That’s a pretty dramatic headline, don’t you think? It’s also the title of an eBook about IBM I will put on sale here about six weeks from now. IBM is in trouble, you see, serious trouble caused primarily by executive corrosion from within. Not only did Big Blue miss its earnings target last quarter for the first time in years, if the rumors I am hearing are correct the company’s primary response will be to screw U.S. employees even more than they have already.
When all else fails have Carrie Underwood sing
The rumor I’ve heard is that IBM, which not long ago changed its 401K contribution policy to push what had been a biweekly payment into an annual one right at the end of the year, may have decided this year (and in the future?) not to make any 401K contribution at all. Since IBM’s U.S. employees can divert up to eight percent of their gross compensation into the 401K and IBM has traditionally made a comparable matching payment, this possible change in compensation policy could save the company close to $1 billion.
In one sense one might ask what’s wrong with that? Companies have to do what they have to do in this economy and workers sometimes suffer. But for IBM it indicates the company is getting near the bottom of its bag of tricks for maintaining earnings growth toward that ambitious 2015 goal of $20 per share. Management seem to be down to three ideas to improve the numbers: 1) savage the 401K plan; 2) sell the low-end server business to Lenovo for a reported $2.5 billion, and; 3) expect a miracle called PureSystems.
Change is inevitable in any business, but at IBM the policies and policy changes are particularly opaque. They are handed down from on-high by a management generally out of touch with reality, yet simultaneously determined to share as little information as possible with employees. At least that’s the way it appears to me.
IBM management plans are secret. The majority of the company does not know the plan and is not actively involved in helping the company achieve it. So there is probably no inside feeling at IBM about the sale of the low-end server business because very few know it’s even being considered. Fewer still know why it is being considered.
Internally IBM’s culture is a lot like USA society in the 1950’s and early 1960’s. There was an implicit trust in the government back then and we accepted the answers we got from Washington. Most of the IBM community has been conditioned not to think and to accept whatever they are told by management. If the server business is sold most will naively accept whatever explanation is offered. They won’t know this is just one of many businesses that could be sold for the corporation to make its numbers.
The more interesting problem for IBM is the high-end server business called PureSystems. IBM has high hopes for it. This is where magical thinking comes into play and magical thinking has been at the heart of IBM’s troubles for the last three decades, starting back in the John Opel years.
PureSystems is very expensive and I expect the profit margins are high. If you look at IBM, HP, or Dell’s low end server business you can calculate an average price per processor. Pure is made of many, many servers. Pure is also completely unproven. Its average cost per processor is a lot higher. Pure has a network switch and a storage area network built in. If you add up all the components Pure costs a lot more than if someone built their own system from parts. It is not going to be easy selling, or — more important — providing a financial justification for buying Pure. What if IBM does not sign the amount of PureSystems business it expects?
Then more IBM divisions will be put on the block to prop up earnings while the company waits for the next miracle.
I’m not sure where you got that 8% number Bob– I’ve been contributing north of 10% for years. Other than that I think you’re spot on. There’s a sense of malaise and unease around IBM that is different than the “management is out to get me” paranoia that’s been around now since Palmisano initiated this nonsense of whacking people simply to satisfy that Jack Welch ‘relative contribution’ monster. When the 2015 plan came out a lot of wags, me included, said the only way to satisfy it was to whack every IBM US employee. I’m retiring at year end (I’m one of those who took the Transition to Retirement bait) but I don’t see any way there’s not a flood following me out the door in ’14, and not a voluntary flood either. Betting on PureSystems actually seems a lot like the OS/2 bet back in the day in the sense that the company announced The Next Big Thing — and no product was available. Good luck with using non-existant products to shore up the balance sheet. I think there’s a further angle to upper management not being in touch that I’m interested to see you pursue, and that’s that many or even most of them didn’t grow up in the trenches; they zoomed in from consultancies and accounting shops and they just don’t seem to know the IT or sales games the way they should.
The match program is for 6% match maximum (1% auto contribution, 5% match if the employee puts in at least 5%), but I honestly don’t think there’s a limit on how much you can contribute to your 401K as long as you’re within federal limits. I don’t know where the 8% number is coming from, Mr. Cringely.
Otherwise, this post is very accurate. Especially this quotation: “[Policy changes] are handed down from on-high by a management generally out of touch with reality, yet simultaneously determined to share as little information as possible with employees.” It’s this approach that is a HUGE problem and it’s destroying US morale. I understand that business changes are inevitable; you have to grow revenue and continuously balance the books, but why can’t you be at least partially transparent about what you’re doing and why? Be up front that you’re cutting the US workforce to drive a larger business strategy. Be honest that you don’t even know how to solve the problem of growing revenue and you’re going to try a lot of different approaches and hope one sticks.
At the same time, IBM seems to have this ridiculous expectation that employees should be loyal. They are fairly disgruntled when critical talent (like myself) leaves for a better opportunity. Oh, sorry, were you being loyal to me when you, without any notice, walked a team of contractors out the door without transitioning their projects, so now the regular employees are picking up the pieces because you didn’t think you needed a plan? Were you being loyal to me when you cut the 401K match program and vehemently denied layoffs are coming? Were you being loyal to me when you assured me that you’re not sending US jobs to Asia and Africa, but did it again and again and again?
There is also a lot of mindset that “this is how it is everywhere. This is the best company in the world to work for so just suck it up.” Yeah, that’s why I found a great job with a company that is focused on investing in its US workforce to grow US revenue.
I can tell you where the 8% came from – before I left IBM I was in this subset. If you were at a certain age and number of years, IBM would do an automatic 2% addition to your 6%, taking you to 8%. Then they would match the full 8%. My guess is they did this because they felt sorry (probably not) for folks like myself who just missed the old pension plan and got converted to the new cash-balance with very few years left to make up the difference. I doubt it was empathy, probably more like trying to keep the lawsuits at bay.
Seems like a lot of confusion on the 401 match program. Here’s my understanding of it;
Everyone gets a automatic 4% contribution from the company. Then, depending on several factors, the company will match up to a maximum of 6% additional. This is what I am doing today… I contribute 6%, the company puts in 10%. Of course, this was always done bi-monthly and now won’t be done but once, at the end of the year, giving the company an entire year to figure out an excuse to fire you just before they deposit their match. Loyalty? wow, that’s gone the way of the dodo bird, sad to say.
RecentlyFormerIBMer said: “There is also a lot of mindset that “… This is the best company in the world to work for..”
Very true. Interestingly, this is also a misconception shared by many Americans about their country, the USA. In reality, both IBM and the USA are slowly circling the drain because of the mismanagement of their leaders.
