Given IBM’s earnings miss last week and the impact it had on company shares I thought rather than just criticizing the company it might make better sense to consolidate my ideas for how to fix IBM. Here they are.
Early in his tenure as CEO, Sam Palmisano made changes that created IBM’s problems today. IBM customers are buying fewer products and services. Revenue has dropped each quarter for the past ten. Sam’s changes alienated IBM customers, many of whom are ending what has been in many cases a multi-decade relationship. No amount of earnings promises, no amount of financial engineering, will fix this problem.
IBM forgot the most important part of running a business. While shareholder value is important, it is customers that make business possible.
Under Sam’s leadership IBM began to cut quality, cut corners, and under-deliver on its commitments. IBM squeezed every penny out of every deal without regard to the impact it would have on customers. And those customers have paid dearly. The reputation IBM earned over a century was ruined in a few short years.
What Ginni Rometty and IBM need to do now is simple: Stop doing the things that are damaging IBM. Go back to customers being a corporate priority. They are after all the folks who generate IBM’s revenue.
The Services Problem — IBM needs to fix Global Services, the company’s largest division touching the most customers and a catalyst for IBM sales. For IBM to succeed they need a strong and effective services organization. IBM’s Cloud strategy, for example, cannot be financially successful without Services. If Services fail, IBM will fail. It is that simple.
IBM’s Global Services have seen the worst cost cuts and the most layoffs. These cuts have hurt IBM customers. Many contracts have been cancelled and sales lost. IBM is no longer considered to be a trusted supplier by many of its customers.
To fix IBM it needs to invest in Global Services and in its people. Yes, there are already quality improvement programs and automation projects, but these efforts are new, few, and small. Their focus is at the account level, not the organization. Most of the problems are at the leadership level, where profit has been the only priority. Global Services is in crisis and IBM needs to get serious about fixing this organization.
IBM is hemorrhaging talent on a global scale across all divisions. It cannot retain good people. IBMers, as they call themselves, are underpaid, neglected, and have been abused for years. Most of IBM’s 400,000+ employees are no longer working for the company. Their jobs have become nightmares. They are prevented from doing good work. They know IBM is neglecting its customers, but they are powerless to do anything. The best they can do is to try to survive until reason returns to IBM’s leadership, if ever.
Every IBM staff cut now has a direct impact on revenue. After the 1Q 2014 earning miss IBM hit its sales support teams hard with layoffs, making it immediately much harder for IBM to sell products and services. Customers became frustrated and shopped elsewhere. In 3Q 2014 revenue took a big fall as a direct result of this earlier bonehead move. Formerly growing lines of business in IBM are now declining. After 10 years of continuous layoffs, any subsequent reduction has a direct and immediate impact on business. IBM can no longer afford to cut staff.
IBM needs to stop staff cuts and start doing the things needed to retain its good workers, including paying them better.
Global Services is horribly inefficient. There is very little automation. The business information systems are poor. IBM has too many people managing accounts and too few servicing them. Global Services is in serious need of a business process redesign and better information systems. For the last 10 years all IBM has done is replace skilled American labor with cheap offshore labor. IBM’s workforce of 400,000 workers looks impressive. Ask IBM how many of them have minimal education and have worked for IBM for less than 3 years? That huge workforce is now a hollow shell of a once great company.
If IBM can invest $1.2 billion in the Cloud, why can’t it invest $200 million in Global Services? A wise investment could cut in half the number of people needed to manage IBM’s accounts. It could allow IBM support teams to operate proactively instead of reactively. The client experience would be greatly improved – fewer problems, things running better. If IBM’s Services customers were happy, business retention would be better, more products and services could be sold. This division could again be the business catalyst of the corporation. It is time to manage it better and make modest investments in it.
To look at this another way, if IBM continues to neglect Global Services and does not invest in it, then those billions of dollars in investments in Cloud and Analytics will be wasted. If IBM is to grow again, Services must again become IBM’s most important business. As goes Services, so goes the whole corporation.
The Cloud Problem — Cloud computing is one of IBM’s gambles for future prosperity. Cloud means different things to different people but what is important for IBM is to understand the business reasons behind the Cloud. It is part of an evolutionary process to reduce the cost of computing. This means less expensive computing for customers and lower profit margins for IBM. It means reduced hardware sales. It implies there will be reduced support costs from Services, too. This is the opposite of what IBM is now telling itself about the Cloud.
For IBM to be profitable in Cloud computing it needs to provide value-added services with its Cloud platform. Most Cloud offerings are a Platform as a Service (PaaS). There isn’t enough profit in PaaS for IBM to get a good return on its multi-billion dollar investment. IBM needs to provide additional things with its Cloud service — Services and Software as a Service (SaaS). To provide Cloud SaaS IBM needs to have software applications that the market needs. They don’t. The biggest market for Cloud Saas is not with IBM’s huge legacy customers, it is the other 80 percent of the market consisting of not-so-big companies that IBM has served poorly (if at all) in recent years. They will want something this is cost effective and “just works.” IBM does not have in its product portfolio the business applications these customers need. In this area IBM is dangerously behind and faces stiff competition from firms like Amazon, Microsoft, Google – even Oracle. IBM urgently needs to invest in the software its next generation of customers will want to use.
The Software Problem – IBM’s software business was one of its brighter stars in 2013. It enjoyed sales growth and good profit margins. The problem is IBM’s software business is far from where it needs to be. To understand IBM’s situation in software, look at Oracle. For years Oracle was a database company. Today Oracle is much more than a database company. It has developed and acquired a portfolio of business applications. If you want an HR system or an accounting system you can find it at Oracle. When it comes to software IBM is still very much in the 1970s. They sell the tools their customers need to write their own business applications. If you have a business and want to purchase finished software you can use to run your business, IBM will probably not be your first choice. While IBM’s software division has been growing nicely, its long-term potential is limited because it is not aligned to the needs of the market.
IBM’s current management approach has crushed the life from most of the software companies it has purchased. Software is not a business you can carve into pieces and scatter all over the world. Software works best when there is a short and tight communications link between the customer and a dedicated product development team. Product development needs to understand the needs and directions of the customers, it needs to be empowered to design new products and versions that will increase its value to the market, and it needs to be enabled to produce those products and versions quickly and efficiently.
IBM’s announcement last week of running SAP HANA is a step in the right direction. Though I think SAP will be making more money on the deal than IBM.
Here’s the key: every company in existence needs an accounting program, order processing, inventory management, distribution and other types of “run your business” applications. All of IBM’s big customers already have the applications they need. They’ve had them for 25 years. It is all the smaller companies that could use better and cheaper application. These organizations make up 90 percent of the IT market and are not served well — if at all — by IBM. This is where the big money in Cloud is.
IBM used to have a lot of “run your business” software. Since the demise of the old General Systems division in a political bloodbath a lot of this software has faded out of existence. This is a huge problem for IBM.
Oracle bought PeopleSoft and got a very good accounting system and a very good HR system. They’ve bought other companies who sell “run your business” software. Computer Associates (CA) has bought many of these types of businesses too. If you want to buy an accounting package, I don’t think IBM would have anything to sell you. It probably doesn’t have anything they could put in the Cloud, either. But Intuit (Quickbooks) has an accounting package and figured out they can make more money be selling it as a service. So did Salesforce.com These companies are years ahead of IBM.
For Cloud to become a big money maker for IBM, IBM needs to buy applications — big time. Maybe it should buy Intuit, Salesforce, etc. Could it afford to buy CA? Can it afford not to buy CA?
Software as a Service (SaaS) is critical for IBM’s Cloud to be financially successful. Unfortunately today IBM does not have software that customers want to use or need for their business. IBM needs to be a lot smarter about its software investments and completely change how they manage this business.
The Mobile Problem – IBM invented the first smart phone (the Simon) in 1993. Today IBM is completely non-existent in the mobile market. Apple and Google are the leaders; Microsoft has been working very hard and making enormous investments to get a foothold in this market. That said, Microsoft is light-years ahead of IBM. IBM has completely missed the biggest change in Information Technology in a decade. This should speak volumes about the leadership at IBM and why they need a large scale change in management.
IBM cannot buy its way into the mobile market. If it isn’t working for Microsoft, it won’t work for IBM. Then again IBM does not have to make big acquisitions to become a big player. IBM needs to think differently. IBM should start by looking at the App Stores of Apple and Google. There IBM will find tens of thousands of applications, most of them written by individuals and small companies. This can be an archetype for a whole new IBM behavior — creativity. IBM needs its vast workforce to come up with ideas, act on them, and produce mobile applications. IBM should have its own App Store. This will give a way to learn how to use the new mobile platforms. It will provide a way for the application developers to interact with IBM’s customers. Over time IBM will learn and develop mobile technology that is useful to IBM’s customers. This is a market where seeing and using a live application is much better than marketing copy in a sales presentation.
IBM should be partnering with Apple, Google, and yes – Microsoft. There should be no favorites. IBM already has a mobile deal of sorts with Apple but it is key to understand that it has so far resulted in a total head count increase in Cupertino of two workers, which shows what Apple thinks of IBM. Apple is not enough.
IBM should license development tools for every mobile platform. These tools should be made available to any employee with an interest in developing a mobile application. IBM should make it easy for employees to get mobile devices, especially tablets. IBM should provide internal infrastructure – servers, applications, etc. with which to develop and demonstrate mobile computing. The better IBM understands mobile technology, the sooner and better IBM can support its customers. There is a place in the mobile market for IBM. It must make up for lost time and become everyone’s trusted partner.
The Quality Problem — The best definition of quality is “delighting the customer.” Quality means being able to do the same thing tomorrow, better, faster, and cheaper. Quality is continuous improvement. It is possible to improve quality and at the same time reduce labor and costs. Companies that have mastered this skill went on to dominate their markets. Quality is a culture, an obsession. It must start from the top and involve everyone – IBM’s executives, all levels of management, employees, suppliers, even customers.
Sometime soon one of IBM’s competitors will implement a serious Continuous Quality Improvement program. When that happens, IBM will be toast. History has shown that when a company trashes its quality, neglects its customers, and makes earnings its only priority – bad things happen. Over the last 50 years, the USA has lost many industries this way. If IBM does not get serious about quality its survival will be at risk.
The Respect Problem – Today in IBM “Respect for the individual” is dead. So is “Superlative customer service.” Every decision made by IBM for the last 10 years has been to find ways to spend nothing, do as little as possible, and get to $20 EPS. IBM’s workforce is operating in survival mode. They have no voice, no means to make IBM better, and they are certainly not going to stick their necks out. IBM is squandering its greatest resource and most of its best minds. Most of IBM’s businesses are declining. As business declines IBM cuts staff. Quality and services get worse and business declines even more. Execution gets worse. Every day customers trust and respect IBM less. They buy less. IBM needs to break this cycle of insanity. They need to start treating their employees better and mobilize them to save the company.
The Leadership Problem – IBM has no vision, none, nada, zip. CEO Ginni Rometty and her cadre have no clue how to fix what’s wrong with IBM. And even if they did, they are too tainted by the current state of the company – a state they created. IBM executives are for the most part in a state of paralysis. They don’t know what to do. They know their business has serious problems. Even if they knew what to do they’re afraid to act. Ginni and the $20 EPS target had most of the senior executives frozen from doing anything. This type of management style can be fatal for business. The CEO should be helping each division become more successful. Because $20 EPS has been the only goal, IBM’s senior leaders have become unable to manage their businesses.
Here’s why current management can’t do the job. If the current VP-level managers at IBM (the only level, by the way, that’s allowed to even see the budget) take action to spend some of the profit to fix their businesses, they’ll be in hot water with Ginni Rometty and IBM’s culture of blame simply for trying to do something. Just watch: Ginni’s plan to save the company will involve further cuts. You can’t cut your way to prosperity. If they take action and the fix doesn’t work, then they’ll be punished for trying. So the only obvious option current management seems to have is stand by and watch Ginni and the finance department kill their divisions.
IBM has been here before, back in 1993 under CEO John Akers the company cratered, booking an $8 billion loss on $40 billion in sales. That’s when, for the first time in its history, IBM turned to an outsider to be CEO. They should do this again – find another Gerstner, ideally a better Gerstner, because he had a share in creating the current crisis, too.
Ginni Rometty has to go and with her much of IBM’s board.
The Bottom Line – IBM has never been the low cost provider of anything, yet a company of IBM’s size and talent should be able to be the undisputed lowest cost, highest volume supplier in the industry. IBM’s leaders are mostly from the sales organizations. Those with expert operational and leadership skills don’t go far in IBM. A new way of thinking is needed in every corner of IBM. Every line of business should be asking itself “how can we become the best, cheapest, and biggest supplier?” Every line of business should have well reasoned plans, funding to act on those plans, and a green light to proceed.
