In 2022, IBM’s software segment is expected to generate US$25 billion of the company’s revenue, amounting to approximately US$60.53 billion for 2022. In 2016, IBM changed its segment reporting for the first time to reflect the company’s shift away from a hardware, software and services company and towards becoming a cognitive solutions and cloud platform company. In the fourth quarter of 2021, the company will revamp its segment reporting to better align it with the company’s platform-centric approach to hybrid cloud and AI.
Restructuring of IBM’s Business Operations
Business segment reporting changed following the discovery of IBM’s management system and organizational changes. The company spun off its infrastructure services business into a separate company, Kindril. The new classification of business segments is based on several factors, such as homogeneity of products, technologies and customer base. Business is now organized into software, consulting, infrastructure, financing and other sectors.
Moving to Hybrid Cloud
One of IBM’s responses to its declining revenue has been to restructure some of its business by moving into areas such as cloud, blockchain and artificial intelligence. The company is looking to offset its underinvestment in the cloud by developing software and platform products. For example, its platform IBM Cloud aims to help customers move their operations to cloud environments. In early 2019, IBM acquired Red Hat, an open source technology company that provides a hybrid cloud platform. As a major and innovative player in the industry, IBM continually spends at least US$5 billion on research and development, such as advances in quantum computing and artificial intelligence.