I love hearing from you guys who have left IBM and have found better jobs elsewhere. My level of misery at IBM after 26 years has reached an all time high. The morale could not be worse in my area. I don’t know a single colleague who is happy. I am really sick of the off-shoring and constant threat to my employment and wondering if the next layoff will finally include me. I am sick of working with incompetent resources overseas and the inefficiency and frustration of it all. I am sick of arrogant upper management and their stupid ideas which they force down our throats to make their bonuses (e.g., GenO, Liquid Portal, Career Point, etc.). I’m sick of the fact that there is never a kind word said to any of us anymore – forget awards, forget bonuses, forget pay raises. We don’t even get a verbal “good job”. IBM clearly wants us gone. Come on, IBM, pull the trigger. I’m tired of it all.
8/17/13
I am an IBM veteran (1972-2002) .
A simple questinon: why you don’t quit?
Shoshan Shacham
Israel
People don’t quit because they are indentured servants. Making just enough and made to feel inadequate.I was at IBM for more than a decade brought in millions but did not have 100% utilization.
Why you dont not quite?
Shoshan Shacham
IBM Veteran (1972-2002)
Israel
17/8/2013
So, is IBM salvageable, or is it doomed? Is is a financial version of 100 years of solitude? (100 quarters of solitude?).
Is there ANY way, other than a coup d’etat, to save the company?
First time for me ever !!!
I agree that IBM is like the goverment in the 50’s and 60’s – Hoverisim
I am pretty sure Hoover was elected President in 1928….
Can’t wait to get a copy of that eBook!
Why doesn’t IBM license their “Watson” technology as a “SIRI” like service? They could write an app that would sell millions of copies and the technology has already been developed. That could “plug” a revenue hole some quarter.
Imagine being to ask your cell phone anything and get an intelligent answer.
Just Sayin’.
B.J.
BlaneJackson.com
Not a bad idea to increase revenue. Unfortunately, IBM is not going to make 10 dollar apps and sell them to millions of people. That would be a disruptive Googlesque/Facebookish innovation it is incapable of. IBM would rather continue to make bloated million dollar apps and sell them to 10 people (CEOs). And, when that doesn’t work, fire away people and perform financial engineering to show continued profit. Seems like even this trick has run its course.
My prediction is that, in the long term, IBM will slowly turn into an investment house/holding company specializing in the IT sector. It will no longer be a company that develops its own products or services. It will simply buy blossoming IT cows, milk them for a while and then butcher them when they stop being useful. Rinse and repeat until kingdom come.
You have just described Computer Associates. Is this what it comes to? Dirty financial games? Very sad.
So like Oracle then…
Become? Sorry, but IBM has been doing this for years.
IBM is a Ponzy scheme run by lawyers.
Imagine if all first and even second level tech support is delivered by Watson.
Pure Systems could eventually be about more than virtualized data-centers -it could include virtualized data-center staff.
Possibly another way of reducing head-count.
“Hello, my name is Bob and I’ll be your DB2 admin today.”
Apparently it is easier to apply AI techniques to a medical area like cancer treatment than it is to use the same technology to diagnose software problems. Not sure what that says about IBM software!
Let Watson replace the CEO and leave people in charge of tech support. 🙂
Because they are IBM. In the apps space, they are way way behind most consultancies (who are way behind digital agencies). IBM will think of this idea and implement it in 1-3 years. By then Google glass or something else will have taken over the technology world and no one will be interested in the watson app for mobiles. Then they will build another one for Google glass in 1-3 years and something else will have come out. The main problem as I see it is the glacial speed. Technology and slow don’t go together.
What about the focus on Design IBM is undertaking by hiring ~5000 “Designers” over the next 5 years? Is this a last ditch effort to chase an Apple-esque return to glory? And if so, could it work?
I did attend the ‘focus on design’ session. Reminded me a lot of the year 2002 when the global consultancy I worked for did something similar. That was the first time web based applications, etc. got a proper design instead of jumping into coding. That is when design principles were a hot topic too. I was a newcomer to IBM when I attended this session, so did not really understand why they are talking about things that were news in 2002/2003. Now I understand that IBM actually lives in that era. I did become cheeky and ask about how you are planning to have design principles for new technology e.g. apps, Google glass etc. and they gave me a cock and bull answer which basically meant they would think about it when they come to that bridge. The real world however, is already there.
Ideas are suppose to be cheap and it’s all about execution.
The result of that is that Management manages the balance sheet instead of products timelines(just lip service).
Result: Companies are withering away.
Companies have been screwing over employees to get business for ages. A well-know router company, in order to get business from a well known insurance company changed all their employee’s healthplans to the well known insurance company’s not-as-good plan. Many are not happy with the decreased coverage which costs more.
Each quarter, for many years, we sellers read the IBM executives blog stating about how well we have done and how much there is to do for the next quarter. Doesn’t management realize that, after a while, IBMers in STG stop reading these blogs because they are written to the same formula quarter after quarter?
How does IBM expect sales to increase as they fire their sellers and support staff? Oh, yeah, social media, including Twitter, will be the next wave of selling eliminating face to face customer and seller contact. What IBM management does not realize is that to sell high value (i.e., profit) hardware customers still want to look a sales person in the eye to confirm trust and competency.
Why did IBM miss its numbers? Because social media did not deliever on its hype to be the new wave of selling replacing those previously fired sellers.
Can IBM’s second quarter 2013 earnings be good? I would think not since employees are now spending time trying to figure out whether they are going to be fired. Since IBM management is smart enough to understand this impact on employee productivity they will probably fire more than normal in any quarter to try to right the ship quickly.
After reading this article, I went to the PureSystems site to checkout what they are selling and saw a quote pop up saying “29% of late deployment of IT projects are institution and configuration delays…”. I think that they meant “installation” rather than “institution”. I can’t believe that IBM with their $ has a typo on the home page of their flagship product. Maybe just another sign of cutting corners where it matters and spending too much everywhere else.
If you knew where the systems are built and supported. You would understand the fractured English malapropism.
Looks like they fixed the typo. 😉
They fixed that typo, but later in the sentence it still has: “29% of late deployment of IT projects are due to installation and configuration delays and 34% are due to deploy time.”
“deploy time” or perhaps deployment? Wow.
IBM power is being replaced by, of all things, smart watches that will probably flood the stores for Christmas. outside the megasystems, they’ve outsourced everything except a stultified bureaucracy and “I am entitled because I have a tie” mentality. that they will NEVER outsource.
if they still had the production equipment, their small business solution would be 39 Card Sorters and 10 Keypunches.
Sounds like the tyranny of the shareholder wanting those annual or even quarterly returns. Kind of an investor Attention Deficit Disorder that forces managements to always make a buck even if they have to sell their seed corn.
