Strategic imperatives continue to be a silver lining in GTS segment
Let’s take a look at the IBM’s Technology Services and Cloud Platforms segment’s performance in fiscal 3Q17. This segment includes the GTS (global technology services) business and IBM’s cloud infrastructure and platform capabilities.
As GTS contributes more than 40% towards the company’s overall revenues, its performance is crucial to IBM’s overall growth. In fiscal 3Q17, IBM’s GTS revenue accounted for ~44% of its total revenue. In 3Q17, this segment fell 4% to $8.5 billion. However, the segment’s Strategic Imperatives business revenue continued to post growth and reported growth of 16% in constant currency terms. Cloud revenue rose 16% in the segment. Overall, GTS signings have risen 25% in the last quarter. The growth in signings bodes well for the company, as it should lead to a backlog and an increase in revenues.
Hybrid cloud’s role in GTS growth
In regards to the importance of hybrid cloud and its role in the company’s growth, IBM said, “We had strong signings performance in Infrastructure Services this quarter, as clients look to implement hybrid cloud environments.” Earlier in the series, we discussed the IBM cloud private software platform, which is its latest version of the private and hybrid cloud.
Though IBM leads in the hybrid cloud space and is taking several initiatives to maintain its position, competition is heating up in this space. Analysts seem to be encouraged by Microsoft’s (MSFT) strategy in the hybrid cloud space. Citing Timothy Horan, an analyst with Oppenheimer, CNBC reported, “Microsoft is focused on embedding all products and services with AI capabilities. Microsoft has proven it can execute on its hybrid cloud strategy, and we expect accelerating growth on both the top and bottom lines.”