Welcome to the Cloud Wars Minute — your daily cloud news and commentary show. Each episode provides insights and perspectives around the “reimagination machine” that is the cloud.
This episode is sponsored by Acceleration Economy’s AI Ecosystem Course, December 14. Discover how AI has created a new ecosystem of partnerships with a fresh spirit of customer-centric cocreation and renewed focus on reimagining what is possible.
In today’s Cloud Wars Minute, I take a look at IBM’s thriving generative artificial intelligence (GenAI) business.
00:41 — IBM is a 112-year-old company, an iconic American and global brand that has been reinventing itself pretty aggressively over the last four years under CEO Arvind Krishna. One of the outcomes has been that it has built a one-billion-dollar run rate for its generative AI business.
01:45 — Krishna said on the recent Q3 earnings call that its book of business for GenAI, for the quarter, is “in the low hundreds of millions of dollars.” He didn’t describe it as a billion-dollar annualized run rate. He said it’s growing rapidly, and $200 million on a quarterly basis translates pretty nicely to about a billion-dollar annualized run rate for its GenAI business.
02:26 — Krishna said that this is the revenue they’ve been generating so far and that the interest is even larger. He said it’s done thousands of hands-on interactions with customers both large and small. Krishna said clear patterns are emerging in AI use cases for the enterprise. He cited three in particular: code modernization, customer service, and digital labor.
03:15 — The first one in particular is code modernization. There are still many billions of lines of COBOL code out. A version of watsonx Code Assistant, an IBM GenAI product, is able to come in now and modernize some of that COBOL. COBOL is very, very old and it still works very well. But nobody knows how to use it anymore.
04:28 —There are still COBOL systems running back core banking systems, pension funds, doing traffic lights, and involved a lot in airports and airline reservation systems. So, it’s a fascinating look ahead into what’s going on.
04:46 — We’re nearing the end of Krishna’s fourth year as CEO. He inherited an awful mess. Krishna has done a terrific job in these almost four years of trying to clean up a lot of those messes and get the momentum of the company and the focus behind some key scenarios and behind hybrid cloud and AI.