rephrase the whole things
IBM’s decade of Transformation : Turnaround to Growth
From 1960 – 1991
- IBM developed the S/360 computer, English like computer language FORTRAN, hard disk, floppy disk, supermarket checkout station, early version of ATM
- In 1981 IBM PC’s became the most successful technology introduction
- IBM’s money making machine – the mainframe
- Early signs of trouble in 1884 as return on sales , assets and equity began to decline partly due to converting a leasing oriented business to a sales oriented business
- Problems started in 1991 as Revenues declined at faster pace – more than 60% for each of the next two years
- Further decline due to IBM’s denial to get into client/server and network computing business
- Technology shift towards midrange and mobile personal computers led to fewer purchases of mainframes
- Inadequate planning to combat the threat from emerging technologies
- Inadequate marketing of products
- Competitors like Compaq and Dell stole the PC market from IBM
- Turf battles between autonomous divisions of the company
- High fixed costs
- Failure to address customer Problems
- Failure to identify emerging business opportunities
- Lack of commonality in certain products and processes
- Poor performance n internal IT management (the area where could have the expert) – 125 data centers and 128 CIO’s
- Lack of standardization led to higher data processing costs
- Deep hierarchy levels
- Heavy reliance on corporate staff
- Consensus driven decision making culture
1991 – 2003 : turnaround to growth
- Voluntary retirement packages
- Forced layoffs when target not met
- Integrated systems solution corporation created in 1991
- L.V Gernster chosen to lead the company in April 1993 and he put the main focus on “customers first”
- New CEO involved in direct meeting with its best customers
- Each senior executives given a group of customers to handle during the turnaround period. The executives responsible for accounts of their customers and accountable for any problems
- Bear-hug key employees from leaving
- Jerry York, ex-Chrysler CFO charged with cost control
- Benchmarking study launched to compare costs with its competitors – the ratio of expense to revenue was 9 % above its competitors which led to 75000 employee lay offs
- Business unit managers charged with fixing, closing or selling underperforming parts of business
- Outsourced PC manufacturing
- Moved all products under ThinkPad brand
- IT running operations cost cut down by half – resulted in $2 billion in cost savings
- Data centers reduced from 155 to 11 which would transfer data to 3 megacenters
- centralized IT leadership – 128 CIO’s reduced to 1
- Networks converted to 1 protocol
- Increased component reuse
- ONE IBM
- Gernsters 8 operating principles to operate as one company
- Changing the culture – inevitable resistance from the middle management.
- Reengineering global functions and processes
- Each member of CEC assigned a functional engineering project with 2 tasks – cost cutting and redesigning it for global use and sustained competitiveness
- governance structures removed
- Hired Abby Kohnstamm as senior vice president of marketing to oversee IBM’s sponsorship of 1994 winter Olympics
- Changed strategic vision to “E-business”
- Acquired Lotus Development corporation and Increased importance on Middleware
- Acquired Tivoli systems to fill the distributed systems and management software void
- Shifted focus form products to services and consulting
- Improved technical expertise for its customers
- Divided the business units into horizons – mature business, rapidly growing business, emerging business
- By 2003, 22 of the 25 new EBO’s were transitioned from new ventures to high-growth businesses
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