I’ve been working on a big column or two about the Office of Personnel Management hack while at the same time helping my boys with their Kickstarter campaign to be announced in another 10 days, but then IBM had to go yesterday and announce earnings and I just couldn’t help myself. I had to put that announcement in the context you’ll see in the headline above. IBM is so screwed.
Below you’ll see the news spelled-out in red annotations right on IBM’s own slides. The details are mainly there but before you read them I want to make three points. First, IBM’s sexy new businesses (cloud, analytics, mobile, social and security or CAMSS) aren’t growing — and probably won’t be growing — faster than its old businesses are shrinking and dying. This doesn’t have to be. IBM could carefully invest in some of those older businesses and become a much better company and investment.
Second is something that doesn’t immediately fall out of these slides but I think it should be said: from what I hear IBM’s analytics sales (the very essence of its Big Data strategy) have been dismal. Nobody is buying.
And a third point that could be an entire column in itself is that Google’s two latest cloud announcements (support for Windows Server and broad release of its Kubernetes container manager) effectively blow out of the water IBM’s nascent cloud operation.
Sadly, IBM has already lost the cloud and analytics wars, they have yet to be even a factor in mobile, and social is a business that IBM has yet to even explain how they’ll make money. Of all these new businesses that will supposedly drag IBM out of the mess it’s currently in only data security has a chance, and that’s if they don’t blow that, too.
When IBM bought SPSS, I was optimistic until they posted their pricing. Which was, “Contact us.” As far as I can tell, it went up from a few thousand to $35,000. Except for students, who they still try to rope in. Fortunately, I still have an antique version of SPSS. Fewer bells and whistles but it should work indefinitely, but I can see why demand would fall when you can also get SAS, Stata, and a wide range of new products for both niches and general purpose use — and keep that old copy of SPSS going for a few more years.
Also, do not forget PSPP https://www.gnu.org/software/pspp
Don’t forget R, which is free
Did I read correctly that IBM has agreed to “teach” China its hardware workings, to give away its IP so CN could rebuild it as “trusted in-country Chinese?” Seems like giving away one’s IP needs a rationale (pun intended.)
We see tremendous portent in Watson. ‘Hope they don’t buy the farm before realizing that dream.
I think that you’re beating a dead horse with IBM – they are basically heading in the same direction as DEC and for many of the same reasons. Sure, the stock analysts still “like” them to a degree but that only the sales commissions talking – the company is a dead man walking.
Let’s move on.
Not just IBM/Dec, but all tech companies. How many companies successfully moved on to something else, once their original core tech became obsolete? Apple and…??? They all get to a point where all they’re doing is hoping and praying they can keep the dying horse on it’s feet a little longer.
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The amazing thing about IBM is that they maintain A SINGLE CUSTOMER. It’s obvious their business strategy for a long time has been to screw their customers. This just shows that corporate CTOs are so stupid they belong in a zoo. They must know IBM will low ball the bid, then replace every decent engineer with a low-wage no talent. And bring in old obsolete hardware. Bait/switch.
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There is absolutely nothing interesting going on in tech. Instead of worrying about dinosaurs like IBM, we should just give up and blog about celebrity gossip.
The Power Systems and System z Mainframe business is good tech, and it’s hardly “old” or “obsolete” hardware. Same on the FlashSystems (from Texas Memory Systems buy) and the Storwize product line. The CTOs buying this stuff aren’t “stupid.” This stuff sells and does well. It isn’t nearly enough to boost the company, but it would be so awesome if they stopped trying to cut themselves to prosperity, and shoehorn in good tech into the latest bandwagon they’re jumping on.
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There’s good stuff here that can help them, but the people are the start of it, and without good people, everything is going to suffer. Blame who you want on the EPS target hoops they were jumping through, it was a lofty and stupid goal to appease The Street, nothing more. Sure, Ginny may have inherited it, but nonetheless she kept it going even after it was a proven loser.
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Sad, I’ve never worked for IBM but have been involved in their tech for 20 years, and there’s so much good there, the process and management is a killer.
I don’t think the CTOs are crazy. Untangling a relationship gone bad is often expensive and difficult. (Getting off a mainframe, for instance.) It takes things getting really bad before people see enough benefit. IBM exploits that.
The flip side is that by the time they leave, the relationship is so sour that they NEVER come back.
Revenues are down even in constant currency and adjusting for divestitures, AND they keep acquiring companies all the time. Even with the acquisitions their sales are dropping continuously. Horrendous performance.
It’s sad they are taking so many acquired companies down with them.
Not really. It’s a big pay day for the acquired company. They wouldn’t agree to it if they had great options on their own.
Pay day for the owners. Regular staff are always screwed.
If Ginni were named Gene, he’d have been axed more than a year ago. Why this woman is still on IBM’s payroll is beyond understanding. She has no strategy but then, she has no objectives that would require a strategy. As I tell all my IBM friends — get while the getting is good.
The Getting has not been worth it for a while now.
I believe the word ‘out’ was omitted….. THAT is a good recommendation.
Tweetie Bird was objecting to “while the getting is good”, i.e. the getting is no longer good.
None of the senior execs are capable of executing in the market IBM now finds itself. They are dinosaurs in the age of mammals. Their best hope was that a rising star from one of the acquisitions (Lance Crosby anyone?) would grab the company by the scruff of its neck and drag it in the right direction. Sadly they all leave in frustration as the old school circle the wagons and allow no new blood into the inner sanctum.
I haven’t been “in” ibm for many years now, I got out while the real perpetrator of this downfall was still running the show, Captain Palmisano.
I don’t envy Ginni, she took over for Sam who had clearly set ibm up on this steady state path to profits based on a completely static future, meanwhile everything was changing. When Ginni first came in, shaking things up wasn’t really an option, ibm was doing well at that moment and changing a good thing (as far as investors were concerned) would have been heresy on Wall St. She was simply expected to carry the baton across the finish line with that ridiculous $20 by 2015 goal
She’s definitely made her own mistakes but to some extent shes in a lose-lose situation that was being built years before she took the helm.
Another quarter and news of more layoffs continue whilst the number of managers and new appointments of senior staff who are apparently going to save us from this mess continue and as another person leaves it makes life harder and harder for those of us remaining making it impossible to deliver great customer service that will keep the customers we have.
We all just feel like sitting ducks, regardless of skills, abilities and performance waiting for our one on one manager meeting to tell us that we are no longer required.
We never have the proper skills such as industry certifications and the like because there is never any money for training but rest assured there are a bunch of internal free courses available that offer little or no value and would be worthless with any other employer.
And then there is the PBC process with a very small number of employees able to get a bonus or pay rise due to quotas so people work the bare minimum and if you are like me give up part way through the year after you hear other employees (your competitors who it is best not to collaborate or share information with because you might help them get your pay rise) have already done much better than and you will never “catch them” so best to save the petrol for next years PBC chase or just give up all together and do the bare minimum or start looking for another job.
So we are a company in decline and a workforce lacking motivation with no training, old skills and no hope of a pay rise or bonus unless we some how manage to outperform God during the year whilst looking over our shoulders waiting to be told we no longer have a job.
Anyhow have to go my manager has organise a one on one meeting out of the blue – must have something important to tell me…
Re: ” must have something important to tell me…” Don’t keep us in suspense.
To all the naysayers. We have AGILE!!!!. Look our for IBM in the future.
One or two product areas like Agile or Watson, even if it they are massive financial successes, won’t save IBM. That’s always the view from the religious on the front lines that have fallen prey to the corporate propaganda machine and see their product or area as a major contributor instead of the reality that in the grand scheme of IBM it’s a tactical minor win and believe that win will turn this sinking ship around and make it profitable.
The Titanic is sinking and the amount of water, even when selling entire divisions isn’t going to change a damn thing. IBM is done. Put a fork in it.
