IBM is run by Chairman, President and CEO Arvind Krishna and reports its business in four segments: Software, Consulting, Infrastructure and Financing (2025 Annual Report). The segments sit on top of globally integrated support organizations – sales coverage, parts of marketing, finance, legal, HR and the CIO office – whose costs are shared by all four, so the company works as product segments plus shared functions rather than the old five-division model.
Arvind Krishna became CEO on 6 April 2020. The 2025 Annual Report names him as the chief operating decision maker: he reviews segment profit to allocate resources and judge performance.
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Four segments
Software holds Red Hat, automation, data and AI, and transaction processing software; Consulting holds Strategy and Technology and Intelligent Operations; Infrastructure holds IBM Z, Power, storage and support; Financing provides client and commercial financing.
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Shared support organizations
IBM says it uses globally integrated support organizations to get economies of scale, so sales coverage and functions such as Accounting, Treasury, Legal, Human Resources and the Chief Information Office are shared and their costs allocated to the segments.
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Geography for reporting
Revenue is also tracked for three regions: Americas, Europe/Middle East/Africa and Asia Pacific. IBM says it operates in more than 175 countries.
What changed in 2025-26
Confluent joins Software
IBM completed its acquisition of Confluent on 17 March 2026, making it a wholly owned subsidiary. IBM had announced the deal in December 2025 at $31 per share, an enterprise value of about $11 billion, and said Confluent would be integrated into the Software segment.
HashiCorp inside Automation
IBM acquired HashiCorp on 27 February 2025. The annual report now lists HashiCorp, including Terraform, inside the Automation area of the Software segment.
New reporting lines for AI
From the first quarter of 2025 IBM reports Software as Hybrid Cloud (Red Hat), Automation, Data and Transaction Processing, and Consulting as Strategy and Technology and Intelligent Operations. The Data area includes AI assistants and agents and is underpinned by watsonx.
Results by segment, 2025
In 2025 Software revenue was $29,962 million, Consulting $21,055 million, Infrastructure $15,718 million and Financing $737 million, of total revenue of $67,535 million. IBM and its wholly owned subsidiaries employed about 264,300 people at 31 December 2025.
IBM's four segments (2025)
Software
Main business areasHybrid Cloud (Red Hat), Automation, Data, Transaction Processing
Revenue, 2025$29,962 million
Consulting
Main business areasStrategy and Technology, Intelligent Operations
Revenue, 2025$21,055 million
Infrastructure
Main business areasHybrid Infrastructure (IBM Z, Power, storage, cloud IaaS), Infrastructure Support
Revenue, 2025$15,718 million
Financing
Main business areasClient and commercial financing
Revenue, 2025$737 million
Total
Main business areasIncluding other revenue
Revenue, 2025$67,535 million
What it means for you
When you sell to or partner with IBM, find the business area that owns your topic (for example Automation or Data), not just the segment.
Expect one IBM sales coverage team across products; the support organizations are shared, so the account team is the entry point.
Read segment margins with care: shared costs are allocated, so margins partly reflect IBM's allocation method.
Track acquisitions to see where IBM is building: HashiCorp and Confluent both went into Software.
For your own company, consider IBM's split: report by product segment, run sales and back-office as shared services.
The Business Engineer lens
IBM now reports most of its revenue from Software and Consulting, with acquisitions such as HashiCorp and Confluent folded into the software platform. The Business Engineer view: the structure is built to sell an enterprise AI and data stack through one shared go-to-market, with Consulting as the delivery arm.
IBM reports in four product-based segments and runs sales and corporate functions as shared, globally integrated support organizations, all under CEO Arvind Krishna.
What are IBM's business segments?
Software, Consulting, Infrastructure and Financing, according to its 2025 Annual Report.
What happened to Global Technology Services?
IBM spun off its managed infrastructure services business as Kyndryl on 3 November 2021; it is now a separate public company.
Who runs IBM?
Arvind Krishna, Chairman, President and CEO; he became CEO on 6 April 2020.
Correction (11 Oct 2026): an earlier section on this page, “IBM Organizational Structure in the AI Era”, made unsourced claims and predictions; it has been removed.
Details– Functional departments dedicated to technology research, development, and innovation. Functional managers oversee these areas.
Advantages– Specialization in technology development and innovation. – Efficient research and development processes. – Technological leadership.
Drawbacks– Potential silos between functional departments. – Challenges in cross-functional collaboration and coordination.
