Robert Cringley has just posted an extended essay on how IBM can be turned around.
If there's one company that Cringley understands, it's IBM. He's done his research on this company and apparently has dozens of contacts inside the company, plus many more former employees who departed either voluntarily or as part of an "RA" (Resource Action = layoff).
I expected Cringely to go ballistic when CEO Ginny Rometty dropped a three-part bombshell on the financial markets last week: 1) IBM missed its expected revenue and earnings estimates for the quarter by a huge margin; 2) IBM was selling its semiconductor manufacturing business to Global Foundaries; and 3) Rometty was giving up on the infamous "Roadmap 2015" to $20 earnings/share established by her predecessor, Sam Palmisano, which Rometty had been following diligently since she took over the reins in 2012.
Instead, Cringely reacted in a measured way, writing a pair of short analysis pieces for Forbes; the first on how the IBM server business (the high end business the company retained, not the commodity business sold to Lenovo) will be at a huge cost disadvantage over the next 10 years, even after the sale of the microelectronics division to Global Foundaries; second, how IBM's software and services businesses have been badly damaged by frequent waves of layoffs, so that opportunities for revenue growth too often come from tightening enforcement of software licenses and similar gadgetry.
Now, a week after the announcement, comes the longer reaction piece. Bear in mind that Cringley is a journalist and blogger, not a management consultant or financial analyst, so his advice won't be confused with a bound report prepared for management's eyes only by McKinsey & Co. Cringley's prescription follows...
1. Stop cutting staff, particularly in Global Services. The layoffs are damaging quality and alienating customers.
2. Look for Cloud Computing opportunities higher in the stack, in SaaS (Software as a Service) rather than in the commodity PaaS (Platform as a Service). Look for sales opportunities from smaller customers outside the Fortune 1000 (IBM's traditional customer base).
3. Acquire more business software companies (e.g. Intuit, Computer Associates) to obtain products that can be converted into SaaS offerings for the cloud.
4. Create a mobile app store, not to compete against Apple, Google and Microsoft, but rather to entice ISVs to develop mobile applications for IBM's enterprise and cloud software.
5. Fire Ginny Rometty as CEO
Ginni’s plan to save the company will involve further cuts. You can’t cut your way to prosperity.
6. Ask several members of the board to follow Ms. Rometty out the door.
This reminds me of a curmudgeonly quote made several decades ago by W. Edwards Deming, the statistician and quality guru who is credited for helping to revive Japan's industry after World War II:
Populating management with financially oriented people has ruined this country (USA).
Apparently some folks in Armonk, NY didn't get the memo.
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IBM's vast research department was recently reorganized to ramp up efforts related to cognitive computing. The push began with the development of the original Watson, but has expanded to include other areas of software and hardware research aimed at helping machines provide useful insights from huge quantities of often-messy data. “We’re betting billions of dollars, and a third of this division now is working on it,” says John Kelly, director of IBM Research, said of cognitive computing, a term the company uses to refer to artificial intelligence techniques related to Watson.
(Score: -1, Offtopic) by Anonymous Coward on Tuesday October 28 2014, @12:00PM
We're pissing away
I don't know what
I'm to say I'll say it anyway
Today's another day to find you
Shying away
I'll be coming for your love, OK?
Piss on me, piss me on
I'll be gay
In a day or two
So needless to say
I'm odds and ends
But that's me stumbling away
Slowly learning that life is OK.
Say after me
It's no better to be safe than sorry
Piss on me, piss me on
I'll be gay
In a day or two
Oh the things that you say
Is it life or
Just a play my worries away
You're all the things I've got to
remember
You're shying away
I'll be cuming on you anyway
Piss on me, piss me on
I'll be gay
In a day or two
(Score: 0) by Anonymous Coward on Tuesday October 28 2014, @12:12PM
What song do those lyrics go to?
(Score: 0) by Anonymous Coward on Tuesday October 28 2014, @02:14PM
The Ballad of Systemd?
