My first blog in this series — Why IBM Matters Again, looked at IBM’s missed S-curves, the assets it has today and the IBM trends, as well as the seven questions that will decide whether its resurgence is real or another false dawn.
But assets alone don’t explain turnarounds. Companies succeed or fail on the basis of the structures that govern how they prioritize, price, sell, and execute.
IBM’s resurgence cannot be explained only by Red Hat, watsonx, or Consulting. It also reflects a quieter, harder shift: the company has been hard at work to change its stripes, operating model and culture. These steps don’t mean the job is finished, they are moves in the right direction, and whether they hold under pressure is still an open question. But they show what it looks like when a century-old incumbent starts to fix the structural bottlenecks that once made it slow, fragmented, and mistrusted.
This blog explores five areas where IBM has changed its structures and commercial foundations, not cosmetic adjustments, but rewiring of incentives, governance, and culture.
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Five structural shifts reshaping IBM (2019–2025)
1. From internal silos to unified customer alignment
- Problem: For decades, IBM’s software, consulting, and infrastructure businesses operated independently, each with its own Profit and Loss (P&L) and priorities with issues compounded by disparate account management models. There was conflict even between IBM’s direct and partner channels. That fragmentation was visible to clients, in inconsistent pricing and disjointed experience
- Fix: IBM has been rebuilding around the customer rather than the org chart. At the top, it created shared commercial governance across software, consulting, and infrastructure, ensuring common account coverage and go-to-market priorities. In the field, IBM directed focus around shared client outcomes, formalizing cross-functional account pods, client engineering teams and relationship-management talent. It even formalized a structured partner program with standardized incentives and pricing guardrails. Each strategic account now has clear ownership, with teams accountable for both growth and success
- Why it matters: This was a hygiene issue that needed immediate attention, something that competition exploited for years! IBM now shows up as one company, not three. Its joint posture with ecosystem has also improved significantly. Clients see continuity in relationships, faster execution, and engagements built around their goals instead of IBM’s structure
- What to watch: Whether alignment holds as markets and leadership change, fragmentation tends to return when incentives or reporting lines drift apart
2. From revenue protection to customer success
- Problem: IBM’s commercial model once prioritized protecting existing revenue over customer success. Renewals and expansion discussions were often mired in strict contract negotiations (leading to pejorative phrases like “IBM has more lawyers than sellers”), not in realized value
- Fix: IBM shifted its focus toward customer success and measurable adoption. Contracts were simplified and sales incentives now emphasize usage, satisfaction, and long-term growth
- Why it matters: Revenue and customer outcomes are now aligned. IBM grows when its clients do, not when contracts tighten. The relationship feels more like partnership than policing
- What to watch: Whether this customer-centric approach can hold steady when growth slows or commercial pressure intensifies
3. From legacy drag to hybrid strength
- Problem: IBM’s mainframe business, once its crown jewel, had come to be viewed as something dragging it under water, essential for mission-critical workloads but seen as costly and out of step with the S-curve IBM wanted to ride, cloud
- Fix: IBM has re-engineered its mainframe portfolio to compete in the hybrid era, not discard it. Recent generations (z16 and z17) combine embedded Artificial Intelligence (AI) capabilities, cloud-native integration through OpenShift, and flexible consumption models that better align cost with usage. These changes, along with gains in workload density and energy efficiency, have strengthened the platform’s economics for high-volume, latency-sensitive workloads. Many enterprise clients, especially in banking, insurance, and government, now view mainframes as an efficient alternative for those critical workloads, where they continue to drag their feet on cloud adoption
- Why it matters: The mainframe now stands as a hybrid-strength platform, secure, performant, and economically credible. Clients can modernize in place instead of migrating out, combining reliability with the scalability and economics expected of the cloud era
- What to watch: Whether IBM can sustain this competitiveness beyond regulated industries and continue improving developer experience, automation, and cost transparency
4. From legacy commercial constructs to a modern commercial model
