Red Hat CEO Paul Cormier is the focal point of IBM’s transformation expectations. When Big Blue paid $ 34 billion for its company in 2018, it was because it believed that it could be the organization’s linchpin to shift focus to hybrid computing.
In its most recent earnings report, IBM posted positive revenue growth for the second time in just eight quarters, and it was Red Hat’s 15% growth that led the way. Cormier recognizes his company’s role for IBM, and he does not shy away from it.
As he told me in an interview before the company’s Red Hat Summit this week, a lot of cloud technology is based on Linux, and as the company originally named it selling Red Hat Enterprise Linux (RHEL), their To say that this is a technology is very comfortable working with their organization. He sees the two companies working well together, with Red Hat benefiting from selling his company’s software to IBM, while remaining technically neutral, something that benefits customers And pushes the overall IBM vision.
Quite first year
Even though Cormier has been with Red Hat for 20 years, Arvind Krishna took over as CEO of IBM’s CEO and longtime Red Hat CEO Jim Whitehurst in place of Arvind Krishna as his CEO . Cormier stepped in as the leader as soon as the epidemic hit America with all its might.
“Going into my first year of an epidemic, nobody knew what the business was going to look like, and not that we’re completely out of the woods yet, but we experienced that very well, ” They said.
One reason for this is that like many software companies, it has seen its customers shift to the cloud much faster than before. While the epidemic has served as a forceful event for digital transformation, it has left many companies to manage hybrid on-prime and cloud environments, a place where Red Hat can help.
“Having a hybrid architecture yields a lot of value […], But it is complicated. It doesn’t just happen with magic, and I think we helped a lot of customers, and it accelerated a lot of things over the years of what was going to happen.
In terms of the workforce moving to work from home, Red Hat worked 25% of its workforce that was even before the epidemic, so the transition was not as difficult as you might think for a company of its size. . “Every meeting of Red Hat had someone from afar. [before the pandemic]. And so we were stuck in that mode overnight. I think we had an easier time than others for that reason.
Acting as IBM’s development engine
Red Hat’s 15% growth was a major reason for IBM that modest revenue growth in the last quarter, something that has been difficult for the past seven years. On IBM’s earnings call with analysts, both CEO Krishna and CFO Jim Kavanaugh saw Red Hat as double-digit growth in the coming years as the key to driving the company toward more stable positive revenue.
Cormier says he anticipates the same things IBM expects – and Red Hat is there to work ahead of him. “We see growth going on because it’s a very big market, and that’s the way that’s really playing out. We share optimism,” he explained.
While he understands that Red Hat should remain neutral and work with multiple cloud partners, IBM is free to push Red Hat, and that type of sales behind it also helps drive Red Hat’s revenue. is. “What IBM does for us, they open the door for us in many more places. They are in many more countries than we were [prior to the acquisition], And they have many high-level relationships where they can open the door for us.
In fact, Cormier points out that IBM’s salespersons have quotas to push Red Hat into their largest accounts. “IBM’s sales are very encouraging to bring Red Hat to help solve customers’ problems with Red Hat products,” he said.
No pressure or nothing
When you’re being billed as a kind of savior for a company as IBM, it wouldn’t be surprising for Cormier to feel the weight of those expectations. But if he is the one he does not show it. While he acknowledges that there is pressure, he argues that it is no different from being a public company, only that stakeholders have changed.
“Sure it’s pressure, but before [being acquired] We were a public company. I see Arvind as the chairman of the board and IBM as our shareholders. Our shareholders put a lot of pressure on us [when we were public]. So I did not feel any more pressure with our shareholders with IBM and with Arvind.
Although they currently represent only 5% of IBM’s revenue, Cormier knows that it’s not really about that number, per se. It is about what his team does and how it fits in with IBM’s change strategy.
Being under pressure to deliver quarter after quarter is the job of any CEO, especially one who is in a position to run a company like Red Hat under a corporation like IBM, but Cormier is always comfortable in his skin and confident in himself. It is with that double-digit growth, along with the company’s ability to continue chugging. There is definitely a market potential. It is up to Red and Hat and IBM to take advantage of this.