IBM’s software revenue grew in the second quarter as clients leaned on hybrid cloud and AI platforms. 

The tech giant’s software revenue increased 7% year over year to $6.6 billion, according to IBM’s earnings supplements. The software revenue includes income from Red Hat, automation, data and AI and security. 

WHY IT MATTERS: IBM bank clients are looking to software and products for AI capabilities, Chief Executive Arvind Krishna said during Wednesday’s earnings call. 

“AI is being infused into our software products,” he said. For example, during the quarter IBM began to roll out generative AI model configuration tool WatsonX, and its clients are starting to use the technology to accelerate generative AI workflows. 

Citi, for one, is looking for use cases for large language models and NatWest is embedding WatsonX into its chatbot experience, Krishna said. 

Truist, too, is exploring generative AI through WatsonX, Ken Meyer, Truist’s chief Information and experience officer, previously told Bank Automation News. 

BY THE NUMBERS: IBM reported in Q2: 

• Consulting revenue, including business transformation, technology and hybrid cloud consulting, and application operations, grew 4.3% YoY to $5 billion; 
• Infrastructure revenue fell 14.6% YoY to $3.6 billion; and 
• Total revenue fell 0.4% YoY to $15.5 billion. 

FLASHBACK: In May, the tech provider launched its Center of Excellence for generative AI, which allows clients, including financial institutions, to seek IBM consultants for expertise, use cases and AI advancements, according to an IBM release. 

The Center of Excellence has more than 1,000 consultants available to help with product creation and training around AI, Krishna said during Wednesday’s call. 

FORWARD LOOK: During the quarter, IBM acquired technology expense management provider Apptio, Krishna said, noting that “Apptio’s offerings combined with IBM’s IT automation software and our AI capabilities, will give clients the most comprehensive approach to optimize their IT environments.” 

The acquisition is expected to close by the end of the year, Chief Financial Officer Jim Kavanaugh said during the call. 

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