Business Units
TypeDivisional
Details– Divisional structure with separate units for various business segments, such as cloud computing, cognitive solutions, and more.
Advantages– Focused management and decision-making in each business unit. – Adaptation to specific market dynamics and customer needs.
Drawbacks– Potential variations in strategies and operations across business units. – Challenges in maintaining consistent global standards.
Sales and Marketing
TypeFunctional
Details– Functional departments responsible for sales and marketing activities. Functional managers oversee sales and marketing efforts.
Advantages– Specialization in sales and marketing strategies. – Effective promotion of IBM’s products and services.
Drawbacks– Limited integration between sales/marketing and other operational functions. – Challenges in aligning strategies with broader goals.
Customer Support
TypeFunctional
Details– Functional department responsible for customer support and service operations. Functional managers oversee customer service.
Advantages– Efficient handling of customer inquiries and concerns. – Specialized expertise in customer service.
Drawbacks– Limited integration between customer service and other operational functions. – Challenges in ensuring consistent customer experiences.
Finance and Administration
TypeFunctional
Details– Functional departments for financial management and administrative functions. Functional managers oversee financial operations.
Advantages– Effective financial planning and management. – Compliance with regulatory requirements.
Drawbacks– Limited integration between financial and other operational functions. – Challenges in aligning financial strategies with business goals.
Introduction
IBM is an American multinational technology corporation that was founded in 1911 by Charles Ranlett Flint as the Computing-Tabulating-Recording Company (CTR).
IBM is a manufacturer and seller of various products, such as compute — as explored in the economics of AI compute infrastructure — r software, middleware, and hardware, nanotechnology, and hosting and consultancy services.
Over this time, some of IBM’s notable inventions include the ATM, hard disk drive, magnetic stripe card, SQL programming language, and dynamic random-access memory (DRAM).
IBM has an organizational structure characterized by product-based divisions. This allows the company to carry out its strategy of developing innovative and competitive products across multiple markets.
Function-based segments and geographic divisions
Function-based segments
Geographic divisions
Like most organizations, IBM’s geographic divisions help it manage a global business despite differences in various regional markets. This is important for IBM since the company has operations in more than 170 countries.
IBM has a total of three geographic divisions
Americas.
Asia Pacific, and
Europe/Middle East/Africa.
Comparison with Top Related Companies
Oracle: Oracle’s structure is somewhat similar to IBM’s, with a focus on technology and cloud as well as hardware and services divisions. However, Oracle has streamlined its operations around cloud services more aggressively in recent years. Unlike IBM, which maintains a separate division for legacy hardware and systems, Oracle integrates its hardware solutions more directly with its cloud services, aiming for a synergistic approach to sales and product development.
SAP: SAP operates with a functional and product-based matrix structure, with a strong focus on software solutions for business operations and customer relationship management. SAP is less diversified than IBM in terms of product offerings but maintains a similar structure to support global operations and product development. SAP’s structure is more narrowly focused on software and services tailored to enterprise resource planning, which contrasts with IBM’s broader approach including hardware and financing services.
Similarities and Differences
Similarities: All these companies use a combination of functional and product-based divisions to manage their extensive product portfolios and global operations. This structure supports specialization in product development while maintaining operational efficiencies through centralized functional support.
Implications
Innovation and Specialization: IBM’s product-based divisions allow for deep specialization and innovation within specific technology areas, which is crucial for maintaining competitiveness in areas like cloud computing and cognitive solutions. However, this separation can sometimes slow down cross-divisional innovation compared to more integrated structures like Microsoft’s.
Operational Efficiency: The functional segments in IBM’s structure, such as Integrated Supply Chain and Global Markets, help optimize global operations and adapt strategies to local markets efficiently. However, this can also create challenges in aligning diverse product strategies and operational practices across the company.
Market Responsiveness: IBM’s geographic divisions facilitate responsiveness to local market conditions and customer needs, similar to Oracle and SAP. This structure supports global reach but requires effective coordination to ensure consistency in global branding and customer experience.
Key takeaways
IBM has an organizational structure characterized by product-based divisions. This allows the company to carry out its strategy of developing innovative and competitive products in multiple markets.
Like organizations with a similar global reach, IBM’s geographic divisions help it manage operations despite differences in various regional markets. The Americas division is by far the most lucrative for IBM in terms of revenue.
Key Highlights
Geographic Divisions: IBM employs geographic divisions to manage its global business presence effectively, considering regional market variations. The company operates in more than 170 countries and has three main geographic divisions:
Americas: Contributing a significant portion of IBM’s revenue, nearly 50% in recent years.
