New IBM CEO Virginia Rometty: What’s Her Strategy?
Virginia (“Ginni”) M. Rometty officially succeeded Sam Palmisano as IBM CEO on January 1, 2012. Rometty appears to inherit a strong IBM. But some investors worry IBM’s earnings growth will slow in 2012. Plus, is IBM’s channel focus — increasingly involving business analytics and business intelligence — too narrow for some partners? The VAR Guy offers some insights — plus key IBM channel leaders that VARs and MSPs may need to engage.
The VAR Guy this month is looking at multiple high-tech CEOs, some of whom are new to the CEO post while others could be on a CEO hot seat.
First up is the CEO transition at IBM. Under former CEO Palmisano, who remains chairman, IBM spent a decade focusing on Four Key Questions, according to The New York Times:
- “Why would someone spend their money with you — so what is unique about you?”
- “Why would somebody work for you?”
- “Why would society allow you to operate in their defined geography — their country?”
- “And why would somebody invest their money with you?”
It’s hard to argue with the results. During Palmisano’s tenure, IBM says, Big Blue “increased EPS [earnings per share] by almost five times, generated over $100 billion in free cash flow, and invested more than $50 billion in research and development—creating over $100 billion of shareholder value since 2002 through an increase in market capitalization and dividends paid.”
Meanwhile, IBM’s closest rival — Hewlett-Packard — over the past decade has stumbled badly amid multiple CEO changes and strategic missteps.
But here’s the challenge for new IBM CEO Virginia Rometty: IBM’s Q3 earnings, announced in October 2011, triggered some concern about slowing growth. The VAR Guy wonders: Is Rometty stepping into the CEO seat just as Big Blue begins to face a new round of business challenges? Hmmm…
Pundits expect Rometty to continue IBM’s big bet on business analytics and business intelligence software — which help companies to manage their data. Moreover, there are signs that Rometty helped Palmisano to craft Big Blue’s services and cloud strategies — so don’t expect big changes there.
Still, IBM’s business analytics push has narrow appeal to channel partners. Sure, some partners have bet their companies on business intelligence, database management and information management. But the vast majority of IBM’s channel partners more likely focus on bread-and-butter offerings like IBM servers.
As customers shift their server hardware budgets to cloud services, IBM partner strategies will need to change.
During IBM PartnerWorld 2011, Palmisano told partners to focus on four areas:
- Invest in skills and focus on customer outcomes.
- Embrace IBM’s growing software portfolio.
- Understand the importance of applications and workloads.
- Expand your services capabilities.
No doubt, Rometty will reinforce those themes in 2012. But partners should also keep a close eye on Channel Chief Rich Hume and Andy Monshaw, general manager of IBM’s global and medium sized businesses. Monshaw seems to be developing an IBM strategy that more closely aligns with managed services providers, MSPmentor has reported.
Rometty helped to build IBM Global Services into a worldwide powerhouse. Will she share some secrets to success with MSPs and other IT services providers? The VAR Guy is watching.