Why doesn’t this happen in Asia? Are there investors thinking different? Or will Asia come to resemble the US instant gratification model?
Does IBM match 401K contributions dollar-per-dollar even if the employee is contributing as much as 8% of salary? In my experience with a half dozen or so firms, its been more like 50 cents to the dollar with a cap of 2%. My guess is that rather than eliminating the match altogether, they’ll drop their contribution down to something closer to the other big consulting firms. Of course, once they’ve fully implemented the master plan and eliminated all American jobs (BWAH HA HA HA), they won’t really need to offer a 401K plan anyway 🙂
They match dollar for dollar, but up to 6%, not 8%. But now, you only get it on December 14, if you’re employed 🙂 I think your prediction is probably correct.
This what the Alliance@IBM CWA Local sent out today to employees and members.
On April 18th, during a conference call about 1st quarter earnings, CFO Loughridge said the following:
“Given our first quarter performance, we now expect to take the bulk of our work force balancing actions for the year in the second quarter. As opposed to last year when it was distributed across the quarters.”
See link here: http://www.nasdaq.com/article/ibm-profit-machine-slows-layoffs-planned-20130418-01335#.UXV65Erwyti
The day before, the media was also reporting of a possible sale of the x86 group: http://www.crn.com/news/data-center/240153148/ibm-in-talks-to-sell-x86-server-business-to-lenovo.htm
It is not going to be a good 2nd quarter or year for IBM employees. And don’t forget, with the change to the 401(k), you only get the matching funds if you are still employed in December.
Once again the executives are making the workers walk the plank while they insulate themselves from job cuts or a financial hit.
IBM employees across the country have been voicing their disgust as Roadmap/Roadkill 2015 throws more IBM workers into the unemployment line and working conditions decline.
Some employees have even suggested a one day nationwide sickout to send a message to IBM executives that they have had enough.
Next week, April 30th, is the IBM stockholder meeting. We are encouraging IBM workers to wear black and blue to signify the mugging of employees. We are also urging workers to talk to their co-workers (on their own time) to build the Alliance and organize in every IBM business unit.
IBM executives will only listen to employee grievances when there is power behind that unified voice.
Join the Alliance today: afl.salsalabs.com/o/4004/donate_page/alliance-join
Make your voice heard!
The Alliance@IBM team
Not providing 401K contributions could be a blessing in disguise, as the Obama Administration is planning to seize some of that money, by walking back the government’s tax free promises on 401K and Roth IRAs.
There is no plan to seize 401K money you crackpot
https://www.fool.com/retirement/iras/2012/02/15/will-congress-take-away-your-ira.aspx
That article talks about changing the generous rules not requiring the liquidation of an *INHERITED* IRA.
What the article says the pres is proposing (anything done must be done by congress, not the president) is to remove the ability to perpetually delay paying the taxes due on an IRA. Preventing further delays of a tax due on an inheritance, isn’t “Seizing” anything.
The point of the article is that tax laws can be changed, not necessarily in favor of any one group, such as retirees.
No Sh*T sherlock, but there are no plans to do so
Obama plan is to cap 401k earnings or any IRA earnings (at present with todays rate about $3mil) rate with a formula that would limit annuity size from your 401k with provisions to adjust to interest rates changes. The plan is to level out your earnings to a “reasonable” amount. If you have more than the allotted amount you will not be able to contribute to it. If it drops you will be able to contribute up to the cap. This reads to me as more government crap with at least another 77,000 pages of tax code on top of the 77,000 we have today. Of course there is much more to this but that is the high level view of one of the proposals to restrict your savings/earnings. Hell, they are taxing rain in Maryland!
Which is why I prefer putting money into a post-tax IRA account so that I know the money coming out is not taxable at all. Pre-tax IRA accounts are, as you said, subject to the whims of the government as to the taxes that will be levied at the time you withdraw from it, and it won’t be in your favor.
Kodak, another age-old, iconic, New York-headquartered company went bankrupt. It’s not too much of a stretch to see it happening to IBM too.
is it just me, or has the RSS feed stopped working again
> is it just me, or has the RSS feed stopped working again
same here with Sage reader/Firefox–“XML parse error”
> is it just me, or has the RSS feed stopped working again
same here with Sage reader/Firefox–“XML parse error”
It’s not just you. The feed list is missing the latest article, this one. It doesn’t surprise me since it’s hard to get an updated page until late at night. That’s when you’ll see all the duplicate comments from during the day when the only responses were “not responding” or “you already said that” or both.
Its just another example of short term thinking driven by Wall Streets quick buck mentality.
As pensions disappear, 401k matching declines, more and more people will retire with less.
This will reduce the free cash and reduce the buyers. This will lead to lower revenue and profits which will force corporations to further cut to please Wall Street.
Yet during it all CEO’s pay themselves 354 times the average employee as reward (as reported in yahoo http://finance.yahoo.com/news/ceos-earn-354-times-more-than-average-worker-203748434.html).
And will the employees revolt? There is an organized effort to break the Unions (whose short term thinking greedy tactics in the past didn’t help the cause).
Just like the Government borrows today and passes the bill on to future generations, corporations and Wall Street are borrowing from todays workers and we’ll all pay in the future.
Welcome to the Dark Side of Capitalism! MikeN needs to turn off the Fox News and the Big Limburger and go do some research before he regurgitates their stuff. It never ceases to amaze me how little people know about the ways of BIG business when left to their own devices. Even wonder why Unions were created in the first place? Ever listen to the lyrics of the song ’16 Tons’ and what’s a ‘company store’ anyway?
Chuck is right about the greedy tactics of the Unions shooting themselves in the foot. They saw their chance and made like the bosses they were opposing.
A pox on both their houses.
There are some bright lights though. Every once in a while some company leader actually figures it out and does well by his employees, see the article about Dropcam’s CEO Greg Duffy on Slashdot today.
History has lessons we can learn, we just have to give it a chance.
It’s not just the dark side of capitalism but also the dark side of government interference. The big companies can afford the best tax lawyers to actually read the law and make sure they are taking advantage of what the law allows. What’s wrong with that is that the laws are so complicated that everyone cannot take equal advantage. Unfortunately government gets elected on promises of redistributing wealth they can only destroy the productivity of business. That’s not capitalism.
The government sold you out 30+ years ago with NAFTA and GATT. Leveling the world business playing field so that the U.S. standard of living comes down. We are just now going through the initial pains. And the government it fixing to sell you out again by passing comprehensive immigration reform giving millions of illegals to gain experience and compete for your job in just a few short years, along with the millions of more that will come over the border, along with Muslim Chechen political refuges gettin’ their welfare money. So make sure you smile when you pay your taxes son!