Thankfully IBM gave up on its 2015 goal of $20 EPS. Unfortunately IBM still plans to continue cutting staff to reach prosperity, which is insane. By now it should be painfully obvious this is destructive to the company. IBM needs to step back and be honest with itself and its shareholders. It needs to set reasonable budgets and financial expectations. It needs to spend more on its people and on improvements. IBM needs to regroup and repair the company. For the next three to five years IBM should plan on turning in lower, but still good profits. If they do this by 2020 they could again be a business juggernaut.
Whenever a company decides it’s ok to screw its suppliers, its customers, or its employees, it is only a matter of time until it gets around to screwing all 3 groups. That is because the idea that screwing people is ok becomes the corporate mindset.
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That is where the repair should start, but it won’t. IBM is doomed.
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That said, IBM is still big enough to be feared. They are currently in direct competition for a contract for which a number of other more highly-qualified companies are also competing. However, IBM will lie, cheat, and steal.
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Of course, since they can’t seem to hire people any more, they are paying premium rates to contractors. Although I’m a “hired gun” myself, there is no way I would contract with IBM, because I know the likelihood of getting shafted myself is very high.
In the early 1990s I worked for Enterprise Rent-A-Car. They were a dedicated IBM customer. There CIO was their old IBM Systems Engineer assigned to service them. They were the largest single site user of AS/400s – having grown from a small user company of around $100 million in 1980 to $1 billion in 1992, IBM found a way to daisy chain AS/400s together in a single room with satellite transmission to offices all over the country to keep Enterprise from having to change platforms and applicatins. Enterprise was so loyal that they even went with OS/2 for a while.
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Enterprise was a growth phenomenon and they make money with everything they do: rent cars, lease cars, sell cars – they’re more profitable than the car companies themselves. They are, in essense, a sales organization. Their core competency is how to manage sales people. This is not very easy. Managing sales people is a lot like herding cats. Most companies blow this.
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Enterprises’ operating philosophy was rather simple. The customer comes first. Take care of your employees and they will take care of the customer. Empower the employee to be able to take care of the customer – if you don’t do this, then you aren’t serious about the customer coming first. Hire at the bottom. Only promote from within.
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First, the first 3 years turnover was over 90%. If you survive that, turnover was less than 3%. They often hired liberal arts majors with high energy, type A personalities. If a person survived, by their 6th year they were managing an operation, getting a slice of the profits, and making a nice income and from there it only gets better. What they, in effect did, was put customer’s first and empowered their employees to do that, and have profit sharing occur at as low of a level as possible so that employees, while putting customer’s first, were still mindful of the impact on the bottom line. No one got ahead by putting profit first.
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IBM should have been paying attention to Enterprise.
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When I worked at GM, they way they did product development was like this: an idea was launched on the marketing/sales side of the company. The idea then gets passed from marketing to design, to engineering, to manufacturing engineers, to industrial engineers and so on. The last department that gets it is the cost accountants. The cost accounts would realize that if you used a part that was only a few cents cheaper you would save tens of millions of dollars. And every penny saved is a penny earned, right? The problem was, the cost accountants were single threadedly focused on cutting cost so much that they didn’t realize that their cost cuts were cutting revenues faster than cost – AND THE MARKETING FOLKS DIDN’T HAVE THE PRESENCE &/OR POWER TO MAKE THE CASE THAT COST CUTS WERE CUTTING REVENUE FASTER THAN COST. We all know that GM was a finance driven company, that all of their CEOs came from the finance arm.
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It seems to me that IBM is the same way as GM.
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They need to put customer’s first. They need to take care of their employees and empower them to do what ever they need to take care of customers – and give them profit sharing at the lowest level possible so that the balance of decisions between taking care of customers and providing ROI is done at the lowest level and as close to the customer as is possible. People who service customers need to be empowered to stand up to the cost accountants – and win.
Nice history TimKa, thanks 🙂
Well-reasoned and well-written. Chances of any of these suggestions coming to pass? I leave that as an exercise for the reader.
> exercise
Distractedly mumbles something about using a Bose-Einstein probability distribution for all the air molecules in a room spontaneously gathering together in a corner (and grooving with a Pict), wanders off …
in a *cave*, not a corner…
Either way, makes no sense to me. Is there a web page where I can read about this obscure reference?
As an long-time mainframer, it has disappointed me to see what IBM has done over the past decade. You hit the nail on the head – even the classic customer base from the post-war era at the mainframe level is beginning to think of walking away, which in its own right is a mistake, because thousands of Intel servers can’t handle the I/O requirements of a financial enterprise. The old saw about 90% of the world’s financial transactions take a trip through at least one COBOL program still holds. And System z is a helluva Linux server platform.
However, IBM now has a reputation that CA used to have – we buy software companies and destroy them, just like we destroyed our own Software division. CA has shirked that mantle with the departure of Wang and Sanjay, and now IBM needs to do the same. The problem is who to buy? The DoJ is going to look very closely at a CA acquisition, and with BMC, Compuware, and other major players in the enterprise-including-mainframe space now privately held, IBM would have to pay huge premiums to buy out the private investors. Up to two weeks ago, TIBCO would have been a good candidate, but they are now going private.
One possibility is Software AG, which has the positives of having some decent software as well as an old-time mainframe legacy, plus it’s out of Germany, which helps on the anti-trust level, and IBM still has a somewhat decent reputation over there. But Herr Streibich still has his pipe dream of being acquired by SAP, so unless Herr Schnell can convince dem Vorstand that IBM is better, this is a long shot.
Another step is for IBM to release its stranglehold on development of software for System z for operating systems that do not have a penguin as their logo. It is cost-prohibitive for mom-and-pop or basement/garage tinkers (like myself) to get into the System z space as the costs of licenses for development systems runs well over $5000/year (plus the initial hardware investment). The IBM mainframe software industry grew exponentially back in the days when you could look at the source code. The switch to OCO when MVS/XA was released strangled innovation.
I’m like you in some respects; I fell in love with IBM in my youth. When I was in college, I wanted to work for IBM. I interviewed there twice during the 2000s; both times the positions were lost due to budget cuts. I’m still in the System z ISV community writing system tool code, and I want to stay with that until the day I retire (or die at the keyboard), but I do not want to work for the current IBM. I sincerely hope that somebody, whether it is Ginny or someone not tainted by Palmisano, can rescue it from the brink of afterthought.
Come On Bob ! Let the monster die. They had not been able to move from their arrogance for the last 50 years! Just read (YOUR) Accidental Empires !!!
IBM had committed so many errors along the years … let them die.
Who benefits from the existence of IBM ?
Nobody.
No, 400,000+ employees benefit from IBM. Don’t forget the human costs if IBM fails
Jobs are created by demand, not “businesspeople”. If customers are going elsewhere, then don’t the jobs follow?
Not necessarily.
You’re assuming that the company would want to hire ex-IBMers, and they may decide to go the temp worker route instead.
If any employer chooses not to hire an ex-ibmer, it means there is less demand for that particular skill. If the customers are really going elsewhere for a product requiring the same skills to produce, then the job will follow, although it may be called “temp” or “permanent”, depending on the extent of the demand.
I think we should be open to the possibilities that IBM going nova might generate for employees. All those customers will need good people to help them, a transition plan to other platforms if nothing else.
The no-hoper sales folk and management will hurt of course Good!
Another interesting thought coming from the analogy is what will be left by a stellar explosion? Will there be a white dwarf left behind to burn brightly or a black hole to forever warp the industry space.
They should buy Xero and leave HQ in New Zealand
IBM Lotus Notes is possibly the worst software I’ve ever used, was OK 20 years ago but today it just makes my job harder, it actually gets in the way of me getting to my information.
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I’d sure not buy any software I’d want my employees using from IBM if there were other options.
I have been retired from IBM for less than a year after having spent 34 of 36 years in the field sales and technical sales organizations in the United States. It gives me no pleasure to see IBM struggling but one needn’t have been Nostradmus to see it coming.
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I could riff on Bob’s suggestions from now until Christmas but would prefer to just toss out a few observations that hopefully the reader will find of interest. First– ‘IBM needs to fix Global Services, the company’s largest division touching the most customers and a catalyst for IBM sales.’ I was never in the services organization. I spent a measurable part of my years competing against the services division. In my experience it never — repeat, never — catalyzed any sales for me, my teammates, or my immediate sales organization. The notion that IBM Services generates business for the rest of the company is a myth. You have to beat them over the head to include you in deals, and in fact, in more than one instance I caught their sales guys “unhooking” other IBM products from deals because they didn’t have the know-how to do deals with IBM products. And this was not a new phenomenon– this went on almost from the first day there was an IBM services organization. So in addition to fixing its obvious problems, IBM should also make them part of IBM as opposed to just something that dangles off the side of the org chart and generates cash flow.
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‘IBM is hemorrhaging talent on a global scale across all divisions. It cannot retain good people.’ Absolutely. I could barely begin counting the number of friends ready to jump ship the moment that last kid gets out of the house, or college — assuming they last that long. ‘The best they can do is to try to survive until reason returns to IBM’s leadership, if ever.’ Just a thought — if squeezing the last dime out of a spreadsheet is what you think your business is, the company has excellent management. Tragically for all concerned, Gerstner laid the groundwork for that “company as a metric” balderdash that Palmisano raised to an art form, then hung around Rometty’s neck like a flaming tire.
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‘After 10 years of continuous layoffs, any subsequent reduction has a direct and immediate impact on business. IBM can no longer afford to cut staff.’ This has been the case for quite awhile now. The whole Jack Welch ‘lop off the bottom three people every year’ thing that Palmisano decided was the way to maximize those spreadsheet outputs has done incalculable damage to IBM’s workforce in the context of its quality, loyalty, and capabilities. The real result is that very few trust their boss as a matter of course. All management pronouncements are assumed from the start to not be hiding a pony.
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‘These organizations make up 90 percent of the IT market and are not served well — if at all — by IBM.’ IBM has never and quite likely will never understand what it calls the ‘small, medium business’ (SMB) market. Internally, for years, it’s where careers went to die. It was always a very poorly served marketplace because the sales (and by extension, your career) plan rewarded working with those big companies– not those organizations that might grow into big companies.
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‘IBM should license development tools for every mobile platform. These tools should be made available to any employee with an interest in developing a mobile application. IBM should make it easy for employees to get mobile devices, especially tablets. IBM should provide internal infrastructure – servers, applications, etc. with which to develop and demonstrate mobile computing.’ IBM just spent 15 years stamping out all ‘skunkworks;’ I know, mine got stamped out twice. After awhile, you give up. Unfortunately this would be tied up in red tape like you wouldn’t believe so …
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‘If IBM does not get serious about quality its survival will be at risk.’ In 1985, IBM knew that fully 25% of all the host DASD shipping from the plant in Tucson was defective. It didn’t do anything for a long time because it was cheaper to send a CE out to fix it than to get it right the first time. Good luck with this one.
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‘Every line of business should be asking itself “how can we become the best, cheapest, and biggest supplier?” Every line of business should have well reasoned plans, funding to act on those plans, and a green light to proceed.’ Amen, brother.
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Ginni’s got to go, ASAP, or there’s no hope. The moment she took the job, she took responsibility for Roadkill 2015, but didn’t have the guts or insight or both to chuck what was obviously a steaming pile of toxic waste. In fact, in several regards, she doubled down. What’s the old proverb, a snake rots from the head? The head is rotten. It has to be cut off to have any chance of saving the body.
Spot on about small business. My buddy was hired by IBM straight out of college in the mid-80s, it was his dream job. They gave him a huge rural territory, and for a guy who could sell snow to Eskimos getting farmers to spring for computers was a cakewalk. His reward for putting up huge numbers? His quota was upped retro-actively, and he had to pay back part of his commissions. After a few years building his resume he quit his dream job and never looked back.
I’m currently working for a medium sized organization that desperately needs some enterprise wide accounting and finance apps, cloud-based would be terrific. I’m sure there’s plenty more orgs ready to line up, if the price is right. Unfortunately, in my experience IBM’s pricing and contract terms aren’t very welcoming.
While the software division has been profitable, the other shoe is about to drop.
The annual Big Data (or whatever buzz term they are using this year) is next week and attendance numbers are way down according to a vendor friend who attends the event. My Cognos support renewal came in at a 20% increase this year. IBM says that is because they simplified the licensing model and added functionality. BS This is on top of large increases every year since IBM bought Cognos. That is one way to gain short-term profit while implementing a customer elimination strategy.
We passed on IBM SPSS for SAS. It was a great decision. SAS gets customer service, IBM does not.
The bleeding will continue.
The fundamental problem is that there is no mechanism for punishing the executives who make “shareholder value” focused decisions. These excutives take golden parachutes and jump the ship with a pot of gold made in the den of gamblers, called “the Wall Street”!