Talent exodus is in full flow in UKI. No one is being replaced so this is snowballing. There is now already a serious lack of top talent, and IBM is not competing in the marketplace unless the position is in CAMSS. Recruiters are targeting IBM talent, fed lists of strong candidates via ex employees
….”data security has a chance, and that’s if they don’t blow that, too.”….. When the executives start leaving it speaks volumes. Kristen Lovejoy VP & GM IBM Security Services took over as IBM CISO earlier this year left IBM recently.
A company bringing in $20 billion a quarter is never screwed. A bit too clickbait-ish with the title there, to be honest. SaaS sounds like a great idea to the people that get to sell it, but in the long run it sounds like more money expended versus an up-front purchase model. Let’s see how long “spend more money for the same capability” remains popular with the business community. The only thing holding IBM back is a legacy organization and legacy culture holding it back from experimenting and researching the new SaaS market and coming up with unique products. If that’s the only thing holding it back, then it can emerge from this potentially bad future, but the fulcrum will be held by senior leadership, and they need to be able to make the right decisions. A company that is big and risk-averse will always have a hard time becoming agile and youthful if its senior leaders remain shepherds of sacred cows.
Enron brought in $20 billion per quarter and look what happened to them. Clickbaiting? This blog doesn’t even carry ads, so why would I worry about clicks? Just telling the truth here and your comment sounds suspiciously like the time IBM Hong Kong called me a “gadfly.” .
spot on cringely. i worked at ibm. disaster in the making. worst job i ever had. ibm is toast….why giini is not fired is beyond me. dead company walking.
if there is only one thing holding IBM back, it’s denial at the top. that 1980s thing is decoration, not production.
IBM is a case study of the Iron Law of Institutions in action.
http://rationalwiki.org/wiki/Iron_law_of_institutions
“Continuing high level of investment and shareholder returns”
I guess they’re not even pretending to care about customers any more.
Are you sure you’re not covering General Motors circa 2007? …and IBM won’t have the option of a taxpayer-funded “quick rinse” bankruptcy.
Bob, revenue from “Cloud” covers a wide variety of products and services and not just XaaS. Included in the Cloud labeling are a number of different software products as well. IBM has now reorganized by a number of business units one of which is cloud. The former SW brands now fall under a Cloud BU and so the revenue accruing to the Cloud label in the presentation will include a large percentage of non XaaS offerings.
What I find very interesting is that IBM is touting a 30% increase in cloud y over y but they really didn’t have much to offer in cloud last year. On top of that Amazon just released their Q2 results and they had an 80% increase in cloud y over y. IBM can say what they want but they are not even close to being the market leader like they were with services back in the day
I was an IBMer for 21 years until I left to take a job with a different company in 2013.
I can assure you with absolute certainty that the “Cloud Revenue” is overinflated. IBM did (and I’m sure still does) spends a ridiculous amount of time and energy parsing out Revenue, with lots of folks fighting over it based on their own personal objectives.
The hot topics of the moment as mentioned by the talking heads out of Armonk (i.e. CAMSS) ALWAYS get more revenue allocated their way than what was legitimately earned.
Watch it, SG&A is not higher. The positive 8% means it is improving year to year, not increasing. Positive sign is B(etter), negative is W(orse).
Now, 8% improvement in that area is not enough when confronted to sales decline, all the more as 11 pts out of the 8 (!) are coming from currency exchange.
Looking at the numbers exactly as reported to the SEC: Revenue dropped from $24,047M to $20,813M, or 13.4%. SG&A dropped from $5,593M to $5,179M, or 7.4%. What this tells me is the sales people saw reduced commissions, but everyone else up the food chain got the same compensation.
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IBM continues to go through a lot of effort and accounting wizardry to give the impression things are not so bad. If you look at the actual SEC filings and the GAAP numbers IBM’s decline is accelerating.
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If history is a good lesson when Gerstner took over there was a big staff cut to stabilize the business. It was followed with each division developing a “get back to health plan” and then acting on it. The surviving staff had a mission, they had some job security, each division had a plan, and resources were provided to make it all work. In truth the exact opposite is happening. There is no real plan. There is a belief CAMSS will save the day. The remaining businesses are being gutted. No one has a secure job. There is no plan to restore the divisions back to health.
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John, I agree with almost all you are saying, except on commissions where you are maybe right but it’s not obvious. My point is that SG&A drop is mainly due to currency variation : the same amount of SG&A accounted in, say, Euros is much less in reported dollars this year than when reported in dollars last year.
The rot set in long before Rometty took over. Palmisano’s focus on shareholder value (to the exclusion of almost all else) was the begining of the end and it was the legacy Rometty perpetuated.
Agreed. Gerstner set the stage, albeit one which corrected course and allowed Services to carry the day for quite some time. It was Palmisano who had ZERO vision and therefore applied the ‘wet towel effect’ i.e. twisting every drop out of the company via cost cuts, offshore labor arbitrage, minimal investment and completely missing new paradigms right under his big nose (cloud, mobile). History will show it was he who doomed the company while walking away with a cool $200m.
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Rometty was handed the turd but even so, she was part of Sam’s gang so she too has blood on her hands.
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Couldn’t happen to a more ruthless team of executives.
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I think I wrote a whole book about that…
I know, I bought a copy and thoroughly enjoyed it. Having worked on the inside, I watched this IBM train wreck in slow motion. Your book summarized the tragedy quite accurately.
I read more of your book and enjoyed it more than the perk every employee got from the 100 anniversary book IBM sent everyone. I didn’t even flip open the cover on that one. And I agree your ebook was spot on. Since I also lived that nightmare
Actually, a very poignant commentary. Ruthless and greedy is bang on. What Sam P set up – and Ginny spiked – should go down in the annals of corp history. But this one still has a long death to play out….many years of agony left.
[…] ex employee of the company puts it less politely: IBM is so screwed. I think that he may have personal issues, his points are however well made. In the same way that […]
Well said…IBM is in big time trouble….
analytics is pure software.. and that category is shrinking fast…and bulk of IBM profit….you can only loose 10% revenue ten periods in a row to get to zero
No wonder Ginni renegotiated her package to be more independent from the top line. She needs 3 more years to be able to walk away with 200 million like Sam.
Ginni basically only renamed her tenure from 2015 roadmap to higher value segment… but the game remains the same… no investment, no innovation, just squeezing costs
I think Bufett is in it for the short and medium term profit and the break up value….that game he understands
The strategic imperatives are nothing but relabeling of software, service and hardware… If not, there would have been acquisitions or announcements of truly innovative products… nothing is happening at that front
So…Maximo is now analytics…Cognos is analytics….SPSS is now analytics… etc etc…
it is pure a game of relabeling and associated musical chairs of execs in charge of newly formed strategic imperative departments… old wine in new bags… and if you do not comply you get fired… since Ginni makes her bonus on the strategic imperatives and therefore these must show double digit growth… so it is basically a giant ponzi scheme where all execs get remunerated based on how much relabeling they got done.
0.90 (i.e. -10%) to the 10th power is 0.349, not zero.
I stand corrected! thanks… point is… you can only shrink by 10% a quarter for a few years….and my fear is…. current slide is irreversible…since IBM is not innovating and truly addressing a growth market with new and innovative products and/or solutions….
