Supremes for help in bringing age-discrimination battle to court
"This remains our playbook going forward. And given our success to date, we now believe we can achieve at least $3 billion in annual run rate savings by the end of 2024," said the CFO.
Cap-ex was down by around $400 million, said Kavanaugh, "reflecting actions to optimize our real estate portfolio. These actions reduced our net CapEx although had limited benefit to our profit performance."
"We are seeing increased productivity in our business, which will lead to workforce rebalancing fairly consistent with 2023 levels," he added.
Given the way [11]other [12]tech [13]vendors have started the year by cutting their workforce, IBM likely won't be the last to follow this playbook. ®
Get our [14]Tech Resources
[1] https://www.ibm.com/downloads/cas/G40GBAOP
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZbKTvhFYancHB1hCMqqb6AAAAIY&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
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[7] https://www.theregister.com/2024/01/25/ibm_cloud_toronto_migration/
[8] https://www.theregister.com/2024/01/24/public_exploit_published_within_hours/
[9] https://www.theregister.com/2024/01/24/rise_and_fall_of_cua/
[10] https://www.theregister.com/2024/01/23/ibm_supreme_court/
[11] https://www.theregister.com/2024/01/24/sap_restructure/
[12] https://www.theregister.com/2024/01/18/google_ceo_tell_googlers_more/
[13] https://www.theregister.com/2024/01/11/twitch_employee_layoff/
[14] https://whitepapers.theregister.com/
The enterprise tech bellwether has just filed results for [1]calendar Q4 : revenue edged up four percent year-on-year to $17.4 billion; Software was up 3.1 percent to $7.5 billion; Consulting grew a 5.8 percent rise to $5 billion; and Infrastructure was up by 2.75 percent to $4.6 billion. Financing fell to $200 million.
Operating profit for the quarter ended December 31 was up to $3.75 billion.
[2]
CEO Arvind Krishna said IBM had entered the financial year with the intent to throw its muscle behind cloud computing and software, including AI - though it does not break out AI turnover in a standalone division, so progress is hard to decipher.
[3]
[4]
He said the sales pipeline for generative AI and WatsonX in Q3 was in the "low hundreds of millions, since then demand continues to increase and our book of business in the fourth quarter is roughly double the third quarter amount."
"There was a balance of both large and small transactions across both segments," Krishna added. "Enterprise use cases of addressing code modernization, customer service and digital labor continue to offer meaningful near-term benefits to clients."
[5]
IBM highlighted work with customers using the WatsonX code assistant for Red Hat Ansible, including a pilot with Citi "where initial results point to substantial developer productivity and core quality improvements that have led to plans for a rapid expansion focused on scaling for enterprise-wide outcomes."
Other clients in this space range from NatWest to Lockheed Martin, Boehringer Ingelheim, and Seville Football Club, which is using WatsonX to find the right players to sign by describing attributes that are then scanned across more than of 200,000 scouting reports.
In a rundown of the biz dynamics in the quarter, CFO James Kavanaugh said software was boosted by its Hybrid Cloud Platform sales, and Transaction Processing. zSystems still benefited from a refresh cycle, and Red Hat revenues went up eight percent.
[6]
"Clients are also prioritizing cloud modernization and cloud-based application development projects. This focus on digital transformation and AI initiatives to drive productivity and cost savings has been consistent throughout the year," said the chief financial officer. All of this brought in consulting dollars to IBM.
For the year, IBM grew two percent to $61.9 billion, with Software and Consulting up by five percent each, and Infrastructure down five percent. Operating income was $7.5 billion, up from $1.78 billion, as total expenses fell to $25.6 billion from $31.5 billion.
IBM expects "similar macro trends" in 2024 to the ones it experienced last year. Krishna said: "Every client I speak with is asking about how to boost productivity with AI and how to manage their technology stack, much of which is deployed across a hybrid environment, public, private and on-premises. These trends continue to fuel demand for both hybrid cloud and artificial intelligence."
Kavanaugh said IBM remains "laser focused on productivity initiatives" to "digitally transform our business processes and scale AI within IBM. This includes simplifying our application and infrastructure environments, streamlining our supply chain, aligning our teams by workflow, reducing our real estate footprint, and enabling a higher value-added workforce through automation and AI-driven efficiencies."