Spot on I have been here 15 years I’ve never seen such despondency people have little hope they will even keep their jobs for the next month
Big Blue, or Idling Red And Grey, is not coming back. the whole castle is committed to the dead-end road, and doesn’t care about the dungeons where they chain the peasants.
just wait until Wail Street finally gets it, and the Dow reflects it.
There is one place left for massive headcount cuts in IBM…the executive ranks. It’s time to rid the company of the overpaid ‘yes-men’ that don’t recognize value and are more interested in pleasing those above them and looking for the next promotion than in protecting the people below them, energizing them to do their best work, and knocking roadblocks out of the way from doing real accomplishments.
1. As was said before, fire half the execs. Including the top three tiers. Do this right now, and put that savings into hiring real developers and testers. People who understand production environments, availability, and quality.
2. Think about real productivity. Most tools in use have followed the failed client server model, you have to be connected to do anything. This is a real problem for the road warriors that are the customer facing bodies. Hotel and airport connectivity is just not substantial enough to use these “tools.” This had real productivity costs, and hurts morale when worker bees are dinged for not getting mindless admin done when it is impossible to do so.
3. More real technical staff is an urgent requirement, both to support sales but also to support customers trying to implement software/hardware.
4. Recognize that not all technical staff are interchangeable parts.
5. Remember who pays the bills. It is not IBM execs, it is not stock holders. It is customers, and if they are not happy they don’t pay their bills, they do not buy the second license of the product (that second license is where real money is made, as you do not have to spend to make that sale), they cost more in support, etc.
6. The grandest strategy often fails when the sergeants that have to implement it run up against tactical reality. And sometimes the strategy has to be abandoned, especially when it is crafted by first lieutenants who have never implemented anything.
7. An ongoing successful company has to balance between the needs of existing customers and systems, and what looks promising for the future. It has to reward both the grinders and the brilliant fireflies – because it takes both to produce long term value and income for all involved.
Spot on!
I’m a 32 year old technology professional and I have been programming since I was 14. I’ve worked for giant companies working on mainframes to startups working on websites and iPhone apps. I would never even consider using IBM for any project, though don’t think I’m just picking on IBM since I would never use Oracle or Microsoft either. AWS and other cloud providers all the way and open sourced software full stack is simply the way to go. Everything else will continue to shrink and there’s no end in sight. You can’t financial engineer your way out of a broken business model.
Can’t say I know much about IBM, but a good deal of this advice would apply to ANY company: invest in your people, make customers a corporate priority, etc.
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I like the idea of getting the rank and file IBMers to work with mobile devices and develop apps for IBM app stores. Right now it seems like the OS vendors (Apple, Google, Microsoft) are hoarding all the action and everything goes through them. Facebook seems to be pointing the way out by having a cross-platform application everyone wants, where most all the data resides in the cloud. Seems like mobilizing cloud services would be a natural path for an aspiring cloud player to take.
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IBM has had such influence and longevity in American technology it would be horrible to see them die, kind of like watching Coca-Cola evaporate.
for i in $blog_post; do
sed -i ‘s/IBM/HP/’ $i
done
I was going to say, HP is so similar to IBM in many ways. Services are an albatross on margins, though probably not so moribund as IBM’s. HW business is a bit more robust than IBM, but they’re selling off the consumer side, SW business is small and not compelling. The only HP software I deal with as a consumer are the bloated printer drivers.
The areas I see where HP is better off than IBM are 1) that HP has better experience dealing with smaller customers. 2) They seem to have a better model for their cloud and big data initiatives, but only because they still have a viable server and hosting business – for now.
I’d really like to see Bob’s thoughts on this comparison, too.
I ‘retired’ from HP two years ago. There are certainly the usual cast of snakes and weasels in HP. I think HP’s real problem is the hyper-analytical mind set of many managers. They are great at analyzing until they have identified so many risks that it is obvious to them that whatever business or initiative they are looking at must be shut down. Passion drives change. When they fired VJ they fired one of the few leaders who had any passion. Don’t get me started about Hurd-Mott, et. al.
There’s only one way to fix IBM. That’s for a big, respected shareholder, like Warren Buffett, to propose an alternate Board of Directors. Most of the current shareholders probably understand that the current BOD has led IBM to a disastrous condition. So Buffett comes in, throws out the current BOD and most of the incompetent top management, and gets IBM back on the road to recovery. Maybe he could be persuaded to do this as a service to the world. One could only hope.
Berkshire-Hathaways percentage of ownership in IBM is not enough for it to come in, clean house and set up a new BOD and CEO to lead IBM back. Rather, Buffet may recommend dumping its stake in IBM before the value really wanes and disintegrates.
The idea is that Buffett uses his reputation to convince a majority of shareholders to vote in his alternate Board of Directors. He would have to do some campaigning to pull this off, but he surely has the resources to do it. It is rare for an outsider to sponsor an alternate BOD, but is certainly possible. Most shareholders only send in their proxy or fail to even vote because there is no organized opposition to the existing BOD.
Warren Buffet use his influence? You mean the guy who said that he never considered buying IBM before because he doesn’t understand technology? What credibility would he have telling a technology company how to fix itself?
That’s a very good question. I guess he would have to consult his circle of friends (other billionaires) to assemble a team of knowledgeable people who would have the required expertise. Warren’s main contributions would be two-fold.
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His worldwide reputation and respect as a financial genius. (And that rare willingness to confess his own limitations.)
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His ability (which I am assuming) to assemble a team of knowledgeable people who could plan how to save IBM from the present group of IBM incompetents.
To fix IBM you’d need to fix the C*O level and possibly also the directors’.
I agree about your view about doing business: it’s all about customers, those people that give you the money in exchange of products and services.
The C*O level of the big companies I know about don’t have a clue any more about the things their business is based upon. Those levels are the ones that in the end select the other levels.
All these levels are completely alienated not only from the “real world business”. They play with charts, diagrams and pages with just three numbers in it. Those could be related to tyres or pizzas. To them it’d be the same.
But it should not.
The real problem, in my opinion, with IBM is not the market. It’s the “head” of the company that’s too far from even understanding the market.
I have personally attended kick-off meetings for huge crucial projects where the contributes from the higher levels resembled this stuff: https://www.youtube.com/watch?v=BKorP55Aqvg .
Bob, to ride the ICT market (even a niche part of it) you need to know it.
You need to know the products and the related technologies, you need to keep up with the research trends.
Most of all big companies cannot do this any more as the have set themselves too far.
In my country we say that “the fish starts stinking from the head”. And IBM stinks quite badly.
I can’t help but wonder how that differs from Ginny’s or Bob’s plans. I guess they differ in that the video’s goals were too specific. 🙂
IBM has one thing that pretty much no one else has and that is the good old mainframe system Z box and related software (and not that Linux stuff either) but like so many things IBM, it is not cheap or easy to setup and use and it’s just getting worse. If IBM had made it easy to get into the mainframe development world instead of locking everyone out there would be plenty of experienced and talented people to run the systems today. Instead we are left with complicated, hard to use software and systems with an aging support base and dwindling customer base. IBM also just sees those systems as cash cows to fund all the pie in the sky ventures they keep coming up with and customers are not daft (even though IBM thinks they are), they know when they are getting screwed.
As many others have already said, IBM needs to REALLY put it’s customers interests first instead of looking for ‘high profit’ business opportunities. If I were a customer of ANY business that openly said they were looking to sell ‘high profit’ services, I’d read that as ‘they are trying to screw me’ and go elsewhere.
[…] IBM has no vision, none, nada, zip. CEO Ginni Rometty and her cadre have no clue how to fix what’s wrong with IBM. They have to be replaced. […]
1) As previous comments suggested, fire 90% of managers. As far as I see, most of them tech illiterate or coming from a 20+ years old obsolete tech background: they have no vision, they don’t even understand current technology.
2) Stop treating people like goods or services. IT in many respect similar to basketball: if one wants to build a champion team, he has to pay top money for the best players. IBM tries to win the championship with cheap players trying to keep them on board with lies and promises.
3) Select a management team with a VISION. IBM is still capable of doing great things, but needs someone who shows directions for the company, for its investors and above all for its clients.
This makes me wonder about another great US company that I used to be involved with. They seem to have lost every business unit they had, renaming them and having them taken over by the new giants in the tech sector. Certainly now in the UK they’re fairly invisible. Couldn’t even tell you what they do now.
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Whatever happened to Motorola?
Dr. John: “dust in the wind.” there are no Galvins left, and there is no Motorola left. emergency services radio is about it.
There must be some “Galvin lived in Barrington, Illinois with his wife, Mary Barnes Galvin. Together they have four children and thirteen grandchildren. Galvin, who was a Christian, died in October 2011 in Chicago, Illinois.” http://en.wikipedia.org/wiki/Bob_Galvin
Motorola split; part of it became Freescale.
My parents had a Motorola radio. It had tubes in it. 🙂
“… find another Gerstner, ideally a better Gerstner, because he had a share in creating the current crisis, too.”
I question whether anyone who says this should be writing about how to save IBM.
Gerstner is where all the current problems started (with Watson Jr’s blessing). Why not ask some older employees about where their pensions went to under LVG, who now collects $1M/yr for life for doing that, thanks to the BoD.
IBM, more or less, reflects America today (warts and all). A “me too” society, not the innovators that sent a man to the moon.
Try again Cringely!
Ps: regarding the Lotus products, IBM bought them not so much for selling to customers, but mostly as an alternative to buying MS Office licenses; it paid for itself in short order. Lotus was quietly retired a couple of years ago, long past its productive use anywhere.
As if Cringely ever knows what he`s yapping about!
Look at the arcticle above, it`s not a “plan” in any sense, just a collection of generalized words from some 101 brochure.
Who is going to fire themselves for the good of the company?
You are asking people to give up their career gravy train and food stamp program for the cold harsh real world. The people in charge are the problem. You can not expect a cancer to cut itself out to save the person, it is not in the nature of cancers to work like that.
“Who is going to fire themselves for the good of the company?”
People who are given significant incentives to leave, whether positive (severance/retirement package) or negative (crappy pay and work environment).
IBM seems overly focused on applying negative incentives to the rank and file.
Frankly, most of the execs I knew during my tenure couldn’t get a job at Kroger stocking the toilet paper shelf…
everybody has their price. buyout.
news item, MarketWatch, 10/28/14… IBM authorizes another $5 billion share buyback, with $1.4 billion still on the table from the previously authorized share buyback. IBM is not going to be fixed. the board has decided to continue the slot machine game, paying out a little bit to keep the shills around, while not doing anything useful. longs and associates, your move…
Bob has good advice. Clearly nobody at the top is listening – another $5 billion in buy backs over two years: https://www.zerohedge.com/news/2014-10-28/buyback-things-ibm-repurchase-another-5-billion-stock-next-two-quarters
And they just announced another $5 billion in additional buybacks. This management ‘nest’ has lost their collective minds, if they actually ever had any to begin with. They deserve their downhill slide into oblivion.
http://seekingalpha.com/news/2066015-ibm-adds-5b-to-buyback
After all these layoffs, the solution for IBM is automation?
ooh, then IBM will be arguing with “call-ah me Bob” to get their internal communications working.
Yes, automation is a smarter way to go. Currently, with the finance people in control, you become more efficient by removing X US- or Europe-based resources and hiring X or 2X or 4X Global Delivery Center resources. In sum, you’re keeping the basic process and simply hiring cheaper people to continue the process. Finance people aren’t smart enough to know how to improve the process or to ask too many questions about whether customers are happy with the current process. By contrast, if you automate, you might cut staff at some point, but the point isn’t necessarily to cut staff. If you can be cheaper and better by automating the process, you might gain market share and be able to use the expertise of your staff to do something else.
After reading the article and all of the comments, three things are clear: 1) IBM should value its customers and try to make them happy. 2) IBM values its shareholders and tries to make them happy. 3) IBM doesn’t know or understand who its customers are.
So, IBM will probably “downsize” the very people who create the wealth, leading to less wealth and therefore more downsizing. It will soon resemble the USS Enterprise with hundreds of Captain Kirks and no Scotty’s !!
The Buyback Of Things: IBM To Repurchase Another $5 Billion In Stock In Next Two Quarters
well, there’s another $5 billion spent for payoffs, er, eps.
I think after all this time we need to come to the conclusion that ibm senior execs do NOT want to change. How many buybacks, customer lawsuits and employee abuse has to take place? Palmisano and Rometty have said it time and time again, it’s the stakeholders that matter. Damn the customers and employees.
Not sure what the end game is; but what is obvious is that no one sitting in the C Suite is getting poorer.