- Problem: IBM’s commercial architecture was built in another era, one dominated by perpetual licenses, regional entitlements, dense Stock Keeping Unit (SKU) matrices, and approval-heavy discounting. The model worked for large enterprise clients accustomed to multi-year procurements. However, it made IBM slower and less flexible in a market that had shifted to cloud-era simplicity and consumption-based engagement
- Fix: IBM is progressively dismantling this legacy complexity. It has been consolidating SKUs, standardizing entitlements, simplifying renewals, and expanding subscription and consumption-based licensing across key product lines. At the same time, governance has tightened, deal approvals, discount bands, and contracting are now managed through a (more) global, consistent, transparent framework
- Why it matters: These changes go beyond pricing hygiene. IBM is modernizing how it sells and how customers buy, moving from contracts optimized for predictability to models designed for flex. The company is becoming easier to buy from, which is essential for keeping pace with new buying behaviors and procurement standards in hybrid and AI markets
- What to watch: Whether IBM can complete this shift without revenue disruption, migrating from perpetual revenue recognition to recurring models while maintaining margin discipline
5. From closed systems to open, developer-friendly ecosystems
- Problem: For years, IBM was seen as powerful but closed. Its platforms were proprietary, its licensing rigid, and its engagement with external developers and partners limited. That made IBM dependable in regulated industries but difficult to collaborate with across the broader technology community
- Fix: IBM has worked to change that reputation. It open-sourced its Granite family of AI models, co-founded the AI Alliance with Meta, announced a partnership with Anthropic and aligned its software with open standards. Just as importantly, IBM has expanded its dialogue with the developer community through initiatives like IBM TechXchange (where I am live blogging from), now a hands-on, developer-focused event showcasing open technologies, real code, and peer collaboration. Together, these efforts reflect a shift from closed ownership to active participation across clients, partners, and developers alike
- Why it matters: Openness is both a technology strategy and a cultural shift. By becoming easier to build on, partner with, and contribute to, IBM is rebuilding trust and relevance in an ecosystem where influence depends on collaboration
- What to watch: Whether IBM can maintain this open, developer-connected posture in the long term, not just through events or alliances, but in how it supports daily developer experiences, partnerships, and standards participation
IBM’s structural work has addressed many long-standing bottlenecks, but several risks remain:
- Licensing complexity: Simplification continues, but metrics such as Cloud Pak Virtual Private Cloud (VPC) still challenge CIOs and procurement teams trying to model total cost.
- Developer mindshare: Credibility is improving, but hyperscalers still set the default for where new workloads are built
- Channel consistency: IBM’s partner-first model will work only if pricing discipline and incentives remain consistent across regions and deal sizes
- Quantum pacing: Quantum progress is visible, but the commercial timeline and use cases remain uncertain
- Cultural urgency: Structures have evolved faster than behavior; sustaining speed, simplicity, and accountability will be IBM’s hardest cultural test
What the industry can learn
IBM’s rewiring is ongoing; none of this is final. But it offers a blueprint for other incumbents. Some changes were tactical, standardizing pricing, strengthening governance, and focusing the portfolio. Some – like going all in on hybrid and AI – were highly talked about and openly discussed strategic bets. Others were implicit and deeply structural, aligning commercial leadership across divisions, shifting incentives from revenue protection to customer success, and re-engineering its legacy.
The broader lesson: Structural change is the price of admission to the next S-curve. Companies rarely fall behind because they lack technology; they fall behind because their operating models are tuned to a world that no longer exists. IBM’s progress shows both the difficulty and the necessity of rebuilding those foundations while the business keeps running.
For every large enterprise now confronting the AI and hybrid-cloud frontier, the imperative is clear: Technology choices matter, but it’s organizational design and incentive alignment that determine who catches, and survives, the next curve.
If you enjoyed reading this blog, check out IBM Think 2025 – View From The Front Row | Blog – Everest Group, which delves deeper into other topics regarding IBM.
Reach out to Abhishek Singh ([email protected]), to discuss more in depth about our insights and offerings at Everest Group.
