Energy, Environment & Utilities Industry

Market Opportunity
March 2021

MD&I Global Industries Team

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EE&U is below industry growth with 4.9% CAGR compared to the
overall industry average of 6.8% from 2021-2024.
Market Opportunity by Industry
WW 2021 Opportunity: $1.8T; 6.8% CAGR (2021-2024)
400 12%

350
10%
300
8%
250
Market Opportunity ($B)

CAGR (2021-2024)
200 6%

150
4%
100
2%
50

0 0%
. G IP E il I r c s U e T o P s r D
FM Ed CP co
m & ta CS de ni an
c
T&
ut C& nc
e
ay
e
le Re vi ro E& A A
&
B& .& & M o ct su
r ie P
ov e Te Pr e In Sc r e
al re El fe ca
G l es ca Li lth
ho th ea
W e al H
H
Sources: BU_GMV_030121_Plan,
BU_GMV_030121_Plan_NewCoView, GMV1H21_Final
IBM MD&I | 2021 | © IBM Corporation | IBM Internal Cloud_wIndustry_ AllFxPivot_03012021vF; Const Curr-IBM 2
PlanRt NonPlCtries:IBM FX Fcst
EE&U Market E&U Overall Oppty. E&U Cloud Oppty.

Opportunity Overview 8 0 .0
Oppty. ($B) YtY Growth
78.5 7 .0 %
Public Cloud
100%
Private Cloud Non-Cloud
60.3% 54.7% 50.5% 46.7% 43.2% 39.5%

90%
6 .0 %

The Energy, Environment & Utilities industry market opportunity is 74.2

5.9% 5.8%
7 5 .0

expected to grow from $68.1B to $78.5B, growing $10.4B from 2021 to

5 .0 %

80%
70.9

% Total Oppty.
4.7% 70%
33.5% 34.9%
4 .0 %

2024. The energy market is changing with growth in renewable 68.1 4.2% 60% 30.1% 32.0%
7 0 .0

electricity generation. Utilities are exploring how AI, ML, and Edge can 66.3 3.6%
3 .0 %

65.7 50% 27.9%

support the expanding energy storage market and adopting IT services
2 .0 %

24.7%
40%
6 5 .0

for new operating models and clean energy projects.

23.3% 25.6%
1 .0 %

30% 19.4% 21.4%

15.0% 17.4%
0 .0 %

20%
6 0 .0

Cloud: Cloud is expected to hold 60% of the market opportunity, with

10%
-1 .0 %

non-cloud declining from over 50% to 40% in 2024. Utilities are -0.9%
0%
5 5 .0 -2 .0 %

increasing their use of cloud platforms for grid modernization and digital 2019 2020 2021 2022 2023 2024 2019 2020 2021 2022 2023 2024
customer marketplaces. Public cloud is growing faster than private cloud
at 15.0% compared to 10.2% CAGR.
E&U Geo Oppty. E&U BU Oppty.
Geo: APAC is the fastest growing region with 7.1% CAGR and EMEA 8% 12%
is close behind at 5.1% CAGR from 2021 to 2024. The Americas is the
7%
biggest in terms of size ($41.6B in 2024) with the largest incremental 10%

CAGR (2021-2024)

CAGR (2021-2024)
6%
opportunity from 2021 to 2024. 8%
5%
BU: Cloud & Cognitive Software is the fastest growing unit with 9.7% 4% 6%
CAGR while GBS is the biggest business unit in terms of size ($34B in 3%
4%
2024). 2%
1% 2%
0% 0%
Key
0 1 2 3 4 5 6 0 0.5 1 1.5 2 2.5 3 3.5 4
Bubble Size & Label is Incremental Oppty. ($B) (2021-2024) Incremental Oppty. ($B) (2021-2024)
2024 Market Oppty.
*Bubble size and axes not comparable across charts* Sources: BU_GMV_030121_Plan,
BU_GMV_030121_Plan_NewCoView, GMV1H21_Final
*Unassigned SW and Overlapped Opportunity not displayed in BU* Cloud_wIndustry_ AllFxPivot_03012021vF; Const Curr-IBM
IBM MD&I | 2021 | © IBM Corporation | IBM Internal 3
*YtY data available in embedded Excel charts* PlanRt NonPlCtries:IBM FX Fcst
EE&U Opportunity: E&U S1-S2 Oppty.
7.1%
E&U S1-S2 Growth