Look at all the IBM executives, officers, and insiders who sold or exercised options when IBM stock was at $200 this year:
http://finance.yahoo.com/q/it?s=IBM+Insider+Transactions
That should tell ya something. They knew something about 1st QTR 2013.
IBM needs to spend less time thinking about the big picture (which is wonderful but like a Picasso, out of reach for most people) and spend more time fixing the small stuff. IBM products used to be the cream of the crop, now it’s more like death by a thousand little things that don’t work correctly. I can see that being in high value (read profit) areas makes sense but if you keep abandoning areas that don’t perform well or fail to support them properly, pretty soon you will develop a reputation for being less than a good long term partner. What good is the ‘big picture’ view then?
Imagine what it means for every company dependent on IBM for information security services if the IBM’ers who deliver those services are frightened, confused and cynical.
Imagine what it means for every company dependent on IBM for information security services if the IBM’ers who deliver those services are frightened, confused and cynical.
I shudder to think what the quality of the IBM support will be for the PURE systems, given the very poor support they currently offer for less complex products.
The first set of CIOs who buy PURE / outsource to an IBM PURE solution will be very brave individuals, or even foolhardy ones, to risk their careers.
I’ve worked for IBM for … well, forever (a little over 30 years). I’m in STG (server product development).
For a number of years now, it’s felt like we’re working for a bankrupt company. You want to be good stewards of the “stockholder’s company”, but it’s been carried to an extreme where it significantly impacts morale and our ability to get our jobs done.
You mean like not plowing when it snows, have employees vacuum their own cubicles, and removing cups from the water fountain to pinch pennies?
Gotta love those IBM commercials with the “I’m an IBMer” catchall at the end. Question to the IBMer in the commercial: Ok, your an IBMer, but for how much longer?
IBM treats employees as widgets. Executives (or IBM Director and above) are the only entitled ones that IBM consider human beings.
Actually, most of the time, the people featured in these “I am IBMer” commercials ARE executives! You think an executive will give up the chance to have his/her face in front of millions? No effing way unless he/she is butt-ugly.
For example, the young lady featured at the end of this commercial is a Director: https://www.youtube.com/watch?v=IKfm_5SZADU
In cases the spokespersons are not executives, they are only months away from becoming one.
I cannot wait for the eBook to be released Bob. The more customers of IBM read it, the better long term success customers, employees AND shareholders will benefit at the same time.
IBM used to talk about it’s people being its greatest asset. Then the yearly employee survey disappeared. Then everything down to pencil erasers needed business justification and 3 levels of approval before final SVP approval. Then, the “thank you” gift program where peers can send small gifts to others for their achievements only had napkins with the IBM logo on them (sarcastic but not too far from the truth), which ultimately became and eHallmark card type of recognition program. Then the internal IT helpdesk disappeared and what remains is that after a few days tickets automatically close because “multiple attempts to contact you were attempted with no response”. Then, during yearly reviews you are reminded you are getting a low rating because of what happened 2-years ago by a set of first line managers that are told what to say by their second line and HR. And if you pushed back on your manager, they had the ability to rewrite the review to make some “clarifications”. One would think all of the above is a little stretching; alas it is FACTUAL.
With all of the great things that IBM had at its disposal, it has created generations of IBM’ers that for the most part are in survival mode now. While there are many individual managers who excel and truly care of customers, shareholders and employees…. they are dwarfed by the majority of folks who talk-the-talk and do not walk-the-walk. IBM leadership as a whole continues to fail in small ways every year and maybe…. just maybe …. the cracks are beginning to show.
Note to Ginny….. to what end is simply achieving the EPS numbers when clients and employees are treated the way they are? IT is a complex business, no doubt. However, when a company as old as IBM cannot make it in the top 100 of all respected companies in the world, and IBM claims to be a global company, all that experience and chatter just seems to be superficial and stems from arrogance; and others are beginning to take notice.
I cannot wait for the eBook to be released Bob. The more customers of IBM read it, the better long term success customers, employees AND shareholders will benefit at the same time.
IBM used to talk about it’s people being its greatest asset. Then the yearly employee survey disappeared. Then everything down to pencil erasers needed business justification and 3 levels of approval before final SVP approval. Then, the “thank you” gift program where peers can send small gifts to others for their achievements only had napkins with the IBM logo on them (sarcastic but not too far from the truth), which ultimately became and eHallmark card type of recognition program. Then the internal IT helpdesk disappeared and what remains is that after a few days tickets automatically close because “multiple attempts to contact you were attempted with no response”. Then, during yearly reviews you are reminded you are getting a low rating because of what happened 2-years ago by a set of first line managers that are told what to say by their second line and HR. And if you pushed back on your manager, they had the ability to rewrite the review to make some “clarifications”. One would think all of the above is a little stretching; alas it is FACTUAL.
With all of the great things that IBM had at its disposal, it has created generations of IBM’ers that for the most part are in survival mode now. While there are many individual managers who excel and truly care of customers, shareholders and employees…. they are dwarfed by the majority of folks who talk-the-talk and do not walk-the-walk. IBM leadership as a whole continues to fail in small ways every year and maybe…. just maybe …. the cracks are beginning to show.
Note to Ginny….. to what end is simply achieving the EPS numbers when clients and employees are treated the way they are? IT is a complex business, no doubt. However, when a company as old as IBM cannot make it in the top 100 of all respected companies in the world, and IBM claims to be a global company, all that experience and chatter just seems to be superficial and stems from arrogance; and others are beginning to take notice.
Forbes, on last weeks report https://www.forbes.com/sites/ericjackson/2013/04/22/is-ibm-signalling-a-large-corporate-spending-pullback-or-a-big-shift-to-the-cloud/
I knew IBM was circling the toilet when they picked a female CEO.
Females (even if they are super competent) are safety oriented and operate best in safe environments with a well established playbook. Think you will ever see a female start up an HP from humble beginnings in a garage with an audio oscillator? Uh uh.
HP signaled a long decline with Carly.
When a female shows up in top management, you just know the show is over – nothing more to see. Sure, the momentum of a megacorporation will continue on and on but ultimately, it will die out from lack of passion and vision and adventurousness. Just a cash machine until it isn’t and is superceded by real warriors.
That’s an incredibly sexist statement, full of generalizations and typical white man bigotry. IBM’s roadmap to destruction started during Palmisano’s time. Ginni Rometty is simply carrying on with the roadmap as any Palmisano replacement would be doing. It is not fair to make Ginni Rometty the scapegoat for IBM’s problems. Obviously, women and minorities are going to be behind white men in business – it is still a white man’s world in American business – people like you try to ensure it remains that way with twisted theories and gross generalizations. Stop spewing your misogynistic BS, and leave CEO gender out of this discussion as it has nothing to do with IBM’s problems, which were a loooong time of WHITE MAN making.
