IBM CEO Blames Execution Issues for Software Shortfall

IBM CEO Arvind Krishna attributed the company's recent software shortfall to execution issues rather than any fundamental problems. In its Q2 earnings call, Krishna explained that IBM witnessed a shift in client spending priorities toward servers, storage, and memory purchases.

The sudden shift was driven by supply chain constraints and cybersecurity concerns, leading customers to prioritize hardware investments over traditional software offerings. As a result, IBM failed to close a double-digit number of large deals on the expected timelines, accounting for most of the shortfall.

Krisha noted that about one-third of those shifted deals have since closed, suggesting that the shortfall was due to deferral rather than destruction. IBM is adapting to deliver greater business value to clients and aligning with their priorities.

The company's CFO, James Kavanaugh, emphasized that IBM's core software and infrastructure competencies are still strong, but the vendor must continue to evolve its go-to-market model to capture growth opportunities.