(Score: 0) by Anonymous Coward on Tuesday October 28 2014, @04:52PM
FYI http://youtu.be/djV11Xbc914 [youtu.be]
(Score: 0) by Anonymous Coward on Tuesday October 28 2014, @12:10PM
Can anyone tell me what AIX, DB2 and Informix are like to use? Are they good? Are they bad? Describe the experience to me, in great detail.
(Score: 2, Informative) by Anonymous Coward on Tuesday October 28 2014, @03:21PM
Informix: can't help you, never was directly responsible for it.
DB2: what Oracle wishes it were, in Ellison's most tear-filled, pillow-hugging moments. It used to be a turd in an ugly can, but someone in Big Blue got the memo that it needs to be more flexible, faster and accessible. If anyone asks me what to replace their Oracle installation with (this happens more than you might think, especially when licence fees come due) my answer isn't MySQL, or even Postgres. It's DB2. It's boringly solid inside. Some of the more edge-cutty features are a bit less stable, but that's true for everyone. Inside the engine is utterly reliable. And the support is second to none. Seriously, get it for free, and make up your own mind.
AIX: Used to be called Aches and Pains, many moons ago. (Giving away my age here.) In reality, I'd use it for serious work before pretty much anything else except maybe OpenBSD.
But the best thing about these products is the Red Books. If you don't know what they are, they're IBM's internal HOWTOs and FAQs. And they are awe-inspiringly deep.
Go figure, IBM knows how to make stuff work.
(Score: 2) by strattitarius on Tuesday October 28 2014, @09:48PM
I was able to meet some of the DB2 developers and the guy who was the lead for writing the Red Books and documentation for DB2. They are smart and put my knowledge of databases to shame. Thank goodness IBM hasn't canned that group, yet.
Slashdot Beta Sucks. Soylent Alpha Rules. News at 11.
(Score: 0) by Anonymous Coward on Monday November 10 2014, @01:48AM
There's an entertaining technical debate between the Oracle and DB2 folks over "optimistic" (multiversion) vs. "pessimistic" (lock-based) concurrency control to prevent disasters when multiple transactions try to access/update the same table, row, or field, which you can read about by googling "IBM Oracle multiversion concurrency control". IBM was/is the staid defender of lock-based techniques, at least through the mid-00's. Not sure if this is still the case now.
(Score: 2) by kaszz on Tuesday October 28 2014, @12:12PM
This makes me wonder:
Populating management with financially oriented people has ruined this country (USA).
Does it mean that those positions should be populated by statisticians or, some other category?
(Score: 0) by Anonymous Coward on Tuesday October 28 2014, @12:24PM
Statistics are the problem. Modern business management is all about stats and metrics, and making decisions on the assumption that these stats and metrics correlate to reality. Well in most cases they don't, leading to the disatrous situation we have now.
(Score: 1, Interesting) by Anonymous Coward on Tuesday October 28 2014, @12:33PM
There are a number of problems with metrics.
As I see it, the biggest one is in choosing the right metric. Your measurements can be 100% accurate but still misleading if they don't measure what you need to be measuring.
The other problem with a metrics-first approach to business is that it reinforces the status quo. You got on maximizing what you've already got that you stagnate and become to rigid to keep up with the changing marketplace, that lets young and hungry businesses eat your lunch. It is a similar problem with "big data" - where we end up with a sort of self-fulfilling prophecy, except "big data" has a societal impact instead of taking down individual corporations.
(Score: 1, Interesting) by Anonymous Coward on Tuesday October 28 2014, @01:57PM
That is part of the issue.
The other part is ignoring your customers. Seeing them only as a way to extract money and an open cash register. Instead of someone who is willing to come off money because you provide value. I see it time and time again. I ask these top VP people 'how will this help our customers'. The answer to that question is usually very telling. I many times get a blank stare they had not even considered the point. What do your customers want. Many will not know. But some will. Ask them.
I also hear sr vp level people telling me 'we only want businesses that make billions of dollars'. Yet they have nothing in the pipeline to do that. As if any of the ventures we are working on are worth a billion dollars. Guess what, it probably already would be if it was worth that.
Look to the people who create value instead of destroying it. It sounds like this dude is advocating buy someone who can build things as you already stupidly sold off those parts of your business.