Under Ginni IBM has not chosen an attack mode, rather it took a defensive (retractive) move back into 1) mainframes (now souped up) or systems 2) middleware (being relabeled but in essence still just middleware “augmented” with SPSS, Cognos and workflow type applications, and 3) managing large outsourcing contracts (now part of the services organization) in which a variety of acquired software products (for workflow, expense management etc) were sold as part of the deal to manage the outsourced functions…
Ginni will relabel to the tune of 40Bn… as she told wall street… by 2018 the growth initiatives will grow to 40Bn… but she also stated, that would be 40% of OVERALL IBM revenue mix… so IBM will have to become a 100BN company by 2018 again?… yeah… right!…it is IMHO much more likely IBM will drop to 60Bn revenue by 2018…
“We are engineering a downturn,” explained CFO Martin Schroeter (https://www.businessinsider.com/ibm-ceo-sets-big-40-billion-goal-2015-2#ixzz3gkVg0rFM)
Ginni’s successor will sell or spin IBM of piece by piece
by 2018, she has her 200 million and could care less
I was laid-off back in late 2008. At first I was devastated, I’d been with IBM for 17+years and really enjoyed my role (Technical Sales – Open Source & Software technology). Sales were good, always made/exceeded quota, well respected and endorsed by my customer base. But, I learned that internally, because I hadn’t pursued advancement into a management role, and I’d been there so long, I was viewed as someone who wasn’t motivated, passionate about my job and the company.
While, even though it did take me awhile to get back on my feet, looking back, getting axed back then was the best thing to happen to me. I stay in touch with my former colleagues and all I hear about is the constant “looking over my shoulder” for the next wave of layoffs. IBM used to be a good fun company to work for but not anymore. I truly feel for those still there but being someone who went through the pian, Better Is Out There!!
I hear you, I was shown the door in 2009 and it was the best thing to happen to me too. I am now a manager in IT security and we constantly poach IBMers fleeing the dysfunction that is IBM. The story these former IBM employees tell me is exactly the same, no bonus, no pay increase, no contract support, poor customer sat and then of course worrying about the next round of RA’s. There is no reason to stay and many to leave.
How does IBM’s relationship with Apple (IBM MobileFirst for IOS) fit into the grand scheme?
See: https://www.apple.com/business/mobile-enterprise-apps/
Can you spell Kaleida or Teligent? If you don’t know what I’m talking about, they were two IBM and Apple joint ventures in the 90’s that failed miserably.
In fact, JV’s fail more often than they succeed…
Their new mobile relationship isn’t technically a joint venture, nor is it a big deal: Apple added precisely TWO new positions to support IBM.
This one has failure written all over it from the start. No one is buying these poorly made ready apps. However they are an effective deterrent of IBM’s design and enterprise capability.
But it’s not a failure from Apple’s point of view: they selling many thousands more Macs, iPhones, and iPads, and all they have to do is add two positions….
Were you aware that one of the key leaders behind the Apple / IBM partnership left IBM less than a year after the deal was announced?
Gee, an acquaintance quit a darned good job to get a much better, higher-paying job at Taligent. Moved off to the PDRC with his wife and kid and I never heard from him again. Hmm, maybe a search engine will turn him up…
http://acronyms.thefreedictionary.com/PDRC
Mostly, it’s a win for Apple because IBM is buying Macbooks all around. I haven’t seen at all what IBM gets out of it, other than a bunch of apps that no one is buying. It’s like IBM suddenly discovered the iPad just as tablets sales started flattening out.
IBM leadership finally got on the bandwagon after the Apply announcement and started handing out iPads to everyone in a sales role.
IBM are beginning to look at lot like CA and BMC 10 years ago. I don’t think it will go bust just gradually disappear into irrelevancy. If I were them I would play to their strengths of mainframes and consulting. Instead of building there own cloud and big data they will eventually have to move to consulting and managed services for the aws, azures and googles of this world.
Rackspace (a much smaller company) is already doing this. IBM will need alot more pain in their cloud and big data business before they are forced to do the same. IBM don’t have the culture of Amazon, Google and Microsoft Azure to run commodity cloud infrastructure.
In 5 years time when AWS is say 35 billion, Azure say 25 billion and Google Cloud Business is say 20 billion in revenue this money been spent by companies in 2020 will be money not spent with IBM, Oracle, HP etc.
As a former (recently) IBMer, I can tell you that GBS isn’t all that great. IBM won’t invest in a bench and basically every consulting deal is made up of 20% IBM and 80% subcontractors. Of the 20% IBM, the majority is off-shore. It’s not a client-centric model.
As a former buyer of IBM “stuff”, this is long overdue (IBM is so screwed). It’s corporate ethics culture of determining what its customers will get and when they’ll get it that carried from when it was the defacto monopoly in the 50’s, 60’s & 70’s into the 80’s did not serve it well. It didn’t know how to deal with competition in the 80’s and has been degrading since (not necessarily in $$$, but, in technology, which is purportedly what its business is).
No tears here as they did it to themselves.
I have been extended an offer to work in one of the “hot” CAMSS areas for a senior position. The offer is generous and equivalent to big tech companies like Google or Facebook. They accepted my counter offer because I had multiple offers.
Is there anyone who is working in the CAMSS areas at IBM here? How is your experience? Is there a future career at IBM?
ToIBMrTobe, watch out man. You will be going into an environment where everyone is unhappy, very unhappy. And very unmotivated. Managers no longer have any control of what happens to you and there is no career path there. Just did 12 years and was happy to take the package. I was in a CAMSS group and its total chaos.
Don’t let the money fool you, your going to make big mistake if you go there.
Good Luck and choose wisely….
What area of CAMSS were you spefically in? Were you part of the old legacy SW that was grouped into CAMSS?
I do not recommend joining IBM, recently left after 5 1/2 years and it is one of the most bureaucratic organizations I have ever worked for. Things could easily be improved but management is too scared of blotting their copy-books to raise issues. Twice I was warned to stop complaining (issues like only 30GB space for developing databases) or I would be asked to leave. I have decades of experience at development leadership level, but feel that the time spent at IBM was a waste and hindered my career, a stagnation of my abilities rather than increasing them.
They are a spent force, and Ginni got the job since she was able to cut to increase profits, not a technology leader IMHO.
I completely agree with your comment. I just left after 5 wasted years. Anyone in a leadership role there knows the true story and they are basically powerless to fix anything.
IBMerToBe I agree with what the other ex IBMers are saying. I spent 16 years there all in Global Services. To give you some perspective on how things devolved there. My kids were excited every time we were somewhere and they saw the IBM logo. IBM would host picnics in the summer and Christmas party’s in December. That all stopped when the EPS targets were created and my kids excitement at seeing the IBM logos turned into disgust at the company that was making their dad work 16 hour days and travel 75% of the time. My last year at IBM I did not get a day off, including weekends and holidays, until the 4th of July. I hope your experience is like my first 10 years when I enjoyed what I did and felt like I made a difference.
careful there.
they love to post senior position with senior pay, but because every responsibility role is given to a friend, cousin or already taken by a higher up (especialy outside usa) you’re in the real risk of getting the pay but not the role.
I got hired for architect, found myself developer. pushed a solution that saved them 60k year in my first three month there, someone else got the merit and I got a pat on the back (note this was not part of my assignment, I did it on my own time out of my own will and still a higher up maanged to get the credit and use it to leverage a better position for himself)
I have sat on numerous calls where they talk about the strategy to hire big names to big themselves up. You get hired and give them your processes, ideas, strategies etc and they use you and sideline you. Seen it happen numerous times. Until eventually you get sacked. However they still use you to lure even bigger names to replace you. The work also by passes you and goes out to a bunch of unskilled grads to do a hatchet job. How convienent it is having your name (in name only) associated with the project or service line because they can also blame you.
Re: “bigger names to replace you. The work also by passes you and goes out to a bunch of unskilled grads”. Confusing…sounds like unskilled grads=bigger names. Unless you mean the bigger names are supervising the unskilled grads, which could be better or worse for the customer depending on quality of the combination compared to what they replace.
