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Building safeguards becoming a focal point after the CrowdStrike outage in July, the massive disruption displaying the vulnerabilities in software supply chains, but IT infrastructure services providers like Kyndryl are on the move to help companies manage these risks, especially for an AI-driven future. Joining us now, Kyndryl chairman and CEO Martin Schroder here in studio. Thank you for joining us, Martin.

Thank you. Thank you.

And I want to start with the outage and sort of the role that your company played within that to maybe help our viewers sort of understand what your company does. What were you guys able to do during that outage and how does that work?

Yes. Thank you for the time. Look, when when what we do is we run the mission critical systems that that run the world. So the banking systems, the airline reservation systems, the the uh manufacturing supply chain. So all of that has to keep running and that's sort of the the the nature of the business. So when CrowdStrike happened, we're very quickly able to rally the teams within, I'm talking seconds, rally the teams, understand with our platform what our customers are experiencing and because we have observability to all of this and we have deep knowledge of what's mission critical, what's maybe less so, we then started the the process of interacting with their customer base to help them get things back online. So for us mission critical for our customers were back up, you know, within 24 hours and we spent the week and then making sure the rest of the 45,000 servers that that we managed that this impacted were ready to go by Monday morning.

And so effectively you all provide the back office. Is that sort of the IT back office for many, many companies. Am I describing that correctly?

At at at at some level, yes. So so, you know, for a core banking system to run for a bank to know if somebody takes money out in an ATM and have all everything checked, all those systems have to run. When you, I don't know if you're an Amex customer, I'm an Amex customer. We we run Amex's systems. So when when you hit that when you hit their your card at the that all has to go through their chain. We run those system. When a call is placed, we run we we manage and and and keep track of half the mobile traffic in India for instance. All of that has to be understood and managed so it can show up on a bill somewhere. So we run those mission critical systems on behalf of, again, the companies the the companies that sort of drive the world and make the world work.

And at Imagine, we have to talk about artificial intelligence, of course. And the boom that we've seen there, it seems to me like it would make a lot of those processes maybe more complicated, more complicated. How does AI sort of play a role in that?

Yeah, for for us, AI is a big deal uh for a couple of reasons. One, AI sits at the heart of how our Kindral Bridge platform works and provides insights to customers. Think of that as sort of the machine learning side of AI. Uh and and and Kindral, we because we're the biggest, we have more data than anybody else. So we understand best how how systems interact, how they operate, database size, architecture, networking. So we know more about any anybody else about how systems can be optimized and we provide our customers insights. At the same time, our customers are trying to get ready for not only they've been using machine learning, but now they're trying to get ready for GenAI. And and what that translates to for us is we have to help customers sort of bridge what I'll call bridge the chasm between the the line of business uh owner or the line of business executive who who wants to use GenAI in their business and the practical reality of what the CIO and CTO are faced with, who has to protect data, make sure it's resilient, make sure the data's architected in a way where you can get it. So so for us it's an opportunity to help our customers and that's part of why it's part of why you see our Kindral Consult business growing so rapidly. So in in the last quarter, our signings in Kindral Consult were up 49% over the trailing 12 months, we're up in the 20%. And this has been uh for us an opportunity again, we know more about their systems, we have deep insights into how they're running, and we're able to bridge the chasm between what the again the reality of the CIO who might have to answer a question for a regulator who definitely has to make sure that the data that all those servers are coming off of are patched and are controlled with the the idea and the and the excitement around that company wanting to use uh GenAI. At the same time, by the way, you know, there are there are lots of uh there are lots of regulatory changes. In Europe for instance, they have the banking system is now undergoing what's called Dora, which is really focused on European resiliency. So we we do a lot of consulting in European banking to help them get ready for the regulatory regime. So so again, the role we play and what we can do for our customers, whether it's an opportunity like GenAI or it's a regulatory change like Dora, or it's a it's a risk like what happened with CrowdStrike, we sit at the heart of how they run and therefore we have to play an important role in how they address it.

And what's and what's the willingness um to spend on the part of your clients right now? Sort of where are we in that spending cycle? And do these new technologies like a GenAI extend that spending cycle to some degree?

So what we're seeing again, uh our Kindral Consult business has been up 20% plus in signings over the last 12 months. It's been we've been consistently growing it since we were spun out. So what we see is pretty heavy investment because what technology has been able to demonstrate over the last call it 20 years, it can address more and more and more of the business challenges. You have an employee engagement issue, there's a technology piece to that answer. You have a customer engagement issue, there's a technology piece to that answer. And so for us in order to to get a uh in order to get a business ready for whatever that technology is, the architecture has to be right, the infrastructure has to work while, again, we run mission critical, while not sacrificing the things that you're ready to do. CIOs, CEOs are not going to be fired if if the GenAI uh science experiment runs two days late. CIOs do get fired if they lose resilience and the bank is down for a period of time, right? So so you have to do all these things. Uh you have to run and transform at the same time. And that's where we sit. We sit at the heart of run and transform for mission critical.

Got you. Martin, thanks for coming in. Good to meet you in person. Appreciate it.

Thank you.