(Score: 1) by Whoever on Tuesday October 28 2014, @03:10PM
Statistics are not the problem. Statistics are merely a tool.
In general, MBA types don't have a good grasp of statistics, so they tend to misuse the tool. In particular, as you noted, understanding the limits of accuracy of statistics and their value (or lack of) in predicting the future. Think of it as the Dunning-Kruger effect applied to statistics when used by MBAs.
(Score: 2) by frojack on Tuesday October 28 2014, @08:51PM
MBAs really don't have that many tricks up their sleeves.
The MBA degree program largely consists of
1) Finding costliest items in the budget
2) Cutting same
3) Avoid risk, by liberal use of risk-shifting paperwork.
Very seldom to they look at the revenue side of the equation, and even when they do, they tie revenue to sales staff, and never look any farther.
No, you are mistaken. I've always had this sig.
(Score: 3, Insightful) by HiThere on Tuesday October 28 2014, @07:10PM
Statistics aren't the problem, but they aren't the solution, either. They're just a tool
If you want to build things, get an Engineer at the head.
If you want to sell things, get a Salesman (not just any Sales Manager) at the head.
If you want to do lots of things, get a good manager at the head, but put the right expert in charge of every department. It's a load of garbage to claim that a good manager can manage anything. They can only properly manage the things that they can understand. Steve Jobs was fantastic because he was a missionary with a vision who understood engineering, design, and marketing. He wasn't that good a manager, but he was able to inspire managers that he hired with his vision (I did say he was a missionary) and his vision was based on sound engineering and good design. This is an extremely rare combination, and you can't expect to find someone like that who is amenable to your purpose. So you need to backstop.
This means that you MUST have each department managed by someone who is both a competent manager and is really skilled in what they are managing. And you need someone at the top who can inspire them to do their best. A much more abstract task than inspiring them to follow your vision.
Javascript is what you use to allow unknown third parties to run software you have no idea about on your computer.
(Score: 3, Insightful) by Zinho on Tuesday October 28 2014, @07:55PM
Modern business management is all about stats and metrics, and making decisions on the assumption that these stats and metrics correlate to reality.
I've got a pretty metric-centric management where I work, and it's not necessarily bad. The one warning about use of metrics is that once you start measuring something and using it as a measure of success, behavior changes to improve that metric whether it's good or bad for the company/employees/customers involved.
With that in mind, the big mistake many corporations are making (at the bidding of their MBA-wielding overlords) is that they are focusing on quarterly earnings as their prime metric of success. There are many short-term strategies (layoffs, spinning off subdivisions with a larger-than-necessary share of debt, etc) that work to improve the quarterly earnings, some of which even make the company more profitable in the process. Many of them, unfortunately, tend to destabilize the company in the long-term. Reducing or eliminating R&D is a clear example - on the balance sheet it appears to be a black hole for money, reducing profitability and never generating income; however, R&D is where all new products come from, without it a company stagnates and eventually becomes irrelevant in the market. IT is seen the same way, it's a cost center only and generates no revenue - outsourcing to reduce spending makes sense if you're looking to reduce expenses, but is seen as an unconditionally bad decision by the people who depend on IT for their operations.
There is an old story about a goose [storyit.com] that should perhaps become mandatory reading at business school...
"Space Exploration is not endless circles in low earth orbit." -Buzz Aldrin
(Score: 3, Insightful) by Thexalon on Tuesday October 28 2014, @01:20PM
In my experience, management works best when the managers in question understand the jobs of the people they are managing, and understand the primary expertise of the company.
So, for example, the best CFO of a car company is going to be somebody who really understands cars and also has a talent for making sure the books are in good shape. The best CMO of a software company is somebody who really understands software but also knows how to communicate about it to the public. And yes, that means that the best CEOs have a decent understanding of what goes on at every level of their company.