Big names are hired ‘Show ponies’ for CAMSS services. Like a Candyman selling candy. Prentends to be selling sweets but really is selling dentistry services. The agency types are lured in with fancy titles and higher pay than the digital agencies they hail from. Once hired they find the job doesn’t really exist. It’s sales – more bait and switch – marketing press for all the design and digital magazines to hoodwink clients. New big hires = more marketing press. The previous ones slip out the back door quietly while the flashbulbs are in full blaze at the front door.
An NY Chief Creative Officer won’t even know about a project in Des Moines. It will just get resourced out.
In my experience the work wasn’t going to unskilled grads, it was going offshore or to subcontractors. Global Services is a joke under Bridgette.
Hope you like using IBM Worklight, since renamed MobileFirst…
https://www-03.ibm.com/software/products/en/mobilefirstfoundation : “Not available for purchase online.” 🙂
I couldn’t resist, and I really wanted to hold myself back, but I have to say it:
Welcome to 1999! 🙂
@IBMer ToBe – I would dig down into the specific CAMSS area to see exactly what they consider to be a part of that definition. All of IBM SW has been redefined as CAMSS, including old legacy products. So, unless you will be working with newly acquired and/or developed technology it may simply be a label on old technology.
I will be in the M(obile) area, speficially the Apple partnership so it is definitely the “new” CAMSS. I met with the team and thought they were knowledgable and very friendly. Are you currently an IBMer? What’s your current experience there? Thanks
EDIT: I found this site through google search. I just realized this site sentiment is really against IBM. I would like to hear a subjective and real life experience.
If you decide to go, make sure you have a good outside-of-IBM network and can get hired elsewhere fast. This also implies keeping your skill set up-to-date and marketable. The company no longer fosters the beliefs of its founder, T.J. Watson Sr. and his sons plus the the first couple of CEOs that followed T.J. Jr. Two events beginning back in 1970 led to IBM management becoming myopic. In the 80s, Ignoring the advice of those who recommended that all PC development (H/W and S/W) be done in house, added to that less than stellar vision. Once Gerstner turned it into a “service company”, it lost even more of any vision that was still left. Now, unless you are in the inner circle, you are nothing more than a disposable commodity. If the project you work on is highly successful, you have a good chance of being retained for the next project. Otherwise, even if you were a stellar performer, you could be insulted by being told to train your replacement before you are shown the door. There is also a good chance to be shown the door even if you were a good performer because management considers you are being paid too much. So if you decide to take the position, be sure “to keep your irons in the fire” so as not to be unemployed too long and best of luck.
Exactly, keep that external network ramped up and hot. You’re gonna need it sooner or later, the stacked ranking system (PBC’s) guarantees that. Your rating will not be a factor of your performance so much as a factor of your relationship with your management – friends don’t get cut if it can be helped. I loved working there, did over 15 years but everyone is going to get laid off sooner or later to cut costs and retain the illusion of profit.
@IBMerToBe
Absolutely, there’s some great people there, but they’re leaving in droves.
IBM has lost its soul. Ask anyone who is working there today, or who has left in the last 10 years (and who have or had a soul themselves). They will tell you. Don’t be seduced by the immediate opportunity and think you will be unharmed by what’s going down all around you.
No Vision, No values, No Soul. It is sad, for a company with such a legacy. But it can be the source of some great business school analysis to counter the thesis that a company is all about delivering share holder value, and that is what should consume senior executives 365 x 24. Also, a great example of how long a company it’s size can get away with financial engineering to look successful.
I am currently an IBMer. The people I work with are fantastic. I have found IBMers in general to be a great group of people to work with and an incredibly supportive culture of teamwork. However… ever since Palmisano and recently Ginni, there is a broad consensus that executive management is out of touch with the field, that working conditions and incentives have deteriorated since Gerstner left, that the company is not being well managed at the executive level, that our direction, objectives and goals tend to be too little and too late in a fast moving market, Cloud is just one example. Having said that, I believe that IBM can still be a great place to work due to the people, but am not optimistic about the medium term prospects in areas like Cloud or Analytics.
Current IBMer here (15 yrs), and yes, IBMerToBe, you are stepping into a difficult position. There are still great people at IBM, but we’re overworked, have little clear direction or achievable goals, and are jerked around from bad idea to bad idea (under the guise of being agile, when it’s actually just reactive because Exec A, who drove last quarter is in opposition to Exec B, who is driving this quarter). It’s frustrating and soul-killing. Morale stinks across the board. I still do my job, because I’m paid to do so and I’ve not yet found a workable alternative, but my enthusiasm faor doing it well left a long time ago. My group looks “outward,” and in theory, we serve an external customer, but our only mandate is to please executives (internal stakeholders), who often are very out of touch, and when their ideas/policies/decisions don’t fly, they not only don’t take responsibility, but they lay blame at your feet for doing what you’re told.
We’re also under constant paranoia that the next RA (layoff) will include our number. A good many people have been set adrift for no other reason than cost cutting. A good rating, if you manage to snag one (my 1 last year cost me 55+ hrs/ week, and my reward was 1% raise), is no guarantee of continued employment either.
It’s demoralizing and sad. This place used to be awesome. Maybe it will be again. Good luck to you.
I joined IBM in 2010 and it hasn’t been all bad, but then again my expectations are low. I have just a few years until retirement and I’m hoping the project I’m working on doesn’t implode before retirement day. I work in Global Business Services in a rare long-term contract. I used to work closely with another IBM division that was recently “divested”. A whole bunch of really smart people I used to work with are now working for a different company, and my fellow IBMers and I are cast into a contracting role. The one thing I have noticed in my five years at IBM is that all the really smart people have left, been laid off, been sold off or retired. Those people who are left are marketing wizards with a lot of mousse and cufflinks. I don’t like those people too much.
IBMer to Be – Please note that the guy who made the IBM / Apple deal happen left IBM less than a year after the deal. That’s how bad the place is.
[…] Cringely, writes in a blog, “IBM is so screwed” that the indicators are looking all […]
A thought: Apple has about $200b in spare change, IBM is worth about that today…
I do hope I didn’t just read the Fallacy of the Big Savior Merge. it’s crap. a successful business should never pile out the cash to buy a big foundering heap of “if only.” they should use that money to outwit and crash the foundering.
patents are cheaper in Chapter 7. the rest of a flailing outfit, not so much.
I ought to trademark that… PATENTS ARE CHEAPER IN CHAPTER 7.
[…] a post titled “IBM is so screwed,” Bob X. Cringely provides his analysis of IBMs most recent earnings report. Spoiler alert: […]
@swschrad – Absolutely, and of course we know Apple would never consider such an acquisition, even if IBM’s trajectory were the opposite of what it is now, as their products and markets are so opposite. However I think of the $200B observation more as putting things in perspective. Once the great leader in technology, IBM could now be bought with the cash reserves of another technology company.
Seems they should rename “cloud, analytics, mobile, social and security” (CAMSS) to “social, cloud, analytics, mobile, and security” (SCAMS)
All this critical talk. IBM is about vision, delivering customer value, innovation, and superb salesmanship.
Remember, it refers to itself as “The World’s Most Essential Company” for a reason.
Oh, I forgot….add ethics and humility to the Armonk mix.
Go IBM!!!
You obviously don’t work for the company to have a comment like that.
The comment above (darb July 23, 2015 at 2:21 pm) could almost have been delivered by Danny Kaye himself. 🙂
“Isn’t it grand! Isn’t it fine! Look at the cut, the style, the line!
The suit of clothes is all together
But all together it’s all together
The most remarkable suit of clothes that I have ever seen.
These eyes of mine at once determined
The sleeves are velvet, the cape is ermine
The hose are blue and the doublet is a lovely shade of green.
Somebody send for the Queen.”
To those commenting on my previous comment….
Mine was dripping in sarcasm.
