Ibm Term

As CEO of IBM, Samuel J. Palmisano used the momentum of the success gained under the leadership of Louis Gestner to steer the business in a new direction. Sam intends to restore the organization to the former status it held as a technological leader with an admirable company culture. Palmisano’s plan calls for the reorganization of the executive management board, restructuring of incentive programs, and an emphasis on collaboration across all divisions. Establishing closer relationships between researchers and clients is also a key factor in creating new opportunities for growth for IBM. E-business on demand is the new initiative at the heart of Palmisano’s strategy for the growth of IBM’s Global Services. E-business will transform IBM from a hardware and software company to an IT services provider.

Disbanding the executive management committee and creating a set of management teams was the first step in Palmisano IBM restructuring plan. “He created three of them: strategy, operations, and technology. Instead of picking only high-level executives for each team, Palmisano selected managers and engineers most familiar with the issues.”1 Sam found the remoteness of the committee members from the frontlines was impeding the company’s progress. Decentralizing management empowers employees to make decisions and participate in IBM’s future success. The transference of knowledge across the organization is more efficient and effective when collaboration at all levels is encouraged. To show his commitment to the participative management approach the CEO then had the board take a portion of his bonus and redistribute it to top executives based on their team performance. This gesture of sharing the rewards solidifies Palmisano’s role as a leader and his intent to restore the former prestige of the corporate culture.

Global Services is IBM’s consulting and services division fashioned by Lou Gerstner. During Palmisano’s leadership Global Services became IBM’s most profitable division and continues to display tremendous growth potential. The division sells IT packages to organizations that include software, hardware, as well as systems and software integration. To achieve the seamless integration of systems IBM has made a major investment in open source technologies such as the Linux operating system and grid computing. “Linux is one of the world's fastest-growing operating system. IBM is a strong supporter of Linux as a way to promote open standards. Open standards allow the interoperability of various applications, technologies, and computer devices, providing customers with a wider choice and flexibility to deploy applications.2 The open source licensing of these technologies allows IBM to develop upon their capabilities to suit the client’s needs while eliminating the expense of commercial products.

The recent inclination for corporations to downsize IT departments and reduce operation costs means that IBM cannot rely on the sales of hardware and software for continued growth. Sam Palmisano’s vision for IBM’s future success is contingent on the company becoming a provider of “On-Demand Business” IT services. The concept is to distribute computer services like utilities and have customers pay on a usage basis. This removes the burden of capital and resources necessary to maintain an IT department for the client and creates a continuous source