I quit. I couldn’t take it anymore. When HR asked me why I pointed to Roadkill 2015 and told them “You’re either not going to make that, or you’re going to make it in a way that I want to be no part of. Either way, I don’t want to be here to see it.” I was fortunate in that I got a work-from-home gig that pays significantly more and includes stock grants etc. I feel terrible for friends left behind that aren’t so lucky and are trapped below deck as the ship sinks.
I was born in 1954, the year of the landmark Supreme Court ruling – Brown v Board of Education. I was 10 when the 1964 Civil Rights act was passed. As a young adult I witnessed improvement in women’s rights, disability rights, and a number of other important causes. I’ve seen a lot of social reform and improvement in my life time. I have taught diversity classes…
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As a corporation IBM was the undisputed leader in human rights and social reform. IBM’s policies and actions have been consistently decades ahead of society. Today IBM has become the poster child for the exact opposite. IBM has led in cutting benefits, cutting pensions, offshoring jobs, abusing overtime, cheating customers, etc. It is appalling what a once great corporation has become.
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If IBM were only a business, I’d say let them fail. They were more than that, they were a role model that made society better. That is the great loss in today’s IBM. If any of the old IBM can be saved, we need to try to save it. If Sam and Ginni have crushed the moral life out of IBM, the company should be allowed to fail. They will be held accountable in their eternal life.
Wow, has IBM fooled you and others — you need to read this.
“IBM and the Holocaust: The Strategic Alliance between Nazi Germany and America’s Most Powerful Corporation” is a book by investigative journalist Edwin Black which details the business dealings of the American-based multinational corporation International Business Machines (IBM) and its German and other European subsidiaries with the government of Adolf Hitler during the 1930s and the years of World War II. In the book Black outlines the way in which IBM’s technology helped facilitate Nazi genocide through generation and tabulation of punch cards based upon national census data.”
Huffington post update about IBM’s role in the Holocaust.
https://www.huffingtonpost.com/edwin-black/ibm-holocaust_b_1301691.html
Remember, though, that over the years IBM has been subject to a number of legal actions (including one or more Consent Decrees; I forget the details) which FORCED them to behave in a better way, because they had behaved so poorly in the past. They then turned around and made lemonade out of lemons by hawking this in their marketing materials as their being “a cut above the rest” in the corporate world.
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IIRC, Thomas J. Watson, Sr. (the original founder of IBM, and who was in charge in the 1930s) was something of a con man and rapscallion. His son, Thomas J. Watson, Jr., didn’t really get along with his dad (they didn’t see eye-to-eye on a lot of things), and it was only with some reluctance on both their parts that he took over the reigns of IBM from his dad in the 1950s.
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IBM’s genius over the years was to move towards the future while not getting rid current services and products while doing so. That’s how you move your customers with you.
But once you chase the customers away, it’s kind of late to first start thinking about tomorrow.
And the toxic thing is that manipulating the stock to boost the price is the popular lazy way out. Managing well is so much harder. And far too many in upper management apparently would rather be known for being obscenely wealthy instead of earning a rep for successful management.
And of course there’s a culture: conservative and, worse, fearful.
Given those ignored realities, it leaves this post as a complete fantasy. IBM’s in a death spiral. May take years or longer, but it’s inevitable.
Re: “…would rather be known for being obscenely wealthy instead of earning a rep for successful management.” If someone is obscenely wealthy, they must have successfully managed something. 🙂
Yes – they can successfully manage their own wealth. But how much talent does it take to sign pink slips in order drive up a stock price … vs… going the Steve Jobs route and creating value in the market through innovation and uncompromising quality engineering? Along with an indefatigable commitment to customer ROI?
You have to wonder about the competence of a company that manages to delete half its employees at the Rochester, MN site out of blue pages, VPN and badge access on a Monday morning. Including one of the senior executives, Walt Ling. Perhaps it was a malicious employee. Perhaps it was incompetence. Perhaps it was a test for impending layoffs gone wrong. Really doesn’t matter. Would you trust your business to a company that can shoot itself in the foot like that?
I’ve been an IB
The executive suite is so certain they’re being disrupted and couldn’t possibly succeed at riding the new wave of cloud-or-whatever that they’ve assumed they have no higher calling than to cease all investment in old low-margin businesses and returning to shareholders all proceeds from winding them down.
I worked for IBM for 10 years in microelectronics, and as a cog in the machine, I worked on exciting, innovative, uniquely valuable technology. But IBM throughout is simply organizationally unable of investing in growth opportunities in its low-margin businesses. So they wither until divested. 10 years and the decision matrix was inevitably of two choices: keep doing what we’d done in the past, or do stop doing that to save money. Never was investment in growth opportunities an option.
I’m not sure what value IBM offers customers… maybe customers are supposed to be excited by a stable of disparate software acquisitions that are accretive to earnings and foster continued margin expansion in the roadmap to EPS of $20. I think it used to be solutions or hardware or systems or customer focus or something.
It’s clear to me that the IBM bigwigs are in “pump” mode, keeping the stock afloat by any means necessary until they are ready to dump and dismantle, Gordon Gekko style.
IBM execs DON’T CARE about IBM. This is a concerted plan on their part. They know exactly what they are doing! They are treating IBM like a cash cow. They are manipulating stock for THEIR OWN GAIN. “Stockholder value” means their own value. They have no intention of saving or changing IBM. What is it to them if IBM fails? They will have taken all of the value out of the company and gotten richer than they could have in any other situation. Their reputations won’t be sullied. They will be admired and emulated. Their techniques will be taught: “How to Take the Value out of a Company for your own Personal Gain 101”. None of this has taken them by surprise. It’s a strategic plan. Any talk of reform on our part is just ignoring the elephant in the room.
SC’s comment beginning “IBM execs DON’T CARE about IBM.” is spot on. We in IBM sales recently received a note telling us how to discuss IBM’s strategy with clients. One of the party lines is; “– Since 2003 the company has divested more than $20 billion in low-margin annual revenue, so we could focus on higher value opportunities.”
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“Higher value” to whom? The customer? – No. IBM itself? – No. Stockholders? – Yes.
And since 2003 IBM has spent $130 billion buying back its own stock to provide that “higher value” to stock holders. So (over 10 years) we shed $20B in revenue and spent $130B of profit and borrowed money to provide “higher value”. That makes no sense to me. Unless (as SC indicates) … it was planned all along for “THEIR OWN GAIN”.
Enron anyone? There’s a great documentary on Netflix “The Smartest Guys in the Room”.
iBM senior executives are way more sophisticated and polished; but they’re doing the same thing on a much less obvious level.
To borrow a quote (from Office Space) I saw recently:
“So Ginni, what would you say ‘ya do here?’…”
200 million over 400k employees is $500 per employee. How is that supposed to fix the company?
I’m really surprised that you think automation is the problem, something I haven’t seen mentioned on this site before.
Bob actually said “Yes, there are already quality improvement programs and automation projects, but these efforts are new, few, and small.” So it sounds like he favors more automation. But I’m still confused since in the past he has discussed the disadvantages of firing talented people and replacing them with algorithmic processes.
Was this poor earnings report the reason you pushed up the launch of your e-book? I’m still surprised you left that much money on the table.
Most contractors in IBM Global Services will be furloughed during the months of November and December. A large percentage of the workforce in IBM’s GDC’s are contractors. You can expect the quality of service from GTS to go from bad to terrible.
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Compared to IBM’s senior executives Ebenezer Scrooge was a saint.
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For the holiday’s IBM’s top performers will get lumps of coal. Everyone else will get nothing. Your health benefits will be higher next year. IBM will pass on most of the cost increase to the employees. So for 2015 everyone gets a net pay decrease.
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How does IBM feel about its workforce and its customers? “bah humbug!”
All keen observations, Robert. What you say about Global Services is true, especially in regards to staffing. I left four years ago, when things really began to go bad. When I started in 2001, I worked with dozens of people who had 15+ years with the company, but over the next ten years almost all had quit in disgust and sadness over what the company has become: a machine solely dedicated to generating Shareholder Value. Most of the people I worked with — talented, top-notch technology workers — have left the company. It may not be a sinking ship, but it is adrift.
As you say, SV is a key component of running a public-traded corporation, but when it becomes the primary objective, everything goes to shit. By the time I left, raises had been virtually eliminated, layoffs were a quarterly nightmare, benefits were slashed, training all but abolished, and utilization targets exceeded 100% (including vacation time). All decisions, including raises, came from corporate bean-counters and middle managers were powerless to resist and forced to do Somer’s dirty work. Positions are eliminated and not back-filled, so remaining employees are overworked and bitter; not exactly a winning strategy for good customer satisfaction. All of this occurred while the stock price doubled and cheerleading internal memos crowed about the awesome financial results “we” were getting.
I watch with sadness as the IBM Alliance group tries to unionize. I hate to be negative, but in my view, this is a hopeless effort to get a corrupt and venal company to treat its workers with decency. It is hard when you are on the inside to imagine a life outside of Big Blue, but once you are out, it’s not long before you wonder why you stuck around for so long.
You’re forgetting that after the election, President Obama will implement an amnesty and other measures that will help IBM’s bottom line. From The Wall Street Journal
Those changes include measures to massively expand the number of foreign workers for IT companies—measures aggressively lobbied for by IT giants like Mark Zuckerberg and Bill Gates.
After reading all these comments I think that the only thing that can safe IBM is reading this post and comments on bob’s blog. Free advice and very good ones too. Bob can even write a new book “how to safe your company from downfall, mistakes from IBM” that can tip big companies in the future how to safe their company if they are like IBM. But maybe IBM is not worth saving? maybe it is destined to fail. IBM’s glories time has ended and now it time for new companies to flourish and take BIG blue’s place.
Perhaps it’s like one half / two halves, or himself / themselves. One safe / two saves. 🙂
So, based on what you’re writing here, I can see a few things IBM might be able to do that might work and are different from what you suggest.
One thing is, you say that IBM sells the stuff folks use to build their own applications instead of the applications themselves. Instead of acquiring applications, why not use their tools to build those applications? Do a series of customer projects and integrations “for free”. Pick a prototypical customer in an industry, write an app for that industry for that customer for free (for a time), and have IBM keep ownership of the result. This does two things: gets IBM a product, and provides an “eat your own dogfood” demo of using their app-building tools, theoretically enhancing the value of both.
On mobile, a big thing they ought to do is integrate mobile development and cloud development, making it trivial for their tool customers to build their own mobile apps (the “mobile dev tools” thing you were talking about) but also giving *them* good mobile interfaces for all the apps they build via the strategy above.
(And a thing I’d really like to see them do is… they built Lotus Improv once. It was quite remarkable. It was also written in Objective-C. Presumably they’ve got that source somewhere. Imagine what could happen if they released it for the iPad at a low price point. I don’t think it would have to cost them much. But this is probably a pipe dream, alas.)
I agree. I was working at a company that was developing some new hardware. We had our own instruction set and compiler and development tools. One priority for the CEO was to develop working applications that could be shown to customers.
IBM has no shortage of projects, and there is (at least in some areas) a strong push to create as much “Intellectual Capital” (reusable assets — whether an entire product or not) as possible.
The problem is getting value out of them later; even for products that IBM has already commercialized, there are generally multiple support models — with some of them boiling down to “don’t bother filing bug reports, let alone support requests; we won’t help you because increased usage by an IBMer doesn’t provide extra revenue”.
Eventually that leads to the problem Mr Szyslak pointed out: customers prefer non-IBM tools on the assumption that we are choosing them for quality rather than revenue; it is hard to argue against that if we ourselves have problems with the internal tools … or even remember having such problems on a previous project.
All of this is great … but all of the focus should really be on one this right now – bring in new senior management (including Ginni, some of the BOD, and clean up most of the 2 layers below Ginni). They are not a leadership team that has demonstrated any commitment to employees over the last 10 years, and over that time, they have lost the commitment of the broader IBM Team. The large group who left, and a large number of those that have stayed.
There are a large number of IBMers that remain committed to IBM and the values IBMers believe in. For these IBMers Clients, trust and respect for individuals and innovation are their key values. They are committed to those values. Senior management has not demonstrated they are committed to those values. With the right leadership, IBM can get back on track.
I wonder why IBM does not hire this analyst … what he describes here have been main IBM’s main issues for a long time; the alternatives seems to be very appropriated too…
You got the time-frame nearly right. I’d start the Doomsday Clock at 2001, though, when IBM killed project Monterey (64-bit AIX for Itanium). That’s when they went from paying employees 2-year $50k retention bonuses, to chronic layoffs.
I contracted on and off at IBM in the late-90s until 2005. I was looking to take my career in a different direction, when IBM offered a permanent position for enough money to get my attention.
I turned them down, in part because of how much work was being sent to India at the time. I was sharing an office with a guy who was learning to do a job I’d done 3 years prior. Once he learned it, he was headed back to Bangalore.
