Reinventing IBM

 
 
By eweek  |  Posted 2004-03-29 Email Print this article Print
 
 
 
 
 
 
 

The executive managing the company's transformation talks about pushing for horizontal alignment while pursuing on-demand gains.

Linda Sanford, senior vice president of enterprise on-demand transformation and information technology at IBM, sat down with eWEEK Senior Writer Darryl K. Taft in her office in Somers, N.Y., to discuss IBMs strategy.

How much of the IBM infrastructure has had to shift to accommodate on-demand?

Its a continuous thing. We are learning as we go along and continuously adding to our list of things that need to be changed or reinvented. And I think every part of our business will be changed in some form or fashion because when we talk about on demand, what were doing is flipping ourselves on our side. I always feel all businesses were built vertically, and you have all these silos, such as a sales organization and a development organization, etc. And becoming on demand says now the company is running in a way that everything is connected horizontally. And who is out there driving what we do and how we do it? The customer. Its no longer a world of silos; the customer is driving us. We need to deliver short-term changes and short-term impacts where we can demonstrate to ourselves and to our customers that we are more responsive.

IBMs year-old acquisition of Rational Software Corp. has paid off handsomely. Click here to read more. Are all the IBM brands involved?

Very much so. It has become IBMs strategy, our road map. This is where all of us focus our efforts and our resources. The role that my team and I get to play is that we can look across all the businesses at IBM and make sure we are aligned because if we are going to flip ourselves on our sides, it means we have to align ourselves so that were optimizing the effort. Our job is to ensure that we have horizontal alignment across the company so that were driving the rate and pace of our own transformation. And that means we work very closely with the brands as part of our virtual team.

Click here to read more about IBMs on-demand push. Do you have any projections for how much productivity you expect to gain or how much youre going to save through this effort?

I think [IBM CEO] Sam [Palmisano] said it was a 10-year, $10 billion effort. But at some point, we will share those numbers. I think we need to get some of these proof points under our belt here so that were not just projecting, but saying, "This is real." The one weve used is on the supply chain side. Two years ago, we had delivered about $5.6 billion of cost savings through our integrated supply chain effort. This past year was at least that, plus more. So where does all that saving go to? It goes to one of three places. It either goes to the bottom line—and we see it in terms of more earnings per share that the shareholders receive. Or it goes to price, and its a continuously competitive market out there, and we need to keep taking cost out because price is coming down. Then some of it also gets reinvested again. Thats our model for how we fund these kinds of initiatives. It is productivity; clearly, productivity is the name of the game. And productivity either leads to cost reductions or to revenue growth.

When you first got this assignment, what was your reaction?

Very early on—I think within the first 10 days—we had to do an employee broadcast or something. So we had to get up there and start talking about it, and we were saying things like, How do you even spell on demand? Is it capital o and capital d or little o and little d? But we had spent a lot of time thinking about how wed become on demand.

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