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IBM Software to Play Scrooge, Fire Cratchits Wholesale, Source Says

IBM Software to Play Scrooge, Fire Cratchits Wholesale, Source Says

 

IBM is reportedly supposed to play Scrooge and fire 13,000 people from its software unit.

 

At least that’s what the scuttlebutt inside says. The first indications of whether this news is true or not could reportedly start becoming apparent this Wednesday.

 

The job cuts are supposed to be part of a reorganization IBM is planning for the Software Group apparently because it’s unhappy with the fact that its no-growth software revenues have been frozen in time for the last few years and haven’t inched above $13 billion.

 

Management may have also been bitten by the consolidation bug given the acquisition of Tivoli, Informix, Crossroads and Rational, buys that kept software revenues from sinking during the post-bubble troubles. It’s said product units will be decimated.

 

Presumably IBM is also quietly biting its nails over the maybe-it-is-maybe-it-ain’t financial recovery.

 

There are reports that executives will be demoted, something HP has done, and that salaries will be capped. The Software Group currently bears a strong resemblance to a bank; it reportedly has something like 17 VPs.

 

An internal memo that IBM circulated on Monday says that “trends in the global software arena indicate” that its software “sales team is not organized to effectively meet our goals in 2004 and beyond” so it’s going to have a “different look” come January.

 

The memo says the changes in the sale structure are meant to:

 

* “Align resources to support the sale of middleware solutions

 

* “Place the focus of decision-making closer to customers

 

* “Focus on long-term customer success

 

* “Make major investment in generating new customers and increasing sales to occasional customers

 

* “Focus on the 12 specialty areas: Automation, Business Integration/Industry Solutions, Business Intelligence, Competitive Winback, Content Management/Document Management, Development Tools, Linux, Pervasive, Portals/Dynamic Workplace, Security, Storage and z-Series

 

* “Improve Telesales, channel and SMB sales

 

* “Better align with sales and distribution industry clusters

 

* “Increase/improve skills.”

 

The memo doesn’t specify what exactly will change but it does say that “Customers don’t think in terms of brands. They want integrated solutions for their IT and business process problems – regardless of brand or vendor.”

 

 So one gathers it’ll reassign sales teams from brands to its 12 new verticals, which are probably a bit different than people might think.

 

IBM’s solutions sell goes back to the year one so when the memo quotes IBM’s software prince, Steve Mills, as saying, “These days, companies don’t want to buy technology. They want to buy business solutions built for their industry,” he sounds kinda lame. One wonders if he’ll be as powerful as he’s been.

 

The Financial Times got a hint of what’s going on and figures the move, which it called a “massive reorganization” without mentioning anything about a reduction in force, will require a similar response from Microsoft, Oracle and SAP.

 

It said IBM is supposed to spend millions of dollars to lure third-party programmers to write for its infrastructure platforms and IBM’s own developers will be set to writing 60 middleware products tailored to each market segment.

 

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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