rebirth of ibm

Download Rebirth of IBM

Post on 13-May-2015




0 download

Embed Size (px)


Changes after the downturn, how the company had make its way to success.


  • 1.Presentation On Rebirth OfPresented By Ritu Lakhotia-Ronak H Patel

2. HISTORY OF IBM International Business Machines [IBM] is an American multinational technology and consulting corporation headquartered in Armonk, New York, United States. IBM manufactures and sells computer hardware and software, and it offers infrastructure, hosting and consulting services in areas ranging from mainframe computers to nanotechnology. As of December 2011, IBM was the third-largest publicly traded technology company in the world by market capitalization. The company was founded in 1911 as the Computing Tabulating Recording Corporation through a merger of three companies: the Tabulating Machine Company, the International Time Recording Company, and the Computing Scale Corporation. CTR adopted the name International Business Machines in 1924, using a name previously designated to CTR's subsidiary in Canada and later South America. 3. Two CEOs who made IBM where it is today.Louis GerstnerSamuel J.PalmisanoCurrent CEOs of IBMSamuel J.PalmisanoVirginia Rometty 4. IBM Market capatilization : Over $155 billion Employs : Over 3,19,000 Operation : Over 150 countries One of the most profitable globle companies in 2004 Its surpassing competitor : EDS, Accenture, CAP Gemini and HP sandeep 5. AKERSS LAST STAND To improve the performance of the IBM, former CEO thought to break up the IBM into 13 different company. Akers also did cost reduction Between 1991-93, he laid off half of the employee. Restructuring charges increased. Several competitors came at this time also. It started loosing its clients. As a result of which akers resigned in 1993 And thus louis Gerstner was appointed as the new CEO of the company. 6. GERSTNERS IMMEDIATE MOVE Analyst found that gerstner has no work exprience in this industry First task of gerstner was that, break up the company into 13 parts or let it be as a single company. He found that IBM have the ability to provide its client with hardware, software & service including business consultancy. What more it needed to add was to give customized to its client 7. He changed the culture.He gave instruction to the employee regarding the meeting.He adopted the autocratic leadership style.He made campus style headquarter. 8. NEW BUSINESS MODEL He focused on internet.Gerstners effort was to make IBM a customerdriven company.To sale customized product. 9. CHANGES IN COMPUTER HARDWARE With decline in the sale of mainframe , it reduced the cost of mainframe computing and increased the scalability of its computers.IBM started positioning smaller mainframes as Enterprise serverThey launched ThinkPad computing devices for corporate customers.Started developing new and advance microprocessor chips.Sanjeev rp 10. CHANGES IN COMPUTER SOFTWARE With rapid pace of change in the computer s/w and so many market leader in s/w like Oracle, SAP , Microsoft etc has led IBM to come with new idea of developing network s/w. IBM began to buy companies that possessed unique network s/w. In 1995 , IBM acquired a company called Lotus(which had developed the popular lotus Notes collaborative s/w). Developed middleware s/w that links h/w & s/w. 11. CHANGES IN SERVICES & CONSULTING Company established a service division called ISSC(Integrated system solution corporation) to provide IT service.This division provided outsourcing service.Renamed the service division into global service to offer client an outsourcing and business consultancy service.thefirstcomputer 12. E-BUSINESS AT IBM E-business is the conduct of business on the Internet, not only buying and selling but also servicing customers and collaborating with business partners. IBM coined the term E-BUSINESS . Acquisition with Lotus helped to understand how powerful is the internet for e- business. In 1996, started its global marketing campaign about value chain transactions with other companies and client online. 13. CONTD.. Soon it became leader in e-business which gave competitive advantage over companies such as SAP , Oracle , HP. Companies like Wal-mart , Goodyear formed contract with IBM . Even it targeted SMBs for e-business. E-business helped with its own cost-cutting efforts. 14. GERSTNER TRANSFERS POWER TO PALMISANO By 2000, IBM had replaced EDS has the world leader in computer services, it had a backlog of outsourcing contracts worth over $100 billion . Until he retired as CEO of IBM in february 2002,Gertsner continued to work to strengthen his new services driven business model across all IBMS U.S and global operations. ronz 15. CHANGE Pay for Performance evaluation Stock option system incentive structure to encourage employees. Change in IBMs culture Conservative, hierarchical & product orientedEntrepreneurial , collaborative and customer oriented 16. SAMUEL PALMISANO The in-charge of global services, became Gerstners hand-picked successor. IBMs organizational structure Sam PalmisanoCORPORATE HEADQUARTERSGlobal servicesHardwareSoftwareGlobal financingR&DGlobal sales and distribution 17. E-business initiative IBM gained success and started creating customized solutions for the need of different problems of different industries.New services driven business model.Consultants knowledge of competitive informationacquisition of services and software offerings throughout 1990sIBM has spent more than $7billion on acquisitions since 2000. 