IBM CEO's seven most sizzling soundbites from Best of Breed
Arvind Krishna on cutting direct accounts, how partners should respond to inflation and acquisition of 'frenemy' VMware by Broadcom
The soundbites have been ringing out all week at CRN parent The Channel Company's 2022 Xchange Best of Breed Conference, with the CEOs of HPE, Crowdstrike and VMware among those to take to the stage.
IBM CEO Arvind Krishna was questioned by The Channel Company Founding Partner Robert Faletra and CRN Executive Editor of News Steven Burke on Monday night. Krishna took the helm of Big Blue back in 2020, when he called for a "maniacal focus" from the "entire company" on hybrid cloud and AI.
You can read Krishna's full interview over at our sister title CRN US here, but here we pick out some of the Big Blue chief's most scintillating soundbites from the session.
1) "From our conversations with clients, I would tell you that nobody loves it, but they all understand. Because most of our clients are doing the same out to their clients."
Asked whether partners should react to inflation by raising their prices, Krishna replied that they should, but added that it is more a question of how.
"So if you're getting … an eight [per cent] to nine percent increase in your labour rate, there isn't that much margin. If you have 40 per cent margin, OK, maybe you can live with it. … But if not, you've got to pass it on. Now the question is, how much do you pass on and in what time? … So maybe you pass six per cent of it on and then see what's going to happen," he said.
"If inflation comes down, then you can do six one more year, and then you're caught up. … Maybe slightly lower margins for a while, but you are passing on a price increase."
What does Krishna think about Broadcom's acquisition of VMware? See next page...
IBM CEO's seven most sizzling soundbites from Best of Breed
Arvind Krishna on cutting direct accounts, how partners should respond to inflation and acquisition of 'frenemy' VMware by Broadcom
2) "As long as they keep innovating on the products, they keep giving more function back to their clients—it's a strong franchise. That falls away, then that's a different question."
Asked about his stance on Broadcom's acquisition of IBM partner and competitor VMware, Krishna said that VMware remains an important partner for his company.
"We are a partner. I just want to be clear. Look, the whole world competes," he added.
"We can partner with Microsoft and we can partner with AWS. And we run Linux on those clouds. We run Red Hat Linux on the spot. We run OpenShift on those clouds. … We run a lot of our software portfolio on top of VMware. VMware in turn becomes the layer that helps to abstract out hardware, whether from Lenovo, HP, Dell and many other partners.
"So I would to call it more of a partner, not a competitor. So what are we hearing? Look, I think that vSphere, vSAN, NSX have a really strong position in the ecosystem. I think that the 20,000-plus—I think it is that many, but there could be more—clients who use it are probably very reluctant to move. …
"But it comes down to not what is happening today. I think it'll come down to what is going to happen in 2023 and 2024."
IBM has become much more channel-friendly, according to Krishna. Find out more on following page...
IBM CEO's seven most sizzling soundbites from Best of Breed
Arvind Krishna on cutting direct accounts, how partners should respond to inflation and acquisition of 'frenemy' VMware by Broadcom
3) "I want to increase the number of clients also, not just wallet share. … That means that we need [the channel's] help. We are not going to go there directly at all."
Addressing a question about how IBM is changing how it works with partners, Krishna said that Big Blue is taking marketshare and needs the channel's help to target further gains in the ‘long tail' beyond its largest enterprise clients.
The number of clients it serves directly has fallen from around 5,000 to 400 in the last two years, he said.
IBM has grown above the market in the last three quarters and expects to maintain that, Krishna added.
"That means we are taking share … and the bulk of that is not in the top 400 [enterprises]. The bulk of that is in the long tail," he said.
Krishna was also quick to highlight IBM's burgeoning business with hyperscalers Microsoft and AWS as an example of Big Blue's more partner-friendly approach.
IBM's book of business with the public cloud duo was "not measurable" - standing at "a few tens of millions [of dollars]" - in January 2020 but now has a combined runrate of over $1bn, he said.
"And the pipeline is more than $3bn to $5bn. So that tells you that we are much more open. We're much more friendly," Krishna said.
"Who would have thought three years ago that IBM and Microsoft or IBM and Amazon would work together? But that is where it comes together through all of you. It doesn't really come together because we say so."
See next page for Krishna's views on the cybersecurity opportunity for partners...