IBM had set a target of making annual run rate cost savings of $2 billion by the end of 2024 and has passed the $1.5 billion mark, which it said freed up money to invest in beefing up productivity and investments in technical and industry skills.
[7]IBM Cloud is upgrading a datacenter and users will have to halt their Power VMs
[8]Using GoAnywhere MFT for file transfers? Patch now – an exploit's out for a critical bug
[9]The rise and fall of the standard user interface
[10]Ex-IBM staff ask US Supremes for help in bringing age-discrimination battle to court
"This remains our playbook going forward. And given our success to date, we now believe we can achieve at least $3 billion in annual run rate savings by the end of 2024," said the CFO.
Cap-ex was down by around $400 million, said Kavanaugh, "reflecting actions to optimize our real estate portfolio. These actions reduced our net CapEx although had limited benefit to our profit performance."
"We are seeing increased productivity in our business, which will lead to workforce rebalancing fairly consistent with 2023 levels," he added.
Given the way [11]other [12]tech [13]vendors have started the year by cutting their workforce, IBM likely won't be the last to follow this playbook. ®
Get our [14]Tech Resources
[1] https://www.ibm.com/downloads/cas/G40GBAOP
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZbKTvhFYancHB1hCMqqb6AAAAIY&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZbKTvhFYancHB1hCMqqb6AAAAIY&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZbKTvhFYancHB1hCMqqb6AAAAIY&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZbKTvhFYancHB1hCMqqb6AAAAIY&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZbKTvhFYancHB1hCMqqb6AAAAIY&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2024/01/25/ibm_cloud_toronto_migration/
[8] https://www.theregister.com/2024/01/24/public_exploit_published_within_hours/
[9] https://www.theregister.com/2024/01/24/rise_and_fall_of_cua/
[10] https://www.theregister.com/2024/01/23/ibm_supreme_court/
[11] https://www.theregister.com/2024/01/24/sap_restructure/
[12] https://www.theregister.com/2024/01/18/google_ceo_tell_googlers_more/
[13] https://www.theregister.com/2024/01/11/twitch_employee_layoff/
[14] https://whitepapers.theregister.com/
Re: What does IBM do these days?
AMBxx
I've worked on a few projects with IBM over the years.
First it involved going to their data centres - lots of servers with warning lights flashing as RAID was degraded. Nobody ever bothered to fix that.
To make life more difficult, there weren't enough keyboards to go around all the servers (this was before RDP). If you left the server you were working on, someone would take your keyboard. As these were the old PS/2 keyboards, you'd then have to reboot to make another keyboard work.
More recently, they wanted me to do some very specialised work. Just a few days. My PI only covers me to £1m. They wanted £2m. By the time we'd sorted that out (6 months), the remainder of the project had been abandoned.
No, I don't know what they do any more either!
Re: What does IBM do these days?
Yet Another Anonymous coward
They think up new euphemisms for firing people
If the economy really tanks there will be a massive market as $1Tn FANG stocks all try to 'right-size', 'best-size' reduction-in-force', 'exterminate' (we dropped that one ed.) or 'rebalance human resources' - and IBM will be at the industry forefront of supplying these phrases
Rebalancing
elsergiovolador
manager> Hey Steve we are adopting workforce rebalancing to increase productivity. Exciting times!
steve> What does it mean?
manager> Pack your stuff.
What does IBM do these days?
Posting anon because I don't want to get ridiculed since this is a genuine question.
I'm in my early 40s. When I was at uni, 20+ years ago, I was given several recommendations that I should seriously consider working for IBM. These recommendations were from people such as uni lecturers who had never even worked there. I never did, and went on to become a software engineer at relatively tiny companies by comparison. That said I enjoy what I do.
Whenever I read stories about IBM - specifically from those who work(ed) there - it sounds like one horror story after another.
My vague recollection from 20+ years ago is they were this massive company that had had success with PCs in the 2 decades prior. I know they had some heritage in the server department and was largely unaware of anything to do with their software ventures.
When I look at them in 2024 I've no idea what they actually do. The stand out seems to be "consultancy" and it's hard to imagine anything other than they're still somehow riding on the wave of successes of the past. As per, "you don't get fired for buying (insert big company name here)". I can't imagine their consultancy services in the IT industry are significantly better than the - literally thousands of - other much smaller consultancies.
So, WTF do they actually do? And out of interest did anyone enjoy working there?