In 2007, IBM made about 7500 people from the IT world, take a 15% pay cut in lieu of overtime. This happened after the courts in California, made them pay 56 million to the workers that were forced to work, without any compensation for the extra hours worked. Based on rough calculations, that 15% pay cut translated into about 70 million dollars in savings for IBM, a year. They did pay some overtime, which I believe was charged to the customer. But then restrictions were imposed on paying the overtime. There are currently, a lot of IBMers that are living with that 15% pay cut, forced on them by the IBM management.
That very year, LEAN or Six Sigma methodology was launched and people were laid off left and right. Work did not get done and contractors were hired to compensate for the loss of trained manpower. Many of the ex-IBMers were brought back as contractors. All these gimmicks, to only trick the stockholders and Wall Street.
Sam Palmisano took 170 million dollars as his Golden Parachute payment! As it is, he made about 35 million dollars a year in salary and bonuses. The general worker in the IT support wing, gets little or no raise at all. I know of people who have gone without any raises for over 6 years!!! With the 401K payments pushed to the end of the year, it means less money in the pockets, month to month anyway. And if any worker is laid off before December 31st, IBM stands to ‘save’ all that money, to pay its executives!!
How long can this go on?
Cringley, you obviously have many credible sources, and yes, IBM is in a state of decline.
North American workers are treated badly. The focus is on outsourcing to folks in India who probably make less than McDonald’s employees. How can IBM in conscience outsource marketing and social media to India when those jobs clearly involve English Language skills that people on another continent don’t possess.
Meanwhile Gini Romney gets a bonus of 40 million and IBM employees will get lay-off slips.
It’s a very sad decline, but one that is inevitable if the company doesn’t start treating their employees better, and become INNOVATIVE again. At this point, IBM employees should be job hunting. The company has NO loyalty to them.
Exactly what I did after 2+ decades of watching the madness and reading very legible hand writing on the wall, Therefore I decided to resource-action (fire) IBM after finding a much better job, one where the company actually cares about the employees (appreciation days, picnics, gift-card giveaways, focus groups on how to make the place better.) At first I was shocked but then realized I had been at IBM way too long and had basically forgotten what a healthy company was like. We also get a 2-for-1 match on our 401K distributed into each paycheck, not held hostage until the end of the year in some slimy bait-n-switch move, probably dreamed up by ole Randy-Mac himself.
The company is a shell of it’s former self, driven by executive greed and the maniacal paradigm of ‘maximize shareholder value’ at the expense of employees and clients, while at the same time benefiting mostly executives. But worse these same executives have, as Bob states, corroded from the inside due to being completely out of touch with the realities of the business. Most of them are not technology savvy, they are finance beans at best. Not a good mixture for innovating a computer company onto the next big technology wave.
If you can, get out as fast as possible. I can assure you the world outside those blue walls is much more appealing on so very many levels. I was pleasantly surprised and have not looked back, other than to read some of my former co-workers posts and realize that it’s only getting worse.
I was wondering if you could supply the name of your new employer?
After 25+ years at IBM, and about 3.5 years shy of retirement, I just got laid off. Still have a mortgage and still need health benefits. Any leads are appreciated……
I was told by my manager last year that I had to travel to a foreign country for training because the development team for a (somewhat) newly acquired company was there. Since my passport was expired, I had to apply for a renewal and was told by said manager that IBM no longer paid for such things even though I was being required to travel FOR THE COMPANY.
Shortly thereafter I found out from a friend in another department working on the same product that his passport renewal fee was reimbursed by IBM, so basically my manager lied to my face.
I was told by my manager last year that I had to travel to a foreign country for training because the development team for a (somewhat) newly acquired company was there. Since my passport was expired, I had to apply for a renewal and was told by said manager that IBM no longer paid for such things even though I was being required to travel FOR THE COMPANY.
Shortly thereafter I found out from a friend in another department working on the same product that his passport renewal fee was reimbursed by IBM, so basically my manager lied to my face.
Your manager likely didn’t know whether or not you could expense the Passport, and he did not care enough to bother checking into it for you. His easy answer was “no”. Sadly, this is typical of IBM management these days.
And then I read this
https://www.networkworld.com/community/blog/ibm-researchers-model-human-blood-system-build-solar-power-prototype
IBM researchers supposedly developing ways to use the power of the sun more effectively.
This is the “city on the hill” I could have had allegiance to – but what I saw was a bureaucratic golem.
I was told by my manager last year that I had to travel to a foreign country for training because the development team for a (somewhat) newly acquired company was there. Since my passport was expired, I had to apply for a renewal and was told by said manager that IBM no longer paid for such things even though I was being required to travel FOR THE COMPANY.
Shortly thereafter I found out from a friend in another department working on the same product that his passport renewal fee was reimbursed by IBM, so basically my manager lied to my face.
Ginny’s bitching, whining, blaming employee’s for failure to deliver because she sees a hit on her performance bonus.
Does IBM or Lenovo have a smart phone?
Does IBM or Lenovo have a smart phone?
Oops . . . they do:
http://shopap.lenovo.com/in/en/products/smartphones/
Not sure I can afford one at 20,899 !
I believe that is INR = Indian Rupees. It is about £250.
I was quite surprised by this one.
Normally IBM products are extremely unusable and defective, but they are double the price.
I was surprised to see this one with competitive pricing!!!!
Not sure if it is any better than their remaining products though.
Got out two years ago myself; there is really no other option. Forget the Quixiotic IBM Alliance/union effort: IBM has kennels of lawyers, endless piles of cash, and a vast pool of foreign resources they are all too willing to use. Fighting to bring a union into a work environment in which management is dedicated only to “shareholder value” is hopeless, and a waste of your life. If you are talented, there are plenty of other good companies out there; why give your services to a greedy, incompetant company?
Everything Bob and others detail here is accurate. For the vast majority of IBMers, life at IBM has become career suicide and financially unsustainable: they have gutted training and benefits; pay increases are a thing of the past (I made 5% more than my starting salary in 10 years, despite growing my skills and responsibility); outsourcing and layoffs have destroyed morale. No one is happy. Almost everyone on my project was actively seeking new jobs.
The main thing to remember is that they have been jacking up stock price through cost cutting and aquisitions, not through innovation or growth (unless you call such financial tactics innovation) and have no intention of changing course.With the executive compensation and incentives so heavily weighted by stock value, the company has simply become a oligarchy with a very short vision of the future. When things really get bad, they will cash in and move out, leaving the remaining employees and shareholders with crumbs.
Got out two years ago myself; there is really no other option. Forget the Quixiotic IBM Alliance/union effort: IBM has kennels of lawyers, endless piles of cash, and a vast pool of foreign resources they are all too willing to use. Fighting to bring a union into a work environment in which management is dedicated only to “shareholder value” is hopeless, and a waste of your life. If you are talented, there are plenty of other good companies out there; why give your services to a greedy, incompetant company?
