With its spinoff from IBM completed, Kyndryl is expanding its capabilities across multiple areas and establishing itself as a distinct entity. The services portfolio Kyndryl inherited from IBM included managed infrastructure services and cloud services. Kyndryl has now expanded to the advisory and implementation services business. When IBM and Kyndryl split, there was little clarity on a go-to-market strategy or its impact on clients. Now that the process is finished, Kyndryl has organized and created six global practice areas. Based on recent interactions with Kyndryl leaders, we are trying to understand their new structure, focus areas, and expansion plans for each global practice.
This research byte examines Kyndryl’s Core Enterprise and zCloud practice led by Group Leader Jamie Rutledge. Based on Kyndryl’s vision shared with Avasant advisors and enterprises, we will focus on Kyndryl’s delivery of mainframe services centered on IBM i and IBM Z Systems as well as IBM Power Sytems and IBM mainframes.
Kyndryl has identified the following six practice areas:
- Cloud: Supplies architecture design, migration, deployment, and management services for multiple clouds.
- Core Enterprise and zCloud: Supports management of mission-critical workloads through IBM Z and IBM i environments.
- Digital workplace: Provides optimization of IT touchpoints to improve employee experience.
- Application, data, and AI: Offers management and performance optimization services for SAP and Oracle applications.
- Security and resilience: Affords a secure environment for customers through identity management and security risk and regulatory compliance.
- Network and edge: Administers consulting and managed network services.
According to Kyndryl’s Q4 FY 2022 report, core enterprise and zCloud is its strongest and highest revenue-generating practice, contributing 33% of its total revenue. With over 30 years of experience, it has 8,000 employees trained on IBM i and IBM Z platforms. It is investing significantly in acquiring fresh talent and plans to hire 300 new and experienced employees each year for this practice.
Amalgamation of Mainframe and Cloud
Mainframe technologies are critical in banking, insurance, healthcare, travel, retail, and government sectors, where mission-critical workloads should have nearly zero downtime. It also ensures security and reliability while processing high volumes of transactions and maintaining data integrity. The mainframe has undergone continuous innovation over time and can integrate with multiple cloud environments to create a unified IT environment.
Nevertheless, legacy mainframe applications face challenges in achieving agility and speed because of their complex architecture. There is also an ongoing debate among many customers about moving away from the mainframe altogether due to a perception of a lack of mainframe resources and a misconception that the mainframe is capital-intensive. Kyndryl (along with IBM, of course) is facing these challenges and addressing misconceptions as follows:
- By developing platforms that are not solely dependent on COBOL language and leveraging languages including Java and Linux
- By adopting consumption-based models, which help in mainframe use without intensive capital investment
- By leveraging the cloud in conjunction with the mainframe to achieve agility and speed
A hybrid cloud strategy involving mainframes and cloud helps enterprises leverage the ability of mainframes to handle mission-critical systems coupled with the dynamic capabilities of the cloud to address variable and changing customer demands.
Kyndryl is also pivoting its mainframe services by helping enterprises adopt a hybrid cloud strategy. Kyndryl brings its expertise in mainframe technologies to its clients, assisting them in understanding the challenges in transitioning and migrating to new platforms, as needed. It is positioning itself as an end-to-end transformation partner, supporting its client’s technology modernization journey by providing expertise across both legacy and new technologies.
After the spinoff, Kyndryl acquired core capabilities for its managed infrastructure and cloud services. As for its mainframe services, it has expanded them in the following three ways:
- Creating application operations services to integrate all elements of the mainframe platform into a DevOps environment.
- Implementing hyperscaler integration services while developing use cases with cloud service providers (CSPs).
- Modernizing its applications portfolio for systems hosted in the mainframe environment.
Expansion and Augmentation of Services
In its core enterprise and zCloud practice, Kyndyrl’s key differentiator is its approach of the right platform for the right workload. This allows it to serve different customer segments based on their application, data, and business requirements. Depending on the client’s requirements, Kyndryl is now free to recommend the right hybrid cloud strategy. Free from IBM, Kyndryl helps enterprises transform platforms, integrate with a cloud provider, or migrate to a new platform. Kyndryl also provides scalability through its multitenant cloud offering zCloud for IBM Z workloads and a consumption-based pricing model. Enterprises can select the right platform based on their unique requirements.
Kyndryl is taking a three-fold approach to strengthen and further expand its capabilities in this practice.
- Organic growth: In 2021, it deployed new instances of its multitenant cloud offering, zCloud, in Dallas and Ashburn to enable physical proximity to cloud platform providers. zCloud is now enabled in 19 countries and delivered from 13 countries.
- Acquisitions: By acquiring the Finnish IT service provider Samlink in November 2021, it added application management capabilities to its portfolio.
- Partnerships: It is strengthening its partnerships with CSPs. Through its partnership with Microsoft, it has integrated mainframe environments in the Azure cloud and plans to expand use cases with GCP and AWS as well.
Kyndryl has also delivered key engagements in the banking, financial services, and insurance sector, helping clients achieve tangible business benefits. For RSA Insurance, Kyndyl provided end-of-system support by migrating the client to the cloud, leading to 30% performance gains. For Broadridge Financial Solutions, it migrated its mission-critical systems to a dedicated, private instance of IBM i cloud, leading to 20%–30% faster daily batch processing.
The mainframe is still a critical technology across multiple industries that depend on it for maintaining their core applications. It is not going away anytime soon. However, some enterprises are considering moving away from the mainframe because of the perception of a lack of skilled resources and its inability to enable cost savings and provide greater flexibility. As a result, Kyndryl is redefining its mainframe service portfolio to cater to modern and flexible infrastructure needs via a cloud-centric strategy. It is expanding its capabilities to support clients’ transformation and modernization plans through a hybrid cloud strategy centered around IBM Z and IBM i platforms. The approach includes attaining acquisitions, fostering partnerships, and designing transition strategies by segregating clients based on their mainframe perception and adoption.
The hybrid cloud strategy can help Kyndryl’s customers integrate their mainframe environments with the cloud. Kyndryl can help clients identify and run workloads in a suitable environment without hampering their mainframe investments. The hybrid cloud strategy will also help customers better accommodate changing business needs by leveraging both mainframe and cloud environments to handle high volumes of transactions. Moreover, enterprises can also consider hosting mainframe applications and data in multiple environments, enabling them to move from a CAPEX to an OPEX model. Because of its breadth of mainframe services and expertise on IBM Z and IBM i platforms, Kyndryl can carry out the right mainframe strategy and road map for its clients, whether it be modernizing, migrating, or retaining applications on their existing platforms.
By Parinita Singh, Principal Analyst, and Sanchita Pati, Senior Research Analyst, Avasant