IBM Names CEO of New Managed Services Spinoff

Martin Schroeter will lead the new IBM managed services spinoff, which the company plans to launch by year’s end. In naming Schroeter as CEO of the new company, for now dubbed “NewCo,” IBM is turning to a familiar face.

IBM’s Martin Schroeter

Schroeter is a 28-year IBM veteran who once led the IT giant’s global technology services business. He has held key leadership roles, including CFO. At the time of Schroeter’s retirement last year, he was VP of IBM’s global markets, overseeing industries and integrated accounts.

“Martin has the strategic vision and business judgment to realize NewCo’s enormous potential as the global leader in managed infrastructure services,” IBM chairman and CEO Arvind Krishna, said.. “He has a deep understanding of the industry and has earned the trust of our clients and of the investor community.”

In October, the company announced the new IBM managed services spinoff as a standalone, publicly held company. IBM has identified managed technology infrastructure services as a $500 billion market opportunity. It believes that splitting its technology and hybrid cloud business from managed infrastructure services will boost growth for both companies.

NewCo, the working name for the IBM managed services business, posted nearly $19 billion in revenue last year. In an October blog explaining the spinoff, Krishna said that is twice the size of its nearest competitor. While IBM didn’t identify its nearest rival, Insight Enterprises, No. 1 on last year’s MSP 501 list, reported revenue of $6.7 billion.

IBM said NewCo has 90,000 employees and serves 4,600 enterprise clients across 115 countries.

“It will leverage its unrivaled expertise to offer hosting and network services, services management, infrastructure modernization, and migrating and managing multicloud environments,” Krishna said. “These are critical services that are core to client operations.”

Picking One of Its Own

It’s not surprising that IBM picked a CEO for NewCo from its own ranks.

“Martin Schroeter is long-term IBMer that has the broad experience across the organization to lead the first phase of NewCo’s journey,” said Forrester analyst Jay McBain. “Probably most important was his experience as IBM’s CFO from 2014-2017, as it transformed its business from a services-led model that Louis Gerstner built in the ’90s to a multicloud, hybrid cloud company focused on emerging technology.”

While NewCo will become a separate and independent company, its DNA is firmly associated with IBM in terms of personnel, products, and shared customers and partners, according to Pund-IT principal analyst Charles King.

“That makes it vital for NewCo’s leadership to have a deep organizational and strategic understanding of IBM,” King said. “Equally important is Schroeter’s experience in a variety of IBM executive roles. In fact, you could say that he’s emblematic of IBM’s practice of preparing candidates for senior roles by rotating them through its business units and global organizations. Schroeter’s past positions, including SVP of global markets, CFO and GM of IBM Global Financing, and work in company offices in Japan, Australia and the U.S., make him an ideal candidate to lead and manage NewCo.”

Schroeter’s Leadership Priorities

Schroeter doesn’t officially begin his role as CEO of NewCo until Jan 15. During a December talk at Carnegie Mellon University, where he received his MBA, Schroeter shared his leadership priorities.

Key is a willingness to keep learning, he said. For example, when Schroeter ran IBM’s services business in Asia, he managing 60,000 people. So he learned the importance of speaking in superlatives.

“Part of this is, how do you build the leadership skills and interaction skills so that you can lead people at the right level?” he said.

The other part is understanding technology at a deeper level.

“The world is becoming more technical,” he said.

Schroeter recalled an instance where he was preparing to meet a client who wanted to understand IBM’s Red Hat acquisition.

“So I spent a few hours over the last few weekends just making sure I knew why OpenShift is the best container platform, understanding the Red Hat business model, to make sure I can really explain it clearly and crisply to clients. There’s a leadership element to continuous learning — and that’s an evolution.”