The reason this is critically important is that if you don't understand what somebody below you is doing in a hierarchy, you are:
A. Less likely to have realistic expectations about their performance, and
B. More likely to fall for that somebody lying to you about their job performance.
All of this is heresy in the Cult of the MBA, where management is supposed to be something that is in no way related to the actual task you are managing.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 2) by HiThere on Tuesday October 28 2014, @07:19PM
That's a good recipe for a medium sized company. For a company as large as IBM I don't think you can find anyone who understands the whole picture. So you need people in charge of the departments that understand their department, and are good managers. And you need at the top someone who can inspire those managers (and their subordinates, though largely indirectly) to do their best for the company. Even that's pretty tricky. You definitely don't want finance in charge, but you also don't dare ignore them. Engineering being in charge has much to recommend it for a strongly technical company, but it also builds in its own weaknesses. Ditto for Sales. And the guy at the top needs to have an idea of where he wants the company to go, and to be able to communicate it to all the top level managers, and preferably to the other people in the company too. And its best if he can get them all to buy into his vision...except that has the dangers of not hearing any warning signs when you forget something or make a big mistake. And design shouldn't be either subordinate to engineering, or dominant over it.
Javascript is what you use to allow unknown third parties to run software you have no idea about on your computer.
(Score: 2) by Hairyfeet on Tuesday October 28 2014, @08:02PM
According to Jim Sterling at The Escapist [escapistmagazine.com] the reason why we are seeing a billion ripoffs of just a handful of games while entire genres like horror and non military shooters get ignored is exactly this, game companies hiring CEOs from packaged goods companies instead of hiring...ya know, people that actually UNDERSTAND games or the games industry? So it looks like its a stupidity disease across all the industries.
ACs are never seen so don't bother. Always ready to show SJWs for the racists they are.
(Score: 2) by zocalo on Tuesday October 28 2014, @01:22PM
UNIX? They're not even circumcised! Savages!
(Score: 3, Interesting) by PizzaRollPlinkett on Tuesday October 28 2014, @12:15PM
Okay, say you do fire the board, CEO, the whole C-level crew, and the VPs. Clean them all out. Then replace them with...who?
Today's professional management class don't know how to build and grow. The only arrow they have in their quiver is to fire and outsource. I'm convinced of that. Their professional training has been in ways to boost short-term profits by firing people and outsourcing. I don't think they understand anything else about business. But a generational change has taken place in American business, and the generation of professional managers we have now were all trained in the same way. So who are you going to get to change things? Not some 80-year-old Baby Boomer. Someone like that won't have the energy and drive to turn IBM around. I don't think the people running corporations today would know how to do anything to cause growth. The only thing they've been trained to do is to make cuts for a short-term boots in profits. That's the only tool they have.
The problem is the professional management class protects their position running corporations, because they can fire anyone they want. Workers have no power at all. What are you going to do when you get fired just because an executive wants a bigger bonus? Your job performance doesn't matter. (And company performance doesn't matter - Warner Bros is purging employees after record years.)
Someone could start a new company that does things right - treats people as valuable assets and does quality work. But the corporations which hire consultants want things done cheap and don't care about quality, so who would pay for your services?
Workers could unionize, but there is more supply than demand, and companies like IBM would just switch to 100% offshore labor before they would deal with a union.
(E-mail me if you want a pizza roll!)
(Score: 2) by kaszz on Tuesday October 28 2014, @12:29PM
If you can steal the customers from the corporations that is run by MBA:s etc. Then you can also start to sink them into the drain. Banks will be a problem because they are run by the same people. And the lawmakers are made up of lawyers..
(Score: 3, Informative) by Nerdfest on Tuesday October 28 2014, @02:45PM
Banks and a few other areas (including government) are also the ones that have allowed IBM to exist as long as they have. These are the people who genuinely seem to believe "nobody every got fired for buying IBM". These are the original fanbois. If not for them I think IBM would have been out of business twenty years ago. These people are slowly retiring, but a many remain, and they tend to be in management positions now. It's sad that the people supporting IBM tend to be in businesses that are resistant to competition.
(Score: 2) by Sir Garlon on Tuesday October 28 2014, @02:37PM
The beauty of being a pundit is that you don't have to provide solutions. You only need to point out problems.
Though I would add that if anyone did have a good answer to that question, he or she would be a fool to tell IBM for free.
[Sir Garlon] is the marvellest knight that is now living, for he destroyeth many good knights, for he goeth invisible.
