IBM's tech and business agenda leads with AI, hybrid cloud

IBM's local headquarters in Milan, Italy.

IBM's local headquarters in Milan, Italy. Emanuele Cremaschi via Getty Images News

Company No. 28 on our 2023 Top 100 made a big investment in the federal market through its acquisition of Octo Consulting and sees that as directly tied to Big Blue's bigger, global vision for itself.

For IBM in its current era, the importance of picking which technologies to focus on means zeroing in on artificial intelligence and hybrid cloud computing as areas Big Blue wants to be a global leader.

Tech is of course not all of the story for this global commercial company. Public sector, and in particular the federal government, represent a priority customer set for IBM as seen in its $1.2 billion acquisition of Octo Consulting.

That transaction closed earlier this year and was reviewed by Big Blue's chief executive Krishna and the entire C-level leadership team, given the size and specs of what Octo brought and the market it works in.

"It's about our government clients in the federal space leading the way, driving innovation and because of the nature of the missions they serve," Susan Wedge, managing partner for the U.S. public and federal market at IBM's consulting business, told me. "You can think of the federal government as a microcosm of a number of industries."

IBM ranks at No. 28 on our 2023 Top 100 with approximately $1.3 billion in unclassified prime obligations.

Mark Johnson, IBM's vice president of technology for the U.S. federal market, singled out computer network and supply chain security as one of the areas where federal agencies are taking an innovation leadership role.

The defense industrial base's emerging cybersecurity standard known as CMMC is one example Johnson cited, along with the push toward more secure software attestation practices that get away from self-certification.

Johnson told me IBM has stood up an executive steering committee to drive how Big Blue prioritizes security in its portfolio given how the company believes those requirements influence certain commercial markets.

"It's not just the federal business, it's the hospital in Croatia or the bank in Australia that also want that level of security and privacy for their solutions," Johnson said. "It's important around the world, so we lead with some of these requirements that are coming out and that raises the bar for all our software and technology."

IBM's emphasis on AI and hybrid cloud as its pathways for continued success also illustrate how the approximately 288,300-employee company views its overall vision and public sector focus as intertwined.

Johnson pointed out that IBM has been involved in the AI landscape over the past four decades, well before the ongoing hype cycle involving generative AI. IBM designed its Watson system to answer questions posed in natural language.

Watsonx is the newest iteration of that technology through its products built for functions like foundation models generative AI, enterprise-level AI, data storage and workflow acceleration.

Trustworthiness and responsible development of AI technologies has become an equal part of the overall artificial intelligence conversation along with what the tools do. Wedge cited IBM's AI ethics board as one group helping shape the company's direction in that regard.

"It's really a multidisciplinary team responsible for governance and decision-making for AI practices," Wedge said of that panel she is a member. "We've got a set of AI ethics that we live by, we evaluate programs that we're going to be moving forward with."

As IBM's Red Hat subsidiary defines it, hybrid cloud combines at least two computing environments that share information with one another and run a uniform series of applications for a business of enterprise.

That can mean two or more private or public clouds, at least one of each, or even a physical hardware or virtual environment connected to at least one cloud. But either way, the data is everywhere and Johnson sees many agencies trying to pull all of that into a single place.

Johnson believes leaving the data where it needs to be is a better approach, along with these other steps to achieve hybrid cloud:

"Let the applications get pushed out to the edge and process that data there, and send back only what they need to send back and request only what they need... That way we can query across a variety of different places with the data."

According to how IBM sees the world: what happens across its public sector and federal teams will take Big Blue into many new places it has not been before.

"It really is opportunity for us to not only have that impact for our clients and the people they serve, but also to learn a lot that benefits many of our other clients and our company as well," Wedge said.

(An upcoming episode of our WT 360 podcast will feature my full conversation with Wedge and Johnson that goes over the IBM and Octo teams coming together, more on how the public sector and federal business contributes to Big Blue's overall strategy, and insights into the role of IBM Research for the rest of the company)