SoylentNews is people
SoylentNews
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: 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