IBM creates new federal structure amid broader changes

There are some significant transitions going on over at IBM that have grabbed the headlines.

Long-time CEO Ginni Rometty is stepping down in April after eight years in the role. She’ll be replaced by Arvind Krishna, the current senior vice president for cloud and cognitive software.

James Whitehurst, CEO of recently-acquired Red Hat, will become president of IBM.

Rometty will remain executive chairman through the end of this year, then retire after 40 years with the company.

But closer to home, IBM has combined its federal and public sector units into one business that will be known as IBM U.S. Public Sector and Federal Market.

That newly-combined business is now led by Jay Bellissimo as general manager. Sam Gordy, who previously ran IBM Federal, is now chief strategy officer of the combined business.

IBM U.S. Public Sector and Federal Market will have three of what IBM calls industries:

• Healthcare and Life Sciences: led by Mike Errity, vice president.
• Government and Education: led by Judy Kelly, vice president,
• Defense and Intelligence: led by Retired Adm. Ray Spicer, vice president.

One government-facing unit is not part of the consolidation -- IBM Global Business Services U.S. Public Sector. That continues to be led by Andrew Fairbanks. But a source described Fairbanks as a “dotted line” report to Bellissimo.

The move isn’t directly linked to Rometty’s retirement but you can see some connections, at least in what the company’s priorities are.

As Rometty’s successor, Krishna has deep experience in key technologies such as cloud computing, artificial intelligence, quantum computing and blockchain. IBM’s organic growth has been anemic under Rometty, but she also has led a major transformation at the company including the acquisition of 65 companies to build a $21 billion hybrid cloud business.

In its most recent quarter, IBM reported a slight increase in revenue and beat analysts' earnings expectations in a potential sign that the company is poised for steadier growth.

But you can see a connection between Krishna and Whitehurst in the corporate ranks and who is leading the public sector and federal business, given Bellissimo’s background in AI and machine learning. Bellissimo previously was the general manager for cognitive process transformation.

It should be no surprise given the size of public sector and federal as one of IBM’s biggest industry groups that the priorities of the business area reflects the priorities of the company as a whole -- IBM sees its future as in the hybrid cloud and in cognitive computing.

IBM company has two hybrid cloud offerings for government, one for infrastructure as a service and another for platform as a service. Both are rated with a FedRAMP Impact Level of High, apparently recent upgrades to their status.

The new structure in the public sector space should allow IBM to bring a more streamlined approach to the market and customers by grouping like accounts together such as health care and life sciences, and defense and intelligence. The groupings have similarities and share mission goals. Customers will be served by combined teams that can share industry knowledge, business processes and technical expertise, an IBM source told me.

To hear a critique of IBM during the Rometty years, watch this CNBC segment..