I told my manager that I didn’t see enough interesting work at IBM to last the rest of my career.
Turns out I was right.
Been with IBM 36 years. This article and the comments ring true. I’m in Global Services and there are simply too many people who don’t contribute. They set up endless conference calls and blogs boring the rest of us to death but never bring in a penny of revenue. This overhead creates hourly rates that are simply not competitive. When the SHsTF, we lay off two rowers and add another coxswain to the boat.
I agree 110%. I call them parasites. The structure is full of 70% of people who are just overheads., An the ones who aren’t spend up to 60% of their time working on things generated by internal processes.
I think you have underestimated the Apple-IBM engagement, and hope you revisit the story soon. It’s the elephant in the room you are not seeing.
PS, please don’t ever retire.
I frankly don’t think it is possible to turn IBM around. I think it is a company that has gone too far down the rabbit hole and now has nothing left. I think this article is correct about what needs to be done but in the Wall Street climate we have right now. The bone headed assumptions made by bean counters and the decimation IBM has made in its talent pool I think they have nothing left. They are dead business walking IMHO.
A contrary opinion on the recent leadership of Big Blue: http://techpinions.com/why-bill-hewlett-and-dave-packard-made-hp-what-it-was/36471 (though there isn’t any argument over why Ginnie is good). However, the author doesn’t have too many kind words about the recent string of CEO’s at HP
High praise: ” IBM, brought back from a near collapse by Louis Gerstner, has had steady management by Sam Palmisano and Ginnie Rommety.”
Hi I joined IBM from another competitor. I was shocked to see the state of IBM from inside. There is no empowerment in IBM even at senior levels. This goes across all the functions, including customer management to delivery. I agree with most of the comments here that IBM needs to change drastically to turn around. IBM needs to fire most of the senior leadership staff and retain the skilled resources. Selling is a nightmare due to the number of organisations in IBM, infact my client says, they feel like dealing with 4 -5 different companies and not ONE IBM.
People like to throw around the “they should all be fired” line a lot, but I think these folks should be more careful. “Fire them all” has historically been a way of completely taking over a company (putting in your own toadies) and then completely ripping it to shreds (lining your own pockets), not so much as a way of actually fixing problems. Granted, some new blood may be needed here and there, but real change generally has to come from within, and it requires real leadership – not just cow-towing to Wall Street or whoever.
http://i-stand-corrected.blogspot.com/2009/10/so-sorry-im-too-busy-towing-my-cow.html
Sorry, I grew up out in farm country, so cow-towing was something that I actually saw done on occasion. 🙂 And I could make a harsh joke here about “towing that cow out to pasture”, but I won’t.
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Your point is noted, though.
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Gosh, when we had a critter die on us, we always called up the rendering plant guy. He came out with a good sized panel truck. Then he wrapped a cable around the hind legs and turned on the winch. That poor critter got towed right up the back ramp and into the truck. We never called it “cow towing” though. We called it “getting the dead wagon” or words to that effect.
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Then one time we decided to take care of a dead bull ourselves. We used the tractor bucket to dig a hole and shoved the critter into the hole. This left one of his legs sticking up. But no one cared. They just covered him up the best they could and left one leg high and dry. It either rotted off or somebody stole it. Life on the farm.
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We also used the term “cowtowing” to mean submitting to a higher authority.
In the context of submitting to a higher authority it should be spelled with a “k”: https://www.merriam-webster.com/dictionary/cowtow .
I stand corrected. (No wonder I couldn’t pronounce it properly.)
Lotus Notes pretty much sums up IBM. Notes is slow, difficult to use, completely different from other applications and years behind!
Couldn’t agree more,
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Lotus Notes was just an OK product 20 years ago when it was pretty much a framework for distributed/replicated database applications. In fact I built some early apps in Notes before the web got pervasive.
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IBM had a big clients using Notes but it never got any better over the years and now its just a waste of space that gets in the way of doing your job.
I have been looking at the capital structure from IBM and see that the amount of debt has increased by approximately 50% since 2011 while revenue and free cash flow decreased, this is something a read nothing about here.
I also noticed the mayor part of the credit is to expire between now and 2017 which could cause interest rates to rise.
If no revenue and profit increase miracle happens soon I’d say IBM will see financial turmoil sooner then expected and possible layoffs and more cuts must take place to continue.
I also read about the debt/equity ratio from the actual IBM is worse than Lehman Brothers when it collapsed.
I am not a finance guy and would like to know Cringely’s view on this.
Thank you!
Who cares? IBM, etc, are bygones of a previous era when on premise hardware mattered. In 10-20 years, when today’s cloud advocates are tomorrow’s CEO/CTOs, IBM will be about as relevant as the typewriter. Bye, bye, we won’t miss you IBM and company.
(Cough, cough.)
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It’s probably not going to turn out quite that way. If there is anything the IT industry loves to do, it’s to re-invent old concepts and slap new names on them. Back in olden times, what you today call “The Cloud” was known as “time-sharing” and “service bureaus”. And while these never went completely away, the advent of relatively inexpensive computing power caused most companies to bring things in-house. Now, with the rise of the internet, things are starting to swing a bit the other way – not necessarily because this is such a great idea, but largely because in-house client-server computing has turned out to be outrageously inefficient and expensive in the aggregate. Once the IT industry re-invents the mainframe (but calling it something else, of course – this is already happening) then things may start swinging back again.
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thanks!!
HMM.
Some who went through the 90’s remember the way people were removed then. Mike Attardo, the Snr VP of Microelectronics took a helicopter from Armonk to fly to East Fishkill (about 60 miles) to talk to management about how they should be letting people go. At the time, this was a huge disruption which had never happened before. The lack of sensitivity continues today – why fly when the company is dying and people are scared ? The CEO Akers was just incompetent. It’s not far from this situation now.
Today we have a 20th century group of Senior VPs and a board to match. One was handcuffed (with money)to prevent her/him from taking the CEO job at HP, others were raking in the stock options and now stock. Some have made lots of money from this stock ($50-60M at least at that Senior VP Level). Why do they deserve it ?
The lack of respect for the employees, many of whom are the only bulwark between disaster for IBM and survival is astonishing and HR (with a few exceptions) contains people with no knowledge of IBM, how it works, what it stood for and what it could be whose sole job is finding ways to fire people.
In past jobs (eg Senr VP Services) Ginni had a dial- called utilization, which was turned up when she felt revenue was dropping. With no concern to what she was doing to the employees who were already under a lot of pressure. So what’s new ? She is great with customers but does not have strategic thought in her body. That’s OK when you are selling but not when you are running a company.
She is a fantastic sales person but has the dual challenge of proving herself and showing that a woman can make it in the CEO’s position at IBM. She has been given a flaming tire as someone put it by Palmisano (this is a guy who would excoriate, denigrate and swear at people when he managed the PC division yet seemed like a Rodney Dangerfield character some times) and unfortunately has little room to maneuver. What she does not understand is that the only people who can help her are not the nose buttward execs who surround her) but the employees earning a regular wage. She is as hard nosed as any of her predecessors but thinks that beating people up is the only way to make this company move forward. That is not so.
The corporate staff (these are the folks who analyze the company in an area called strategy) can pull out innumerable studies explaining what is going on (from 10 years ago) that cloud etc were a problem but they are generally ineffective because they, like most of IBM have been emasculated from making any real decisions, or at least applying real investments against those decisions (well maybe the cognitive computing stuff may be an exception, but I bet within 6 months they too will be pushed up against the wall to deliver revenue today). Ginni surrounds herself with people who are trying to extract as much money as they can before they retire/leave, so they are trying to keep the company afloat before that event, because they know its all over for them and for the stock if they cant find a way to keep it afloat. They are all blind to the truth and to making the effort to fix IBM.
If I were Ginni, I would reach out to the employees, treat them like they are somewhat better than subhuman and ask them for help. Then fire / retire the majority of the Senior and next level management and then leave herself, because she does not know what she is doing (OK so maybe get the employees to decide who stays and who goes – do a real jam as they call it ).
The only way IBM is going to recover is by getting the spinmastering management out of the way, bring back those who have left because they were disgusted with the company and get the employees to help the company. There are many people who were treated well by IBM, many who are proud to have worked there and many who still bleed blue. And they will help.
For those who ask “who needs IBM” I would say that perhaps the question is “who needs IBM as it is configured now?” because there are many very competent people who still care about IBM in the company and can fix the company if only it were not such a military organization ruled by financial types.
Right now most of the employees who are there are keeping their heads down hoping that they can survive, because there is no other way through this. Speak up and you are out.
So the company needs to be fixed…
How you might ask? It’s simple. Give employees much more control and the tools to understand the implications of decisions that they make. Create organizational structures which are flatter and faster to make decision. Allow them to work in teams whose leaders are not beating them up to create a sale from nowhere, but find (by asking the employees) which managers they think could help restore sanity.
Get rid of the ridiculous management structure (8-10 levels in some areas), bring together the CEO’s of the companies that IBM acquired who have really had no jobs at IBM to drive the new IBM and replace the Board of Directors (voted in by the employees and larger shareholders again) with those CEOs and others. I mean look at the board. 9 of the 12 have presided over the Roadkill 2015 fiasco (which initially was a great boost for the stock) and 5 have been there for 9 or more years. Cmon. To paraphrase Kipling “If you can keep your head when all about you men are losing theirs and blaming it on you – you clearly don’t understand the situation”.
Create a system where the different brands can sell together and any modification of sales price to help complete the sale ends up as a credit to those who take a hit. Yes the system will be gamed, but there are many in the IBM who can provide tools to minimize the gaming.
Give Ireland back to the Irish as Paul McCartney once warbled and get rid of the mess at the top.
Good Luck IBM. Good Luck to you all.
Mr Cringely, I stumbled on your recent Forbe’s articles about IBM on decline. I am an ex employee, working for IBM Brazil until June 2014. I was there for about 5 years.
I just couldn’t believe when I read your “How to fix IBM” article. Every period, every comma tells the reason I left the company.
I had an agreement with my manager and I was fired (I asked to leave the company and he asked me to stay a little longer so he could fire me in the next “layoff session”, and that’s how it happened).
In those 5 years I stayed there, I saw stupid decisions took by leadership. Decisions that would harm business and create a big mess in processes, so employees would have to deal with more and more work overload.
In 2013 november, when layoffs started in Brazil, workers started to go crazy. That was intensified by the layoffs in february-march and april-may. Many times ONE employee was performing 3-4 people job’s. Overtime started to become a rule (and most of the time, extra work was not paid. It was registered and sometime in the future the employee could take those hours off).
Employees started to be under pressure. Respect for the employee was replaced by profit in the first time.
Bureaucracy is a rule in almost every department. i.e: In some departments, you have to flag your daily tasks as ‘DONE’ in 2, 3, 4, 5 different tools… write those tasks on spreadsheets and so on. Sometimes you completed a task in 10 minutes and spend another 30 to change task status in different tools. Want to ask 1 overtime hour? Just ask to your manager (filling a tool), to the DPE (another tool) and fill more 3 different tools to register your overtime hour. It’s insane, but you spend 30-40 minutes to ASK and register 1 hour you did not do yet!
If you have an idea to automate something in the department, you have to submit your automation to an uncountable numbers of validations/rules/procedures/reviews. The bureaucracy is in EVERY corner in that company. Many times an employee is discouraged to make something good for the company because of all the bureaucracy he has to go through. It is something crazy. In many cases you spend more of the time reporting to the tools you did your job than actually doing it!
After november-2013, clients were not in the first place anymore. If some customer high severity server was down, most of the time IBM had to act reactively because they had no employees to take care of some of the important things anymore. They just act when they were warned by the customer.
Once I heard something terrifying from my team leader in a PBC meeting: “I’ve gone over my own values to stay at this company”. I have seen she harassing many people in my department during 3 years I had her as a team leader.
In february 2014 I had a meeting about the new IBM Cloud Strategy. And your article was right: they know they are going to cloud. How will they make profit with it? They have no idea. They think they will make some servers available to customers and that’s OK. Software as a Service? What’s that?
After reading your articles I was completely relieved. You described everything is happening in IBM just the way I realized months ago. Now I see that my the decision to leave the company was the right decision.
Vlad, you stated “If I were Ginni” and that’s your problem, you are not, no one else is. She and the IBM board, for whatever reason (self profit I guess) are on the course they are on and they are not going to change, in spite of all the assertions that the company is ‘reinventing’ itself. It’s not going to change, and neither is the way IBM works internally. Not until it really collapses will anything really happen in that company because the people in charge, the same ones that got it into this mess (and that includes most to the multiple redundant management layers), think they can fix it.
