IBM Reorganizes Systems Group for SMB Push

IBM restructures its hardware units to focus more on small and midsize businesses.

IBM is reorganizing its hardware group to focus more on specific market segments, particularly the small and midsize business market.

In an internal memo sent to employees in the company's Systems and Technology Group on Jan. 3, William Zeitler, senior vice president and group executive of that unit, said the company will focus on four main client groups: enterprise systems, business systems, industry systems and microelectronics.

According to Zeitler's memo, the Enterprise Systems segment will focus on large companies and will be led by Jim Stallings; the Business Systems segment will focus on small and midmarket accounts and be led by Erich Clementi; the Industry Systems segment will focus on vertical markets such as retail, telecommunications, and healthcare, "where IT is often embedded in processes beyond the traditional data center," and be led by Curtis Tearte.

The Microelectronics segment will be led by Adalio Sanchez, Zeitler said.

"We're really gearing up for the SMB market," said Tim Breuer, a spokesman for IBM's STG unit.

Analysts have projected the SMB market for IT products and services to be as large as $500 billion, and IBM wants its share. CEO Sam Palmisano said in 2007 that the SMB sector may become IBM's biggest customer segment within the next five years.

According to IBM, the company sold $17 billion in products and services to SMBs in 2006.

"Our plan for achieving sustained growth in 2008 and beyond requires that we accelerate this transformation across STG," Zeitler said in the memo. He noted that a key step "is to move to a client-centered structure—top to bottom."

Moreover, Zeitler said, "a client-focused model will enable us to extend our enterprise leadership, accelerate our growth in SMB, and exploit new embedded and OEM opportunities outside the traditional IT market. These changes play to our strength in addressing the broad client challenges that drive new opportunity today—like IT complexity, business resilience and energy efficiency."

He also said that this approach, "combined with our deep technical leadership, will put STG in a much stronger position to set the agenda for the next-generation data center or for innovative solutions in SMB."

Breuer said an example of the IBM STG group's ongoing move to a client-centric focus is the BladeCenter S offering, which was built for SMB clients.

"You'll see a lot more products from IBM this year that are laser-focused on specific client sets and needs, and very tailored sales efforts as well," Zeitler said.

He added that the overall point of the restructuring is to enable IBM to marshal the right mix of products and technologies faster to solve the needs of the four customer sets. IBM last reorganized its hardware division 15 years ago.

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