Inside Kyndryl’s Southeast Asia playbook

Kyndryl, the new managed services provider (MSP) on the block, is already setting its sights on the ASEAN market after being spun off from IBM less than three months ago.

Out of the six managed services practices, it has identified three – cloud, data and artificial intelligence (AI) and networking and edge – where it is likely to make a dent in the market. At the same time, it is looking to grow its local partner ecosystem while tapping its global capabilities to stand out from the pack.

In an interview with Computer Weekly, Susan Follis, managing director of Kyndryl ASEAN, unpacks the company’s growth strategy in the region, its relationships with hyperscale cloud providers and how it sees the competition.

What is Kyndryl’s growth strategy for the ASEAN market?

Follis: We’ve been getting ready for this change for a year, and we were told how things were going to be very different. It would be fast, flat and focused and the operational model would change. And that starts with leadership and a change in the culture of running a business as well.

We now run very differently and are operationally very light. We are now maniacally focused on what we do well by leveraging the success of our past, as well as enabling the future as we now have no ties to any specific platform. We can grow in skills that we didn’t grow in before.

Let me say specifically that we are very focused on our growth in our consulting, implementation and advisory services. In ASEAN, that market is forecasted to grow 46% by 2024. It also changes the dynamics of the services that we are looking to provide to clients, both short term and long term. That’s very exciting to me, because it truly is starting in a position of listening to clients, putting the clients first, determining what they need in their digital agenda and then going from there.

We will be partnering with many different partners, and we want to set up the right partner ecosystem in ASEAN – even within each country – but we now have the ability to make decisions locally. It’s a very exciting time and Covid-19 has pushed us to move faster, whether it be migrating to the cloud or going to the last mile and reaching customers where they are.

And focusing on what the needs are locally and being very specific will help us in our execution. We start with our practices and services offerings that we tailor and deliver to our clients. So, although we’re local, we leverage global, and that gives us a different kind of perspective than some of the others that are covering ASEAN.

Which of Kyndryl’s six practices do you think has bigger growth opportunities in ASEAN?

Follis: Managed cloud services is definitely a top priority for us. We’ve been doing IT managed services for 30 years now and I think the managed environment is increasingly complex. As clients bring more partners into their ecosystem and mixing cloud with legacy infrastructure, you need to have very detailed service management, operational management, service level commitments, resiliency and security to make things work. The silos that we’ve been operating in now have to come together and infrastructure is finally being recognised as core to achieving a resilient and secure brand.

Another practice is data and AI. We manage two million terabytes of storage, 750,000 virtual servers, and over the years we have learned to protect and mine data across multiple platforms. And with millions of apps coming to the market, how do we help clients manage all of that operationally and at the infrastructure level, so that they can have one consistent experience? So, mining data, no matter what tool you’re using, is very big for us in ASEAN as well.

The third one is network and edge. It’s always been an issue of trying to get that last mile with our customers and building their edge compute capabilities. It’s an area that’s maybe not quite as mature, but it’s estimated to grow at 15% in ASEAN between now and 2024. We’re on the tip of that one and there’s more to come, but I think it’s a very exciting area and really levels the playing field. And we can see how much can be done now when you work remotely as long as you have the connections to get there.

What are your thoughts on hyperscalers – some of whom Kyndryl has partnerships with – providing managed services for companies?

Follis: I understand why they’re doing that in the sense that there is a lot to be done to ensure that cloud services are being deployed correctly and managed on a day-to-day basis. I think the difference is where we’re coming from. We’re a services-based company. We live it every single day. We’re in mission-critical businesses, and we know what to do when there’s an issue. We have all the processes in place, escalation points, and we run it as a service and that is our sole business.

Do some people want to go with one cloud provider and the services that they offer? They may and that may serve them well for a while. Over time as their business grows, as more partners come into play and more platforms are being used, that may be a limitation.

And so, we do not anticipate getting into any kind of concerns with the hyperscalers around that. If there are some clients they want to go after, then we won’t be engaging with them on those clients. It is really meant to be a partner ecosystem and what we’re going to market with is something that serves clients well and that we agree is the right thing to do for our clients.

You mentioned about leveraging global capabilities and I presume that includes the intellectual property (IP) that Kyndryl has built up over the years. Could you talk about the sorts of IP that you are looking to tap to serve your customers in the region? Some analysts have suggested that Kyndryl could consider building a kind of a private cloud solution.

Follis: From my perspective, that’s really not on my radar at all. I really love to work with partners that we are heavily invested in. My focus for ASEAN is to really grow the business from a breadth perspective.

I think we are going to potentially look to partner and grow the business in local ways through local partners, and through recognising that perhaps we could do something more for our clients if we did something interesting and different that fills the gap that we potentially have.

But at this point, I’m not really sure I see what that is. We’re just getting started. We will be in Finland to make an acquisition specifically related to IT services in banking. And so, these kinds of things are possible. It really depends on what we think is the right thing to do for the business here.

At this point, we’re really just focused on what we do well, which is leveraging the growth of our managed infrastructure services, and surrounding it with the consulting, advisory and implementation services.

In ASEAN, Alibaba Cloud has been growing its presence extensively across the region, setting up local datacentres in places like Indonesia and the Philippines. Do you see any potential partnerships with them?

Follis: So first of all, we’re very heavily invested in our partnership with Google. And Google is quite big in Indonesia and other parts of ASEAN as well. That’s a big investment for our clients and we achieved certifications locally as well.

My peer in China does have a relationship with Alibaba Cloud and there are obviously lots of parameters to be looked at from a business perspective. I’m not part of that discussion, but I don’t think we’re taking anything off the table. It’s about what is the right thing to do for our clients in ASEAN, and there’ll be some guardrails that every partner will have to follow in order to become a Kyndryl partner.

What would you say would be your biggest competitor, particularly in this region?

Follis: It’s very interesting because some competitors may become partners. The local companies that have reach and continue to grow mainly from hardware implementations have their value carved out. The difference for us is we’re not in the application space. We’re really a technology systems integrator and so our view of who our competitors are is a bit different. I find that locally, we’re not necessarily trying to do the app modernisation work. We want to do the containerisation so that you can run containers on the infrastructure, but we will partner with people that were mentioned in several articles comparing us to them.

So, I think there are a couple of different ways to look at it. If we were trying to just drive revenue through resale licenses of any kind, the competitors there would be different than the ones that are coming at it from an industry and app perspective.

I think in the middle, where the infrastructure is, and where you have basically that need now to truly build a resilient and reliable base, there’s all that play in that space, some more than others.

But quite frankly, we’ve been doing this for 30 years and only this. I’ve had a chance to be exposed to some of the other companies and how they work. I would say we’re always looking at opportunities we’re working on to determine who the competitor is in a particular situation, and it does vary within ASEAN where every country is different.

I don’t take our customer business or our focus lightly. I think the competitive space is emerging and I think people are trying to figure out how they can take on more, but I’m really focused on leveraging what we have, surrounding it with more consultative services, listening to clients and going in the direction they want to. I’m not trying to creep into somebody else’s space at this point in time.