18. IBMs new operating structure SIX MAJOR GROUPS WITH SIMILAR TYPE OF COMPUTING The systemization of sales force according to the clients future business objectives and it integrated among different operating groups.Financial services Banking Financial markets, Insurance.Public Education , Government. Healthcare, life sciencesIndustrial Aerospace, automotive. Defense ,electronics.Distribution CommunicationsSMBs Consumer products, retail. Travel , transportation. Energy Media and telecommunications Less than 1000 employees 19. R&D IBMs R&D was another area that has allowed the company to differentiate from its rivals. It has been awarded more U.S. patents that any other company each year for the last 11 years. IBM spends about $5billion annually on R&D and concentrates on developing new software. 20. RECENT DEVELOPMENTS IN THE OPERATING GROUPS. Competitors altering their business model in order to compete with IBM.Eg. HPs merger with COMPAQ IN 2003 ORACLES merger with peoplesoft in 2005. 21. GLOBAL SERVICES IBM global service is the biggest contributor to revenues and profit of 48% as of 2003. It still continues to offer clients the best of breed such as Peoplesofts HRM software and SAPs ERP software. Indeed, in the early 2000s IBM invested over $3billion to develop Linux- based operating and applications software to reduce Microsoft dominance. Global services have 3 main line of business: 1. 2.3.Strategic Outsourcing Services Integrated Technology Services; Business Consulting Services. 22. FINAL THREE KINDS OF SOLUTIONS IBM OFFERS ARE:1. 2. 3.Financial management. Human capital management [HRM] E - business integration 23. HARDWARE The 2 main hardware segment recognized by IBM in 2003 are System and Technology Group and the Personal Systems Group.The former deals with the clients of large enterprise while the latter was going under major transformation. 24. SOFTWARE Gerstners hope to obtained 2million from SMB clients by 2001 didnt succeed because of early recession in 2000s. But however, the software division has been rapidly working to develop the open source middleware solutions that can be scaled to the needs of SMBs To built strength in application software it made many strategic acquisitions after the success of Lotus acquisition such as Tivoli Systems and Rational Software in 2003 for $2.1billion. IBM hopes that when the economy recovers sales of software will increase dramatically. 25. GLOBAL FINANCING IBMs global financing division allows it to provide its clients with the financing they need to purchase its computer products and services. This division is a major source of profitability. Indeed, it is currently the largest IT financier in the world. Although not a major contributor to total profits, financing is a very profitable operation with high gross margins. 26. RESEARCH AND DEVELOPMENT The research divisions focus is to contribute to IBMs success by balancing projects that have an immediate impact with those that are long term investments.It helps to develop innovations that support customized industry-specific solutions.It also focuses on emerging technologies like nanotechnologies and automatic computing that may pay off decades in the future. 27. CHANGES BROUGHT BY PALMISANO Hewas appointed as CEO in 2002Companyworks to achieve sustainable competitive advantage over its rivals Manyacquisitions took place to support Palmisanos idea of e-business on demand initiativeSanjeev sk 28. PROBLEMS FACED BY PALMISANO Prevalence of poor economic conditions in early 2000s. Dip in IBM revenues. Dip in its stock price as its existing and potential clients slashed their IT budgets. Companies searched for newer avenues to diversify their market in areas of new computer hardware and software. To convince potential client to buy new kinds of software and hardware. 29. SOLUTIONS SOUGHT BY PALMISANO Identification of objectives to achieve from advanced IT applications Further innovation Significantly reduce cost structure Integrate activities across a companys value chain Accurately forecast potential return on investment from capital expenditures on new products 30. CREATION OF ON-DEMAND BUSINESS A customized IT platform based on IBM hardware and software Respond quickly to any and all opportunities demands and threats from customers and environment. Completely integrate their companys value chain activities Integrate with external strategic partners, suppliers and distributors. 31. BENEFITS OF ON DEMAND IT Companieswould obtain m