As Dennie M. Welsh, the first general manager of IGS, said in December 1996: . It is clear we cannot stand still. IBM Global Services must change because our customers, marketplace and competitors are all changing. Our new management structure will enable greater teamwork throughout IBM and continue building on the momentum of profitable services growth and customer satisfaction worldwide.. And change it did.
Among the new moves were reorganizing services around clear lines of business mapped to customer needs and concerns; aligning IGS capabilities, skills and practices around three major areas (innovation and integration, infrastructure support, and strategic outsourcing); and gearing up consulting group practices to help clients implement and manage standards-based environments. IGS made other adjustments as well. It moved out of the network infrastructure business by selling its Global Network because it could acquire underlying connectivity from other providers at less cost and investment.
As a corollary of that, IBM elected to concentrate on managing the information and data that was streaming into networks by connecting business processes across enterprises and up and down industry value chains. In addition, IBM merged the Consulting Group — which was previously tied to its sales units — into Global Services. Ginni Rometty, general manager of IBM Global Services, Americas, says . What this did for Services and for IBM was to join at the hip our best market-facing thinkers with our integration experts who knew how technology fits together to deliver higher value solutions to the customer..
Late-1990s And Beyond In recent years, IBM Global Services has expanded its portfolio to offer many more e-business services as a result the powerful effect of the Internet on commerce. Customers needed help to sort out the new range of technology choices. They wanted advice on a coherent strategy fore-business and a better understanding on the impact of technology on their overall enterprise strategy, especially advice that is relevant and specific to their own industries.
IBM Global Services responded rapidly to these emerging needs because it always believed serious e-business. is what customers would eventually want. And, as demonstrated by the collapse of many dot-com start-ups, that belief has been validated by events in the marketplace. Much of what IBM learned and applied to customers was derived from the company. s own transformation during the late-nineties into a leading e-business in its own right. IBM converted its in-house experience in e-business into several commercial opportunities. For example, internal advances based on business intelligence and knowledge management tools were incorporated into many solutions, and IBM.
s expertise in using the intranet as its primary internal communications channel paid dividends when many customers asked IBM to build similar web environments for them. Going forward, IBM Global Services has increased its industry focus by concentrating its skills, knowledge and capabilities on clients. specific business issues and building an inventory of reusable assets to speed response time. IGS has integrated at the industry level, where itconcentrates on 16 industries grouped into five sectors.
In building its services business over the past 10 years, IBM has learned at least six lessons which might be applicable to other businesses. First, commit to business and cultural change for the long run. IBM. s successful services evolution was not initially obvious to observers. Even though the services-only business (excluding maintenance) was unprofitable until 1994, IBM stayed the course, and that business has grown accordingly. Second, invest in people and the processes to support them. In the services business, people are the brand.
For that reason, IBM invests over $1 billion a year in education and training for its employees, much of it done via distance learning. Third, align your resources closely to customer demands. Fourth, adhere to your core strengths and remain focused on strategy. IBM did not get distracted by the dot-com mania. The company believed e-business was not about browsers but was really about business; not about clicks but about commerce. IBM. s business plan was based on that belief and when the market eventually shifted in that direction, IBM was ready and positioned to deliver mission-critical services solutions.
Fifth, build and leverage multiple value chains. In today. s global business environment, alliances and . co-opetition. are common practices because no one company can do it all. Competitive advantage can be derived by identifying the role that best suits your company and by recognizing what someone else can do much better or much quicker — and combining the two. Sixth, adapt, anticipate and be quick to innovate. IBM now regenerates its services portfolio on a rigorous and regular basis. Annual strategic plans are a relic of the past.
IBM says that it and Eastman Kodak Company have entered into an agreement under which IBM will design, build and manage a new state-of-the-art data center for Kodak in Rochester, N. Y. IBM introduces Business Recovery Services, an offering that enables a business to continue operations in the event of an unplanned outage or disaster. IBM signs a service contract with Hibernia National Bank to operate and maintain its computer systems and provide information processing support throughout the organization.