Segment 1 vs. Segment 2 5.6% 6.2%

4.4%
5.7%
4.5%
5.9%
5.3%
3.1% 3.2%

0.4%

YtY Growth
Oppty. ($B)
Segment Opportunity: Client accounts in Segment 1 (S1) make
up 18% of the EE&U industry opportunity while Segment 2 (S2) 60.9 64.5
54.0 55.9 58.3
clients hold an 82% share in 2021. The S1 opportunity is mainly 54.2
split by clients in Americas (50%) and EMEA (40%). S2
opportunity is still largely split between clients in Americas (44%)
and EMEA (26%). GBS leads all business units with 55% share of -6.6%
S1 opportunity and 48% share of S2. 12.3 11.5 12.2 12.6 13.3 14.0

Segment Growth: Growth of Segment 1 (4.8% CAGR) is nearly 2019 2020 2021 2022 2023 2024 2019 2020 2021 2022 2023 2024
the same to Segment 2 (4.9% CAGR) from 2021 to 2024. Cloud
& Cognitive Software is the fastest growing unit for both Segment E&U S1-S2 Geo Oppty. E&U S1-S2 BU Oppty.
1 (10.3% CAGR) and Segment 2 (9.6% CAGR) from a business
unit perspective. Americas is the fastest growing region for 8% 12%
Segment 1 with 5.6% CAGR while APAC is the fastest for 7% 10%

CAGR (2021-2024)
CAGR (2021-2024)
Segment 2 with 7.1% CAGR. 6%
8%
5%
4% 6%
3% 4%
2%
1% 2%
0% 0%
Key 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 0 0.5 1 1.5 2 2.5 3 3.5

Bubble Size & Label is
2024 Market Oppty.
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S1 Oppty. Incremental Oppty. ($B) (2021-2024) Incremental Oppty. ($B) (2021-2024)
*Bubble size and axes not comparable across charts* Sources: BU_GMV_030121_Plan,
BU_GMV_030121_Plan_NewCoView, GMV1H21_Final
S2 Oppty. *Unassigned SW and Overlapped Opportunity not displayed in BU* Cloud_wIndustry_ AllFxPivot_03012021vF; Const Curr-IBM
4
*YtY data available in embedded Excel charts* PlanRt NonPlCtries:IBM FX Fcst
EE&U Opportunity: 2021 Market Opportunity NewCo Presence by Industry
WW 2021 NewCo Proportion Avg: 12.1%; 1.1% CAGR
IBM vs. NewCo NewCo Proportion of Total 2021 Oppty. NewCo CAGR (2021-2024)
16% 6%
14% 4%
With the NewCo spin-off, IBM will be more exposed to high-

NewCo Proportion
growth markets, increasing the CAGRs across all industries. 12% 2%

NewCo CAGR
10% 0%
The degree to which total CAGR will be impacted relies primarily
upon two factors: NewCo proportion of total opportunity and the 8% -2%
CAGR of that NewCo proportion.
6% -4%
. o E cs U D IP P ce es l T I er r
Ed t G m FM ai CS v i d ye
Relative to other industries, the EE&U industry shows moderate Au CP M& o n i E& A& l eco C& ran i enc Ret T& Pa
.& & t r
Te B& u o e
v le ec In
s Sc Pr car
levels of NewCo presence with 12.5% opportunity share and a Go sa El fe re th
le Li ca al
lower NewCo CAGR (0.5%). However, it only slightly increases ho al
t h
He
W e
the overall EE&U industry CAGR – 4.9% CAGR for IBM with H
NewCo compared to 5.5% CAGR for IBM without NewCo.
E&U NewCo-RemainCo Oppty. E&U NewCo-RemainCo Growth

IBM NewCo IBM NewCo

6.9% 6.4%
4.5% 4.8% 5.2%
8.5 8.7
8.5 8.5
9.3 8.7

YtY Growth
Oppty. ($B) 0.1%
0.6% 1.3%
0.3% -0.4%
62.4 65.7 69.9
56.9 57.0 59.6 -1.9%
-7.0%

2019 2020 2021 2022 2023 2024 2019 2020 2021 2022 2023 2024

Sources: BU_GMV_030121_Plan,
BU_GMV_030121_Plan_NewCoView, GMV1H21_Final
IBM MD&I | 2021 | © IBM Corporation | IBM Internal Cloud_wIndustry_ AllFxPivot_03012021vF; Const Curr-IBM 5
*YtY data available in embedded Excel charts* PlanRt NonPlCtries:IBM FX Fcst
EE&U Opportunity by E&U Market Oppty. by Market
Geography Americas APAC EMEA Japan