Years ago, talking to a “Director”, I mentioned that there seemed to be two types of IBM’rs. The “Worker” whom believes that they could make a difference and also right the wrongs found along the way regardless of how large or painful. Just put a plan in place and do it. This was after all “Big Blue”, we had power, money, recognition, damn we can fix the world if necessary. The other segment was the “Comfortable” set. These with 20-30 years of a nicely padded 401k, pension plan, savings, kids in college, mortgage almost nill and a couple of 1-2 year old nice cars (Mercedes, Porsche etc) in the driveway. Not a huge Silicon Valley salary like those of us from the dot com era got on joining, but a nice “comfortable” salary. These folks went about their jobs trying very hard NOT to make any waves, most of them very good and competent people but would go out of their way not to spend any money outside of their “budget” as that would draw attention. They wanted to make things better, they really did, but not at the expense of drawing unwanted attention. Their idea of “better” was reducing expenses, capital outlay and depreciation. Can’t count the number of times I was asked if the new XXXX piece of equipment that I had planned, campaigned, budgeted, lobbied, justified (repeatedly), bargained, and finally was allowed to purchase was really necessary, since it was now at the top of the depreciation spreadsheet. “It would really help our budget if we could move a few of these high ticket items to some other group” was the common cry. Those that did so were often promoted as they had demonstrated “fix” capability. No, they took something that was broken and made it worse, but the numbers on the spreadsheet were more important. A lot of us “Workers” are gone now but most of the “Comfortable” set are still there, heads bowed, fighting the good fight. Go to the Dilbert web site and spend a half hour. Almost every one could be applied to some group at IBM. This is a house of cards, when it falls it will be ugly and a LOT of very good people will be affected, but fall it will. The shock will be felt everywhere, inside and outside of IBM.
Ex-Blue’r, you are spot on. In Global Services, we would try to solution IBM’s newest equipment on many of the commercial outsourcing deals and would be told “too expensive, doesn’t fit the cost case, go back to the drawing board and it needs to be cheap.” Read that again: we were not allowed to solution IBM’s latest and greatest equipment on many GTS deals. As a result, the final solution would typically be sourced with N-1 or N-2 used equipment from IBM Global Financing.
[…] – Robert X. Cringely, in a recent blog post […]
Is Bob on vacation? Retired? Not well?
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Be nice to hear from him!
I see that Bob posted to Forbes on 11/19, so he is still alive and able to write.
I thought I’d try to “follow” him by setting up an account on the Forbes.com site, and “following” him. There are dozens of “writers” to choose from, not listed alphabetically, so I used the search box to find him. Next I pushed the “Follow” button, which started the usual clockwise circling buffering/thinking/waiting icon. After 10 minutes, it’s still buffering. While waiting I can’t help but wonder if that icon would circle the other way for .au based domains. I also couldn’t help but notice that Bob describes himself as an ” iconoclast who writes about technology”. But lately, he seems to be writing about “technology companies”, exclusively. 🙁 While waiting, I decided to look up the definition of iconoclast and found that it is “a person who attacks settled beliefs or institutions”. I imagine it would be harder to attack settled beliefs about technology, unless you’re Einstein, of course, or a crackpot. Oh well, still circling, but I have to go (no pun intended); maybe it’ll work anyway and I’ve become a Cringely Forbes.com follower.
If you want to see when he posts something new, then you might consider setting up a Google Alert for that. I’ve been using this successfully for several years now in order to keep an eye on various things.
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Of course, some people at Forbes might disagree. But if anything I’ve found my alerts to be too comprehensive at times (more noise than news), rather than not comprehensive enough.
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https://www.forbes.com/sites/kashmirhill/2013/07/30/google-alerts-are-broken/
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Forbes.com is apparently Bob’s day job now, with this site being secondary, at best. His postings at Forbes will only show up here later, if they show up at all. Given that Bob says that he’s eventually been fired from every job he’s ever had, his current situation may only be temporary. 🙂
Mission accomplished. It’s being reported as tech companies got nothing, but actually H1 and other visa holders including not eligible for work H4s, are being given work permits. This amounts to a doubling of H1B visas. Plus new rules to expand L1 and O and OPT visas.
Bob’s Post at Forbes:
As IBM Commits to New (and Counter-Productive) Share Buybacks, Employees Are Starting to Speak Out.
Nov. 6, 2014. My recent post How To Fix IBM struck a nerve among IBM’s 400,000+ employees with thousands of comments about the post on IBM discussion boards and a sharp uptick of IBM employees asking to connect with me on LinkedIn. This latter point is especially important because it shows a significant change in IBM employee behavior where for the first time they are willing to be linked publicly with IBM’s biggest critic (me). This is either foolish of the IBMers or the sign of a huge crack in IBM’s corporate shell. I suspect it is the latter. Having read those thousands of messages so you don’t have to, it is becoming clear that IBM’s recent earnings miss and share drop are being misinterpreted by IBM management, whose clearest response so far has been authorizing another $5 billion in share buybacks — just the opposite of what’s really required to save Big Blue. So just to be perfectly clear, here is IBM’s big problem: the company is failing faster than it can be rebuilt. At the end of 2013 IBM’s Global Technology Services division was a $38.5 billion business. But according to the 3Q14 earnings report, pre-tax income is dropping at an 11 percent rate. IBM’s Global Business Services division was an $18.4 billion business according to the same announcement and sales are dropping at a rate of 15 percent. These two business units account for 57 percent of IBM’s revenue. So 57 percent of IBM’s business is now declining at double-digit percentage rates. Something has to happen to make up for these declines. IBM optimistically says cloud — the company’s great hope — is now a $3.1 billion business. How long will it take for IBM to grow the cloud business to the approximate size of GTS?
at 7.5 percent growth per year — 32 years
at 10 percent growth per year — 24 years
at 15 percent growth per year — 16.5 years
at 25 percent growth per year — 10.3 years
at 50 percent growth per year — 5.68 years
at 100 percent growth per year — 3.32 years
In the 3Q earning statement they said cloud was up 80 percent from the same period last year. At 80 percent growth per year that’s 3.92 years. Is 80 percent growth sustainable for a big company? At 80 percent do you think Amazon, Microsoft or Google will sit quietly by while IBM charges ahead? That would lead to (yet another) cloud price war and, given IBM’s obsession with earnings, do you think they could stomach several quarters of big losses in Cloud? When you are near zero in market share, 80 percent growth is nothing. After a couple years IBM will be doing very well if they can sustain 25 percent, which means it will take 10 years to build a big enough cloud business for IBM. At that growth rate 10 years is a very long time — enough time for the competition to figure out your business and become more competitive. That’s assuming IBM is already ahead and they aren’t. IBM is behind in cloud.
Bob’s Post at Forbes Nov. 19, 2014 Death Of The (IBM) Salesman.
“He don’t put a bolt to a nut, he don’t tell you the law or give you medicine. He’s a man way out there in the blue, riding on a smile and a shoeshine… A salesman is got to dream, boy. It comes with the territory. ” — Death of a Salesman.
We look at companies in quantitative terms or business fundamentals but hardly ever in terms of sociology. Well, maybe we should. IBM is an enigma, for years an earnings superstar yet more recently suffering consistent sales declines and a string of asset sales that smack of selling its seed corn to look successful. This makes no sense unless we understand the distorted logic of IBM’s management. Like every IBM CEO before her, Ginni Rometty came from IBM sales and sees enterprise sales as the very heart of IBM’s business. So in times of stress she preserves that heart by sacrificing everything else. The problem with this strategy is that traditional enterprise sales can no longer be central to IBM’s future as a successful company. Only Ginni doesn’t appear to know that.
IBM was operated for 100 years by an army of dapper salesmen selling mainly to the largest organizations in the world. Their sales process was expensive but that was okay because only the largest outfits with the deepest pockets even needed IBM products and services. As a sales operation, IBM continually asks itself what can I sell, how much can I sell, how much can I charge, and how much commission can I earn? This fixation on commissions more than anything limits IBM’s ability to change and evolve.
Today’s enterprise-class technology is being sold in new ways (more self-service) and at far lower prices per unit. Shifting to a mass-market model dictates a fundamental change in how you sell things. A traditional IBM-type sales organization is too slow and expensive to be competitive in this plebeian new world. So IBM has had to cut prices, and doing that without lowering the cost of the sales process means IBM has been under-delivering, according to those on the inside, because actually delivering costs too much. In one sense this is an industry problem. Everyone in traditional IT services is providing crappy service. Customers keep demanding lower prices so the whole services sector has descended to “you get what you pay for. ”
IBM has lost a lot of big corporate and government customers in recent years like Disney, Hilton Hotels, and the State of Texas. I have talked to these former IBM customers and many more. The story they tell is of a smooth marketing organization that sells customers on the size of its business and the success previous IBM customers have had. Add to that a rock-bottom price and the deal tends to look too good to pass up. But, former IBM customers report, these pre-sales perceptions are seldom confirmed. To make its profit targets from lowball contracts IBM starts cutting corners from day one. That’s what happens when you take the value of the contract, subtract the target profit, subtract sales commissions, then tell the people delivering the service to do so from whatever money is left over. Honest to God that’s how they do it.
“Big companies get confused,” Steve Jobs once explained to me. “When they start getting bigger they want to replicate their initial success. And a lot of them think, well, somehow there is some magic in the process of how that success was created, so they start to institutionalize process across the company. And before very long people get confused that the process is the content. And that’s ultimately the downfall of IBM. IBM has the best process people in the world. They just forgot about the content. ”
Steve said this in 1995.
IBM’s management will not generally get involved if the accounts beg for help or raise awareness that things are about to go badly. In general most accounts leave without IBM doing much to keep them. Sometimes a customer CEO will complain to IBM CEO Ginni Rometty. Being the good salesperson that she is, Rometty will promise to fix the problems. IBM technical SWAT teams are dispatched to the account like an invasion force. They check everything, typically finding hundreds of pages of things to fix, do better, etc. All costs for the SWAT teams and the corrections are paid by the IBM team responsible for the account. Herein lies a further difficulty: the financial conditions that caused the original problem have not been fixed, according to IBM SWAT team members I have met. Those problems started when IBM did not budget enough money to do the original work. Now the account team has a boatload of new costs from the SWAT teams and no budgetary relief. The funding problem just gets worse, so more heads are eliminat ed hurting even more customers. It’s a downward spiral.
When my father-in-law — a longtime McDonald’s owner-operator — got an order wrong, he fixed it and then threw in a free apple pie. IBM tends to lead its customers to believe it will fix all their problems. But what really happens is they take the account team to the woodshed while doing little to fix the management and budget conditions that caused the problem in the first place. And there’s no apple pie.
IBM is a conflicted place. Its poor performance in delivering services threatens its credibility in the very market segments the company is counting on for future growth. An example that hasn’t been reported before now is that IBM is in the process of kicking all mobile devices, including those of IBM employees, off its global intranet. If an IBMer, even an IBM salesperson, wants to use such a device at an IBM site, they’ll have to rely on their personal data connection to do so. There is a plausible reason to knock all the mobile devices off of IBM’s Intranet: security. IBM is very careful about its internal security and mobile devices are now a big risk. But how can IBM sell mobile technology to customers when its own networks are not ready for mobile?
Another example of bad thinking is how IBM’s business priorities and management culture have kept it from improving quality and automating. The company says it is automating, but the automation to which Ginni referred in her 3Q earnings call is an internal project called Dynamic Automation. IBM has licensed automation code from IPSoft, a New York IT automation company, and set it up as a cloud service on SoftLayer, IBM’s recent cloud acquisition. Dynamic Automation has two components. One looks at network events and problems and if it recognizes a specific issue it starts an automated task to fix it. The other component runs preventative code on servers. The service is being pushed very hard onto IBM’s outsourcing contracts. It is being sold as a tool that can augment an already overworked and underskilled support organization. That’s the official story. The real story is that those accounts will see even deeper IBM staff cuts in 2015.
Dynamic Automation is not a 100% fix. There will be many things it can’t do and the outsourcing accounts will have fewer people to handle those. This won’t matter to IBM, predict IBMers briefed on the initiative, because Dynamic Automation is one of Ginni’s pet projects. The political pressure to implement it is enormous. Regardless of the actual results, IBM executives will declare Dynamic Automation an amazing success and probably won’t play up the fact that it’s licensed code from an outside commercial product and not an internally developed tool.
The grand vision that’s supposed to replace most of IBM’s current revenue over time is called CAMSS — Cloud, Analytics, Mobile, Social and Security. Cloud is a commodity, deflationary business. It will not produce the profit margins IBM normally expects. Analytics comes with a big price tag and an unproven track record. IBM is far behind in mobile. Yes, they can do amazing things there, but with scores of companies already in mobile – companies more efficient and agile than IBM — can this really become a high volume, high profit market for Big Blue? Look at Google’s Chromebook, which is essentially a dumb box that only runs a browser. All of the applications, all of the intelligence, run on servers somewhere else. For the Chromebook they run in Google’s cloud. This is the easiest and most secure way to deploy mobile applications. Doing this or something like this is a no-brainer and will become the de facto solution for the mobile enterprise. But computing services like these can’t be a high volume, high profit margin business for IBM if Google is willing to provide them for free.