Thanks for the clarification. Perhaps we should just assume the occasional positive comment is sarcasm. 🙂
I came to IBM Australia as part of an outsource deal they signed with my previous company nearly 5 years ago. Right from day one I could see that they were not serious about the Services part of their business. The M.O. seems to be to sign a big deal, then strip out all the resourcing and run as lean as possible – always too lean. IBM is happy to pay penalties of a few million each month when they are making over $1B per year from one customer.
The upshot of running your business like this is that the reputational damage is fatal. Because of their poor performance on major accounts, IBM have not signed a major deal in Australia since 2010. And even more so, I’m told by my sources still within the company that they have been asked NOT to re-tender for business that are are currently contracted for.
I got out earlier this year and I pity those who are still there.
RE Rob July 23, 2015 at 3:43 pm and Outsourced accounts Down Under;
You might know of this other big outsourced account where the staff from the client org came over with their entitlements intact. As some of them had racked up close to thirty years of service, paying them out was unthinkable. So they were set up to fail by systematic and calculated overload. First stumble, hit them with a warning letter. Working sixteen hour days and weekends won’t make a dent in the load. So with the next inevitable stumbles, another pair of warning letters and get thrown out the door. There’s thirty years of severance gone. Since it’s all done properly, no legal recourse either.
Ethics and humility indeed!
I have read and agree with everyone’s comment. I am in the consulting end. I support layers above me who add no value. Everyday I feel like a freelancer. Odd for a company this size.
SteveRacer….don’t say ‘add no value’. Those extra layers are a key reason why you need to bill at $275+ an hour for IBM to make a profit. And where would you be without the guidance the Account Executive(s) give you, and the financial craziness you’re asked to do on their behalf? *s*
I just left GBS and felt so much relief. Regarding the freelancer comment, all of my projects were staffed with 80% subcontractors. It was ridiculous.
So what happened to the layoff count?
Bob you know who this is.. Im left with one question. How is it that no one on the BOD seems able to do simple math? When will GR have to step down?
Jetter should get it, he’s actually listening to employees, or at least looks like he is.
Jetter is in no way better than Rometty, Palmisano and the like. He’s part of the cabal. Didn’t make the expected numbers in IBM Germany, blamed the employees, reportedly treated his underlings not exactly nice… Yet he’s getting promoted. Do not expect anything from him.
Oh that’s disappointing, got no one then.
IBM announced massive layoffs yesterday. Mostly to GTS, after she said half of the income came from them in a video, and announced that they were “hiring like crazy.”
Oh they’re “hiring like crazy” alright – In India and China, and anywhere else they can find ultra-cheap labor. Little education required. They’ll train you and give you a cookbook on how to do your job. Meanwhile the folks that are bringing in all the money and are trying to preserve IBM’s reputation with its customers are getting whacked big time.
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At this point it doesn’t matter whether Jetter or anyone else is leading GTS. GTS has the most USA employees and that is a big expense Ginni can continue to cut to keep the earnings up. This is all a numbers game. IBM wants to buy back stocks, pay big dividends, maintain its net profit. Since revenue is dropping the only way to do that is to deeply cut the expensive staff.
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GTS, your contributions to IBM’s bottom line both in revenue and in sacrificing your job to maintain shareholder value is appreciated.
@ibmertobe I’m an IBMer but I also agree with the folks here to a great degree. You will love your time here, but only because there are still great people to work with. Congrats on your offer. Make sure you have a good boss, otherwise it’s a tough road.
A good boss at IBM is a bit of an oxymoron. Most are too busy trying to save themselves. Everyone is managing up. NO ONE is managing down. NO ONE.
Ditto that. I used to have stellar FLMgmt, but my latest mgr, who is new to both IBM and mgmt, put off her training for a year, spending her time kissing exec ass instead.
The inside joke was….
IBM = Idiots Become Management/Managers
I spent ten years in SWG building a customer success organization that would work to avoid revenue reversals due to shelfware and poor value realization. IBM nickel-and-dimed it, yet we were still fairly successful. The program eventually died through lack of care and mysel and many of my team were “RA’ed”.
Guess what ? The new “panic du jour” of SWG is CUSTOMER SUCCESS ! Slap on some tactical investment in customer value realisation in a desperate attempt to compensate for years of overselling and neglect. Too little, too late.
IBM doesn’t know what it stands for any more.I hear tales of confusion and despair from colleagues within where I used to hear good things sometimes.
Its sad. So much potential. Lions led by donkeys.
I worked at IBM for 10 years and quit voluntarily. Now I work for an IBM customer. I can see front-row that things has not changed since I quit. The company treats is customers so badly that I’m often embarassed to say I worked there. There are many great IBM’ers working there, but much fewer than in 2010. MAny people have quit, and those that had a chance has jumped. The only good people left there are those working in a speciality area where they have difficulty finding a job in another place. And even those don’t perform that well since they are essentially told to spend as little as possible on the customer, and that the account is already in the negative etc. For this reason, serious stability and security incidents that 5 years ago would have had everyone on their marks, can now go on for months without anyone doing anything serious. It is just circulated among IBM incident handler and managers who are usually clueless about how the systems work. Only after high-level management pressure from the customer side is there any chance the incidents will even see an engineer. Oftentimes the incident managers will outright lie to the customers.
It also sucks to be an IBM employee, at least if you are an engineer with many other options. Meager pay raises (on top of an already below-market pay, cut bonuses and benefits. Also all the intranet articles are totally about abstract cloud and social ideas, making little sense to an engineer who might actually try to visualize how the ideas are going to be realized at the customer side, let alone how it might make money. But as I remember, Ginni said some years ago, that these big “arcs” make it easier to steer the company. Yeah, I am sure it becomes easier to manage if you just ignore all those annoying details and can live in la-la land thinking IBM will magically become competitive in the cloud and that IBM still has serious credibility with customers.
I think IBM has maybe 1-2 years with some chance to turn the ship. There are still many clueless management types at the customers who dont realize how bad it is yet (partly due to the IBM lies), and who will continue to buying IBM for some time. But sooner or later, even those drones realize who bad it is and new projects will be outsourced to other vendors. Soon after that, the old cash cows will either move or will disappear from the balance sheet as they are decomissioned. This is what IBM is already seeing, albeit at a limited scale. But if this accelerates, as it very well might, history from IBM and other companies shows that things can go down so quickly, that it is not unrealistic to think IBM might find itself bordering on bankruptcy within 1-2 years – just like in the 90s. The Q2 results, and the 13 quarters with declining revenue, is a stark reminder of that. If IBM thinks this is bad, just continue down the current road for 1-2 years… then you will see bad!
I am a gray haired old geezer, spent almost four decades at IBM. I have lived the skid downhill to Deadman’s Curve for a very long time. Right now they are just sliding past ClusterPh_ck Alley with three flat tires and a broken windshield and are almost at that dreaded curve. It’s been a long time coming. The place is a mess, all over the floor, and Think40 is not going to fix the problem. Have a nice day.
LOL! That was a wonderful and accurate description 😉
Classic!
25 years ago, when I was a young budding engineer, my company was a customer and partner of IBM. We bought IBM hardware and software as well as jointly developing products with IBM. On one major project, IBM decided to ‘dump’ obsolete technology that was repackaged to mask the fact it was the previous generation. I alerted my execs, who asked IBM about it. The IBM execs lied to mine and basically called me incompetent all so that they could “dump” their old generation technology on us.
Since that incident, as I’ve risen in the industry, I’ve made it my mission to bury IBM.
I don’t know if I would be alive and see IBM bury into the grave,but I will die peacefully seeing that.They absolutely humiliated during the Jan RA.Worst place to work.I saw couple of people taking about ethics and humility in IBM.What ethics???????? This is really a sick company.