Everything Bob and others detail here is accurate. For the vast majority of IBMers, life at IBM has become career suicide and financially unsustainable: they have gutted training and benefits; pay increases are a thing of the past (I made 5% more than my starting salary in 10 years, despite growing my skills and responsibility); outsourcing and layoffs have destroyed morale. No one is happy. Almost everyone on my project was actively seeking new jobs.
The main thing to remember is that they have been jacking up stock price through cost cutting and aquisitions, not through innovation or growth (unless you call such financial tactics innovation) and have no intention of changing course.With the executive compensation and incentives so heavily weighted by stock value, the company has simply become a oligarchy with a very short vision of the future. When things really get bad, they will cash in and move out, leaving the remaining employees and shareholders with crumbs.
Apparently people think I should stop watching ‘Faux News’ and ‘Limburger’.
Is it a fact that it was proposed that bank deposits should be partially seized in Cyprus? How about that Obama’s budget proposes taxing Roth IRAs for the first time?
Yet people think this is all loony conspiracy theory.
Dude, take this off-topic gibberish somewhere else. It us dumb and annoying.
“Where we haven’t transformed rapidly enough, we struggled. We have to step up with that and deal with that, and that is on all levels.” Virginia Rometty, CEO of IBM, in video to IBM employees on 4/25/13
Does she mention what they’re supposed to transform into “more rapidly”?
Purple tadpoles.
IBM researcher jumps off bridge.
https://www.lohud.com/article/20130424/NEWS03/304240057/IBM-researcher-leaps-from-Bear-Mountain-Bridge-dies
How much did IBM pay Carrie Underwood to sing? What a waste of money! IBM spends money on such frivolous nonsense and then turns around and fires hard working employees? Disgusting.
[…] I, Cringely The Decline & Fall of IBM – I, Cringely […]
Are you aware that now IBM is going to be outsourcing their own technical training??
They’ve been outsourcing training for years – just not completely. Guess they are completely giving it up. That’s too bad.
Time for another GenO and Liquid survey. We are told by management to lie and be positive, or it will put us on the radar for even more GenO bureaucracy crammed down our throats. Upper management should know that we systematically LIE on all of this GenO and Liquid crap, just to stay off the radar. These surveys are BS wastes of time and money, and it’s demoralizing that there is no one in IBM with the guts to end this GenO idiocy.
as usual Dilbert covers that off..
http://dilbert.com/strips/comic/1996-06-29/
Morale @IBM is low. PureSystems is a dream but today is nothing else but bare metal. The hopes are also on high end systems like Power and Power Linux (Funny enough that nobody cares to get important ISV signed up for this as well). Ginni leaves in a dream world and has no clue what is happening on the field. If you cut Comissions like she did to sales, why should they even bother to fight knowing that it will not bring them any benefit at all whilst she can smile in front of the investors.
IBM has become what Siemens was in the 90’s in Germany. It was nothing else but a bank with a small electronics shop. This company is a big bank with lawayers and people waiting next to the fax for orders for some IT material. Sad to see but this is the moment when change can occur. I just hope that Ginni will not be for IBM what Leo was for HP
I voluntarily left prison, I mean IBM, recently. I am counting my lucky stars. I worked in STG and the morale in my former area could not possibly be any lower. I did not obviously conduct any scientific study, but I think I can safely say that about 60-75% of the guys that I worked with are actively looking for employment elsewhere. I’d somewhat disagree with Cringely in that current IBMer’s are conditioned to just accept what senior level management does. That may have been the case back in the day, but not anymore. I’d say its just the opposite. There are obviously a few company men left who have drank all the Kool-Aid, but for the most part, I think everyone realizes they are being lied to and treated like annoyances. There is an almost palpable animosity between the “grunts” and management at this point. Sam Palmisano’s 2010 Roadmap was when IBM hit the iceberg. Every business decision since then has been based on raising earnings/share, and nothing else. That ship is sinking, its only a matter of time.
One thing really is true and some comments told that about IBM. MORALE is at it’s minimum, if still existent.
The IBM values have now shifted to :
” Lack of trust & irresponsibility in all relationships ”
” Dedication to the shareholders short term success ”
” Innovation that matters for few pockets in very short term ”
All we care is AUDITS, SECURITY CHECKS, MAKE UP NUMBERS, METRICS SHOULD LOOK GREEN;
Customer comes later, (IF) when you have some time after all audits and all checks make sure everything is working correctly as all metrics should show if someone was to buy our division;
IBM is already sold! It’s no longer for sale! Buffet is saying he won’t sell his shares, just to have some more people buying in the idea of 2015, so that he can sell his shares last just like all other High Level Executives are doing as they retire and leave the company one by one.
Most of those who were part of the 2015 roadmap announcement are long gone from the company…
IBM terminated me in 2012 in one of their infamous resource actions. I have to agree with the posts by other IBM employees. IBM management has decided that USA based employees are unacceptably expensive. Employees no longer get necessary training. We were told year after year that WE didn’t meet our revenue targets, and that the budget for training and raises was being cut as a result. And year after year, I would read Sam Palmisano’s gloating speeches about how great IBM was doing at the annual stockholder’s meetings. I have lost track of how many billions of dollars the senior executives spent buying back stock during those years. Buying back stock has one purpose, push up the price of a stock. The people making that decision happen to get paid bonuses based on the stock price. I didn’t get a raise for the last several years of my tenure. By my calculation, IBM now has only about 25% of it’s global workforce based in the USA. How can anyone still think of IBM as as iconic American corporation? IBM certainly doesn’t care about experience or expertise any longer. Shortly after IBM terminated me, management moved another employee into my job. I worked in a highly technical sales area requiring expertise, experience, and a lot of customer contact. My group used to hire employees with field sales experience. That is no longer true. The person who replaced me had no field sales experience or expertise in my specialty area, none. That person had never worked with the complicated software that I supported. And I agree with the poster who stated IBM uses deliberate and dishonest low performance ratings as a justification for eliminating USA based employees. For example, after our group lost the only qualified and experienced experts in a particular software application, management refused to replace them at all. In addition to performing my usual job, I spent more than a year learning as much as I could about the tools and software for that application, so our group could still function. No one asked me or told me to take on that task. No one from management bothered to discuss how we were supposed to provide support for that application, or provide a plan for dealing with the loss of our experienced personnel. During that time, management refused to provide any training or assistance for me. And as a reward, I received a job review rating of unacceptable for that year.