IBM CEO's seven most sizzling soundbites from Best of Breed
Arvind Krishna on cutting direct accounts, how partners should respond to inflation and acquisition of 'frenemy' VMware by Broadcom
4) "I think most of your clients … the last budget that they will touch is the cyber budget. … You have criminals who are going to come."
Invited to lay out partners' security opportunity with Big Blue, Krishna focused on threat management, identity management and data protection.
"So whether it's threat management—and we keep innovating, we keep building our own, we keep buying properties. And so what is called threat surface management is a big topic. What is my threat surface? Doing the old days of pen[etration] testing once in two years—really, for two years, you're going to leave yourself open in case something came the day after the pen test?," he said.
"So how do you do it much more automatically? So our threat management portfolio there with both Randori and QRadar, I think it's a great place where we can work together.
"Then if I look at identity management, it's a problem. Yes, on a singular public cloud, maybe you can get an answer. But if you're not on a singular public cloud, you go to the to-do identity management and access controls across all of the spaces.
"I talked about data. How do you protect your data—especially databases, because that's typically where credit card numbers and people's names and addresses and their personal information are stored.
"So those are all areas that I think we are great at. Yes, you have other choices. But the fact that we have a multibillion-dollar business there tells you there is a lot of opportunity that is there together for all of us, going down that path together with our clients."
Which three areas is IBM enjoying channel success? Krishna explains on following page...
IBM CEO's seven most sizzling soundbites from Best of Breed
Arvind Krishna on cutting direct accounts, how partners should respond to inflation and acquisition of 'frenemy' VMware by Broadcom
5) "Red Hat is almost 70 per cent channel, which is actually our single biggest success. Everything else at IBM is more like 30 per cent. So that's a strong success."
Krishna picked out Red Hat as one of three areas where partners are enjoying success with IBM (the other two being storage and AI).
IBM won't "touch" that high percentage figure, Krishna stressed, adding that "we want them to only go up from there, not down".
Regarding AI, Krishna said IBM is seeing "a lot of success" around conversational agents that deflect calls, emails and queries coming into an enterprise.
"An area where I think there's a lot of opportunity, but we are not seeing it yet with the channel, is around AIOps [artificial intelligence operations]," he added.
"So when I say AIOps, I mean observability, application resource monitoring, application performance monitoring. … The products in there will be Turbonomic, Watson AIOps, Instana as examples.
"I think the ability to go into an enterprise and tell them, ‘Look, we can do things a lot more automated. We can take some cost out. We can do monitoring, and eventually go closed loop on AI'—which I don't think is happening yet, I think is a massive opportunity given the current labour market."
Is VMware IBM's biggest hybrid cloud competitor? Krishna weighs in on following page...
IBM CEO's seven most sizzling soundbites from Best of Breed
Arvind Krishna on cutting direct accounts, how partners should respond to inflation and acquisition of 'frenemy' VMware by Broadcom
6) "That is the world, I think, for the next 10 years. Five years ago, people debated, ‘No, it all goes to a singular public cloud.' And we looked at it and said, ‘That doesn't ever happen.'"
Asked about whether he regards VMware as IBM's biggest hybrid cloud competitor, Krishna replied that he "doesn't look at it that way".
The world is going to become multi-cloud, he predicted.
"I think our clients are going to need multiple public clouds. And for the larger ones, they're going to have a lot of on-premises infrastructure," he said.
"People want diversity. People want optionality. People want flexibility. Nobody's going to get themselves locked into only one [public cloud]. There are a few, but that's probably 10 percent of the world."
Where does Krishna believe IBM can be a public cloud number-one? See final page for the answer...
IBM CEO's seven most sizzling soundbites from Best of Breed
Arvind Krishna on cutting direct accounts, how partners should respond to inflation and acquisition of 'frenemy' VMware by Broadcom
7) "We're chasing three markets for IBM public cloud"
Asked where IBM can be a public cloud number-one, Krishna picked out three areas, namely FSS [financial software services] cloud, SAP workloads and VMware on cloud.
The former is about "building in the regulatory controls that our banking clients need all over the world"
"As you build in those controls, it takes a lot of cost and angst out of those clients. … We have 150 banks now on our council for FSS cloud. That's No. 1. But what's under it is both Red Hat and VMware—that's why I say it's an ‘and', it's not a, ‘I don't want to get into a conflict.' Those are the two most common pieces inside of that," he explained.