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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.
(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.