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30 Management Discussion
International Business Machines Corporation and Subsidiary Companies
($ inmillions)
For the year ended December 31: 2015 2014**
Yr.-to-Yr.
Percent
Change
Yr.-to-Yr.
Percent Change
Adjusted for
Currency
Global Services external revenue $49,182 $54,954 (10.5)% (1.1)%*
Global Technology Services $32,017 $35,442 (9.7)% 0.5%*
Outsourcing 16,992 19,082 (11.0) (0.5)
Integrated Technology Services 8,893 9,506 (6.4) 2.5
Maintenance 6,132 6,853 (10.5) 1.2*
Global Business Services $17,166 $19,512 (12.0)% (4.1)%*
Outsourcing 4,898 5,438 (9.9) (2.0)*
Consulting and Systems Integration 12,268 14,075 (12.8) (4.9)
* Adjusted for divestitures and currency.
** Reclassified to conform with 2015 presentation.
Global Technology Services revenue of $32,017 million decreased
9.7percent as reported in 2015 compared to the prior year, but
increased 1percent adjusted for currency (10points) and the
Systemx divestiture, as the company helps clients transition to a
hybrid cloud services platform bringing cloud, mobility and secu-
rity to infrastructure services. Within GTS, outsourcing revenue
of $16,992 million decreased 11.0percent as reported and 1per-
cent adjusted for currency as the company continues to reinvent
its portfolio, providing the most modern IT services that connect
clients to the cloud-based mobile world. Integrated Technology
Services (ITS) revenue of $8,893 million decreased 6.4percent
as reported, but grew 3percent adjusted for currency compared
to the prior year with strong performance in SoftLayer through-
out the year. Maintenance revenue of $6,132 million decreased
10.5percent as reported, but grew 1percent adjusted for currency
(9points) and the Systemx divestiture (3points). This business
continues to contribute significant revenue by delivering a wide
range of support services to maintain and improve clients’ IT infra-
structure. Throughout 2015, there was continued strong demand
for Multi-Vendor Support services where clients can leverage the
company’s global distribution and inventory capabilities.
Within GTS, the strategic imperatives, including hybrid cloud
services, grew strong double digits at constant currency for the full
year, including strong demand for SoftLayer. The company con-
tinues to increase its cloud capacity with 46 cloud data centers
opened around the world as of December 31, 2015. This Infrastruc-
ture-as-a-Service cloud platform provides clients with a range of
cloud services, including virtual and bare metal servers along with
a dedicated dark fiber network infrastructure. As clients evaluate
their technology roadmap, they look for agility and innovation and
to gain insight into data from all sources. The company’s hybrid
cloud stack is an open platform that enables this innovation. Cli-
ents can choose from public, private and dedicated environments
based on their needs, such as workload, performance, data sov-
ereignty and regulatory requirements. Entire industries and value
chains are being disrupted, and clients are looking to the company
for competitive advantage.
Global Business Services revenue of $17,166 million decreased
12.0percent as reported and 4percent adjusted for currency
(8points) compared to the prior year. Within GBS, outsourcing
revenue of $4,898 million decreased 9.9percent as reported and
2percent adjusted for currency (8points). Consulting and Systems
Integration (C&SI) revenue of $12,268 million declined 12.8percent
as reported and 5percent adjusted for currency.
As the company continued to transform the GBS business
during the year, revenue from the strategic imperative practices
grew at strong rates. However, overall revenue performance con-
tinues to be impacted by the company’s shift away from traditional
enterprise application implementations. Clients are moving away
from ERP engagements to initiatives that focus on digitizing their
business with analytics, cloud and mobile technologies. As part of
the company’s partnership with Apple, it has now delivered over
100MobileFirst for iOS applications. This unique partnership
brings together the simplicity of design and ease of use of the
Apple mobile device with IBM’s ability to build applications that
scale securely and efficiently to the enterprise, helping to transform
the way work gets done across 14 industries and 65professions.
These applications allow clients to securely access their most
critical data and processes, so that they can redesign workflows
and drive productivity. Since the partnership with Apple was
announced in 2014, the company has generated over $1billion in
signings from the program.