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Kyndryl taps Microsoft generative AI for new service, moves toward future profitability

News Analysis
Aug 09, 20234 mins
Generative AIMicrosoft

Kyndryl and Microsoft want drive new generative AI applications and services for enterprise customers

LLMs, ChatGPT, Generative AI
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Kyndryl said it would tap into Microsoft’s enterprise-grade generative AI technology to develop business applications with Microsoft Cloud.

The IT infrastructure provider announced the joint project with Microsoft on the heels of announcing significant 1Q 2024 earnings where Kyndryl executives said the company will return to profitability in the next year, at least a year ahead of what financial analysts predicted after the company spun out of IBM in November 2021.

In addition, Kyndryl chairman and chief executive officer Martin Schroeter told analysts on the company’s first quarter financial call that he expects the company to return to revenue growth in calendar year 2025 and that the company will reach its medium-term profit goals – in what he called significant progress for a company that has been independent for only 6 quarters.

While the company reported a fiscal first-quarter revenues of  $4.2 billion, a loss of $141 million compared with a loss of $250 million, in the year-ago period and revenue declined to $4.19 billion from $4.29 billion in the year-over-year period, the company now says it will return to profitability in the next year, at least a year ahead of what financial analysts predicted after the company spun out of IBM in November 2021.

“Annual losses are now behind us. We expect to make money this year and each year going forward as measured by our adjusted pre-tax income,” Schroeter said. “We’re relentlessly transforming our business, and this past quarter represented an important turning point.”

Part of that transformation is the development of AI applications and services. That’s, in part, where the Microsoft relationship will play a larger role.  Microsoft was the first significant partner to sign on with Kyndryl signed after it spun out from Big Blue.

At that time the companies said they will focus on data modernization and governance, industry-specific AI innovation, cyber security and resiliency, and transformation of mission critical workloads to the cloud.

The new partnership will expand on that role.  The companies are promising to rapidly design, develop and drive new generative AI applications and services for enterprise customers.  Kyndryl said it would utilize partnership’s Joint Innovation Centers, Kyndryl’s growing patent portfolio in data and AI, and its access to Microsoft Cloud, 365 Copilot, Azure OpenAI Service and Microsoft Fabric, to offer the new services. Microsoft Cloud specializes in cloud application services and offers a variety of services from streaming videos, web mail, and office productivity software according to the vendor.

The vendor also said its Kyndryl University for Microsoft would train thousands of its employees on Microsoft AI technologies.

Under the joint development Kyndryl said it expects to develop and pilot industry-specific models for use inn enterprise automation and workplace productivity applications.

For example, the company said it had developed a virtual assistant to automatically summarize problem descriptions and develop relevant information to improve efficiency and response rates.

The Microsoft relationships is only part of Kyndryl’s AI plans.  In a recent Network World interview the company said AI will be a key cog in its Bridge infrastructure integration platform.

Bridge integrates all manner of management tools, intellectual property, and processes that Kyndryl has built through years of delivering services. It then takes that centralized information and uses it to deliver as-a-service capabilities and applications that help control and manage enterprise infrastructure. It also uses AI and ML to analyze the aggregated data in real time to provide IT operations teams with the intelligence they need to keep systems running at peak performance, Kyndryl says.

Bridge has a growing library of data and AI services, which customers can use not only to build a solid data foundation but also to securely implement and scale AI for greater visibility into their technology estate’s performance, Kyndryl CTO Antoine Shagoury said. Among the potential benefits are reduced incident resolution times, lower energy consumption to meet net zero goals, and greater cyber resilience.

“In the AI arena, we see strong interest from CIOs and CTOs about how AI and AIOps can impact their business, from a technology and financial, cost point of view. And you’ll see new services around that,” Shagoury said.

Other focus areas for new Bridge AI services will be around helping customers deliver industry-specific outcomes – from enabling smart industry 4.0 manufacturing practices and reducing production quality risks to identifying new markets to develop and selling products at scale, Shagoury said.