The profit erosion that IBM has faced these last years has led them to focus on a new strategic imperative that will now tackle four of the fastest growing businesses, which are — the cloud, big data, analytics, security, and mobile. These four emerging business units are expected to power IBM to diversify its unprofitable and traditional hardware units into a more profitable business entity overall.
USD 4 billion investment to boost IBM’s businesses
In 2014, these four business areas generated 27% of IBM revenues, and if the company reaches its goal for 2018, these four units will contribute to 44% of the predicted revenue of USD 90 billion. During its annual investor conference, IBM top executives stated that the company will invest USD 4 billion in its four focus areas in order to achieve IBM’s projected goal in the industry. The investment made in these areas will free up money in order to increase efficiency, while not necessarily cutting down spending in other areas.
Hiring new assets
In order to reach its ambitious goal, IBM’s workforce is being increasingly deployed towards the emerging units, laying off some workers and hiring new ones with different skill sets. In the coming year, the company will deliver low single-digit growth in revenue and high single-digit in operating earnings per share. IBM’s chairwoman, Mrs Rometty, stated that she believes in the recent investment divestitures and thus has great confidence that IBM will achieve its long term model.
Investing in the future
The decline in IBM’s revenue was due to the restructuring of the company’s businesses, which saw business units being sold off with not enough money being generated, stated Rometty. But with these new incentives, IBM sits closely with its cloud and applications businesses worth USD 7 billion. In order to support the Softlayer asset purchased by IBM, a spending surge of USD 1.2 billion is being injected into the company to build data centers.
Strategic Partnerships
New partnerships are in IBM’s strategic incentives in order to develop cloud-based businesses apps with partners. Also, deals are being entered into with Japanese telecommunications and Internet corporation Softbank to bring its Watson big data technology to Japan and help fuel Big Blue towards its USD 40 billion goal. Softbank Corp is a leading Japanese corporation dealing with operations in broadband, fixed-line telecommunications, e-commerce, Internet, broadmedia, technology services, finance, media and marketing with various other businesses in the industry.
Source: Techtime, sourcebank
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