IBM terminated me in 2012 in one of their infamous resource actions. I have to agree with the posts by other IBM employees. IBM management has decided that USA based employees are unacceptably expensive. Employees no longer get necessary training. We were told year after year that WE didn’t meet our revenue targets, and that the budget for training and raises was being cut as a result. And year after year, I would read Sam Palmisano’s gloating speeches about how great IBM was doing at the annual stockholder’s meetings. I have lost track of how many billions of dollars the senior executives spent buying back stock during those years. Buying back stock has one purpose, push up the price of a stock. The people making that decision happen to get paid bonuses based on the stock price. I didn’t get a raise for the last several years of my tenure. By my calculation, IBM now has only about 25% of it’s global workforce based in the USA. How can anyone still think of IBM as as iconic American corporation? IBM certainly doesn’t care about experience or expertise any longer. Shortly after IBM terminated me, management moved another employee into my job. I worked in a highly technical sales area requiring expertise, experience, and a lot of customer contact. My group used to hire employees with field sales experience. That is no longer true. The person who replaced me had no field sales experience or expertise in my specialty area, none. That person had never worked with the complicated software that I supported. And I agree with the poster who stated IBM uses deliberate and dishonest low performance ratings as a justification for eliminating USA based employees. For example, after our group lost the only qualified and experienced experts in a particular software application, management refused to replace them at all. In addition to performing my usual job, I spent more than a year learning as much as I could about the tools and software for that application, so our group could still function. No one asked me or told me to take on that task. No one from management bothered to discuss how we were supposed to provide support for that application, or provide a plan for dealing with the loss of our experienced personnel. During that time, management refused to provide any training or assistance for me. And as a reward, I received a job review rating of unacceptable for that year.
I have to agree with the other posts from current and former ibm employees.
ibm terminated me in another of their infamous resource actions in 2012. Within a few weeks, they replaced me with another employee who had no expertise or experience in the area of software that I supported. I worked in an area that required a lot of technical expertise and experience with direct customer contact. ibm used to fill those positions with people who had field sales and direct customer contact experience. That is no longer true. Experience and expertise no longer have any real value at ibm. Those qualities simply make you too expensive in ibm management’s view.
Over the last several years, I experienced the following:
I had maybe two raises of a few hundred dollars a year, less than five hundred dollars per year.
Management provided no significant training in my area of expertise, despite constant change in the products that I supported
Management eliminated our bonus program that was based on sales results.
Any openings in my area are mostly filled with non USA-based workers with little or no actual experience, or management moves a current employee into an opening regardless if that employee actually has any expertise or experience in the area in question.
We had to complete and file documents every quarter justifying our continued employment, as doing an excellent job wasn’t enough. We had to complete certification projects despite the fact that our customers didn’t care about whether or not we had certifications. They just wanted expert support and assistance.
The budget for training and raises was cut repeatedly as we were told we didn’t meet our revenue targets. Those revenue targets didn’t seem to have any connection with the realities of the devastated American economy of those years. I remember an ibm press release that stated ibm doesn’t blame bad financial results on market conditions. Management blamed us instead. We lost our focus. We didn’t deliver. We took our eye off the ball. It was an endless stream of tired clichés about our poor performance.
But every year, I read sam palmisano’s gloating speeches at the annual shareholder’s meetings about how great ibm was doing. I read about the generous dividends granted, and the billions of dollars spent on buying back stock. Buying back stock has one goal, increasing the price of the stock. It’s not money spent on research and development or actually taking care of the employees. And I don’t remember sam ever talking about the employees in any meaningful way.
At one point, our group lost the only experienced experts in a particular application. Management refused to find qualified replacements, and simply told us to assume their duties, in spite of the fact that none of us had any expertise or experience in that area. With no help from management, I spent over a year learning the tools and software for that application, which was completely new to me. This was in addition to doing my normal job, so our group didn’t come under criticism for not providing acceptable support. Management also refused to provide any budget for training any of us. For my reward, I received a job performance review rating of unacceptable for that year.
Based on released information, I estimate that only about 25% of ibm’s global workforce is based in the USA now. How can anyone still accept the image of ibm as the iconic American corporation? I see that as a triumph of marketing and propaganda.
The 2015 project and goals are grossly unrealistic and simply unattainable. The whole program is just another insignificant carrot dangled in front of the employees.
And yes, the use of lowercase for the names is deliberate.
Actually Sam did say something meaningful about the employees:
Snipped from the 2011 Anual report:
Fourth, why would someone work here? In an earlier
era, this had a lot to do with job security and stability.
We learned the hard way that that was unsustainable.
And yet, IBM today remains an employer of choice.
Why? I believe it is because, at this institution, an individual
can actually change the world, can learn something new
every day, can collaborate with some of the smartest people
on the planet, can work in a progressive environment and
can truly be a global citizen.
Since 2002 we have invested about $100 billion in
non-salary employee compensation — bonuses,
commissions, benefits and employee equity — including
more than $5 billion in employee learning and
development. In 2005, we became the first corporation
to guarantee our employees’ genetic privacy. The
way we develop leaders was ranked number one in the
world by Fortune. And we have received widespread
recognition for our diversity, work/life, environmental
and collaboration policies and programs.
In the end, it comes back to our values as IBMers. It was
no accident that the first major work effort I launched
at that senior leadership meeting nine years ago was a
collective “jam” on who we are and why we exist. What
resulted — the values IBMers themselves shaped — has
held up remarkably well as a distillation of what it means
to be “an IBMer.”
We still have a long way to go to fully realize these values
in our work, our management systems and our behavior.
But I think it’s safe to say, after nearly a decade, that we
laid the right foundation. I am also convinced that the
transformation we have carried out since then was only
possible because we first undertook this deeper dive
of self-discovery
IBM Business Plan Shell Game v1.1
Publicly Set 10 Year EPS Goal
Revenue Declines = Layoff Staff = Cost Reduction = False Profits = EXEC’s Make Bonus Targets, then Buy Back Stock = Reduced Shares = Increased EPS = Stock Price Rise & WS Happy, then Revenue Declines = Layoff Staff = Cost Reduction = False Profits = EXEC Make Bonus Targets, then Buy Back Stock = Reduced Shares = Increased EPS = Stock Price Rise & WS Happy…..Do Until Collapse
The recent “blame” laid by Genny on the sales staff for not closing business fast enough should be enough to call for her to resign. Not one time does Genny (who is captain of the ship) accept any responsibility, or culpability but rather berates her own troops as though she were royalty. There is no organization where this would be tolerated.. in the military an officer who did such a thing would be relieved of command, or simply fragged by his own troops.
Genny has two strikes.,. she is not a leader.. and has no vision… she needs to resign and restore honor to the office she holds.
So nearly six weeks have passed since you wrote this blog article, Bob. When are you going to announce availability of your IBM e-book?