When it comes to Security, IBM is the expert. They could do very well with a security service. But the hollowing-out of its services unit hurts the sale of security services. If many of IBM’s customers no longer trust IBM, they will not trust IBM to protect them from security risks and cyber crime. There are other, more reliable, vendors in town.
IBM is setting itself up for another crisis similar to 1993 when John Akers was CEO, before Lou Gerstner was brought in to smash heads and fix the problems. Under Akers IBM that year lost $8 billion on $40 billion in sales. Like Akers, Rometty is overconfident in IBM’s technical superiority. IBM thinks, for example, that its Power8 processor designs are better than anything in the market. These chips may be a little better than Intel, maybe, but they are a lot more expensive, which won’t fly in a commoditized IT market. That market is already turning away from IBM Systems products and their premium pricing. IBM all but admits it needed to try a new approach and opened up its Power chip designs for other hardware makers to license. Software sales will eventually decline too, since IBM had more than others relied on selling hardware systems on which that software runs. By late 2015 I suspect all of IBM’s mature businesses will be in free fall.
During the last days of the Akers administration IBM was in crisis and leadership did not know what to do. They clung to business decisions that were hurting them like inflating mainframe pricing that ultimately hurt mainframe sales. They clung too long to pet projects that were failing, especially OS/2.
IBM is in the same situation today. Its leaders, especially in services, do not know what to do. Their internal problems with upset customers have largely overwhelmed management. Senior executives are clinging to business decisions and polices that are hurting many of IBM’s businesses. IBM’s numbers are headed in the wrong direction. Its revenue has dropped each quarter for the last ten. After the last two quarters cost cuts could be predicted. What is disconcerting about IBM was where they did the cost cuts, and the fact they ran out and bought back more stock.
The market wants to buy cloud and big data, both of which are core to IBM’s growth plans. Both also use large arrays of low cost servers, Intel servers. Guess who just sold its Intel server business?IBM’s plan is to sell its processors for these large arrays of servers. A different processor requires code to be recompiled and/or rewritten. It’s an open question whether the market wants different processor that costs a lot more. Is IBM aligning itself to the new market needs? IBM would argue yes, but by trying to do it differently, IBM is trying to pull the market away from where it wants to head. That’s OS/2 all over again.
This week IBM announced the signing of a deal with Lufthansa for $1. 25 billion. Over 7 years that is $178. 6 million per year. In the spreadsheet on this page I have collected IBM’s revenue from services (both its Global Technology and Global Business divisions) for the last 4 years. I’ve estimate the year end numbers for 2014 and converted the revenue lost to the number of equivalent Lufthansa deals. Over the last 3 years IBM has lost 24. 4 Lufthansa-sized deals. Every six weeks IBM loses a Lufthansa-size customer.
As I explained here last week, it takes time for new businesses to get up and running, and to start producing large profits. It could take 5-10 years before IBM’s new businesses are generating the same level of revenue and income as the legacy businesses they are intended to replace. And this is extremely optimistic. During this start-up phase the financial performance of the new businesses will be weak. It is important to keep the existing businesses sound so that their financial performance will average out the overall corporate numbers.
If you consider IBM to be short-term investment, then the continuously declining revenue numbers must be a concern. While IBM has continued to increase net income through financial engineering and cutting costs this can’t continue indefinitely. At some point its net income will start dropping, too. The 4Q2014 earnings will be down. The 1Q2015 earnings will likely continue this decline.
If you consider IBM to be a long-term investment, how does money spent on stock repurchase help corporate transformation? How does gutting its existing businesses help? How does the considerable damage to IBM’s reputation help? IBM’s major divisions are now losing business faster than the new businesses can pick up the slack. Profit margins will get thinner. Chances are very good IBM’s stock price will drop each quarter around the earnings statement. The decline will continue until IBM stops doing things that hurt business, distract from transformation, and endanger the company’s future.
It comes with the territory.
I worked for IBM in SA for 25 years and left in 2008. I saw some of these symptoms then and its really sad to see where it has deteriorated to now, especially having lived through the Lou Gerstner era where the company had regenerated itself
New forbes article if anyone is interested..
https://www.forbes.com/sites/robertcringely/2014/11/25/tv-3-0-is-already-here/
Thanks for the direct link. This link (below) may be helpful for future articles, provided it’s updated (sometimes these rss links just stop at some point). I found this up-to-date link by receiving an email from Forbes as a Cringely follower, and then clicking the “Follow” link on the page to which it led: https://www.forbes.com/sites/robertcringely/feed/
I hope so too. After dealing with the Forbes website for a few days, I’m ready to give up on them. I left this post at Bob’s TV 3.0 article, but you may have a hard time finding it or any other comments there, so I’m repeating it here: “The organization of this website is a mess. I’m trying to follow Cringely and comments. One day there are 3 comments on an article and the next day there are none, with no link available to make them visible. Also, if I want to read older Cringely comments, they are not on the same page, instead there are completely unrelated articles by some other authors under it. I need to go back to the Cringely feed to find a previous article, click on it, then make comments visible, and sometimes click on a second page since the article was split up for some reason. Bob, if you happen to read this, please duplicate your posts on Cringely.com since this Forbes website is hopeless.”
……………and a UK conference call midweek informs us that more layoffs/RA’s; but ‘don’t worry, those that are going have been made aware’. This call was made mandatory at 0845 the same morning of the announcement. Strangely enough I was well on the road at this time servicing my customers needs……..if the inestimable Mr Cringely has Ginni’s email address could he please email all of the above and highlight it in bold and underline it all. Maybe use baby talk and dumb it down even more………………you couldn’t make this up if you tried.
Re: The TV 3.0 Article: https://www.forbes.com/sites/robertcringely/feed/
“TV 3.0 is so-called Over-the-Top (OTT) television — streaming video services that rely on cheap Internet service.” It’s difficult to argue with a statement containing an oxymoron…’cheap Internet service’. How can it be cheaper to send a thousand individual data streams to a thousand receiving devices than to send one stream which can be simultaneously received (and optionally recorded) by those thousand devices? A thousand separate streams use a thousand times the bandwidth of one. The current OTA and cable models are more efficient than the current Internet model, that requires multiple streams. That is not to say the Internet can’t be involved. Each cable company head-end could receive a single stream over the Internet that it stores and distributes it to all their customers simultaneously on a single channel. The Internet is involved but it doesn’t look any different to the customers, who must tune to a specific channel at a specific time to receive a particularly popular program. Individual streams for each device only make sense for niche programming.
Goodness! This article has been here a month and IBM still isn’t fixed.
Is Bob OK? It is over a month now since he has posted here.
Things I would like to buy for Christmas:
* that book Bob wanted to publish but was too long
* NerdTV season 2 🙁 🙁 🙁 we’re coming up on a decade since Bob threatened to release this. then the Computer History affiliation was announced and nothing came of that either.
* foil disk drives (hmmmm)
* insight from Bob that is not IBM-related
* 2015 predictions! 🙂
I think IBM’s lawsuit in 2013 following the awarding of the CIA’s cloud contract to Amazon was pretty emblematic of the problem at IBM. Instead of looking inside the company to figure out why they weren’t competitive, they sue the customer.
Hi Guys,
I agree with all the above.
I joined IBM straight out of Uni in ’84. For a country boy from outback Australia it was my dream job. To join the biggest and the best, in the fastest growing industry, to just sit at the feet of giants in such a professional sales force was a blessing – and to see the world. – What a ride.
But above all I learnt:
1. Have respect for the individual.
2. Give the best customer service of any company in the world.
3. Pursue all tasks with the idea that they can be accomplished in a superior fashion
These were values I could get out of bed for.
These were actions that I could apply in all my day to day activities.
This was my compass.
You see IBM taught me that people don’t buy WHAT IBM does, they buy WHY IBM does things.
Not only was I energised by the WHY, but most importantly it inspired my customers.
The Watsons’ understood this and built one of the worlds greatest companies around this principle and these 3 values.
But the Palmisano’s and Rometty’s of the world are no Watsons.
EPS ! Now there is a rallying call for the team.
SVP to sales team. “Guys, I know we haven’t given you a pay rise this year or last, well ok the year before that too, and we have taken away your (fill in any asset/colleague here), but have you seen our EPS numbers. Hell I might miss out on a few million in options if you don’t fix this for me.” – OK, I am inspired by this pep talk, my adrenaline’s spiked, I am charged and ready to see my customers now.
Sales team to customer: “I know what your thinking Mr Customer, Do I need this right now, and will the board approve it ? Well a lot of my customers have asked the same question. But then they’ve seen IBM’s quarterly income statement, and gosh darn they’ve realised that my boss has an options package that’s just riding on this deal.”
When did the WHY become IBM’s EPS?
I ceased my employment with IBM many years ago, but I didn’t leave IBM, it was IBM that already had left IBM.
IBM today does not have a Business problem, nor a Financial or Innovation problem.
It has a Values problem.
How Father and Son must weep.
We stated!
VERY well stated Bruce.
Spot on. Well said.
You neglected to mention the innovation problem. IBM used to open frontiers in computing and hardware. They have dismantled their legendary R&D operations to the point that they are thoroughly behind the curve. They no longer have the ambition to be pioneers. This is not the company that developed the compiler under TJ Watson, Jr. They aren’t even showing the desire to be that company again.
The powers that be at Apple had the good sense to follow the advice of their internal analysis that buying NeXT was the path forward. It doesn’t seem as if any such analysis has even been done at IBM. The company is completely unmoored.
There is still a solid core of technically skilled IBM employees present. Between layoffs, deaths (indeed!), and retirements the core has weakened greatly– a more recent phenomena is an increasing number of long term employees leaving for better jobs. Very few American hires last more than 5 years before leaving. A new phenomenon though is fatigue. Even two or three years ago it was possible to rally the few remaining workers to push a project through, now the opinion is slowly swinging to: sacrifice hundreds of hours of personal time for what? Pay is below Federal pay grade (ignoring benefits, which are far better for Civil Service), and merit increases are unheard of for anyone near the top (80%+) of their band. It is pretty astounding that corporate refuses to increase pay for the top workers even a token amount, the very workers that one has to have to survive are eyeing the exits more and more.
In the ‘old’ days, IBM relied upon a large band of very technically skilled people because their products were specific to the hardware they produced such as the mainframe and required specific skills. Today, IBM is moving towards more generic software for its solutions. The ‘old’ products are just cash cows that let IBM keep functioning until it can move off them. The mainframe today is more Linux than good old MVS and it’s ilk so even the mainframe is moving towards being a commodity piece of gear.
As a result, IBM needs all these highly skilled people less and less as it can shift what is effectively commodity programing to cheaper parts of the world.
While IBM makes this transition it still needs the old products and people to support them as they are important to the cash flow but I very much doubt that IBM has anything more than a temporary allegiance to them until it completes its transition.
I think what is sad about this is that IBM is becoming just another software and services vendor in a large market as it loses what made it unique so that instead of leading the way, it will just play follow along and catch up. Its one advantage in the corporate arena is is size and history so it still remains attractive to a lot of larger corporate businesses that are operating behind a firewall.
Working in IBM environments has been very good to me over the past 40 years and I hope it will continue to be so for a few more at least but the reality is that IBM, like the world, is changing.
I’m not against IBM changing, even if personally I think they are abandoning some things that made them great, but it would be nice though if IBM could change with a little more empathy for its workers instead of treating them like dirt.
[…] Comment about IBM on the Cringely blog […]
Bruce……………………nailed it. I have become the very person that 15 years or so ago I would have loathed. Just comfortable and awaiting my severance pay……….no excuse and no reason, just tired and worn out from trying to be heard to improve matters on behalf of my customers though never for my own personal benefit (but that being said the latter would follow the former surely?). I have no faith in the company direction and even less in that it will be resolved. I want the company to see the light I really do as I have friends and colleagues here but you just get worn down and tired by attempting to suggest positive ways forward. No incentive to make the effort any longer. Very sad.
Things have gotten so bad for IBM that they have resorted to clawing back sales commissions previously paid to sellers. A buddy of mine is an IBM analytics rep and he ranted that IBM is making him pay back over $70K that he earned in a prior commission period (and he doesn’t have it). Guess its a $25M issue affecting hundreds of incentive based employees and managers–some owe IBM back $100K+!!! Has something to do with SPSS SaaS licensing that reps are no longer paid on but was never made clear. Watch out for some big sales turnover at year’s end.
Well stated Bruce.