Re: “people taking about ethics and humility in IBM”. That was darb, who clarified in a later post that the original post was “dripping in sarcasm”.
is that the reason they are retrenching staffs every quarter in Nigeria? With just one month of severance salary. I blame the Nigeria Govt. for their lack of caring attitude to the suffering of the masses. All our politicians care about is their pocket. Our labour law is rubbish. Other countries come use and dump us without proper compensation. I cry for my country called Nigeria.
No, that is to help people manage e-mail account lists.
I have a news magazine article from the 1980’s titled “The Colossus That Works.” It is about IBM, the then Wall Street darling. Only a few years later IBM was in serious trouble. The similarities between then and now are striking. IBM kept boosting prices to push up earnings. They antagonized customers and IBM lost contact with the market. In the technology industry things change and they can change fast. IBM missed the signals. As sales dropped they resorted to creative accounting and more price increases. That caused the bottom to fall out of their business.
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Why can’t Wall Street see history repeating itself? In the 1990’s when IBM was in serious trouble and had a some very painful layoff, the first in company history, they still had the full support of their loyal workforce. Once unshackled and under better leadership that workforce was an important part of IBM’s turnaround. Today IBM does not have a strong and loyal army ready to saving the company. Sam screwed the IBM workforce big time.
[…] https://www.cringely.com/2015/07/21/ibm-is-so-screwed/ […]
Wow, there are now over 100 comments to this column. It is a shame so few other subjects get this much attention and discussion. Many years ago a mentor taught me the value of listening. If you listen you will hear many things that are important to your business. Customers, suppliers, and employees will alert you to problems long before they become serious. They will alert you to opportunities too. If you listen and act responsibly on that feedback, things will go well for your business.
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As an IBM’er I’ve seen this process fail. IBM’ers have been alerting and warning management for 10 years of growing problems with our business. The number of “problem accounts” and contract terminations began to rise at an alarming rate. For a while IBM was able to mask this by selling more than we were losing. This is not a sustainable business plan. For the last several years we’ve lost revenue each and every quarter. When your customers make conscience decisions to buy less from you, that is powerful feedback.
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IBM’s executives are ignoring the feedback from everyone — their employees, their customers. This is a recipe for disaster. Privately many of them will admit things are very bad, but everyone is required to continue the charade.
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Poor Mr. Cringely has taken quite a beating from IBM this year over his reports. His reports have been very good. Even now those big layoff’s IBM denies are still going on. IBM no longer has a single big layoff, they have 100’s of little layoff’s scattered all over the world (but mostly in the USA) and throughout the year.
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You’ve got to admit IBM can do one thing great — they can give the perception everything is okay and the company is “going through the biggest transition in its history” — while internally things are much worse. Wall Street is still buying the Kool Aide.
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The simple truth is IBM rejects feedback. They don’t want it. They don’t respect it. They won’t use it. IBM’s executive’s minds are made up and they don’t want to be confused with the facts. When a company rejects and ignores feedback, it is serious. Clearly no amount of articles from Mr. Cringely and others will help. No amount of speaking up by IBM’s customers and employees will help. IBM isn’t listening. IBM’s financial statements now tell a clear story. IBM is losing business at double digit rates. IBM’s customers are now speaking with their checkbooks.
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If you are an IBM employee there is only one thing to do — get out. In 5 years IBM will probably be 1/2 its size today. Your job is at risk. You no longer have a pension. You no longer have retirement benefits. There is no financial reason for anyone to make a career working at IBM. In fact from a financial point of view IBM is now one of the worse companies to chose for a career. You, we can no longer let IBM’s exec’s endanger the financial security of our families. It is time to walk away from it.
That’s exactly what I did – walk away. Best move I ever made. To John’s points, specifically:
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1) IBM executives don’t listen. This is because, like at Enron, in their minds they are the smartest people in the room, why listen to anyone else.
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2) (The executives) can give the perception that everything is ok. This is the IBM spin tactic at its finest. I learned early on that an IBM executive can look you straight in the eye on a sunny blue-sky day and, with a wink and a nod, attempt to convince you the sky is green. The leadership culture has morphed into a very unethical entity, all cloaked in corporate stylish spin. It’s quite sickening but Wall St. seems to buy the message, at least for now.
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3) On the point of declining revenues, it has been mentioned in various forums before but worth reiterating here. Many of the legions of IBMers who were ruthlessly laid off over the past umpteen years, or perhaps like myself who just left out of pure disgust, are now with other organizations and in positions with input to the procurement process. Make no bones about it, these folks will NOT recommend IBM. On the contrary, they will do everything within their power to steer HW/SW/CLOUD purchases away from their former employer whom they know to be just a bunch of corporate politicians padding each others pockets and brewing the next batch of spin (and layoffs.)
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What goes around comes around.
truer words were never spoken. IBM is toxic.
IBM is the Titanic and the employees are just busy rearranging the deck chairs.
As the Captain of the Titanic probably muttered “Screw it, it’s just ice” IBM’s plans don’t include hitting an iceberg so in its mind there never will be one in front of them. When they do hit it, they will immediately convene an all day crit sit call run by dozens of attorneys whose sole job will be to determine how little to tell the soon to be drowning passengers. If there is one takeaway from having to deal with IBM it’s how opaque they are and what little they do share might not entirely be the truth. And not just sales-spin but outright screw you falsehoods. It’s hard to know what if anything sr management thinks because, as the old Chinese proverb says “Heaven is high and the emperor is far away”. It would be shocking if if any third line managers had the faintest grasp of what their people even do. And third line is the middle of the pack. There are so many layers of management that there are whole pseudo-organizations that no one’s so much as heard of. They are carved out of thin air to serve no purpose other than shuttling status reports up the chain and threats down the chain. There are barely a few first line managers who have any sort of technical background at all. Above that, it’s unheard of. They’re all lifers, attorneys and financial risk managers. It’s quite nearly impossible to have a technical discussion with any manager about anything. Customers are even worse off being kept in the dark when actual outages and operational problem interrupt their services.
I’m in Canada and it’s downright dismal. People leave and arent replaced and morale is at an all time low. Looking elsewhere actively.
Hi Cringely – thanks for your blog, I come here maybe once every 3 months – when the disgust in IBM gets too much. Thanks for always fighting against this thing that calls itself a business. Sadly when IBM fails – and I pray to the powers that be that it will fail – the people who will suffer is us fools who need the money to make a living. I cant believe we are allowing this thing to treat us like slaves. IBM is as far as I am concerned worst than dog crap stuck on the bottom of your shoe, I despise this place. One manager defended IBMs ways to me when I made my feelings clear some time back and I cant help but think is this what you need to tell yourself to be able to live with what you are doing or are you really that stupid. It reminds me of every historic genocidal country – telling the people how great the country is doing and then slaughtering them behind closed doors. And the people keep believing the stories, probably because its human nature to want to hope things will get better.
Even worse is that they are planning to buy up to 200,000 Macs every year! Great idea, IBM: piss money away on over-priced toys while the real work gets done on PCs that remain…
https://www.macrumors.com/2015/07/31/ibm-200k-macs/
The quote from the video says “I’d like to be able to offer these to everyone that can use it. We’ve got to find a way to make the overall cost the same or lower than PCs to make that happen…”
Agreed, we have to upgrade every second year. Then we get laptops that arent client ready. It’s such an issue connecting to client server to fix issues. We spend more time getting crap fixed of our own before we can connect to fix client issues. About a month or so before one of our client contracts expired we were told to make sure if any issues come up we need to make sure its dealt with fast. Anything the client asked had to be provided. (The client was unhappy at that time and there was a real fear that the contract wont be renewed). The list goes on an on. Right now a lot of jobs are dependent on a client contract that will expire in a month or so (different client). Apparently the client will be off-shored anyway so a lot of jobs will still go. I am happy for other countries getting work, but I still really want them to fail miserably.
