IBM Corp. has appointed Martin Schroeter, a former senior executive who left the company last year, to lead the $19 billion “NewCo” managed infrastructure services business it’s planning to spin off. 

Schroeter will become chief executive officer of NewCo effective Jan. 15, according to an announcement today.

IBM said in October that it will spin off a part of its professional services and consulting operation into an independent company. IBM is tentatively referring to the new organization as NewCo while it’s working on the transaction, which is expected to complete by year’s end. The plan is that NewCo, which has annual revenues of about $19 billion, will become publicly traded after the spinoff is completed.

Schroeter served as IBM’s senior vice president of global markets before his departure from the company last June. In that role, the executive oversaw IBM’s sales, marketing and worldwide geographic operations. Schroeter was earlier chief financial officer and had previously held other management positions inside the company.

Schroeter, who in total spent close to 30 years at IBM, is set to become CEO of the world’s largest provider of managed infrastructure services. NewCo is nearly twice the size of its nearest competitor and serves more than three quarters of the Fortune 100, according to IBM. 

NewCo’s 90,000 or so employees help client organizations with tasks ranging from maintaining their corporate networks to managing cloud environments. It’s a business that IBM is exiting because it’s pursuing an effort to refocus on higher-margin, higher-growth areas such as artificial intelligence and platform-as-a-service software. The spinoff, IBM CEO Arvind Krishna said when the move was announced last year, will give the company flexibility to “bring innovations to market more quickly.”

Krishna said the move will also bring benefits for NewCo. By separating from IBM, NewCo will “have greater freedom to forge partnerships and alliances in the managed infrastructure services space,” he wrote in a blog post. “This will open new avenues for growth.”

The company provided more detail in a separate statement, specifying that NewCo will “also be able to partner fully across all cloud vendors.” IBM operates a public cloud that competes with platforms such as Amazon Web Services and Microsoft Corp.’s Azure. Once it spins out of IBM, NewCo may work to foster stronger relationships with those platform operators.

But at the same time, Krishna wrote in the blog post last year, “our two companies will continue to share a strong bond as NewCo will remain IBM’s preferred partner for infrastructure.” Under Schroeter’s leadership, that relationship could put NewCo in a strong position to target revenue opportunities in IBM’s customer base, which includes many of the world’s largest organizations. 

“IBM today runs 87% of the world’s credit card transactions …. we run the airline reservation systems, we run the supply chains of the world,” Schroeter said in a 2019 interview on SiliconANGLE Media’s theCUBE studio. “The reason our clients allow us to do that is because they trust us at the very core.”

NewCo counted 4,600-plus clients in more than 110 countries when the spinoff was announced last year. 

Photo: SiliconANGLE