What is Kyndryl? IBM’s managed infrastructure services spin-off explained

CEO Martin Schroeter is ex-IBM. He left the company in June 2020, before the spin-off was announced, and came back to lead Kyndryl, then known as NewCo, in January 2021. He was previously SVP of global markets at IBM, and before that its CFO.

The next senior appointments, in March 2021, were CMO Maria Bartolome Winans, who came to the spin-off directly from her role as CMO for IBM Americas, and Group President Elly Keinan, another former IBMer who took time out to work in venture capital after 33 years at the company.

Global Head of Corporate Affairs Una Pulizzi was also a new hire in April 2021, previously in a similar role at GE, while General Counsel Edward Sebold was chief legal officer for IBM’s Watson Health division.

More poaching of senior IBMers occurred in early May, 2021. Chief Transformation Officer Nel Akoth was previously with IBM Global Business Services; Leigh Price moved from one leadership role in strategy and corporate development to another; and Vineet Khurana became controller at Kyndryl after five years in three different CFO roles at IBM. Kyndryl’s global alliances and partnerships leader Stephen Leonard held a number of positions at IBM, most recently as general manager of the Power Systems division.

It wasn’t until the second half of May 2021 that Kyndryl began to name its top technical staff: CIO Michael Bradshaw is new to IBM, having previously served as CIO at NBC/Universal and as CIO for Mission Systems and Training at Lockheed Martin. CTO Antoine Shagoury is a former CIO of US bank State Street and of stock exchanges in London and the US. Most recently, he worked at strategic advisory partnership Ridge-Lane.

Other senior Kyndryl hires from outside IBM include Vic Bhagat, a former CIO for Verizon Enterprise Solutions, EMC, and several units of GE as the head of its customer advisory practice, and COO Harsh Chugh, most recently CFO at SaaS provider PlanSource.

 Who is on Kyndryl’s board?

To provide the new company with more stability, Kyndryl’s board of directors will serve overlapping three-year terms through 2027, so it’ll take at least two elections for an outside group to take control of the board.

Kyndryl’s first 10 directors are:

• CEO Martyn Schroeter, board chairman
• Stephen Hester, lead independent director. He was CEO of RSA Insurance Group until June 2021, and is chairman of easyJet
• Dominic Caruso, retired Johnson & Johnson CFO
• John Harris, former VP of business development for Raytheon and board member at Cisco Systems
• Shirley Ann Jackson, President of Rensselaer Polytechnic Institute
• Janina Kugel, former CHRO and member of the managing board of German industrial conglomerate Siemens
• Denis Machuel, CEO of temporary staffing firm Adecco
• Rahul Merchant, former head of technology at retirement fund TIAA, Fannie Mae, and Merrill Lynch, and current board member at Convergint Technologies, Juniper Networks, and Emulex
• Jana Schreuder, retired COO of Northern Trust and current board member at Entrust Datacard and Blucora
• Howard Ungerleider, President and CFO of commodity chemicals company Dow

What does Kyndryl’s split mean for IBM?

IBM is still one of the biggest technology businesses in the world. Its split with Kyndryl freed it from a legacy business that wasn’t growing, and enabled it to reorganize into three main operating segments now called Software, Consulting (formerly Global Business Services), and Infrastructure. And it’s doing well post-split: for the full year 2022, revenue from Software rose 6.9% to $25 billion, and Consulting made $19.1 billion, up 7.1%. Even Infrastructure, the segment Kyndryl was spun out of, grew 7.8% to $15.3 billion, after slipping 2.4% the previous year.

Customer needs for application services and infrastructure services are diverging, so spinning off Kyndryl has allowed IBM to focus on growing its open hybrid cloud platform and AI capabilities, and its growth is accelerating. The split has turned IBM from a services-led company to one making more than half its revenue from software and solutions.

IBM CEO Arvind Krishna, in his letter to investors in the 2022 annual report, attributed one-third of IBM’s 12% annual growth to incremental external sales to Kyndryl. Even apart, the two companies’ fortunes remain linked.