Asia Pacific: Managing operations in the Asia-Pacific region.
Europe/Middle East/Africa: Overseeing activities in Europe, the Middle East, and Africa.
Global Reach and Revenue Distribution: IBM’s wide global reach necessitates a structure that accommodates the complexities of various regional markets. The Americas division stands out as the most revenue-generating division, contributing substantially to the company’s overall revenue.
Innovation and Patents: IBM’s commitment to innovation is highlighted by its extensive patent filings and notable inventions over the years, including the ATM, hard disk drive, and more.
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In 2018, revenue was $80 billion.
Revenue decreased to $77 billion in 2019.
In 2020, revenue dropped further to $73.62 billion.
The revenue saw a significant decline in 2021, reaching $57.35 billion.
In 2022, revenue experienced a slight increase, amounting to $60.53 billion.
2019: Net income increased from $8.73 billion in 2018 to $9 billion, resulting in a 3.09% increase year over year.
2020: Net income decreased to $5.59 billion, reflecting a -37.89% change compared to 2019.
2021: Net income slightly increased to $5.74 billion, indicating a 2.68% increase year over year compared to 2020.
2022: Net income decreased significantly to $1.64 billion, showing a -71.43% change compared to 2021.
IBM Revenue Breakdown
Software revenue increased from $23.42 billion in 2021 to $25 billion in 2022, resulting in a 6.73% growth year over year.
Consulting revenue grew from $17.84 billion in 2021 to $19.1 billion in 2022, reflecting a 7.08% growth year over year.
Infrastructure revenue rose from $14.2 billion in 2021 to $15.3 billion in 2022, indicating a 7.75% growth year over year.
Financing revenue declined from $0.774 billion in 2021 to $0.645 billion in 2022, showing a -16.67% decrease year over year.
Other revenue experienced a significant drop from $1.12 billion in 2021 to $0.453 billion in 2022, resulting in a -59.55% decrease year over year.
Software:
Generated $25 billion in revenue.
Contributed $19.94 billion in gross profit.
Consulting:
Produced $19.1 billion in revenue.
Accounted for $4.86 billion in gross profit.
Infrastructure:
Brought in $15.3 billion in revenue.
Generated $8 billion in gross profit.
In a functional organizational structure, groups and teams are organized based on function. Therefore, this organization follows a top-down structure, where most decision flows from top management to bottom. Thus, the bottom of the organization mostly follows the strategy detailed by the top of the organization.
In a flat organizational structure, there is little to no middle management between employees and executives. Therefore it reduces the space between employees and executives to enable an effective communication flow within the organization, thus being faster and leaner.
IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.
McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.
McKinsey & Company has a decentralized organizational structure with mostly self-managing offices, committees, and employees. There are also functional groups and geographic divisions with proprietary names.
Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.
Nestlé has a geographical divisional structure with operations segmented into five key regions. For many years, Swiss multinational food and drink company Nestlé had a complex and decentralized matrix organizational structure where its numerous brands and subsidiaries were free to operate autonomously.
Nike has a matrix organizational structure incorporating geographic divisions. Nike’s matrix structure is also present at the regional and sub-regional levels. Managerial responsibility is segmented according to business unit (apparel, footwear, and equipment) and function (human resources, finance, marketing, sales, and operations).
Patagonia has a particular organizational structure, where its founder, Chouinard, disposed of the company’s ownership in the hands of two non-profits. The Patagonia Purpose Trust, holding 100% of the voting stocks, is in charge of defining the company’s strategic direction. And the Holdfast Collective, a non-profit, holds 100% of non-voting stocks, aiming to re-invest the brand’s dividends into environmental causes.
Samsung has a product-type divisional organizational structure where products determine how resources and business operations are categorized. The main resources around which Samsung’s corporate structure is organized are consumer electronics, IT, and device solutions. In addition, Samsung leadership functions are organized around a few career levels grades, based on experience (assistant, professional, senior professional, and principal professional).
Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.
Starbucks follows a matrix organizational structure with a combination of vertical and horizontal structures. It is characterized by multiple, overlapping chains of command and divisions.
Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.
Toyota has a divisional organizational structure where business operations are centered around the market, product, and geographic groups. Therefore, Toyota organizes its corporate structure around global hierarchies (most strategic decisions come from Japan’s headquarter), product-based divisions (where the organization is broken down, based on each product line), and geographical divisions (according to the geographical areas under management).
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