(Score: 2) by bob_super on Tuesday October 28 2014, @04:04PM
Sadly, the answer is "not a woman".
Huge companies make an effort to push a woman to the top, exactly once, whether she's competent or because it looks good on paper. Then pundits and peers instantly start to nitpick and argue every little decision she makes, even if they align with her predecessors, until they've achieved critical mass of "I told you she wasn't strong enough". At the first real speed bump, even if cyclical or required hard choices, the rest of the street rallies around the pundits, ousts her, and it's back to 20 years of good ol' boys.
I'm exaggerating only a bit. You can easily see this pattern, and it applies to women and non-Asian minorities, at the top of companies or governments. Very few escape it, because it takes exceptional timing, insane charisma or crummy opposition to overcome the "see? we tried it" bias.
(Score: 2) by emg on Tuesday October 28 2014, @05:25PM
I don't know about IBM, but, in most companies, you;d replace them with people who've worked their way up the company and know the company's business, rather than MBAs who only know how to push up the share price for a couple of years before they pull their Golden Parachute.
I'm firmly convinced that the MBA must have been a Communist plot to destroy the West, which has, unfortunately, survived the collapse of the Soviet Union. No other explanation makes sense.
(Score: 3, Funny) by richtopia on Tuesday October 28 2014, @06:54PM
Step seven was left off the list, and would answer your replacement question:
7. Hire Robert Cringley as CEO
Also, as can be expected:
8. ????
9. PROFIT!!!
(Score: 2) by HiThere on Tuesday October 28 2014, @07:23PM
Well, if you can't use professional managers, you use experts in the field. Some engineers make good managers of engineering departments. Some salesmen make good managers of sales departments. Etc. And surely you could find one good manager to put at the top. If you can't find one, build one.
Javascript is what you use to allow unknown third parties to run software you have no idea about on your computer.
(Score: 3, Interesting) by hendrikboom on Wednesday October 29 2014, @03:21AM
Along time ago, when I was young and energetic instead of an old greybeard, I heard that IBM's promotion policies were to have two distinct tracks -- technical, and management.
The trick was, that they would only promote people from one track to the other. Tus anyone reaching the top would have experience in both.
I don't know what they do now.
(Score: 2) by VLM on Tuesday October 28 2014, @01:26PM
In 2014 does IBM still have a purpose? I hate to make the old Apple quote about the best thing they could do is shut down and distribute the proceeds to the shareholders, but ...
So they've gotten rid of everything substantial other than consultative services. So they're pimps. And they're downsizing and outsourcing all their working girls. The long term outlook for that isn't very bright.
Alternately, they have a very deep patent portfolio. So they could go into the lucrative field of patent trolling.
The problem with being a middleman who automates and outsources the heck out of everything, is nobody needs a middleman anymore once they can use the same business processes and tools and not bother paying the middleman a profit anymore. You've gotta be a pretty dysfunctional company internally before you're better off having IBM do "it" for you.
Look for sales opportunities from smaller customers outside the Fortune 1000
Bzzzt that'll fail. If your company is so huge that its suffering from dinosaur nervous center paralysis, then IBM acting as a pimp to connect you with a script reader in India who does nothing other than tell users to keep reinstalling windows (on your mac) is not performing much of a service, but it is "a" service. A smaller less paralyzed company doesn't require providing a profit for middlemen.
to entice ISVs to develop
Why? Rats deserting a sinking ship and all that. Build it and they will come "works" for a little while with high end real estate and other scams, but eventually its not cool anymore. Look at the spectacular sales figures for Amazon's cell phone or Microsofts cell phone. Look at it from the point of view of an ISV not the point of view of IBM. From the ISV perspective, "I could dump expensive labor into something that won't sell, and if it did sell IBM would keep all the profit. Or I could just spin up some resources on AWS and sell it ourselves and keep all the profit... Its not like IBM will be able to compete, they're downsizing like crazy so I'll just hire the experts they just fired..."
(Score: 2) by wonkey_monkey on Tuesday October 28 2014, @06:40PM
Cringley? Rometty? Bingly Bongly?
I don't know if this is a news story or an excerpt from a Harry Potter book.
systemd is Roko's Basilisk