14%
APAC and EMEA show the fastest growing markets with
attractive opportunities. The Americas still show the greatest 12%
incremental growth, due largely to the size of the US.
10%
• Americas: The US will show the largest incremental
opportunity of $5B across geos, with the highest CAGR

CAGR (2021-2024)
(4.6%).
8%

• APAC: ISA is expected to grow the fastest across geos with 6%

12.1% CAGR. GCG will show the largest incremental growth
opportunity with $0.9B.
4%
• EMEA: DACH is expected to have the highest CAGR
(7.3%) and the greatest incremental opportunity ($0.9B). 2%
• Japan: Showing moderate growth with 3.6% CAGR
0%
compared to other markets.

-2%

-4%
Key -0.5 -0.3 -0.1 0.1 0.3 0.5 0.7 0.9 1.1 1.3 1.5

Bubble Size & Label is Incremental Oppty. ($B) (2021-2024)

2024 Market Oppty.
Sources: BU_GMV_030121_Plan,
*US not shown due to distortion* BU_GMV_030121_Plan_NewCoView, GMV1H21_Final
IBM MD&I | 2021 | © IBM Corporation | IBM Internal Cloud_wIndustry_ AllFxPivot_03012021vF; Const Curr-IBM 6
*YtY data available in embedded Excel charts* PlanRt NonPlCtries:IBM FX Fcst
 Business Unit Group Business Unit Measurement Segments

Notes, Terminology, and Blockchain Platform

Cloud Dev/ Bluemix
Data AI
Cloud & Data Platform Integration Offerings

GMV Taxonomy Internet of Things

Watson Data Platform
IBM Sterling Supply Chain
Blockchain Services
Cloud Video
Cognitive Applications Talent Management
GMV Notes Cloud & Cognitive Software Weather
The Global Market View (GMV) is IBM's proprietary asset that provides an IBM Sterling B2B Collaboration
external, objective view of the IT market that can be applied to internal IBM Overlapped (Watson Health) Overlapped (Watson Health)
Business Units. Red Hat Red Hat
Security Svcs
Security
Security SW
It is both a process and model that integrates hundreds of external data Cognitive Systems
sources (such as IDC, Gartner, Forrester, TBR, etc.) along with IBM Transaction Processing SW Storage Software
internal assessments, competitor vendor data and other leading economic Z system Middleware
and IT indicators for historical and forecast periods. Watson Health Watson Health
Overlapped Red Hat Oppty. Overlapped Red Hat Oppty.
AMS
It includes other traditional and contemporary market views that are used for Consulting
performance measurement and strategic planning. GBS Security
GBS GBS GPS+Kenexa
Promontory
Important Terminology Overlapped GBS Security
Overlapped Promontory Oppty.
• Incremental Opportunity: Difference in market opportunity b/w start Cloud Managed Services Cloud Managed Services
and end year Infrastructure Services
GTS
GTS TSS
• Public Cloud includes Cloud Public Services, Hosted Private Cloud GTS Cloud Platform GTS Cloud Platform
Services: On Demand, Cloud Services Provider Opportunity Security Svcs Security Svcs
• Private Cloud includes Enterprise Private Cloud, Hosted Private Cloud Servers w OS Servers w OS
Systems
Storage HW Storage HW
Services: Dedicated, Enterprise Private Cloud – Enabling Collaboration Solutions
Cognitive Applications
• NewCo includes GTS Cloud Managed Services and GTS Infrastructure WCE-Divested Procurement
Services at Measurement Segment level Security Security SW (Unassigned SW)
Unassigned Software
Collaboration Solutions
Unassigned SW Unassigned SW
Watson Data Platform (Unassigned)
Overlapped Blockchain Services Oppty. Overlapped Blockchain Services Oppty. Overlapped Blockchain Services Oppty.
Overlapped Red Hat Oppty. (Server OS) Overlapped Red Hat Oppty. (Server OS) Overlapped Red Hat Oppty. (Server OS)

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Contacts
Stella Moss Mary Nguyen Laurie Beaver
stella.moss@ibm.com mary.t.nguyen@ibm.us.com laurie.beaver@ibm.com
Analyst, MD&I Principal Advisor, Associate Advisor,
MD&I MD&I

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