Kyndryl CFO David Wyshner: We’re No Longer ‘IBM Captive’

‘We’re taking what we already are — which is a No. 1 player in the IT infrastructure services space … becoming an independent company, and that gives us a new freedom to no longer be an IBM captive,’ Kyndryl CFO David Wyshner tells CRN in an interview.

The chief financial officer for Kyndryl — the spin-off of IBM’s managed infrastructure services business that started life as an independent company on Thursday — told CRN in an interview that the company plans to use its intellectual property portfolio, its nearly 90,000 employees and $19 billion in revenue to overcome the increasingly competitive digital transformation market.

“We’re taking what we already are — which is a No. 1 player in the IT infrastructure services space … becoming an independent company, and that gives us a new freedom to no longer be an IBM captive,” said David Wyshner, whose company debuts on the New York Stock Exchange Thursday under the symbol “KD.”

Wyshner continued: “We’re able to expand what we do going forward to participate in a broader set of technology ecosystems, to provide a broader set of capabilities to customers, and in the process to unlock a larger addressable market and growth potential for us as a company.”

[RELATED: Kyndryl Executives Predict ‘Positive Revenue Growth’ In Four Years]

Wyshner joined New York-based Kyndryl earlier this year from Greenwich, Conn.-based transportation and contract logistics firm XPO Logistics.

Wyshner previously worked as CFO of Wyndham Worldwide, leading the company’s separation into one privately acquired business and two public companies. He also led the company’s nearly $2 billion acquisition of hotel chain La Quinta in 2018.

Wyshner’s experience includes working on the spin-off of a multi-billion dollar subsidiary of Cendant and breaking up the travel services company into four independent groups in the mid-2000s, according to his LinkedIn. He became CFO of Cendant successor Avis Budget Group, notably leading Avis’ acquisition of Zipcar in 2013 for about $500 million.

Wyshner and the other Kyndryl executives have a lot of work ahead of them. Kyndryl disclosed an array of details about its business and operations in a recent regulatory filing, including declining revenue for the past several years, workforce reductions, the competitive landscape (including with competitors such as DXC Technology) and vendor partnerships beyond IBM (such as with VMware and Microsoft).

In the regulatory filing, Kyndryl said it foresees taking part in a $415 billion market for providing “innovative services to design, run and modernize customer technology environments.”

“Kyndryl is uniquely positioned to address these IT services needs, as a natural extension of the role it plays supporting the mission critical technology infrastructure of the world’s most important businesses and institutions,” the filing says.

Here’s how Kyndryl plans to take on the competition.

What People should Know About Kyndryl

One of the key reasons we‘re so excited about the opportunity is that we’re taking what we already are — which is a No. 1 player in the IT infrastructure services space, which we think is a really important space because of the mission critical work that we do, and a trust that we’ve developed from our customers that you could see in our service level agreement performance, in the NPS (net promoter score) that we have and the long term relationships we have with our customers — so we’re taking this No. 1 position in an important space with really strong customer relationships, becoming an independent company, and that gives us a new freedom to no longer be an IBM captive.

(Being an IBM captive meant being) really, really good at providing services that have a large IBM technology component to them or a large IBM hardware component to that. But we‘re able to expand what we do going forward to participate in a broader set of technology ecosystems, to provide a broader set of capabilities to customers, and in the process to unlock a larger addressable market and growth potential for us as a company … (as) a company going public with $19 billion of revenue, we’re a unicorn of sorts.

And we‘re able to combine that base that we have with a brand new growth potential, a new freedom to pursue a somewhat different mission, to reinvest in our business and to grow over time. That’s what I’m hoping people take away. It’s what we’ve been talking to investors about for the last few weeks.

Kyndryl’s Competitive Advantage

It‘s in the scale that we have, and the investment we make produces in data … the intellectual property and the expertise and the constant learning that goes on.

Being twice the size of anyone else means we‘re able to learn twice as fast and generate more information, more learnings and we can apply. When it comes to developing, you start applying AI with data, we put ourselves in a position where ideally we’re able to identify problems before they happen.