A refresh every other year?! I’ve been at IBM just over a year and when I looked a month or so ago, I was not eligible for a laptop refresh for another three years. So, apparently I’m on the four year refresh cycle which is ridiculous. Assuming I last that long, my laptop will be crawling so slow by then, it’d be faster to use a typewriter.
I was in GBS and the laptop refresh was every FOUR years. Of course you had to perform your own laptop migration. The instructions they sent were always wrong, so then you ended up spending at least a week of downtime trying to fix all of it. And then you had to make up for the time you spent away from your client in your utilization target.
The 200K number doesn’t add up at all. IBM has a policy to replace employee laptops once every 3 years. The entire workforce is now less than 350K employees, if not substantially lower. Are they going to be replacing employee laptops every year for well over half the workforce? That also doesn’t account for the trend of companies moving away from laptops for all employees and towards mobile devices like iPads/Tablets where they fit. It also doesn’t address the fact that most Mac users do not replace their systems nearly as frequently as PC users or that most users in general are not buying new systems these days… just look at the PC industry.
There is no way IBM is going to be buying 200K MacBooks from Apple annually to use for internal employees. And don’t even get me started about how they have replaced contractor laptops with Toshiba systems that no one wants to deal with. I suppose they are going to be providing these MacBooks to all of the contractors too? LOL.
The CIO office at IBM is so far removed from the day-to-day life of the developers, testers, and admins it is cartoonish. The Software Groups maintain entire organizations to avoid having to go to the CIO’s office for support.
Hell, IBM’s stack still doesn’t run natively on Macs without thirteen versions of Java running in the background…
Re: “IBM’s stack still doesn’t run natively on Macs without thirteen versions of Java running in the background…” Am I correct in assuming that means the IBM stack is written natively for Windows, and a version was written in Java for use on other OSs? Why 13 versions; did it evolve over many years?
IBM isnt screwed – its kind of self-destruction
One thing that always amazed me was that Global Services “owns” all of the buildings, IT etc. They charge each dept a significant amount for every employee. Per month charges such as $$ per Lotus Mailbox, $$$ per foot for office/lab space, $$ for each ethernet connection. All of these appear to be added to the “profit/income” on the spreadsheet. As the RA’s continue the “profit” from each employee shrinks by a substantial amount. The most creative bookkeeping quandary ever. It’s a giant snowball and it’s rolling downhill.
I would guess that one department’s revenue is the other’s expense, so both will go down by the same amount, having no net affect on the overall balance sheet.
I’m not an avid authority on what manipulation those spreadsheet jockey’s use, but during my tenure saw countless times where in place policies and procedures had not a single bearing on any degree of common sense. Countless times witnessed million dollar deals jeopardized because some bean counter didn’t want to take 5k out of his bucket. I suspect these days those situations are much more plentiful.
I was an IBM employee for almost 20 years before volunteering to be put on the RA list last year. I had enough and was ready to go. By that point IBM had become an IT sweatshop. Employees are only worried about their own PBC ratings, afraid to take risks or do anything that might subject them to a lower rating. This includes helping other employees (you don’t dare make someone else look better when competing for a coveted top rating). A top rating of 1 or 2+ is the only way to get some meager raise or at least stay off the fire list. Managers only worry about hanging on to their share of the tiny fiefdoms they built often by waging war on other teams. Poorly-conceived projects get funded because of political sway and more important or innovative work gets shelved. Priorities shift daily, so long term goals are never achieved. Deliverable generally fail because all the experienced people were fired and replaced with inexperienced low-cost labor offshore years ago. The few experienced people that are left are so overworked and burned out that they are just biding time until they can retire. IBM is not being eaten by the competition, it is eating itself. Toxic doesn’t begin to describe just how bad it is.
Rob, did you know, that after the failed IBM GDF (Global Delivery Framework) the new Agile approach has become as being the new trend? Also management started using Word instead of regular Presentation software as well, a new sign of insanity. Every presentational application has been a black sheep.
Also, you might love this: ftp://ftp.rogerwinters.com/agile.pdf
I won’t get into a discussion on the the merits of Agile, but it was amazing how IBM sales folks (and their ‘solutioning’ experts) adopted Agile as de facto methodology factored into all development contracts. Worked very well on the spreadsheet in terms of pricing….obviates the need for doing proper requirements/design, and timebox everything perfectly. When you poked away at the premises of the methodology being promoted, you quickly got the sense you were asking people questions who had neither the experience, understanding and (dare say) capacity to understand what a large development project really meant. The concept of ‘rolling wave’ was only something that could be understood when playing with Duckie in the bathtub.
As much as IBM moved its strategy to Services in the 90s, it did so with an ingrained ‘Selling Big Iron’ approach. I daresay it still fundamentally does not know (as in, does not have the knowledge and capacity) how to do Services well in many areas of the I.T. Services business. From a methodology perspective. Let alone undermining everything with a management approach which cared less and less about delivering quality and value to customer, only value to shareholder.
The damage done to the IBM Brand in Services business would take many years to turn around if indeed the company ever resolved to fix the problems in the first place. But Sales people running the Services business without a need of Delivery knowledge will never ever lead to a successful model.
I’ve been very negative relative to IBM’s future. However, I think leveraging Watson (assuming employees are allowed to be creative in doing so) might be one ticket to the future of IBM, assuming they don’t mismanage it. Unfortunately, the current upper management needs to be jettisoned if any new business venture is to be successful. The same sad crew will make the same bad decisions if left to manage quarter by quarter.
I read today that IBM is acquiring Merge, a medical imaging company. If anything will save Blue, it’s continuing to explore the healthcare data / image business. They’re a bit late in the game, but at least there’s potential to make money off the grey haired folks they laid off over the past 10-15 years. There are a lot of us.
I have seen so many deals fail because the people in the room don’t understand the technology. They are not techie enough. They are not even hiring techies anymore. The folk from agencies have web background and talk a good game but do not know the detail or how to do large implementation projects. I have worked in a few tech companies where I was the one without the deepest tech knowledge. Other firms had some real heavy weight people.
However during my time at IBM I was hands down the only one in the room with tech knowledge. The client was usually also head and shoulders above the other IBMers in the room.
What was funny that some people at IBM in internal meetings would say “we are not talking technical at this stage” “we are leaving the technology out of it for now” and then proceed to try to solve deeply complex technical issues. I had a huge falling out with one muppet who spent $500k of a client’s money building an HTML demo of something that just needed a simple CMS system like WordPress and could be knocked out in a day.
However they were clueless about the most basic stuff that even 12 year old boys (and girls) know. My role was supposed to be non-technical as well in the strategy area.
Obviously I was a complete fool, thinking there was a link between strategy and technology in a technology company! Can’t think of a single example where I had an intelligent conversation on technology or strategy. My dotted line manager and resource even complained they didn’t understand what I did.
Is there a website/forum to discuss various IBM things? Besides this one and the alliance site?
http://lmgtfy.com/?q=ibm+employee+discussion+forum
I work for IBM in the UK and we are on our 3rd redundancy / restructuring program in 8 months. So I guess cringleybyou are right about quarterly restructuring. Doesn’t give me much faith in IBMs stategy and morale in the workforce is at an all time low
My point is that SG&A drop is mainly due to currency variation : the same amount of SG&A accounted in, say, Euros is much less in reported dollars this year than when reported in dollars last year.
[…] Robert Cringely, published July 21, […]
Wow, wonder what Warren Buffett saw in them. Looks like he rolled a gutter ball on this one.
Bob you are right in your prediction of January. In Australia in the last month they have laid waste to whole departments. I would say they have offloaded about 5 to 8% of staff. Combined with RAs this year, they are aiming for a sales only presence by the end of the decade.
