IBM has been transforming its business, addressing the evolving needs of its clients, while continuing to support their most critical business processes. The company is becoming more than a hardware, software and services company; it is emerging as a cognitive solutions and cloud platform company. To support this transformation, IBM has made a number of changes to its management system and organizational structure. Segment reporting reflects the way the company analyzes business results and allocates resources. IBM redoubled the efforts to reinvent the core hardware, software and services franchises, while investing to create new ones - in cloud, data, cognitive, security and the other businesses that comprise the strategic imperatives. This is not simply to manage a portfolio of businesses, but to build the integrated capability that clients would need for the new era.

The primary changes are driven by realignment of IBM’s software portfolio, as software value shifts to new areas:

The company has created a cognitive solutions business. This encompasses the solutions units addressing many of the strategic areas, including analytics, commerce and security, several of the new initiatives around Watson, Watson Health, Watson IoT, and Transaction Processing software. Many of these are new opportunity areas, opening up incremental revenue and profit pools.

Integration software, including WebSphere, has been brought together with IBM’s cloud infrastructure and platform capabilities and Global Technology Service, reflecting the importance of integration software to enterprise-grade hybrid clouds.

Operating systems software has been more closely aligned with the underlying hardware platforms

IBM began to see that the IT industry would radically reorder, driven by the phenomenon of data, the maturation of cloud computing and the emergence of what many call artificial intelligence or AI. The company is convinced that the source of value for its clients and partners would shift, and that the convergence of these innovations would usher in a new era in both technology and business.