AI and hybrid cloud drive IBM Consulting’s growth platforms
The types of generative AI solutions drawing investor and media hype at the moment—ChatGPT-4 and MidJourney, for instance—are huge models with broad capabilities. But for enterprises looking to add generative AI to their technology strategy in an effort to deliver a specific business outcome, IBM is “placing its emphasis” on smaller models that “are much more curated,” as IBM Consulting SVP John Granger explained at the recent JP Morgan Global Technology, Media and Communications Conference.
He continued: “I think what’s critical here for businesses is confidence around the quality of the data, the amount of the bias, and so on…That is the fundamental issue I think. We in IBM have always been super focused on enterprise, so what Iw Ould say is that at the moment…clients are experimenting with both types the broader models and the more narrow. When they are starting to think about how they might go into production and scale, they’re shifting much more to the narrower foundation models.”
Granger said IBM’s CEO Arvind Krishna identified AI as a critical area three years ago. In the company’s consulting business, he said 21,000 of the 160,000 consultant work in the AI and data space, and IBM Consulting has done “40,000-odd” engagements in this area. He also made the case for the recently-launched watsonx platform, which consists of three primary blocks: watsonx.AI studio for training foundation models, watson.data data store and lakehouse to organize enterprise data, and watsonx.governance to direct, manage and coordinate data AI workflows. Taken together, “It’s an enterprise-ready toolset that uses trusted data in order to accelerate the building and deployment of machine learning and foundation models.”
In terms of how it will fit into the consulting organization, Granger likened it to the RedHat acquisition which has turned into an a consulting business with $2 billion in revenues and $8 billion in signings. He said the idea is to build out a watsonx business in a similar manner.
Bigger picture on IBM, including IBM Consulting’s strategy, Granger called out Krishna’s mission of delivering transformation “powered by the preeminent technologies of our time, hybrid cloud and AI, leveraging an ecosystem. To that last point, “No one company can hope to provide, to have a monopoly, on all the technology solutions a client needs. Therefore, what you’ve got to do is to ensure you can orchestrate and integrate those solutions to provide value to clients.” In addition to the Red Hat practice, Granger also mentioned $1 billion-plus AWS and Azure capabilities, in addition to longstanding lines of business around Adobe, Salesforce and SAP.
He also laid out three “growth platforms” his organization is aligned around: “The journey to cloud, application migration, application modernization, the management of cloud in a hybrid cloud environment.;” “intelligent workflows” which covers capabilities on process expertise, talent, finance, supply chain, customer care and “our whole data and AI capability;” and security. That framework is predicated on a “transform to grow” ethos meant to let customers “focus more and more on less and less.”
In terms of competitive dynamics, Granger described a “really crowded” consulting/system integrator market, and broke down IBM Consulting’s differentiation into three parts. The first one is being a part of IBM. “If you want to do really big, complicated, end-to-end transformations, possibly with a global footprint, really there are only two players in our marketplace,” the other being Accenture. He also touted IBM Consulting’s industry expertise which “means that we have a really good understanding of what [clients] businesses are.” A third factor, Granger said is client experience, particularly around co-creation, co-execution, and rapid scale up ability.
Asked about any potential M&A activity, Granger said the decision-making asks if a target company aligns with IBM’s strategy, generates synergy across the company beyond the consulting shop, and is it cash accretive in a reasonable amount of time.