IBM was considered by many to be a national treasure when it fell on hard times in 1992 and needed a savor; his name turned out to be Gerstner. But in fact any dolt can fire 100k and that is what he did in one year bringing the IBM headcount down to a little over 200k from 400k at its peak; other incentive programs had already reduced its headcount by another 100k. He also ditched the IBM culture of a shared vision of the company and replaced it with an “exec knows best” and “only shareholders and execs will prosper” culture that over time has destroyed the morale of what was one of the best companies on the globe to work at by far which fostered loyalty par none.
Palmissano instituted one of the largest outsourcing programs in corp history and took US IBM headcount from over 250k to its current 70k and still declining by continuous mini layoffs that affect everyone. All those jobs were sent to India where most IBM headcount is today where you can hire five Indians for one American. As the hollowing out of morale continued the portfolio of IBM mostly data center focus started to become obsolete with the Cloud that they ignored because it was a commodity service they avoided. When companies like Amazon, Google, and Microsoft took off with cloud it could not be avoided anymore since this mega trend directly replaces most of the data center IBM had lived off. This shift occurred just as Ginnie arrived by she continued on with the strat of Pamilsano of financial engineering the EPS to $20 by 2015. First revenue stalled and now its in decline as IBM loses customers and sheds losing divisions like their Fabs.
Ginnie claims they will dish out finally with a more smaller and profitable company but the destruction of morale compared to competition with the other leading IT companies with their better morale and growing business will be the final end of IBM. Not out of business but a must smaller company not the leader of IT at all or even a buy out by some raider or other company that will take only the parts they want and sell the others. In addition millions of people consisting of former employees and family members will never forget the way they were treated and many are in the field of IT today and will never recommend IBM as a vendor.
The only way this will change is to have yet another Gerstner/Jobs like personality to arrive and revitialize the portfolio of IBM and its HR policies; that person has not been born yet……………finis IBM as a national or even major IT corp………….
Here’s an example of the typical IBM strategy. Earlier this year management (all 45 levels of it) decided the employee was not educated enough with the CAMMS strategy. So into the office we all go for weekly education sessions. Oh, its important that we all row in the same direction so we need to be educated and the company is serious. September rolls around and the company cancels all education – “to allow us to focus on priorities for the last quarter”. Apparently education isn’t one of those priorities. Joke’s on us once again.
Amazon is innovating so fast and making a commodity of IBM businesses. IBM will not be able to move fast. It is bleeding good talent. It is no longer the company that new college graduates want to join.
Fox News is running a story about mass adoption of macs inside IBM because the support costs are so much lower than windows based PCs Their headline is that IBM goes Apple: Helpdesk calls way down compared to Windows.
Apparently the cost comparison shows that only 5 percent of Mac users call the helpdesk, compared to 40 percent of PC users, according to Fletcher Previn, VP of Workplace-as-a-Service at IBM, who spoke about the program at a conference held recently in Minneapolis.
“IBM is now rolling out Macs to its employees at a rate of 1,900 devices per week. The tally so far for the four-month-old program is 130,000 Macs and iOS devices into the hands of IBM employees, according to a post from JAMF Software’s user conference, where Previn was speaking.” direct quote from the story…
The Lenovos were basically the cheapest bricks available and with poor hardware spec. It’s not a black and white PC vs Mac battle that IBM is making it out to be. That’s just an opportunity to bash Microsoft and blame them for them having faulty equipment.
More bullshit and spin. They also had Toshibas with higher specs for developers and they were fine! No help desk issues there. I know because I spent a lot of time visiting support.
Most of the problems were hardware related or their own terrible internal software. Every week at least one member of the team had laptop issues. In 4 years I could never connect to the network. Lots of people had the same issue with poor configurations. It was an internal bug that we all knew about yet the protocol was to ignore it as most people 85% would be fine and this could be blamed on the individuals not having their settings right. The amount of downtime waiting 20 minutes for your laptop to wake up meant none of were very efficient. Hence really long hours and only getting about 4 hours worth of work done. Great thing GBS charges by the hour! Glad the clients are happy to pay for grads at very expensive day rates to spend a week on something that could be done in 1/2 a day.
Bill B. The good talent is already gone. In GBS there is no delivery capability it’s just a sales front. They can’t innovate their way out of a wet paper bag. It’s sell….sell…sell…. Which is hilarious because the sales are so bad because they are hiring big industry names to try to draw clients in to the new CAMSS services and not looking at what they really need to deliver. Clients aren’t stupid!
Smoke and mirrors oh and the Emporer has no clothes. Watson won’t be turning a profit for at least 5 years if ever.
Thanks for staying on top of IBM, Bob.
It’s really been a joy following you, for the past 20+ years of insightful analysis.
Don’t know if you read any David Stockman, but I thought you’d enjoy his IBM column, today –
http://davidstockmanscontracorner.com/the-big-blue-canary-in-armonk/
Dear Cringley,
Kudos for the IBM articles. I work for IBM and consider it only a JOB. I have tons of savings and investments that can support me and my family if I lost my job. I am not very exited about working
for any tech company anymore. I am waiting for that pink slip with lots of lust and excitement.
As listed above, IBM should be ashamed of itself becoming a 130 billion company just by buying back shares and betraying the nation by outsourcing tech info to enemy nations. Please if you work at IBM
and you are a brown noser, keep doing so and help them disintegrate. If you are in the trenches,
try not to kill yourself and if you are a new grad apply somewhere else.
Do not worry and be happy. None of us will last forever and that include once great companies like IBM.
Live long and prosper.
wow…..that’s not very encouraging! Hope waiting for the package is worth the suffering and dispair….
I see SEC is not liking the financial engineering and games being played by the IBM bean counting wizards. Finance runs the show at IBM. Don’t tell us they’ve stumbled!!!
I was directed over here from zerohedge.com on the article about IBM today. I just completed a six-month contract with IBM and I never really saw so much confusion. There are managers who have no business being in the positions they are in. They are unorganized, have no clue about today’s technology and simply can’t manage anything.
I had my contract extended two times just so that I could cover for the project in case they needed the difficult technical questions answered. I realized they really don’t value any of the technical expertise of anyone – they only value it long enough to make a lot of money from the project and then want to throw you to the curb as soon as they can.
This company is in dire need of new management before they go under. I also worked a short project with HP and as shocking as it maybe the confusion within HP is much worse.
I’ve been in IT since 1990 well before I could grow a beard. If I could work a new career making what I’m making now, I would never, ever consider working in IT another day.
it’s bad folks, current management (the 20+ year IBMers) still run the business like it’s 1995 and what a shame. This company needs new blood. I agree w the article, cloud is a commodity and their analytic solutions, they are getting killed by smaller more nimble vendors in the market. There is no mobile strategy and no one is buying mobile first nor does IBM know how to monetize. Social to IBM is a community site and there new email package Verse that was build by millennials (yawn). The only thing left is security and they will screw that up too or sell off because that’s what this team does, no strategy and moral is at an all time low. The good folks have left the train station while the 20+ year IBMers stay on board. Hey someone has to turn off the power on the way out the door. This will be a much smaller company in 3 years and the layoffs continue to happen. Bottom line it’s toxic at big blues and a management team that’s clueless what to do.
Cringely’s comment (slide 7) about quarterly head count “rebalancing” (firing skilled/experienced Americans) resulting in a decline in product and service quality are at the heart of past and future revenue declines. Even if Rometty’s product strategy is perfect, her (and the company’s) ultimate undoing is the failure to recognize that it takes skilled, motivated people (not resources) to implement the strategy. Her and her predecessor’s relentless pursuit of cheap labor has put the company on this downward spiral that ends with either the company failing, or a change in leadership that will restore IBM to a premium service/product provider, able to demand and get higher prices.