On-Demand Computing Takes Hold at IBM

eWEEK gets a behind-the-scenes look at IBM's strategy for transformation-and sees a company reinventing itself in line with its on-demand message.

SOMERS, N.Y.—When CEO Sam Palmisano set IBM on the path toward On Demand in October 2002, he said the company would help its customers better respond to their own customers, competitors and rapidly changing market. But in Palmisanos view, the transformation starts at home, so he decided IBM must first transform itself into an on-demand entity as proof that the company was ready for an on-demand world.

Collaboration was key to delivering an on-demand environment, said Linda Sanford, senior vice president of enterprise on-demand transformation and information technology at IBM and the executive Palmisano picked to lead the companys internal effort to reinvent itself as an on-demand entity.

"Collaboration plus innovation equals innovation and growth," Sanford told a Cyberposium audience in January at Harvard Business School, in Cambridge, Mass. The audience of MBA candidates seemed to get it, sitting rapt during Sanfords speech and following up with questions about collaboration.

/zimages/4/28571.gifClick here to read a new eWEEK interview with Sanford.

Last month, at IBMs facility here, Sanford told eWEEK that collaboration is the first part of the process for getting everybody in an organization working on the same page. She defined an on-demand business as an enterprise that has integrated business processes across the company with business partners, suppliers and clients and can respond with speed to any demand, market opportunity or external threat.

"When Sam launched it ... he really launched it with two equally important points," Sanford said. "One was that clearly he had heard, after meeting with many of our customers and our suppliers and our partners, that theyre all dealing with this reinvention of their businesses. Having just come out of ... the dot-com boom and the dot-com bust and just one unpredictable thing after another happening, all businesses were stepping back and saying, We need to reassess and re-evaluate what we do and how we do it so were not caught flat-footed when the next thing happens."

So, she said, the No. 1 "part of our job is to help our customers reinvent themselves. Equally important, we needed to demonstrate to our customers that we were eating our own cooking. We needed to reinvent ourselves as well."

Bruce Harreld, IBMs senior vice president of strategy, recalled the beginnings of that approach: "I said to Sam, I think we need a timeout here, and we need to really think about this. So Sam actually carved out a day in August, which then led to an agreement of the senior management team in August of 2002 to dramatically change things. We didnt know what to call it; in fact, we didnt care what we called it. So whatever you want to call that, I think over the next 10 years, were going to really make a major difference here."

Next page: IBM says its two steps ahead of customers.