Genny has not properly accounted for the damage that poor moral will cause. We are losing the best and the brightest now.. soon we ill not have the critical mass to deliver.. Genny is a poor leader who berates her own staff, something no real leader would ever do.. especially since she crippled them by laying off most of the presales technical support- of course they cannot close business. In the military she would be summarily relieved of command.
IBM bought Kenexa to push its “smarter workforce” initiative to outside companies. I’m sure they will solve all the internal morale issues as well. *chuckle*
PureSystems is apparently doing pretty badly right now. It very well could be why IBM has missed its earnings. I’m not sure why Pure isn’t selling, but from the people I know who have worked on it, it sounds like it product was not given the time to be properly architected and it was rushed out the door. Apparently the product has features that simply don’t work.
There’s too many ‘yes’ men (and women) in this company that are afraid to stand up to upper management. That, in my opinion, is the biggest issue with IBM. This is especially a problem with our developers in India and China. They don’t question the direction things are going, or if they do, they’re ostracized for it. This results in management thinking things are just hunky dory while the quality of the products slowly erode. It’s certainly not sustainable.
Axes falling all over IBM today, June 12, 2013. Mostly the Server and Technology group. Some Marketing positions. Some Business Analytics (Cognos) positions. The company is probably cutting 6,000 to 8,000 jobs as they plan to spend $1 billion to trim the workforce. Welcome to a smarter company – composed of a few fat chiefs and swarms of young Injuns!
Reliable resources report the cut at 30% of all US STG staff.
PureSystems is just IBM’s attempt to keep up with unified computing systems like HP CloudSystem or Cisco UCS (bundled in NetApp’s FlexPod or EMC with VCE VBlock).
I believe VBlock is now at a $1 billion run rate, after 3 years. PureSystems just launched in 2012, if you’d like to do the math. It won’t save IBM.
I have dealt with senior IBM management. They are very smart, but very conservative. There are two things each IBM era needs to get their culture moving: a bold strategic move, and a vision. Gerstner had software (WebSphere, Lotus) & “net-centric computing”. Palmisano had PwC and Strategic Outsourcing + e-Business as the vision. Rometty has nothing and Smarter Planet (so far).
The only thing that could save IBM is to build a cloud service on a scale and quality as Amazon Web Services with their WebSphere and InfoSphere product lines. That too is at a $1b run rate, but likely will explode.
Many thanks Getty! We won’t wait around to get started!
It is not necessarily a bad thing that IBM is laying off employees and pissing off the remaining. The job market is better than it has been in 3 years, so it is a good time to be disgruntled and look for good jobs.
Unfortunately I think the whole philosophy of IBM is old school and in the current era of tablets, mobiles, holograms, innovation and fast growth, IBM philosophy does not stand a one in million chance of survival.
I am just wondering how long it takes for such big stinky organizations to die.
Is wall street finally starting to see the light?
http://finance.yahoo.com/news/ibm-woes-stock-decline-may-155004005.html
The net of “all” the issues articulated in this blog is that IBM executives are compensated on the value of the stock. That is their singular focus and they are being led around by the accountants. They, the leadership, have taken their eyes off the software, technology, research, engineering and services components that made this company great, instead choosing to simply focus on stock price and dividends.
The dichotomy between Executive Management and the “feet on the street” is significant and expanding. There is no roadmap to success with this level of disconnect. Compound the ill effects of this gap is the apparent disregard for the human resource. It is difficult to come to work every day, knowing you are expendable. It is impossible to focus all my energies on top performance when I am also looking for alternative opportunities or simply “bitching and moaning” about the company policies around the virtual water cooler.
Ginni needs to shake up her senior executive staff. The Board needs to hold all accountable for performance beyond the stock value. If the company units they oversee underperform, HOLD THEM EQUALLY ACCOUNTABLE as their subordinates. She needs to listen to employees beyond her insulated inner circle, hear what is really happening.
I am so upset that my profitable company was acquired by this out of touch behomouth and that all we worked for has been ruined in less than two years. Wake up Ginni or you will go down in history as the first female executive and the last executive.
As a current employee affected by the predictions, most coming true, that Robert makes, I found it extremely amusing to look in blue pages and see that there are Nine (9) levels of management between myself and Ginn1. Wow. Mathematically, (and over simplistically), that would make the size of IBM 10 to the 9th or a billion employees. OK I know that’s not realistic, but come on, 9 levels? I’d expect 5 at most.
buffet says whatever it takes to protect his investment
a happy workforce is surely what decent employers want or is that old fashioned insecurity at any level is counter productive irene
Former IBMer… ’84 to ’95. I might even be at fault for the decline in those years [ 😉 ], though not for the years since. Startling statistics I read recently: In 1986, at its peak world-wide employment, IBM employed 407k people, about 50% in US and 50% in rest of world. In 2012, IBM employed about 150k people, with 25% in US and 75% in rest of world.
Personal view: Opel might not have been the brightest CEO, but he was a lot brighter than Gerstner or any of his successors. And John Akers — the last of the bottoms-up sales/marketing guys to be CEO — single-handedly saved the company from a disaster its accountants had cooked up in 1988. Idea was to give incentives to anyone with under 5 years service to leave the company, thus allowing the company to plunder pension plan contributions it had made on their behalf. It would have been an incredible one-time windfall of cash. But Akers asked the accountants point blank: “Who do you think does the work in this company?” He’s alleged to then have rudely dismissed them.
Not looking forward to the day that 8-bar logo scheme is used to form RIP, but I suspect it’s going to happen before I’m old enough to collect any of that pension.
Bob,
I wish i had time to read your book, but my commute (to IBM) is 2 hours each direction.
So, any chance you will do an audiobook version? Please?
From a personnel standpoint I think that IBM’s problems are morale and allocation. By allocation I mean deploying the right people with the right experience where they are needed. Compensation is a big issues as well. But let’s remember that IBM employs about 430,000 employees. Many of these employees were added as a result of acquisitions. IBM added 30,000 employees when the acquired PWC. To put this in perspective IBM announced that they layoff 13,000 people. 13,000 is huge number, but when you take into account how many acquisitions and total number of people they employee it is all that significant.
So therefore it’s only natural that there will be layoffs from time to time. Does needs to spend money on training as any company does. Yes they do.
PureSystems is already making a lot of money for IBM In fact they are fastest growing part of IBM server business. Last year IBM indicated that they were selling 300 Puresystems flex servers a month. IBM’s Watson business is projected to generate $2 billion a year by 2017. IBM’s cloud business is generating $4.4 billion with the Softlayer acquisition.
In the end IBM is company facing significant challenges from a internal structural and geographic revenue perspective. But these are huge opportunities as well.
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