IBM's SoftLayer chief departs amid cloud transition

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The head of IBM’s SoftLayer cloud services business has left the company, hard on the heels of IBM naming another executive to lead a new cloud division.

“We wish Lance Crosby the best as he takes a well-deserved break before pursuing new endeavors,” IBM said in a statement Wednesday, confirming his departure.

IBM acquired SoftLayer in 2013 for $2 billion. Its technology has become a key part of IBM’s cloud offerings, for which revenue amounted to $7 billion in 2014, the company reported last week.

“Now that the business is successfully integrated into IBM, I am ready to take some time off before I pursue my next challenge,” Crosby said in a separate statement. No replacement for him has yet been named.

His departure follows IBM’s decision to appoint longtime executive Robert LeBlanc to lead IBM Cloud, a new division that will try to speed IBM’s progress in selling cloud services.

It’s heightened focus on the cloud comes as IBM struggles in other parts of its business. The company’s revenue has declined for the past 11 quarters, with hardware sales falling as customers move more of their computing to the cloud. For the last quarter ended in December, IBM’s revenue was down 12 percent from a year earlier to $24.1 billion, while profit fell 11 percent.

Adding to its woes, a Forbes columnist this week reported that IBM was gearing up to cut a whopping 26 percent of its workforce, or about 112,000 people, though IBM has vehemently denied the report.

Expanding its cloud business is a big part of IBM’s recovery effort. It has acquired Cloudant and Lighthouse Security to strengthen its cloud offerings, and the company says other cloud deals could be in the works.

IBM invested more than $1.2 billion last year in 40 cloud data centers around the world, and launched a new cloud marketplace. It also claims to have signed more than $4 billion in multiyear enterprise cloud agreements.

Rivals Oracle and SAP have generally viewed cloud infrastructure as a commodity, focussing more on middleware and applications instead. But IBM has placed its own emphasis largely on the infrastructure layer, with the addition of services to set itself apart from Amazon, said analyst Robert Mahowald, a vice president for SaaS and cloud software with IDC.

“IBM is making a bet and taking the stance that infrastructure really matters,” he said. “It remains to be seen who is right.”

Crosby, meanwhile, “did a great job of growing SoftLayer’s software and making it attractive to IBM,” he added.

His departure is no real surprise, Mahowald said, noting that in meetings, Jim Comfort, IBM’s general manager for GTS cloud development and delivery, has been IBM’s main “go-to guy” for cloud.

“I think it has been in the works for a while,” Mahowald said. “It seems to me that when you’re the CEO of an acquired company, there’s the expectation of either being elevated or hanging around for 24 months and then exiting quietly. I think Crosby is just doing his duty.”

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