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The Way Business Is Moving

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Issue Date: September 2005

IBM restructures global services

1 September 2005
Patrick Wachter

IBM has reorganised its Global Services business and named a team of three executives to run the division, according to an internal memo from IBM chairman and CEO, Sam Palmisano, to senior leaders at the company, obtained by CBR last month.
The changes are effective immediately, the memo states, and will help the company "better focus on our services growth strategy and enhance our marketplace performance." Despite leading the global services market, IBM's "share position is modest, and there are many exciting growth prospects before us," the memo states.
In the memo, Palmisano stated that Global Services accounts for half of all IBM revenue and a third of its profits, with more than half of the entire workforce in service positions. It came only a day after IBM reported increased profit on slowing sales for the second quarter. The company was able to post a profit due to the sale of its PC business and a $775m cash settlement from Microsoft. Global Services revenue rose 6% on the quarter to $12bn.
The new executive team includes Mike Daniels as senior vice president for IT Services. According to the memo, this position includes management of "strategic outsourcing, ITS [integrated technology services], e-business hosting, SMB [small and medium business] services and IBM Global Financing, as well as the IBM global account." Daniels previously served as general manager for the IBM Americas division.
Ginni Rometty is senior vice president for Enterprise Business Services. Rometty will oversee business consulting services, which include consulting and systems integration, business transformation outsourcing and application management services. EBS also will encompass advanced solutions, assets innovation and export business, the memo explains. Rometty previously directed IBM Business Consulting Services
Bob Moffat is senior vice president for Integrated Operations and will manage 'integrated supply chain, strategic outsourcing delivery, ITS parts, logistics and call centres,' the memo states. Moffat was previously senior vice president of supply chain operations.
All three executives will report to Palmisano. John Joyce, who previously headed Global Services, has resigned from the company and has joined Silver Lake Partners, a private equity group.


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