And in complex IT environments that have a whole range of technologies and hardware that is pieced together around the world, being able to identify issues before they even happen is incredibly valuable.

What People Should Understand About Kyndryl’s Assets And Operating Expenses Over Time

From a financial perspective, one of our big goals is to increase margins over time. We‘ll have some more of our revenues drop through as profit.

There are a number of initiatives that we‘ll have in place … we are becoming asset lighter over time, and we will continue to become asset lighter … that’s happening in all areas of technology.

You can see that declining capital intensity in our numbers each year. The amount that we‘re investing in new capital expenditures is less than our depreciation expense, because of this trend. I think that will be helpful to us over time.

We do expect to take advantage of additional automation in our business, which will provide cost savings. Our goal is to develop in our people new and additional skills to grow the advisory and implementation services piece of our business to be driving revenue growth over time, and as a result, providing actually a great set of opportunities for our people as well.

When we look at overall objectives for us, one of the things we want to do is be whether to customers and technology providers, to be a partner of choice, to be an employer of choice and to be an investment choice. Those are three guiding principles for us … These themes we all know about are impacting our business.

Asset lighterness, the rapid explosive growth in data that‘s out there, that has a big impact and will on us going forward. Increasing digitization that just about every organization is pursuing, plus the need for cybersecurity and cyber resiliency.

These trends are going to continue to play out in our business. And part of what makes the space that we operate in important and, depending on the day, challenging and a whole opportunity because of those challenges.

Opportunity With Kyndryl For Smaller Partners

As Martin (Schroeter, Kyndryl CEO) likes to say, almost all of our customers have chosen a principal cloud provider.

So we‘re already part of their technology stack, but not necessarily able to provide as broad a group of services as we can when we build out these partnerships.

On If We Will See The Number Of Kyndryl Employees Decrease

That‘s not a focus of ours, looking at it from that perspective. It’s about having the right amount of resources to be able to serve our customers. A number we’re focused on is revenue and growing that revenue base over time.

And that‘s one of the things that becomes really exciting here. Our addressable market becomes bigger (by spinning off) … We have a $415ish billion market that’s faster growing, take us to half a trillion-ish (dollars) by 2024. It’s taking advantage of those opportunities that we’re focusing on.

And with respect to our people, this is exciting, No.1, because we‘re an independent company

No. 2, because the transformation that we‘re going on, it involves developing a broader set of skills among our people, particularly in something like cloud-related certifications across a variety of different ecosystems. That I think is going to be very exciting for our people and exciting as we recruit people.

What’s Important To Understand About Kyndryl’s Continued Relationship With IBM

The important thing to know about the relationship with IBM is it will continue to be an important one. We‘re going to be one of IBM’s largest customers. And we are going to provide a large, significant amount of services to customers based on IBM hardware and software.

That‘s our legacy, our starting point, and we expect that to continue into the future as well.

There‘s a lot of work that needs to be done out there for which a mainframe is a darn good solution. There’s a need to process incredible volumes of transactions. That’s the way to do it. And, that’s going to be IBM dependent.

The TSAs are utility stuff that needs to be done for a period of time till we fully separate. It’s completely standard to have that in a spin transaction.

With respect to the continued equity ownership of 19.9 percent, there‘s no control associated with that. THere aren’t any board seats or anything. That’s a financial decision that IBM has made, and I expect them to sell that stake down within a year and probably even less.

(The TSAs) support us being able to do what we need to do. Housekeeping type stuff. This business was very much intertwined with all the IBM processes, people and finances and so forth.

What Makes Kyndryls’ IP Portfolio A Competitive Advantage

There is risk management and risk mitigation … You know how important ERM (enterprise risk management) is to organizations.

These technologies and our ability to connect them the way we do using the IP that we have, it provides major risk mitigation for our customers as they think about their technology stacks and what they need the technology to do for their business.