I work for a large health care organization (200,000 employees) who signed a contract with IBM services to help get their data centers and applications in better shape. Almost 7 years later, some of our large applications are more stable and our datacenter might be in better shape but the other mid level applications are so far behind in security patches, proactive and preventative maintenance and non existent and our internal IT teams, because they laid off so many when IBM was hired, don’t have the technical skills to understand when IBM drops the ball or misses critical updates that go undetected for years. A large set of the employees at this company are just waiting for the retirement payday and not really interested in fixing the relationship and delivering value to our internal teams. Our secret IBM contract has no SLAs, no follow through on misses, no leadership and no really ability to identify problems and find solutions…just lots of talking and meetings. I suspect our contract had to do with IBM choosing us for health care for their employees in the location where we provide services, and us selecting IBM nothing to based that on. As I read your posts, I commiserate as I hear companies leaving IBM global and wish for the day…
The comment on IBM having a ‘values problem’ is bang-on! Very astute IMHO. It’s the fundamental reason why the road back is more than just a financial one. The self-proclaimed ‘Most Essential Company in the world’ is values bankrupt.
Here’s an explanation of IBM I haven’t
seen in this thread:
I was a Research Staff Member for a while
at IBM’s Watson lab in Yorktown Heights.
But long before that I got an offer, that
I declined, at the IBM branch office in
Chicago. There the manager of the office
told me two things about IBM:
(1) You might think that IBM is an
electronic company or a computer company,
but it’s not. Instead, IBM is a marketing
company. We’d get into the grocery
business tomorrow if we thought that there
was money in it.
(2) You might think that in IBM, research
comes up with new ideas, manufacturing
produces corresponding products, and
marketing sells them. That’s exactly
backwards. Instead, marketing sees what
products they believe they can sell;
manufacturing produces them; and
manufacturing goes to research if they
need to. What IBM charges for the
products is not based on what the products
cost to produce but the most IBM can sell
them for. Usually this is more than the
cost of production, and that is good, but
at times it is less.
While I was at Research, I heard the
phrase “a good IBM customer”. This meant
a large organization in, say, banking,
insurance, or manufacturing, sometimes
government, with a lot of ‘back office’
record keeping and processing to do.
OF course, way back there, 1920s or so,
Tom Watson, Sr. saw Hollerith’s punched
cards and concluded “This is the answer to
back office record keeping and
processing”. Actually it was earnings
from punched cards, not computers, that
built the elegant Yorktown Heights
facility, right, in 1959.
Of course later, computers, and then with
transistors, came forward; Tom, Jr. pushed
hard with System 360; and that became
nearly a license to print money.
IBM sold on the golf course, etc. to the
customer’s CxO members and was the
customer’s CIO right hand man; “No one got
fired for buying IBM.”.
Soon, from some of the needs of the US
DoD, reservations for American Airlines,
etc., digital communications became
important, and IBM modified its hardware
and software to provide on-line
transactions processing systems and
printed more money.
The big push by US aerospace for digital
electronics made microprocessors possible,
and up came Microsoft, HP, Apple, etc.
Things digital just exploded (and with
mobile and more are continuing to do so),
but IBM’s business with the big company
CIO’s was essentially saturated and then
stagnated, and IBM was slow to find new
customers and business models.
IBM remained a “marketing company” with
their old business model of being the
right hands of the CIOs of big
organizations.
The power in IBM remained with the
marketing people who sold mainframes
(System 360 and follow-ons), and those
people often worked hard to crush anything
else in IBM — fight with people down the
hall instead of competitors outside.
In the 1980s, IBM had everything in
computing from microprocessor design and
manufacturing to virtual machines (first
done at the IBM Cambridge Scientific
Center for a time-sharing system for
developing operating systems and long
resisted by the mainframe gang), personal
computers, research in ‘wearable’
computers (now starting to catch on),
TCP/IP on a single chip (now relevant to
the internet of things), digital
communications networks, social media
(Prodigy), printing,
scientific-engineering computing, personal
computers (the PS series and OS/2),
magnetic storage, magnetic storage
subsystems, relational database, high end
transaction processing hardware, J.
Cocke’s discrete component prototype RISC
running with an 80 MHz clock when the
mainframes had an 11 MHz clock, the Mach
kernel, DB/2 on OS/2, giant
magneto-resistive disk heads, the elegant
scripting language Rexx (done without
management support), the elegant editor
XEDIT (done without management support),
and more.
But, the power inside IBM was still with
the mainframe marketing people, and they
just didn’t want the other business
opportunities. Maybe their problem was
that they couldn’t see how to sell tons of
personal computers to CxO members on golf
courses. A common remark about other
lines of business was that there was no
“business case”, e.g., like selling
mainframes to insurance companies had been
in the 1970s. E.g., the main attitude
about OS/2 was that it would be just for
“cooperative processing” for “THE
mainframe”. Uh, what about people who
didn’t actually have a ‘mainframe’?
IBM started to flop in development: E.g.,
IBM tried Office Vision, had hundreds of
people, spent many millions, finally gave
up, in effect tossed all the work into
Long Island Sound, and told customers to
use Lotus.
Since IBM was a marketing company,
development was a stepchild. Tom, Sr. had
a lot of good mechanical guys in the big
plant in Poughkeepsie. Tom, Jr. spent,
pounded, spent, drove, spent, etc. and
finally got System 360 out and then spent
and spent and spent to get the bugs out.
Along the way DEC with the PDP-10, GE with
Multics, and more actually had much better
ideas in both hardware and software. Yes,
Multics was good on data security with
‘capabilities’ and ‘access control lists’,
and much later when IBM finally took
mainframe data security seriously with
their Resource Access Control System
(RACF), guess what ideas they used?
Without the really hard driving of Tom,
Sr. and Tom, Jr. and their deep pockets,
net, far too often, but definitely not
always — e.g., System 38 (elegant
computing for small organizations), DB/2
(revolutionary, relational database), PL/I
(programming language with a lot in scope
of names, data types, data structures, and
more), VM (virtual machine) — IBM’s
development was unimaginative, clumsy, and
slow and resulted in products that were
just too expensive.
Once I met with some of the staff of the
‘management committee’, or whatever it was
called, that met in a room with a long
table diagonally across the hall from the
CEO’s corner office in Armonk, and in that
room they explained to me: Long each year
the top managers met here, reported the
results, terrific, nicely exceeding their
high projections, but then somehow they
started missing their projections. No one
knew just why. It was as if somehow God
had ceased to smile on IBM. That was,
really, the level of understanding.
One remark by a well informed observer was
that the IBM top management was a lot of
guys off the farm who made good. The
implication was that they really didn’t
much understand what they were doing but
had been good salesmen lucky enough to
have been at the right place at the right
time.
Well, IBM stayed in the computer business
and didn’t actually get into the grocery
business (except maybe for point of sale
equipment). But, with the power of
Moore’s law, the Internet, optical fibers,
etc., the computer business kept changing,
and IBM’s top management never quite ‘got
it’. E.g., when OS/2 was still the best PC
operating system but when PCs clearly
needed much more in operating systems,
Gerstner said “I’m not going to sink $2
billion into another desktop operating
system” or some such. So, Gerstner left
the door wide open for Microsoft’s NT,
Windows 2000, Windows XP, …, Linux,
Apple, Android, the huge server farms of
Microsoft, Google, Facebook, Amazon, etc.
Bummer. Dumb. Brain-dead. Biggie-time
dumb, dumb. Go sell some more mainframes
to banks and insurance companies, Lou, if
you can. Of course, you can nearly hold
your breath until your entire mainframe
instruction set can be emulated on an
Intel x86 chip, but, sure, keep putting
your trust in golf games with CxOs!
Back there, IBM had a ‘super-salesman’
Buck Rodgers. Once he and I were in a
selling competition. I was an assistant
professor in an MBA program trying to get
some decent computing, better than the
punched cards on the central mainframe,
and selecting from the super-mini
computers much like Multics. Buck and his
buddies were trying to sell us a
mainframe.
The problems with IBM’s offering:
(1) WAY too much cost and space for the
computer room for power, raised floor,
A/C, etc.
(2) WAY too much cost for system
management and operations.
(3) WAY to much cost, space, and
complexity for system documentation.
(4) Just awful, clumsy, ability to drive
popular, effective serial, full duplex,
XON-XOFF protocol ASCII devices.
(5) Applications software WAY too clumsy
and/or expensive.
(6) WAY, WAY too much cost for any
expansion of capacity.
(7) System software that made very
inefficient use of disk space.
When the dust settled, IBM got zip, zilch,
and zero. We got a nice super-mini, and I
was appointed Chair of the computer
committee. The super-mini lasted for 15
years, long after PCs had become a better
solution. The campus CIO who had run the
campus mainframe and had opposed me got a
new career, and I served on the committee
to pick a new CIO.
Net, the marketing guys running IBM
consistently, ever since Tom, Jr. retired,
just did NOT ‘get it’. What Tom left and
the growth in digital everything kept IBM
going this long, but, clearly, still, IBM
just doesn’t ‘get it’. They are not Gates,
Ellison, Shugart, Jobs, Page and Brin,
Zuck, etc.
But, maybe they are still trying to be a
‘marketing company’: Have their salesmen
see what can be sold, and then sell it.
For what to sell, mostly don’t try to
develop it and, instead, buy it. So their
contribution is to find something they
think they can sell, buy it, and put the
IBM marketing behind selling it. And they
might support it. So, maybe they are
still trying to do what that Chicago
branch office manager explained to me so
long ago.
So, IBM bought SPSS and C-PLEX and are
trying to sell them. Maybe they are
trying to sell help desk support services.
Maybe they are still trying to sell
mainframes to customers locked in by their
applications software.
At least for a while, IBM Microelectronics
was making the core chips for the IP
routers and LAN switches for Cisco and
Juniper. Alas, didn’t get into the router
business and sold the microelectronics
division. Maybe couldn’t sell those chips
on a golf course!
IBM was early into the amazing amplifier
that can wrap around an optical fiber and
amplify the digital signal without
converting from optical to electrical and
back. For a while, IBM actually ran ALL
of the Internet. Alas, I haven’t heard
that IBM is big in the Internet now.
Guess somehow can’t see that from a golf
course.
Here’s what IBM should do: Take everyone
in the company and give each of them a
blue badge. Then, somewhere, set up a
subsidiary corporation with a group of 10
bright people and give them red badges and
stock options in the subsidiary
corporation. Give those 10 people
complete freedom to do what they want.
When they want more people, have them pick
from people with blue badges and give
those people red badges. Let the red part
grow and the blue part, if it insists,
shrink. Done.
What might the red part do? Okay, Gates
and Intel put a computer on each desk.
But that computer is running an operating
system still heavily based on Windows NT
15+ years old.
So, come out with a computer, for
desktops, homes, and small and medium
businesses.
Take the usual issues of extreme
frustration now and address them. Realize
that processors with 50+ cores are quite
doable now and where useful take advantage
of that.
Frustrations:
(1) System and data security, on LANs,
among remote locations, with peripheral
devices (e.g., thumb drives), and on the
Internet.
(2) Absolutely the system just must be
able to run just any possible software,
any stream of bits at all, malicious or
not, with full safety. Do this with a
‘hardened’ operating system, virtual
machines, attribute control lists, ‘users’
with constrained capabilities much as for
‘logged in users’ of old time-sharing
systems, ‘sandboxes’, ‘containers’, etc.
(3) System, peripheral, and software
selection, acquisition, installation,
configuration, documentation, backup,
recovery, usage, and support. Biggies.
(4) Have the computer be for a ‘cloud’ for
other computers, mobile devices, and the
internet of things, for a house, an
apartment house, a small or medium
business, etc., good for I/O, monitoring,
and control of everything from the door
locks to the security cameras, sous vide
cooking, children’s toys, etc.
(5) Have the system good for software
development: there is now a big push to
teach everyone to ‘code’; so, everyone
should code, and the computer should come
ready for that, with languages, libraries,
development tools, documentation,
subsystems, etc.
(6) Have the software for the thing all
ready to go, with all the good open source
code, e.g., R, TeX, LaTeX, emacs, C, C++,
Java, Python, ready to use, and good if
relatively simple versions of personal
productivity applications, now including
for working with voice, still images, and
video.
“Be wize, virtualize”. So, enable nearly
everything in software from the past, back
to PC/DOS and System 360, via various
cases of emulation or virtualization.
There’s more. And, do a good job, say, as
nicely polished as System 38.
The market is right there, waiting, ready
to be taken. Have the red group do it.
Bob – dunno if IBM reads your column, but I’ve got a simple fix: hire me as your CEO
http://antipaucity.com/2015/01/08/fix-ibm-hire-me-as-your-ceo/#.VK7iMorF8Xc
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